<PAGE> 1
ANNUAL REPORT
DECEMBER 31, 1998
THE TRAVELERS VARIABLE LIFE INSURANCE
SEPARATE ACCOUNT ONE
[LOGO TRAVELERS LIFE AND ANNUITY]
The Travelers Insurance Company
The Travelers Life and Annuity Company
One Tower Square
Hartford, CT 06183
<PAGE> 2
THE TRAVELERS VARIABLE LIFE INSURANCE
SEPARATE ACCOUNT ONE
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1998
<TABLE>
<S> <C> <C>
ASSETS:
Investments in eligible funds at market value:
Greenwich Street Series Fund, 338,316 shares (cost $5,444,271) ... $ 5,937,440
Smith Barney Concert Allocation Series Inc., 23,538 shares
(cost $269,427) ................................................ 280,168
The Travelers Series Trust, 193,369 shares (cost $2,172,130) ..... 2,440,863
Travelers Series Fund Inc., 7,099,670 shares (cost $37,777,976) .. 44,245,451
-----------
Total Investments (cost $45,663,804) ........................... $52,903,922
Receivables:
Dividends .......................................................... 85,853
Premium payments and transfers from other Travelers accounts ....... 1,989,545
Other assets ......................................................... 1,778
-----------
Total Assets ..................................................... 54,981,098
-----------
LIABILITIES:
Payables:
Insurance charges ................................................ 9,441
Administrative fees .............................................. 4,591
-----------
Total Liabilities .............................................. 14,032
-----------
NET ASSETS: .......................................................... $54,967,066
===========
</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, 1998
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends ............................................................. $ 1,964,228
EXPENSES:
Insurance charges ..................................................... $ 370,704
Administrative fees ................................................... 182,019
-----------
Total expenses ...................................................... 552,723
-----------
Net investment income ............................................. 1,411,505
-----------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold ...................................... 14,571,579
Cost of investments sold ............................................ 13,786,319
-----------
Net realized gain (loss) .......................................... 785,260
Change in unrealized gain (loss) on investments:
Unrealized gain at December 31, 1997 ................................ 4,467,693
Unrealized gain at December 31, 1998 ................................ 7,240,118
-----------
Net change in unrealized gain (loss) for the year ................. 2,772,425
-----------
Net realized gain (loss) and change in unrealized gain (loss) ..... 3,557,685
-----------
Net increase in net assets resulting from operations .................... $ 4,969,190
===========
</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, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income ......................................... $ 1,411,505 $ 118,922
Net realized gain (loss) from investment transactions ......... 785,260 339,138
Net change in unrealized gain (loss) on investments ........... 2,772,425 3,205,033
------------ ------------
Net increase in net assets resulting from operations ........ 4,969,190 3,663,093
------------ ------------
UNIT TRANSACTIONS:
Participant premium payments
(applicable to 13,971,696 and 11,877,130 units, respectively) 15,399,481 12,668,925
Participant transfers from other Travelers accounts
(applicable to 10,633,309 and 9,594,528 units, respectively) 15,068,220 12,632,833
Growth rate intra-fund transfers in
(applicable to 9,467,029 and 14,024,894 units, respectively) 13,558,388 17,848,901
Contract surrenders
(applicable to 599,831 and 603,379 units, respectively) ...... (816,829) (713,491)
Participant transfers to other Travelers accounts
(applicable to 14,233,046 and 12,446,521 units, respectively) (16,185,232) (13,416,453)
Growth rate intra-fund transfers out
(applicable to 9,474,012 and 14,055,338 units, respectively) . (13,558,388) (17,848,901)
------------ ------------
Net increase in net assets resulting from unit transactions ... 13,465,640 11,171,814
------------ ------------
Net increase in net assets .................................. 18,434,830 14,834,907
NET ASSETS:
Beginning of year ............................................. 36,532,236 21,697,329
------------ ------------
End of year ................................................... $ 54,967,066 $ 36,532,236
============ ============
</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
Citigroup Inc. (formerly 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, 1998, the eligible funds available under Separate
Account One were: 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 Enterprise Portfolio
(formerly Van Kampen American Capital Enterprise Portfolio), TBC Managed Income
Portfolio, Smith Barney High Income Portfolio, Smith Barney International Equity
Portfolio, Smith Barney Large Cap Value Portfolio (formerly 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; 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.
Effective December 18, 1998, the Zero Coupon Bond Fund Portfolio Series 1998 of
The Travelers Series Trust was fully liquidated.
