<PAGE> 1
Registration No.33-58131
811-7259
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 1
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 1
THE TRAVELERS FUND BD II FOR VARIABLE ANNUITIES
------------------------------------------------
(Exact Name of Registrant)
THE TRAVELERS LIFE AND ANNUITY COMPANY
--------------------------------------
(Name of Depositor)
ONE TOWER SQUARE, HARTFORD, CONNECTICUT 06183
-----------------------------------------------
(Address of Depositor's Principal Executive Offices)
Depositor's Telephone Number, including area code: (860) 277-0111
---------------
ERNEST J. WRIGHT
Assistant Secretary
The Travelers Life and Annuity Company
One Tower Square
Hartford, Connecticut 06183
----------------------------
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: ____________________
It is proposed that this filing become effective (check appropriate box)
_____ immediately upon filing pursuant to paragraph (b) of Rule 485.
X on May 1, 1996 pursuant to paragraph (b) of Rule 485.
- -----
_____ 60 days after filing pursuant to paragraph (a)(1) of Rule 485.
_____ on __________ pursuant to paragraph (a)(1) of Rule 485.
If appropriate, check the following box:
_____ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
PURSUANT TO RULE 24f-2 OF THE INVESTMENT COMPANY ACT OF 1940, THE REGISTRANT
HEREBY DECLARES THAT AN INDEFINITE AMOUNT OF VARIABLE ANNUITY CONTRACT UNITS
WAS REGISTERED UNDER THE SECURITIES ACT OF 1933. A RULE 24f-2 NOTICE FOR THE
FISCAL YEAR ENDED DECEMBER 31, 1995 WAS FILED ON FEBRUARY 29, 1996.
<PAGE> 2
THE TRAVELERS FUND BD II FOR VARIABLE ANNUITIES
Cross-Reference Sheet
Form N-4
<TABLE>
<CAPTION>
ITEM
NO. CAPTION IN PROSPECTUS
- --- ---------------------
<S> <C> <C>
1. Cover Page Prospectus
2. Definitions Glossary of Special Terms
3. Synopsis Prospectus Summary
4. Condensed Financial Information Condensed Financial Information
5. General Description of Registrant, The Insurance Company; The Separate
Depositor, and Portfolio Companies Account and the Underlying Funds
6. Deductions and Expenses Charges and Deductions; Distribution of
Variable Annuity Contracts
7. General Description of Variable The Contract
Annuity Contracts
8. Annuity Period The Annuity Period
9. Death Benefit Death Benefit
10. Purchases and Contract Value The Contract; Distribution of Variable
Annuity Contracts
11. Redemptions Surrenders and Redemptions
12. Taxes Federal Tax Considerations
13. Legal Proceedings Legal Proceedings and Opinions
14. Table of Contents of the Statement Appendix B - Contents of the Statement
of Additional Information of Additional Information
CAPTION IN STATEMENT OF ADDITIONAL
INFORMATION
---------------------------------------------------
15. Cover Page Cover Page
16. Table of Contents Table of Contents
17. General Information and History The Insurance Company
18. Services Principal Underwriter; Distribution and
Management Agreement
19. Purchase of Securities Being Offered Valuation of Assets
20. Underwriters Principal Underwriter
21. Calculation of Performance Data Performance Information
22. Annuity Payments Not Applicable
23. Financial Statements Financial Statements
</TABLE>
<PAGE> 3
PART A
INFORMATION REQUIRED IN A PROSPECTUS
<PAGE> 4
PROSPECTUS
This Prospectus describes an individual flexible premium variable annuity
contract (the "Contract") offered by The Travelers Life and Annuity Company (the
"Company"). The Contract is currently available for use in connection with (1)
individual nonqualified purchases; (2) Individual Retirement Annuities (IRAs)
pursuant to Section 408 of the Internal Revenue Code of 1986, as amended (the
"Code"); and (3) qualified retirement plans. Qualified contracts include
contracts qualifying under Section 401(a), 403(b) or 408(b) of the Code.
Purchase Payments made under the Contract will accumulate on a fixed and/or a
variable basis, as selected by the Contract Owner. If on a variable basis, the
value of the Contract prior to the Maturity Date will vary continuously to
reflect the investment experience of underlying funds ("Underlying Funds")
available under The Travelers Fund BD II for Variable Annuities ("Fund BD II").
The Underlying Funds currently available are: Smith Barney Income and Growth
Portfolio, Alliance Growth Portfolio, American Capital Enterprise Portfolio,
Smith Barney International Equity Portfolio, Smith Barney Pacific Basin
Portfolio, TBC Managed Income Portfolio, Putnam Diversified Income Portfolio,
G.T. Global Strategic Income Portfolio, Smith Barney High Income Portfolio, MFS
Total Return Portfolio, and AIM Capital Appreciation Portfolio, and Smith Barney
Money Market Portfolio of the Smith Barney Travelers Series Fund, Inc., and
Smith Barney Total Return Portfolio of the Smith Barney Series Fund.
This Prospectus provides the information about Fund BD II that you should know
before investing. Please read it and retain it for future reference. Additional
information about Fund BD II is contained in a Statement of Additional
Information ("SAI") dated May 1, 1996 which has been filed with the Securities
and Exchange Commission ("SEC") and is incorporated by reference into this
Prospectus. A copy may be obtained, without charge, by writing to The Travelers
Life and Annuity Company, Annuity Investor Services, One Tower Square, Hartford,
Connecticut 06183-9061, or by calling 1-800-842-8573. The Table of Contents of
the SAI appears in Appendix A of this Prospectus.
THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUS FOR THE
UNDERLYING FUNDS. BOTH THE CONTRACT PROSPECTUS AND THE UNDERLYING FUND
PROSPECTUS SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THIS PROSPECTUS IS DATED MAY 1, 1996
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<S> <C>
GLOSSARY OF SPECIAL TERMS.............................................................. 4
PROSPECTUS SUMMARY..................................................................... 5
FEE TABLE.............................................................................. 7
CONDENSED FINANCIAL INFORMATION........................................................ 9
THE INSURANCE COMPANY.................................................................. 10
THE SEPARATE ACCOUNT AND THE UNDERLYING FUNDS.......................................... 10
The Travelers Fund BD II For Variable Annuities (Fund BD II)......................... 10
The Underlying Funds................................................................. 10
Underlying Fund Investment Managers.................................................. 12
Substitution and Additions........................................................... 12
PERFORMANCE INFORMATION................................................................ 12
THE CONTRACT........................................................................... 13
Purchase Payments.................................................................... 13
Right to Return...................................................................... 13
Accumulation Units................................................................... 13
CHARGES AND DEDUCTIONS................................................................. 14
Contingent Deferred Sales Charge..................................................... 14
Administrative Charges............................................................... 15
Mortality and Expense Risk Charge.................................................... 15
Reduction or Elimination of Contract Charges......................................... 15
Underlying Fund Charges.............................................................. 16
Premium Tax.......................................................................... 16
Changes In Taxes Based Upon Premium or Value......................................... 16
OWNERSHIP PROVISIONS................................................................... 16
Types of Ownership................................................................... 16
Beneficiary.......................................................................... 16
Annuitant............................................................................ 17
TRANSFERS.............................................................................. 17
Dollar-Cost Averaging (Automated Transfers).......................................... 17
Telephone Transfers.................................................................. 18
SURRENDERS AND REDEMPTIONS............................................................. 18
Systematic Withdrawals............................................................... 18
DEATH BENEFIT.......................................................................... 19
Death Proceeds Prior to the Maturity Date............................................ 19
Death Proceeds After the Maturity Date............................................... 20
THE ANNUITY PERIOD..................................................................... 20
Maturity Date........................................................................ 20
Allocation of Annuity................................................................ 20
Variable Annuity..................................................................... 21
Fixed Annuity........................................................................ 21
</TABLE>
2
<PAGE> 6
<TABLE>
<S> <C>
PAYMENT OPTIONS........................................................................ 21
Election of Options.................................................................. 21
Annuity Options...................................................................... 22
Income Options....................................................................... 22
MISCELLANEOUS CONTRACT PROVISIONS...................................................... 23
Termination.......................................................................... 23
Misstatement......................................................................... 23
Required Reports..................................................................... 23
Suspension of Payments............................................................... 23
Transfers of Contract Values of Other Annuities...................................... 23
FEDERAL TAX CONSIDERATIONS............................................................. 24
General Taxation of Annuities........................................................ 24
Tax Law Diversification Requirements for Variable Annuities.......................... 24
Ownership of the Investments......................................................... 24
Penalty Tax for Premature Distributions.............................................. 24
Mandatory Distributions for Qualified Plans.......................................... 25
Nonqualified Annuity Contracts....................................................... 25
Individual Retirement Annuities...................................................... 25
Qualified Pension and Profit-Sharing Plans........................................... 26
Federal Income Tax Withholding....................................................... 26
VOTING RIGHTS.......................................................................... 27
DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS............................................. 27
Conformity with State and Federal Laws............................................... 27
LEGAL PROCEEDINGS AND OPINIONS......................................................... 28
THE FIXED ACCOUNT...................................................................... 28
Transfers............................................................................ 28
APPENDIX A............................................................................. 29
APPENDIX B............................................................................. 30
</TABLE>
3
<PAGE> 7
GLOSSARY OF SPECIAL TERMS
- --------------------------------------------------------------------------------
The following terms are used throughout the Prospectus and have the indicated
meanings:
ACCUMULATION UNIT -- An accounting unit of measure used to calculate the value
of a Contract before Annuity Payments begin.
ACCUMULATION UNIT VALUE -- The dollar amount of an Accumulation Unit.
ANNUITANT -- The person on whose life this contract is issued and the amount of
the monthly Annuity Payments depend.
ANNUITY PAYMENTS -- A series of periodic payments for life; for life with either
a minimum number of payments or a determinable sum assured; or for the joint
lifetime of the Annuitant and another person and thereafter during the lifetime
of the survivor.
ANNUITY UNIT -- An accounting unit of measure used to calculate the amount of
Annuity Payments.
CASH SURRENDER VALUE -- The amount payable to the Contract Owner or other payee
upon full or partial surrender of the Contract during the lifetime of the
Annuitant. The amount will be the contract value, less any applicable surrender
charge and any premium tax not previously deducted.
COMPANY (WE, OUR) -- The Travelers Life and Annuity Company.
COMPANY'S HOME OFFICE -- The principal offices of The Travelers Life and Annuity
Company located at One Tower Square, Hartford, Connecticut 06183-9061.
CONTRACT DATE -- The date on which the Contact, benefits and the contract
provisions become effective.
CONTRACT OWNER (YOU, YOUR) -- The person or entity to whom the Contract is
issued.
CONTRACT VALUE -- The current value of Accumulation Units credited to the
Contract less any administrative charges.
CONTRACT YEARS -- Twelve-month periods beginning on the Contract Date.
FIXED ACCOUNT -- An additional account into which Purchase Payments may be
allocated and which is included in the Contract Value. Purchase Payments
allocated to the Fixed Account will earn interest at a rate guaranteed by the
Company; this rate will change from time to time.
INCOME PAYMENTS -- Optional forms of payments made by the Company which are
based on an agreed-upon number of payments or payment amount.
MATURITY DATE -- The date on which the first Annuity or Income Payment is to
begin under a Contract.
PURCHASE PAYMENT -- A gross amount paid to the Company during the accumulation
period.
SEPARATE ACCOUNT -- Assets set aside by the Company, the investment experience
of which is kept separate from that of other assets of the Company (Fund BD II).
SUB-ACCOUNT -- The portion of the assets of the Separate Account which is
allocated to a particular Underlying Fund.
UNDERLYING FUND(S) -- The investment option(s) available under the Separate
Account.
VALUATION DATE -- A day on which Separate Account assets are valued. A Valuation
Date is any day on which the New York Stock Exchange is open for trading. The
value of Accumulation Units and Annuity Units will be determined as of the close
of trading on the New York Stock Exchange.
VALUATION PERIOD -- The period between the close of business on successive
Valuation Dates.
VARIABLE ANNUITY -- An annuity contract which provides for accumulation and for
Annuity Payments which vary in amount in accordance with the investment
experience of a Separate Account.
4
<PAGE> 8
PROSPECTUS SUMMARY
- --------------------------------------------------------------------------------
INTRODUCTION
The Contract described in this Prospectus is both an insurance policy and a
security. As an insurance policy, it is subject to the insurance laws and
regulations of each state in which it is available for distribution. As a
security, it is subject to the federal securities laws. The Contract is an
individual flexible premium variable annuity. It allows you to allocate Purchase
Payments to any or all of the Underlying Funds currently available under Fund BD
II, as well as to the Fixed Account. (See "Underlying Funds" on page 10.) An
initial lump-sum Purchase Payment of at least $5,000 must be made to the
Contract; additional Purchase Payments of at least $500 may be made. In some
states, subsequent Purchase Payments are not allowed. (See "Purchase Payments,"
page 13.) Purchase payments over $1,000,000 may be made with the Company's prior
consent.
RIGHT TO RETURN
You may return the Contract and receive a full refund of the Contract Value
(including charges) within twenty days after the Contract is delivered to you,
unless state law requires a longer period. (See "Right to Return," page 13.)
CHARGES AND EXPENSES
No sales charges are deducted from Purchase Payments when they are received.
However, a Contingent Deferred Sales Charge ("CDSC" or "surrender charge") may
apply if you make a full or partial surrender of the Contract Value during the
first seven years following each Purchase Payment. The maximum surrender charge
that could be assessed is 6% of the amount withdrawn. (See "Contingent Deferred
Sales Charge," page 14.)
Other charges include the contract administrative expense charge ($30 annually)
and a Sub-Account administrative expense charge (0.15% on an annual basis of the
average daily net assets allocated to each of the Underlying Funds). (See
"Administrative Charges," page 15.) A mortality and expense risk charge,
equivalent on an annual basis to 1.25% of the daily net assets of amounts
allocated to each Underlying Funds will also be charged. (See "Mortality and
Expense Risk Charge," page 15.) If applicable, state premium taxes will also be
deducted and paid when due. (See "Premium Tax," page 16.)
TRANSFERS
Prior to the Maturity Date, you may reallocate the Contract Value among the
Fixed Account and any of the Underlying Funds available under Fund BD II.
Transfers between the variable Sub-Accounts are unlimited. Transfers between the
Fixed Account and any of the Underlying Funds are subject to certain
restrictions. (See "Transfers," page 17, and "The Fixed Account," page 28.)
Dollar-Cost Averaging, or automated transfers, are also available. The minimum
automated transfer amount is $400. (See "Dollar Cost Averaging (Automated
Transfers)," on page 17.)
SURRENDERS
Prior to the Maturity Date, you may surrender all or part of the Contract Value
subject to certain charges and limitations. You will be liable for income tax on
the taxable portion of any full or partial surrender, and you may incur a 10%
tax penalty if such surrender is made prior to the age of 59 1/2. (See
"Surrenders and Redemptions," page 18 and "Penalty Tax for Premature
Distributions" page 24.)
Systematic withdrawals of at least $100 on a monthly, quarterly, semiannual or
annual basis may be elected if your Contract Value is at least $15,000. All
applicable surrender charges and premium taxes will be deducted. (See
"Systematic Withdrawals," on page 18.)
5
<PAGE> 9
DEATH BENEFIT
A death benefit is payable to the Beneficiary upon the death of the Annuitant
prior to the Maturity Date with no Contingent Annuitant surviving. The death
benefit will vary based on the Annuitant's age at the time of death. (See "Death
Benefit," page 19.)
THE ANNUITY PERIOD
On the Maturity Date, or other agreed-upon payment date, the Company will
provide Annuity or Income Payments as described in the section entitled "The
Annuity Period." (See page 20.)
THE FIXED ACCOUNT
Although this Prospectus specifically applies only to the variable features of
the Contract, the Contract also allows you to allocate Purchase Payments to a
Fixed Account where they will earn interest at a rate guaranteed by the Company,
which interest rate will not be less than 3% per year. (See "The Fixed Account,"
page 28.)
6
<PAGE> 10
FEE TABLE
- --------------------------------------------------------------------------------
FUND BD II AND ITS UNDERLYING FUNDS
The purpose of the Fee Table is to assist Contract Owners in understanding the
various costs and expenses that he or she will bear, directly or indirectly,
under the Contract. The information listed reflects expenses of the Sub-Accounts
as well as of the Underlying Fund Expenses. Additional information regarding the
charges and deductions assessed under the Contract can be found on page 14.
Expenses shown do not include premium taxes, which may be applicable.
CONTRACT OWNER TRANSACTION EXPENSES
Contingent Deferred Sales Charge (as a percentage of purchase payments):
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
LENGTH OF TIME FROM PURCHASE PAYMENT CONTINGENT DEFERRED
(NUMBER OF YEARS) SURRENDER CHARGE
-----------------------------------------------------------------------------------
<S> <C>
1 6%
2 6%
3 6%
4 3%
5 2%
6 1%
7 and thereafter 0%
Annual Contract Administrative Charge
(Waived if Contract Value is $40,000 or more) $30
</TABLE>
ANNUAL SUB-ACCOUNT CHARGES
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
STANDARD ENHANCED
DEATH BENEFIT DEATH BENEFIT
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Mortality and Expense Risk Fee
(as a percentage of daily net asset value) 1.02% 1.30%
Sub-Account Administrative Charge
(as a percentage of daily net asset value) 0.15% 0.15%
TOTAL SUB-ACCOUNT CHARGES 1.17% 1.45%
</TABLE>
UNDERLYING FUND EXPENSES
(as a percentage of average net assets of the Underlying Fund)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
MANAGEMENT OTHER TOTAL UNDERLYING
FEE EXPENSES FUND EXPENSES
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Smith Barney Income and Growth Portfolio 0.65% 0.08%1 0.73%
Alliance Growth Portfolio 0.80% 0.10%1 0.90%
American Capital Enterprise Portfolio 0.70% 0.18%1 0.88%
Smith Barney International Equity Portfolio 0.90% 0.54%1* 1.44%
Smith Barney Pacific Basin Portfolio 0.90% 0.93%1 1.83%
TBC Managed Income Portfolio 0.65% 0.27%1 0.92%
Putnam Diversified Income Portfolio 0.75% 0.22%1 0.97%
G.T. Global Strategic Income Portfolio 0.80% 0.67%1* 1.47%
Smith Barney High Income Portfolio 0.60% 0.10%1 0.70%
MFS Total Return Portfolio 0.80% 0.15%1 0.95%
Smith Barney Money Market Portfolio 0.60% 0.05%1 0.65%
AIM Capital Appreciation Portfolio 0.80% 0.20%1 1.00%
Smith Barney Total Return Portfolio 0.75% 0.25%2 1.00%
</TABLE>
(1) Other expenses are as of October 31, 1995, taking into account the current
expense limitations agreed to by the Managers. The Managers waived all of
their fees for the period and reimbursed the Funds for their expenses. If
such fees were not waived and expenses were not reimbursed, Total Underlying
Expenses for the Smith Barney/Travelers Series Fund Portfolios would have
been: Smith Barney Income and Growth Portfolio, 0.94%; Alliance Growth
Portfolio, 0.97%; American Capital Enterprise Portfolio, 1.26%; Smith Barney
International Equity Portfolio, 1.21%; Smith Barney Pacific Basin Portfolio,
2.23%; TBC Managed Income Portfolio, 1.29%; Putnam Diversified Income
Portfolio, 1.31%; G.T. Global Strategic Income Portfolio, 1.93%; Smith
Barney High Income Portfolio, 1.07%; MFS Total Return Portfolio, 1.06%;
Smith Barney Money Market Portfolio, 0.94%.
(2) Other expenses are as of December 31, 1995, taking into account the current
expense limitations agreed to by the Managers. The Managers waived all of
their fees for the period and reimbursed the Funds for their expenses. The
Smith Barney Series Fund Total Return Portfolio had no fees waived and no
expenses reimbursed.
* Smith Barney International Equity Portfolio and G.T. Global Strategic Income
Portfolio earned credits from the Custodian which reduced the service fees
incurred. When these credits are taken into consideration, Total Underlying
Fund Expenses are 1.21% and 1.11% respectively.
7
<PAGE> 11
EXAMPLE*
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
STANDARD DEATH BENEFIT ELECTION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
A $1,000 investment would be If the Contract is not
subject to the following surrendered at the end of
expenses, assuming a 5% the period shown or if it
annual return on assets, if is annuitized, a $1,000
the Contract is surrendered investment would be subject
or if certain income to the following expenses,
options are elected at the assuming a 5% annual return
end of the period shown**: on assets:
- ------------------------------------------------------------------------------------------------------------------------
ONE YEAR THREE YEARS ONE YEAR THREE YEARS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Smith Barney Income and Growth Portfolio $ 80 $ 123 $ 20 $63
Alliance Growth Portfolio 82 127 22 67
American Capital Enterprise Portfolio 81 126 21 66
Smith Barney International Equity Portfolio 85 138 25 78
Smith Barney Pacific Basin Portfolio 86 139 26 79
TBC Managed Income Portfolio 81 126 21 66
Putnam Diversified Income Portfolio 82 129 22 69
G.T. Global Strategic Income Portfolio 84 133 24 73
Smith Barney High Income Portfolio 80 121 20 61
MFS Total Return Portfolio 82 129 22 69
Smith Barney Money Market Portfolio 80 121 20 61
AIM Capital Appreciation Portfolio 82 127 22 67
Smith Barney Total Return Portfolio 83 130 23 70
</TABLE>
ENHANCED DEATH BENEFIT ELECTION
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
A $1,000 investment would be If the Contract is not
subject to the following surrendered at the end of
expenses, assuming a 5% the period shown or if it
annual return on assets, if is annuitized, a $1,000
the Contract is surrendered investment would be subject
or if certain income to the following expenses,
options are elected at the assuming a 5% annual return
end of the period shown**: on assets:
- ------------------------------------------------------------------------------------------------------------------------
ONE YEAR THREE YEARS ONE YEAR THREE YEARS
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Smith Barney Income and Growth Portfolio $ 83 $ 131 $ 23 $71
Alliance Growth Portfolio 85 136 25 76
American Capital Enterprise Portfolio 84 135 24 75
Smith Barney International Equity Portfolio 88 146 28 86
Smith Barney Pacific Basin Portfolio 89 148 29 88
TBC Managed Income Portfolio 84 135 24 75
Putnam Diversified Income Portfolio 85 137 25 77
G.T. Global Strategic Income Portfolio 87 142 27 82
Smith Barney High Income Portfolio 83 130 23 70
MFS Total Return Portfolio 85 137 25 77
Smith Barney Money Market Portfolio 83 130 23 70
AIM Capital Appreciation Portfolio 85 136 25 76
Smith Barney Total Return Portfolio 86 139 26 79
</TABLE>
* The Example reflects the $30 Annual Contract Administrative Charge as an
annual charge of 0.075% of assets based on an anticipated average account
value of $40,000.
** The Contingent Deferred Sales Charge is waived if annuity payout has begun or
if an income option of at least five years' duration is begun after the first
Contract Year. (See "Charges and Deductions-Contingent Deferred Sales
Charge," page 6.)
8
<PAGE> 12
CONDENSED FINANCIAL INFORMATION
THE TRAVELERS FUND BD II FOR VARIABLE ANNUITIES
ACCUMULATION UNIT VALUES
(UNAUDITED)
<TABLE>
<CAPTION>
YEAR ENDING PERIOD ENDING
DECEMBER 31, 1995 DECEMBER 31, 1994
STANDARD ENHANCED STANDARD ENHANCED
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SMITH BARNEY/TRAVELERS SERIES FUND INC.
ALLIANCE GROWTH PORTFOLIO
Unit Value at beginning of period (1) $ 1.047 $ 1.046 $1.000 $1.000
Unit Value at end of period 1.396 1.390 1.047 1.046
Number of units outstanding at end of period (thousands) 1,573,668 452,737 16,522 7,338
AMERICAN CAPITAL ENTERPRISE PORTFOLIO
Unit Value at beginning of period (2) $ 1.039 $ 1.037 $1.000 $1.000
Unit Value at end of period 1.362 1.356 1.039 1.037
Number of units outstanding at end of period (thousands) 764,534 329,130 2,941 1,618
TBC MANAGED INCOME PORTFOLIO
Unit Value at beginning of period (3) $ 0.997 $ 0.995 $1.000 $1.000
Unit Value at end of period 1.142 1.137 0.997 0.995
Number of units outstanding at end of period (thousands) 225,876 89,569 2,849 980
G.T. GLOBAL STRATEGIC INCOME PORTFOLIO
Unit Value at beginning of period (2) $ 0.945 $ 0.944 $1.000 $1.000
Unit Value at end of period 1.121 1.116 0.945 0.944
Number of units outstanding at end of period (thousands) 32,765 79,526 2,400 1,063
SMITH BARNEY HIGH INCOME PORTFOLIO
Unit Value at beginning of period (4) $ 0.988 $ 0.986 $1.000 $1.000
Unit Value at end of period 1.162 1.157 0.988 0.986
Number of units outstanding at end of period (thousands) 242,593 331,521 3,105 1,147
SMITH BARNEY INTERNATIONAL EQUITY PORTFOLIO
Unit Value at beginning of period (1) $ 0.955 $ 0.954 $1.000 $1.000
Unit Value at end of period 1.050 1.046 0.955 0.954
Number of units outstanding at end of period (thousands) 556,129 200,940 14,141 5,898
SMITH BARNEY INCOME AND GROWTH PORTFOLIO
Unit Value at beginning of period (1) $ 0.981 $ 0.980 $1.000 $1.000
Unit Value at end of period 1.291 1.285 0.981 0.980
Number of units outstanding at end of period (thousands) 596,201 146,469 6,654 3,015
SMITH BARNEY MONEY MARKET PORTFOLIO
Unit Value at beginning of period (1) $ 1.016 $ 1.014 $1.000 $1.000
Unit Value at end of period 1.058 1.054 1.016 1.014
Number of units outstanding at end of period (thousands) 2,373,923 819,856 7,171 3,736
PUTNAM DIVERSIFIED INCOME PORTFOLIO
Unit Value at beginning of period (1) $ 1.009 $ 1.007 $1.000 $1.000
Unit Value at end of period 1.170 1.165 1.009 1.007
Number of units outstanding at end of period (thousands) 823,783 126,460 5,803 3,669
SMITH BARNEY PACIFIC BASIN PORTFOLIO
Unit Value at beginning of period (2) $ 0.899 $ 0.898 $1.000 $1.000
Unit Value at end of period 0.910 0.906 0.899 0.898
Number of units outstanding at end of period (thousands) 37,278 19,544 1,842 978
MFS TOTAL RETURN PORTFOLIO
Unit Value at beginning of period (1) $ 0.979 $ 0.977 $1.000 $1.000
Unit Value at end of period 1.216 1.211 0.979 0.977
Number of units outstanding at end of period (thousands) 912,547 101,550 9,099 3,480
AIM CAPITAL APPRECIATION PORTFOLIO
Unit Value at beginning of period (5) $ 1.000 $ 1.000 $-- $--
Unit Value at end of period 0.958 0.957 -- --
Number of units outstanding at end of period (thousands) 2,536,732 908,266 -- --
SMITH BARNEY SERIES FUND:
SMITH BARNEY TOTAL RETURN PORTFOLIO
Unit Value at beginning of period (6) $ 1.010 $ 1.010 $1.000 $1.000
Unit Value at end of period 1.251 1.247 1.010 1.010
Number of units outstanding at end of period (thousands) 651,440 148,894 1,109 277
</TABLE>
(1) Initial period covers June 20, 1994 (date of availability under Fund BD II)
to December 31, 1994.
(2) Initial period covers June 21, 1994 (date of availability under Fund BD II)
to December 31, 1994.
(3) Initial period covers June 28, 1994 (date of availability under Fund BD II)
to December 31, 1994.
(4) Initial period covers June 22, 1994 (date of availability under Fund BD II)
to December 31, 1994.
(5) Initial period covers October 2, 1995 (date of availability under Fund BD
II) to December 31, 1994.
(6) Initial period covers November 21, 1994 (date of availability under Fund BD
II) to December 31, 1994.
The financial statements of Fund BD II are contained in the Statement of
Additional Information, and in the Annual Report to Contract Owners. The
financial statements of The Travelers Life and Annuity Company and Subsidiaries
are contained in the Statement of Additional Information.
9
<PAGE> 13
THE INSURANCE COMPANY
- --------------------------------------------------------------------------------
The Travelers Life and Annuity Company is a stock insurance company chartered in
1973 in Connecticut and continuously engaged in the insurance business since
that time. It is licensed to conduct life insurance business in a majority of
the states of the United States, and intends to seek licensure in the remaining
states, except New York. The Company is an indirect wholly owned subsidiary of
Travelers Group Inc., a financial services holding company. The Company's Home
Office is located at One Tower Square, Hartford, Connecticut 06183.
THE SEPARATE ACCOUNT AND THE UNDERLYING FUNDS
- --------------------------------------------------------------------------------
THE TRAVELERS FUND BD II FOR VARIABLE ANNUITIES (FUND BD II)
Fund BD II was established on February 22, 1995 and is registered with the SEC
as a unit investment trust under the Investment Company Act of 1940, as amended
(the "1940 Act"). The assets of Fund BD II will be invested exclusively in the
shares of the Underlying Funds.
The assets of Fund BD II are held for the exclusive benefit of the owners of
this separate account, according to the laws of Connecticut. Income, gains and
losses, whether or not realized, from assets allocated to Fund BD II are, in
accordance with the Contracts, credited to or charged against Fund BD II without
regard to other income, gains and losses of the Company. The assets held by Fund
BD II are not chargeable with liabilities arising out of any other business
which the Company may conduct. Obligations under the Contract are obligations of
the Company.
All investment income and other distributions of the Underlying Funds are
payable to Fund BD II. All such income and/or distributions are reinvested in
shares of the respective Underlying Fund at net asset value. Shares of the
Underlying Funds listed above are currently sold only to life insurance company
separate accounts to fund variable annuity and variable life insurance
contracts. Fund shares are not sold to the general public.
THE UNDERLYING FUNDS
Purchase Payments are allocated to the Underlying Funds in accordance with the
selection made by the Contract Owner.
More detailed information about the options and their inherent risks may be
found in the current prospectuses for the Underlying Funds. These prospectuses
are included with and must accompany this Prospectus. Since there are varying
degrees of risk inherent in each option, please read them carefully before
investing. Additional copies of the prospectuses may be obtained by contacting
your registered representative or by calling 1-800-842-8573.
Fund BD II currently invests in the following Underlying Funds:
SMITH BARNEY/TRAVELERS SERIES FUND INC.:
SMITH BARNEY INCOME AND GROWTH PORTFOLIO. The objective of the Income and
Growth Portfolio is current income and long-term growth of income and capital by
investing primarily, but not exclusively, in common stocks.
ALLIANCE GROWTH PORTFOLIO. The objective of the Growth Portfolio is long-term
growth of capital by investing predominantly in equity securities of companies
with a favorable outlook for earnings and whose rate of growth is expected to
exceed that of the U.S. economy over time. Current income is only an incidental
consideration.
AMERICAN CAPITAL ENTERPRISE PORTFOLIO. The Enterprise Portfolio's objective is
capital appreciation through investment in securities believed to have
above-average potential for capital appreciation. Any income received on such
securities is incidental to the objective of capital appreciation.
SMITH BARNEY INTERNATIONAL EQUITY PORTFOLIO. The objective of the International
Equity Portfolio is total return on assets from growth of capital and income by
investing at least 65% of its assets in a diversified portfolio of equity
securities of established non-U.S. issuers.
10
<PAGE> 14
SMITH BARNEY PACIFIC BASIN PORTFOLIO. The Pacific Basin Portfolio's objective
is long-term capital appreciation through investment primarily in equity
securities of companies in Asian Pacific Countries.
TBC MANAGED INCOME PORTFOLIO. The objective of the Managed Income Portfolio is
to seek high current income consistent with prudent risk of capital through
investments in corporate debt obligations, preferred stocks, and obligations
issued or guaranteed by the U.S. Government or its agencies or
instrumentalities.
PUTNAM DIVERSIFIED INCOME PORTFOLIO. The objective of the Diversified Income
Portfolio is to seek high current income consistent with preservation of
capital. The Portfolio will allocate its investments among the U.S. Government
Sector, the High Yield Sector, and the International Sector of the fixed income
securities markets.
G.T. GLOBAL STRATEGIC INCOME PORTFOLIO. The Strategic Income Portfolio's
investment objective is primarily to seek high current income and secondarily to
seek capital appreciation. The Portfolio allocates its assets among debt
securities of issuers in the United States, developed foreign countries, and
emerging markets.
SMITH BARNEY HIGH INCOME PORTFOLIO. The investment objective of the High Income
Portfolio is high current income. Capital appreciation is a secondary objective.
The Portfolio will invest at least 65% of its assets in high-yielding corporate
debt obligations and preferred stock.
MFS TOTAL RETURN PORTFOLIO. The Total Return Portfolio's objective is to obtain
above-average income (compared to a portfolio entirely invested in equity
securities) consistent with the prudent employment of capital. Generally, at
least 40% of the Portfolio's assets will be invested in equity securities.
SMITH BARNEY MONEY MARKET PORTFOLIO. The investment objective of the Money
Market Portfolio is maximum current income and preservation of capital by
investing in high quality, short-term money market instruments.
AIM CAPITAL APPRECIATION PORTFOLIO. The investment objective of the AIM Capital
Appreciation Portfolio is to seek capital appreciation by investing principally
in common stock, with emphasis on medium-sized and smaller emerging growth
companies.
SMITH BARNEY SERIES FUND INC:
SMITH BARNEY TOTAL RETURN PORTFOLIO. The investment objective of the Smith
Barney Total Return Portfolio is to provide total return, consisting of
long-term capital appreciation and income. The Portfolio will seek to achieve
its goal by investing primarily in a diversified portfolio of dividend-paying
common stock.
