<PAGE> 1
UNIVERSAL ANNUITY
SEMI-ANNUAL REPORTS
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
JUNE 30, 1995
[TRAVELERS INSURANCE LOGO]
THE TRAVELERS INSURANCE COMPANY
ONE TOWER SQUARE
HARTFORD, CONNECTICUT 06183
<PAGE> 2
[TIMCO LOGO] The Travelers Investment Management Company ("TIMCO")
provides equity management and advisory services for The
Travelers Growth and Income Stock Account for Variable
Annuities.
[TAMIC LOGO] Travelers Asset Management International Corporation
("TAMIC") provides fixed income management and advisory
services for the following Travelers Variable Products
Separate Accounts contained in this report: The Travelers
Quality Bond Account for Variable Annuities and The
Travelers Money Market Account for Variable Annuities.
<PAGE> 3
THE TRAVELERS VARIABLE PRODUCTS SEPARATE ACCOUNTS
INVESTMENT ADVISORY COMMENTARY AS OF JUNE 30, 1995
ECONOMIC REVIEW AND OUTLOOK
While the economy has slowed more than we expected at the beginning of the
year, the magnitude and duration of this slowdown is still unclear. The
slowing that has occurred already has enabled the ten-year U.S. Treasury Bond
rate to decrease 1.5% this year. Because of this at least some of the
stimulative effect of the Federal Reserve Board ("Fed") reducing rates has been
set in motion already. A reduction of the Federal Funds rate, (a sensitive
indicator of the direction of interest rates), to a 5.50% or perhaps 5.00%
level is possible but may not add much more to economic growth since a decrease
in rates has already been priced into the bond market. The question remains
how weak is the economy and how long will the weakness persist. We lean
towards the scenario of a modest slowdown, much like the modest recovery, with
growth resuming by the end of this year. The decline in interest rates that
has already occurred along with the improved export competitiveness brought on
by the weak dollar should help growth to pick up. In addition, last year's
strong growth did not bring on typical late cycle excesses (business borrowings
for leverage or new plants, excessive inventory buildups, or significant wage
pressure increases). Therefore, we think this is a mid-cycle growth slowdown
in a longer recovery and the second half of the recovery will see more
confidence build up and allow some of the previous excesses to reappear.
Capacity utilization and unemployment have not yet fallen that far below the
historic inflation triggers that they reached last year, so that if growth
picks up by late this year or in the first half of next year, the Fed will have
to resume their bias towards tightening. This view implies rising short-term
and intermediate-term rates next year with the yield curve flattening, assuming
the market stays comfortable with the Fed's anti-inflation resolve.
On the bullish side, the market has rallied so strongly because there is a
significant risk that 1994's growth was an aberration in a longer term
disinflationary cycle. With diminished consumer spending, the decline in
interest rates may have only a minor impact on consumer behavior. Foreign
economies may weaken in tandem with the United States, reducing the impact of
the weakness in the dollar to boost our exports. The global trend towards
tight fiscal and monetary policy continues. The U.S. budget cuts that are
currently being considered may cut 0.5% from 1996's growth rate in addition to
allowing the bond market to lower long-term inflation expectations. If numbers
continue to come in weak and the economy does not respond to the reduction in
bond rates seen so far, the Fed will get much more aggressive about cutting
rates. If this happens, the Fed Funds rate could be in the 4-5% range by early
next year with the yield curve steepening as the long end lags the decline.
Because of the uncertainty that exists right now, we are vigilantly watching
key economic variables to give us a clue as to which view is right. First,
consumer spending on housing and autos should pick up if the decline in
interest rates is of any value in boosting the economy. Numbers released in
late June and early July have started to show some pick up. Second, we have
been concerned about the sharp drop-off in growth in Europe and what looks like
another recession in Japan. We will be monitoring developments overseas
closely to see what impact they will have on the United States. Argentina and
Mexico are not completely out of the woods as their economies will be going
through a high stress period in the second half of the year. We think they
will make it through, but there remains a significant risk of more problems
developing that could hurt all emerging economies as they did at the turn of
this year. Finally, we will be watching the behavior of the stock market. It
has not shown signs of recession yet and has been boosted by technology stocks
which have been the major beneficiaries of the strong growth in the investment
sector of the economy. To date, this has supported our view of a modest
slowdown but we will be watching this closely for any changes.
-1-
<PAGE> 4
FIXED-INCOME MARKET COMMENTARY
After a negative year in 1994, the bond market bounced back during the first
half of the year as represented by the Lehman Government/Corporate Bond Index,
a broad based bond market index. This index was up 11.8% for the six months
ending June 30, 1995, following a loss of 3.5% in 1994. The month of May had
the most impressive performance, as payroll employment figures turned negative
in April and May, the first back-to-back reduction for non-farm payroll numbers
since January of 1992. The month of May was the best month in the bond market
since February 1986. Market expectations shifted from expecting continued Fed
tightening at the beginning of the year to expectations of the Fed reducing
interest rates. By the end of June, the market had already anticipated a Fed
rate cut of .5% to .75 % by year end. Numerous economists are expecting second
quarter gross domestic product to come in close to zero, with growth forecasts
for the rest of the year not much better. Inflation still seems to be
relatively well contained, with our expectations of year-over-year Consumer
Price Index ("CPI"), a broad based indicator of inflation, to remain in the
3.0-3.5% range.
Within the U.S. bond market, the tax exempt bond market sector was by far the
worst-performing sector as it was hurt with concerns about the flat tax in
April and then individual investors suffered "sticker shock" at the low yields
implied by the U.S. Treasury bond market rally in May. Corporate and
asset-backed securities outperformed U.S. Treasuries while mortgage-backed
securities lagged due to the sharp decline in interest rates. The high yield
market also lagged, particularly the B quality sector whose spreads widened in
May and June. The yield curve steepened with the two-year to thirty-year
spread widening to 82 basis points from 18 at the beginning of the year.
Until we develop more conviction about when economic growth is bottoming, we
are staying close to our duration targets. We have been balancing a slightly
long duration position with an underweighting on the one- to three-year
maturity range. The two-year U.S. Treasury Bond has had a tremendous rally
this year due to the shift in expectations about Fed tightening. When the
economy bottoms and expectation for further rate cuts are dampened, we think
the two year will perform poorly.
In terms of sector strategy, the areas of the corporate bond market that tend
to be more recession proof are being favored in asset selection. Relative
spreads in the investment grade corporate market are not compensating you for
any recession risk. We are using the recent corporate spread widening to
selectively buy media, utility, and consumer product names that should still
show solid earnings in the event of a slowdown. In the mortgage-backed market,
the recent increase in volatility and the decline in rates has caused this
sector to widen. We are selectively looking for well structured securities to
add as corporate proxies, as well as sufficiently seasoned high coupon
collateral as cushion paper that should provide incremental return. We remain
cautious on the municipal market because pressure from flat tax concerns will
put a lid on the sector's relative performance.
-2-
<PAGE> 5
EQUITY MARKET COMMENTARY
Lower interest rates and better-than-expected corporate profits propelled broad
stock market averages to a series of new highs during the first half of 1995.
Including dividends, the S&P 500 Stock Index recorded a gain of 20.2% over the
six-month period ended June 30, 1995. Small cap stocks continued to lag
somewhat, with the Russell 2000 up 14.4% through the same period.
Technology stocks led the market during this record-setting advance. The
technology sector rose in market value by 40%, driven by unprecedented levels
of business spending for semiconductors, computer systems and
telecommunications equipment. When evidence of a rapid slowdown in economic
growth surfaced in May, bond yields fell sharply; and the yield curve steepened
in anticipation of Fed's easing of interest rates. Stocks in the financial
sector rallied strongly, paced by money center banks, mortgage lenders and
brokerage firms. Lower interest rates also benefited economically sensitive
groups such as home-builders and stocks in the materials sector, including
paper, forest products, chemicals and containers.
Reflecting a lackluster retail environment, consumer oriented groups such as
food, apparel and household products lagged the overall market. The weakness
in the consumer sector culminated in a late June sell-off of consumer
cyclicals, following a series of preannounced earnings disappointments for the
second quarter. The weaker-than-expected earnings were attributed to soft
consumer demand and margin pressure created by higher materials prices.
Consequently, earnings estimates in the consumer durables area have plunged 10%
in the past month.
The surprise in the first half was the strength of reported earnings, despite
low income growth, sluggish consumer spending and tight monetary policy.
Actual earnings in the fourth quarter of 1994 and the first quarter of 1995
dramatically exceeded expectations. Earnings estimates continue to rise,
especially in the technology, commodities and energy sectors. Concerns remain,
however, that earnings disappointments lie ahead as an inevitable fallout of
slowing economic growth. Although capital spending has been the key driver of
this business expansion, it is reasonable to ask whether the industrial sector
can continue a high rate of investment spending in the face of falling final
demand? On the plus side, the recent Fed decision to cut interest rates has
given the financial markets confidence. Since the odds favor continued easing
by the Fed over the next year, lower interest rates should provide ongoing
support to equity price to earnings ratios. In addition, the accelerated pace
of merger and acquisition activity seen recently in the technology, health care
and financial sectors seems likely to continue, and provide an upward bias to
stock prices.
-3-
<PAGE> 6
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
- --------------------------------------------------------------------------------------------------
<S> <C>
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES....................................................................... 5
THE TRAVELERS QUALITY BOND ACCOUNT
FOR VARIABLE ANNUITIES....................................................................... 16
THE TRAVELERS MONEY MARKET ACCOUNT
FOR VARIABLE ANNUITIES....................................................................... 26
</TABLE>
-4-
<PAGE> 7
THE TRAVELERS
GROWTH AND INCOME
STOCK ACCOUNT
FOR VARIABLE ANNUITIES
During the first six months of 1995, the Travelers Growth and Income Stock
Account achieved a total return of 21.2% before fees and expenses,
outperforming the Standard & Poor's 500 Stock Index ("S&P 500") total return of
20.2%. Net of fees and expenses, the portfolio's total return of 20.3% was
well ahead of the 16.1% average total return for variable annuity stock
accounts in the Lipper Growth & Income category.