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
$27,389,945 and $14,571,579, respectively, for the year ended December 31, 1998.
Realized gains and losses from investment transactions are reported on an
identified cost basis. The cost of investments in eligible funds was $45,663,804
at December 31, 1998. Gross unrealized appreciation for all investments at
December 31, 1998 was $7,247,981. Gross unrealized depreciation for all
investments at December 31, 1998 was $7,863.
-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 $4,407 and $15,103 in satisfaction of such contingent
surrender charges for the years ended December 31, 1998 and 1997, respectively.
4. NET CONTRACT OWNERS' EQUITY
<TABLE>
<CAPTION>
DECEMBER 31, 1998
-----------------------------------------
UNIT NET
UNITS VALUE ASSETS
----- ----- ------
<S> <C> <C> <C>
Greenwich Street Series Fund
Total Return Portfolio
Price 1 ................................. 1,751,193 $ 1.545 $2,705,615
Price 2 ................................. 2,080,853 1.552 3,230,255
Smith Barney Concert Allocation Series Inc.
Select Balanced Portfolio
Price 1 ................................. 118,053 1.057 124,823
Select Conservative Portfolio
Price 1 ................................. 25,067 1.041 26,089
Select Growth Portfolio
Price 1 ................................. 30,260 1.136 34,361
Price 2 ................................. 15,041 1.138 17,116
Select Income Portfolio
Price 1 ................................. 77,186 1.007 77,700
The Travelers Series Trust
MFS Emerging Growth Portfolio
Price 1 ................................. 424,098 1.515 642,652
Price 2 ................................. 205,184 1.519 311,656
Zero Coupon Bond Fund Portfolio Series 2000
Price 1 ................................. 20,657 1.139 23,524
Price 2 ................................. 490,556 1.144 561,163
Zero Coupon Bond Fund Portfolio Series 2005
Price 1 ................................. 301,609 1.215 366,331
Price 2 ................................. 501,893 1.220 612,331
</TABLE>
-5-
<PAGE> 7
NOTES TO FINANCIAL STATEMENTS - CONTINUED
4. NET CONTRACT OWNERS' EQUITY (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1998
--------------------------------------------
UNIT NET
UNITS VALUE ASSETS
----- ----- ------
<S> <C> <C> <C>
Travelers Series Fund Inc.
AIM Capital Appreciation Portfolio
Price 1 ................................. 1,418,576 $ 1.483 $ 2,103,209
Price 2 ................................. 2,273,530 1.489 3,386,241
Alliance Growth Portfolio
Price 1 ................................. 1,941,558 2.138 4,151,968
Price 2 ................................. 2,507,228 2.149 5,387,261
MFS Total Return Portfolio
Price 1 ................................. 1,933,087 1.502 2,902,692
Price 2 ................................. 2,069,954 1.509 3,122,567
Putnam Diversified Income Portfolio
Price 1 ................................. 1,112,544 1.126 1,253,170
Price 2 ................................. 501,306 1.131 567,197
Smith Barney International Equity Portfolio
Price 1 ................................. 952,661 1.274 1,213,529
Price 2 ................................. 1,463,263 1.280 1,872,424
Smith Barney Money Market Portfolio
Price 1 ................................. 5,652,559 1.124 6,352,391
Price 2 ................................. 445,433 1.129 503,005
Smith Barney High Income Portfolio
Price 1 ................................. 1,015,323 1.279 1,298,215
Price 2 ................................. 1,267,299 1.285 1,628,099
Smith Barney Large Cap Value Portfolio
Price 1 ................................. 1,256,445 1.597 2,006,411
Price 2 ................................. 1,584,922 1.604 2,542,641
TBC Managed Income Portfolio
Price 1 ................................. 427,850 1.135 485,409
Price 2 ................................. 308,125 1.139 351,091
Van Kampen Enterprise Portfolio
Price 1 ................................. 913,430 1.927 1,760,103
Price 2 ................................. 1,728,449 1.936 3,345,827
-----------
Net Contract Owners' Equity ................. $54,967,066
===========
</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>
GREENWICH STREET SERIES FUND (11.2%)
Total Return Portfolio
Total (Cost $5,444,271) ................................... 338,316 $ 5,937,440