11
<PAGE> 15
UNDERLYING FUND INVESTMENT MANAGERS
The Underlying Funds receive investment management and advisory services from
the following investment professionals:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
FUND INVESTMENT MANAGER SUB-ADVISER
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Smith Barney Income and Smith Barney Mutual Funds
Growth Portfolio Management Inc.("SBMFM")
- ----------------------------------------------------------------------------------------------
Alliance Growth Portfolio SBMFM Alliance Capital
Management L.P.
- ----------------------------------------------------------------------------------------------
American Capital Enterprise SBMFM American Capital Asset
Portfolio Management, Inc
- ----------------------------------------------------------------------------------------------
Smith Barney Int'l Equity SBMFM
Portfolio
- ----------------------------------------------------------------------------------------------
Smith Barney Pacific Basin SBMFM
Portfolio
- ----------------------------------------------------------------------------------------------
TBC Managed Income Portfolio SBMFM The Boston Company Asset
Management, Inc.
- ----------------------------------------------------------------------------------------------
Putnam Diversified Income SBMFM Putnam Investment Management,
Portfolio Inc.
- ----------------------------------------------------------------------------------------------
G.T. Global Strategic Income SBMFM G.T. Capital Management Inc.
Portfolio
- ----------------------------------------------------------------------------------------------
Smith Barney High Income SBMFM
Portfolio
- ----------------------------------------------------------------------------------------------
MFS Total Return Portfolio SBMFM Massachusetts Financial
Services Company
- ----------------------------------------------------------------------------------------------
Smith Barney Money Market SBMFM
Portfolio
- ----------------------------------------------------------------------------------------------
AIM Capital Appreciation SBMFM AIM Capital Management, Inc
Portfolio
- ----------------------------------------------------------------------------------------------
Smith Barney Total Return SBMFM
Portfolio
- ----------------------------------------------------------------------------------------------
</TABLE>
SUBSTITUTIONS AND ADDITIONS
If any of the Underlying Funds should become unavailable for allocating purchase
payments, or if, in the judgment of the Company further investment in an
Underlying Fund becomes inappropriate for the purposes of the Contract, we may
substitute another registered, open-end management investment company.
Substitution may be made with respect to both existing investments and the
investment of any future Purchase Payments. However, no such substitution will
be made without notice to Contract Owners, state approval if applicable, and
without prior approval of the, to the extent required by the 1940 Act, or other
applicable law. Additional Underlying Funds may also be added under the
Contract.
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
From time to time, the Company may advertise different types of historical
performance for the Underlying Funds available through Fund BD II. The Company
may advertise the "standardized average annual total returns" of each,
calculated in a manner prescribed by the SEC, as well as the "non-standardized
total return," as described below.
"Standardized average annual total return" will show the percentage rate of
return of a hypothetical initial investment of $1,000 for the most recent one-,
five- and ten-year periods (or
12
<PAGE> 16
fractional periods thereof). This standardized calculation reflects the
deduction of all applicable charges made to the Contract, except for premium
taxes which may be imposed by certain states. "Non-standardized total return"
will be calculated in a similar manner, except non-standardized total returns
will not reflect the deduction of any applicable Contingent Deferred Sales
Charge or the $30 annual contract administrative charge, which would decrease
the level of performance shown if reflected in these calculations.
Performance information may be quoted numerically or may be presented in a
table, graph or other illustration. Advertisements may include data comparing
performance to well-known indices of market performance (including, but not
limited to, the Dow Jones Industrial Average, the Standard & Poor's (S&P) 500
Index and the S&P 400 Index, the Lehman Brothers Long T-Bond Index, the Russell
1000, 2000 and 3000 Indices, the Value Line Index, and the Morgan Stanley
Capital International's EAFE Index). Advertisements may also include published
editorial comments and performance rankings compiled by independent
organizations (including, but not limited to, Lipper Analytical Services, Inc.
and Morningstar, Inc.) and publications that monitor the performance of Fund BD
II and the Underlying Funds.
The total return quotations are based upon historical earnings and are not
necessarily representative of future performance. A Contract Owner's Contract
Value at redemption may be more or less than original cost. The SAI contains
more detailed information about these performance calculations, including actual
examples of each type of performance advertised.
THE CONTRACT
- --------------------------------------------------------------------------------
Purchase Payments are paid to the Company and credited to the Contract Owner's
account to accumulate until the Maturity Date. The Contract Owner assumes the
risk of gain or loss according to the performance of the selected
Sub-Account(s). There is generally no guarantee that the Contract Value at the
Maturity Date will equal or exceed the total Purchase Payments made under the
Contract, except as specified or elected under the Death Benefit provisions
described on page .
PURCHASE PAYMENTS
The minimum initial Purchase Payment must be at least $5,000. Additional
payments of at least $500 may be made under the Contract at any time. Purchase
Payments over $1,000,000 may be made with the Company's prior consent. In some
states, subsequent Purchase Payments are not allowed to this Contract. The
initial Purchase Payment is due and payable before the Contract becomes
effective.
The Company will apply the initial Purchase Payment within two business days
following its receipt at the Company's Home Office. Subsequent Purchase Payments
will be credited to the Contract on the basis of Accumulation Unit values next
determined after receipt of the Purchase Payment.
RIGHT TO RETURN
You may return the Contract for a full refund of the Contract Value (including
charges) within twenty days after you receive it (the "free-look period"). Where
state law requires a longer period, or the return of Purchase Payments, the
Company will comply. The Contract Owner bears the investment risk during the
free-look period; therefore, the Contract Value returned may be greater or less
than your Purchase Payment. If the Contract is purchased as an Individual
Retirement Annuity and is returned within the first seven days after delivery,
your Purchase Payment will be refunded in full. During the remainder of the
free-look period, the Contract Value (including charges) will be refunded. All
Contract Values will be determined as of the next valuation date following the
Company's receipt of the Owner's written request for refund.
ACCUMULATION UNITS
The number of Accumulation Units to be credited to the Contract once a Purchase
Payment has been received by the Company will be determined by dividing the
amount allocated to each
13
<PAGE> 17
Underlying Fund by the current applicable Accumulation Unit Value. The value of
an Accumulation Unit may increase or decrease.
The initial Accumulation Unit Value applicable to each segment of the Separate
Account was established at $1.00. The value of an Accumulation Unit on any
Valuation Date is determined by multiplying the value on the immediately
preceding Valuation Date by the net investment factor for the Valuation Period
just ended. The net investment factor, calculated for each Underlying Fund,
takes into account the investment performance, expenses and the deduction of
certain expenses. The net investment factor is described more fully in the SAI.
CHARGES AND DEDUCTIONS
- --------------------------------------------------------------------------------
CONTINGENT DEFERRED SALES CHARGE ("CDSC")
No sales charges are deducted from Purchase Payments when they are received and
applied under the Contract. However, a CDSC will be assessed if a full or
partial surrender of the Contract Value is made during the first six years
following a Purchase Payment. The length of time from receipt of the Purchase
Payment to the time of surrender determines the amount of the charge. This
charge will not exceed the aggregate amount of the Purchase Payments made under
the Contract.
The purpose of the surrender charge is to help defray expenses incurred in the
sale of the Contract, including commissions and other expenses associated with
the printing and distribution of prospectuses and sales material. However, the
Company expects that the Contingent Deferred Sales Charges assessed under the
Contract will be insufficient to cover these expenses; the difference will be
covered by the general assets of the Company which are attributable, in part, to
mortality and expense risk charges under the Contract which are described below.
The surrender charge is equal to a percentage of the amount withdrawn from the
Contract (not to exceed the aggregate amount of the Purchase Payments made under
the Contract), and is calculated as follows:
<TABLE>
<CAPTION>
LENGTH OF TIME FROM
PURCHASE PAYMENT CONTINGENT DEFERRED
(NUMBER OF YEARS) SALES CHARGE
- ----------------------------------------------------
<S> <C>
1 6%
2 6%
3 6%
4 3%
5 2%
6 1%
7 and thereafter 0%
</TABLE>
For purposes of determining the amount of any CDSC, surrenders will be deemed to
be taken first from any applicable free withdrawal amount (as described below);
next from remaining Purchase Payments (on a first-in, first-out basis); and then
from contract earnings (in excess of any free withdrawal amount). Unless the
Company receives instructions to the contrary, the CDSC will be deducted from
the amount requested.
No CDSC will be assessed (1) in the event of distributions resulting from the
death of the Contract Owner or the death of the Annuitant with no Contingent
Annuitant surviving; (2) if an annuity payout has begun; or (3) if an income
option of at least five years' duration is begun after the first Contract Year.
FREE WITHDRAWAL ALLOWANCE. There is a 15% free withdrawal allowance available
each year after the first Contract Year. The available withdrawal amount will be
calculated as of the first Valuation Date of any given Contract Year. The free
withdrawal allowance applies to partial surrenders of any amount and to full
surrenders, except those full surrenders transferred directly to annuity
contracts issued by other financial institutions.
14
<PAGE> 18
ADMINISTRATIVE CHARGES
CONTRACT ADMINISTRATIVE CHARGE. An administrative charge of $30 will be
deducted annually from the Contract to compensate the Company for expenses
incurred in establishing and administering the Contract. The contract
administrative charge will be deducted from the Contract Value on the fourth
Friday of August of each year by cancelling Accumulation Units in each
Sub-Account on a pro rata basis. This charge will be prorated from the date of
purchase to the next date of assessment of charge. A prorated charge will also
be assessed upon voluntary or involuntary surrender of the Contract. The
Contract Administrative Charge will not be assessed upon distributions resulting
from the death of the Contract Owner or the Annuitant with no Contingent
Annuitant surviving, or after an annuity payout has begun, or if the Contract
Value is equal to or greater than $40,000 on the charge assessment date.
SUB-ACCOUNT ADMINISTRATIVE CHARGE. An administrative charge is deducted on each
Valuation Date from the amounts allocated to the variable Underlying Funds in
order to compensate the Company for certain administrative and operating
expenses. The charge is equivalent, on an annual basis, to 0.15% of the daily
net asset value allocated to each of the Underlying Funds.
Neither administrative charge can be increased. The charges are set at a level
which does not exceed the average expected cost of the administrative services
to be provided while the Contract is in force, and the Company does not expect
to make a profit from these charges.
MORTALITY AND EXPENSE RISK CHARGE
A mortality and expense risk charge is deducted on each Valuation Date from
amounts held in the Separate Account. This charge is intended to cover the
mortality and expense risks associated with guarantees which the Company
provides under the Contract. The mortality risk portion of the insurance charge
compensates the Company for guaranteeing to provide Annuity Payments to an
Annuitant according to the terms of the Contract regardless of how long the
Annuitant lives and no matter what the actual mortality experience of other
Annuitants under the Contract might be, and for guaranteeing to provide the
standard or the enhanced death benefit if an Annuitant dies prior to the
Maturity Date. The expense risk charge compensates the Company for the risk that
the charges under the Contract, which cannot be increased during the duration of
the Contract, will be insufficient to cover actual costs.
For those Contract Owners who have elected a standard death benefit provision,
the insurance charge is equivalent, on an annual basis, to 1.02% of the daily
net asset value of amounts held in the Separate Account.
For those Contract Owners who have elected an enhanced death benefit provision,
the insurance charge is equivalent, on an annual basis, to 1.30% of the daily
net asset value of amounts held in the Separate Account. The Company reserves
the right to lower the mortality and expense risk charge at any time.
If the amount deducted for mortality and expense risks is not sufficient to
cover the mortality costs and expense shortfalls, the loss is borne by the
Company. If the deduction is more than sufficient, the excess will be a profit
to the Company. The Company expects to make a profit from the mortality and
expense risk charge.
REDUCTION OR ELIMINATION OF CONTRACT CHARGES
The CDSC, the administrative charges, and the mortality and expense risk charge
under the Contract may be reduced or eliminated when certain sales of the
Contract result in savings or reduction of sales expenses. The entitlement to
such a reduction in the Contingent Deferred Sales Charges or the administrative
charge will be based on the following: (1) the size and type of group to which
sales are to be made; (2) the total amount of Purchase Payments to be received;
and (3) any prior or existing relationship with the Company. There may be other
circumstances, of which the Company is not presently aware, which could result
in fewer sales expenses. In no event will reduction or elimination of the
Contingent Deferred Sales Charge or the administrative
15
<PAGE> 19
charge be permitted where such reduction or elimination will be unfairly
discriminatory to any person.
UNDERLYING FUND CHARGES
Fund BD II purchases shares of the Underlying Funds at net asset value. The net
asset value of each Underlying Fund reflects investment management fees and
other expenses already deducted from the assets of the Underlying Funds. For a
complete description of these investment advisory fees and other expenses, refer
to the prospectus for the Underlying Funds.
PREMIUM TAX
Certain state and local governments impose premium taxes. These taxes currently
range from 0.5% to 5.0%, depending upon jurisdiction. The Company, in its sole
discretion and in compliance with any applicable state law, will determine the
method used to recover premium tax expenses incurred. Where required, the
Company will deduct any applicable premium taxes from the Contract Value either
upon death, surrender, annuitization, or at the time Purchase Payments are made
to the Contract, but no earlier than when the Company has a tax liability under
state law.
CHANGES IN TAXES BASED UPON PREMIUM OR VALUE
If there is any change in a law assessing taxes against the Company based upon
the premiums of the contract, gains in the contract or value of the contract, we
reserve the right to charge you proportionately for this tax.
OWNERSHIP PROVISIONS
- --------------------------------------------------------------------------------
TYPES OF OWNERSHIP
OWNER. The Contract belongs to the Owner designated on the Contract
Specifications page, or to any other person subsequently named pursuant to a
valid assignment. An assignment of ownership or a collateral assignment may be
made only for nonqualified contracts. The Owner has sole power during the
Annuitant's lifetime to exercise any rights and to receive all benefits given in
the contract provided the Owner has not named an irrevocable beneficiary and
provided the Contract is not assigned.
The Owner is the recipient of all payments while the Annuitant is alive unless
the Owner directs them to an alternate recipient. An alternate recipient under a
payment direction does not become the Owner.
JOINT OWNER. For nonqualified contracts only, Joint Owners may be named in a
written request prior to the Contract Date. Joint Owners may independently
exercise transfers between the Sub-Accounts or between the Fixed Account and the
Sub-Accounts. All other rights of ownership must be exercised by joint action.
Joint owners own equal shares of any benefits accruing or payments made to them.
All rights of a Joint Owner end at death if another Joint Owner survives. The
entire interest of the deceased Joint Owner in the Contract will pass to the
surviving Joint Owner.
SUCCEEDING OWNER. For nonqualified contracts only, if Joint Owners are not
named, the Contract Owner may name a Succeeding Owner in a written request. The
Succeeding Owner becomes the Owner if living when the Owner dies. The Succeeding
Owner has no interest in the Contract before then. The Owner may change or
delete a Succeeding Owner by written request.
BENEFICIARY
The Beneficiary is the party named by the Owner in a written request. The
Beneficiary has the right to receive any remaining contractual benefits upon the
death of the Annuitant or the Owner. If there is more than one Beneficiary
surviving the Annuitant, the Beneficiaries will share equally in benefits unless
different shares are recorded with the Company by written request prior to the
death of the Annuitant or Owner.
16
<PAGE> 20
With nonqualified contracts, the Beneficiary may differ from the designated
beneficiary as defined by the distribution provisions of the Contract. The
designated beneficiary may take the contract benefits in lieu of the Beneficiary
upon the death of the Contract Owner.
Unless an irrevocable Beneficiary has been named, the Owner has the right to
change any Beneficiary by written request during the lifetime of the Annuitant
and while the Contract continues.
ANNUITANT
The Annuitant is designated on the Contract Specifications page, and is the
individual on whose life the Maturity Date and the amount of the monthly annuity
payments depend. The Annuitant may not be changed after the Contract Date.
For nonqualified contracts only, the Contract Owner may also name one individual
as a Contingent Annuitant by written request prior to the Contract Date. A
Contingent Annuitant may not be changed, deleted or added to the Contract after
the Contract Date.
If an Annuitant who is not also an owner or a joint owner dies prior to the
Maturity Date while this Contract is in effect and while the Contingent
Annuitant is living:
1) the Contract Value will not be payable upon the Annuitant's death;
2) the Contingent Annuitant becomes the Annuitant; and
3) all other rights and benefits provided by this Contract will continue in
effect.
When a Contingent Annuitant becomes the Annuitant, the Maturity Date remains the
same as previously in effect, unless otherwise provided.
TRANSFERS
- --------------------------------------------------------------------------------
Prior to the Maturity Date, the Contract Owner may transfer all or part of the
Contract Value between Sub-Accounts. There are no charges or restrictions on the
amount or frequency of transfers currently; however, the Company reserves the
right to charge a fee for any transfer request, and to limit the number of
transfers to one in any six month period. Since different Underlying Funds have
different expenses, a transfer of Contract Values from one Sub-Account to
another could result in a Contract Owner's investment becoming subject to higher
or lower expenses.
DOLLAR-COST AVERAGING (AUTOMATED TRANSFERS)
Dollar-cost averaging permits the Contract Owner to transfer a fixed dollar
amount to other Sub-Accounts on a monthly or quarterly basis so that more
Accumulation Units are purchased in a Sub-Account if the value per unit is low
and less Accumulation Units are purchased if the value per unit is high.
Therefore, a lower-than-average value per unit may be achieved over the long
run.
You may elect automated transfers through written request or other method
acceptable to the Company. You must have a minimum total Contract Value of
$5,000 to enroll in the Dollar-Cost Averaging program. The minimum total
automated transfer amount is $400.
Certain restrictions apply for automated transfers from the Fixed Account that
do not apply to automated transfers from any of the Sub-Accounts. You may
establish automated transfers of Contract Values from the Fixed Account at any
time. Automated transfers from the Fixed Account may not deplete your Fixed
Account Value in a period of less than twelve months from your enrollment in the
Dollar-Cost Averaging program.
You may start or stop participation in the Dollar-Cost Averaging program at any
time, but you must give the Company at least 30 days' notice to change any
automated transfer instructions that are currently in place. Automated transfers
are subject to all of the other provisions and terms of the Contract, including
provisions relating to the transfer of money between Sub-Accounts. The Company
reserves the right to suspend or modify transfer privileges at any time and to
assess a processing fee for this service.
17
<PAGE> 21
Before transferring any part of the Contract Value, Contract Owners should
consider the risks involved in switching between investments available under
this Contract. Dollar-cost averaging requires regular investments regardless of
fluctuating price levels, and does not guarantee profits or prevent losses in a
declining market. A potential investor should consider his or her financial
ability to continue purchases through periods of low price levels.
TELEPHONE TRANSFERS
A Contract Owner may place a transfer request via telephone. The telephone
transfer privilege is available automatically; no special election is necessary
for a Contract Owner to have this privilege available. All transfers must be in
accordance with the terms of the Contract. Transfer instructions are currently
accepted on each Valuation Date between 9:00 a.m. and 4:00 p.m., Eastern time,
at 1-800-842-8573. Once instructions have been accepted, they may not be
rescinded; however, new telephone instructions may be given the following day.
If the transfer instructions are not in good order, the Company will not execute
the transfer and will promptly notify the caller.
The Company will make a reasonable effort to record each telephone transfer
conversation, but in the event that no recording is effective or available, the
Contract Owner will remain liable for each telephone transfer effected.
Additionally, the Company is not liable for acting upon instructions believed to
be genuine and in accordance with the procedures described above. As a result of
this policy, the Contract Owner may bear the risk of loss in the event that the
Company follows instructions that prove to be fraudulent.
SURRENDERS AND REDEMPTIONS
- --------------------------------------------------------------------------------
A Contract Owner may redeem all or any portion of the Cash Surrender Value of
the Contract at any time prior to the Maturity Date. The Contract Owner must
submit a written request (in the proper form) specifying the investment option
from which the surrender is to be made. The Cash Surrender Value will be
determined as of the next valuation following receipt of the Owner's surrender
request at the Company's Home Office. The Cash Surrender Value may be more or
less than the Purchase Payments made depending on the Contract Value at the time
of surrender.
The Company may defer payment of any Cash Surrender Value for a period of not
more than seven days after the request is received in the mail, but it is the
Company's intent to pay as soon as possible. Requests for surrender that are not
in good order will not be processed until the deficiencies are corrected. The
Company will contact the Contract Owner to advise of the reason for the delay
and what is needed to act upon the surrender request.
SYSTEMATIC WITHDRAWALS
Prior to the Maturity Date of the Contract, a Contract Owner may elect in
writing on A form provided by the Company to take systematic withdrawals from
the Contract by surrendering a specified dollar amount (at least $100) on a
monthly, quarterly, semiannual or annual basis. The election must be made on the
form provided by the Company. Any applicable surrender charges above the free
withdrawal allowance and any applicable premium taxes will be deducted. The
minimum Contract Value required to begin systematic withdrawals is $15,000. The
Company will process the withdrawals as directed by surrendering on a pro-rata
basis Accumulation Units from all investment options in which the Contract Owner
has an interest, unless otherwise directed. The Contract Owner may begin or
discontinue systematic withdrawals at any time by notifying the Company in
writing, but at least 30 days' notice must be given to change any systematic
withdrawal instructions that are currently in place.
The Company reserves the right to discontinue offering systematic withdrawals or
to assess a processing fee for this service upon 30 days' written notice to
Contract Owners.
Each systematic withdrawal is subject to federal income taxes on the taxable
portion. In addition, a 10% federal penalty tax may be assessed on systematic
withdrawals if the Contract Owner is under age 59 1/2. Contract Owners should
consult with their tax adviser regarding the tax consequences of systematic
withdrawals.
18
<PAGE> 22
DEATH BENEFIT
- --------------------------------------------------------------------------------
Prior to the Maturity Date, a Death Benefit is payable to the Beneficiary upon
the death of the Annuitant, Contract Owner or the first of Joint Owners,
provided there is no Contingent Annuitant. Two different types of death benefits
are available under the Contract: a Standard Death Benefit and an Enhanced Death
Benefit (the Enhanced Death Benefit may not be available in all jurisdictions).
Death Benefits are payable upon the Company's receipt at its Home Office of due
proof of death. A Beneficiary may request that a death benefit payable under the
Contract be applied to one of the settlement options available under the
Contract, subject to the contract provisions. (See also "Nonqualified Annuity
Contracts," page .) See Appendix A for Contracts issued in the state of
Florida.
For nonqualified contracts, if the Contract Owner (including the first of joint
owners) dies before the Maturity Date, a distribution may be required under the
minimum distribution requirements of the federal tax law. If so required, the
Company will recalculate the value of the Contract under the provisions of
"Death Proceeds Prior to the Maturity Date," below. The value of the Contract,
as recalculated, will be credited to the party taking distributions upon the
death of the Contract Owner with the Annuitant or Contingent Annuitant
surviving. This will generally be the surviving joint owner or succeeding owner,
or otherwise the Beneficiary in accordance with all the circumstances and the
terms of the Contract. This party may differ from the Beneficiary who was named
by the Owner in a written request and who would receive any remaining
contractual benefits upon the death of the Annuitant. This party may be paid in
a single lump sum, or by other options, but should take distributions as
required by minimum distribution rules of the federal tax law.
If the Contract Owner's spouse is the surviving joint owner, the spouse may
elect to continue the Contract as owner in lieu of taking a distribution under
the Contract. (See generally, "Nonqualified Annuity Contracts," page .) In
this case, all references to age in the "Death Proceeds Prior to the Maturity
Date" section will be based on the Contract Owner's age rather than the
Annuitant's age.
DEATH PROCEEDS PRIOR TO THE MATURITY DATE
STANDARD DEATH BENEFIT. Under the standard death benefit, if the Annuitant dies
BEFORE AGE 75 and before the Maturity Date, the Company will pay to the
Beneficiary a death benefit in an amount equal to the greatest of (1), (2) or
(3) below, each reduced by any applicable premium tax or prior surrenders not
previously deducted:
1) the Contract Value;
2) the total Purchase Payments made under the Contract; or
3) the Contract Value on the latest fifth contract year anniversary
immediately preceding the date on which the Company receives due proof
of death.
If the Annuitant dies ON OR AFTER AGE 75, BUT BEFORE AGE 85 and before the
Maturity Date, the Company will pay to the Beneficiary a death benefit in an
amount equal to the greatest of (1), (2) or (3) below, each reduced by any
applicable premium tax or prior surrenders not previously deducted:
1) the Contract Value;
2) the total Purchase Payments made under the Contract; or the Contract
Value on the latest fifth contract year anniversary occurring on or
before the Annuitant's 75th birthday.
If the Annuitant dies ON OR AFTER AGE 85 and before the Maturity Date, the
Company will pay to the Beneficiary a death benefit in an amount equal to the
Contract Value, less any applicable premium tax.
See Appendix A for Contracts issued in the state of Florida.
19
<PAGE> 23
ENHANCED DEATH BENEFIT. Under the enhanced death benefit, if the Annuitant dies
BEFORE AGE 75 and before the Maturity Date, the Company will pay to the
Beneficiary a death benefit equal to the greater of (1) the guaranteed death
benefit, or (2) the Contract Value less any applicable premium tax.
The guaranteed death benefit is equal to the Purchase Payments made to the
Contract (minus surrenders and applicable premium tax) increased by 5% on each
contract date anniversary, but not beyond the contract date anniversary
following the Annuitant's 75th birthday, with a maximum guaranteed death benefit
of 200% of the total of Purchase Payments minus surrenders and minus applicable
premium tax.
If the Annuitant dies ON OR AFTER AGE 75, BUT BEFORE AGE 85 and before the
Maturity Date, the Company will pay to the Beneficiary a death benefit in an
amount equal to the greater of (1) the guaranteed death benefit as of the
Annuitant's 75th birthday, plus additional purchase payments, minus surrenders
and applicable premium tax; or (2) the Contract Value less any applicable
premium tax.
If the Annuitant dies ON OR AFTER AGE 85 but before the Maturity Date, the
Company will pay to the Beneficiary a death benefit equal to the Contract Value
less any applicable premium tax.
DEATH PROCEEDS AFTER THE MATURITY DATE
If the Annuitant dies on or after the Maturity Date, the Company will pay the
Beneficiary a death benefit consisting of any benefit remaining under the
Annuity or Income Option then in effect.
THE ANNUITY PERIOD
- --------------------------------------------------------------------------------
MATURITY DATE
Annuity Payments will ordinarily begin on the Maturity Date stated in the
Contract. If no Maturity Date is elected, the Maturity Date will be the
Annuitant's 70th birthday for qualified contracts and the Annuitant's 75th
birthday, or ten years after the Contract Date, if later, for nonqualified
contracts. The Maturity Date is the date on which the Company will begin paying
the first of a series of Annuity or Income Payments in accordance with the
Settlement Option selected by the Contract Owner. Annuity or Income Payments
will begin on the Maturity Date unless the Contract has been fully surrendered
or the proceeds have been paid to the Beneficiary prior to that date. The
Company may require proof that the Annuitant is alive before Annuity Payments
are made.
See Appendix A for Contracts issued in the state of Florida.
For nonqualified Contracts, at least 30 days before the original Maturity Date,
a Contract Owner may elect to extend the Maturity Date to any time prior to the
Annuitant's 85th birthday or, for qualified Contracts, to a later date with the
Company's consent. Certain annuity options taken at the Maturity Date may be
used to meet the minimum required distribution requirements of federal tax law,
or a program of partial surrenders may be used instead. These mandatory
distribution requirements take effect generally upon the death of the Contract
Owner, or with qualified contracts upon either the Contract Owner's attainment
of age 70 1/2 or the death of the Contract Owner. Independent tax advice should
be sought regarding the election of minimum required distributions.
See Appendix A for Contracts issued in the state of Florida.
ALLOCATION OF ANNUITY
When an Annuity Option is elected, it may be elected as a Variable Annuity, a
Fixed Annuity, or a combination of both. If, at the time Annuity Payments begin,
no election has been made to the contrary, the Contract Value shall be applied
to provide an annuity funded by the same investment options. At least 15 days
prior to the Maturity Date, you may reallocate the basis on which Annuity
Payments will be determined. (See "Transfers," page .)
20
<PAGE> 24
VARIABLE ANNUITY
ANNUITY UNIT VALUE. The initial value of an Annuity Unit applicable to each
Funding Option was established at $1. The Annuity Unit Value as of any Valuation
Date is equal to (a) the value of the Annuity Unit on the immediately preceding
Valuation Date, multiplied by (b) the corresponding net investment factor for
the Valuation Period just ended, divided by (c) the assumed net investment
factor for the Valuation Period. (For example, the assumed net investment factor
based on an annual assumed net investment rate of 3.0% for a Valuation Period of
one day is 1.000081 and, for a period of two days, is 1.000081 X 1.000081.) The
value of an Annuity Unit as of any date other than a Valuation Date is equal to
its value on the next succeeding Valuation Date.
The number of Annuity Units credited to the Contract is determined by dividing
the first monthly Annuity Payment attributable to each Sub-Account by the
corresponding Annuity Unit Value as of 14 days prior to the date Annuity
Payments commence. The number of Annuity Units remains fixed during the annuity
period.
DETERMINATION OF FIRST ANNUITY PAYMENT. The Contract contains tables used to
determine the first monthly Annuity Payment. The amount applied to effect an
Annuity will be the Contract Value as of 14 days before the date Annuity
Payments commence less any applicable premium taxes not previously deducted.
The amount of the first monthly payment depends on the Annuity Option elected. A
formula for determining the adjusted age is contained in the Contract. The total
first monthly Annuity Payment is determined by multiplying the benefit per
$1,000 of value shown in the tables of the Contract by the number of thousands
of dollars of value of the Contract applied to that Annuity Option. The Company
reserves the right to require satisfactory proof of age of any person on whose
life Annuity Payments are based before making the first payment under any of the
Settlement Options.
DETERMINATION OF SECOND AND SUBSEQUENT ANNUITY PAYMENTS. The dollar amount of
the second and subsequent Annuity Payments is not predetermined and may change
from month to month based on the investment experience of the applicable
Underlying Fund. The total amount of each Annuity Payment will be equal to the
sum of the basic payments in each Underlying Fund. The actual amounts of these
payments are determined by multiplying the number of Annuity Units credited to
each Underlying Fund by the corresponding Annuity Unit Value as of the date 14
days prior to the date before payment is due.
See Appendix A for Contracts issued in the state of Florida.
FIXED ANNUITY
A Fixed Annuity provides for payments that do not vary during the Annuity
Period. The dollar amount of the first Fixed Annuity Payment will be calculated
as described under "Variable Annuity" above. All subsequent payments will be
made in the same amount. If it would produce a larger payment, the Company
agrees that the first Fixed Annuity Payment will be determined using the Life
Annuity Tables in effect on the Maturity Date.
PAYMENT OPTIONS
- --------------------------------------------------------------------------------
ELECTION OF OPTIONS
On the Maturity Date, or other agreed-upon date, the Company will pay an amount
payable under the Contract in one lump sum, or in accordance with the payment
option selected by the Contract Owner. Election of an option must be made in
writing in A form satisfactory to the Company. Any election made during the
lifetime of the Annuitant must be made by the Contract Owner. While the
Annuitant is alive, the Contract Owner may change a Settlement Option election
by written request at any time prior to the Maturity Date. Once Annuity or
Income Payments have begun, no further election changes are allowed. During the
Annuitant's lifetime, if no election has been made prior to the Maturity Date,
the Company will pay to the Contract Owner the first of a series of monthly
Annuity Payments based on the life of the Annuitant, in accordance with Annuity
21
<PAGE> 25
Option 2 (Life Annuity with 120 monthly payments assured). For certain qualified
contracts, Annuity Option 4 (Joint and Last Survivor Joint Life
Annuity -- Annuity Reduced on Death of Primary Payee) will be the automatic
option as described in the contract.
The minimum amount that can be placed under an Annuity or Income Option will be
$2,000 unless the Company consents to a lesser amount. If any monthly periodic
payment due any payee is less than $100, the Company reserves the right to make
payments at less frequent intervals, or to pay the Contract Value in one
lump-sum payment.
See Appendix A for Contracts issued in the state of Florida.
ANNUITY OPTIONS
Subject to the conditions described in "Election of Options" above, all or any
part of the Cash Surrender Value of the Contract may be paid under one or more
of the following Annuity Options. Payments under the Annuity Options may be
elected on a monthly, quarterly, semiannual or annual basis.
OPTION 1 -- LIFE ANNUITY -- NO REFUND. The Company will make Annuity Payments
during the lifetime of the Annuitant, terminating with the last payment
preceding death. This option offers the maximum periodic payment, since THERE IS
NO ASSURANCE OF A MINIMUM NUMBER OF PAYMENTS OR PROVISION FOR A DEATH BENEFIT
FOR BENEFICIARIES.
OPTION 2 -- LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS ASSURED. The
Company will make monthly Annuity Payments during the lifetime of the Annuitant,
with the agreement that if, at the death of that person, payments have been made
for less than 120, 180 or 240 months, as elected, payments will be continued
during the remainder of the period to the Beneficiary.
OPTION 3 -- JOINT AND LAST SURVIVOR LIFE ANNUITY -- NO REFUND. The Company will
make Annuity Payments during the joint lifetime of the two persons on whose
lives payments are based, and during the lifetime of the survivor. No further
payments will be made following the death of the survivor.
OPTION 4 -- JOINT AND LAST SURVIVOR LIFE ANNUITY -- ANNUITY REDUCED ON DEATH OF
PRIMARY PAYEE. The Company will make Annuity Payments during the lifetime of the
two persons on whose lives payments are based. One of the two persons will be
designated as the primary payee, the other will be designated as the secondary
payee. On the death of the secondary payee, if survived by the primary payee,
the Company will continue to make Annuity Payments to the primary payee in the
same amount that would have been payable during the joint lifetime of the two
persons. On the death of the primary payee, if survived by the secondary payee,
the Company will continue to make Annuity Payments to the secondary payee in an
amount equal to 50% of the payments which would have been made during the
lifetime of the primary payee. No further payments will be made following the
death of the survivor.
OPTION 5 -- OTHER ANNUITY OPTIONS. The Company will make any other arrangements
for Annuity Payments as may be mutually agreed upon.