Stock selection in the Technology sector contributed importantly to portfolio
performance, in particular from positions in Texas Instruments (+82%) and, in
the semiconductor equipment group, in both KLA Instruments (+61%) and Applied
Materials (+115%). In the Producer Durables sector, the portfolio benefited
from overweighted positions in McDonnell Douglas (+61%), Boeing (+34%),
Parker-Hannifin (+20%) and Deere (+29%). Another key factor to the portfolio's
favorable relative performance was stock selection in the Financial sector,
through holdings in Citibank (+39%), Chase Manhattan Bank (+36%), Bank of New
York (+37%) and Lehman Brothers (+48%).
Given the 22% advance by the S&P 500 since November and the likelihood of
slower economic growth through the remainder of the year, we believe that
careful stock selection is critical at this stage of the market cycle. In the
Technology sector, we have focused on stocks that exhibit improving
fundamentals, but which still trade at a reasonable multiple of their expected
growth rates, including 3COM and Cabletron Systems in the networking group,
Oracle Systems in the software group and KLA Instruments in the semiconductor
equipment group. In the Materials sector, we have emphasized Dow Chemical and
Praxair. In the Consumer sector, our major overweights include Nike and
Procter & Gamble. In the Finance sector, we have emphasized Citibank,
Jefferson Pilot and Transamerica for relative value and earnings momentum.
-5-
<PAGE> 8
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 1995
<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (identified cost $311,674,422)...................... $ 372,914,689
Cash....................................................................................... 79,714
Receivables:
Dividends............................................................................... 782,480
Interest................................................................................ 38,122
Investment securities sold.............................................................. 17,306,405
Purchase payments and transfers from other Travelers accounts........................... 416,228
Other assets............................................................................... 20,786
--------------
Total Assets........................................................................ 391,558,424
--------------
LIABILITIES:
Payables:
Investment securities purchased......................................................... 9,121,922
Contract surrenders and transfers to other Travelers accounts........................... 139,742
Investment management and advisory fees................................................. 18,803
Variation on futures margin............................................................. 33,913
Accrued liabilities........................................................................ 52,157
--------------
Total Liabilities.................................................................... 9,366,537
--------------
NET ASSETS:.................................................................................. $ 382,191,887
==============
</TABLE>
See Notes to Financial Statements
-6-
<PAGE> 9
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends......................................................... $ 4,221,752
Interest.......................................................... 477,519
----------------
Total income................................................. $ 4,699,271
EXPENSES:
Investment management and advisory fees........................... 781,617
Insurance charges................................................. 1,985,613
----------------
Total expenses............................................... 2,767,230
---------------
Net investment income..................................... 1,932,041
---------------
REALIZED GAIN AND CHANGE IN UNREALIZED GAIN ON
INVESTMENT SECURITIES:
Realized gain from investment security transactions:
Proceeds from investment securities sold..................... 181,550,033
Cost of investment securities sold........................... 166,948,674
----------------
Net realized gain......................................... 14,601,359
Change in unrealized gain on investment securities:
Unrealized gain at December 31, 1994......................... 12,899,180
Unrealized gain at June 30, 1995............................. 61,240,267
----------------
Net change in unrealized gain for the period.............. 48,341,087
---------------
Net realized gain and change in unrealized gain........ 62,942,446
---------------
Net increase in net assets resulting from operations.............. $ 64,874,487
===============
</TABLE>
See Notes to Financial Statements
-7-
<PAGE> 10
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1995 1994
---- ----
(UNAUDITED)
<S> <C> <C>
OPERATIONS:
Net investment income................................................. $ 1,932,041 $ 3,903,113
Net realized gain from investment security transactions............... 14,601,359 9,768,357
Net change in unrealized gain on investment securities................ 48,341,087 (17,759,208)
---------------- -----------------
Net increase (decrease) in net assets resulting from operations.... 64,874,487 (4,087,738)
---------------- -----------------
UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 1,347,272 and 3,287,872 units, respectively)........ 10,268,854 22,820,587
Participant transfers from other Travelers accounts
(applicable to 1,212,264 and 2,395,050 units, respectively)........ 9,308,130 16,585,884
Administrative charges
(applicable to 20,461 and 52,573 units, respectively).............. (172,035) (356,909)
Contract surrenders
(applicable to 1,483,742 and 3,654,777 units, respectively)........ (11,349,400) (25,688,114)
Participant transfers to other Travelers accounts
(applicable to 1,861,397 and 5,819,195 units, respectively)........ (13,988,736) (40,465,786)
Other payments to participants
(applicable to 78,645 and 245,574 units, respectively)............. (601,919) (1,752,347)
---------------- ----------------
Net decrease in net assets resulting from unit transactions........ (6,535,106) (28,856,685)
---------------- ----------------
Net increase (decrease) in net assets........................... 58,339,381 (32,944,423)
NET ASSETS:
Beginning of period................................................... 323,852,506 356,796,929
---------------- ----------------
End of period......................................................... $ 382,191,887 $ 323,852,506
================ ================
</TABLE>
See Notes to Financial Statements
-8-
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
The Travelers Growth and Income Stock Account for Variable Annuities ("Account
GIS") is a separate account of The Travelers Insurance Company ("The
Travelers"), an indirect wholly owned subsidiary of Travelers Group Inc., and
is available for funding certain variable annuity contracts issued by The
Travelers. Account GIS is registered under the Investment Company Act of 1940,
as amended, as a diversified, open-end management investment company.
The following is a summary of significant accounting policies consistently
followed by Account GIS in the preparation of its financial statements.
SECURITY VALUATION. Investments in securities traded on a national securities
exchange are valued at the last-reported sale price as of the close of
business of the New York Stock Exchange on the last business day of the period;
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.
When market quotations are not considered to be readily available for
long-term corporate bonds and notes, such investments are generally stated at
fair value on the basis of valuations furnished by a pricing service. These
valuations are determined for normal institutional-size trading units of such
securities using methods based on market transactions for comparable securities
and various relationships between securities which are generally recognized by
institutional traders. Securities, including restricted securities, for which
pricing services are not readily available are valued by management at prices
which it deems in good faith to be fair.
Short-term investments for which a quoted market price is available are valued
at market. Short-term investments for which there is no reliable quoted market
price are valued by computing a market value based upon quotations from dealers
or issuers for securities of a similar type, quality and maturity.
FUTURES CONTRACTS. Account GIS may use stock index futures contracts as a
substitute for the purchase or sale of individual securities. When Account GIS
enters into a futures contract, it agrees to buy or sell a specified index of
stocks at a future time for a fixed price, unless the contract is closed prior
to expiration. Account GIS is obligated to deposit with a broker an "initial
margin" equivalent to a percentage of the face, or notional value of the
contract.
It is Account GIS's practice to hold cash and cash equivalents (including
short-term investments) in an amount at least equal to the notional value of
outstanding purchased futures contracts, less the initial margin. Generally,
futures contracts are closed prior to expiration.
Futures contracts purchased by Account GIS are priced and settled daily;
accordingly, changes in daily prices are recorded as realized gains or losses
and no asset is recorded in the Statement of Investments. However, when
Account GIS holds open futures contracts, it assumes a market risk generally
equivalent to the underlying market risk of change in the value of the
specified indexes associated with the futures contract.
OPTIONS. Account GIS may purchase index or individual equity put or call
options, thereby obtaining the right to sell or buy a fixed number of shares of
the underlying asset at the stated price on or before the stated expiration
date. Account GIS may sell the options before expiration. Options held by
Account GIS are listed on either national securities exchanges or on
over-the-counter markets, and are short-term contracts with a duration of less
than nine months. The market value of the options will be the latest sale
price as of the close of business of the New York Stock Exchange, or in the
absence of such sale, the latest bid quotation.
REPURCHASE AGREEMENTS. When Account GIS enters into a repurchase agreement (a
purchase of securities whereby the seller agrees to repurchase the securities
at a mutually agreed upon date and price), the repurchase price of the
securities will generally equal the amount paid by Account GIS plus a
negotiated interest amount. The seller under the repurchase agreement will be
required to provide to Account GIS securities (collateral) whose market value,
including accrued interest, will be at least equal to 102% of the repurchase
price. Account GIS monitors the value of collateral on a daily basis.
Repurchase agreements will be limited to transactions with national banks and
reporting broker dealers believed to present minimal credit risks. Account
GIS's custodian will take actual or constructive receipt of all securities
underlying repurchase agreements until such agreements expire.
-9-
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED
FEDERAL INCOME TAXES. The operations of Account GIS form a part of the total
operations of The Travelers and are not taxed separately. The Travelers is
taxed as a life insurance company under the Internal Revenue Code of 1986, as
amended (the "Code"). Under existing federal income tax law, no taxes are
payable on the investment income and capital gains of Account GIS. Account GIS
is not taxed as a "regulated investment company" under Subchapter M of the
Code.
OTHER. Security transactions are accounted for on the trade date. Dividend
income is recorded on the ex-dividend date. Interest income is recorded on the
accrual basis.
2. INVESTMENTS
Purchases and sales of securities other than short-term investments aggregated
$168,802,871 and $156,845,659, respectively, for the six months ended June 30,
1995. Realized gains and losses from security transactions are reported on an
identified cost basis.
At June 30, 1995, Account GIS held 34 open S&P 500 Stock Index futures
contracts with a maturity date of September 15, 1995. The underlying face
value, or notional value, of these contracts at June 30, 1995, amounted to
$9,301,550. In connection with these contracts, short-term investments with a
par value of $790,000 had been pledged as margin deposits.
Net realized gains (losses) resulting from futures contracts were $2,280,340
and ($190,085) for the six months ended June 30, 1995 and the year ended
December 31, 1994, respectively. These gains (losses) are included in the net
realized gain from investment security transactions on both the Statement of
Operations and the Statement of Changes in Net Assets. The cash settlement
for June 30, 1995 is shown on the Statement of Assets and Liabilities as a
payable for variation on futures margin.
3. CONTRACT CHARGES
Investment management and advisory fees are calculated daily at an annual rate
of 0.45% of Account GIS's average net assets. These fees are paid to The
Travelers Investment Management Company, an indirect wholly owned subsidiary of
Travelers Group Inc.
Insurance charges are paid to The Travelers for the mortality and expense risks
assumed by The Travelers. On contracts issued prior to May 16, 1983, these
charges are equivalent to 1.0017% of the average net assets of Account GIS on
an annual basis. On contracts issued on or after May 16, 1983, the charges for
mortality and expense risks are equivalent to 1.25% of the average net assets
of Account GIS on an annual basis. Additionally, for certain contracts in the
accumulation phase, a semi-annual charge of $15 (prorated for partial periods
and the level of participation in other separate accounts of The Travelers) is
deducted from participant account balances and paid to The Travelers to cover
administrative charges.