----------- -----------
SMITH BARNEY CONCERT ALLOCATION SERIES INC. (0.5%)
Select Balanced Portfolio (Cost $119,008) ................... 10,466 124,859
Select Conservative Portfolio (Cost $25,517) ................ 2,244 26,096
Select Growth Portfolio (Cost $46,806) ...................... 4,116 51,491
Select Income Portfolio (Cost $78,096) ...................... 6,712 77,722
----------- -----------
Total (Cost $269,427) ..................................... 23,538 280,168
----------- -----------
THE TRAVELERS SERIES TRUST (4.6%)
MFS Emerging Growth Portfolio (Cost $776,983) ............... 56,584 954,566
Zero Coupon Bond Fund Portfolio Series 2000 (Cost $544,336) . 53,906 553,079
Zero Coupon Bond Fund Portfolio Series 2005 (Cost $850,811) . 82,879 933,218
----------- -----------
Total (Cost $2,172,130) ................................... 193,369 2,440,863
----------- -----------
TRAVELERS SERIES FUND INC. (83.7%)
AIM Capital Appreciation Portfolio (Cost $4,430,165) ........ 378,430 5,479,665
Alliance Growth Portfolio (Cost $7,061,948) ................. 362,248 9,530,735
MFS Total Return Portfolio (Cost $5,298,681) ................ 353,897 6,026,861
Putnam Diversified Income Portfolio (Cost $1,828,353) ....... 151,739 1,820,865
Smith Barney International Equity Portfolio (Cost $2,819,798) 223,843 3,075,597
Smith Barney Money Market Portfolio (Cost $4,890,412) ....... 4,890,411 4,890,412
Smith Barney High Income Portfolio (Cost $2,844,923) ........ 231,208 2,927,089
Smith Barney Large Cap Value Portfolio (Cost $3,899,964) .... 225,149 4,550,260
TBC Managed Income Portfolio (Cost $826,050) ................ 71,090 836,728
Van Kampen Enterprise Portfolio (Cost $3,877,682) ........... 211,655 5,107,239
----------- -----------
Total (Cost $37,777,976) .................................. 7,099,670 44,245,451
----------- -----------
TOTAL INVESTMENT OPTIONS (100%)
(Cost $45,663,804) .......................................... $52,903,922
===========
</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, 1998 AND 1997
<TABLE>
<CAPTION>
TOTAL RETURN SELECT BALANCED SELECT CONSERVATIVE
PORTFOLIO PORTFOLIO PORTFOLIO
--------------------------- ------------------ ------------------
1998 1997 1998 1997 1998 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends ........................................... $ 297,701 $ 182,798 $ 520 $-- $ 274 $--
----------- ----------- --------- --- -------- ---
EXPENSES:
Insurance charges ................................... 44,782 27,615 489 -- 99 --
Administrative fees ................................. 22,263 13,704 218 -- 43 --
----------- ----------- --------- --- -------- ---
Net investment income (loss) .................... 230,656 141,479 (187) -- 132 --
----------- ----------- --------- --- -------- ---
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold .................... 225,198 233,208 1,671 -- 5,174 --
Cost of investments sold .......................... 176,533 176,287 1,690 -- 5,483 --
----------- ----------- --------- --- -------- ---
Net realized gain (loss) ........................ 48,665 56,921 (19) -- (309) --
----------- ----------- --------- --- -------- ---
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year .......... 589,708 298,602 -- -- -- --
Unrealized gain (loss) end of year ................ 493,169 589,708 5,851 -- 579 --
----------- ----------- --------- --- -------- ---
Net change in unrealized gain (loss) for the year (96,539) 291,106 5,851 -- 579 --
----------- ----------- --------- --- -------- ---
Net increase (decrease) in net assets
resulting from operations ....................... 182,782 489,506 5,645 -- 402 --
----------- ----------- --------- --- -------- ---
UNIT TRANSACTIONS:
Participant premium payments ........................ (2) -- -- -- -- --
Participant transfers from other Travelers accounts . 1,418,102 1,585,614 120,207 -- 25,979 --
Growth rate intra-fund transfers in ................. 1,680,187 2,672,412 -- -- -- --
Contract surrenders ................................. (94,033) (57,298) (1,029) -- (292) --
Participant transfers to other Travelers accounts ... (132,383) (134,189) -- -- -- --
Growth rate intra-fund transfers out ................ (1,680,187) (2,672,412) -- -- -- --
----------- ----------- --------- --- -------- ---