INCOME OPTIONS
Instead of one of the Annuity Options described above, and subject to the
conditions described under "Election of Options," all or part of the Cash
Surrender Value of the Contract may be paid under one or more of the following
Income Options, provided that they are consistent with federal tax law
qualification requirements. Payments under the Income Options may be elected on
a monthly, quarterly, semiannual or annual basis:
OPTION 1 -- PAYMENTS OF A FIXED AMOUNT. The Company will make equal payments of
the amount elected until the Contract Value applied under this option has been
exhausted. The first payment and all later payments will be paid from each
Sub-Account or the Fixed Account in proportion to the Cash Surrender Value
attributable to that Account. The final payment will include any amount
insufficient to make another full payment.
22
<PAGE> 26
OPTION 2 -- PAYMENTS FOR A FIXED PERIOD. The Company will make payments for the
period selected. The amount of each payment will be equal to the remaining
Contract Value applied under this option divided by the number of remaining
payments.
OPTION 3 -- OTHER INCOME OPTIONS. The Company will make any other arrangements
for Income Payments as may be mutually agreed upon.
The amount applied to effect an Income Option will be the Contract Value as of
14 days before the date Income Payments commence, less any applicable premium
taxes not previously deducted and any applicable contingent deferred sales
charge. The Contract Value used to determine the amount of any Income Payment
will be determined on the same basis as the Contract Value during the
Accumulation Period, including the deduction for mortality and expense risks and
the Sub-Account Administrative Charge. Income Options differ from Annuity
Options in that the amount of the payments made under Income Options are
unrelated to the length of life of any person. Although the Company continues to
deduct the charge for mortality and expense risks, it assumes no mortality risks
for amounts applied under any Income Option. Moreover, payments are unrelated to
the actual life span of any person. Thus, the Annuitant may outlive the payment
period.
MISCELLANEOUS CONTRACT PROVISIONS
- --------------------------------------------------------------------------------
TERMINATION
No Purchase Payments after the first are required to keep the Contract in
effect. However, the Company reserves the right to terminate the Contract on any
Valuation Date if the Contract Value as of that date is less than $1,000 and no
Purchase Payments have been made for at least two years, unless otherwise
specified by state law. Termination will not occur until 31 days after the
Company has mailed notice of termination to the Contract Owner at his or her
last known address and to any assignee of record. If the Contract is terminated,
the Company will pay to the Contract Owner the Cash Surrender Value (Contract
Value, in the states of Washington and New Jersey), less any applicable
administrative charge or premium tax.
MISSTATEMENT
If the Annuitant's or Contract Owner's sex or date of birth was misstated, all
benefits under the Contract are what the Purchase Payment paid would have
purchased at the correct sex and age. Proof of the Annuitant's or Contract
Owner's age may be filed at any time at the Company's Home Office.
REQUIRED REPORTS
As often as required by law, but at least once in each Contract Year before the
due date of the first Annuity Payment, the Company will furnish a report showing
the number of Accumulation Units credited to the Contract and the corresponding
Accumulation Unit Value as of the date of the report for each Underlying Fund to
which the Contract Owner has allocated amounts during the applicable period. The
Company will keep all records required under federal or state laws.
SUSPENSION OF PAYMENTS
The Company reserves the right to suspend or postpone the date of any payment of
any benefit or values for any Valuation Period (1) when the New York Stock
Exchange ("Exchange") is closed; (2) when trading on the Exchange is restricted;
(3) an emergency exists as determined by the SEC so that disposal of the
securities held in the Sub-Accounts is not reasonably practicable or it is not
reasonably practicable to determine the value of the Separate Account's net
assets; or (4) during any other period when the SEC, by order, so permits for
the protection of securityholders.
TRANSFERS OF CONTRACT VALUES TO OTHER ANNUITIES
The Company may permit Contract Owners to transfer their Contract Values into
other annuities offered by the Company or its affiliated insurance Companies
under rules then in effect.
23
<PAGE> 27
FEDERAL TAX CONSIDERATIONS
- --------------------------------------------------------------------------------
The following description of the federal income tax consequences under this
Contract is not exhaustive and is not intended to cover all situations. Because
of the complexity of the law and the fact that the tax results will vary
according to the factual status of the individual involved, tax advice may be
needed by a person contemplating purchase of an annuity contract and by a
Contract Owner or Beneficiary who may make elections under a contract. For
further information, a qualified tax adviser should be consulted.
GENERAL TAXATION OF ANNUITIES
Amounts credited to the Contract are not generally taxable until they are
received by the Contract Owner or the Beneficiary, either in the form of Annuity
Payments or other distributions. Distributions from annuities that include
previously taxed amounts may be taxed on either an income-first basis or an
income-last basis, or on a pro-rata basis according to the type of plan or due
to other circumstances.
TAX LAW DIVERSIFICATION REQUIREMENTS FOR VARIABLE ANNUITIES
The Code requires that any nonqualified variable annuity contracts based on a
segregated asset account shall not be treated as an annuity for any period if
investments made in the account are not adequately diversified. Final tax
regulations define how segregated assets accounts must be diversified. The
Company monitors the diversification of investments constantly and believes that
its accounts are adequately diversified. The consequence of any failure is
essentially the loss to the contract owner of tax deferred treatment. The
Company intends to administer all contracts subject to this provision of law in
a manner that will maintain adequate diversification.
OWNERSHIP OF THE INVESTMENTS
Assets in the segregated asset accounts must be owned by the Company and not by
the Contract Owner for federal income tax purposes. Otherwise, the deferral of
taxes is lost and income and gains from the accounts would be includable
annually in the Contract Owner's gross income.
The Internal Revenue Service has stated in published rulings that a variable
contract owner will be considered the owner of the assets of a segregated asset
account if the owner possesses an incident of ownership in those assets, such as
the ability to exercise investment control over the assets. The Treasury
Department announced, in connection with the issuance of temporary regulations
concerning investment diversification, that those regulations "do not provide
guidance concerning the circumstances in which investor control of the
investments of a segregated asset account may cause the investor, rather than
the insurance company, to be treated as the owner of the assets of the account."
This announcement, dated September 15, 1986, also stated that the guidance would
be issued by way of regulations or rulings on the "extent to which policyholders
may direct their investments to particular subaccounts [of a segregated asset
account] without being treated as owners of the underlying assets." As of the
date of this prospectus, no such guidance has been issued.
The Company does not know if such guidance will be issued, or if it is, what
standards it may set. Furthermore, the Company does not know if such guidance
may be issued with retroactive effect. New regulations are generally issued with
a prospective-only effect as to future sales or as to future voluntary
transactions in existing contracts. The Company therefore reserves the right to
modify the contract as necessary to attempt to prevent contract owners from
being considered the owner of the assets of the accounts.
PENALTY TAX FOR PREMATURE DISTRIBUTIONS
Taxable distributions taken before the Contract Owner has attained the age of
59 1/2 will be subject to a 10% additional tax penalty unless the distribution
is taken in a series of periodic distributions for life or life expectancy, or
unless the distribution follows the death or disability of the Contract Owner.
Other exceptions may be available in certain tax-qualified plans.
24
<PAGE> 28
MANDATORY DISTRIBUTIONS FOR QUALIFIED PLANS
Federal tax law requires that minimum annual distributions begin by April 1st of
the calendar year following the calendar year in which a participant under a
qualified plan, a Section 403(b) annuity, or an IRA attains age 70 1/2.
Distributions must also begin or be continued according to required patterns
following the death of the Owner or the Annuitant.
NONQUALIFIED ANNUITY CONTRACTS
Individuals may purchase tax-deferred annuities without tax law funding limits.
The Purchase Payments receive no tax benefit, deduction or deferral, but
increases in the value of the contract are generally deferred from tax until
distribution. If a nonqualified annuity is owned by other than an individual,
however (e.g., by a corporation), the increases in value attributable to
Purchase Payments made after February 28, 1986 are includable in income
annually. Furthermore, for contracts issued after April 22, 1987, all deferred
increases in value will be includable in the income of a Contract Owner when the
Contract Owner transfers the contract without adequate consideration.
If two or more annuity contracts are purchased from the same insurer within the
same calendar year, distributions from any of them will be taxed based upon the
amount of income in all of the same calendar year series of annuities. This will
generally have the effect of causing taxes to be paid sooner on the deferred
gain in the contracts.
Those receiving partial distributions made before the Maturity Date will
generally be taxed on an income-first basis to the extent of income in the
contract. If you are exchanging another annuity contract for this annuity,
certain pre-August 14, 1982 deposits into an annuity contract that have been
placed in the contract by means of a tax-deferred exchange under Section 1035 of
the Code may be withdrawn first without income tax liability. This information
on deposits must be provided to the Company by the other insurance company at
the time of the exchange. There is income in the contract generally to the
extent the Cash Value exceeds the investment in the contract. The investment in
the contract is equal to the amount of premiums paid less any amount received
previously which was excludable from gross income. Any direct or indirect
borrowing against the value of the contract or pledging of the contract as
security for a loan will be treated as a cash distribution under the tax law.
The federal tax law requires that nonqualified annuity contracts meet minimum
mandatory distribution requirements upon the death of the Contract Owner,
including the first of joint owners. Failure to meet these requirements will
cause the surviving joint owner, the succeeding Contract Owner, or the
Beneficiary to lose the tax benefits associated with annuity contracts, i.e.,
primarily the tax deferral prior to distribution. The distribution required
depends, among other things, upon whether an Annuity Option is elected or
whether the new Contract Owner is the surviving spouse. Contracts will be
administered by the Company in accordance with these rules and the Company will
make a notification when payments should be commenced.
INDIVIDUAL RETIREMENT ANNUITIES
To the extent of earned income for the year and not exceeding $2,000 per
individual, an individual may make deductible contributions to an individual
retirement annuity (IRA). There are certain limits on the deductible amount
based on the adjusted gross income of the individual and spouse and based on
their participation in a retirement plan. If an individual is married and the
spouse does not have earned income, the individual may establish IRAs for the
individual and spouse. Purchase Payments may then be made annually into IRAs for
both spouses in the maximum amount of 100% of earned income up to a combined
limit of $2,250.
The Code provides for the purchase of a Simplified Employee Pension (SEP) plan.
A SEP is funded through an IRA with an annual employer contribution limit of 15%
of compensation up to $30,000 for each participant.
25
<PAGE> 29
QUALIFIED PENSION AND PROFIT-SHARING PLANS
Under a qualified pension or profit-sharing plan, Purchase Payments made by an
employer are not currently taxable to the participant and increases in the value
of a contract are not subject to taxation until received by a participant or
Beneficiary.
Distributions are taxable to the participant or Beneficiary as ordinary income
in the year of receipt. Any distribution that is considered the participant's
"investment in the contract" is treated as a return of capital and is not
taxable. Certain lump-sum distributions may be eligible for special forward
averaging tax treatment for certain classes of individuals.
FEDERAL INCOME TAX WITHHOLDING
The portion of a distribution which is taxable income to the recipient will be
subject to federal income tax withholding as follows:
1. ELIGIBLE ROLLOVER DISTRIBUTION FROM SECTION 403(B) PLANS OR ARRANGEMENTS
OR FROM QUALIFIED PENSION AND PROFIT-SHARING PLANS
There is a mandatory 20% tax withholding for plan distributions that are
eligible for rollover to an IRA or to another retirement plan but that
are not directly rolled over. A distribution made directly to a
participant or Beneficiary may avoid this result if:
(a) a periodic settlement distribution is elected based upon a life or
life expectancy calculation, or
(b) a term-for-years settlement distribution is elected for a period of
ten years or more, payable at least annually, or
(c) a minimum required distribution as defined under the tax law is
taken after the attainment of the age of 70 1/2 or as otherwise
required by law.
A distribution including a rollover that is not a direct rollover will
be subject to the 20% withholding, and a 10% additional tax penalty may
apply to any amount not added back in the rollover. The 20% withholding
may be recovered when the participant or Beneficiary files a personal
income tax return for the year if a rollover was completed within 60
days of receipt of the funds, except to the extent that the participant
or spousal Beneficiary is otherwise underwithheld or short on estimated
taxes for that year.
2. OTHER NON-PERIODIC DISTRIBUTIONS (FULL OR PARTIAL REDEMPTIONS)
To the extent not described as requiring 20% withholding in 1 above, the
portion of a non-periodic distribution which constitutes taxable income
will be subject to federal income tax withholding, if the aggregate
distributions exceed $200 for the year, unless the recipient elects not
to have taxes withheld. If no such election is made, 10% of the taxable
distribution will be withheld as federal income tax. Election forms will
be provided at the time distributions are requested. This form of
withholding applies to all annuity programs.
3. PERIODIC DISTRIBUTIONS (DISTRIBUTIONS PAYABLE OVER A PERIOD GREATER THAN
ONE YEAR)
The portion of a periodic distribution which constitutes taxable income
will be subject to federal income tax withholding under the wage
withholding tables as if the recipient were married claiming three
exemptions. A recipient may elect not to have income taxes withheld or
have income taxes withheld at a different rate by providing a completed
election form. Election forms will be provided at the time distributions
are requested. This form of withholding applies to all annuity programs.
As of January 1, 1996, a recipient receiving periodic payments (e.g.,
monthly or annual payments under an Annuity Option) which total $14,350
or less per year, will generally be exempt from periodic withholding.
Recipients who elect not to have withholding made are liable for payment of
federal income tax on the taxable portion of the distribution. All recipients
may also be subject to penalties under the estimated tax payment rules if
withholding and estimated tax payments are not sufficient to cover tax
liabilities.
26
<PAGE> 30
Recipients who do not provide a social security number or other taxpayer
identification number will not be permitted to elect out of withholding.
Additionally, United States citizens residing outside of the country, or U.S.
legal residents temporarily residing outside the country, are not permitted to
elect out of withholding.
VOTING RIGHTS
- --------------------------------------------------------------------------------
The Contract Owner has certain voting rights in Fund BD II and the Underlying
Funds. The number of votes which a Contract Owner may cast in the accumulation
period is equal to the number of Accumulation Units credited to the account
under the Contract. During the annuity period, the Contract Owner may cast the
number of votes equal to (i) the reserve related to the Contract divided by (ii)
the value of an Accumulation Unit, and a Contract Owner's voting rights will
decline as the reserve for the Contract declines.
Each person having a voting interest in Fund BD II will receive periodic reports
relating to the Underlying Fund(s) in which he or she has an interest, as well
as any proxy materials, including a form on which to give voting instructions
with respect to the proportion of the Underlying Fund shares held by Fund BD II
which correspond to his or her interest in the Sub-Account.
Upon the death of the Contract Owner, all voting rights will vest in the
Beneficiary of the Contract, except in the case of Contracts where the surviving
spouse becomes the Contract Owner.
The Company will vote shares of Underlying Funds held by Fund BD II at regular
and special meetings of the Underlying Fund shareholders in accordance with
instructions received from persons having a voting interest in Fund BD II. The
Company will vote shares for which it has not received instructions in the same
proportion as it votes shares for which it has received instructions. However,
if the 1940 Act or any regulation thereunder should be amended, or if the
present interpretation thereof should change, and as a result the Company
determines that it is permitted to vote shares of the Underlying Funds in its
own right, it may elect to do so.
DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS
- --------------------------------------------------------------------------------
The Company intends to sell the Contracts in all jurisdictions where it is
licensed to do business and where the Contract is approved. The Contracts will
be sold by life insurance sales agents who represent the Company, and who are
licensed registered representatives of the Company or certain other registered
broker-dealers. The compensation paid to sales representatives will not exceed
6.25% of the payments made under the Contracts.
From time to time the Company may pay or permit other promotional incentives, in
cash, credit or other compensation.
Any sales representative or employee will have been qualified to sell Variable
Annuities under applicable federal and state laws. Each broker-dealer is
registered with the Securities and Exchange Commission under the Securities
Exchange Act of 1934, and all are members of the National Association of
Securities Dealers, Inc. Tower Square Securities, Inc., an affiliate of the
Company, is the principal underwriter for the Contracts.
CONFORMITY WITH STATE AND FEDERAL LAWS
The Contract is governed by the laws of the state in which it is delivered. Any
paid-up Annuity, Cash Surrender Value or death benefits that are available under
the Contract are not less than the minimum benefits required by the statutes of
the state in which the Contract is delivered. The Company may at any time make
any changes, including retroactive changes, in the Contract to the extent that
the change is required to meet the requirements of any law or regulation issued
by any governmental agency to which the company, the Contract or the Contract
Owner is subject.
27
<PAGE> 31
LEGAL PROCEEDINGS AND OPINIONS
- --------------------------------------------------------------------------------
There are no pending material legal proceedings affecting Fund BD II. Legal
matters in connection with the federal laws and regulations affecting the issue
and sale of the Contract described in this Prospectus, as well as the
organization of the Company, its authority to issue variable annuity contracts
under Connecticut law and the validity of the forms of the variable annuity
contracts under Connecticut law, have been reviewed by the General Counsel of
the Life and Annuities Division of the Company.
THE FIXED ACCOUNT
- --------------------------------------------------------------------------------
Under the Fixed Account, the Company assumes the risk of investment gain or
loss, guarantees a specified interest rate, and guarantees a specified periodic
annuity payment. The investment gain or loss of Fund BD II or any of the
Sub-Accounts does not affect the Fixed Account portion of the Contract Owner's
Contract Value, or the dollar amount of fixed annuity payments made under any
payout option.
The Company guarantees that, at any time, the Fixed Account Contract Value will
not be less than the amount of the Purchase Payments allocated to the Fixed
Account, plus interest credited as described above, less any applicable premium
taxes or prior surrenders. If the Contract Owner effects a surrender, the amount
available from the Fixed Account will be reduced by any applicable Contingent
Deferred Sales Charge.
Purchase Payments allocated to the Fixed Account portion of the Contract and any
transfers made to the Fixed Account become part of the general account of the
Company which supports insurance and annuity obligations. Neither the general
account nor any interest therein is registered under, nor subject to the
provisions of the 1933 or 1940 Acts. The Company will invest the assets of the
Fixed Account at its discretion. Investment income from such Fixed Account
assets will be allocated by the Company between itself and the Contracts
participating in the Fixed Account.
Investment income from the Fixed Account allocated to the Company includes
compensation for mortality and expense risks borne by the Company in connection
with Fixed Account Contracts. The amount of such investment income allocated to
the Contracts will vary from year to year in the sole discretion of the Company
at such rate or rates as the Company prospectively declares from time to time.
The initial rate for any deposit into the Fixed Account is guaranteed for one
year from the date of such deposit. Subsequent renewal rates will be guaranteed
for the calendar quarter. The Company also guarantees that for the life of the
Contract it will credit interest at not less than 3% per year. Any interest
credited to amounts allocated to the Fixed Account in excess of 3% per year will
be determined in the sole discretion of the company. The contract owner assumes
the risk that interest credit to the Fixed Account may not exceed the minimum
guarantee of 3% for any given year.
TRANSFERS
Transfers from the Fixed Account to any other available investment option(s)
will be permitted twice a year during the 30 days following the semiannual
Contract Date anniversary in an amount of up to 15% of the Fixed Account Value
on the semiannual Contract Date anniversary. (This restriction does not apply to
transfers from the Dollar-Cost Averaging Program.) Amounts previously
transferred from the Fixed Account to the Sub-Accounts may not be transferred
back to the Fixed Account for a period of at least 6 months from the date of
transfer. The Company reserves the right to waive either of these restrictions
in its discretion.
Automated transfers from the Fixed Account to any of the Sub-Accounts may begin
at any time. Automated transfers from the Fixed Account may not deplete your
Fixed Account value in a period of less than twelve months from your enrollment
in the Dollar-Cost Averaging program.
28
<PAGE> 32
APPENDIX A
FOR CONTRACTS ISSUED IN THE STATE OF FLORIDA
- --------------------------------------------------------------------------------
DEATH BENEFITS
DEATH PROCEEDS PRIOR TO THE MATURITY DATE
The Enhanced Death Benefit is not available in Florida.
STANDARD DEATH BENEFIT. Under the standard death benefit, if the Annuitant dies
BEFORE AGE 75 and before the Maturity Date, the Company will pay to the
Beneficiary a death benefit in an amount equal to the greatest of (1), (2) or
(3) below, less any applicable premium tax or prior surrenders not previously
deducted:
1) the Contract Value;
2) the total Purchase Payments made under the Contract; or
3) the Contract Value on the latest fifth contract year anniversary
immediately preceding the date on which the Company receives due proof
of death.
IF THE ANNUITANT DIES ON OR AFTER AGE 75, BUT BEFORE AGE 90 and before the
Maturity Date, the Company will pay to the Beneficiary a death benefit in an
amount equal to the greatest of (1), (2) or (3) below, less any applicable
premium tax or prior surrenders not previously deducted:
1) the Contract Value;
2) the total Purchase Payments made under the Contract; or
3) the Contract Value on the latest fifth contract year anniversary
occurring on or before the Annuitant's 75th birthday.
THE ANNUITY PERIOD
MATURITY DATE
The maturity date may not be any date beyond the Annuitant's 90th birthday.
THE VARIABLE ANNUITY
Variable payouts are not permitted in Florida. Contract Owners may only have
their Contract Values applied to provide a Fixed Annuity.
Disregard the "Variable Annuity" section described on page 19.
ELECTION OF OPTIONS
ON THE MATURITY DATE, OR OTHER AGREED-UPON DATE, THE COMPANY WILL PAY AN AMOUNT
PAYABLE UNDER THE CONTRACT IN ACCORDANCE WITH THE PAYMENT OPTION SELECTED BY THE
CONTRACT OWNER. Election of an option must be made in writing in a form
satisfactory to the Company. Any election made during the lifetime of the
Annuitant must be made by the Contract Owner. While the Annuitant is alive, the
Contract Owner may change a Settlement Option election by Written Request at any
time prior to the Maturity Date. Once Annuity or Income Payments have begun, no
further election changes are allowed. During the Annuitant's lifetime, if no
election has been made prior to the Maturity Date, the Company will pay to the
Contract Owner the first of a series of monthly Annuity Payments based on the
life of the Annuitant, in accordance with Annuity Option 2 (Life Annuity with
120 monthly payments assured). For certain tax-qualified contracts, Annuity
Option 4 (Joint and Last Survivor Joint Life Annuity -- Annuity Reduced on Death
of Primary Payee) will be the automatic option as described in the contract.
The minimum amount that can be placed under an Annuity or Income Option will be
$2,000 unless the Company consents to a lesser amount. If any monthly periodic
payment due any payee is less than $100.00, the Company reserves the right to
make payments at less frequent intervals, or to pay the Contract Value in one
lump-sum payment.
29
<PAGE> 33
APPENDIX B
CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
The Statement of Additional Information contains more specific information and
financial statements relating to the Separate Account and The Travelers Life and
Annuity Company. A list of the contents of the Statement of Additional
Information is set forth below:
The Insurance Company
Principal Underwriter
Distribution and Management Agreement
Valuation of Assets
Performance Data
Independent Accountants
Financial Statements
- --------------------------------------------------------------------------------
COPIES OF THE STATEMENT OF ADDITIONAL INFORMATION DATED MAY 1, 1996 (FORM NO.
L-12540S) ARE AVAILABLE WITHOUT CHARGE. TO REQUEST A COPY, PLEASE CLIP THIS
COUPON ON THE DOTTED LINE ABOVE, ENTER YOUR NAME AND ADDRESS IN THE SPACES
PROVIDED BELOW, AND MAIL TO: THE TRAVELERS LIFE AND ANNUITY COMPANY, ANNUITY
INVESTOR SERVICES, ONE TOWER SQUARE, HARTFORD, CONNECTICUT 06183-9061.
Name:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
30
<PAGE> 34
THIS PAGE INTENTIONALLY LEFT BLANK.
31
<PAGE> 35
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
<PAGE> 36
VINTAGE
STATEMENT OF ADDITIONAL INFORMATION
dated
May 1, 1996
for
THE TRAVELERS FUND BD II FOR VARIABLE ANNUITIES
ISSUED BY
THE TRAVELERS LIFE AND ANNUITY COMPANY
This Statement of Additional Information ("SAI") is not a prospectus but
relates to, and should be read in conjunction with, the Individual Variable
Annuity Contract Prospectus dated May 1, 1996. A copy of the Prospectus may be
obtained by writing to The Travelers Life and Annuity Company, Annuity
Services, One Tower Square, Hartford, Connecticut 06183-9061, or by calling
1-800-842-8573.
TABLE OF CONTENTS
<TABLE>
<S> <C>
THE INSURANCE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
PRINCIPAL UNDERWRITER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
DISTRIBUTION AND MANAGEMENT AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
VALUATION OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
<PAGE> 37
THE INSURANCE COMPANY
The Travelers Life and Annuity Company (the "Company"), an indirect
wholly owned subsidiary of Travelers Group Inc., is a stock insurance company
chartered in 1973 in Connecticut and continuously engaged in the insurance
business since that time. The Company is licensed to conduct a life insurance
business in a majority of the states of the United States, and intends to seek
licensure in the remaining states, except New York. The Company's Home Office
is located at One Tower Square, Hartford, Connecticut 06183, and its telephone
number is (860) 277-0111.
The Company is a wholly owned subsidiary of The Travelers Insurance
Company, which is indirectly owned, through a wholly owned subsidiary, by
Travelers Group Inc., a financial services holding company engaged, through its
subsidiaries, principally in four business segments: (i) Investment Services;
(ii) Consumer Finance Services; (iii) Life Insurance Services; and (iv)
Property and Casualty Insurance Services.
PRINCIPAL UNDERWRITER
Tower Square Securities, Inc. ("Tower Square"), an affiliate of the
Company, serves as principal underwriter for Fund BD II and the Contracts. The
offering is continuous. Tower Square is an indirect wholly owned subsidiary of
Travelers Group Inc. and its principal executive offices are located at One
Tower Square, Hartford, Connecticut.
DISTRIBUTION AND MANAGEMENT AGREEMENT
Under the terms of the Distribution and Management Agreement among
Fund BD II, the Company and Tower Square, the Company provides all
administrative services and mortality and expense risk guarantees related to
variable annuity contracts sold by the Company in connection with the Fund BD
II. Tower Square performs the sales functions related to the Contracts. The
Company reimburses Tower Square for commissions paid, other sales expenses and
certain overhead expenses connected with sales functions. The Company also
pays all costs (including costs associated with the preparation of sales
literature); all costs of qualifying Fund BD II and the variable annuity
contract with regulatory authorities; the costs of proxy solicitation; and all
custodian, accountant's and legal fees. The Company also provides without cost
to the Fund BD II all necessary office space, facilities, and personnel to
manage its affairs.
VALUATION OF ASSETS
The value of the assets of each Underlying Fund is determined on each
Valuation Date as of the close of the New York Stock Exchange. Each security
traded on a national securities exchange is valued at the last reported sale
price on the Valuation Date. If there has been no sale on that day, then the
value of the security is taken to be the mean between the reported bid and
2
<PAGE> 38
asked prices on the Valuation Date or on the basis of quotations received from
a reputable broker or any other recognized source.
Any security not traded on a securities exchange but traded in the
over-the-counter-market and for which market quotations are readily available
is valued at the mean between the quoted bid and asked prices on the Valuation
Date or on the basis of quotations received from a reputable broker or any
other recognized source.
Securities traded on the over-the-counter-market and listed securities
with no reported sales are valued at the mean between the last reported bid and
asked prices or on the basis of quotations received from a reputable broker or
other recognized source.
Short-term investments for which a quoted market price is available
are valued at market. Short-term investments maturing in more than sixty days
for which there is no reliable quoted market price are valued by "marking to
market" (computing a market value based upon quotations from dealers or issuers
for securities of a similar type, quality and maturity.) "Marking to market"
takes in account unrealized appreciation or depreciation due to changes in
interest rates or other factors which would influence the current fair values
of such securities. Short-term investments maturing in sixty days or less for
which there is no reliable quoted market price are valued at amortized cost
which approximates market.
NET INVESTMENT FACTOR
The net investment factor is used to measure the investment
performance of a Sub-Account from one Valuation Period to the next. The net
investment factor for a Sub-Account for any Valuation Period is equal to the
sum of 1.000000 plus the net investment rate (the gross investment rate less
any applicable Sub-Account deductions during the Valuation Period relating to
the Insurance Charge and the Sub-Account Administrative Charge). The gross
investment rate of a Sub-Account is equal to (a) minus (b) divided by (c)
where:
(a) = investment income plus capital gains and losses (whether
realized or unrealized);
(b) = any deduction for applicable taxes (presently zero); and
(c) = the value of the assets of the Underlying Fund at the beginning
of the Valuation Period.
The gross investment rate may be either positive or negative. A
Sub-Account's assets are based on the net asset value of the Underlying Fund,
and investment income includes any distribution whose ex-dividend date occurs
during the Valuation Period.
PERFORMANCE INFORMATION
From time to time, the Company may advertise several types of historical
performance for Sub-Accounts of Fund BD II. The Company may advertise the
"standardized average annual total returns" of the Underlying Funds available
through the Separate Account, calculated in a manner
3
<PAGE> 39
prescribed by the Securities and Exchange Commission, as well as the
"non-standardized total return," as described below:
STANDARDIZED METHOD. Quotations of average annual total return are
computed according to a formula in which a hypothetical initial investment of
$1,000 is allocated to an Underlying Fund, and then related to ending
redeemable values over one-, five- and ten-year periods, or inception, if an
Underlying Fund has not been in existence for one of the prescribed periods.
These quotations reflect the deduction of all recurring charges during each
period (on a pro rata basis in the case of fractional periods). The deduction
for the semiannual administrative charge ($15) is converted to a percentage of
assets based on the actual fee collected, divided by the average net assets per
contract sold under the Prospectus to which this Statement of Additional
Information relates. Each quotation assumes a total redemption at the end of
each period with the assessment of any applicable Contingent Deferred Sales
Charge at that time.
NON-STANDARDIZED METHOD. Non-standardized "total return" will be
calculated in a manner similar to "standardized" as describe above. However,
non-standardized total return will not reflect the deduction of any applicable
Contingent Deferred Sales Charge or the $15 semiannual contract administrative
charge, which, if reflected, would decrease the level of performance shown.
The Contingent Deferred Sales Charge is not reflected because the Contract is
designed for long-term investment.
GENERAL. Within the guidelines prescribed by the SEC and the National
Association of Securities Dealers, Inc. ("NASD"), performance information may
be quoted numerically or may be presented in a table, graph or other
illustration. Advertisements may include data comparing performance to
well-known indices of market performance (including, but not limited to, the
Dow Jones Industrial Average, the Standard & Poor's (S&P) 500 Index and the S&P
400 Index, the Lehman Brothers Long T-Bond Index, the Russell 1000, 2000 and
3000 Indices, the Value Line Index, and the Morgan Stanley Capital
International's EAFE Index). Advertisements may also include published
editorial comments and performance rankings compiled by independent
organizations (including, but not limited to, Lipper Analytical Services, Inc.
and Morningstar, Inc.) and publications that monitor the performance of Fund BD
II and the Underlying Funds.
For Underlying Funds that were in existence prior to the date they
became available under Fund BD II, the standardized average total return and
non-standardized total return quotations will show the investment performance
that such Underlying Funds would have achieved (reduced by the applicable
charges) had they been held available under the Contract for the period quoted.
The total return quotations are based upon historical earnings and are not
necessarily representative of future performance. An Owner's Contract Value at
redemption may be more or less than original cost.
Average annual total returns for each of the Underlying Funds available under
Fund BD II computed according to the standardized and non-standardized methods
for the period ending December 31, 1995 are set forth in the following table.
4
<PAGE> 40
STANDARDIZED TOTAL RETURN CALCULATIONS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Regular Since Enhanced Since Inception
1 Year Inception 1 Year Inception Date
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Smith Barney Income
and Growth 25.50% 14.55% 25.13% 14.22% 6/20/94
Alliance Growth Portfolio 27.27% 20.86% 26.90% 20.51% 6/20/94
American Capital Enterprise
Portfolio 25.12% 18.89% 24.74% 18.54% 6/21/94
Smith Barney International
Equity Portfolio 3.97% (0.66)% 3.66% (0.96)% 6/20/94
Smith Barney Pacific Basin
Portfolio (4.81)% (9.75)% (5.09)% (10.01)% 6/21/94
TBC Managed Income
Portfolio 8.54% 5.34% 8.23% 5.03% 6/28/94
Putnam Diversified
Income Portfolio 10.00% 7.06% 9.68% 6.74% 6/20/94
G.T. Global Strategic
Income Portfolio 12.58% 3.92% 12.25% 3.61% 6/21/94
Smith Barney High
Income Portfolio 11.68% 6.59% 11.35% 6.28% 6/22/94
MFS Total Return
Portfolio 18.21% 9.93% 17.87% 9.61% 6/20/94
Smith Barney Money
Market Portfolio (1.83)% (0.14)% (2.12)% (0.44)% 6/20/94
AIM Capital Appreciation
Portfolio --- (9.96)% --- (10.02)% 10/10/95
Smith Barney Total
Return Portfolio 17.43% 12.94% 17.09% 12.61% 12/3//93
</TABLE>
5
<PAGE> 41
NONSTANDARDIZED TOTAL RETURN CALCULATIONS
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Regular Since Enhanced Since Inception
1 Year Inception 1 Year Inception Date
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Smith Barney Income
and Growth Portfolio 31.52% 18.21% 31.15% 17.88% 6/20/94
Alliance Growth Portfolio 33.29% 24.42% 32.92% 24.08% 6/20/94
American Capital Enterprise
Portfolio 31.14% 22.48% 30.77% 22.14% 6/21/94
Smith Barney International
Equity Portfolio 9.98% 3.27% 9.68% 2.98% 6/21/94
Smith Barney Pacific Basin
Portfolio 1.21% (5.99)% 0.93% (6.25)% 6/21/94
TBC Managed Income
Portfolio 14.56% 9.22% 14.24% 8.91% 6/28/94
Putnam Diversified
Income Portfolio 16.02% 10.84% 15.70% 10.53% 6/20/94
G.T. Global Strategic
Income Portfolio 18.60% 7.77% 18.26% 7.46% 6/21/94
Smith Barney High
Income Portfolio 17.70% 10.40% 17.37% 10.09% 6/22/94
MFS Total Return
Portfolio 24.23% 13.67% 23.88% 13.35% 6/20/94
Smith Barney Money
Market Portfolio 4.19% 3.78% 3.89% 3.49% 6/20/94
AIM Capital Appreciation
Portfolio ---- (4.21)% ---- (4.27)% 10/10/95
Smith Barney Total
Return Portfolio 23.45% 15.49% 23.10% 15.17% 12/3/93
</TABLE>
6
<PAGE> 42
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., certified public accountants, 100 Pearl
Street, Hartford, Connecticut, are the independent auditors for Fund BD II.
