TRAVELERS QUALITY BOND ACCOUNT FOR VARIABLE ANNUITIES, N-30D, 1997-02-28

TRAVELERS QUALITY BOND ACCOUNT FOR VARIABLE ANNUITIES
N-30D, 1997-02-28

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<PAGE> 1
UNIVERSAL ANNUITY

ANNUAL REPORTS
DECEMBER 31, 1996

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

[TRAVELERSLIFE AND ANNUITY LOGO]

The Travelers Insurance
The Travelers Life and Annuity Company
One Tower Square
Hartford, CT 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

[TRAVELERSLIFE AND ANNUITY LOGO]

THE TRAVELERS VARIABLE PRODUCT SEPARATE ACCOUNTS
INVESTMENT ADVISORY COMMENTARY AS OF DECEMBER 31, 1996

ECONOMIC REVIEW AND OUTLOOK

As 1996 began, the Federal Government found itself paralyzed by a prolonged
budget dispute. In the financial markets, investors were focused on signs of a
slowing economy. With two-year Treasury notes priced to yield less than the
federal funds rate, the bond market clearly expected the Federal Reserve Board
("Fed") to cut interest rates significantly. The Fed lowered the federal funds
rate by 0.25% in January, but strong employment growth over the next several
months sent the bond market into a tailspin reminiscent of 1994. Interest
rates hit their highest levels for the year in the June to September period as
investors prepared for the Fed to raise interest rates at their September
meeting.

The policymakers at the Fed decided to hold steady at their September meeting
and interest rates declined through the autumn as economic growth once again
slowed. The financial markets also responded positively to the Republicans'
success in retaining control of Congress in the November election. Going into
December, the bond and stock markets reflected a "best of all worlds" scenario
of moderate economic growth with low inflation, low unemployment and a benign
to positive political landscape. Interest rates started to move back up again
in December as some economic indicators strengthened, but ended the year well
below the levels seen in the second and third quarters.

We expect real economic growth to average around 2% in 1997. The consumer
sector, which makes up two thirds of Gross Domestic Product ("GDP"), should
show modest growth. The factors that would otherwise contribute to strong
consumer spending -- low unemployment, high consumer confidence, and the wealth
effects from the strong stock market -- should be muted by high consumer debt
levels (particularly at lower income levels) and lack of pent-up demand. The
export sector should continue to grow 5% to 10% in 1997, helped by the United
States' strong competitive position and continued robust growth in emerging
markets. Growth should improve slightly in Europe and Japan, helped by the
recent strengthening of the dollar against those currencies. The stronger
dollar is likely to be a mixed blessing, by making the prices of foreign
imports more attractive and thereby helping to dampen inflation. The capital
goods sector has slowed in recent quarters, but is still expected to grow
faster than overall U.S. economy. The government sector should continue to be
a drag on GDP growth.

Overall, we believe that the U.S. economy is likely to remain on a path of
moderate non-inflationary growth in 1997. However, because of the current low
level of unemployment, we also expect that the Fed will remain cautious and
biased towards a tighter monetary policy. Whether the Fed acts may depend in
part on market psychology. Upward shifts in long-term bond yields have served
to moderate economic growth in recent years and reduced the need for any major
changes in Fed policy.

-1-

<PAGE> 4

FIXED INCOME COMMENTARY

The U.S. bond market had its best quarter of the year in the fourth quarter.
The Lehman Intermediate Government/Corporate Index returned 2.5% for the
quarter and 4.1% for the full year. For the year, the Lehman Long
Government/Corporate Index provided a total return of only 0.1%. Treasury
bonds with maturities longer than 10 years had negative total returns.

Within the fixed income market, all private issuer sectors outperformed
Treasury bonds as quality spreads continued to narrow. While Treasuries
performed almost as poorly in 1996 as in 1994, the effect on other sectors was
relatively neutral, unlike 1994 when there were problems with mortgage-backed
derivatives, Mexico, and Orange County. The yield curve was also remarkably
stable in 1996, unlike 1994 when short-term interest rates rose considerably.
The mortgage-backed, high yield, and municipal sectors were the best performing
areas in 1996 on a duration-adjusted basis. Within the corporate sector, lower
quality and foreign issues were the best performers based on both higher
coupons and spread tightening.