Net increase (decrease) in net assets
resulting from unit transactions ................ 1,191,684 1,394,127 119,178 -- 25,687 --
----------- ----------- --------- --- -------- ---
Net increase (decrease) in net assets ........... 1,374,466 1,883,633 124,823 -- 26,089 --
NET ASSETS:
Beginning of year ................................. 4,561,404 2,677,771 -- -- -- --
----------- ----------- --------- --- -------- ---
End of year ....................................... $ 5,935,870 $ 4,561,404 $ 124,823 $-- $ 26,089 $--
=========== =========== ========= === ======== ===
</TABLE>
-8-
<PAGE> 10
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
SELECT GROWTH SELECT INCOME MFS EMERGING GROWTH ZERO COUPON BOND FUND
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO SERIES 1998
- ------------------------- ---------------------- --------------------------- ---------------------------
1998 1997 1998 1997 1998 1997 1998 1997
- -------- -------- -------- ----- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 943 $ -- $ 1,407 $ -- $ -- $ 6,449 $ 13,431 $ 14,195
- -------- -------- -------- ----- --------- --------- --------- ---------
425 115 345 -- 5,380 836 1,974 2,018
195 51 153 -- 2,506 386 1,040 996
- -------- -------- -------- ----- --------- --------- --------- ---------
323 (166) 909 -- (7,886) 5,227 10,417 11,181
- -------- -------- -------- ----- --------- --------- --------- ---------
1,596 396 1,288 -- 193,784 2,306 280,325 9,939
1,494 395 1,319 -- 160,718 2,000 282,185 10,018
- -------- -------- -------- ----- --------- --------- --------- ---------
102 1 (31) -- 33,066 306 (1,860) (79)
- -------- -------- -------- ----- --------- --------- --------- ---------
(672) -- -- -- 1,628 -- (2,681) (3,447)
4,685 (672) (374) -- 177,583 1,628 -- (2,681)
- -------- -------- -------- ----- --------- --------- --------- ---------
5,357 (672) (374) -- 175,955 1,628 2,681 766
- -------- -------- -------- ----- --------- --------- --------- ---------
5,782 (837) 504 -- 201,135 7,161 11,238 11,868
- -------- -------- -------- ----- --------- --------- --------- ---------
1 -- -- -- 31,169 -- 3 --
142 47,830 78,008 -- 507,404 368,833 3,890 38,179
16,893 -- -- -- 333,615 82,592 53,944 188,170
(994) (311) (812) -- (11,045) (1,416) (3,587) (3,857)
(136) -- -- -- (148,933) -- (274,369) (346)
(16,893) -- -- -- (333,615) (82,592) (53,944) (188,170)
- -------- -------- -------- ----- --------- --------- --------- ---------
(987) 47,519 77,196 -- 378,595 367,417 (274,063) 33,976
- -------- -------- -------- ----- --------- --------- --------- ---------
4,795 46,682 77,700 -- 579,730 374,578 (262,825) 45,844
46,682 -- -- -- 374,578 -- 262,825 216,981
- -------- -------- -------- ----- --------- --------- --------- ---------
$ 51,477 $ 46,682 $ 77,700 $ -- $ 954,308 $ 374,578 $ -- $ 262,825
======== ======== ======== ===== ========= ========= ========= =========
</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, 1998 AND 1997 (CONTINUED)
<TABLE>
<CAPTION>
ZERO COUPON BOND FUND ZERO COUPON BOND FUND AIM CAPITAL APPRECIATION
PORTFOLIO SERIES 2000 PORTFOLIO SERIES 2005 PORTFOLIO
--------------------- --------------------- -------------------------
1998 1997 1998 1997 1998 1997
--------- --------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends ........................................... $ 32,036 $ 28,920 $ 46,437 $ 37,278 $ 6,709 $ --
--------- --------- --------- --------- ----------- -----------
EXPENSES:
Insurance charges ................................... 4,178 4,022 6,647 4,796 37,703 24,568
Administrative fees ................................. 2,177 1,996 3,350 2,282 18,757 12,178
--------- --------- --------- --------- ----------- -----------
Net investment income (loss) .................... 25,681 22,902 36,440 30,200 (49,751) (36,746)
--------- --------- --------- --------- ----------- -----------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold .................... 14,142 16,664 26,877 21,083 403,308 267,687
Cost of investments sold .......................... 13,577 16,920 24,154 21,384 316,192 209,800
--------- --------- --------- --------- ----------- -----------
Net realized gain (loss) ........................ 565 (256) 2,723 (301) 87,116 57,887