On contracts issued prior to May 16, 1983, The Travelers retained from Account
GIS sales charges of $25,590 and $54,101 for the six months ended June 30, 1995
and the year ended December 31, 1994, respectively. The Travelers generally
assesses a 5% contingent deferred sales charge if a participant's purchase
payment is surrendered within five years of its payment date. Contract
surrender payments are stated prior to the deduction of $92,820 and $146,421 of
contingent deferred sales charges for the six months ended June 30, 1995 and
the year ended December 31, 1994, respectively.
-10-
<PAGE> 13
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED
4. NET ASSETS HELD BY AFFILIATE
Approximately $10,263,000 and $8,001,000 of the net assets of Account GIS were
held on behalf of an affiliate of The Travelers as of June 30, 1995 and
December 31, 1994, respectively. Transactions with this affiliate during the
six months ended June 30, 1995 and the year ended December 31, 1994, were
comprised of participant purchase payments of approximately $423,000 and
$356,000 and contract surrenders of approximately $122,000 and $653,000,
respectively.
5. NET CONTRACT OWNERS' EQUITY
<TABLE>
<CAPTION>
JUNE 30, 1995
-------------------------------------------------
UNIT NET
UNITS VALUE ASSETS
----- ----- ------
<S> <C> <C> <C>
Contracts issued prior to May 16, 1983..................... 18,410,431 $ 8.573 $ 157,846,219
Annuity Contracts issued prior to May 16, 1983............. 451,891 8.573 3,874,397
Contracts issued on or after May 16, 1983.................. 26,436,604 8.318 219,925,117
Annuity Contracts issued on or after May 16, 1983.......... 65,652 8.318 546,154
---------------
Net Contract Owners' Equity................................ $ 382,191,887
===============
</TABLE>
-11-
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED
6. SUPPLEMENTARY INFORMATION
(Selected data for a unit outstanding
throughout each period.)
<TABLE>
<CAPTION>
Contracts issued prior to May 16, 1983 SIX
MONTHS
ENDED FOR THE YEARS ENDED DECEMBER 31,
JUNE 30, (DERIVED FROM AUDITED FINANCIAL INFORMATION)
-------- --------------------------------------------------------
1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income........................ $ .104 $ .192 $ .189 $ .192 $ .201 $ .199
Operating expenses............................. .056 .100 .092 .085 .077 .069
-------- ------- ------- ------- ------- -------
Net investment income.......................... .048 .092 .097 .107 .124 .130
Unit value at beginning of period.............. 7.120 7.194 6.664 6.587 5.145 5.383
Net realized and change in unrealized gains
(losses)..................................... 1.405 (.166) .433 (.030) 1.318 (.368)
-------- ------- ------- ------- ------- -------
Unit value at end of period.................... $ 8.573 $ 7.120 $ 7.194 $ 6.664 $ 6.587 $ 5.145
======== ======= ======= ======= ======= =======
SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase (decrease) in unit value.......... 1.45 (.07) .53 .08 1.44 (.24)
Ratio of operating expenses to average net
assets....................................... 1.45%# 1.41% 1.33% 1.33% 1.33% 1.33%
Ratio of net investment income to average net
assets....................................... 1.25%# 1.30% 1.40% 1.67% 2.11% 2.50%
Units outstanding at end of period (thousands) 18,862 19,557 21,841 22,516 24,868 28,053
Portfolio turnover rate........................ 47% 103% 81% 189% 319% 54%
</TABLE>
<TABLE>
<CAPTION>
Contracts issued on or after May 16, 1983 SIX
MONTHS
ENDED FOR THE YEARS ENDED DECEMBER 31,
JUNE 30, (DERIVED FROM AUDITED FINANCIAL INFORMATION)
-------- --------------------------------------------------------
1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income........................ $ .102 $ .189 $ .184 $ .188 $ .198 $ .192
Operating expenses............................. .064 .115 .106 .098 .091 .079
-------- -------- -------- -------- -------- ---------
Net investment income.......................... .038 .074 .078 .090 .107 .113
Unit value at beginning of period.............. 6.917 7.007 6.507 6.447 5.048 5.295
Net realized and change in unrealized gains
(losses)..................................... 1.363 (.164) .422 (.030) 1.292 (.360)
-------- -------- -------- -------- -------- ---------
Unit value at end of period.................... $ 8.318 $ 6.917 $ 7.007 $ 6.507 $ 6.447 $ 5.048
========= ======== ======== ======== ======== =========
SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase (decrease) in unit value.......... 1.40 (.09) .50 .06 1.40 (.25)
Ratio of operating expenses to average net
assets....................................... 1.70%# 1.65% 1.57% 1.58% 1.58% 1.57%
Ratio of net investment income to average net
assets....................................... 1.00%# 1.05% 1.15% 1.43% 1.86% 2.25%
Units outstanding at end of period (thousands) 26,502 26,692 28,497 29,661 26,235 19,634
Portfolio turnover rate........................ 47% 103% 81% 189% 319% 54%
</TABLE>
# Annualized.
-12-
<PAGE> 15
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF INVESTMENTS (UNAUDITED)
JUNE 30, 1995
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------------------ --------------
<S> <C> <C>
COMMON STOCKS (98.9%)
AMUSEMENTS (1.2%)
Mirage Resorts, Inc. (A) 32,600 $ 998,375
Walt Disney Co. 61,000 3,393,125
-------------
4,391,500
-------------
BANKING (4.5%)
Banc One Corp. 74,137 2,390,918
Bank of Boston Corp. 9,600 360,000
BankAmerica Corp. 13,400 705,175
Barnett Banks, Inc. 13,500 691,875
Chase Manhattan Corp. 14,300 672,100
Citicorp 55,900 3,235,212
First Interstate Bancorp 9,300 746,325
First Union Corp. 13,600 615,400
J.P. Morgan & Co. 16,900 1,185,113
Mellon Bank Corp. 12,800 532,800
NationsBank Corp. 42,400 2,273,700
Norwest Corp. 62,400 1,794,000
U.S. Bancorp 38,600 928,812
Wells Fargo & Co. 4,500 811,125
-------------
16,942,555
-------------
CHEMICALS, PHARMACEUTICALS AND
ALLIED PRODUCTS (13.1%)
Abbott Laboratories 66,700 2,701,350
American Home Products Corp. 29,100 2,251,612
Amgen (A) 11,900 956,462
Bristol-Myers Squibb Co. 68,300 4,652,937
Dow Chemical Co. 48,700 3,500,312
E.I. Dupont de Nemours & Co. 60,100 4,131,875
Eastman Chemical Company 17,100 1,017,450
Eli Lilly & Co. 25,900 2,033,150
Forest Labs, Inc. (A) 23,600 1,047,250
Geon Co. 41,700 1,198,875
International Flavors & Fragrances 40,700 2,024,825
Johnson & Johnson 74,200 5,017,775
Merck & Co., Inc. 87,100 4,267,900
Mylan Labs, Inc. 12,100 372,075
Pfizer, Inc. 29,600 2,734,300
Praxair, Inc. 74,700 1,867,500
Procter & Gamble Co. 71,900 5,167,813
Schering-Plough Corp. 43,200 1,906,200
Union Carbide Corp. 46,800 1,561,950
W.R. Grace & Co. 7,800 478,725
-------------
48,890,336
-------------
COMMUNICATION (10.1%)
Ameritech Corp. 60,800 2,675,200
AT&T Corp. 168,000 8,925,000
Bell Atlantic Corp. 44,100 2,469,600
Bellsouth Corp. 53,800 3,416,300
Capital Cities ABC, Inc. 20,500 2,214,000
CBS, Inc. 13,465 902,155
GTE Corp. 82,200 2,805,075
MCI Communications Corp. 58,300 1,278,956
NYNEX Corp. 62,700 2,523,675
Pacific Telesis Group 20,000 535,000
Sprint Corp. 33,500 1,126,438
SBC Communications, Inc. 81,100 3,862,388
Tele-Communications, Inc. (A) 61,000 1,429,687
U.S. West, Inc. 18,000 749,250
Viacom International, Inc. Cl. B (A) 55,700 2,583,088
-------------
37,495,812
-------------
CONTRACTORS (0.7%)
Fluor Corp. 25,700 1,336,400
Halliburton Co. 33,800 1,208,350
-------------
2,544,750
-------------
ELECTRICAL AND ELECTRONIC MACHINERY (6.6%)
Amphenol Corp. (A) 58,100 1,692,162
Andrew Corp. (A) 15,200 879,700
General Electric Co. 164,000 9,245,500
Intel Corp. (A) 70,200 4,444,537
Maxim Integrated Products (A) 16,700 851,700
Micron Technology 18,000 987,750
Motorola, Inc. 43,700 2,933,363
Scientific-Atlanta, Inc. 45,400 998,800
Texas Instruments, Inc. 18,000 2,409,750
-------------
24,443,262
-------------
FINANCE (4.2%)
American Express Co. 43,300 1,520,912
Dean Witter Discover & Co. 39,200 1,842,400
Federal Home Loan Corp. 37,100 2,550,625
Federal National Mortgage Assoc. 33,900 3,199,313
Green Tree Financial Corp. 21,400 949,625
Household International 19,300 955,350
ITT Corp. 26,400 3,102,000
Lehman Brothers Holding, Inc. 78,600 1,719,375
-------------
15,839,600
-------------
FOOD (9.2%)
Archer-Daniels Midland Co. 103,200 1,922,100
Campbell Soup Co. 20,900 1,024,100