The services provided to Fund BD II include primarily the examination of the
Fund's financial statements. The Financial Statements of Fund BD II have been
audited by Coopers & Lybrand L.L.P., as indicated in their report thereon, and
are included herein in reliance upon the authority of said firm as experts in
accounting and auditing.
The balance sheets of The Travelers Life and Annuity Company (the
"Company") as of December 31, 1995 and 1994 and the statements of operations
and retained earnings and cash flows for the years then ended, have been
included herein in reliance upon the report of KPMG Peat Marwick, LLP,
independent certified public accountants, and upon the authority of said firm
as experts in accounting and auditing. The report of KPMG Peat Marwick LLP
covering the December 31, 1995 and 1994 financial statements of the Company
refers to a change in the accounting for investments in accordance with
provisions of Statement of Financial Accounting Standards No. 115, "Accounting
for Certain Investments in Debt and Equity Securities," in 1994.
The statements of operations and retained earnings and cash flows of
the Company for the year ended December 31, 1993 have been included herein in
reliance upon the report dated September 16, 1994 of Coopers & Lybrand L.L.P.,
certified public accountants, and upon the authority of said firm as experts in
accounting and auditing.
7
<PAGE> 43
THE TRAVELERS FUND BD II
FOR VARIABLE ANNUITIES
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS:
Investments in eligible funds at market value:
Smith Barney/Travelers Series Fund Inc.:
Alliance Growth Portfolio, 185,439 shares (cost $2,538,617)................. $ 2,496,002
American Capital Enterprise Portfolio, 97,951 shares (cost $1,282,128)...... 1,263,570
TBC Managed Income Portfolio, 31,455 shares (cost $355,126)................. 341,596
G.T. Global Strategic Income Portfolio, 11,136 shares (cost $122,501)....... 121,048
Smith Barney High Income Portfolio, 54,613 shares (cost $626,668).......... 605,660
Smith Barney International Equity Portfolio, 70,849 shares (cost $736,324).. 756,671
Smith Barney Income and Growth Portfolio, 72,893 shares (cost $935,968)..... 937,403
Smith Barney Money Market Portfolio, 2,886,060 shares (cost $2,886,060)..... 2,886,060
Putnam Diversified Income Portfolio, 94,488 shares (cost $1,096,398)........ 1,066,768
Smith Barney Pacific Basin Portfolio, 5,520 shares (cost $49,167)........... 51,003
MFS Total Return Portfolio, 91,256 shares (cost $1,085,806)................. 1,085,946
AIM Capital Appreciation Portfolio, 321,132 shares (cost $3,108,343)........ 3,082,868
Smith Barney Series Fund:
Total Return Portfolio, 77,431 shares (cost $983,136)....................... 986,473
-----------
Total Investments (cost $15,806,242)...................................... 15,681,068
-----------
Receivables:
Dividends..................................................................... 255,886
Purchase payments and transfers from other Travelers accounts................. 1,360,447
Other assets.................................................................... 106
-----------
Total Assets.............................................................. 17,297,507
-----------
LIABILITIES:
Payable for contract surrenders and transfers to other Travelers accounts....... 8,445
Accrued liabilities............................................................. 2,616
-----------
Total Liabilities......................................................... 11,061
-----------
NET ASSETS........................................................................ $17,286,446
===========
</TABLE>
See Notes to Financial Statements
-1-
<PAGE> 44
THE TRAVELERS FUND BD II
FOR VARIABLE ANNUITIES
STATEMENT OF OPERATIONS
FOR THE PERIOD NOVEMBER 8, 1995 (DATE OPERATIONS COMMENCED) TO DECEMBER 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends.................................................... $ 262,043
EXPENSES:
Insurance charges............................................ $ 14,620
Administrative fees.......................................... 1,589
--------
Total expenses............................................. 16,209
---------
Net investment income.................................... 245,834
---------
REALIZED LOSS AND CHANGE IN UNREALIZED LOSS ON
INVESTMENTS:
Realized loss from investment transactions:
Proceeds from investments sold............................. 136,938
Cost of investments sold................................... 137,447
--------
Net realized loss........................................ (509)
Unrealized loss on investments:
December 31, 1995.......................................... (125,174)
---------
Net realized loss and change in unrealized loss.......... (125,683)
---------
Net increase in net assets resulting from operations......... $ 120,151
=========
</TABLE>
See Notes to Financial Statements
-2-
<PAGE> 45
THE TRAVELERS FUND BD II
FOR VARIABLE ANNUITIES
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD NOVEMBER 8, 1995 (DATE OPERATIONS COMMENCED) TO DECEMBER 31, 1995
<TABLE>
<CAPTION>
1995
----------
<S> <C>
OPERATIONS:
Net investment income.......................................... $ 245,834
Net realized loss from investment transactions................. (509)
Net change in unrealized loss on investments................... (125,174)
-------------
Net increase in net assets resulting from operations......... 120,151
-------------
UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 14,991,745 units)............................. 17,056,576
Participant transfers from other Travelers accounts
(applicable to 321,920 units)................................ 372,855
Contract surrenders
(applicable to 1,879 units).................................. (2,206)
Participant transfers to other Travelers accounts
(applicable to 229,855 units)................................ (260,930)
-------------
Net increase in net assets resulting from unit transactions.. 17,166,295
-------------
Net increase in net assets................................... 17,286,446
NET ASSETS:
Beginning of period............................................ -
-------------
End of period.................................................. $ 17,286,446
=============
</TABLE>
See Notes to Financial Statements
-3-
<PAGE> 46
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
The Travelers Fund BD II for Variable Annuities ("Fund BD II") is a
separate account of The Travelers Life and Annuity Company ("Travelers
Life"), which is a wholly owned subsidiary of The Travelers Insurance
Company, an indirect wholly owned subsidiary of Travelers Group Inc., and
is available for funding certain variable annuity contracts issued by
Travelers Life. Fund BD II is registered under the Investment Company Act
of 1940, as amended, as a unit investment trust.
Participant purchase payments applied to Fund BD II are invested in one or
more eligible funds in accordance with the selection made by the contract
owner. As of December 31, 1995, the eligible funds available under Fund BD
II are: Alliance Growth Portfolio, 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 Smith Barney/Travelers Series Fund Inc.; and Total Return
Portfolio of Smith Barney Series Fund. Smith Barney/Travelers Series Fund
Inc. is incorporated under Maryland law. Smith Barney Series Fund is
registered as a Massachusetts business trust. Both funds are managed by
Smith Barney Mutual Funds Management Inc., an indirect wholly owned
subsidiary of Travelers Group Inc.
The following is a summary of significant accounting policies consistently
followed by Fund BD II 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 II 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 Fund BD II. Fund BD II
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 $15,943,689 and $136,938,
respectively, for the period ended December 31, 1995. Realized gains and
losses from investment transactions are reported on an identified-cost
basis. The cost of investments in eligible funds was $15,806,242 at
December 31, 1995. Gross unrealized appreciation for all investments at
December 31, 1995 was $27,095. Gross unrealized depreciation for all
investments at December 31, 1995 was $152,269.
3. CONTRACT CHARGES
Insurance charges are paid to Travelers Life for the mortality and expense
risks assumed by Travelers Life. For contracts with a standard death
benefit provision, these charges are equivalent to 1.02% of the average net
assets of Fund BD II 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 II 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 Travelers Life to cover
contract administrative charges.
Administrative fees are paid to Travelers Life for administrative expenses
incurred by Travelers Life. This charge is equivalent to 0.15% of the
average net assets of Fund BD II on an annual basis.
-4-
<PAGE> 47
NOTES TO FINANCIAL STATEMENTS - CONTINUED
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 . No deductions were taken for the
period ended December 31, 1995.
4. NET CONTRACT OWNERS' EQUITY
<TABLE>
<CAPTION>
DECEMBER 31, 1995
----------------------------------------------
ACCUMULATION UNIT NET
UNITS VALUE ASSETS
------------ -------- -----------
<S> <C> <C> <C>
Smith Barney/Travelers Series Fund Inc.:
Alliance Growth Portfolio
Standard............................... 1,573,668 $ 1.396 $ 2,196,422
Enhanced............................... 452,737 1.390 629,207
American Capital Enterprise Portfolio
Standard............................... 764,534 1.362 1,041,231
Enhanced............................... 329,130 1.356 446,338
TBC Managed Income Portfolio
Standard............................... 225,876 1.142 257,885
Enhanced............................... 89,569 1.137 101,831
G.T. Global Strategic Income Portfolio
Standard............................... 32,765 1.121 36,716
Enhanced............................... 79,526 1.116 88,736
Smith Barney High Income Portfolio
Standard............................... 242,593 1.162 281,962
Enhanced............................... 331,521 1.157 383,676
Smith Barney International Equity
Portfolio
Standard............................... 556,129 1.050 584,053
Enhanced............................... 200,940 1.046 210,127
Smith Barney Income and Growth Portfolio
Standard............................... 596,201 1.291 769,568
Enhanced............................... 146,469 1.285 188,253
Smith Barney Money Market Portfolio
Standard............................... 2,373,923 1.058 2,511,927
Enhanced............................... 819,856 1.054 863,812
Putnam Diversified Income Portfolio
Standard............................... 823,783 1.170 963,857
Enhanced............................... 126,460 1.165 147,332
Smith Barney Pacific Basin Portfolio
Standard............................... 37,278 0.910 33,928
Enhanced............................... 19,544 0.906 17,712
MFS Total Return Portfolio
Standard............................... 912,547 1.216 1,109,536
Enhanced............................... 101,550 1.211 122,945
AIM Capital Appreciation Portfolio
Standard............................... 2,536,732 0.958 2,429,736
Enhanced............................... 908,266 0.957 869,420
Smith Barney Series Fund:
Total Return Portfolio
Standard............................... 651,440 1.251 814,618
Enhanced............................... 148,894 1.247 185,618
-------------
Net Contract Owners' Equity $ 17,286,446
=============
</TABLE>
-5-
<PAGE> 48
NOTES TO FINANCIAL STATEMENTS - CONTINUED
5. SCHEDULE OF FUND BD II OPERATIONS AND CHANGES IN NET ASSETS
FOR THE PERIOD NOVEMBER 8, 1995 (DATE OPERATIONS COMMENCED) TO DECEMBER 31,
1995
<TABLE>
<CAPTION>
AMERICAN TBC G.T. GLOBAL SMITH
ALLIANCE CAPITAL MANAGED STRATEGIC BARNEY
GROWTH ENTERPRISE INCOME INCOME HIGH INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------- ---------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............................................. $ 71,580 $ 38,960 $ 18,181 $ 4,427 $ 27,093
---------- ---------- --------- -------- ---------
EXPENSES:
Insurance charges...................................... 2,554 1,306 252 102 283
Administrative fees.................................... 275 135 35 12 39
---------- ---------- --------- -------- ---------
Net investment income (loss)......................... 68,751 37,519 17,894 4,313 26,771
---------- ---------- --------- -------- ---------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Realized gain (loss) from investment transactions:
Proceeds from investments sold....................... 55,534 155 60 64 142
Cost of investments sold............................. 56,573 158 60 63 144
---------- ---------- --------- -------- ---------
Net realized gain (loss)............................. (1,039) (3) - 1 (2)
Change in unrealized gain (loss) on investments:
Unrealized gain (loss) beginning of period........... - - - - -
Unrealized gain (loss) end of period................. (42,615) (18,558) (13,530) (1,453) (21,008)
---------- ---------- --------- -------- ---------
Net change in unrealized gain (loss) for the period (42,615) (18,558) (13,530) (1,453) (21,008)
---------- ---------- --------- -------- ---------
Net increase (decrease) in net assets
resulting from operations........................ 25,097 18,958 4,364 2,861 5,761
---------- ---------- --------- -------- ---------
UNIT TRANSACTIONS:
Participant purchase payments.......................... 2,815,148 1,430,843 275,352 122,591 659,877
Participant transfers from other Travelers accounts 67,993 37,768 80,000 - -
Contract surrenders.................................... (503) - - - -
Participant transfers to other Travelers accounts...... (82,106) - - - -
---------- ---------- --------- -------- ---------
Net increase in net assets resulting from
unit transactions...................................... 2,800,532 1,468,611 355,352 122,591 659,877
---------- ---------- --------- -------- ---------
Net increase in net assets............................ 2,825,629 1,487,569 359,716 125,452 665,638
NET ASSETS:
Beginning of period.................................... - - - - -
---------- ---------- --------- -------- ---------
End of period.......................................... $2,825,629 $1,487,569 $ 359,716 $125,452 $ 665,638
========== ========== ========= ======== =========
</TABLE>
-6-
<PAGE> 49
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
SMITH SMITH SMITH
BARNEY BARNEY BARNEY PUTNAM SMITH
INTERNATIONAL INCOME MONEY DIVERSIFIED BARNEY MFS AIM CAPITAL
EQUITY AND GROWTH MARKET INCOME PACIFIC BASIN TOTAL RETURN APPRECIATION TOTAL RETURN
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO COMBINED
- ------------- ---------- --------- ----------- ------------- ------------ ------------ ------------ --------
<C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 836 $ 15,676 $ 8,627 $ 44,601 $ 149 $ 26,481 $ 3,038 $ 2,394 $ 262,043
-------- -------- ---------- ---------- ------- ---------- ---------- --------- -----------
751 759 2,031 704 48 857 4,240 733 14,620
83 98 275 100 6 127 313 91 1,589
-------- -------- ---------- ---------- ------- ---------- ---------- --------- -----------
2 14,819 6,321 43,797 95 25,497 (1,515) 1,570 245,834
-------- -------- ---------- ---------- ------- ---------- ---------- --------- -----------
35,908 396 44,352 21 19 62 90 135 136,938
35,387 385 44,352 21 18 61 93 132 137,447
-------- -------- ---------- ---------- ------- ---------- ---------- --------- -----------
521 11 - - 1 1 (3) 3 (509)
- - - - - - - - -
20,347 1,435 - (29,630) 1,836 140 (25,475) 3,337 (125,174)
-------- -------- ---------- ---------- ------- ---------- ---------- ---------- -----------
20,347 1,435 - (29,630) 1,836 140 (25,475) 3,337 (125,174)
-------- -------- ---------- ---------- ------- ---------- ---------- ---------- -----------
20,870 16,265 6,321 14,167 1,932 25,638 (26,993) 4,910 120,151
-------- -------- ---------- ---------- ------- ---------- ---------- ---------- -----------
760,996 911,643 3,527,872 1,086,983 49,035 1,186,910 3,256,149 973,177 17,056,576
12,389 29,913 8,446 15,623 673 22,680 72,615 24,755 372,855
(75) - - - - (627) (500) (501) (2,206)
- - (166,900) (5,584) - (2,120) (2,115) (2,105) (260,930)
-------- -------- ---------- ---------- ------- ---------- ---------- ---------- -----------
773,310 941,556 3,369,418 1,097,022 49,708 1,206,843 3,326,149 995,326 17,166,295
-------- -------- ---------- ---------- ------- ---------- ---------- ---------- -----------
794,180 957,821 3,375,739 1,111,189 51,640 1,232,481 3,299,156 1,000,236 17,286,446
- - - - - - - - -
-------- -------- ---------- ---------- ------- ---------- ---------- ---------- -----------
$794,180 $957,821 3,375,739 $1,111,189 $51,640 $1,232,481 $3,299,156 $1,000,236 $17,286,446
======== ======== ========== ========== ======= ========== ========== ========== ===========
</TABLE>
-7-
<PAGE> 50
NOTES TO FINANCIAL STATEMENTS - CONTINUED
6. SCHEDULE OF ACCUMULATION UNITS FOR FUND BD II
FOR THE PERIOD NOVEMBER 8, 1995 (DATE OPERATIONS COMMENCED) TO DECEMBER 31,
1995
<TABLE>
<CAPTION>
ALLIANCE AMERICAN CAPITAL TBC MANAGED G.T. GLOBAL
GROWTH ENTERPRISE INCOME STRATEGIC INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C>
Accumulation units beginning of period........ - - - -
Accumulation units purchased and
transferred from other Travelers accounts... 2,088,195 1,093,664 315,445 112,291
Accumulation units redeemed and
transferred to other Travelers accounts..... (61,790) - - -
--------- --------- ------- -------
Accumulation units end of period.............. 2,026,405 1,093,664 315,445 112,291
========= ========= ======= =======
SMITH BARNEY SMITH BARNEY SMITH BARNEY SMITH BARNEY
HIGH INCOME INTERNATIONAL INCOME AND MONEY MARKET
PORTFOLIO EQUITY PORTFOLIO GROWTH PORTFOLIO PORTFOLIO
------------ ---------------- ---------------- ------------
Accumulation units beginning of period........ - - - -
Accumulation units purchased and
transferred from other Travelers accounts... 574,114 757,142 742,670 3,351,749
Accumulation units redeemed and
transferred to other Travelers accounts..... - (73) - (157,970)
------- ------- ------- ---------
Accumulation units end of period.............. 574,114 757,069 742,670 3,193,779
======= ======= ======= =========
PUTNAM SMITH BARNEY MFS AIM CAPITAL
DIVERSIFIED PACIFIC BASIN TOTAL RETURN APPRECIATION
INCOME PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------------- ------------- ------------ ------------
Accumulation units beginning of period........ - - - -
Accumulation units purchased and
transferred from other Travelers accounts... 955,065 56,822 1,016,359 3,447,731
Accumulation units redeemed and
transferred to other Travelers accounts..... (4,822) - (2,262) (2,733)
------- ------ --------- ---------
Accumulation units end of period.............. 950,243 56,822 1,014,097 3,444,998
======= ====== ========= =========
TOTAL RETURN
PORTFOLIO
------------
Accumulation units beginning of period........ -
Accumulation units purchased and
transferred from other Travelers accounts... 802,418
Accumulation units redeemed and
transferred to other Travelers accounts..... (2,084)
-------
Accumulation units end of period.............. 800,334
=======
</TABLE>
-8-
<PAGE> 51
REPORT OF INDEPENDENT ACCOUNTANTS
To the Owners of Variable Annuity Contracts of
The Travelers Fund BD II for Variable Annuities:
We have audited the accompanying statement of assets and liabilities of The
Travelers Fund BD II for Variable Annuites as of December 31, 1995, and the
related statements of operations and changes in net assets for the period
November 8, 1995 (date operations commenced) to December 31, 1995. These
financial statements are the responsibility of management. Our responsibility
is to express an opinion on these financial statements based on our audit.
We conducted our audit 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, 1995, 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 audit provides 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 II for
Variable Annuities as of December 31, 1995, the results of its operations and
the changes in its net assets for the period November 8, 1995 (date operations
commenced) to December 31, 1995, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
February 16, 1996
-9-
<PAGE> 52
Independent Auditors' Report
The Board of Directors and Shareholder of
The Travelers Life and Annuity Company:
We have audited the accompanying balance sheet of The Travelers Life and
Annuity Company as of December 31, 1995 and 1994, and the related statements of
operations and retained earnings and cash flows for the years then ended.
These financial statements are the responsibility of the Company's 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. 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 Life and Annuity
Company as of December 31, 1995 and 1994, and the results of its operations and
its cash flows for the years then ended, in conformity with generally accepted
accounting principles.
As discussed in note 3 to the financial statements, the Company adopted the
provisions of Statement of Financial Accounting Standards No. 115, "Accounting
for Certain Investments in Debt and Equity Securities," in 1994.
/s/KPMG Peat Marwick LLP
Hartford, Connecticut
January 16, 1996
7
<PAGE> 53
Report of Independent Accountants
To the Board of Directors and Shareholder of
The Travelers Life and Annuity Company:
We have audited the statements of operations and retained earnings and cash
flows of The Travelers Life and Annuity Company for the year ended December 31,
1993. These financial statements are the responsibility of Company
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit 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. 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 audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of The
Travelers Life and Annuity Company for the year ended December 31, 1993 in
conformity with generally accepted accounting principles.
/s/ COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
September 16, 1994
8
<PAGE> 54
THE TRAVELERS LIFE AND ANNUITY COMPANY
STATEMENT OF OPERATIONS AND RETAINED EARNINGS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
(for the year ended December 31, in thousands) 1995 1994 | 1993
- --------------------------------------------------------------------------------------------|-----------
<S> <C> <C> | <C>
REVENUES |
Premiums $ 2,652 $ 3,498 | $ 4,524
Net investment income 63,209 66,093 | 58,044
Realized investment gains (losses) 18,713 (2,074) | 11,955
Other 17,466 18,702 | 9,102
- --------------------------------------------------------------------------------------------|-----------
102,040 86,219 | 83,625
- --------------------------------------------------------------------------------------------|-----------
|
BENEFITS AND EXPENSES |
Current and future insurance benefits 52,390 55,596 | 67,489
Amortization of deferred acquisition costs |
and value of insurance in force 1,563 - | -
Other operating expenses 4,651 2,758 | 3,075
- --------------------------------------------------------------------------------------------|-----------
58,604 58,354 | 70,564
- --------------------------------------------------------------------------------------------|-----------
|
Income before federal income taxes 43,436 27,865 | 13,061
- --------------------------------------------------------------------------------------------|-----------
|
Federal income taxes: |
Current 2,555 4,742 | 22,124
Deferred 11,964 4,798 | (22,672)
- --------------------------------------------------------------------------------------------|-----------
14,519 9,540 | (548)
- --------------------------------------------------------------------------------------------|-----------
Net income 28,917 18,325 | 13,609
Retained earnings beginning of year 128,990 110,665 | 97,034
Preference stock tax benefit allocated by parent - - | 22
- --------------------------------------------------------------------------------------------|-----------
Retained earnings end of year $ 157,907 $ 128,990 | $ 110,665
- --------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
9
<PAGE> 55
THE TRAVELERS LIFE AND ANNUITY COMPANY
BALANCE SHEET
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
(at December 31, in thousands) 1995 1994
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Fixed maturities, available for sale at market
(cost, $678,293; $624,347) $ 724,639 $ 559,142
Equity securities, at market (cost, $9,453; $14,252) 13,099 16,064
Mortgage loans 125,813 152,359
Real estate held for sale, net of accumulated depreciation of $524; $337 8,995 6,810
Short-term securities 51,381 44,472
Other investments 65,805 72,190
- ---------------------------------------------------------------------------------------------------------------
Total investments 989,732 851,037
- ---------------------------------------------------------------------------------------------------------------
Cash - 296
Investment income accrued 11,030 10,211
Premium balances receivable 2,277 -
Reinsurance recoverables 718 573
Deferred acquisition costs and value of insurance in force 22,560 21,014
Deferred federal income taxes 41,158 94,315
Separate accounts 886,688 820,384
Current federal income taxes 6,691 -
Other assets 3,785 3,539
- ---------------------------------------------------------------------------------------------------------------
Total assets $ 1,964,639 $ 1,801,369
- ---------------------------------------------------------------------------------------------------------------
LIABILITIES
Future policy benefits $ 671,027 $ 691,108
Contractholder funds 11,947 -
Current federal income taxes - 26,071
Separate accounts 856,867 808,181
Other liabilities 61,247 17,889
- ---------------------------------------------------------------------------------------------------------------
Total liabilities 1,601,088 1,543,249
- ---------------------------------------------------------------------------------------------------------------
SHAREHOLDER'S EQUITY
Common stock, par value $100; 100,000
shares authorized, 30,000 issued and outstanding 3,000 3,000
Additional paid-in capital 167,314 167,354
Retained earnings 157,907 128,990
Unrealized investment gains (losses), net of taxes 35,330 (41,224)
- ---------------------------------------------------------------------------------------------------------------
Total shareholder's equity 363,551 258,120
- ---------------------------------------------------------------------------------------------------------------
Total liabilities and shareholder's equity $ 1,964,639 $ 1,801,369
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
10
<PAGE> 56
THE TRAVELERS LIFE AND ANNUITY COMPANY
STATEMENT OF CASH FLOWS
Increase (Decrease) in Cash
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
(for the year ended December 31, in thousands) 1995 1994 | 1993
- ------------------------------------------------------------------------------------------|-------------
<S> <C> <C> | <C>
CASH FLOWS FROM OPERATING ACTIVITIES |
Premiums collected $ 1,950 $ 3,498 | $ 4,524
Net investment income received 66,219 57,240 | 53,944
Benefits and claims paid (71,710) (72,298) | (74,660)
Operating expenses paid (3,013) (4,400) | (3,249)
Income taxes refunded (paid) (35,305) 1,030 | (10,661)
Trading account investments, (purchases) sales, net - - | 35,093
Other (6,772) 22,507 | (683)
- ------------------------------------------------------------------------------------------|-------------
Net cash provided by (used in) operating activities (48,631) 7,577 | 4,308
- ------------------------------------------------------------------------------------------|-------------
CASH FLOWS FROM INVESTING ACTIVITIES |
Investment repayments |
Fixed maturities 11,752 29,043 | 29,479
Mortgage loans 24,137 60,260 | 53,835
Proceeds from investments sold, including real estate |
held for sale |
Fixed maturities 459,971 41,671 | 46,001
Equity securities 11,823 9,373 | 7,676
Mortgage loans 7,013 23,327 | 11,835
Real estate held for sale - 34,181 | 26,014
Investments in |
Fixed maturities (515,098) (204,412) | (206,682)
Equity securities (156) (375) | (5,280)
Mortgage loans (4,890) (5,607) | -
Short-term securities, (purchases) sales, net (5,051) (1,146) | (16,430)
Other investments, (purchases) sales, net 9,274 682 | 46,595
Securities transactions in course of settlement 45,727 5,722 | 1,133
- ------------------------------------------------------------------------------------------|-------------
Net cash provided by (used in) investing activities 44,502 (7,281) | (5,824)
- ------------------------------------------------------------------------------------------|-------------
CASH FLOWS FROM FINANCING ACTIVITIES |
Contractholder fund deposits 5,707 - | -
Contractholder fund withdrawals (1,874) - | -
- ------------------------------------------------------------------------------------------|-------------
Net cash provided by financing activities 3,833 - | -
- ------------------------------------------------------------------------------------------|-------------
Net increase (decrease) in cash $ (296) $ 296 | $ (1,516)
- --------------------------------------------------------------------------------------------------------
Cash at December 31 $ - $ 296 $ -
- --------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
11
<PAGE> 57
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS
The Travelers Life and Annuity Company (the Company) is a wholly owned
subsidiary of The Travelers Insurance Company (TIC), which is an
indirect, wholly owned subsidiary of Travelers Group Inc. (Travelers).
The Company primarily writes single premium group annuity close-out
contracts and individual structured settlement annuities. The single
premium group annuity contracts are typically purchased by
employer-sponsored pension plans upon termination of the plan, asset
reversion or other significant plan changes. The individual structured
settlement contracts are purchased by affiliates, The Travelers
Indemnity Company and its subsidiaries, in connection with the
settlement of certain of its policyholder obligations. In 1995, the
Company also commenced writing individual life and deferred annuity
business.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies used in the preparation of the
accompanying financial statements follow.
Basis of presentation
In December 1992, Primerica Corporation (Primerica) acquired
approximately 27% of The Travelers Corporation's common stock (the 27%
Acquisition). The 27% Acquisition was accounted for as a purchase.
Effective December 31, 1993, Primerica acquired the approximately 73% of
The Travelers Corporation common stock which it did not already own, and
The Travelers Corporation was merged into Primerica, which was renamed
Travelers Group Inc. This was effected through the exchange of .80423
shares of Travelers common stock for each share of The Travelers
Corporation common stock (the Merger). All subsidiaries of The
Travelers Corporation were contributed to The Travelers Insurance Group
Inc. (TIGI).
The 27% Acquisition and the Merger were accounted for as a "step
acquisition", and the purchase accounting adjustments were "pushed down"
as of December 31, 1993 to the subsidiaries of TIGI, including the
Company, and reflect adjustments of assets and liabilities of the
Company to their fair values determined at each acquisition date (i.e.,
27% of values at December 31, 1992 as carried forward and 73% of the
values at December 31, 1993). These assets and liabilities were
recorded at December 31, 1993 based upon management's then best estimate
of their fair values at the respective dates. Evaluation and appraisal
of assets and liabilities, including investments, the value of insurance
in force, other insurance assets and liabilities and related deferred
federal income taxes was completed during 1994. The excess of the 27%
share of assigned value of identifiable net assets over cost at December
31, 1992, which was allocated to the Company through "pushdown"
accounting, was approximately $1.3 million and is being amortized over
ten years on a straight-line basis.
The statements of operations and retained earnings and of cash flows and
the related accompanying notes for the years ended December 31, 1995 and
1994, which are presented on a purchase accounting basis, are separated
from the corresponding 1993 information, which is presented on a
historical accounting basis, to indicate the difference in valuation
bases.
12
<PAGE> 58
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
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 benefits
and expenses during the reporting period. Actual results could differ
from those estimates.
Certain prior year amounts have been reclassified to conform with the
1995 presentation.
Investments
Fixed maturities include bonds, notes and redeemable preferred stocks.
Fixed maturities are valued based upon quoted market prices, or if
quoted market prices are not available, discounted expected cash flows
using market rates commensurate with the credit quality and maturity of
the investment. Fixed maturities are classified as "available for sale"
and are reported at fair value, with unrealized gains and losses, net of
income taxes, charged or credited directly to shareholder's equity.
Equity securities, which include common and nonredeemable preferred
stocks, are carried at market values that are based primarily on quoted
market prices. Changes in market values of equity securities are
charged or credited directly to shareholder's equity, net of applicable
income taxes.
Mortgage loans are carried at amortized cost. For mortgage loans that
are determined to be impaired, a reserve is established for the
difference between the amortized cost and fair market value of the
underlying collateral. Impaired loans were insignificant at December
31, 1995.
Real estate held for sale is carried at the lower of cost or fair value
less estimated costs to sell. Fair value was established at time of
foreclosure by appraisers, either internal or external, using discounted
cash flow analyses and other acceptable techniques. Thereafter, an
allowance for losses on real estate held for sale is established if the
carrying value of the property exceeds its current fair value less
estimated costs to sell. There was no such allowance at December 31,
1995.
Accrual of income is suspended on fixed maturities or mortgage loans
that are in default, or on which it is likely that future payments will
not be made as scheduled. Interest income on investments in default is
recognized only as payment is received.
Investment Gains and Losses
Realized investment gains and losses are included as a component of
pretax revenues based upon specific identification of the investments
sold on the trade date and, prior to the Merger, included adjustments to
investment valuation reserves. These adjustments reflected changes
considered to be other than temporary in the net realizable value of
investments. Also included are gains and losses arising from the
remeasurement of the local currency value of foreign investments to U.S.
dollars, the functional currency of the Company.
13
<PAGE> 59
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Separate Accounts
Separate account liabilities primarily represent structured settlement
annuity obligations, which provide guaranteed levels of return or
benefits to contractholders. The separate account assets supporting
these obligations, which are legally segregated and are not subject to
claims that arise out of any other business of the Company, are carried
at amortized cost. Earnings on structured settlement contracts,
generally net investment income less policyholder benefits and operating
expenses, are included in other revenues.
In addition, the Company has other separate accounts, representing funds
for which investment income and investment gains and losses accrue
directly to, and investment risk is borne by, the contractholders. Each
of these accounts have specific investment objectives. The assets and
liabilities of these accounts are carried at market value, and amounts
assessed to the contractholders for management services are included in
revenues. Deposits, net investment income and realized investment gains
and losses for these accounts are excluded from revenues, and related
liability increases are excluded from benefits and expenses.
Deferred Acquisition Costs and Value of Insurance In Force
Costs of acquiring individual life insurance and annuity business,
principally commissions and certain expenses related to policy issuance,
underwriting and marketing, all of which vary with and are primarily
related to the production of new business, are deferred. Acquisition
costs relating to traditional life insurance are amortized over the
period of anticipated premiums; universal life in relation to estimated
gross profits; and annuity contracts employing a level yield method. A
10- to 25-year amortization period is used for life insurance, and a 10-
to 15-year period is employed for annuities. Deferred acquisition costs
are reviewed periodically for recoverability to determine if any
adjustment is required.
The value of insurance in force represents the actuarially determined
present value of anticipated profits to be realized from annuities
contracts at the date of the Merger using the same assumptions that were
used for computing related liabilities where appropriate. The value of
insurance in force was the actuarially determined present value of the
projected future profits discounted at an interest rate of 16% for the
business acquired. The value of the business in force is amortized over
the contract period using current interest crediting rates to accrete
interest and using an amortization method based on a level yield method.
The value of insurance in force is reviewed periodically for
recoverability to determine if any adjustment is required.
Future Policy Benefits
Benefit reserves represent liabilities for future insurance policy
benefits. Benefit reserves for life insurance and annuity policies have
been computed based upon mortality, morbidity, persistency and interest
assumptions applicable to these coverages, which range from 4.5% to
7.5%, including a provision for adverse deviation. These assumptions
consider Company experience and industry standards and may be revised if
it is determined that the future experience will differ substantially
from that previously assumed. The assumptions vary by plan, age at
issue, year of issue and duration.
14
<PAGE> 60
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Contractholder Funds
Contractholder funds represent receipts from the issuance of universal
life and certain individual annuity contracts. Such receipts are
considered deposits on investment contracts that do not have substantial
mortality or morbidity risk. Account balances are also increased by
interest credited and reduced by withdrawals, mortality charges and
administrative expenses charged to the contractholders. Calculations of
contractholder account balances reflect lapse, withdrawal and interest
rate assumptions based on contract provisions, the Company's experience
and industry standards. Interest rates credited to contractholder funds
range from 4.2% to 6.5%.