--------- --------- --------- --------- ----------- -----------
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of year .......... 1,746 (4,648) 32,155 2,224 402,339 146,685
Unrealized gain (loss) end of year ................ 8,743 1,746 82,407 32,155 1,049,500 402,339
--------- --------- --------- --------- ----------- -----------
Net change in unrealized gain (loss) for the year 6,997 6,394 50,252 29,931 647,161 255,654
--------- --------- --------- --------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations ....................... 33,243 29,040 89,415 59,830 684,526 276,795
--------- --------- --------- --------- ----------- -----------
UNIT TRANSACTIONS:
Participant premium payments ........................ 2 -- 1 -- (34,489) --
Participant transfers from other Travelers accounts . 33,612 52,711 215,876 179,106 1,349,182 1,341,655
Growth rate intra-fund transfers in ................. 125,043 367,996 410,066 332,692 1,378,141 2,070,380
Contract surrenders ................................. (8,139) (8,101) (14,549) (10,289) (65,039) (41,915)
Participant transfers to other Travelers accounts ... (567) (328) (6,506) (7,053) (274,365) (86,881)
Growth rate intra-fund transfers out ................ (125,043) (367,996) (410,066) (332,692) (1,378,141) (2,070,380)
--------- --------- --------- --------- ----------- -----------
Net increase (decrease) in net assets
resulting from unit transactions ................ 24,908 44,282 194,822 161,764 975,289 1,212,859
--------- --------- --------- --------- ----------- -----------
Net increase (decrease) in net assets ........... 58,151 73,322 284,237 221,594 1,659,815 1,489,654
NET ASSETS:
Beginning of year ................................. 526,536 453,214 694,425 472,831 3,829,635 2,339,981
--------- --------- --------- --------- ----------- -----------
End of year ....................................... $ 584,687 $ 526,536 $ 978,662 $ 694,425 $ 5,489,450 $ 3,829,635
========= ========= ========= ========= =========== ===========
</TABLE>
-10-
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
PUTNAM DIVERSIFIED INCOME SMITH BARNEY INTERNATIONAL
ALLIANCE GROWTH PORTFOLIO MFS TOTAL RETURN PORTFOLIO PORTFOLIO EQUITY PORTFOLIO
- ---------------------------- ---------------------------- ---------------------------- ----------------------------
1998 1997 1998 1997 1998 1997 1998 1997
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 447,950 $ -- $ 234,290 $ -- $ 63,092 $ -- $ -- $ --
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
58,186 30,645 40,945 21,280 11,688 6,944 22,988 18,268
28,821 15,027 20,073 10,377 5,658 3,397 11,558 9,036
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
360,943 (45,672) 173,272 (31,657) 45,746 (10,341) (34,546) (27,304)
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
532,083 267,070 370,771 234,586 251,910 122,842 260,883 75,395
359,686 212,972 275,124 195,175 232,480 115,772 216,663 62,664
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
172,397 54,098 95,647 39,411 19,430 7,070 44,220 12,731
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
1,196,570 288,913 537,381 96,283 66,658 6,406 134,005 121,359
2,468,787 1,196,570 728,180 537,381 (7,488) 66,658 255,799 134,005
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
1,272,217 907,657 190,799 441,098 (74,146) 60,252 121,794 12,646
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
1,805,557 916,083 459,718 448,852 (8,970) 56,981 131,468 (1,927)
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
(2,667) -- (33,829) -- 3 -- 18 --
2,871,418 1,949,577 2,184,229 1,382,323 868,738 549,032 593,554 931,630
2,240,715 2,547,398 1,333,510 2,020,832 449,069 537,311 1,060,055 1,797,156
(114,306) (62,390) (82,188) (39,693) (62,555) (14,350) (43,363) (33,954)
(412,184) (132,624) (213,546) (34,999) (186,425) (45,017) (237,302) (56,447)
(2,240,715) (2,547,398) (1,333,510) (2,020,832) (449,069) (537,311) (1,060,055) (1,797,156)
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
2,342,261 1,754,563 1,854,666 1,307,631 619,761 489,665 312,907 841,229
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
4,147,818 2,670,646 2,314,384 1,756,483 610,791 546,646 444,375 839,302
5,391,411 2,720,765 3,710,875 1,954,392 1,209,576 662,930 2,641,578 1,802,276