Coca-Cola Co. 134,400 8,568,000
CONAGRA, Inc. 57,500 2,005,312
CPC International, Inc. 13,300 821,275
H.J. Heinz Co. 22,400 994,000
Kellogg Co. 7,800 556,725
McDonalds Corp. 82,200 3,216,075
PepsiCo, Inc. 72,400 3,303,250
Philip Morris, Inc. 80,700 6,002,063
Ralston-Purina Group 30,700 1,565,700
Sara Lee Corp. 45,500 1,296,750
Seagram Co. Ltd. 31,100 1,076,838
Unilever NV 13,400 1,743,675
-------------
34,095,863
-------------
FURNITURE AND FIXTURES (0.2%)
Masco Corp. 24,600 664,200
-------------
</TABLE>
-13-
<PAGE> 16
STATEMENT OF INVESTMENTS (UNAUDITED) - CONTINUED
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------------ -----------
<S> <C> <C>
INSURANCE (3.2%)
Aetna Life & Casualty Co. 10,400 $ 653,900
American International Group 34,900 3,978,600
Chubb Corp. 23,300 1,866,912
CIGNA Corp. 6,800 527,850
General Reinsurance Corp. 3,700 495,338
Jefferson Pilot Corp. 28,500 1,560,375
Lincoln National Corp. 9,100 398,125
Saint Paul Companies 26,500 1,305,125
Transamerica Corp. 22,300 1,298,975
-------------
12,085,200
-------------
LUMBER AND WOOD PRODUCTS (0.6%)
Georgia-Pacific Corp. 9,300 806,775
Weyerhaeuser Co. 32,500 1,531,563
-------------
2,338,338
-------------
MACHINERY (6.7%)
Apple Computers, Inc. 11,000 511,500
Black & Decker Corp. 35,500 1,096,062
Cabletron System, Inc. (A) 32,500 1,730,625
Caterpillar, Inc. 32,700 2,100,975
Cisco Systems, Inc. (A) 25,300 1,279,231
Compaq Computer Corp. (A) 13,800 626,175
Deere & Co. 13,000 1,113,125
Dell Computer Corp. (A) 20,800 1,251,900
Digital Equipment Corp. (A) 28,500 1,161,375
Harnischfeger Industries 29,400 1,017,975
Hewlett Packard Co. 48,800 3,635,600
International Business Machines Corp. 45,000 4,320,000
Silicon Graphics, Inc. (A) 40,800 1,626,900
Stewart & Stevenson Services, Inc. 100 3,606
Tenneco, Inc. 17,800 818,800
3Com Corp. (A) 16,900 1,132,300
Varity Corp. (A) 39,200 1,724,800
-------------
25,150,949
-------------
METAL PRODUCTS (2.4%)
Ball Corp. 37,800 1,318,275
Gillette Co. 65,800 2,936,325
Nucor Corp. 8,000 428,000
Parker-Hannifin Corp. 28,200 1,022,250
Phelps Dodge Corp. 22,500 1,327,500
Reynolds Metals Co. 21,600 1,117,800
USX-U.S. Steel Group 25,800 886,875
-------------
9,037,025
-------------
MINING (0.5%)
Barrick Gold Corp. 31,200 787,800
Placer Dome, Inc. 41,500 1,084,188
-------------
1,871,988
-------------
MISCELLANEOUS MANUFACTURING (3.1%)
Becton Dickinson & Co. 25,900 1,508,675
Biomet, Inc. (A) 6,800 104,975
Eastman Kodak Co. 31,700 1,921,812
Emerson Electric Co. 18,300 1,308,450
Honeywell, Inc. 12,300 530,438
KLA Instruments Corp. (A) 27,200 2,104,600
Medtronics, Inc. 25,000 1,928,125
Raytheon Co. 11,300 877,163
Xerox Corp. 9,900 1,160,775
-------------
11,445,013
-------------
OIL & GAS (0.5%)
Anadarko Petroleum 15,300 659,812
Schlumberger Ltd. 16,600 1,031,275
-------------
1,691,087
-------------
PAPER AND ALLIED PRODUCTS (0.9%)
Champion International Corp. 9,100 474,337
International Paper Co. 12,500 1,071,875
Stone Container Corp. (A) 51,600 1,096,500
Temple Inland, Inc. 19,400 923,925
-------------
3,566,637
-------------
PETROLEUM REFINING AND
RELATED INDUSTRIES (8.6%)
Amoco Corp. 65,000 4,330,625
Ashland Oil, Inc. 5,000 175,625
Atlantic Richfield, Inc. 25,000 2,743,750
Chevron Corp. 62,200 2,900,075
Exxon Corp. 124,600 8,799,875
Mobil Corp. 45,400 4,358,400
Phillips Petroleum Co. 24,500 817,688
Royal Dutch Petroleum Co. 58,700 7,154,063
Texaco, Inc. 10,700 702,188
-------------
31,982,289
-------------
PRINTING, PUBLISHING AND
ALLIED INDUSTRIES (0.5%)
A.H. Belo 2,500 76,562
Franklin Quest Co. (A) 16,100 386,400
Time Warner Inc. 29,400 1,209,075
Times Mirror Co. 8,900 212,488
-------------
1,884,525
-------------
RETAIL (5.3%)
Albertsons, Inc. 62,100 1,847,475
Circuit City Stores, Inc. 45,500 1,438,937
Darden Restaurants, Inc. (A) 10,000 108,750
Dayton Hudson Corp. 23,300 1,671,775
Dillard Department Stores 17,400 511,125
Home Depot, Inc. 23,366 949,244
J.C. Penney Co. 21,200 1,017,600
Kmart Corp. 20,000 292,500
Limited, Inc. 29,600 651,200
May Department Stores 24,000 999,000
Safeway, Inc. (A) 29,200 1,091,350
Sears Roebuck & Co. 34,600 2,071,675
Tandy Corp. 13,600 705,500
The GAP, Inc. 17,700 617,288
Toys R Us (A) 34,913 1,021,205
Wal-Mart Stores, Inc. 180,900 4,839,075
-------------
19,833,699
-------------
RUBBER AND PLASTIC PRODUCTS (0.5%)
Nike, Inc. 20,200 1,696,800
-------------
SERVICES (3.5%)
Columbia/HCA Healthcare Corp. 56,900 2,460,925
Computer Associates International 13,400 907,850
CUC International, Inc. (A) 17,600 739,200
Healthcare & Retirement CP (A) 33,600 982,800
Microsoft (A) 52,100 4,711,794
Novell, Inc. (A) 13,500 269,156
Oracle Systems Corp. (A) 81,350 3,137,059
-------------
13,208,784
-------------
</TABLE>
-14-
<PAGE> 17
STATEMENT OF INVESTMENTS (UNAUDITED) - CONTINUED
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------------ -----------
<S> <C> <C>
STONE, CLAY, GLASS, AND
CONCRETE PRODUCTS (0.6%)
Minnesota Mining & Manufacturing Co. 36,300 $ 2,078,175
Owens Corning Fiberglass (A) 6,800 250,750
-------------
2,328,925
-------------
TOBACCO MANUFACTURERS (0.7%)
RJR Nabisco Holding Corp. 92,400 2,575,650
-------------
TRANSPORTATION (1.9%)
AMR, Inc. (A) 23,000 1,716,375
Conrail, Inc. 24,900 1,385,062
CSX Corp. 10,000 751,250
Norfolk Southern Corp. 27,000 1,819,125
Pittston Co. 61,900 1,485,600
-------------
7,157,412
-------------
TRANSPORTATION MANUFACTURING (4.7%)
Boeing Co. 52,400 3,281,550
Chrysler Corp. 46,400 2,221,400
Eaton Corp. 6,100 354,563
Echlin, Inc. 5,400 187,650
Ford Motor Co. 111,100 3,305,225
General Motors Corp. 50,700 2,376,563
Martin-Marietta Corp. 24,939 1,574,274
McDonnell Douglas Corp. 33,900 2,601,825
United Technologies Corp. 19,200 1,500,000
-------------
17,403,050
-------------
UTILITIES (4.0%)
Baltimore Gas & Electric Co. 29,400 735,000
Carolina Power & Light Co. 23,000 695,750
Central & Southwest Corp. 42,400 1,113,000
Cinergy Corp. 25,900 679,875
Dominion Resources, Inc. 17,100 624,150
Enron Corp. 20,500 720,063
Florida Power & Light Co. 35,200 1,359,600
NIPSCO Industries, Inc. 31,800 1,081,200
Pacific Enterprises 22,200 543,900
Panhandle Eastern Corp. 56,800 1,384,500
PECO Energy Co. 63,800 1,762,475
Public Service Co. of Colorado 31,800 1,033,500
Public Service Enterprises Group 34,500 957,375
Southern Co. 93,700 2,096,538
-------------
14,786,926
-------------
WHOLESALE TRADE (0.9%)
Alco Standard Corp. 19,000 1,517,625
Arrow Electronics (A) 24,700 1,228,825
Cardinal Health, Inc. 13,000 614,250
-------------
3,360,700
-------------
TOTAL COMMON STOCKS
(COST $307,473,653) 368,712,875
-------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
------------ -----------
<S> <C> <C>
SHORT-TERM INVESTMENTS (1.1%)
COMMERCIAL PAPER (0.8%)
UBS Financial, Inc.,
6.20% due July 5, 1995 $3,200,000 $ 3,197,241
-------------
U.S. GOVERNMENT SECURITIES (0.3%)
United States of America Treasury,
6.04% due September 21, 1995 (C) 355,000 336,661
United States of America Treasury,
6.05% due September 21, 1995 (C) 500,000 474,216
United States of America Treasury,
6.20% due September 21, 1995 200,000 193,696
-------------
1,004,573
-------------
TOTAL SHORT-TERM INVESTMENTS
(COST $4,200,769) 4,201,814
-------------
</TABLE>
<TABLE>
<CAPTION>
NOTIONAL
VALUE
----------
<S> <C> <C>
FUTURES CONTRACTS (0.0%)
S&P 500 Stock Index,
Exp. September, 1995 (D) $9,301,550 -
-------------
TOTAL INVESTMENTS (100%)
(COST $311,674,422) (B) $ 372,914,689
=============
</TABLE>
NOTES
(A) Non-income Producing Security.
(B) At June 30, 1995, net unrealized appreciation for all securities was
$61,240,267. This consisted of aggregate gross unrealized appreciation
for all securities in which there was an excess of market value over
cost of $63,009,745 and aggregate gross unrealized depreciation for all
securities in which there was an excess of cost over market value of
$1,769,478.
(C) Par value of $790,000 pledged to cover margin deposits on futures
contracts.
(D) As more fully discussed in Note 1 to the financial statements, it is
Account GIS's practice to hold cash and cash equivalents (including
short-term investments) at least equal to the underlying face value, or
notional value, of outstanding purchased futures contracts, less the
initial margin. Account GIS uses futures contracts as a substitute for
holding individual securities.