Permitted Statutory Accounting Practices
The Company, domiciled in the State of Connecticut, prepares statutory
financial statements in accordance with the accounting practices
prescribed or permitted by the State of Connecticut Insurance
Department. Prescribed statutory accounting practices include a variety
of publications of the National Association of Insurance Commissioners
as well as state laws, regulations, and general administrative rules.
Permitted statutory accounting practices encompass all accounting
practices not so prescribed. The impact of any permitted accounting
practices on the statutory surplus of the Company is not material.
Premiums
Premiums are recognized as revenues when due. Reserves are established
for the portion of premiums that will be earned in future periods.
Other Revenues
Other revenues include surrender, mortality and administrative charges
and fees as earned on investment and other insurance contracts. Other
revenues also include structured settlement policyholder revenues, which
relate to contracts issued through a separate account of the Company,
net of the related policyholder benefits and expenses.
Federal Income Taxes
The provision for federal income taxes is comprised of two components,
current income taxes and deferred income taxes. Deferred federal income
taxes arise from changes during the year in cumulative temporary
differences between the tax basis and book basis of assets and
liabilities. The deferred federal income tax asset is recognized to the
extent that future realization of the tax benefit is more likely than
not, with a valuation allowance for the portion that is not likely to be
recognized.
15
<PAGE> 61
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Accounting Standards not yet Adopted
Statement of Financial Accounting Standards No. 121, "Accounting for
Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
establishes accounting standards for the impairment of long-lived
assets, certain identifiable intangibles, and goodwill related to those
assets to be held and used and for long-lived assets and certain
identifiable intangibles to be disposed of. This statement requires the
write down to fair value when long-lived assets to be held and used are
impaired. It also requires long-lived assets to be disposed of (e.g.,
real estate held for sale) to be carried at the lower of cost or fair
value less cost to sell and does not allow such assets to be
depreciated. The adoption of this statement, effective January 1, 1996,
did not have a material effect on results of operations, financial
condition or liquidity.
In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" (FAS 123). This statement addresses
alternative accounting treatments for stock-based compensation, such as
stock options and restricted stock. FAS 123 permits either expensing
the value of stock-based compensation over the period earned or
disclosing in the financial statement footnotes the pro forma impact to
net income as if the value of stock-based compensation awards had been
expensed. The value of awards would be measured at the grant date based
upon estimated fair value, using option pricing models. The
requirements of this statement will be effective for 1996 financial
statements, although earlier adoption is permissible if an entity elects
to expense the cost of stock-based compensation. The Company, along
with affiliated companies, participates in stock option and incentive
plans sponsored by Travelers. The Company is currently evaluating the
disclosure requirements and expense recognition alternatives addressed
by this statement.
3. CHANGES IN ACCOUNTING PRINCIPLES
Accounting by Creditors for Impairment of a Loan
Effective January 1, 1995, the Company adopted Statement of Financial
Accounting Standards No. 114, "Accounting by Creditors for Impairment of
a Loan," and Statement of Financial Accounting Standards No. 118,
"Accounting by Creditors for Impairment of a Loan - Income Recognition
and Disclosures," which describe how impaired loans should be measured
when determining the amount of a loan loss accrual. These statements
amended existing guidance on the measurement of restructured loans in a
troubled debt restructuring involving a modification of terms. Their
adoption did not have a material impact on the Company's financial
condition, results of operations or liquidity.
Accounting for Certain Debt and Equity Securities
Effective January 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities" (FAS 115), which addresses accounting and
reporting for investments in equity securities that have a readily
determinable fair value and for all debt securities. Investment
securities have been classified as "available for sale" and are reported
at fair value, with unrealized gains and losses, net of income taxes,
charged or credited directly to shareholder's equity. Previously,
securities classified as available for sale were carried at the lower of
aggregate cost or market value. Initial adoption of this standard
resulted in an increase of approximately $530 thousand (net of taxes) to
net unrealized gains in shareholder's equity. See note 12 for
additional disclosures.
16
<PAGE> 62
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
4. REINSURANCE
The Company participates in reinsurance in order to limit losses,
minimize exposure to large risks, provide capacity for future growth and
to effect business-sharing arrangements. The Company remains primarily
liable as the direct insurer on all risks reinsured.
Life insurance in force ceded to affiliates at December 31, 1995 and
1994 was $97.7 million and $106.0 million, respectively. At December
31, 1995 and 1994, $601.2 million and $0, respectively, was ceded to
non-affiliates.
5. SHAREHOLDER'S EQUITY
Unrealized Investment Gains (Losses)
An analysis of the change in unrealized gains and losses on investments
is shown in note 12.
Additional Paid-in Capital
As a result of the finalization of the evaluations and appraisals used
to assign fair value to assets and liabilities under purchase
accounting, additional paid-in capital was increased by $1.3 million in
1994. It was decreased by $70.4 million in 1993 based upon the initial
evaluations and appraisals.
Shareholder's Equity and Dividend Availability
Statutory net income was $23.0 million and $5.7 million for the years
ended December 31, 1995 and 1994, respectively. Statutory net loss was
$23.0 million for the year ended December 31, 1993.
Statutory capital and surplus was $257.8 million and $233.0 million at
December 31, 1995 and 1994, respectively.
The Company is currently subject to various regulatory restrictions that
limit the maximum amount of dividends available to be paid to its parent
without prior approval of insurance regulatory authorities. Statutory
surplus of $16.4 million is available in 1996 for dividend payments by
the Company without prior approval of the Connecticut Insurance
Department.
17
<PAGE> 63
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
6. DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company has, in the normal course of business, provided fixed rate
loan commitments and commitments to partnerships. The Company does not
hold or issue derivative instruments for trading purposes.
The off-balance-sheet risks of fixed rate loan commitments, commitments
to partnerships and forward contracts were not significant at December
31, 1995 and 1994.
Fair Value of Certain Financial Instruments
The Company uses various financial instruments in the normal course of
its business. Fair values of financial instruments which are considered
insurance contracts are not required to be disclosed and are not
included in the amounts discussed.
At December 31, 1995, investments in fixed maturities had a carrying
value and a fair value of $724.6 million, compared with a carrying value
and a fair value of $559.1 million at December 31, 1994. See note 12.
At December 31, 1995 and 1994, mortgage loans had a carrying value of
$125.8 million and $152.4 million, respectively, which approximates fair
value. In estimating fair value, the Company used interest rates
reflecting the higher returns required in the real estate financing
market.
The carrying values of $1.9 million and $2.4 million of financial
instruments classified as other assets approximated their fair values at
December 31, 1995 and 1994, respectively. The carrying values of $55.3
million and $14.2 million of financial instruments classified as other
liabilities also approximated their fair values at December 31, 1995 and
1994, respectively. Fair value is determined using various methods
including discounted cash flows, as appropriate for the various
financial instruments.
The assets of separate accounts providing a guaranteed return had a
carrying value and a fair value of $869.1 million and $923.0 million,
respectively, at December 31, 1995, compared to a carrying value and a
fair value of $820.4 million and $757.2 million, respectively, at
December 31, 1994. The liabilities of separate accounts providing a
guaranteed return had a carrying value and a fair value of $839.1
million and $766.3 million, respectively, at December 31, 1995, compared
to a carrying value and a fair value of $808.2 million and $681.4
million, respectively, at December 31, 1994.
The carrying values of short-term securities and investment income
accrued approximated their fair values.
18
<PAGE> 64
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
7. COMMITMENTS AND CONTINGENCIES
Financial Instruments with Off-Balance-Sheet Risk
See note 6 for a discussion of financial instruments with off-balance-
sheet risk.
Litigation
The Company is a defendant in various litigation matters. Although
there can be no assurances, as of December 31, 1995, the Company
believes, based on information currently available, that the ultimate
resolution of these legal proceedings would not be likely to have a
material adverse effect on its results of operations, financial
condition or liquidity.
8. BENEFIT PLANS
Pension Plans
The Company participates in qualified and nonqualified, noncontributory
defined benefit pension plans sponsored by an affiliate. Benefits for
the qualified plan are based on an account balance formula. Under this
formula, each employee's accrued benefit can be expressed as an account
that is credited with amounts based upon the employee's pay, length of
service and a specified interest rate, all subject to a minimum benefit
level. This plan is funded in accordance with the Employee Retirement
Income Security Act of 1974 and the Internal Revenue Code. For the
nonqualified plan, contributions are based on benefits paid. The
Company's share of net pension expense was not significant for 1995,
1994 or 1993.
Other Benefit Plans
In addition to pension benefits, the Company provides certain health
care and life insurance benefits for retired employees through a plan
sponsored by TIGI. Covered employees may become eligible for these
benefits if they reach retirement age while working for the Company.
These retirees may elect certain prepaid health care benefit plans.
Life insurance benefits generally are set at a fixed amount. The cost
recognized by the Company for these benefits represents its allocated
share of the total costs of the plan, net of employee contributions.
The Company's share of the total cost of the plan for 1995, 1994 and
1993 was not significant.
The Merger resulted in a change in control of The Travelers Corporation
as defined in the applicable plans, and provisions of some employee
benefit plans secured existing compensation and benefit entitlements
earned prior to the change in control, and provided a salary and benefit
continuation floor for employees whose employment was affected. These
merger-related costs were assumed by TIGI.
19
<PAGE> 65
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
8. BENEFIT PLANS
Savings, Investment and Stock Ownership Plan
Under the savings, investment and stock ownership plan available to
substantially all employees of TIGI, the Company matches a portion of
employee contributions. Effective April 1, 1993, the match decreased
from 100% to 50% of an employee's first 5% contribution and a variable
match based on the profitability of TIGI and its subsidiaries was added.
The Company's matching obligation was not significant for 1995, 1994 or
1993.
9. RELATED PARTY TRANSACTIONS
The principal banking functions, including payment of salaries and
expenses, for certain subsidiaries and affiliates of TIGI, including the
Company, are handled by TIC. Settlements for these functions between
TIC and its affiliates are made regularly. TIC provides various
employee benefit coverages to certain subsidiaries of TIGI. The
premiums for these coverages were charged in accordance with cost
allocation procedures based upon salaries or census. In addition,
investment advisory and management services, data processing services
and claims processing services are provided by affiliated companies.
Charges for these services are shared by the companies on cost
allocation methods based generally on estimated usage by department.
TIGI and its subsidiaries maintain a short-term investment pool in which
the Company participates. The position of each company participating in
the pool is calculated and adjusted daily. At December 31, 1995 and
1994, the pool totaled approximately $2.2 billion and $1.5 billion,
respectively. The Company's share of the pool amounted to $49.5 million
and $44.5 million at December 31, 1995 and 1994, respectively, and is
included in short-term securities in the balance sheet.
The Company's TTM Modified Guaranteed Annuity Contracts are subject to a
limited guarantee agreement by TIC in a principal amount of up to $100
million. TIC's obligation is to pay in full to any owner or beneficiary
of the TTM Modified Guaranteed Annuity Contracts principal and interest
as and when due under the annuity contract to the extent that the
Company fails to make such payment. In addition, TIC guarantees that
the Company will maintain a minimum statutory capital and surplus level.
The Company sells structured settlement annuities to its affiliates, The
Travelers Indemnity Company and its subsidiaries. Such deposits were
$36.6 million, $37.6 million and $48.4 million for 1995, 1994 and 1993,
respectively.
The Company began marketing variable annuity products through its
affiliate, Smith Barney, Inc., in 1995. Deposits related to these
products were $20.5 million in 1995.
Most leasing functions for TIGI and its subsidiaries are handled by TIC.
Leasing expenses are shared by the companies on a cost allocation method
based generally on estimated usage by department.
20
<PAGE> 66
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
10. FEDERAL INCOME TAXES
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
(in thousands) 1995 1994 | 1993
----------------------------------------------------------------------------|-------------
<S> <C> <C> | <C>
Effective tax rate |
------------------ |
|
Income before federal income taxes $ 43,436 $ 27,865 | $ 13,061
Statutory tax rate 35% 35% | 35%
----------------------------------------------------------------------------|-------------
|
Expected federal income taxes $ 15,203 $ 9,753 | $ 4,571
Tax effect of: |
Nontaxable investment income (13) (90) | (85)
Adjustments to benefit and other reserves - (117) | (4,705)
Adjustment to deferred tax asset for |
enacted change in tax rates from |
34% to 35% - - | (255)
Other, net (671) (6) | (74)
----------------------------------------------------------------------------|-------------
Federal income taxes $ 14,519 $ 9,540 | $ (548)
----------------------------------------------------------------------------|-------------
|
Effective tax rate 33% 34% | (4)%
----------------------------------------------------------------------------|-------------
|
Composition of federal income taxes |
----------------------------------- |
Current: |
United States $ 2,555 $ 4,742 | $ 22,124
----------------------------------------------------------------------------|-------------
|
Deferred: |
United States 11,964 4,798 | (22,672)
----------------------------------------------------------------------------|-------------
Federal income taxes $ 14,519 $ 9,540 | $ (548)
------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE> 67
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
10. FEDERAL INCOME TAXES, Continued
The net deferred tax assets at December 31, 1995 and 1994 were comprised
of the tax effects of temporary differences related to the following
assets and liabilities:
<TABLE>
<CAPTION>
(in thousands) 1995 1994
-----------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Benefit, reinsurance and other reserves $ 67,104 $ 70,729
Investments - 30,908
Other 2,570 2,766
-----------------------------------------------------------------------------------------------
Total 69,674 104,403
-----------------------------------------------------------------------------------------------
Deferred tax liabilities:
Investments 19,625 -
Deferred acquisition costs and
value of insurance in force 6,285 7,355
Other 536 663
-----------------------------------------------------------------------------------------------
Total 26,446 8,018
-----------------------------------------------------------------------------------------------
Net deferred tax asset before valuation allowance 43,228 96,385
Valuation allowance for deferred tax assets (2,070) (2,070)
-----------------------------------------------------------------------------------------------
Net deferred tax asset after valuation allowance $ 41,158 $ 94,315
-----------------------------------------------------------------------------------------------
</TABLE>
Starting in 1994 and continuing for at least five years, TIC and its
life insurance subsidiaries, including the Company, will file a
consolidated federal income tax return. Federal income taxes are
allocated to each member on a separate return basis adjusted for credits
and other amounts required by the consolidation process. Any resulting
liability will be paid currently to TIC. Any credits for losses will be
paid by TIC to the extent that such credits are for tax benefits that
have been utilized in the consolidated federal income tax return.
A net deferred tax asset valuation allowance of $2.1 million has been
established to reduce the deferred tax asset on investment losses to the
amount that, based upon available evidence, is more likely than not to
be realized. Reversal of the valuation allowance is contingent upon the
recognition of future capital gains in the Company's consolidated life
insurance company federal income tax return through 1998, and the
consolidated federal income tax return of Travelers commencing in 1999,
or a change in circumstances which causes the recognition of the
benefits to become more likely than not. There was no change in the
valuation allowance during 1995. The initial recognition of any benefit
provided by the reversal of the valuation allowance will be recognized
by reducing goodwill.
22
<PAGE> 68
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
10. FEDERAL INCOME TAXES, Continued
In management's judgment, the $41.2 million "net deferred tax asset after
valuation allowance" as of December 31, 1995, is fully recoverable
against expected future years' taxable ordinary income and capital gains.
At December 31, 1995, the Company has no ordinary or capital loss
carryforwards.
The "policyholders surplus account", which arose under prior tax law, is
generally that portion of the gain from operations that has not been
subjected to tax, plus certain deductions. The balance of this account,
which, under provisions of the Tax Reform Act of 1984, will not increase
after 1983, is estimated to be $2.0 million. This amount has not been
subjected to current income taxes but, under certain conditions that
management considers to be remote, may become subject to income taxes in
future years. At current rates, the maximum amount of such tax (for
which no provision has been made in the financial statements) would be
approximately $700 thousand.
11. NET INVESTMENT INCOME
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
(For the year ended December 31, in thousands) 1995 1994 | 1993
---------------------------------------------------------------------------------|--------------
<S> <C> <C> | <C>
Gross investment income |
----------------------- |
Fixed maturities $ 49,486 $ 44,354 | $ 39,189
Equity securities 497 827 | 930
Mortgage loans 11,644 17,178 | 25,258
Real estate held for sale 2,476 6,299 | 19,028
Other 2,552 4,480 | (4,062)
---------------------------------------------------------------------------------|--------------
66,655 73,138 | 80,343
---------------------------------------------------------------------------------|--------------
|
Investment expenses 3,446 7,045 | 22,299
---------------------------------------------------------------------------------|--------------
Net investment income $ 63,209 $ 66,093 | $ 58,044
------------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE> 69
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
12. INVESTMENTS AND INVESTMENT GAINS (LOSSES)
Realized investment gains (losses) for the periods were as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
(For the year ended December 31, in thousands) 1995 1994 | 1993
----------------------------------------------------------------------------------|-------------
<S> <C> <C> | <C>
Realized |
-------- |
|
Fixed maturities $ (4,240) $ (908) | $ 8,659
Equity securities 6,138 1,675 | 1,580
Mortgage loans 725 36 | (1,564)
Real estate held for sale (35) - | (8,310)
Other 16,125 (2,877) | 11,590
----------------------------------------------------------------------------------|-------------
Realized investment gains (losses) $ 18,713 $ (2,074) | $ 11,955
------------------------------------------------------------------------------------------------
</TABLE>
Changes in net unrealized investment gains (losses) that are included
as a separate component of shareholder's equity were as follows:
<TABLE>
<CAPTION>
(For the year ended December 31, in thousands) 1995 1994 1993
------------------------------------------------------------------------------------------------
<S> <C> <C> | <C>
Unrealized |
---------- |
|
Fixed maturities $ 111,551 $ (65,205) | $ (20,059)
Equity securities 1,834 (27) | (1,389)
Other 4,390 (28) | 8,524
----------------------------------------------------------------------------------|-------------
117,775 (65,260) | (12,924)
Related taxes 41,221 (22,841) | (3,445)
----------------------------------------------------------------------------------|-------------
Change in unrealized investment gains (losses) 76,554 (42,419) | (9,479)
Balance beginning of year (41,224) 1,195 | 10,674
------------------------------------------------------------------------------------------------
Balance end of year $ 35,330 $ (41,224) $ 1,195
------------------------------------------------------------------------------------------------
</TABLE>
The initial adoption of FAS 115 resulted in an increase of approximately
$530 thousand (net of taxes) to net unrealized investment gains in 1994.
Fixed Maturities
Proceeds from sales of fixed maturities classified as available for sale
were $460.0 million and $41.7 million in 1995 and 1994, respectively.
Gross gains of $7.9 million and $869 thousand and gross losses of $10.3
million and $1.9 million in 1995 and 1994, respectively, were realized
on those sales.
24
<PAGE> 70
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
12. INVESTMENTS AND INVESTMENT GAINS (LOSSES), Continued
Prior to December 31, 1993, fixed maturities that were intended to be
held to maturity were recorded at amortized cost and classified as held
for investment. Proceeds from sales of such securities were $16.4
million in 1993, resulting in gross realized gains of $617 thousand.
Prior to December 31, 1993, the carrying values of the trading portfolio
fixed maturities were adjusted to market value as it was likely they
would be sold prior to maturity. Sales of trading portfolio fixed
maturities were $96.6 million in 1993, resulting in gross realized gains
of $12.4 million.
The amortized cost and market values of investments in fixed maturities
were as follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
December 31, 1995
------------------------------------------------------------------------------------------------
Gross Gross
Amortized unrealized unrealized Market
(in thousands) cost gains losses value
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Available for sale:
Mortgage-backed securities -
CMOs and pass through
securities $ 89,044 $ 2,545 $ 378 $ 91,211
U.S. Treasury securities
and obligations of U.S.
Government and
government agencies
and authorities 160,988 24,267 1 185,254
Obligations of states and
political subdivisions 3,500 499 - 3,999
All other corporate bonds 424,676 21,576 2,162 444,090
Redeemable preferred stock 85 - - 85
------------------------------------------------------------------------------------------------
Total $ 678,293 $ 48,887 $ 2,541 $ 724,639
------------------------------------------------------------------------------------------------
</TABLE>
25
<PAGE> 71
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
12. INVESTMENTS AND INVESTMENT GAINS (LOSSES), Continued
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
December 31, 1994
------------------------------------------------------------------------------------------------
Gross Gross
Amortized unrealized unrealized Market
(in thousands) cost gains losses value
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Available for sale:
Mortgage-backed securities -
CMOs and pass through
securities $ 60,102 $ 14 $ 4,624 $ 55,492
U.S. Treasury securities
and obligations of U.S.
Government and
government agencies
and authorities 188,043 25 24,301 163,767
Obligations of states and
political subdivisions 3,000 - 184 2,816
Debt securities issued by
foreign governments 20,076 - 2,157 17,919
All other corporate bonds 352,197 1,140 35,055 318,282
Redeemable preferred stock 929 13 76 866
------------------------------------------------------------------------------------------------
Total $ 624,347 $ 1,192 $ 66,397 $ 559,142
------------------------------------------------------------------------------------------------
</TABLE>
The amortized cost and market value of fixed maturities available for
sale at December 31, 1995, by contractual maturity, are shown below.
Actual maturities will differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
Maturity Amortized Market
(in thousands) cost value
------------------------------------------------------------------------------------------------
<S> <C> <C>
Due in one year or less $ 7,858 $ 8,245
Due after 1 year through 5 years 28,392 29,022
Due after 5 years through 10 years 172,831 178,526
Due after 10 years 380,168 417,635
------------------------------------------------------------------------------------------------
589,249 633,428
Mortgage-backed securities 89,044 91,211
------------------------------------------------------------------------------------------------
Total $ 678,293 $ 724,639
------------------------------------------------------------------------------------------------
</TABLE>
The Company makes significant investments in collateralized mortgage
obligations (CMOs). CMOs typically have high credit quality, offer good
liquidity, and provide a significant advantage in yield and total return
compared to U.S. Treasury securities. The Company's investment strategy
is to purchase CMO tranches which are protected against prepayment risk,
primarily planned amortization class (PAC) tranches. Prepayment
protected tranches are preferred because they provide stable cash flows
in a variety of scenarios. The Company does invest in other types of
CMO tranches if a careful assessment indicates a favorable risk/return
tradeoff. The Company does not purchase residual interests in CMOs.
26
<PAGE> 72
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
12. INVESTMENTS AND INVESTMENT GAINS (LOSSES), Continued
At December 31, 1995 and 1994, the Company held CMOs with a market value
of $68.6 million and $55.5 million, respectively. Approximately 94% and
96% of the Company's CMO holdings are fully collateralized by
GNMA, FNMA or FHLMC securities at December 31, 1995 and 1994,
respectively. Virtually all of these securities are rated AAA.
Equity Securities
The cost and market values of investments in equity securities were as
follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
December 31, 1995
------------------------------------------------------------------------------------------------
Gross Gross
unrealized unrealized Market
(in thousands) Cost gains losses value
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stocks $ 3,310 $ 3,374 $ 68 $ 6,616
Nonredeemable preferred stocks 6,143 340 - 6,483
------------------------------------------------------------------------------------------------
Total $ 9,453 $ 3,714 $ 68 $ 13,099
------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
December 31, 1994
------------------------------------------------------------------------------------------------
Gross Gross
unrealized unrealized Market
(in thousands) Cost gains losses value
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common stocks $ 6,141 $ 3,177 $ 654 $ 8,664
Nonredeemable preferred stocks 8,111 7 718 7,400
------------------------------------------------------------------------------------------------
Total $ 14,252 $ 3,184 $ 1,372 $ 16,064
------------------------------------------------------------------------------------------------
</TABLE>
Proceeds from sales of equity securities were $11.8 million and $9.4
million in 1995 and 1994, respectively. Gross gains of $4.9 million and
$2.8 million and gross losses of $474 thousand and $369 thousand in
1995 and 1994, respectively, were realized on those sales.
Mortgage loans and real estate held for sale
Underperforming assets include delinquent mortgage loans, loans in the
process of foreclosure, foreclosed loans and loans modified at interest
rates below market. The Company continues its strategy, adopted in
conjunction with the Merger, to dispose of these real estate assets and
some of the mortgage loans and to reinvest the proceeds to obtain
current market yields.
27
<PAGE> 73
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
12. INVESTMENTS AND INVESTMENT GAINS (LOSSES), Continued
At December 31, 1995 and 1994, the Company's mortgage loan and real
estate held for sale portfolios consisted of the following:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
(in thousands) 1995 1994
------------------------------------------------------------------------------
<S> <C> <C>
Current mortgage loans $ 108,142 $ 134,868
Underperforming mortgage loans 17,671 17,491
------------------------------------------------------------------------------
Total 125,813 152,359
------------------------------------------------------------------------------
Real estate held for sale 8,995 6,810
------------------------------------------------------------------------------
Total $ 134,808 $ 159,169
------------------------------------------------------------------------------
</TABLE>
Aggregate annual maturities on mortgage loans at December 31, 1995 are
as follows:
<TABLE>
<CAPTION>
(in thousands)
-----------------------------------------------------
<S> <C>
Past maturity $ 3,437
1996 21,927
1997 5,966
1998 21,237
1999 9,700
2000 6,016
Thereafter 57,530
-----------------------------------------------------
Total $ 125,813
-----------------------------------------------------
</TABLE>
Concentrations
At December 31, 1995 and 1994, the Company had no concentration of
credit risk in a single investee exceeding 10% of shareholder's equity.
The Company participates in a short-term investment pool maintained by
TIGI and its subsidiaries. See note 9.
Included in fixed maturities are below investment grade assets totaling
$59.0 million and $51.1 million at December 31, 1995 and 1994,
respectively. The Company defines its below investment grade assets as
those securities rated "Ba1" or below by external rating agencies, or
the equivalent by internal analysts when a public rating does not exist.
Such assets include publicly traded below investment grade bonds and
certain other privately issued bonds that are classified as below
investment grade loans.
28
<PAGE> 74
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
12. INVESTMENTS AND INVESTMENT GAINS (LOSSES), Continued
The Company also had significant concentrations of investments,
primarily fixed maturities, in the following industries:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
(in thousands) 1995 1994
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Oil and gas $ 63,835 $ 39,749
Transportation 44,119 38,523
Banking 33,168 42,191
Chemical manufacturing 16,032 27,326
--------------------------------------------------------------------------------------------------
</TABLE>
Below investment grade assets included in the totals of the previous
table were as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
(in thousands) 1995 1994
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Oil and gas $ 3,469 $ 4,002
Transportation 18,648 2,678
Banking 632 5,124
--------------------------------------------------------------------------------------------------
</TABLE>
Concentrations of mortgage loans by property type at December 31, 1995
and 1994 were as follows:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
(in thousands) 1995 1994
-------------------------------------------------------------------------------------------------
<S> <C> <C>
Office $ 32,024 $ 40,559
Agricultural 29,820 32,890
Retail 27,870 31,712
-------------------------------------------------------------------------------------------------
</TABLE>
The Company monitors creditworthiness of counterparties to all financial
instruments by using controls that include credit approvals, limits and
other monitoring procedures. Collateral for fixed maturities often
includes pledges of assets, including stock and other assets, guarantees
and letters of credit. The Company's underwriting standards with
respect to new mortgage loans generally require loan to value ratios of
75% or less at the time of mortgage origination.
29
<PAGE> 75
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
12. INVESTMENTS AND INVESTMENT GAINS (LOSSES), Continued
Investment Valuation Reserves
There were no investment valuation reserves at December 31, 1995, 1994
and 1993. Investment valuation reserve activity during 1993 was as
follows:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
(in thousands) 1993
------------------------------------------------------------------------------------------------
<S> <C>
Beginning of year $ 41,443
Increase 8,355
Impairments, net of gains/recoveries (6,887)
Purchase accounting adjustment (42,911)
------------------------------------------------------------------------------------------------
End of year $ -
------------------------------------------------------------------------------------------------
</TABLE>
Increases in the investment valuation reserves were reflected as
realized investment losses.
Nonincome Producing
Investments included in the balance sheets that were nonincome producing
for the preceding 12 months were insignificant.
Restructured Investments
The Company had mortgage loan and debt securities which were restructured
at below market terms totaling approximately $17.7 million and $17.4
million at December 31, 1995 and 1994, respectively. At December 31,
1993, the Company's restructured assets were recorded at purchase
accounting value. The new terms typically defer a portion of contract
interest payments to varying future periods. The accrual of interest is
suspended on all restructured assets, and interest income is reported
only as payment is received. Gross interest income on restructured
assets that would have been recorded in accordance with the original
terms of such assets amounted to $4.9 million in 1995 and $5.2 million in
1994. Interest on these assets, included in net investment income,
aggregated $2.0 million in 1995 and $1.4 million in 1994.
30
<PAGE> 76
THE TRAVELERS LIFE AND ANNUITY COMPANY
NOTES TO FINANCIAL STATEMENTS, Continued
13. LIFE AND ANNUITY DEPOSIT FUNDS AND RESERVES
At December 31, 1995, the Company had $683.0 million of life and annuity
deposit funds and reserves. Of that total, $671.2 million were not
subject to discretionary withdrawal based on contract terms. The
remaining $11.8 million were life and annuity products that were subject
to discretionary withdrawal by the contractholders. Included in the
amount that is subject to discretionary withdrawal were $8.2 million of
liabilities that are surrenderable with market value adjustments. An
additional $3.6 million of the life insurance and individual annuity
liabilities are subject to discretionary withdrawals with an average
surrender charge of 6.6%. The life insurance risks would have to be
underwritten again if transferred to another carrier, which is considered
a significant deterrent for long-term policyholders. Insurance
liabilities that are surrendered or withdrawn from the Company are
reduced by outstanding policy loans and related accrued interest prior to
payout.
14. RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES
The following table reconciles net income to net cash provided by (used
in) operating activities:
<TABLE>
<CAPTION>
(For the year ended December 31, in thousands) 1995 1994 1993
-------------------------------------------------------------------------------------------------------
<S> <C> <C> | <C>
Net income $ 28,917 $ 18,325 | $ 13,609
Reconciling adjustments |
Realized (gains) losses (18,713) 2,074 | (11,955)
Deferred federal income taxes 11,964 4,798 | (22,672)
Amortization of deferred policy acquisition costs and |
value of insurance in force 1,563 - | -
Deferred policy acquisition costs (3,109) (21,014) | -
Investment income accrued (819) 1,085 | (9,607)
Insurance reserves (20,081) (16,062) | 80,238
Trading account investments, (purchases) sales, net - - | 35,093
Other (48,353) 18,371 | (80,398)
-----------------------------------------------------------------------------------------|-------------
|
Net cash provided by (used in) operating activities $ (48,631) $ 7,577 | $ 4,308
-------------------------------------------------------------------------------------------------------
</TABLE>
15. NONCASH INVESTING AND FINANCING ACTIVITIES
Significant noncash investing and financing activities include: a) the
transfer of $2.6 million and $5.6 million of mortgage loans and real
estate held for sale from one of the Company's separate accounts to the
general account in 1995 and 1994, respectively; b) acquisition of real
estate through foreclosures of mortgage loans amounting to $10.3 million
and $7.7 million in 1994 and 1993, respectively; and c) increases in
investment valuation reserves in 1993 for mortgage loans and real estate
held for sale (see note 12).
31
<PAGE> 77
VINTAGE
STATEMENT OF ADDITIONAL INFORMATION
Individual Variable Annuity Contract
issued by
The Travelers Life and Annuity Company
One Tower Square
Hartford, Connecticut 06183
L-12540S May, 1996
8
<PAGE> 78
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) The audited financial statements of the Registrant and the Report of
Independent Accountants are contained in the Statement of Additional
Information. The financial statements of the Registrant are:
Statement of Assets and Liabilities as of December 31, 1995
Statement of Operations for the period September 25, 1995 (date
operations commenced) to December 31, 1995 Statement of
Investments as of December 31, 1995 Notes to Financial
Statements
The financial statements of The Travelers Life and Annuity Company and
the Report of Independent Accountants are contained in the Statement
of Additional Information. These financial statements include:
Statement of Operations and Retained Earnings for the years
ended December 31, 1995, 1994 and 1993
Balance Sheet as of December, 1995 and 1994
Statement of Cash Flows for the years ended December 31, 1995,
1994 and 1993
Notes to Financial Statements
(b) Exhibits
1. Resolution of The Travelers Life and Annuity Company Board of
Directors authorizing the establishment of the Registrant.
(Incorporated herein by reference to Registration Statement on
Form N-4, File No. 33-58131, filed via Edgar on March 17, 1995.)
2. Not Applicable.
3. Distribution and Management Agreement among the Registrant, The
Travelers Life and Annuity Company and Tower Square Securities,
Inc. (Incorporated herein by reference to Exhibit 3 to
Pre-Effective Amendment No. 1 to the Registration Statement on
Form N-4, filed September 8, 1995.)
4. Variable Annuity Contracts. (Incorporated herein by reference to
Registration Statement on Form N-4, File No. 33-58131, filed via
Edgar on March 17, 1995.)
5. Form of Application. (Incorporated herein by reference to
Pre-Effective Amendment No. 1 to the Registration Statement on
Form N-4, filed September 8, 1995.)
6(a). Charter of The Travelers Life and Annuity Company, as amended on
April 10, 1990. (Incorporated herein by reference to
Registration Statement on Form N-4, File No. 33-58131, filed via
Edgar on March 17, 1995.)
<PAGE> 79
6(b). By-Laws of The Travelers Life and Annuity Company, as amended on
October 20, 1994. (Incorporated herein by reference to
Registration Statement on Form N-4, File No. 33-58131, filed via
Edgar on March 17, 1995.)
7. None.
8. None.
9. Opinion of Counsel as to the legality of securities being
registered. (Incorporated herein by reference to Registrant's
most recent Form 24f-2 Notice filed on February 29, 1995.)
10(a). Consent of Coopers & Lybrand L.L.P., Independent Accountants, to
the inclusion of their report on the audited financial
statements of the Registrant and their report on the
financial statements The Travelers Life and Annuity Company
contained in Part B of this Registration Statement, and to the
reference to such firm as "Experts" in accounting and auditing.