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
$ 9,539,229 $ 5,391,411 $ 6,025,259 $ 3,710,875 $ 1,820,367 $ 1,209,576 $ 3,085,953 $ 2,641,578
=========== =========== =========== =========== =========== =========== =========== ===========
</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, 1998 AND 1997 (CONTINUED)
<TABLE>
<CAPTION>
SMITH BARNEY MONEY SMITH BARNEY HIGH SMITH BARNEY LARGE
MARKET PORTFOLIO INCOME PORTFOLIO CAP VALUE PORTFOLIO
--------------------------- ------------------------- -------------------------
1998 1997 1998 1997 1998 1997
------------ ------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends .................................. $ 228,416 $ 195,839 $ 169,433 $ -- $ 147,289 $ --
------------ ------------ ----------- ----------- ----------- -----------
EXPENSES:
Insurance charges .......................... 41,046 34,989 20,993 15,991 32,326 19,021
Administrative fees ........................ 18,564 15,758 10,643 8,008 15,976 9,145
------------ ------------ ----------- ----------- ----------- -----------
Net investment income (loss) ........... 168,806 145,092 137,797 (23,999) 98,987 (28,166)
------------ ------------ ----------- ----------- ----------- -----------
REALIZED GAIN (LOSS) AND CHANGE IN
UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment
transactions:
Proceeds from investments sold ........... 10,644,045 10,946,949 384,631 85,083 330,113 201,383
Cost of investments sold ................. 10,644,045 10,946,949 346,152 75,982 240,119 152,442
------------ ------------ ----------- ----------- ----------- -----------
Net realized gain (loss) ............... -- -- 38,479 9,101 89,994 48,941
------------ ------------ ----------- ----------- ----------- -----------
Change in unrealized gain (loss) on
investments:
Unrealized gain (loss) beginning of year . -- -- 297,926 45,893 539,297 94,212
Unrealized gain (loss) end of year ....... -- -- 82,166 297,926 650,296 539,297
------------ ------------ ----------- ----------- ----------- -----------
Net change in unrealized gain (loss) for
the year ............................. -- -- (215,760) 252,033 110,999 445,085
------------ ------------ ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations ................ 168,806 145,092 (39,484) 237,135 299,980 465,860
------------ ------------ ----------- ----------- ----------- -----------
UNIT TRANSACTIONS:
Participant premium payments ............... 15,419,844 12,668,925 65 -- (5) --
Participant transfers from other Travelers
accounts ................................. 1,022,032 341,272 959,475 554,614 1,177,380 1,814,055
Growth rate intra-fund transfers in ........ 453,849 584,140 924,661 1,473,688 1,509,749 1,453,728
Contract surrenders ........................ (121,241) (330,372) (40,730) (30,494) (62,771) (41,259)
Participant transfers to other Travelers
accounts ................................. (13,287,058) (12,649,679) (309,441) (51,754) (255,480) (133,125)
Growth rate intra-fund transfers out ....... (453,849) (584,140) (924,661) (1,473,688) (1,509,749) (1,453,728)
------------ ------------ ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from unit transactions ....... 3,033,577 30,146 609,369 472,366 859,124 1,639,671
------------ ------------ ----------- ----------- ----------- -----------
Net increase (decrease) in net assets .. 3,202,383 175,238 569,885 709,501 1,159,104 2,105,531
NET ASSETS:
Beginning of year ........................ 3,653,013 3,477,775 2,356,429 1,646,928 3,389,948 1,284,417
------------ ------------ ----------- ----------- ----------- -----------
End of year .............................. $ 6,855,396 $ 3,653,013 $ 2,926,314 $ 2,356,429 $ 4,549,052 $ 3,389,948
============ ============ =========== =========== =========== ===========
</TABLE>
-12-
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
TBC MANAGED INCOME PORTFOLIO VAN KAMPEN ENTERPRISE PORTFOLIO COMBINED
- ----------------------------- --------------------------------- -----------------------------------
1998 1997 1998 1997 1998 1997
- --------- --------- ----------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
$ 42,136 $ -- $ 232,164 $ -- $ 1,964,228 $ 465,479
- --------- --------- ----------- ----------- ------------ ------------