See Notes to Financial Statements
-15-
<PAGE> 18
THE TRAVELERS
QUALITY BOND ACCOUNT
FOR VARIABLE ANNUITIES
The bond market recovered from 1994's negative total return with the Lehman
Government/Corporate Index up in the first half. May had the most impressive
performance, as payroll employment figures turned negative in April and May,
the first back to back reduction in non-farm payroll numbers since January of
1992. The month of May was the best month in the bond market since February
1986. Market expectations have shifted from expecting continued Federal
Reserve Board ("Fed") tightening at the beginning of the year to expectations
of Fed easing.
The fund's performance was helped by its overweighting in corporates and strong
performance from issues like Sears Roebuck & Co. and Delta Airlines, whose
spreads have narrowed significantly. The portfolio's underweighting in the
one- to three-year maturity sector hurt the fund's performance, offsetting the
advantage of a slightly long duration mismatch.
While the economy has slowed more than we expected at the beginning of the
year, the magnitude and duration of this slowdown are still unclear. The
slowing that has occurred already has enabled the ten-year U.S. Treasury Bond
rate to decrease over 1.5% this year. A reduction of the Fed Funds rate to a
5.50% or perhaps 5.00% level is possible but may not add much more to economic
growth since a decrease in rates has already been priced into the bond market.
The question remains how weak is the economy and how long will the weakness
persist. We lean towards the scenario of a modest slowdown, much like the
modest recovery, with growth resuming by the end of this year. Capacity
utilization and unemployment have not yet fallen that far below the historic
inflation triggers that they reached last year, so that if growth picks up by
late this year or in the first half of next year, the Fed will have to resume
their bias towards tightening. This view implies rising short-term and
intermediate-term rates next year with the curve flattening, assuming the
market remains comfortable with the Fed's anti-inflation resolve. The key
question is from what level do rates start increasing again.
We are staying close to our duration targets until we develop more conviction
that the slowdown has ended. We are underweighting the two-year maturity range
because we think this is the most vulnerable part of the yield curve after
growth resumes. We are offsetting this by overweighting five-year maturities.
In terms of sector strategy, the areas of the corporate bond market that tend
to be more recession proof are being favored in asset selection. Relative
spreads are not compensating investors for any recession risk. We are using the
recent corporate spread widening to selectively buy media, utility, and
consumer product names that should still show solid earnings in the event of a
slowdown. Our portfolios are emphasizing securities that enjoy attractive
roll-downs in the four-year and eight-year part of the yield curve. In the
mortgage market, the recent increase in volatility and the decline in interest
rates has caused this sector to widen. We are selectively looking for well
structured securities to add as corporate proxies, as well as sufficiently
seasoned high coupon collateral as cushion paper that should provide
incremental return.
-16-
<PAGE> 19
THE TRAVELERS QUALITY BOND ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 1995
<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (identified cost $171,501,775)........... $175,307,677
Cash............................................................................ 220,109
Receivables:
Interest...................................................................... 2,375,279
Purchase payments and transfers from other Travelers accounts................. 264,411
Other assets.................................................................... 1,033
------------
Total Assets.............................................................. 178,168,509
------------
LIABILITIES:
Payables:
Investment securities purchased............................................... 10,568,639
Contract surrenders and transfers to other Travelers accounts................. 88,951
Investment management and advisory fees....................................... 5,964
Accrued liabilities............................................................. 22,620
------------
Total Liabilities......................................................... 10,686,174
------------
NET ASSETS:........................................................................ $167,482,335
============
</TABLE>
See Notes to Financial Statements
-17-
<PAGE> 20
THE TRAVELERS QUALITY BOND ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest....................................................... $ 5,799,976
EXPENSES:
Investment management and advisory fees........................ $ 264,560
Insurance charges.............................................. 960,108
------------
Total expenses.............................................. 1,224,668
---------------
Net investment income.................................... 4,575,308
---------------
REALIZED LOSS AND CHANGE IN UNREALIZED GAIN (LOSS) ON
INVESTMENT SECURITIES:
Realized loss from investment security transactions:
Proceeds from investment securities sold.................... 38,244,713
Cost of investment securities sold.......................... 38,770,622
------------
Net realized loss........................................ (525,909)
Change in unrealized gain (loss) on investment securities:
Unrealized loss at December 31, 1994........................ (6,629,315)
Unrealized gain at June 30, 1995............................ 3,805,902
------------
Net change in unrealized gain (loss) for the period...... 10,435,217
--------------
Net realized loss and change in unrealized gain
(loss)............................................. 9,909,308
--------------
Net increase in net assets resulting from operations........... $ 14,484,616
==============
</TABLE>
See Notes to Financial Statements
-18-
<PAGE> 21
THE TRAVELERS QUALITY BOND ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1995 1994
---- ----
(UNAUDITED)
<S> <C> <C>
OPERATIONS:
Net investment income ................................................. $ 4,575,308 $ 10,078,150
Net realized loss from investment security transactions................ (525,909) (1,194,328)
Net change in unrealized gain (loss) on investment securities.......... 10,435,217 (13,194,301)
------------- --------------
Net increase (decrease) in net assets resulting from operations..... 14,484,616 (4,310,479)
------------- --------------
UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 1,469,540 and 6,301,055 units, respectively)......... 6,596,813 27,333,447
Participant transfers from other Travelers accounts
(applicable to 1,445,560 and 5,749,483 units, respectively)......... 6,495,481 24,892,067
Administrative charges
(applicable to 15,665 and 36,754 units, respectively)............... (73,722) (157,847)
Contract surrenders
(applicable to 1,918,032 and 4,071,409 units, respectively)......... (8,624,220) (17,682,850)
Participant transfers to other Travelers accounts
(applicable to 3,101,576 and 11,082,480 units, respectively)........ (13,867,146) (47,893,070)
Other payments to participants
(applicable to 54,065 and 93,315 units, respectively)............... (248,278) (408,660)
------------- --------------
Net decrease in net assets resulting from unit transactions......... (9,721,072) (13,916,913)
------------- --------------
Net increase (decrease) in net assets............................. 4,763,544 (18,227,392)
NET ASSETS:
Beginning of period.................................................... 162,718,791 180,946,183
------------- --------------
End of period.......................................................... $ 167,482,335 $ 162,718,791
============= ==============
</TABLE>
See Notes to Financial Statements
-19-
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
The Travelers Quality Bond Account for Variable Annuities ("Account QB") is a
separate account of The Travelers Insurance Company ("The Travelers"), an
indirect wholly owned subsidiary of Travelers Group Inc., and is available for
funding certain variable annuity contracts issued by The Travelers. Account QB
is registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company.
The following is a summary of significant accounting policies consistently
followed by Account QB in the preparation of its financial statements.
SECURITY VALUATION. Investments in securities traded on a national securities
exchange are valued at the last-reported sale price as of the close of business
of the New York Stock Exchange on the last business day of the period;
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.
When market quotations are not considered to be readily available for long-term
corporate bonds and notes, such investments are generally stated at fair value
on the basis of valuations furnished by a pricing service. These valuations
are determined for normal institutional-size trading units of such securities
using methods based on market transactions for comparable securities and
various relationships between securities which are generally recognized by
institutional traders. Securities, including restricted securities, for which
pricing services are not readily available, are valued by management at prices
which it deems in good faith to be fair.
Short-term investments for which a quoted market price is available are valued
at market. Short-term investments for which there is no reliable quoted market
price are valued by computing a market value based upon quotations from dealers
or issuers for securities of a similar type, quality and maturity.
FUTURES CONTRACTS. Account QB may use interest rate futures contracts as a
substitute for the purchase or sale of individual securities. When Account QB
enters into a futures contract, it agrees to buy or sell specified debt
securities at a future time for a fixed price, unless the contract is closed
prior to expiration. Account QB is obligated to deposit with a broker an
"initial margin" equivalent to a percentage of the face, or notional value of
the contract.
It is Account QB's practice to hold cash and cash equivalents (including
short-term investments) in an amount at least equal to the notional value of
outstanding purchased futures contracts, less the initial margin. Generally,
futures contracts are closed prior to expiration.
Futures contracts purchased by Account QB are priced and settled daily;
accordingly, changes in daily prices are recorded as realized gains or losses
and no asset is recorded in the Statement of Investments. However, when
Account QB holds open futures contracts, it assumes a market risk generally
equivalent to the underlying market risk of change in the value of the debt
securities associated with the futures contract.
REPURCHASE AGREEMENTS. When Account QB enters into a repurchase agreement (a
purchase of securities whereby the seller agrees to repurchase the securities
at a mutually agreed upon date and price), the repurchase price of the
securities will generally equal the amount paid by Account QB plus a negotiated
interest amount. The seller under the repurchase agreement will be required to
provide to Account QB securities (collateral) whose market value, including
accrued interest, will be at least equal to 102% of the repurchase price.
Account QB monitors the value of collateral on a daily basis. Repurchase
agreements will be limited to transactions with national banks and reporting
broker dealers believed to present minimal credit risks. Account QB's
custodian will take actual or constructive receipt of all securities underlying
repurchase agreements until such agreements expire.
FEDERAL INCOME TAXES. The operations of Account QB form a part of the total
operations of The Travelers and are not taxed separately. The Travelers is
taxed as a life insurance company under the Internal Revenue Code of 1986, as
amended (the "Code"). Under existing federal income tax law, no taxes are
payable on the investment income and capital gains of Account QB. Account QB
is not taxed as a "regulated investment company" under Subchapter M of the
Code.
OTHER. Security transactions are accounted for on the trade date. Interest
income is recorded on the accrual basis.
-20-
<PAGE> 23
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED
2. INVESTMENTS
Purchases and sales of securities other than short-term investments aggregated
$40,247,429 and $30,810,480, respectively, for the six months ended June 30,
1995. Realized gains and losses from security transactions are reported on an
identified cost basis.
Net realized losses resulting from futures contracts were $132,050 for the year
ended December 31, 1994. These losses are included in the net realized loss
from investment security transactions on the Statement of Changes in Net
Assets.
3. CONTRACT CHARGES
Investment management and advisory fees are calculated daily at an annual rate
of 0.3233% of Account QB's average net assets. These fees are paid to
Travelers Asset Management International Corporation, an indirect wholly owned
subsidiary of Travelers Group Inc.