10(b). Consent of KPMG Peat Marwick LLP, Independent Auditors, to the
inclusion of their report on the financial statements of The
Travelers Life and Annuity Company contained in Part B of this
Registration Statement, and to the reference to their firm as
"experts" under the heading "Independent Accountants."
11. None.
12. None.
13. Schedule for Computation of Total Return Calculations -
Standardized and Non- Standardized.
15(a). Powers of Attorney authorizing Jay S. Fishman or Ernest J.
Wright as signatory for Donald T. DeCarlo and Christine B. Mead.
(Incorporated herein by reference to Exhibit 15(a) to
Pre-Effective Amendment No. 1 to the Registration Statement on
Form N-4, filed September 8, 1995.)
15(b). Powers of Attorney authorizing Jay S. Fishman or Ernest J.
Wright as a signatory for Michael A. Carpenter, Robert I. Lipp,
Charles O. Prince III, Marc P. Weill, and Irwin R. Ettinger.
(Incorporated herein by reference to Registration Statement on
Form N-4, File No. 33-58131, filed via Edgar on March 17, 1995.)
15(c). Powers of Attorney authorizing Ernest J. Wright or Kathleen A.
McGah as signatory for Jay S. Fishman or Ian R. Stuart.
<PAGE> 80
Item 25. Directors and Officers of the Depositor
<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address with Depositor
- ---------------- ---------------------------
<S> <C>
Michael A. Carpenter* Chairman, President and Chief Executive Officer
Robert I. Lipp* Director
Jay S. Fishman* Director
Charles O. Prince, III** Director
Marc P. Weill** Director and Senior Vice President
Irwin R. Ettinger** Director
Donald T. DeCarlo* Director, General Counsel and Secretary
Stuart Baritz** Senior Vice President
Jay S. Benet* Senior Vice President
George C. Kokulis* Senior Vice President
Warren H. May* Senior Vice President
Kathleen M. D'Auria* Vice President
Elizabeth Charron* Vice President
Robert Hamilton* Vice President
Ian R. Stuart* Vice President, Chief Financial Officer,
Chief Accounting Officer and Controller
Charles N. Vest* Vice President and Actuary
William H. White* Vice President and Treasurer
Bethann C. Maas* Second Vice President
Ernest J. Wright* Assistant Secretary
Kathleen A. McGah Assistant Secretary
Principal Business Address:
* The Travelers Life and Annuity Company ** Travelers Group Inc.
One Tower Square 388 Greenwich Street
Hartford, Connecticut 06183 New York, New York 10013
</TABLE>
<PAGE> 81
Item 26. Persons Controlled by or under Common Control with The Travelers(R)
Life and Annuity Company or Registrant
OWNERSHIP OF THE TRAVELERS LIFE AND ANNUITY COMPANY
<TABLE>
<CAPTION>
Company State of Organization Ownership Principal Business
- ------- ---------------------- --------- -------------------
<S> <C> <C> <C>
Travelers Group Inc. Delaware Publicly Held ----------------
Associated Madison Companies Inc. Delaware 100.00 ----------------
The Travelers Insurance Group, Inc. Connecticut 100.00 ----------------
The Travelers Insurance Company Connecticut 100.00 Insurance
The Travelers Life and Annuity Company Connecticut 100.00 Insurance
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH
THE TRAVELERS LIFE AND ANNUITY COMPANY
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AC Health Ventures, Inc. Delaware 100.00 Inactive
AMCO Biotech, Inc. Delaware 100.00 Inactive
Associated Madison Companies, Inc. Delaware 100.00 Holding company.
American National Life Insurance (T & C), Ltd. Turks and Caicos Islands 100.00 Insurance
ERISA Corporation New York 100.00 Inactive
</TABLE>
1
<PAGE> 82
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Mid-America Insurance Services, Inc. Georgia 100.00 Third party administrator
National Marketing Corporation Pennsylvania 100.00 Inactive
PFS Services, Inc. Georgia 100.00 General partner
The Travelers Insurance Group Inc. Connecticut 100.00 Holding company
Constitution Plaza, Inc. Connecticut 100.00 Real estate brokerage
KP Properties Corporation Massachusetts 100.00 Real estate
KPI 85, Inc. Massachusetts 100.00 Real estate
KRA Advisers Corporation Massachusetts 100.00 Real estate
KRP Corporation Massachusetts 100.00 Real estate
La Metropole S.A. Belgium 98.83 P-C insurance/reinsurance
Principal Financial Associates, Inc. Delaware 100.00 Inactive
Winthrop Financial Group, Inc. Delaware 100.00 Leasing company.
The Prospect Company Delaware 100.00 Investments
89th & York Avenue Corporation New York 100.00 Real estate
979 Third Avenue Corporation Delaware 100.00 Real estate
Meadow Lane, Inc. Georgia 100.00 Real estate development
Panther Valley, Inc. New Jersey 100.00 Real estate management
Prospect Management Services Company Delaware 100.00 Real estate management
The Travelers Asset Funding Corporation Connecticut 100.00 Investment adviser
</TABLE>
2
<PAGE> 83
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Travelers Capital Funding Corporation Connecticut 100.00 Furniture/equipment
The Travelers Corporation of Bermuda Limited Bermuda 99.99 Pensions
The Travelers Insurance Company Connecticut 100.00 Insurance
The Plaza Corporation Connecticut 100.00 Holding company
Joseph A. Wynne Agency California 100.00 Inactive
The Copeland Companies New Jersey 100.00 Holding company
American Odyssey Funds Management, Inc. New Jersey 100.00 Investment advisor
American Odyssey Funds, Inc. Maryland 100.00 Investment management
Copeland Administrative Services, Inc. New Jersey 100.00 Administrative services
Copeland Associates, Inc. Delaware 100.00 Fixed/variable annuities
Copeland Associates Agency of Ohio, Inc. Ohio 99.00 Fixed/variable annuities
Copeland Associates of Alabama, Inc. Alabama 100.00 Fixed/variable annuities
Copeland Associates of Montana, Inc. Montana 100.00 Fixed/variable annuities
Copeland Benefits Management Company New Jersey 51.00 Investment marketing
Copeland Equities, Inc. New Jersey 100.00 Fixed/variable annuities
H.C. Copeland Associates, Inc. of Massachusetts 100.00 Fixed annuities
Massachusetts
Copeland Financial Services, Inc. New Jersey 100.00 Investment advisory services.
Copeland Healthcare Services, Inc. New Jersey 100.00 Life insurance marketing
H.C. Copeland and Associates, Inc. of Texas Texas 100.00 Fixed/variable annuities
</TABLE>
3
<PAGE> 84
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Tower Square Securities, Inc. Connecticut 100.00 Broker dealer
The Travelers Life and Annuity Company Connecticut 100.00 Life insurance
The Travelers Marine Corporation California 100.00 General insurance brokerage
Three Parkway Inc. - I Pennsylvania 100.00 Investment real estate
Three Parkway Inc. - II Pennsylvania 100.00 Investment real estate
Three Parkway Inc. - III Pennsylvania 100.00 Investment real estate
Travelers Insurance Holdings Inc. Georgia 100.00 Holding company
AC RE, Ltd. Bermuda 100.00 Reinsurance
American Financial Life Insurance Company Texas 100.00 Insurance
Primerica Life Insurance Company Massachusetts 100.00 Life insurance
National Benefit Life Insurance Company New York 100.00 Insurance
Primerica Financial Services (Canada) Ltd. Canada 100.00 Holding company
PFSL Investments Canada Ltd. Canada 100.00 Mutual fund dealer
Primerica Financial Services Ltd. Canada 82.82 General agent
Primerica Life Insurance Company of Canada Canada 100.00 Life insurance
Travelers/Net Plus, Inc. Connecticut 100.00
The Travelers Insurance Corporation Proprietary Limited Australia 100.00 Inactive
Travelers Asset Management International Corporation New York 100.00 Investment adviser
Travelers Canada Corporation Canada 100.00 Inactive
</TABLE>
4
<PAGE> 85
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Travelers Mortgage Securities Corporation Delaware 100.00 Collateralized obligations
Travelers of Ireland Limited Ireland 99.90 Data processing
Travelers/Aetna Property Casualty Corp. Delaware 100.00 Holding company
The Aetna Casualty and Surety Company Connecticut 100.00 Insurance company
ABP Community Urban Redevelopment Corporation Connecticut 100.00
AE Development Group, Inc. Connecticut 100.00
Aetna Casualty & Surety Company of America Connecticut 100.00 Insurance company
Aetna Casualty & Surety Company of Canada Canada 100.00
Aetna Casualty & Surety Company of Illinois Illinois 100.00 Insurance company
Aetna Casualty Company of Connecticut Connecticut 100.00 Insurance company
Aetna Commercial Insurance Company Connecticut 100.00 Insurance company
Aetna Excess and Surplus Lines Company Connecticut 100.00 Insurance company
Aetna Financial Futures, Inc. Connecticut 100.00
Aetna Lloyds of Texas Insurance Company Texas 100.00 Insurance company
Aetna National Accounts U.K. Limited United Kingdom 100.00 Insurance company
Aetna Opportunity Corporation Connecticut 100.00
Aetna Property Services, Inc. Delaware 100.00
AFF, Inc. Connecticut 100.00
Axia Services, Inc. New York 100.00
</TABLE>
5
<PAGE> 86
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Farmington Management, Inc. Connecticut 100.00
The Farmington Casualty Company Connecticut 100.00 Insurance company
Urban Diversified Properties, Inc. Connecticut 100.00
The Standard Fire Insurance Company Connecticut 100.00 Insurance company
AE Properties, Inc. California 100.00
Aetna Insurance Company Connecticut 100.00 Insurance company
Aetna Insurance Company of Illinois Illinois 100.00 Insurance company
Aetna Personal Security Insurance Company Connecticut 100.00 Insurance company
Community Rehabilitation Investment Corporation Connecticut 100.00
The Automobile Insurance Company of Hartford, Connecticut 100.00 Insurance company
Connecticut
The Travelers Indemnity Company Connecticut 100.00 P-C insurance
Commercial Insurance Resources, Inc. Delaware 100.00 Holding company
Gulf Insurance Company Missouri 100.00 P-C insurance
Atlantic Insurance Company Texas 100.00 P-C insurance
Gulf Risk Services, Inc. Delaware 100.00 Claims/risk management
Gulf Underwriters Insurance Company North Carolina 100.00 P-C ins/surplus lines
Select Insurance Company Texas 100.00 P-C insurance
Countersignature Agency, Inc. Florida 100.00 Countersign ins policies
First Trenton Indemnity Company New Jersey 100.00 P-C insurance
</TABLE>
6
<PAGE> 87
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Laramia Insurance Agency, Inc. North Carolina 100.00 Flood insurance
Lynch, Ryan & Associates, Inc. Massachusetts 100.00 Cost containment
The Charter Oak Fire Insurance Company Connecticut 100.00 P-C insurance
The Parker Realty and Insurance Agency, Inc. Vermont 58.00 Real estate
The Phoenix Insurance Company Connecticut 100.00 P-C insurance
Constitution State Service Company Montana 100.00 Service company
The Travelers Indemnity Company of America Georgia 100.00 P-C insurance
The Travelers Indemnity Company of Connecticut Connecticut 100.00 Insurance
The Travelers Indemnity Company of Illinois Illinois 100.00 P-C insurance
The Premier Insurance Company of Massachusetts Massachusetts 100.00 Insurance
The Travelers Home and Marine Insurance Company Indiana 100.00 P-C insurance
The Travelers Indemnity Company of Missouri Missouri 100.00 P-C insurance
The Travelers Lloyds Insurance Company Texas 100.00 Non-life insurance
TI Home Mortgage Brokerage, Inc. Delaware 100.00 Mortgage brokerage services
TravCo Insurance Company Indiana 100.00 P-C insurance
Travelers Bond Investments, Inc. Connecticut 100.00 Bond investments
Travelers General Agency of Hawaii, Inc. Hawaii 100.00 Insurance agency
Travelers Medical Management Services Inc. Delaware 100.00 Managed care
Travelers Specialty Property Casualty Company, Inc. Connecticut 100.00 Insurance management
</TABLE>
7
<PAGE> 88
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
VIPortfolio Agency, Inc. Delaware 100.00 Insurance agency
Primerica Finance Corporation Delaware 100.00 Holding company
PFS Distributors, Inc. Georgia 100.00 General partner
PFS Investments Inc. Georgia 100.00 Broker dealer
PFS T.A., Inc. Delaware 100.00 Joint venture partner
Primerica Financial Services Home Mortgages, Inc. Georgia 100.00 Mortgage loan broker
Primerica Financial Services, Inc. Nevada 100.00 General agency
Primerica Financial Services Agency of New York 100.00 General agency licensing
New York, Inc.
Primerica Financial Services Insurance Marketing of Connecticut 100.00 General agency licensing
Connecticut, Inc.
Primerica Financial Services Insurance Marketing of Idaho 100.00 General agency licensing
Idaho, Inc.
Primerica Financial Services Insurance Marketing of Nevada 100.00 General agency licensing
Nevada, Inc.
Primerica Financial Services Insurance Marketing of Pennsylvania 100.00 General agency licensing
Pennsylvania, Inc.
Primerica Financial Services Insurance Marketing of the United States 100.00 General agency licensing
Virgin Islands, Inc. Virgin Islands
Primerica Financial Services Insurance Marketing of Wyoming 100.00 General agency licensing
Wyoming, Inc.
Primerica Financial Services Insurance Marketing, Inc. Delaware 100.00 General agency licensing
Primerica Financial Services of Alabama, Inc. Alabama 100.00 General agency licensing
Primerica Financial Services of New Mexico, Inc. New Mexico 100.00 General agency licensing
Primerica Insurance Agency of Massachusetts, Inc. Massachusetts 100.00 General agency licensing
Primerica Insurance Marketing Services of Puerto Rico 100.00 Insurance agency
Puerto Rico, Inc.
8
</TABLE>
<PAGE> 89
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Primerica Insurance Services of Louisiana 100.00 General agency licensing
Louisiana, Inc.
Primerica Insurance Services of Maryland 100.00 General agency licensing
Maryland, Inc.
Primerica Services, Inc. Georgia 100.00 Print operations
RCM Acquisition Inc. Delaware 100.00 Investments
SCN Acquisitions Company Delaware 100.00 Investments
SL&H Reinsurance, Ltd. Nevis 100.00 Reinsurance
Southwest Service Agreements, Inc. North Carolina 100.00 Warranty/service agreements
Southwest Warranty Corporation Florida 100.00 Extended automobile warranty
CCC Holdings, Inc. Delaware 100.00 Holding company
Commercial Credit Company Delaware 100.00 Holding company.
American Health and Life Insurance Company Maryland 100.00 LH&A Insurance
Brookstone Insurance Company Vermont 100.00 Insurance managers
CC Finance Company, Inc. New York 100.00 Consumer lending
CC Financial Services, Inc. Hawaii 100.00 Financial services
CCC Fairways, Inc. Delaware 100.00 Investment company
City Loan Financial Services, Inc. Ohio 100.00 Consumer finance
Commercial Credit Banking Corporation Oregon 100.00 Consumer finance
Commercial Credit Consumer Services, Inc. Minnesota 100.00 Consumer finance
Commercial Credit Corporation (AL) Alabama 100.00 Consumer finance
</TABLE>
9
<PAGE> 90
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Commercial Credit Corporation (CA) California 100.00 Consumer finance
Commercial Credit Corporation (IA) Iowa 100.00 Consumer finance
Commercial Credit of Alabama, Inc. Delaware 100.00 Consumer lending
Commercial Credit Corporation (KY) Kentucky 100.00 Consumer finance
Certified Insurance Agency, Inc. Kentucky 100.00 Insurance agency
Commercial Credit Investment, Inc. Kentucky 100.00 Investment company
National Life Insurance Agency of Kentucky, Inc. Kentucky 100.00 Insurance agency
Union Casualty Insurance Agency, Inc. Kentucky 100.00 Insurance agency
Commercial Credit Corporation (MD) Maryland 100.00 Consumer finance
Action Data Services, Inc. Missouri 100.00 Data processing
Commercial Credit Plan, Incorporated (OK) Oklahoma 100.00 Consumer finance
Commercial Credit Corporation (NY) New York 100.00 Consumer finance
Commercial Credit Corporation (SC) South Carolina 100.00 Consumer finance
Commercial Credit Corporation (WV) West Virginia 100.00 Consumer finance
Commercial Credit Corporation NC North Carolina 100.00 Consumer finance
Commercial Credit Europe, Inc. Delaware 100.00 Inactive
Commercial Credit Far East Inc. Delaware 100.00 Inactive
Commercial Credit Insurance Services, Inc. Maryland 100.00 Insurance broker
Commercial Credit Insurance Agency (P&C) of Mississippi 100.00 Insurance agency
Mississippi, Inc.
</TABLE>
10
<PAGE> 91
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Commercial Credit Insurance Agency of Alabama, Inc. Alabama 100.00 Insurance agency
Commercial Credit Insurance Agency of Kentucky, Inc. Kentucky 100.00 Insurance agency
Commercial Credit Insurance Agency of Massachusetts, Inc. Massachusetts 100.00 Insurance agency
Commercial Credit Insurance Agency of Nevada, Inc. Nevada 100.00 Credit LH&A, P-C insurance
Commercial Credit Insurance Agency of New Mexico, Inc. New Mexico 100.00 Insurance agency/Broker
Commercial Credit Insurance Agency of Ohio, Inc. Ohio 100.00 Insurance agency/broker
Commercial Credit International, Inc. Delaware 100.00 Holding company
Commercial Credit International Banking Corporation Oregon 100.00 International lending
Commercial Credit Corporation CCC Limited Canada 100.00 Second mortgage loans
Commercial Credit Services do Brazil Ltda. Brazil 99.00 Inactive
Commercial Credit Services Belgium S.A. Belgium 100.00 Inactive
Commercial Credit Limited Delaware 100.00 Inactive
Commercial Credit Loan, Inc. (NY) New York 100.00 Consumer finance
Commercial Credit Loans, Inc. (DE) Delaware 100.00 Consumer finance
Commercial Credit Loans, Inc. (OH) Ohio 100.00 Consumer finance
Commercial Credit Loans, Inc. (VA) Virginia 100.00 Consumer finance
Commercial Credit Management Corporation Maryland 100.00 Intercompany services
Commercial Credit Plan Incorporated (TN) Tennessee 100.00 Consumer finance
Commercial Credit Plan Incorporated (UT) Utah 100.00 Consumer finance
</TABLE>
11
<PAGE> 92
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Commercial Credit Plan Incorporated of Georgetown Delaware 100.00 Consumer finance
Commercial Credit Plan Industrial Loan Company Virginia 100.00 Consumer finance
Commercial Credit Plan, Incorporated (CO) Colorado 100.00 Consumer finance
Commercial Credit Plan, Incorporated (DE) Delaware 100.00 Consumer finance
Commercial Credit Plan, Incorporated (GA) Georgia 100.00 Consumer finance
Commercial Credit Plan, Incorporated (MO) Missouri 100.00 Consumer finance
Commercial Credit Securities, Inc. Delaware 100.00 Broker dealer
DeAlessandro & Associates, Inc. Delaware 100.00 Insurance consulting
Park Tower Holdings, Inc. Delaware 100.00 Holding company
CC Retail Services, Inc. Delaware 100.00 Leasing, financing
Troy Textiles, Inc. Delaware 100.00 Factoring. Company is inactive.
COMCRES, Inc. Delaware 100.00 Inactive
Commercial Credit Development Corporation Delaware 100.00 Direct loan
Myers Park Properties, Inc. Delaware 100.00 Inactive
Penn Re, Inc. North Carolina 100.00 Management company
Plympton Concrete Products, Inc. Delaware 100.00 Inactive
Resource Deployment, Inc. Texas 100.00 Management company
The Travelers Bank Delaware 100.00 Banking services
The Travelers Bank USA Delaware 100.00 Credit card bank
</TABLE>
12
<PAGE> 93
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Travelers Home Equity, Inc. North Carolina 100.00 Financial services
CC Consumer Services of Alabama, Inc. Alabama 100.00 Financial services
CC Home Lenders Financial, Inc. Georgia 100.00 Financial services
CC Home Lenders, Inc. Ohio 100.00 Financial services
Commercial Credit Corporation (TX) Texas 100.00 Consumer finance
Commercial Credit Financial of Kentucky, Inc. Kentucky 100.00 Consumer finance
Commercial Credit Financial of West Virginia 100.00 Consumer finance
West Virginia, Inc.
Commercial Credit Plan Consumer Discount Company Pennsylvania 100.00 Financial services
Commercial Credit Services of Kentucky, Inc. Kentucky 100.00 Financial services.
Travelers Home Equity Services, Inc. North Carolina 100.00 Financial services
Triton Insurance Company Missouri 100.00 P-C insurance
Verochris Corporation Delaware 100.00 Joint venture company
AMC Aircraft Corp. Delaware 100.00 Aviation
World Service Life Insurance Company Colorado 100.00 Life insurance
Greenwich Street Capital Partners, Inc. Delaware 100.00 Investments
Greenwich Street Investments, Inc. Delaware 100.00 Investments
Greenwich Street Capital Partners Offshore Holdings, Inc. Delaware 100.00 Investments
Margco Holdings, Inc. Delaware 100.00 Holding company
Berg Associates New Jersey 100.00 Inactive
</TABLE>
13
<PAGE> 94
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Berg Enterprises Realty, Inc. (NY) New York 100.00 Inactive
Dublin Escrow, Inc. California 100.00 Inactive
M.K.L. Realty Corporation New Jersey 66.67 Holding company
MRC Holdings, Inc. Delaware 100.00 Real estate
The Berg Agency, Inc. (NJ) New Jersey 100.00 Inactive
Mirasure Insurance Company, Ltd. Bermuda 100.00 Inactive
Pacific Basin Investments Ltd. Delaware 100.00 Inactive
Primerica Corporation (WY) Wyoming 100.00 Inactive
Primerica, Inc. Delaware 100.00 Name saver
RCM Capital Trust Company California 100.00 Trust company
Smith Barney Corporate Trust Company Delaware 100.00 Trust company
Smith Barney Holdings Inc. Delaware 100.00 Holding company
Mutual Management Corp. New York 100.00 Inactive
R-H Capital, Inc. Delaware 100.00 Investments
R-H Sports Enterprises Inc Georgia 100.00 Sports representation
SB Cayman Holdings I Inc. Delaware 100.00 Holding company
Greenwich (Cayman) I Limited Cayman Islands 100.00 Corporate services
Greenwich (Cayman) II Limited Cayman Islands 100.00 Corporate services
Greenwich (Cayman) III Limited Cayman Islands 100.00 Corporate services
</TABLE>
14
<PAGE> 95
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SB Cayman Holdings II Inc. Delaware 100.00 Holding company
SB Cayman Holdings III Inc. Delaware 100.00 Holding company
SB Cayman Holdings IV Inc. Delaware 100.00 Holding company
Smith Barney (Delaware) Inc. Delaware 100.00 Holding company
1345 Media Corp. Delaware 100.00 Holding company
Americas Avenue Corporation Delaware 100.00 Inactive
Corporate Realty Advisors, Inc. Delaware 100.00 Realty trust adviser
IPO Holdings Inc. Delaware 100.00 Holding company
Institutional Property Owners, Inc. V Delaware 100.00 Investments
Institutional Property Owners, Inc. VI Delaware 100.00 General partner
MLA 50 Corporation Delaware 100.00 Limited partner
MLA GP Corporation Delaware 100.00 General partner
Municipal Markets Advisors Incorporated Delaware 100.00 Public finance
SBF Corp. Delaware 100.00 Merchant banking investments
Smith Barney Acquisition Corporation Delaware 100.00 Offshore fund adviser
Smith Barney Global Capital Management, Inc. Delaware 100.00 Investment management
Smith Barney Investment, Inc. Delaware 100.00 Inactive
Smith Barney Realty, Inc. Delaware 100.00 Investments
Smith Barney Risk Investors, Inc. Delaware 100.00 Investments
</TABLE>
15
<PAGE> 96
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Smith Barney Venture Corp. Delaware 100.00 Investments
Smith Barney (Ireland) Limited Ireland 100.00 Fund management
Smith Barney Asia Inc. Delaware 100.00 Investment banking
Smith Barney Asset Management Group (Asia) Pte. Ltd. Singapore 100.00 Asset management
Smith Barney Canada Inc. Canada 100.00 Investment dealer
Smith Barney Capital Services Inc. Delaware 100.00 Derivative product transactions
Smith Barney Cayman Islands, Ltd. Cayman Islands 100.00 Securities trading
Smith Barney Commercial Corp. Delaware 100.00 Commercial credit
Smith Barney Commercial Corporation Asia Limited Hong Kong 99.00 Commodities trading
Smith Barney Europe Holdings, Ltd. United Kingdom 100.00 Holding corp.
Smith Barney Europe, Ltd. United Kingdom 100.00 Securities brokerage
Smith Barney Shearson Futures, Ltd. United Kingdom 100.00 Inactive
Smith Barney Futures Management Inc. Delaware 100.00 Commodities pool operator
Smith Barney Offshore Fund Ltd. Delaware 100.00 Commodity pool
Smith Barney Overview Fund PLC Dublin 100.00 Commodity fund
Smith Barney Inc. Delaware 100.00 Broker dealer
Institutional Property Owners, Inc. VII Delaware 100.00 Never activated
SBHU Life Agency, Inc. Delaware 100.00 Insurance brokerage
Robinson-Humphrey Insurance Services Inc. Georgia 100.00 Insurance brokerage
</TABLE>
16
<PAGE> 97
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Robinson-Humphrey Insurance Services of Alabama, Inc. Alabama 100.00 Insurance brokerage
SBHU Life & Health Agency, Inc. Delaware 100.00 Insurance brokerage
SBHU Life Agency of Arizona, Inc. Arizona 100.00 Insurance brokerage
SBHU Life Agency of Indiana, Inc. Indiana 100.00 Insurance brokerage
SBHU Life Agency of Utah, Inc. Utah 100.00 Insurance brokerage
SBHU Life Insurance Agency of Massachusetts, Inc. Massachusetts 100.00 Insurance brokerage
SBS Insurance Agency of Hawaii, Inc. Hawaii 100.00 Insurance brokerage
SBS Insurance Agency of Idaho, Inc. Idaho 100.00 Insurance brokerage
SBS Insurance Agency of Maine, Inc. Maine 100.00 Insurance brokerage
SBS Insurance Agency of Montana, Inc. Montana 100.00 Insurance brokerage
SBS Insurance Agency of Nevada, Inc. Nevada 100.00 Insurance brokerage
SBS Insurance Agency of North Carolina, Inc. North Carolina 100.00 Insurance brokerage
SBS Insurance Agency of Ohio, Inc. Ohio 100.00 Insurance brokerage
SBS Insurance Agency of South Dakota, Inc. South Dakota 100.00 Insurance brokerage
SBS Insurance Agency of Wyoming, Inc. Wyoming 100.00 Insurance brokerage
SBS Insurance Brokerage Agency of Arkansas, Inc. Arkansas 100.00 Insurance brokerage
SBS Insurance Brokers of Kentucky, Inc. Kentucky 100.00 Insurance brokerage
SBS Insurance Brokers of Louisiana, Inc. Louisiana 100.00 Insurance brokerage
SBS Insurance Brokers of New Hampshire, Inc. New Hampshire 100.00 Insurance brokerage
</TABLE>
17
<PAGE> 98
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SBS Insurance Brokers of North Dakota, Inc. North Dakota 100.00 Insurance brokerage
SBS Life Insurance Agency of Puerto Rico, Inc. Puerto Rico 100.00 Insurance brokerage
SLB Insurance Agency of Maryland, Inc. Maryland 100.00 Insurance brokerage
Smith Barney Life Agency Inc. Louisiana 100.00 Insurance brokerage
Smith Barney (France) S.A. France 100.00 Commodities trading
Smith Barney (Hong Kong) Limited Hong Kong 100.00 Broker dealer
Smith Barney (Netherlands) Inc. Delaware 100.00 Broker dealer
Smith Barney International Incorporated Oregon 100.00 Broker dealer
Smith Barney (Singapore) Pte Ltd Singapore 100.00 Commodities
Smith Barney Pacific Holdings, Inc. British Virgin 100.00 Holding company
Islands
Smith Barney (Asia) Limited Hong Kong 100.00 Broker dealer
Smith Barney (Pacific) Limited Hong Kong 100.00 Commodities dealer
Smith Barney Securities Pte Ltd Singapore 100.00 Securities brokerage
Smith Barney Research Pte. Ltd. Singapore 100.00 Inactive
The Robinson-Humphrey Company, Inc. Delaware 100.00 Broker dealer
Smith Barney Mortgage Brokers Inc. Delaware 100.00 Mortgage brokerage
Smith Barney Mortgage Capital Corp. Delaware 100.00 Mortgage-backed securities
Smith Barney Mortgage Capital Group, Inc. Delaware 100.00 Mortgage trading
Smith Barney Mutual Funds Management Inc. Delaware 100.00 Investment management
</TABLE>
18
<PAGE> 99
<TABLE>
<CAPTION>
% of Voting
Securities
Owned Directly
State of or Indirectly by Principal
Company Organization The Travelers Inc. Business
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Smith Barney Strategy Advisers Inc. Delaware 100.00 Investment management
E.C. Tactical Management S.A. Luxembourg 100.00 Investment management
Smith Barney Offshore, Inc. Delaware 100.00 Decathlon Fund advisor
Decathlon Offshore Limited Cayman Islands 100.00 Commodity fund
Smith Barney S.A. France 100.00 Commodities trading
Smith Barney Asset Management France SA France 100.00 Com. based asset management
Smith Barney Shearson (Chile) Corredora de Chile 100.00 Insurance brokerage
Seguro Limitada
Structured Mortgage Securities Corporation Delaware 100.00 Mortgage-backed securities
The Travelers Investment Management Company Connecticut 100.00 Investment advisor
Smith Barney Private Trust Company New York 100.00 Trust company.
Smith Barney Private Trust Company of Florida Florida 100.00 Trust company
Tinmet Corporation Delaware 100.00 Inactive
Travelers Services Inc. Delaware 100.00 Holding company
Tribeca Management Inc. Delaware 100.00
TRV Employees Investments, Inc. Delaware 100.00 Investments
TRV/RCM Corp. Delaware 100.00 Inactive
TRV/RCM LP Corp. Delaware 100.00 Inactive
</TABLE>
19
<PAGE> 100
Item 27. Number of Contract Owners
As of March 31, 1995, 1,200 contract owners held qualified and non-qualified
contracts offered through the Registrant.
Item 28. Indemnification
Section 33-320a of the Connecticut General Statutes ("C.G.S.") regarding
indemnification of directors and officers of Connecticut corporations provides
in general that Connecticut corporations shall indemnify their officers,
directors and certain other defined individuals against judgments, fines,
penalties, amounts paid in settlement and reasonable expenses actually incurred
in connection with proceedings against the corporation. The corporation's
obligation to provide such indemnification generally does not apply unless (1)
the individual is successful on the merits in the defense of any such
proceeding; or (2) a determination is made (by persons specified in the
statute) that the individual acted in good faith and in the best interests of
the corporation; or (3) the court, upon application by the individual,
determines in view of all of the circumstances that such person is fairly and
reasonably entitled to be indemnified, and then for such amount as the court
shall determine. With respect to proceedings brought by or in the right of the
corporation, the statute provides that the corporation shall indemnify its
officers, directors and certain other defined individuals, against reasonable
expenses actually incurred by them in connection with such proceedings, subject
to certain limitations.
C.G.S. Section 33-320a provides an exclusive remedy; a Connecticut corporation
cannot indemnify a director or officer to an extent either greater or less than
that authorized by the statute, e.g., pursuant to its certificate of
incorporation, by-laws, or any separate contractual arrangement. However, the
statute does specifically authorize a corporation to procure indemnification
insurance to provide greater indemnification rights. The premiums for such
insurance may be shared with the insured individuals on an agreed basis.
Travelers Group Inc. also provides liability insurance for its directors and
officers and the directors and officers of its subsidiaries, including the
Depositor. This insurance provides for coverage against loss from claims made
against directors and officers in their capacity as such, including, subject to
certain exceptions, liabilities under the Federal securities laws.
Rule 484 Undertaking
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liability (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 29. Principal Underwriter
(a) Tower Square Securities, Inc.
One Tower Square
Hartford, Connecticut 06183
<PAGE> 101
Tower Square Securities, Inc. also serves as principal underwriter for the
following :
The Travelers Growth and Income Stock Account for Variable Annuities
The Travelers Quality Bond Account for Variable Annuities
The Travelers Money Market Account for Variable Annuities
The Travelers Timed Growth and Income Stock Account for Variable
Annuities
The Travelers Timed Short-Term Bond Account for Variable Annuities
The Travelers Timed Aggressive Stock Account for Variable Annuities
The Travelers Timed Bond Account for Variable Annuities
The Travelers Fund U for Variable Annuities
The Travelers Fund VA for Variable Annuities
The Travelers Fund BD for Variable Annuities
The Travelers Fund ABD for Variable Annuities
The Travelers Fund ABD II for Variable Annuities
The Travelers Separate Account QP for Variable Annuities
The Travelers Separate Account QP II for Variable Annuities
The Travelers Fund UL for Variable Life Insurance
The Travelers Fund UL II for Variable Life Insurance
The Travelers Variable Life Insurance Separate Account One
The Travelers Variable Life Insurance Separate Account Three
<TABLE>
<S> <C> <C> <C>
(b) Name and Principal Positions and Offices Positions and Offices
Business Address * With Underwriter With Registrant
------------------ ---------------- -----------------
Russell H. Johnson Chairman and Chief Executive -----
Officer
Donald R. Munson, Jr. Director, President and Chief -----
Operating Officer
William F. Scully, III Member, Board of Directors, -----
Senior Vice President, Treasurer
and Chief Financial Officer
Cynthia P. Macdonald Vice President, Chief Compliance -----
Officer, Assistant Secretary
Jay S. Benet Member, Board of Directors -----
George C. Kokulis Member, Board of Directors -----
Warren H. May Member, Board of Directors -----
Kathleen A. McGah General Counsel and Secretary Assistant Secretary
Robert C. Hamilton Vice President -----
Tracey Kiff-Judson Second Vice President -----
Robin A. Jones Second Vice President -----
Whitney F. Burr Second Vice President -----
Marlene M. Ibsen Second Vice President -----
John J. Williams, Jr. Director and Assistant Compliance -----
Officer
Susan M. Curcio Director and Operations Manager -----
</TABLE>
<PAGE> 102
(cont'd)
<TABLE>
<S> <C> <C> <C>
(b) Name and Principal Positions and Offices Positions and Offices
Business Address * With Underwriter With Registrant
------------------ ---------------- -----------------
Gregory C. Macdonald Director -----
Thomas P. Tooley Director -----
Nancy S. Waldrop Assistant Treasurer -----
</TABLE>
* Principal business address: One Tower Square, Hartford,
Connecticut 06183
(c) Tower Square Securities, Inc. serves as the principal underwriter.