6,925 3,443 33,585 18,789 370,704 233,340
3,315 1,591 16,709 9,285 182,019 113,217
- --------- --------- ----------- ----------- ------------ ------------
31,896 (5,034) 181,870 (28,074) 1,411,505 118,922
- --------- --------- ----------- ----------- ------------ ------------
253,916 21,661 389,864 216,188 14,571,579 12,722,440
229,663 20,987 259,042 163,555 13,786,319 12,383,302
- --------- --------- ----------- ----------- ------------ ------------
24,253 674 130,822 52,633 785,260 339,138
- --------- --------- ----------- ----------- ------------ ------------
39,118 1,378 632,515 168,800 4,467,693 1,262,660
10,678 39,118 1,229,557 632,515 7,240,118 4,467,693
- --------- --------- ----------- ----------- ------------ ------------
(28,440) 37,740 597,042 463,715 2,772,425 3,205,033
- --------- --------- ----------- ----------- ------------ ------------
27,709 33,380 909,734 488,274 4,969,190 3,663,093
- --------- --------- ----------- ----------- ------------ ------------
(3) -- 19,370 -- 15,399,481 12,668,925
535,274 175,937 1,103,718 1,320,465 15,068,220 12,632,833
362,687 133,010 1,226,204 1,587,396 13,558,388 17,848,901
(33,144) (7,090) (57,012) (30,702) (816,829) (713,491)
(193,135) (10,151) (253,402) (73,860) (16,185,232) (13,416,453)
(362,687) (133,010) (1,226,204) (1,587,396) (13,558,388) (17,848,901)
- --------- --------- ----------- ----------- ------------ ------------
308,992 158,696 812,674 1,215,903 13,465,640 11,171,814
- --------- --------- ----------- ----------- ------------ ------------
336,701 192,076 1,722,408 1,704,177 18,434,830 14,834,907
499,799 307,723 3,383,522 1,679,345 36,532,236 21,697,329
- --------- --------- ----------- ----------- ------------ ------------
$ 836,500 $ 499,799 $ 5,105,930 $ 3,383,522 $ 54,967,066 $ 36,532,236
========= ========= =========== =========== ============ ============
</TABLE>
-13-
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS - CONTINUED
7. SCHEDULE OF UNITS FOR SEPARATE ACCOUNT ONE FOR THE YEARS ENDED DECEMBER
31, 1998 AND 1997
<TABLE>
<CAPTION>
SELECT CONSERVATIVE
TOTAL RETURN PORTFOLIO SELECT BALANCED PORTFOLIO PORTFOLIO
--------------------------- ---------------------- ---------------------
1998 1997 1998 1997 1998 1997
---------- ---------- -------- ---- ------- ----
<S> <C> <C> <C> <C> <C> <C>
Units beginning of year ............ 3,051,751 2,070,519 -- -- -- --
Units purchased and transferred from
other Travelers accounts ......... 2,052,523 3,089,331 119,080 -- 25,356 --
Units redeemed and transferred to
other Travelers accounts ......... (1,272,228) (2,108,099) (1,027) -- (289) --
---------- ---------- -------- ---- ------- ----
Units end of year .................. 3,832,046 3,051,751 118,053 -- 25,067 --
========== ========== ======== ==== ======= ====
</TABLE>
<TABLE>
<CAPTION>
MFS EMERGING
SELECT GROWTH PORTFOLIO SELECT INCOME PORTFOLIO GROWTH PORTFOLIO
------------------------- ---------------------- ------------------------
1998 1997 1998 1997 1998 1997
------- ------- ------- ---- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Units beginning of year ............ 46,248 -- -- -- 327,674 --
Units purchased and transferred from
other Travelers accounts ......... 15,433 46,559 78,008 -- 685,380 399,280
Units redeemed and transferred to
other Travelers accounts ......... (16,380) (311) (822) -- (383,772) (71,606)
------- ------- ------- ---- -------- --------
Units end of year .................. 45,301 46,248 77,186 -- 629,282 327,674
======= ======= ======= ==== ======== ========
</TABLE>
<TABLE>
<CAPTION>
ZERO COUPON BOND FUND ZERO COUPON BOND FUND ZERO COUPON BOND FUND
PORTFOLIO SERIES 1998 PORTFOLIO SERIES 2000 PORTFOLIO SERIES 2005
------------------------ ------------------------ ------------------------
1998 1997 1998 1997 1998 1997
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Units beginning of year ............ 244,090 211,610 489,816 447,140 632,728 475,491
Units purchased and transferred from
other Travelers accounts ......... 53,372 217,747 142,158 417,090 545,226 498,663
Units redeemed and transferred to
other Travelers accounts ......... (297,462) (185,267) (120,761) (374,414) (374,452) (341,426)
-------- -------- -------- -------- -------- --------