Insurance charges are paid to The Travelers for the mortality and expense risks
assumed by The Travelers. On contracts issued prior to May 16, 1983, these
charges are equivalent to 1.0017% of the average net assets of Account QB on an
annual basis. On contracts issued on or after May 16, 1983, the charges for
mortality and expense risks are equivalent to 1.25% of the average net assets
of Account QB on an annual basis. Additionally, for certain contracts in the
accumulation phase, a semi-annual charge of $15 (prorated for partial periods
and level of participation in other separate accounts of The Travelers) is
deducted from participant account balances and paid to The Travelers to cover
administrative charges.
On contracts issued prior to May 16, 1983, The Travelers retained from Account
QB sales charges of $12,944 and $30,136 for the six months ended June 30, 1995
and the year ended December 31, 1994, respectively. The Travelers generally
assesses a 5% contingent deferred sales charge if a participant's purchase
payment is surrendered within five years of its payment date. Contract
surrender payments are stated prior to the deduction of $56,589 and $67,230 of
contingent deferred sales charges for the six months ended June 30, 1995 and
the year ended December 31, 1994, respectively.
4. NET ASSETS HELD BY AFFILIATE
Approximately $719,000 and $722,000 of the net assets of Account QB were held
on behalf of an affiliate of The Travelers as of June 30, 1995 and December
31, 1994, respectively. Transactions with this affiliate during the six months
ended June 30, 1995 and the year ended December 31, 1994, were comprised of
participant purchase payments of approximately $17,000 and $50,000, and
contract surrenders of approximately $86,000 and $115,000, respectively.
5. NET CONTRACT OWNERS' EQUITY
<TABLE>
<CAPTION>
JUNE 30, 1995
-----------------------------------------------
UNIT NET
UNITS VALUE ASSETS
----- ----- ------
<S> <C> <C> <C>
Contracts issued prior to May 16, 1983................. 9,836,573 $ 4.814 $ 47,352,981
Annuity Contracts issued prior to May 16, 1983......... 60,886 4.814 293,105
Contracts issued on or after May 16, 1983.............. 25,646,524 4.671 119,793,363
Annuity Contracts issued on or after May 16, 1983...... 9,181 4.671 42,886
---------------
Net Contract Owners' Equity.............................................................. $ 167,482,335
===============
</TABLE>
-21-
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED
6. SUPPLEMENTARY INFORMATION
(Selected data for a unit outstanding
throughout each period.)
<TABLE>
<CAPTION>
Contracts issued prior to May 16, 1983 SIX
MONTHS
ENDED FOR THE YEARS ENDED DECEMBER 31,
JUNE 30, (DERIVED FROM AUDITED FINANCIAL INFORMATION)
-------- --------------------------------------------------------------
1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income.............. $ .166 $ .318 $ .306 $ .317 $ .304 $ .281
Operating expenses................... .030 .059 .058 .050 .048 .040
--------- --------- --------- --------- --------- --------
Net investment income................ .136 .259 .248 .267 .256 .241
Unit value at beginning of period.... 4.400 4.498 4.150 3.880 3.421 3.181
Net realized and change in unrealized
gains (losses)..................... .278 (.357) .100 .003 .203 (.001)
--------- --------- --------- --------- --------- --------
Unit value at end of period.......... $ 4.814 $ 4.400 $ 4.498 $ 4.150 $ 3.880 $ 3.421
========= ========= ========= ========= ========= =========
SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase (decrease) in unit value .41 (.10) .35 .27 .46 .24
Ratio of operating expenses to average
net assets......................... 1.33%# 1.33% 1.33% 1.33% 1.33% 1.33%
Ratio of net investment income to
average net assets................. 5.80%# 5.87% 5.66% 6.61% 7.09% 7.31%
Units outstanding at end of period
(thousands)........................ 9,897 10,694 12,489 13,416 14,629 16,341
Portfolio turnover rate.............. 20% 27% 24% 23% 21% 41%
</TABLE>
<TABLE>
<CAPTION>
Contracts issued on or after May 16, 1983 SIX
MONTHS
ENDED FOR THE YEARS ENDED DECEMBER 31,
JUNE 30, (DERIVED FROM AUDITED FINANCIAL INFORMATION)
-------- -------------------------------------------------------------
1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income............... $ .162 $ .310 $ .299 $ .311 $ .299 $ .277
Operating expenses.................... .035 .069 .067 .061 .056 .048
-------- ------- -------- -------- -------- --------
Net investment income................. .127 .241 .232 .250 .243 .229
Unit value at beginning of period..... 4.274 4.381 4.052 3.799 3.357 3.129
Net realized and change in unrealized
gains (losses)....................... .270 (.348) .097 .003 .199 (.001)
-------- ------- -------- -------- -------- --------
Unit value at end of period............ $ 4.671 $ 4.274 $ 4.381 $ 4.052 $ 3.799 $ 3.357
======== ======== ======== ======== ======== ========
SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase (decrease) in unit value .40 (.11) .33 .25 .44 .23
Ratio of operating expenses to average
net assets........................... 1.57%# 1.57% 1.57% 1.58% 1.57% 1.57%
Ratio of net investment income to
average net assets................... 5.56%# 5.62% 5.41% 6.38% 6.84% 7.06%
Units outstanding at end of period
(thousands)........................... 25,656 27,033 28,472 20,250 17,211 14,245
Portfolio turnover rate................ 20% 27% 24% 23% 21% 41%
</TABLE>
# Annualized.
-22-
<PAGE> 25
THE TRAVELERS QUALITY BOND ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF INVESTMENTS (UNAUDITED)
JUNE 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------- -----------
<S> <C>
BONDS (80.2%)
AMUSEMENTS (1.3%)
Time Warner Inc.,
9.625% Notes, 2002 $2,000,000 $2,247,694
AUTO RECEIVABLES (2.2%)
Premier Auto Trust 1993-6,
4.65% Pass Through, 1999 810,062 795,002
Premier Auto Trust 1994-4,
6.65% Pass Through, 1998 1,000,000 1,006,866
Premier Auto Trust 1995-3,
6.25% Pass Through, 1999 (A) 2,000,000 1,998,760
-----------
3,800,628
-----------
BANKING (3.8%)
Bank of New York,
6.41% Notes, 1996 (A) 3,000,000 3,000,000
J.P. Morgan & Co.,
0.00% Notes, 1998 2,000,000 1,686,912
Star Bank NA,
6.375% Notes, 2004 2,000,000 1,918,306
-----------
6,605,218
-----------
COLLATERALIZED MORTGAGE
OBLIGATIONS (17.4%)
American Southwest Financial Corp.,
9.00% Pass Through, 2018 796,858 826,603
FNMA Remic Trust 1994-22,
5.00% Pass Through, 2023 2,775,000 2,423,238
FNMA Remic Trust 1994-39,
6.35% Pass Through, 2023 2,000,000 1,916,478
FNMA Remic Trust 1994-42,
5.75% Pass Through, 2018 2,500,000 2,415,148
FNMA Remic Trust 1993-13,
6.50% Pass Through, 2000 2,326,593 2,245,951
GNMA Backed Trust II,
8.50% Pass Through, 2018 811,507 840,924
GNMA Notification,
9.50% Pass Through, 2017 8,004,557 8,487,328
GS Trust 3,
8.00% Pass Through, 2014 386,086 393,781
Kidder Peabody Mortgage Assets Trust 23,
9.88% Pass Through, 2019 1,041,306 1,076,127
Oxford Acceptance Corp.,
9.70% Pass Through, 2017 302,596 314,067
PB CMO Trust II,
9.20% Pass Through, 2018 608,441 628,732
Prudential Home Mortgage 1992-17,
8.00% Pass Through, 2007 2,000,000 2,043,758
Puget Power GT.,1995-1,
6.45% Pass Through, 2005 (A) 3,000,000 3,000,000
Residential Funding Mortgage
Securities 1993-MZ3,
6.97% Pass Through, 2023 (A) 2,394,104 2,310,765
Ryland Acceptance Corp.,
9.00% Pass Through, 2015 666,716 688,984
Vendee Mortgage Trust 1992-1, 2J
7.75% Pass Through, 2005 950,000 981,766
-----------
30,593,650
-----------
COMMUNICATION (4.0%)
AT&T Corp.,
6.00% Debentures, 2000 1,400,000 1,371,142
Cox Communications, Inc.,
6.875% Notes, 2005 4,000,000 3,942,840
Tele-Communications, Inc.,
9.65% Debentures, 2003 1,500,000 1,654,392
-----------
6,968,374
-----------
CREDIT CARD RECEIVABLES (10.0%)
Chase Manhattan Credit Card Master Trust,
8.75% Pass Through, 1996 2,100,000 2,153,254
First Chicago Master Trust II,
6.25% Pass Through, 1999 1,650,000 1,654,569
First Chicago Master Trust II,
8.40% Pass Through, 1996 2,000,000 2,044,318
Household Private Label CC MT,
1994-2 B Ctf
8.00% Pass Through, 2003 3,500,000 3,682,942
MBNA Master Credit Card Trust 1997-1,
7.25% Pass Through, 1999 1,000,000 1,020,899
Signet Credit Card Master Trust, 1993-4 B,
5.80% Pass Through, 1999 (A) 2,000,000 1,953,136
Standard Credit Card MT 1992-3 B,
5.688% Pass Through, 1998 (A) 2,000,000 2,016,876
Standard Credit Card MT, 1991-6 A,
7.875% Pass Through, 2000 2,950,000 3,088,057
-----------
17,614,051
-----------
FINANCE (8.5%)
Abbey National, 6.40%, Certificate of
Deposit, 1996 (A) 3,000,000 3,000,000
Associates Corp. of North America,
9.125% Notes, 2000 2,500,000 2,740,007
Banponce Financial Corp.,
6.00% Notes, 1997 2,000,000 1,977,820
Ford Motor Credit Co.,
6.25% Bonds, 1998 2,000,000 1,998,282
General Motors Acceptance Corp.,
8.75% Notes, 1996 2,000,000 2,028,312
General Motors Acceptance Corp.,
7.75% Notes, 1999 2,000,000 2,074,690
Xerox Credit Corp.,
10.125% Notes, 1999 1,000,000 1,028,179
-----------
14,847,290
-----------
</TABLE>
-23-
<PAGE> 26
STATEMENT OF INVESTMENTS (UNAUDITED) - CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
<S> <C> <C>
FOOD (1.3%)
Bacardi Martini,
5.75% Notes, 1998 (A) $2,250,000 $ 2,212,335
-------------
FOREIGN GOVERNMENT NON-NATIONAL (2.1%)
Province of Ontario,
8.0%, Bonds, 2001 3,500,000 3,755,427
-------------
MISCELLANEOUS MANUFACTURING (1.9%)
Becton Dickinson & Co.,
8.80% Notes, 2001 3,000,000 3,326,529
-------------
PAPER AND ALLIED PRODUCTS (0.6%)
Champion International Corp.,
7.70% Notes, 1999 1,000,000 1,040,176
-------------
PETROLEUM REFINING AND
RELATED INDUSTRIES (1.9%)
Hydro Quebec,
8.625% Notes, 2002 3,100,000 3,363,810
-------------
RETAIL (4.8%)
Dayton-Hudson Corp.,
9.65% Notes, 2000 1,900,000 2,129,615
Sears Roebuck & Co.,
8.55% Notes, 1996 2,500,000 2,564,097
Sears Roebuck & Co.,
8.98% Notes, 1996 1,500,000 1,541,295
