<PAGE> 1
VINTAGE ANNUITY
ANNUAL REPORT
THE TRAVELERS FUND BD II FOR VARIABLE ANNUITIES
December 31, 1995
[LOGO]
THE TRAVELERS LIFE AND ANNUITY COMPANY
ONE TOWER SQUARE
HARTFORD, CONNECTICUT 06183
<PAGE> 2
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> 3
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> 4
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> 5
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> 6
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> 7
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> 8
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> 9
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> 10
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> 11
Independent Accountants
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut
This report is prepared for the general information of contract owners and is
not an offer of shares of The Travelers Fund BD II for Variable Annuities or
Fund BD II's underlying funds. It should not be used in connection with any
offer except in conjunction with the Prospectuses for the Variable Annuity
products offered by The Travelers Life and Annuity Company and the
Prospectuses of the underlying funds, which collectively contain all pertinent
information, including the applicable sales commissions.