Units end of year .................. -- 244,090 511,213 489,816 803,502 632,728
======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
AIM CAPITAL APPRECIATION ALLIANCE GROWTH MFS TOTAL RETURN
PORTFOLIO PORTFOLIO PORTFOLIO
-------------------------- -------------------------- --------------------------
1998 1997 1998 1997 1998 1997
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Units beginning of year ............ 2,981,929 2,020,691 3,204,642 2,063,437 2,719,511 1,716,546
Units purchased and transferred from
other Travelers accounts ......... 2,014,928 2,727,356 2,768,051 3,038,124 2,422,803 2,690,528
Units redeemed and transferred to
other Travelers accounts ......... (1,304,751) (1,766,118) (1,523,907) (1,896,919) (1,139,273) (1,687,563)
---------- ---------- ---------- ---------- ---------- ----------
Units end of year .................. 3,692,106 2,981,929 4,448,786 3,204,642 4,003,041 2,719,511
========== ========== ========== ========== ========== ==========
</TABLE>
-14-
<PAGE> 16
NOTES TO FINANCIAL STATEMENTS - CONTINUED
7. SCHEDULE OF UNITS FOR SEPARATE ACCOUNT ONE FOR THE YEARS ENDED DECEMBER
31, 1998 AND 1997 (CONTINUED)
<TABLE>
<CAPTION>
PUTNAM DIVERSIFIED INCOME SMITH BARNEY INTERNATIONAL SMITH BARNEY MONEY MARKET
PORTFOLIO EQUITY PORTFOLIO PORTFOLIO
-------------------------- -------------------------- ----------------------------
1998 1997 1998 1997 1998 1997
---------- ---------- ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Units beginning of year ............ 1,065,400 621,538 2,175,509 1,507,875 3,369,561 3,328,723
Units purchased and transferred from
other Travelers accounts ......... 1,159,090 996,513 1,296,620 2,183,812 15,310,363 12,749,969
Units redeemed and transferred to
other Travelers accounts ......... (610,640) (552,651) (1,056,205) (1,516,178) (12,581,932) (12,709,131)
---------- ---------- ---------- ---------- ----------- -----------
Units end of year .................. 1,613,850 1,065,400 2,415,924 2,175,509 6,097,992 3,369,561
========== ========== ========== ========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
SMITH BARNEY HIGH SMITH BARNEY LARGE TBC MANAGED INCOME
INCOME PORTFOLIO CAP VALUE PORTFOLIO PORTFOLIO
-------------------------- -------------------------- ----------------------
1998 1997 1998 1997 1998 1997
---------- ---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Units beginning of year ............ 1,822,547 1,434,816 2,297,582 1,089,556 456,522 304,658
Units purchased and transferred from
other Travelers accounts ......... 1,448,411 1,695,480 1,748,933 2,427,490 805,605 296,438
Units redeemed and transferred to
other Travelers accounts ......... (988,336) (1,307,749) (1,205,148) (1,219,464) (526,152) (144,574)
---------- ---------- ---------- ---------- -------- --------
Units end of year .................. 2,282,622 1,822,547 2,841,367 2,297,582 735,975 456,522
========== ========== ========== ========== ======== ========
</TABLE>
<TABLE>
<CAPTION>
VAN KAMPEN ENTERPRISE
PORTFOLIO COMBINED
-------------------------- ----------------------------
1998 1997 1998 1997
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Units beginning of year ............ 2,164,537 1,366,133 27,050,047 18,658,733
Units purchased and transferred from
other Travelers accounts ......... 1,380,694 2,022,172 34,072,034 35,496,552
Units redeemed and transferred to
other Travelers accounts ......... (903,352) (1,223,768) (24,306,889) (27,105,238)
---------- ---------- ----------- -----------
Units end of year .................. 2,641,879 2,164,537 36,815,192 27,050,047
========== ========== =========== ===========
</TABLE>
-15-
<PAGE> 17
INDEPENDENT AUDITORS' REPORT
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, 1998,
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, 1998, 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 Variable Life
Insurance Separate Account One as of December 31, 1998, 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.
KPMG LLP
Hartford, Connecticut
February 17, 1999
-16-
<PAGE> 18
Independent Auditors
KPMG LLP
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 Prospectus for The
Travelers Variable Life Insurance Separate Account One product(s) 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) (12-98) Printed in U.S.A.