Sears Roebuck & Co.,
9.38% Notes, 1998 550,000 591,653
Sears Roebuck & Co.,
9.23% Notes, 1998 1,500,000 1,618,359
-------------
8,445,019
-------------
SERVICES (1.8%)
Electronic Data System,
7.125% Notes, 2005 (A) 3,000,000 3,115,170
-------------
TOBACCO MANUFACTURERS (1.7%)
Philip Morris Companies, Inc.,
9.80% Notes, 1998 3,000,000 3,052,773
-------------
TRANSPORTATION (3.3%)
American Airlines, Inc., 1993-A4,
6.50% Notes, 1997 1,896,000 1,890,672
Delta Airlines, Inc.,
8.27% Sinking Fund, 2007 1,800,054 1,855,404
Delta Airlines, Inc.,
9.25% Sinking Fund, 2007 (A) 1,910,242 2,066,232
-------------
5,812,308
-------------
TRANSPORTATION MANUFACTURING (2.7%)
Ford Motor Co.,
6.27% Notes, 2000 3,724,735 3,710,342
General Motors Acceptance Corp.,
8.00% Notes, 1997 1,000,000 1,026,690
-------------
4,737,032
-------------
UTILITIES (10.9%)
Baltimore Gas & Electric Co.,
9.125% Bonds, 1995 1,750,000 1,763,837
Boston Edison Co.,
5.95% Debentures, 1998 1,000,000 977,543
DQU II Funding,
7.23% Bonds, 1999 1,772,000 1,782,568
Florida Gas Transmission,
7.75% Notes, 1997 2,500,000 2,593,750
Long Island Lighting Co.,
8.75% Bonds, 1996 1,500,000 1,525,017
NIPSCO Capital Market, Inc.,
0.00% Bonds, 1997 4,500,000 3,809,880
System Energy Resources, Inc.,
6.12% Bonds, 1995 2,000,000 1,995,206
Transco Energy Co.,
9.125% Notes, 1998 1,000,000 1,069,787
United Illuminating Company,
7.375% Debentures, 1998 3,500,000 3,537,737
19,055,325
-------------
TOTAL BONDS
(COST $136,326,623) 140,592,809
-------------
U.S. GOVERNMENT
SECURITIES (17.5%)
United States of America Treasury,
5.625% Notes, 1997 175,000 174,289
United States of America Treasury,
8.50% Notes, 1997 1,500,000 1,576,875
United States of America Treasury,
9.125% Notes, 1999 2,000,000 2,216,250
United States of America Treasury,
6.875% Notes, 1999 1,500,000 1,548,750
United States of America Treasury,
4.25% Notes, 1995 2,000,000 1,986,872
United States of America Treasury,
4.75% Notes, 1998 2,000,000 1,932,500
United States of America Treasury,
5.75% Notes, 2003 2,000,000 1,941,250
United States of America Treasury,
6.25% Notes, 2003 8,660,000 8,681,650
United States of America Treasury,
7.875% Notes, 2004 6,000,000 6,680,616
United States of America Treasury,
5.875% Notes, 2004 4,000,000 3,910,000
-------------
TOTAL U.S. GOVERNMENT
SECURITIES (COST $31,109,274) 30,649,052
-------------
</TABLE>
-24-
<PAGE> 27
STATEMENT OF INVESTMENTS (UNAUDITED) - CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
<S> <C> <C>
SHORT-TERM INVESTMENTS (2.3%)
Commercial Paper (2.3%)
Generale Bank,
6.10% due July 28, 1995 $4,130,000 $ 4,065,816
---------------
TOTAL SHORT-TERM INVESTMENTS
(COST $4,065,878) 4,065,816
---------------
TOTAL INVESTMENTS (100%)
(COST $171,501,775) (B) $ 175,307,677
===============
</TABLE>
NOTES
(A) Management Priced Security.
(B) At June 30, 1995, net unrealized appreciation for all securities was
$3,805,902. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over cost of
$5,533,832 and aggregate gross unrealized depreciation for all securities
in which there was an excess of cost over market value of $1,727,930.
See Notes to Financial Statements
-25-
<PAGE> 28
THE TRAVELERS
MONEY MARKET ACCOUNT
FOR VARIABLE ANNUITIES
The first half of 1995 was for the most part uneventful with the Federal
Reserve Board ("Fed") taking a wait and see attitude towards the economy. The
Fed had been on hold as it assessed the results of its prior tightenings. The
second quarter was quite sluggish in comparison to the first quarter, as the
Fed was moving the economy into a "soft landing". It was evident that
inflation did not cause a problem, but there is some serious concern that the
Fed's moderate growth policy will need some adjustments for the second half of
the year.
The strategy in management of the Travelers Money Market Account's short-term
assets did not change in the second quarter as we continued to invest in the
30- to 60-day maturity range. Short-term rates were most attractive in this
part of the short-term curve. At quarter end the short-term assets remained
stable with a slight increase over the prior quarter and the portfolio's
average life remained at 21 days, unchanged from the prior quarter.
With rates remaining attractive in the 30- to 60-day maturity range the
management of the Travelers Money Market Account's short-term assets will
continue to be invested in this part of the curve. Because of an inverted
yield curve in commercial paper beginning 60- to 90-days, and the economy
showing signs of a much greater slowdown than expected, we will continue to
invest in the 30- to 60-day maturity range. This should bring greater returns
and higher yields to the Travelers Money Market Account's participants.
Diversification, protection of principal, and liquidity remain the top priority
of management.
-26-
<PAGE> 29
THE TRAVELERS MONEY MARKET ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF ASSETS AND LIABILITIES (Unaudited)
June 30, 1995
<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (identified cost $77,879,029). . . . . . . . . . . . . . $ 77,873,774
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,077
Receivables:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229,474
Purchase payments and transfers from other Travelers accounts . . . . . . . . . . . . . . . . 743,862
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 399
--------------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78,880,586
--------------
LIABILITIES:
Payables:
Contract surrenders and transfers to other Travelers accounts . . . . . . . . . . . . . . . . 605,377
Investment management and advisory fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,787
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,714
--------------
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 618,878
--------------
NET ASSETS: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 78,261,708
==============
</TABLE>
See Notes to Financial Statements
-27-
<PAGE> 30
THE TRAVELERS MONEY MARKET ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,362,883
EXPENSES:
Investment management and advisory fees . . . . . . . . . . . . . . . . . . . . . . . . $ 127,180
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 489,025
-----------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 616,205
-------------
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,746,678
-------------
Net increase in net assets resulting from operations . . . . . . . . . . . . . . . . . $ 1,746,678
=============
</TABLE>
See Notes to Financial Statements
-28-
<PAGE> 31
THE TRAVELERS MONEY MARKET ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1995 1994
---- ----
(UNAUDITED)
<S> <C> <C>
OPERATIONS:
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,746,678 $ 2,248,581
------------- -------------
Net increase in net assets resulting from operations . . . . . . . . . . . . . . . 1,746,678 2,248,581
------------- -------------
UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 3,400,982 and 14,485,166 units, respectively) . . . . . . . . . . 7,167,874 29,698,901
Participant transfers from other Travelers accounts
(applicable to 16,673,599 and 45,192,925 units, respectively) . . . . . . . . . . 35,181,847 92,615,492
Administrative charges
(applicable to 22,832 and 49,034 units, respectively). . . . . . . . . . . . . . (48,609) (101,345)
Contract surrenders
(applicable to 2,422,136 and 5,130,779 units, respectively) . . . . . . . . . . . (5,110,635) (10,532,362)
Participant transfers to other Travelers accounts
(applicable to 20,778,969 and 48,771,566 units, respectively). . . . . . . . . . . (43,789,279) (100,065,788)
Other payments to participants
(applicable to 18,785 and 290,664 units, respectively). . . . . . . . . . . . . . (39,672) (598,655)
------------- -------------
Net increase (decrease) in net assets resulting from
unit transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,638,474) 11,016,243
------------- -------------
Net increase (decrease) in net assets . . . . . . . . . . . . . . . . . . . . (4,891,796) 13,264,824
NET ASSETS:
Beginning of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83,153,504 69,888,680
------------- -------------
End of period. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 78,261,708 $ 83,153,504
============= =============
</TABLE>
See Notes to Financial Statements
-29-
<PAGE> 32
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED
1. SIGNIFICANT ACCOUNTING POLICIES
The Travelers Money Market Account for Variable Annuities ("Account MM") is a
separate account of The Travelers Insurance Company ("The Travelers"), an
indirect wholly owned subsidiary of Travelers Group Inc., and is available for
funding certain variable annuity contracts issued by The Travelers. Account MM
is registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company.
The following is a summary of significant accounting policies consistently
followed by Account MM in the preparation of its financial statements.
SECURITY VALUATION. Short-term investments for which a quoted market price is
available are valued at market. Short-term investments for which there is no
reliable quoted market price are valued by computing a market value based upon
quotations from dealers or issuers for securities of a similar type, quality
and maturity.
REPURCHASE AGREEMENTS. When Account MM enters into a repurchase agreement (a
purchase of securities whereby the seller agrees to repurchase the securities
at a mutually agreed upon date and price), the repurchase price of the
securities will generally equal the amount paid by Account MM plus a negotiated
interest amount. The seller under the repurchase agreement will be required to
provide to account MM securities (collateral) whose market value, including
accrued interest, will be at least equal to 102% of the repurchase price.