The compensation listed below is for the year ending December 31, 1995.
<TABLE>
<CAPTION>
Name of Net Underwriting Compensation on
Principal Discounts and Redemption or Brokerage Other
Underwriter Commissions Annuitization Commissions Compensation*
- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Tower Square $ 0 $ 0 $ 0 $ 0
Securities, Inc.
</TABLE>
(c) Not applicable.
Item 30. Location of Accounts and Records
(1) The Travelers Life and Annuity Company
One Tower Square
Hartford, Connecticut 06183
Item 31. Management Services
Not applicable.
Item 32. Undertakings
The undersigned Registrant hereby undertakes:
(a) To file a post-effective amendment to this registration statement as
frequently as is necessary to ensure that the audited financial
statements in the registration statement are never more than sixteen months
old for so long as payments under the variable annuity contracts may be
accepted;
(b) To include either (1) as part of any application to purchase a
contract offered by the prospectus, a space that an applicant can check
to request a Statement of Additional Information, or (2) a post card or
similar written communication affixed to or included in the prospectus that
the applicant can remove to send for a Statement of Additional Information;
and
(c) To deliver any Statement of Additional Information and any financial
statements required to be made available under this Form N-4 promptly
upon written or oral request.
<PAGE> 103
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it meets the requirements of Securities Act
Rule 485(b) for effectiveness of this post-effective amendment to this
Registration Statement and has duly caused this post-effective amendment to
this Registration Statement to be signed on its behalf, in the City of
Hartford, State of Connecticut, on this 22nd day of April, 1996.
THE TRAVELERS FUND BD II FOR VARIABLE ANNUITIES
(Registrant)
THE TRAVELERS LIFE AND ANNUITY COMPANY
(Depositor)
By: *IAN R. STUART
------------------------------------------
Ian R. Stuart
Vice President and Chief Financial Officer
Chief Accounting Officer and Controller
Pursuant to the requirements of the Securities Act of 1933, this post-effective
amendment to this Registration Statement has been signed below by the following
persons in the capacities indicated on April 22, 1996.
<TABLE>
<S> <C>
*MICHAEL A. CARPENTER Chairman of the Board, President and
- ------------------------------------------- and Chief Executive Officer
(Michael A. Carpenter)
*ROBERT I. LIPP Director
- -------------------------------------------
(Robert I. Lipp)
*IAN R. STUART Director
- -------------------------------------------
(Jay S. Fishman)
*CHARLES O. PRINCE III Director
- -------------------------------------------
(Charles O. Prince III)
*MARC P. WEILL Director
- -------------------------------------------
(Marc P. Weill)
*IRWIN R. ETTINGER Director
- -------------------------------------------
(Irwin R. Ettinger)
*DONALD. T. DeCARLO Director
- -------------------------------------------
(Donald T. DeCarlo)
*IAN R. STUART Vice President, Chief Financial Officer
- ------------------------------------------- Chief Accounting Officer and Controller
(Ian R. Stuart)
*By: /s/Ernest J. Wright
------------------------------------------------------
Ernest J. Wright, Attorney-in-Fact
</TABLE>
<PAGE> 104
Description of Non-Standard Returns calculations Fund BD/BD II
The Following notation will be used for a fund's prices, or unit values:
UVINCEP: Unit Value at fund inception
UV85: Unit Value at year-end, 1985. (Year-minus-10)
UV90: Unit Value at year-end, 1990. (Year-minus-5)
UV92: Unit Value at year-end, 1992. (Year-minus-3)
UV94: Unit Value at year-end, 1994. (Prior year)
UV95: Unit Value at year-end, 1995. (Current year)
ALLIANCE GROWTH STOCK
<TABLE>
<CAPTION>
UNIT VALUE RETURN
---------- ------
<S> <C> <C>
INCEPTION (06/20/94 ): 1.000000 24.42
12/85:
12/90:
12/92:
12/94: 1.047185 33.29
CURRENT 12/95: 1.395807
</TABLE>
AMCAP GROWTH STOCK
<TABLE>
<CAPTION>
UNIT VALUE RETURN
---------- ------
<S> <C> <C>
INCEPTION (06/21/94 ): 1.000000 22.48
12/85:
12/90:
12/92:
12/94: 1.038598 31.14
CURRENT 12/95: 1.361968
</TABLE>
TBC MANAGED INCOME
<TABLE>
<CAPTION>
UNIT VALUE RETURN
---------- ------
<S> <C> <C>
INCEPTION (06/28/94 ): 1.000000 9.22
12/85:
12/90:
12/92:
12/94: .996653 14.56
CURRENT 12/95: 1.141791
</TABLE>
GT GLOBAL STRATEGIC INCOME
<TABLE>
<CAPTION>
UNIT VALUE RETURN
---------- ------
<S> <C> <C>
INCEPTION (06/21/94 ): 1.000000 7.77
12/85:
12/90:
12/92:
12/94: .944948 18.60
CURRENT 12/95: 1.120662
</TABLE>
<PAGE> 105
SB HIGH INCOME
<TABLE>
<CAPTION>
UNIT VALUE RETURN
---------- ------
<S> <C> <C>
INCEPTION (06/22/94 ): 1.000000 10.40
12/85:
12/90:
12/92:
12/94: .987591 17.70
CURRENT 12/95: 1.162368
</TABLE>
SB INTERNATIONAL EQUITY
<TABLE>
<CAPTION>
UNIT VALUE RETURN
---------- ------
<S> <C> <C>
INCEPTION (06/20/94 ): 1.000000 3.27
12/85:
12/90:
12/92:
12/94: .954944 9.98
CURRENT 12/95: 1.050280
</TABLE>
SB INCOME & GROWTH
<TABLE>
<CAPTION>
UNIT VALUE RETURN
---------- ------
<S> <C> <C>
INCEPTION (06/20/94 ): 1.000000 18.21
12/85:
12/90:
12/92:
12/94: .981491 31.52
CURRENT 12/95: 1.290871
</TABLE>
SB MONEY MARKET
<TABLE>
<CAPTION>
UNIT VALUE RETURN
---------- ------
<S> <C> <C>
INCEPTION (06/20/94 ): 1.000000 3.78
12/85:
12/90:
12/92:
12/94: 1.015687 4.19
CURRENT 12/95: 1.058195
</TABLE>
PUTNAM DIVERSIFIED INCOME
<TABLE>
<CAPTION>
UNIT VALUE RETURN
---------- ------
<S> <C> <C>
INCEPTION (06/20/94 ): 1.000000 10.84
12/85:
12/90:
12/92:
12/94: 1.008510 16.02
CURRENT 12/95: 1.170101
</TABLE>
SB PACIFIC BASIN
<TABLE>
<CAPTION>
UNIT VALUE RETURN
---------- ------
<S> <C> <C>
INCEPTION (06/21/94 ): 1.000000 -5.99
12/85:
12/90:
12/92:
12/94: .899312 1.21
CURRENT 12/95: .910187
</TABLE>
<PAGE> 106
MFS TOTAL RETURN
<TABLE>
<CAPTION>
UNIT VALUE RETURN
---------- ------
<S> <C> <C>
INCEPTION (06/20/94 ): 1.000000 13.67
12/85:
12/90:
12/92:
12/94: .978766 24.23
CURRENT 12/95: 1.215923
</TABLE>
SB TOTAL RETURN
<TABLE>
<CAPTION>
UNIT VALUE RETURN
---------- ------
<S> <C> <C>
INCEPTION (11/21/94 ): 1.000000 22.45
12/85:
12/90:
12/92:
12/94: 1.013044 23.45
CURRENT 12/95: 1.250571
</TABLE>
AIM CAPITAL APPRECIATION
<TABLE>
<CAPTION>
UNIT VALUE RETURN
---------- ------
<S> <C> <C>
INCEPTION (10/10/95 ): 1.000000 -4.21
12/85:
12/90:
12/92:
12/94:
CURRENT 12/95: .957880
</TABLE>
<PAGE> 107
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description Method of Filing
- ------- ----------- ----------------
<S> <C> <C>
1. Resolution of The Travelers Life and Annuity
Company Board of Directors authorizing the
establishment of the Registrant. (Incorporated
herein by reference to Registration Statement on
Form N-4, File No. 33-58131, filed via Edgar
on March 17, 1995.)
3. Distribution and Management Agreement.
(Incorporated herein by reference to Exhibit 3 to
Pre-Effective Amendment No. 1 to the Registration
Statement on Form N-4, filed September 8, 1995.)
3(b). Selling Agreement Electronically
4. Variable Annuity Contracts. (Incorporated herein
reference to Registration Statement on Form N-4,
File No. 33-58131, filed via Edgar on
March 17, 1995.)
5. Form of Application. (Incorporated herein by
reference to Exhibit 5 to Pre-Effective Amendment
No. 1 to the Registration Statement on Form N-4,
filed September 8, 1995.)
6(a). Charter of The Travelers Life and Annuity Company,
as amended on April 10, 1990. (Incorporated
herein by reference to Registration Statement on
Form N-4, File No. 33-58131, filed via Edgar
on March 17, 1995.)
6(b). By-Laws of The Travelers Life and Annuity Company,
as amended on October 20, 1994. (Incorporated
herein by reference to Registration Statement on
Form N-4, File No. 33-58131, filed via Edgar on
March 17, 1995.)
9. Opinion of Counsel as to the legality of securities being
registered by Registrant. (Incorporated herein by
reference to the Registrant's most recent Form 24f-2
Notice filed on February 29, 1996.)
10(a). Consent of Coopers & Lybrand L.L.P., Independent Electronically
Accountants, to the inclusion of their report on the audited
financial statements of the Registrant and their report
on the financial statements of The Travelers Life
and Annuity Company contained in Part B of this
Registration Statement, and to the reference to such firm
as "Experts" in accounting and auditing.
</TABLE>
<PAGE> 108
<TABLE>
<S> <C> <C>
10(b). Consent of KPMG Peat Marwick LLP, Independent Electronically
Auditors, to the inclusion of their report on the financial
statements of The Travelers Life and Annuity Company
contained in Part B of this Registration Statement, and to the
reference to their firm as "experts" under the heading
"Independent Accountants."
13. Schedule for Computation of Total Return Calculations - Electronically
Standardized and Non-Standardized.
15(a). Powers of Attorney authorizing Jay S. Fishman or
Ernest J. Wright as signatory for Donald T. DeCarlo
and Christine B. Mead. (Incorporated herein by
reference To Exhibit 15 to Pre-Effective Amendment
No. 1 to the Registration Statement on Form N-4,
filed September 8, 1995.)
15(b). Powers of Attorney authorizing Jay S. Fishman or
Ernest J. Wright as signatory for Michael A. Carpenter,
Robert I. Lipp, Charles O. Prince III, Marc P. Weill,
and Irwin R. Ettinger. (Incorporated herein by reference
to Registration Statement on Form N-4, File No. 33-58131,
filed via Edgar on March 17, 1995.)
15(c). Powers of Attorney authorizing Ernest. J. Wright or Electronically
Kathleen A. McGah as signatory for Jay S. Fishman and
Ian R. Stuart.
</TABLE>
<PAGE> 1
EXHIBIT 3(b)
FORM OF
SELLING AGREEMENT
FOR VARIABLE CONTRACTS
ISSUED BY
TRAVELERS AFFILIATED INSURANCE COMPANIES
One Tower Square
Hartford, Connecticut 06183
Tower Square Securities, Inc. (hereafter referred to as TSSI) as
the Principal Underwriter, SMITH BARNEY INC. (hereafter referred to as the
Broker/Dealer), and SBHU LIFE AGENCY, INC. and each company identified on
Exhibit A to this Agreement (hereafter collectively referred to as SBHU), enter
into this agreement effective on __________, 1995 for the purpose of
authorizing the Broker/Dealer and SBHU, through its licensed individual agents
described in paragraph 4, to solicit applications for such variable life
insurance, variable annuity, and modified guaranteed annuity contracts (the
"Contract(s)") as may be issued by The Travelers Insurance Company, The
Travelers Life and Annuity Company, and any affiliated insurance companies
(hereafter referred to as "Insurance Companies" or in their individual
capacity, "Insurance Company") and identified by policy forms in the
Compensation Schedules attached to this agreement as they may be amended by the
Insurance Companies from time to time. The parties represent and agree as
follows:
1. The Insurance Companies are engaged in the issuance of
the Contracts in accordance with federal securities laws
and the applicable insurance laws of those states in
which the Contracts have been qualified for sale. The
Contracts may be considered securities under the
Securities Act of 1933; therefore, the offering and
distribution of the Contracts is made through TSSI as a
registered Broker/Dealer under the Securities Exchange
Act of 1934 and as a member of the National Association
of Securities Dealers, Inc. ("NASD"). The terms of the
offering of the Contracts are more particularly described
in the prospectus(es) for the Contracts.
2. The Broker/Dealer certifies that it is a registered
Broker/Dealer under the Securities Exchange Act of 1934
and a member of NASD. The Broker/Dealer agrees to abide
by all rules and regulations of the NASD, and to comply
with all applicable state and Federal laws and the rules
and regulations of authorized regulatory agencies
affecting the sale of the Contracts.
<PAGE> 2
3. SBHU certifies that it is licensed as an insurance agency
in accordance with the applicable insurance laws of those
states in which the Contracts have been qualified for
sale. Any provisions of this Agreement that must be
performed by an entity that is licensed as an insurance
agency will be carried out by SBHU. Broker/Dealer will
carry out such functions that must be performed by a
registered Broker/Dealer.
4. The Broker/Dealer will select persons to be employed and
supervised by it who will be trained and qualified to
solicit applications for the Contracts in conformance
with applicable state and Federal laws and regulations.
Persons so trained and qualified will be registered
representatives of the Broker/Dealer in accordance with
the rules of NASD and they will be properly licensed in
accordance with the insurance laws of those jurisdictions
in which the Contracts may be lawfully distributed and in
which they solicit applications for such Contracts. The
Insurance Company shall have ultimate authority to
determine whether it shall appoint or terminate a
particular registered representative as an agent of the
Insurance Company with the various state insurance
departments.
5. The Broker/Dealer will review all Contract proposals and
applications for suitability and for completeness and
correctness as to form. The Broker/Dealer will promptly
return to the applicant all applications, together with
any payments received therewith, deemed by the
Broker/Dealer to be unsuitable or not complete and
correct as to form. The Insurance Companies reserve the
right to reject any Contract application and return any
payment made in connection with an application which is
rejected. The Insurance Companies agree to promptly
notify the Broker/Dealer of any such rejection.
a. If the Broker/Dealer is soliciting the sale of
variable annuities or modified guaranteed
annuities, the Broker/Dealer will promptly
forward to the Insurance Companies, at addresses
provided by the Insurance Companies from time to
time, all of the necessary information from
applications taken by Broker/Dealer and found
suitable and in good form, together with all
payments received from such applications.
Broker/Dealer is responsible for accurately
communicating to the Insurance Companies
investment instructions for all business
submitted by Broker/Dealer to the Insurance
Companies. Contracts issued by the Insurance
Companies will be forwarded to the Broker/Dealer
for prompt delivery to the Contract owner. The
Broker/Dealer shall obtain and retain a receipt
for each Contract which Broker/Dealer delivers.
2
<PAGE> 3
b. If the Broker/Dealer is soliciting the sale of
variable life insurance, the Broker/Dealer will
promptly forward to one of the general agents
appearing on the Insurance Companies' most
current list of approved general agents for
variable life insurance (the "Approved General
Agent") all of the necessary information from
applications taken by Broker/Dealer and found
suitable and in good form, including accurate
investment instructions, together with all
payments received with such applications.
Contracts issued by the Insurance Companies will
be forwarded to the Approved General Agent, who
will forward them to the Broker/Dealer. The
Broker/Dealer shall obtain and retain a receipt
for each Contract which Broker/Dealer delivers.
The Broker/Dealer shall promptly return to the Insurance
Companies, or as reasonably directed by the Insurance
Companies, all undelivered Contracts and all receipts for
cancellation of Contracts that Broker/Dealer receives.
6. The Broker/Dealer will perform the selling functions
required by this agreement in accordance with the terms
and conditions of the then current prospectus(es)
applicable to the Contract and will make no
representations not included in the prospectus or in any
authorized supplemental material. No sales solicitation,
including the delivery of supplemental sales literature
or other such materials, shall occur, be delivered to, or
used with a prospective purchaser unless accompanied or
preceded by appropriate then current prospectus(es). Any
material prepared or used by the Broker/Dealer or its
registered representatives, which describes in whole or
in part or refers by name or form number to the Insurance
Companies' Contracts (including underlying investment
funds available under the Contracts), or uses the name of
the Insurance Companies or the logos or Service Marks of
the Insurance Companies, must be approved by the
Insurance Companies in writing prior to any such use.
7. The Insurance Companies represent and warrant that all
advertising, brochures and other materials developed by
them and delivered to Broker/Dealer a) have been read and
approved by the Insurance Companies; b) are in conformity
with the terms and conditions of the applicable
Contracts; c) meet the requirements of all federal, state
and local statutes and regulations applicable to the
Insurance Companies; and d) have been approved by any
regulatory authority whose approval of such material is
required, whether such approval is required before or
after such material is used.
3
<PAGE> 4
8. The Insurance Companies will not identify Broker/Dealer
in any advertising, publicity release or other material
intended for distribution to the public without securing
the prior written approval of Broker/Dealer.
9. The Insurance Companies shall give the Broker/Dealer
prior written notice of any change to the list of states
where the Insurance Companies' products are approved for
sale or to the regulatory status of the Insurance
Companies' products, within a reasonable amount of time
to permit the Broker/Dealer to act on such information.
10. The Insurance Companies shall not suspend sales of any
Contracts or amend any Contracts without giving prior
written notice to the Broker/Dealer. The Insurance
Companies shall provide such notice at least thirty days
prior to suspending sales or amending Contracts, except
where such suspension or amendment is:
(a) necessary for compliance with federal, state, or
local laws, regulations, or administrative
orders; or
(b) necessary to prevent administrative or financial
hardship to the Insurance Companies.
11. Commissions, allowances and any other fees payable to the
Broker/Dealer on sales of the Contracts solicited by the
Broker/Dealer will be paid to the Broker/Dealer, or as
necessary to meet any state insurance law requirements,
to SBHU, in accordance with the Compensation Schedule(s)
attached to this agreement as they may be amended from
time to time and in effect at the time the Contract
payments are received by the Insurance Companies (in the
case of annuities) or at the time applications are
received by the Insurance Companies (in the case of life
insurance), and in accordance with any administrative
procedures agreed to by the Insurance Companies and the
Broker/Dealer and in effect at the time such payments are
received by the Insurance Companies. The Insurance
Companies reserve the right to revise the Compensation
Schedules at any time upon written notice to
Broker/Dealer. Commission to the Broker/Dealer's
registered representative for Contracts solicited by the
registered representative and issued by the Insurance
Companies will be governed by agreement between the
Broker/Dealer and its registered representative and its
payment will be the responsibility of the Broker/Dealer.
12. If the Insurance Companies return all or a portion of a
premium paid with respect to a Contract, Broker/Dealer
shall be obligated to refund to the Insurance Companies
applicable commissions on the amount of such premium only
where:
4
<PAGE> 5
(a) the Contract solicited is returned not taken
under the policy "free look" provisions;
(b) premiums are refunded due to overpayments,
errors in billing or in the timing of automatic
premium collection deductions, or errors
resulting in policy reissue;
(c) the check delivered in payment of any Contract
premium does not clear and the premium is not
otherwise collected;
(d) the Contract is terminated or there is a refund
of premium and an act, error or omission of the
Broker/Dealer or its registered representative
materially contributed to the termination of the
Contract or the need to return premium;
(e) the application is rejected by the Insurance
Companies;
(f) the Insurance Companies are directed by a
judicial or regulatory authority to return
premium without assessment of a surrender
charge;
(g) the applicant's initial premium on a 1035
exchange is returned because the expected
rollover amount from another Contract is not
transferred due to the exchange not meeting the
legal requirements to qualify for a tax-free
exchange;
(h) the Insurance Companies return unearned premium
on a life insurance Contract as required by the
provisions of the Contract;
(i) the Insurance Companies determine that it has a
legal liability to return premiums on a life
insurance Contract within the first year after
the Contract is issued; or
(j) the Insurance Companies and Broker/Dealer
mutually agree to return all or a portion of a
premium paid with respect to a Contract.
13. This agreement will continue unless terminated by either
party upon thirty days prior written notice, except that
the Insurance Companies reserve the right to terminate
this agreement immediately, without notice, in the event
Broker/Dealer ceases to be a registered Broker/Dealer or
a member of the NASD. Failure of any party to terminate
this agreement for any of the causes set forth in this
agreement will not constitute a waiver of the right to
terminate this agreement at a later time for any of these
causes. After any termination of the Agreement, both
parties will continue to process any applications for
Contracts submitted by Broker/Dealer to the
5
<PAGE> 6
Insurance Companies prior to such termination, and the
Insurance Companies shall issue Contracts based on such
applications in accordance with the provisions of the
Agreement.
14. For the purpose of compliance with any applicable federal
or state securities laws or regulations promulgated under
them, the Broker/Dealer acknowledges and agrees that in
performing the Broker/Dealer services covered by this
agreement, it is acting in the capacity of an independent
broker and dealer as defined by the By-Laws of the NASD
and not as an agent or employee of either the Insurance
Companies or any registered investment company.
In furtherance of its responsibilities as a
Broker/Dealer, the Broker/Dealer warrants and represents
that it has established a system to supervise the
activities of its registered representatives and
associated persons that is designed to achieve compliance
with the applicable securities laws and regulations with
the rules of NASD, and the Broker/Dealer acknowledges
that it is responsible for such supervision and
compliance in connection with its solicitation and sale
of the Contracts.
The Broker/Dealer shall be responsible for compliance
with all state and federal laws and regulations
applicable to the Broker/Dealer's activities with respect
to the Contracts. The Broker/Dealer shall obtain proper
customer authorization and shall accurately and in a
timely fashion communicate to the Insurance Companies
investment instructions relating to the Contracts. Each
party to this agreement will hold harmless and indemnify
the Registered Investment Companies which are used to
fund the Contracts, the Insurance Companies or the
Broker/Dealer, as appropriate, for any loss or expense
suffered as a result of the violation or noncompliance by
that party or the Associated Persons of that party of any
applicable law or regulation or any provision of this
agreement, including the Insurance Companies as a result
of Broker/Dealer's inaccurate communication to the
Insurance Companies of investment instructions relating
to the Contracts, provided, however, that no party or any
of its employees or agents will be liable to the other
party for any indirect, special or consequential damages
arising out of or in connection with the performance of
any services pursuant to this Agreement.
15. During the term of this Agreement and after its
termination, the Insurance Companies agree that they will
keep confidential and will not use confidential
information obtained through this Agreement, which
includes, without limitation, the names, addresses and
telephone numbers of the Broker/Dealer's clients where
the Insurance Companies did not have a pre-existing
relationship with such client, for any purposes not
contemplated by this agreement, nor will the Insurance
Companies use
6
<PAGE> 7
such confidential information to solicit sales of goods
or services (including without limitation life, annuity,
and long-term care insurance), nor will the Insurance
Companies disclose such confidential information to any
other party without the Broker/Dealer's consent except as
necessary to carry out the duties contemplated by this
Agreement. The Insurance Companies will not attempt in
any organized fashion to actively induce representatives
of the Broker/Dealer to become independent agents of TSSI
or the Insurance Companies. The Insurance Companies
further agree that without prior approval of the
Broker/Dealer it will not contact registered
representatives of the Broker/Dealer except for the
purposes of servicing their clients' Contracts or for
providing wholesaling support for variable life insurance
Contracts to be issued by the Insurance Companies.
16. The Insurance Companies and the Broker/Dealer agree to
cooperate fully with each other in the event of any
material written customer complaints or regulatory
investigations or proceedings relating to activities
conducted pursuant to this Agreement. Each party shall
promptly notify the other of any such complaint or
investigation and shall consult with the other party
prior to sending any written response with respect to any
such complaint or investigation.
17. All notices to the Insurance Companies relating to this
agreement should be sent to the above address to the
attention of The Travelers Insurance Companies, FS Legal
Department, One Tower Square - 6SHS, Hartford,
Connecticut 06183. All notices to the Broker/Dealer or
SBHU will be duly given if mailed or faxed to the address
shown below to the attention of Jerald E. Hampton.
18. No modification, amendment, supplement to or waiver of
any provisions of the Agreement shall be binding upon the
parties hereto unless made in writing and duly signed by
both parties (except for a change in the Compensation
Schedule or the addition of new products where permitted
in the Agreement). A failure or delay of any party to
exercise any option provided in the Agreement or to
require at any time performance of any of the provisions
of the Agreement shall in no way be construed as a waiver
of such provision.
19. Neither party may assign the Agreement and/or any of its
rights and/or obligations thereunder to any entity that
is not affiliated to the assigning party, without the
other party's consent. The assigning party shall provide
written notice of any such assignment. TSSI reserves
the rights to designate, at its sole discretion, an
alternative Principal Underwriter for the distribution of
the Contracts covered by this Agreement. The designation
will constitute substitution of parties to this Agreement
with assumption of the rights and obligations created by
this agreement as applicable.
7
<PAGE> 8
20. All rules and procedures established by the Insurance
Companies must be reasonable, must not conflict with any
statutes or governmental rules or regulations, and must
be communicated to the Broker/Dealer before the
Broker/Dealer will be subject to them.
21. Should any portion of the Agreement for any reason be
held to be void in law or in equity, the Agreement shall
be construed insofar as is possible, as if such portion
had never been contained therein.
22. Unless otherwise directed by any regulatory authority or
the Contract Owner, the Insurance Companies will only
take instructions from the Broker/Dealer regarding
changes in agent of record.
23. The Broker/Dealer shall be entitled to receive any earned
compensation generated regardless of any events occurring
after the sale resulting in such compensation, including
the termination of this Agreement, unless the
Broker/Dealer ceases to be a registered Broker/Dealer or
member of the NASD, or if the payment of such
compensation would be prohibited by any applicable law or
regulatory authority.
24. The terms "Associated person," "Broker/Dealer," and
"member as used herein shall be defined consistently with
the definition of similar such terms as contained in
Article I of the NASD By-Laws. This Agreement will be
construed in accordance with the laws of the State of
Connecticut.
In reliance on the representations set forth and in consideration
of the undertakings described, the parties represented below do hereby Contract
and agree.
TOWER SQUARE SECURITIES, SMITH BARNEY INC.
INC. 399 GREENWICH STREET
NEW YORK, NEW YORK 10013
By By
---------------------------- --------------------------
Title Title
------------------------- -----------------------
Date of Execution Date of Execution
------------- ----------
Taxpayer I.D.
--------------
SBHU LIFE AGENCY OF SBHU LIFE AGENCY OF
MASSACHUSETTS, INC. OHIO, INC.
8
<PAGE> 9
By By
---------------------------- --------------------------
Title Title
------------------------- -----------------------
Date of Execution Date of Execution
------------- ----------
Taxpayer I.D. Taxpayer I.D.
----------------- --------------
SHEARSON LEHMAN HUTTON SBHU LIFE AGENCY OF
INSURANCE BROKERS OF NEW TEXAS, INC.
HAMPSHIRE, INC.
By By
---------------------------- --------------------------
Title Title
------------------------- -----------------------
Date of Execution Date of Execution
------------- ----------
Taxpayer I.D. Taxpayer I.D.
----------------- --------------
SBS INSURANCE BROKERS SBHU LIFE AGENCY, INC. AND
OF NORTH DAKOTA, INC. OTHER COMPANIES IDENTIFIED ON
EXHIBIT A
By By
---------------------------- --------------------------
Title Title
------------------------- -----------------------
Date of Execution Date of Execution
------------- ----------
Taxpayer I.D. Taxpayer I.D.
----------------- --------------
9
<PAGE> 10
EXHIBIT A
SMITH BARNEY INC. INSURANCE SUBSIDIARIES
Robinson Humphrey Insurance Services of Alabama, Inc.
SBHU Life Agency of Arizona, Inc.
SBS Insurance Brokerage Agency of Arkansas, Inc.
Shearson Lehman Hutton Insurance Agency of Hawaii, Inc.
SBS Insurance Agency of Idaho, Inc.
SBHU Life Agency of Indiana, Inc.
SBS Insurance Brokers of Kentucky, Inc.
Smith Barney Harris Upham Life Agency, Inc.
SBS Insurance Agency of Maine, Inc.
SBHU Life Agency of Massachusetts, Inc.
SBS Insurance Agency of Nevada, Inc.
Shearson Lehman Hutton Insurance Brokers of New Hampshire, Inc.
SBS Insurance Brokers of North Dakota, Inc.
SBHU Life Agency of Ohio, Inc.
SBHU Life Agency of Oklahoma, Inc.
SBS Insurance Agency of South Dakota, Inc.
SBHU Life Agency of Texas, Inc.
SBHU Life Agency of Utah, Inc.
SBS Insurance Agency of Wyoming, Inc.
10
<PAGE> 1
EXHIBIT 10(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this Post-Effective Amendment No. 1 of the
Registration Statement on Form N-4 of our report dated February 16, 1996, on
our audit of the financial statements of The Travelers Fund BD II for Variable
Annuities for the period ended December 31, 1995, and of our report dated
September 16, 1994, relating to our audit of the statements of operations and
retained earnings and cash flows of The Travelers Life and Annuity Company for
the year ended December 31, 1993. We also consent to the reference to our Firm
as experts in accounting and auditing under the caption "Independent
Accountants" in the Statement of Additional Information.
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
April 18, 1996
<PAGE> 1
Exhibit 10(b)
Consent of Independent Certified Public Accountants
The Board of Directors
The Travelers Life and Annuity Company
We consent to the use of our report included herein and to the reference to our
Firm as experts under the heading "Independent Accountants" in the Prospectus.
Our report refers to a change in accounting for investments in accordance with
the provisions of Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities," in 1994.
/s/ KPMG Peat Marwick
April 18, 1996
<PAGE> 1
EXHIBIT 13
THE TRAVELERS FUND BD II FOR VARIABLE ANNUITIES
SCHEDULE FOR COMPUTATION OF TOTAL RETURN CALCULATIONS
Total Return Calculation (Standardized)
The "1-year rate" represents fund performance for the most recent fiscal year.
The "since inception rate" covers the applicable inception date noted through
the end of the most recent fiscal year.
1/n
T = (ERV/P) where:
T = average annual total return
P = a hypothetical initial payment of $1,000
n = the applicable year (1, 5, 10) or portion thereof
ERV = ending redeemable value of a hypothetical $1,000 payment made
at the beginning of each of the periods
For calculating the redeemable value, the $30 annual administrative charge
was expressed as a percentage of assets based on the actual fee collected
divided by the average net assets per contracts sold under that prospectus for
each year for which performance was shown, and was assumed to be deducted on
August 31st of each year.
The unit values used in the calculation reflect the deduction for the
investment advisory fees for the fund and the mortality and expense risk
charge. The applicable contingent deferred sales is reflected in the return
calculations. The charge applies for six years and is a percentage of the
amount surrendered (6%, 6%, 6%, 3%, 2%, 1%).
Total Return Calculation (Non-Standardized)
The non-standardized rate represents fund performance for the calendar
year-to-date, and for the most recent applicable 1-year, 3-year, 5-year and
10-year periods ending with the most recent fiscal year end.
The non-standardized total returns reflect a percentage change in the value of
an Accumulation Unit based on the performance of an account over periods of the
applied period, determined by dividing the increase (decrease) in value for
that unit by the Accumulation Unit Value at the beginning of the period. This
percentage figure reflects the deduction of asset based charges, but does not
reflect the deduction of annual administrative charge or contingent deferred
sales charges. The deduction of the annual administrative charge or the
contingent deferred sales charge would reduce any percentage increase or make
greater any percentage decrease.
For a Schedule of the Computation of the Total Return Quotations, both
Standardized and Non-Standardized, see attached.