Account MM monitors the value of collateral on a daily basis. Repurchase
agreements will be limited to transactions with national banks and reporting
broker dealers believed to present minimal credit risks. Account MM's
custodian will take actual or constructive receipt of all securities underlying
repurchase agreements until such agreements expire.
FEDERAL INCOME TAXES. The operations of Account MM form a part of the total
operations of The Travelers and are not taxed separately. The Travelers is
taxed as a life insurance company under the Internal Revenue Code of 1986, as
amended (the "Code"). Under existing federal income tax law, no taxes are
payable on the investment income and capital gains of Account MM. Account MM
is not taxed as a "regulated investment company" under Subchapter M of the
Code.
OTHER. Security transactions are accounted for on the trade date. Interest
income is recorded on the accrual basis.
2. CONTRACT CHARGES
Investment management and advisory fees are calculated daily at an annual rate
of 0.3233% of Account MM's net assets. These fees are paid to Travelers Asset
Management International Corporation, an indirect wholly owned subsidiary of
Travelers Group Inc.
Insurance charges are paid to The Travelers for the mortality and expense risks
assumed by The Travelers. On contracts issued prior to May 16, 1983, these
charges are equivalent to 1.0017% of the average net assets of Account MM on an
annual basis. On contracts issued on or after May 16, 1983, the charges for
mortality and expense risks are equivalent to 1.25% of the average net assets
of Account MM on an annual basis. Additionally, for certain contracts in the
accumulation phase, a semi-annual charge of $15 (prorated for partial periods
and the level of participation in other separate accounts of The Travelers) is
deducted from participant account balances and paid to The Travelers to cover
administrative charges.
The Travelers assesses a 5% contingent deferred sales charge if a participant's
purchase payment is surrendered within five years of its payment date.
Contract surrender payments are stated prior to the deduction of $60,786 and
$98,960 of contingent deferred sales charges for the six months ended June 30,
1995 and the year ended December 31, 1994, respectively.
3. NET ASSETS HELD BY AFFILIATE
Approximately $1,794,000 and $862,000 of the net assets of Account MM were held
on behalf of an affiliate of The Travelers as of June 30, 1995 and December 31,
1994, respectively. Transactions with this affiliate during the six months
ended June 30, 1995 and the year ended December 31, 1994, were comprised of
contract surrenders of approximately $62,000 and $800,000, respectively.
Participant purchase payments were approximately $965,000 for the six months
ended June 30, 1995.
-30-
<PAGE> 33
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED
4. NET CONTRACT OWNERS' EQUITY
<TABLE>
<CAPTION>
JUNE 30, 1995
------------------------------------------
UNIT NET
UNITS VALUE ASSETS
----- ----- ------
<S> <C> <C> <C>
Contracts issued prior to May 16, 1983 . . . . . . . . . . . . . . . . 205,856 $ 2.196 $ 452,162
Contracts issued on or after May 16, 1983. . . . . . . . . . . . . . . 36,451,287 2.131 77,690,244
Annuity Contracts issued on or after May 16, 1983. . . . . . . . . . . 55,975 2.131 119,302
-------------
Net Contract Owners' Equity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 78,261,708
=============
</TABLE>
-31-
<PAGE> 34
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED
5. SUPPLEMENTARY INFORMATION
(Selected data for a unit outstanding
throughout each period.)
Contracts issued prior to May 16, 1983
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED FOR THE YEARS ENDED DECEMBER 31,
JUNE 30, (DERIVED FROM AUDITED FINANCIAL INFORMATION)
-------- ----------------------------------------------------------------
1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income . . . . . . . . . . . $ .065 $ .091 $ .067 $ .079 $ .120 $ .151
Operating expenses . . . . . . . . . . . . . .015 .028 .027 .027 .026 .024
------- ------- ------- ------- ------- -------
Net investment income . . . . . . . . . . . . .050 .063 .040 .052 .094 .127
Unit value at beginning of period . . . . . . 2.146 2.083 2.043 1.991 1.897 1.770
------- ------- ------- ------- ------- -------
Unit value at end of period . . . . . . . . . $ 2.196 $ 2.146 $ 2.083 $ 2.043 $ 1.991 $ 1.897
======= ======= ======= ======= ======= =======
SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase in unit value. . . . . . . . . . .05 .06 .04 .05 .09 .13
Ratio of operating expenses to average net
assets . . . . . . . . . . . . . . . . . . 1.33%# 1.33% 1.33% 1.33% 1.33% 1.33%
Ratio of net investment income to average net
assets . . . . . . . . . . . . . . . . . . 4.71%# 2.98% 1.93% 2.58% 4.90% 6.93%
Units outstanding at end of
period (thousands). . . . . . . . . . . . . 206 206 218 227 262 326
</TABLE>
Contracts issued on or after May 16, 1983
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED FOR THE YEARS ENDED DECEMBER 31,
JUNE 30, (DERIVED FROM AUDITED FINANCIAL INFORMATION)
-------- --------------------------------------------------------------
1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income . . . . . . . . . . . $ .063 $ .087 $ .065 $ .077 $ .118 $ .149
Operating expenses . . . . . . . . . . . . . .016 .032 .031 .031 .030 .029
-------- -------- ------- ------- ------- -------
Net investment income . . . . . . . . . . . . .047 .055 .034 .046 .088 .120
Unit value at beginning of period . . . . . . 2.084 2.029 1.995 1.949 1.861 1.741
-------- -------- ------- ------- ------- -------
Unit value at end of period . . . . . . . . . $ 2.131 $ 2.084 $ 2.029 $ 1.995 $ 1.949 $ 1.861
======== ======== ======= ======= ======= =======
SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase in unit value. . . . . . . . . . .05 .06 .03 .05 .09 .12
Ratio of operating expenses to average net
assets . . . . . . . . . . . . . . . . . . 1.57%# 1.57% 1.57% 1.57% 1.57% 1.57%
Ratio of net investment income to average net
assets . . . . . . . . . . . . . . . . . . 4.46%# 2.72% 1.68% 2.33% 4.66% 6.68%
Units outstanding at end of
period (thousands). . . . . . . . . . . . . 36,507 39,675 34,227 42,115 55,013 67,343
</TABLE>
# Annualized.
-32-
<PAGE> 35
THE TRAVELERS MONEY MARKET ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF INVESTMENTS (UNAUDITED)
JUNE 30, 1995
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
<S> <C> <C>
SHORT-TERM INVESTMENTS (100%)
BANKERS ACCEPTANCES (7.9%)
Chemical Bank,
5.92% due July 6, 1995 $3,000,000 $ 2,985,729
Rabobank Nederland NV,
5.97% due July 21, 1995 3,200,000 3,186,813
------------
6,172,542
------------
COMMERCIAL PAPER (92.1%)
Abbey National North America, Inc.,
6.02% due July 14, 1995 3,000,000 2,991,280
Amexs Co.,
5.88% due July 10, 1995 3,000,000 2,981,212
Asset Securitization Coop. Corp.,
6.09% due August 1, 1995 3,500,000 3,447,530
Bausch & Lomb, Inc.,
5.74% due September 1, 1995 3,000,000 2,956,922
Ciesco LP,
5.89% due July 18, 1995 3,000,000 2,978,783
CIT Group Holdings, Inc.,
5.99% due August 11, 1995 3,000,000 2,978,047
Daimler Benz North America Corp.,
5.96% due July 10, 1995 3,000,000 2,991,383
Deutsche Bank Financial, Inc.,
5.87% due July 5, 1995 3,000,000 2,985,255
Dillard Investment Co., Inc.,
5.98% due July 7, 1995 3,000,000 2,995,405
Duke Power Co.,
5.94% due July 12, 1995 3,500,000 3,484,736
Export Development Corp.,
5.96% due July 12, 1995 3,500,000 3,490,477
Glaxo Holdings PLC,
5.97% due September 6, 1995 3,000,000 2,966,231
GE Capital Corp.,
5.97% due July 18, 1995 3,000,000 2,989,474
H.J. Heinz Co.,
5.96% due July 11, 1995 3,500,000 3,472,677
J.C. Penney Funding Corp.,
5.95% due August 25, 1995 3,000,000 2,971,071
Kimberly Clark Corp.,
5.98% due July 12, 1995 3,000,000 2,971,585
Eli Lilly & Co.,
6.12% due September 1, 1995 3,000,000 2,939,707
Panasonic Financial, Inc.,
6.19% due August 8, 1995 1,000,000 980,020
Potomac Electric Power Co.,
6.00% due July 28, 1995 3,500,000 3,483,008
Procter & Gamble Co.,
5.97% due July 20, 1995 3,000,000 2,988,469
Tampa Electric Co.,
5.98% due July 25, 1995 3,600,000 3,580,173
Toys R Us, Inc.,
5.97% due July 13, 1995 1,800,000 1,790,925
UBS Financial, Inc.,
6.20% due July 5, 1995 2,800,000 2,797,586
Weyerhaeuser Co.,
5.95% due July 14, 1995 3,500,000 3,489,276
------------
71,701,232
------------
TOTAL INVESTMENTS (100%)
(COST $77,879,029) $ 77,873,774
============
</TABLE>
See Notes to Financial Statements
-33-
<PAGE> 36
Investment Advisers
-------------------
(THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT)
THE TRAVELERS INVESTMENT MANAGEMENT COMPANY
Hartford, Connecticut
(THE TRAVELERS QUALITY BOND AND MONEY MARKET ACCOUNTS)
TRAVELERS ASSET MANAGEMENT INTERNATIONAL CORPORATION
Hartford, Connecticut
Independent Accountants
-----------------------
COOPERS & LYBRAND, L.L.P.
Hartford, Connecticut
Custodian
THE CHASE MANHATTAN BANK, N.A.
New York, New York
The financial information included herein has been taken from the records of
The Travelers Growth and Income Stock, Quality Bond, and Money Market Accounts.
This financial information has not been audited by the Accounts' independent
accountants, who therefore express no opinion concerning its accuracy.
However, it is management's opinion that all proper adjustments have been made.
This report is prepared for the general information of contract owners and is
not an offer of shares of The Travelers Growth and Income Stock, Quality Bond
and Money Market Accounts. It should not be used in connection with any offer
except in conjunction with the Universal Annuity Prospectus which contains all
pertinent information, including the applicable selling commissions.
VG-137 (S/A) (6/95) Printed in U.S.A.