<PAGE> 2
PAGE 1
VINTAGE REGULAR DB STANDARDIZED PERFORMANCE
KASB - ALLIANCE GROWTH STOCK
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR(1) UNIT(1) DOLLAR(5) UNIT(5) DOLLAR(10) UNIT(10) ANNUAL FEE
- ---- ----- ------- ------- ------- ------- ---------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
06/20/94 1.000000 1,000.00 1,000.000 .000750
06/30/94 .985459 .000750
08/31/94 1.036952 -.15 -.145 .000750
09/30/94 1.054122 .000750
12/30/94 1.047185 1,000.00 954.941 .000750
03/31/95 1.119181 .000160
06/30/95 1.271698 .000160
08/31/95 1.347942 -.12 -.091 -.19 -.142 .000160
09/29/95 1.380993 .000160
12/29/95 1.395807 -.07 -.049 -.07 -.052 .000160
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION
<S> <C> <C>
ENDING UNITS 954.801 999.661
ACCOUNT VALUE 1,332.72 1,395.33
SURRENDER VALUE 1,272.72 1,335.33
TOTAL RETURN 27.27 % 33.53 %
ANNUALIZED RETURN 20.86 %
</TABLE>
<PAGE> 3
PAGE 2
VINTAGE REGULAR DB STANDARDIZED PERFORMANCE
KCSB - AIM CAPITAL APPRECIATION
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR(1) UNIT(1) DOLLAR(5) UNIT(5) DOLLAR(10) UNIT(10) ANNUAL FEE
- ---- ----- ------- ----- ------- ----- -------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10/10/95 1.000000 1,000.00 1000.000 .000160
12/29/95 .957880 -.03 -.036 .000160
</TABLE>
<TABLE>
<CAPTION>
SINCE INCEPTION
<S> <C>
ENDING UNITS 999.964
ACCOUNT VALUE 957.85
SURRENDER VALUE 900.37
TOTAL RETURN -9.96 %
</TABLE>
<PAGE> 4
PAGE 3
VINTAGE REGULAR DB STANDARDIZED PERFORMANCE
KESB - AMCAP GROWTH STOCK
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR(1) UNIT(1) DOLLAR(5) UNIT(5) DOLLAR(10) UNIT(10) ANNUAL FEE
- ---- ----- ------- ------- --------- ------- -------- ------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
06/21/94 1.000000 1,000.00 1,000.000 .000750
06/30/94 .986273 .000750
08/31/94 1.061716 -.15 -.142 .000750
09/30/94 1.039042 .000750
12/30/94 1.038598 1,000.00 962.836 .000750
03/31/95 1.122009 .000160
06/30/95 1.247025 .000160
08/31/95 1.327909 -.12 -.092 -.19 -.144 .000160
09/29/95 1.361487 .000160
12/29/95 1.361968 -.07 -.050 -.07 -.052 .000160
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION
<S> <C> <C>
ENDING UNITS 962.695 999.662
ACCOUNT VALUE 1,311.16 1,361.51
SURRENDER VALUE 1,251.16 1,301.51
TOTAL RETURN 25.12 % 30.15 %
ANNUALIZED RETURN 18.89 %
</TABLE>
<PAGE> 5
PAGE 4
VINTAGE REGULAR DB STANDARDIZED PERFORMANCE
KFSB - TBC MANAGED INCOME
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR(1) UNIT(1) DOLLAR(5) UNIT(5) DOLLAR(10) UNIT(10) ANNUAL FEE
- ---- ----- --------- ------- --------- ------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
06/28/94 1.000000 1,000.00 1,000.000 .000750
06/30/94 .997936 .000750
08/31/94 1.009924 -.13 -.131 .000750
09/30/94 1.000974 .000750
12/30/94 .996653 1,000.00 1,003.358 .000750
03/31/95 1.030866 .000160
06/30/95 1.086949 .000160
08/31/95 1.091827 -.11 -.103 -.17 -.154 .000160
09/29/95 1.101802 .000160
12/29/95 1.141791 -.06 -.052 -.06 -.051 .000160
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION
<S> <C> <C>
ENDING UNITS 1,003.204 999.664
ACCOUNT VALUE 1,145.45 1,141.41
SURRENDER VALUE 1,085.45 1,081.41
TOTAL RETURN 8.54 % 8.14 %
ANNUALIZED RETURN 5.34 %
</TABLE>
<PAGE> 6
PAGE 5
VINTAGE REGULAR DB STANDARDIZED PERFORMANCE
KGSB - GT GLOBAL STRATEGIC INCOME
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR(1) UNIT(1) DOLLAR(5) UNIT(5) DOLLAR(10) UNIT(10) ANNUAL FEE
- ---- ----- --------- ------- --------- ------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
06/21/94 1.000000 1,000.00 1,000.000 .000750
06/30/94 .994712 .000750
08/31/94 1.002719 -.15 -.146 .000750
09/30/94 .995774 .000750
12/30/94 .944948 1,000.00 1,058.259 .000750
03/31/95 .971239 .000160
06/30/95 1.035311 .000160
08/31/95 1.036243 -.11 -.108 -.16 -.157 .000160
09/29/95 1.062162 .000160
12/29/95 1.120662 -.06 -.054 -.06 -.051 .000160
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION
<S> <C> <C>
ENDING UNITS 1,058.098 999.646
ACCOUNT VALUE 1,185.77 1,120.27
SURRENDER VALUE 1,125.77 1,060.27
TOTAL RETURN 12.58 % 6.03 %
ANNUALIZED RETURN 3.92 %
</TABLE>
<PAGE> 7
PAGE 6
VINTAGE REGULAR DB STANDARDIZED PERFORMANCE
KHSB - SB HIGH INCOME
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR(1) UNIT(1) DOLLAR(5) UNIT(5) DOLLAR(10) UNIT(10) ANNUAL FEE
- ---- ----- --------- ------- --------- ------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
06/22/94 1.000000 1,000.00 1,000.000 .000750
06/30/94 1.000743 .000750
08/31/94 1.008728 -.14 -.143 .000750
09/30/94 1.007761 .000750
12/30/94 .987591 1,000.00 1,012.565 .000750
03/31/95 1.035328 .000160
06/30/95 1.082768 .000160
08/31/95 1.103795 -.11 -.103 -.17 -.153 .000160
09/29/95 1.115852 .000160
12/29/95 1.162368 -.06 -.052 -.06 -.051 .000160
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION
<S> <C> <C>
ENDING UNITS 1,012.410 999.652
ACCOUNT VALUE 1,176.79 1,161.96
SURRENDER VALUE 1,116.79 1,101.96
TOTAL RETURN 11.68 % 10.20 %
ANNUALIZED RETURN 6.59 %
</TABLE>
<PAGE> 8
PAGE 7
VINTAGE REGULAR DB STANDARDIZED PERFORMANCE
KISB - SB INTERNATIONAL EQUITY
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR(1) UNIT(1) DOLLAR(5) UNIT(5) DOLLAR(10) UNIT(10) ANNUAL FEE
- ---- ----- --------- ------- --------- ------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
06/20/94 1.000000 1,000.00 1,000.000 .000750
06/30/94 1.026673 .000750
08/31/94 1.049587 -.15 -.144 .000750
09/30/94 1.022658 .000750
12/30/94 .954944 1,000.00 1,047.182 .000750
03/31/95 .917500 .000160
06/30/95 1.011661 .000160
08/31/95 1.031348 -.11 -.108 -.17 -.161 .000160
09/29/95 1.050095 .000160
12/29/95 1.050280 -.06 -.055 -.05 -.052 .000160
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION
<S> <C> <C>
ENDING UNITS 1,047.019 999.642
ACCOUNT VALUE 1,099.66 1,049.90
SURRENDER VALUE 1,039.66 989.90
TOTAL RETURN 3.97 % -1.01 %
ANNUALIZED RETURN -.66 %
</TABLE>
<PAGE> 9
PAGE 8
VINTAGE REGULAR DB STANDARDIZED PERFORMANCE
KJSB - SB INCOME & GROWTH
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR(1) UNIT(1) DOLLAR(5) UNIT(5) DOLLAR(10) UNIT(10) ANNUAL FEE
- ---- ----- --------- ------- --------- ------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
06/20/94 1.000000 1,000.00 1,000.000 .000750
06/30/94 .986696 .000750
08/31/94 1.023616 -.15 -.146 .000750
09/30/94 1.011679 .000750
12/30/94 .981491 1,000.00 1,018.858 .000750
03/31/95 1.062254 .000160
06/30/95 1.135578 .000160
08/31/95 1.184840 -.12 -.100 -.18 -.149 .000160
09/29/95 1.217392 .000160
12/29/95 1.290871 -.07 -.051 -.07 -.050 .000160
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION
<S> <C> <C>
ENDING UNITS 1,018.707 999.654
ACCOUNT VALUE 1,315.02 1,290.42
SURRENDER VALUE 1,255.02 1,230.42
TOTAL RETURN 25.50 % 23.04 %
ANNUALIZED RETURN 14.55 %
</TABLE>
<PAGE> 10
PAGE 9
VINTAGE REGULAR DB STANDARDIZED PERFORMANCE
KMSB - SB MONEY MARKET
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR(1) UNIT(1) DOLLAR(5) UNIT(5) DOLLAR(10) UNIT(10) ANNUAL FEE
- ---- ----- --------- ------- --------- ------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
06/20/94 1.000000 1,000.00 1,000.000 .000750
06/30/94 1.000609 .000750
08/31/94 1.004912 -.15 -.148 .000750
09/30/94 1.007300 .000750
12/30/94 1.015687 1,000.00 984.555 .000750
03/31/95 1.026068 .000160
06/30/95 1.037078 .000160
08/31/95 1.044340 -.11 -.104 -.16 -.157 .000160
09/29/95 1.047683 .000160
12/29/95 1.058195 -.05 -.051 -.06 -.052 .000160
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION
<S> <C> <C>
ENDING UNITS 984.400 999.643
ACCOUNT VALUE 1,041.69 1,057.82
SURRENDER VALUE 981.69 997.82
TOTAL RETURN -1.83 % -.22 %
ANNUALIZED RETURN -.14 %
</TABLE>
<PAGE> 11
PAGE 10
VINTAGE REGULAR DB STANDARDIZED PERFORMANCE
KPSB - PUTNAM DIVERSIFIED INCOME
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR(1) UNIT(1) DOLLAR(5) UNIT(5) DOLLAR(10) UNIT(10) ANNUAL FEE
- ---- ----- --------- ------- --------- ------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
06/20/94 1.000000 1,000.00 1,000.000 .000750
06/30/94 1.000680 .000750
08/31/94 1.011665 -.15 -.147 .000750
09/30/94 1.014679 .000750
12/30/94 1.008510 1,000.00 991.562 .000750
03/31/95 1.055554 .000160
06/30/95 1.102322 .000160
08/31/95 1.112083 -.11 -.101 -.17 -.153 .000160
09/29/95 1.121984 .000160
12/29/95 1.170101 -.06 -.051 -.06 -.051 .000160
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION
<S> <C> <C>
ENDING UNITS 991.410 999.649
ACCOUNT VALUE 1,160.05 1,169.69
SURRENDER VALUE 1,100.05 1,109.69
TOTAL RETURN 10.00 % 10.97 %
ANNUALIZED RETURN 7.06 %
</TABLE>
<PAGE> 12
PAGE 11
VINTAGE REGULAR DB STANDARDIZED PERFORMANCE
KRSB - SB TOTAL RETURN
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR(1) UNIT(1) DOLLAR(5) UNIT(5) DOLLAR(10) UNIT(10) ANNUAL FEE
- ---- ----- --------- ------- --------- ------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
12/03/93 .928042 1,000.00 1,077.537 .000750
08/31/94 1.046264 -.59 -.566 .000750
12/30/94 1.013044 1,000.00 987.124 .000750
03/31/95 1.078553 .000160
06/30/95 1.177547 .000160
08/31/95 1.205359 -.12 -.097 -.19 -.161 .000160
09/29/95 1.214969 .000160
12/29/95 1.250571 -.06 -.051 -.07 -.056 .000160
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION
<S> <C> <C>
ENDING UNITS 986.976 1076.754
ACCOUNT VALUE 1,234.28 1,346.56
SURRENDER VALUE 1,174.28 1,286.56
TOTAL RETURN 17.43 % 28.66 %
ANNUALIZED RETURN 12.94 %
</TABLE>
<PAGE> 13
PAGE 12
VINTAGE REGULAR DB STANDARDIZED PERFORMANCE
KSSB - SB PACIFIC BASIN
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR(1) UNIT(1) DOLLAR(5) UNIT(5) DOLLAR(10) UNIT(10) ANNUAL FEE
- ---- ----- --------- ------- --------- ------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
06/21/94 1.000000 1,000.00 1,000.000 .000750
06/30/94 .997711 .000750
08/31/94 1.031654 -.15 -.144 .000750
09/30/94 1.001746 .000750
12/30/94 .899312 1,000.00 1,111.961 .000750
03/31/95 .872934 .000160
06/30/95 .925707 .000160
08/31/95 .921901 -.11 -.117 -.16 -.169 .000160
09/29/95 .913159 .000160
12/29/95 .910187 -.05 -.059 -.05 -.053 .000160
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION
<S> <C> <C>
ENDING UNITS 1,111.785 999.634
ACCOUNT VALUE 1,011.93 909.85
SURRENDER VALUE 951.93 855.26
TOTAL RETURN -4.81 % -14.47 %
ANNUALIZED RETURN -9.75 %
</TABLE>
<PAGE> 14
PAGE 13
VINTAGE REGULAR DB STANDARDIZED PERFORMANCE
KTSB - MFS TOTAL RETURN
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR(1) UNIT(1) DOLLAR(5) UNIT(5) DOLLAR(10) UNIT(10) ANNUAL FEE
- ---- ----- --------- ------- --------- ------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
06/20/94 1.000000 1,000.00 1,000.000 .000750
06/30/94 .984592 .000750
08/31/94 1.018774 -.15 -.147 .000750
09/30/94 1.002750 .000750
12/30/94 .978766 1,000.00 1,021.695 .000750
03/31/95 1.035973 .000160
06/30/95 1.098888 .000160
08/31/95 1.124611 -.11 -.102 -.17 -.152 .000160
09/29/95 1.153454 .000160
12/29/95 1.215923 -.06 -.052 -.06 -.051 .000160
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION
<S> <C> <C>
ENDING UNITS 1,021.541 999.650
ACCOUNT VALUE 1,242.11 1,215.50
SURRENDER VALUE 1,182.11 1,155.50
TOTAL RETURN 18.21 % 15.55 %
ANNUALIZED RETURN 9.93 %
</TABLE>
<PAGE> 15
PAGE 1
VINTAGE ENHANCED DB STANDARDIZED PERFORMANCE
KASE - ALLIANCE GROWTH STOCK
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR(1) UNIT(1) DOLLAR(5) UNIT(5) DOLLAR(10) UNIT(10) ANNUAL FEE
- ---- ----- --------- ------- --------- ------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
06/20/94 1.000000 1,000.00 1,000.000 .000750
06/30/94 .985382 .000750
08/31/94 1.036378 -.15 -.145 .000750
09/30/94 1.053296 .000750
12/30/94 1.045632 1,000.00 956.359 .000750
03/31/95 1.116740 .000160
06/30/95 1.268038 .000160
08/31/95 1.343428 -.12 -.091 -.19 -.142 .000160
09/29/95 1.376065 .000160
12/29/95 1.389856 -.07 -.049 -.07 -.052 .000160
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION
<S> <C> <C>
ENDING UNITS 956.219 999.661
ACCOUNT VALUE 1,329.01 1,389.39
SURRENDER VALUE 1,269.01 1,329.39
TOTAL RETURN 26.90 % 32.94 %
ANNUALIZED RETURN 20.51 %
</TABLE>
<PAGE> 16
PAGE 2
VINTAGE ENHANCED DB STANDARDIZED PERFORMANCE
KCSE - AIM CAPITAL APPRECIATION
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR(1) UNIT(1) DOLLAR(5) UNIT(5) DOLLAR(10) UNIT(10) ANNUAL FEE
- ---- ----- --------- ------- --------- ------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10/10/95 1.000000 1,000.00 1,000.000 .000160
12/29/95 .957290 -.03 -.036 .000160
</TABLE>
<TABLE>
<CAPTION>
SINCE INCEPTION
<S> <C>
ENDING UNITS 999.964
ACCOUNT VALUE 957.26
SURRENDER VALUE 899.82
TOTAL RETURN -10.02 %
</TABLE>
<PAGE> 17
PAGE 3
VINTAGE ENHANCED DB STANDARDIZED PERFORMANCE
KESE - AMCAP GROWTH STOCK
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR(1) UNIT(1) DOLLAR(5) UNIT(5) DOLLAR(10) UNIT(10) ANNUAL FEE
- ---- ----- --------- ------- --------- ------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
06/21/94 1.000000 1,000.00 1,000.000 .000750
06/30/94 .986205 .000750
08/31/94 1.061136 -.15 -.142 .000750
09/30/94 1.038238 .000750
12/30/94 1.037072 1,000.00 964.253 .000750
03/31/95 1.119575 .000160
06/30/95 1.243451 .000160
08/31/95 1.323473 -.12 -.092 -.19 -.144 .000160
09/29/95 1.356636 .000160
12/29/95 1.356166 -.07 -.050 -.07 -.052 .000160
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION
<S> <C> <C>
ENDING UNITS 964.111 999.662
ACCOUNT VALUE 1,307.49 1,355.71
SURRENDER VALUE 1,247.49 1,295.71
TOTAL RETURN 24.75 % 29.57 %
ANNUALIZED RETURN 18.54 %
</TABLE>
<PAGE> 18
PAGE 4
VINTAGE ENHANCED DB STANDARDIZED PERFORMANCE
KFSE - TBC MANAGED INCOME
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR(1) UNIT(1) DOLLAR(5) UNIT(5) DOLLAR(10) UNIT(10) ANNUAL FEE
- ---- ----- --------- ------- --------- ------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
06/28/94 1.000000 1,000.00 1,000.000 .000750
06/30/94 .997920 .000750
08/31/94 1.009429 -.13 -.131 .000750
09/30/94 1.000255 .000750
12/30/94 .995239 1,000.00 1,004.784 .000750
03/31/95 1.028680 .000160
06/30/95 1.083893 .000160
08/31/95 1.088242 -.11 -.103 -.17 -.154 .000160
09/29/95 1.097942 .000160
12/29/95 1.136987 -.06 -.052 -.06 -.051 .000160
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION
<S> <C> <C>
ENDING UNITS 1,004.629 999.663
ACCOUNT VALUE 1,142.25 1,136.60
SURRENDER VALUE 1,082.25 1,076.60
TOTAL RETURN 8.23 % 7.66 %
ANNUALIZED RETURN 5.03 %
</TABLE>
<PAGE> 19
PAGE 5
VINTAGE ENHANCED DB STANDARDIZED PERFORMANCE
KGSE - GT GLOBAL STRATEGIC INCOME
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR(1) UNIT(1) DOLLAR(5) UNIT(5) DOLLAR(10) UNIT(10) ANNUAL FEE
- ---- ----- --------- ------- --------- ------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
06/21/94 1.000000 1,000.00 1,000.000 .000750
06/30/94 .994643 .000750
08/31/94 1.002171 -.15 -.146 .000750
09/30/94 .994999 .000750
12/30/94 .943557 1,000.00 1,059.819 .000750
03/31/95 .969137 .000160
06/30/95 1.032348 .000160
08/31/95 1.032781 -.11 -.108 -.16 -.158 .000160
09/29/95 1.058379 .000160
12/29/95 1.115890 -.06 -.054 -.06 -.051 .000160
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION
<S> <C> <C>
ENDING UNITS 1,059.657 999.646
ACCOUNT VALUE 1,182.46 1,115.50
SURRENDER VALUE 1,122.46 1,055.50
TOTAL RETURN 12.25 % 5.55 %
ANNUALIZED RETURN 3.61 %
</TABLE>
<PAGE> 20
PAGE 6
VINTAGE ENHANCED DB STANDARDIZED PERFORMANCE
KHSE - SB HIGH INCOME
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR(1) UNIT(1) DOLLAR(5) UNIT(5) DOLLAR(10) UNIT(10) ANNUAL FEE
- ---- ----- --------- ------- --------- ------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
06/22/94 1.000000 1,000.00 1,000.000 .000750
06/30/94 1.000680 .000750
08/31/94 1.008181 -.14 -.143 .000750
09/30/94 1.006981 .000750
12/30/94 .986130 1,000.00 1,014.065 .000750
03/31/95 1.033081 .000160
06/30/95 1.079664 .000160
08/31/95 1.100100 -.11 -.103 -.17 -.153 .000160
09/29/95 1.111869 .000160
12/29/95 1.157405 -.06 -.052 -.06 -.051 .000160
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION
<S> <C> <C>
ENDING UNITS 1,013.910 999.652
ACCOUNT VALUE 1,173.50 1,157.00
SURRENDER VALUE 1,113.50 1,097.00
TOTAL RETURN 11.35 % 9.70 %
ANNUALIZED RETURN 6.28 %
</TABLE>
<PAGE> 21
PAGE 7
VINTAGE ENHANCED DB STANDARDIZED PERFORMANCE
KISE - SB INTERNATIONAL EQUITY
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR(1) UNIT(1) DOLLAR(5) UNIT(5) DOLLAR(10) UNIT(10) ANNUAL FEE
- ---- ----- --------- ------- --------- ------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
06/20/94 1.000000 1,000.00 1,000.000 .000750
06/30/94 1.026593 .000750
08/31/94 1.049009 -.15 -.144 .000750
09/30/94 1.021856 .000750
12/30/94 .953532 1,000.00 1,048.733 .000750
03/31/95 .915495 .000160
06/30/95 1.008743 .000160
08/31/95 1.027883 -.11 -.108 -.17 -.162 .000160
09/29/95 1.046336 .000160
12/29/95 1.045789 -.06 -.055 -.05 -.052 .000160
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION
<S> <C> <C>
ENDING UNITS 1,048.570 999.642
ACCOUNT VALUE 1,096.58 1,045.41
SURRENDER VALUE 1,036.58 985.41
TOTAL RETURN 3.66 % -1.46 %
ANNUALIZED RETURN -.96 %
</TABLE>
<PAGE> 22
PAGE 8
VINTAGE ENHANCED DB STANDARDIZED PERFORMANCE
KJSE - SB INCOME & GROWTH
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR(1) UNIT(1) DOLLAR(5) UNIT(5) DOLLAR(10) UNIT(10) ANNUAL FEE
- ---- ----- --------- ------- --------- ------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
06/20/94 1.000000 1,000.00 1,000.000 .000750
06/30/94 .986619 .000750
08/31/94 1.023049 -.15 -.146 .000750
09/30/94 1.010885 .000750
12/30/94 .980034 1,000.00 1,020.373 .000750
03/31/95 1.059933 .000160
06/30/95 1.132304 .000160
08/31/95 1.180863 -.12 -.100 -.18 -.149 .000160
09/29/95 1.213038 .000160
12/29/95 1.285355 -.07 -.051 -.06 -.050 .000160
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION
<S> <C> <C>
ENDING UNITS 1,020.221 999.654
ACCOUNT VALUE 1,311.35 1,284.91
SURRENDER VALUE 1,251.35 1,224.91
TOTAL RETURN 25.13 % 22.49 %
ANNUALIZED RETURN 14.22 %
</TABLE>
<PAGE> 23
PAGE 9
VINTAGE ENHANCED DB STANDARDIZED PERFORMANCE
KMSE - SB MONEY MARKET
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR(1) UNIT(1) DOLLAR(5) UNIT(5) DOLLAR(10) UNIT(10) ANNUAL FEE
- ---- ----- --------- ------- --------- ------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
06/20/94 1.000000 1,000.00 1,000.000 .000750
06/30/94 1.000530 .000750
08/31/94 1.004351 -.15 -.148 .000750
09/30/94 1.006507 .000750
12/30/94 1.014181 1,000.00 986.017 .000750
03/31/95 1.023835 .000160
06/30/95 1.034101 .000160
08/31/95 1.040838 -.11 -.104 -.16 -.157 .000160
09/29/95 1.043936 .000160
12/29/95 1.053676 -.05 -.052 -.06 -.052 .000160
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION
<S> <C> <C>
ENDING UNITS 985.862 999.643
ACCOUNT VALUE 1,038.78 1,053.30
SURRENDER VALUE 978.78 993.30
TOTAL RETURN -2.12 % -.67 %
ANNUALIZED RETURN -.44 %
</TABLE>
<PAGE> 24
PAGE 10
VINTAGE ENHANCED DB STANDARDIZED PERFORMANCE
KPSE - PUTNAM DIVERSIFIED INCOME
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR(1) UNIT(1) DOLLAR(5) UNIT(5) DOLLAR(10) UNIT(10) ANNUAL FEE
- ---- ----- --------- ------- --------- ------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
06/20/94 1.000000 1,000.00 1,000.000 .000750
06/30/94 1.000601 .000750
08/31/94 1.011105 -.15 -.147 .000750
09/30/94 1.013886 .000750
12/30/94 1.007016 1,000.00 993.033 .000750
03/31/95 1.053251 .000160
06/30/95 1.099150 .000160
08/31/95 1.108356 -.11 -.101 -.17 -.153 .000160
09/29/95 1.117977 .000160
12/29/95 1.165112 -.06 -.051 -.06 -.051 .000160
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION
<S> <C> <C>
ENDING UNITS 992.881 999.649
ACCOUNT VALUE 1,156.82 1,164.70
SURRENDER VALUE 1,096.82 1,104.70
TOTAL RETURN 9.68 % 10.47 %
ANNUALIZED RETURN 6.74 %
</TABLE>
<PAGE> 25
PAGE 11
VINTAGE ENHANCED DB STANDARDIZED PERFORMANCE
KRSE - SB TOTAL RETURN
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR(1) UNIT(1) DOLLAR(5) UNIT(5) DOLLAR(10) UNIT(10) ANNUAL FEE
- ---- ----- --------- ------- --------- ------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
12/03/93 .930558 1,000.00 1,074.624 .000750
08/31/94 1.046923 -.59 -.565 .000750
12/30/94 1.012743 1,000.00 987.417 .000750
03/31/95 1.077488 .000160
06/30/95 1.175569 .000160
08/31/95 1.202763 -.12 -.097 -.19 -.161 .000160
09/29/95 1.212081 .000160
12/29/95 1.246730 -.06 -.051 -.07 -.055 .000160
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION
<S> <C> <C>
ENDING UNITS 987.269 1,073.843
ACCOUNT VALUE 1,230.86 1,338.79
SURRENDER VALUE 1,170.86 1,278.79
TOTAL RETURN 17.09 % 27.88 %
ANNUALIZED RETURN 12.61 %
</TABLE>
<PAGE> 26
PAGE 12
VINTAGE ENHANCED DB STANDARDIZED PERFORMANCE
KSSE - SB PACIFIC BASIN
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR(1) UNIT(1) DOLLAR(5) UNIT(5) DOLLAR(10) UNIT(10) ANNUAL FEE
- ---- ----- --------- ------- --------- ------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
06/21/94 1.000000 1,000.00 1,000.000 .000750
06/30/94 .997642 .000750
08/31/94 1.031096 -.15 -.144 .000750
09/30/94 1.000974 .000750
12/30/94 .897995 1,000.00 1,113.592 .000750
03/31/95 .871049 .000160
06/30/95 .923065 .000160
08/31/95 .918828 -.11 -.118 -.16 -.170 .000160
09/29/95 .909910 .000160
12/29/95 .906317 -.05 -.059 -.05 -.053 .000160
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION
<S> <C> <C>
ENDING UNITS 1,113.415 999.634
ACCOUNT VALUE 1,009.11 905.98
SURRENDER VALUE 949.11 851.63
TOTAL RETURN -5.09 % -14.84 %
ANNUALIZED RETURN -10.01 %
</TABLE>
<PAGE> 27
PAGE 13
VINTAGE ENHANCED DB STANDARDIZED PERFORMANCE
KTSE - MFS TOTAL RETURN
<TABLE>
<CAPTION>
PRDT PRICE DOLLAR(1) UNIT(1) DOLLAR(5) UNIT(5) DOLLAR(10) UNIT(10) ANNUAL FEE
- ---- ----- --------- ------- --------- ------- ---------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
06/20/94 1.000000 1,000.00 1,000.000 .000750
06/30/94 .984517 .000750
08/31/94 1.018213 -.15 -.147 .000750
09/30/94 1.001965 .000750
12/30/94 .977320 1,000.00 1,023.206 .000750
03/31/95 1.033719 .000160
06/30/95 1.095736 .000160
08/31/95 1.120855 -.11 -.102 -.17 -.153 .000160
09/29/95 1.149344 .000160
12/29/95 1.210749 -.06 -.052 -.06 -.051 .000160
</TABLE>
<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION
<S> <C> <C>
ENDING UNITS 1,023.052 999.650
ACCOUNT VALUE 1,238.66 1,210.33
SURRENDER VALUE 1,178.66 1,150.33
TOTAL RETURN 17.87 % 15.03 %
ANNUALIZED RETURN 9.61 %
</TABLE>
<PAGE> 28
Description of Non-Standard Returns calculations Fund BD/BD II
The following notation will be used for a fund's prices, or unit values:
UVINCEP: Unit Value at fund inception
UV85: Unit Value at year-end, 1985, (Year-minus-10)
UV90: Unit Value at year-end, 1990, (Year-minus-5)
UV92: Unit Value at year-end, 1992, (Year-minus-3)
UV94: Unit Value at year-end, 1994, (Prior year)
UV95: Unit Value at year-end, 1995, (Current year)
ALLIANCE GROWTH STOCK
UNIT VALUE RETURN
---------- ------
INCEPTION (06/20/94): 1.000000 24.42
12/85:
12/90:
12/92:
12/94: 1.047185 33.29
CURRENT 12/95: 1.395807
AMCAP GROWTH STOCK
UNIT VALUE RETURN
---------- ------
INCEPTION (06/21/94): 1.000000 22.48
12/85:
12/90:
12/92:
12/94: 1.038598 31.14
CURRENT 12/95: 1.361968
TEC MANAGED INCOME
UNIT VALUE RETURN
---------- ------
INCEPTION (06/28/94): 1.000000 9.22
12/85:
12/90:
12/92:
12/94: .996653 14.56
CURRENT 12/95: 1.141791
GT GLOBAL STRATEGIC INCOME
UNIT VALUE RETURN
---------- ------
INCEPTION (06/21/94): 1.000000 7.77
12/85:
12/90:
12/92:
12/94: .944948 18.60
CURRENT 12/95: 1.120662
SB HIGH INCOME
UNIT VALUE RETURN
---------- ------
<PAGE> 29
INCEPTION (06/22/94): 1.000000 10.40
12/85:
12/90:
12/92:
12/94: .987591 17.70
CURRENT 12/95: 1.162368
SB INTERNATIONAL EQUITY
UNIT VALUE RETURN
---------- ------
INCEPTION (06/20/94): 1.000000 3.27
12/85:
12/90:
12/92:
12/94: .954944 9.98
CURRENT 12/95: 1.050280
SB INCOME & GROWTH
UNIT VALUE RETURN
---------- ------
INCEPTION (06/20/94): 1.000000 18.21
12/85:
12/90:
12/92:
12/94: .981491 31.52
CURRENT 12/95: 1.290871
SB MONEY MARKET
UNIT VALUE RETURN
---------- ------
INCEPTION (06/20/94): 1.000000 3.78
12/85:
12/90:
12/92:
12/94: 1.015687 4.19
CURRENT 12/95: 1.058195
PUTNAM DIVERSIFIED INCOME
UNIT VALUE RETURN
---------- ------
INCEPTION (06/20/94): 1.000000 10.84
12/85:
12/90:
12/92:
12/94: 1.008510 16.02
CURRENT 12/95: 1.170101
SB PACIFIC BASIN
UNIT VALUE RETURN
---------- ------
INCEPTION (06/21/94): 1.000000 -5.99
12/85:
12/90:
<PAGE> 30
12/92:
12/94: .899312 1.21
CURRENT 12/95: .910187
MFS TOTAL RETURN
UNIT VALUE RETURN
---------- ------
INCEPTION (06/20/94): 1.000000 13.67
12/85:
12/90:
12/92:
12/94: .978766 24.23
CURRENT 12/95: 1.215923
SB TOTAL RETURN
UNIT VALUE RETURN
---------- ------
INCEPTION (11/21/94): 1.000000 22.45
12/85:
12/90:
12/92:
12/94: 1.013044 23.45
CURRENT 12/95: 1.250571
AIM CAPITAL APPRECIATION
UNIT VALUE RETURN
---------- ------
INCEPTION (10/10/95): 1.000000 -4.21
12/85:
12/90:
12/92:
12/94:
CURRENT 12/95: .957880
<PAGE> 1
EXHIBIT 15 (C)
THE TRAVELERS FUND BD II FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, JAY S. FISHMAN of Haworth, New Jersey, Director of The
Travelers Life and Annuity Company (hereinafter the "Company"), do hereby make,
constitute and appoint ERNEST J. WRIGHT, Assistant Secretary of said Company,
and KATHLEEN A. McGAH, Assistant Secretary of said Company, or either one of
them acting alone, my true and lawful attorney-in-fact, for me, and in my name,
place and stead, to sign registration statements on behalf of said Company on
Form N-4 or other appropriate form under the Securities Act of 1933 and the
Investment Company Act of 1940 for The Travelers Fund BD II for Variable
Annuities, a separate account of the Company dedicated specifically to the
funding of variable annuity contracts to be offered by the Company, and
further, to sign any and all amendments thereto, including post-effective
amendments, that may be filed by the Company on behalf of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 1st day
of April, 1996.
/s/Jay S. Fishman
Director
The Travelers Life and Annuity Company
<PAGE> 2
THE TRAVELERS FUND BD II FOR VARIABLE ANNUITIES
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That I, IAN R. STUART of East Hampton, Connecticut, Vice
President, Chief Financial Officer, Chief Accounting Officer and Controller of
The Travelers Life and Annuity Company (hereinafter the "Company"), do hereby
make, constitute and appoint ERNEST J. WRIGHT, Assistant Secretary of said
Company, and KATHLEEN A. McGAH, Assistant Secretary of said Company, or either
one of them acting alone, my true and lawful attorney-in-fact, for me, and in
my name, place and stead, to sign registration statements on behalf of said
Company on Form N-4 or other appropriate form under the Securities Act of 1933
and the Investment Company Act of 1940 for The Travelers Fund BD II for
Variable Annuities, a separate account of the Company dedicated specifically to
the funding of variable annuity contracts to be offered by the Company, and
further, to sign any and all amendments thereto, including post-effective
amendments, that may be filed by the Company on behalf of said registrant.
IN WITNESS WHEREOF, I have hereunto set my hand this 1st day
of April, 1996.
/s/Ian R. Stuart
Vice President, Chief Financial Officer
Chief Accounting Officer and
Controller
The Travelers Life and Annuity Company