We expect interest rates to stay in the trading range established in 1996 (the
yield of the 30-year Treasury bond ranged between 6.0% and 7.2%). On one hand,
investors are concerned that low unemployment will eventually give rise to
inflationary wage growth. We believe this sets a floor for long-term bond
yields at about 6.0%. At the upper end of the range, the 7.2% level has proved
to be sufficient to generate increased demand for bonds and depress high risk
asset classes and interest sensitive sectors of the economy. We feel that
central bank vigilance against inflation, globalization, and productivity
improvements will keep inflation under control, preventing interest rates from
rising much above their 1996 high.

Within the fixed income markets, demand for corporate, mortgage-backed and
asset-backed issue continues to be high. Yield spreads (relative to Treasury
issues) for lower and higher quality corporate bonds are quite narrow. The
mortgage-backed and asset-backed markets are similarly compressed, with
investors digging for yield. There is nothing in our economic outlook that is
likely to change the tight spread environment in the near future. We are being
careful, however, to weed out riskier credits and issues that do not offer
enough yield premium to offset their potential for negative surprises. The
foreign area continues to offer opportunities, particularly foreign corporate
bonds that sometimes have very strong balance sheets but are capped by the
rating of their home country. Foreign sovereign credits are also continuing to
improve based on solid global economic growth and increased acceptance of the
need for sound fiscal and monetary policy.

EQUITY COMMENTARY

During 1996, financial markets were repeatedly jolted by changes in sentiment
about the strength of the U.S. economy and the direction of Fed policy. When
investors gained confidence that the economy was continuing on a track of
moderate, non-inflationary growth, the stock market advanced strongly and
posted another year of outstanding performance. For the twelve-month period
ending December 31, 1996, the Standard & Poor's 500 Stock Index ("S&P 500")
provided a total return of 23.0%. Over the same period, the Russell 2000 Stock
Index, a measure of the performance of the small company segment of the equity
market, provided a total return of 16.5%.

After a weak start in January, the stock market moved broadly higher through
the first months of spring. Small company shares advanced strongly in April
and May, led by the technology sector. In late June and July, when long-term
bond yields moved back over 7%, the stock market traded back down to where it
began the year. Recent initial public offerings and more speculative issues
were particularly hard hit during the reversal. Large company stocks quickly
recovered their losses when the bond market stabilized at the end of July.
However, small company stocks continued to struggle. During the autumn,
against the backdrop of lower bond yields, low inflation and surprisingly
resilient corporate earnings, the stock market made its strongest advance of
the year, with large company issues leading the way.

-2-

<PAGE> 5

As measured by the S&P 500, the U.S. stock market has provided a cumulative
total return of nearly 70% over the past two years, capping a six-year bull
market that began in October of 1990. Notwithstanding the strong overall
environment for equities, 1996 marked the third consecutive year of
underperformance by small and mid sized company stocks relative to "blue chip"
indices. The underperformance of small company stocks can be explained in part
by the sharper falloff in earnings growth experienced by smaller companies in
the 1995-96 period. The performance lag also reflected a backing away by
investors from higher risk growth stocks, in an environment of rising interest
rates and market volatility.

Given the frequent alarms raised in 1996 about slowing earnings growth,
investors showed an understandable preference for industry sectors with visible
earnings momentum. In the energy sector, analysts' earnings estimates and
share prices moved sharply higher in response to firmer prices for oil and
natural gas. Stocks in the finance sector also performed exceptionally well
despite emerging credit quality concerns. In the consumer sector, specialty
and broad-line retail stocks were up strongly in response to higher than
expected levels of consumer spending. The technology sector provided superior
returns for investors last year, led by Intel and Microsoft. Within the
technology sector, software, semiconductor and computer product stocks had the
strongest relative performance. Industrial cyclical stocks underperformed, as
soft domestic and export demand led to declining commodity prices for paper,
copper, aluminum, steel and fertilizer products. The health care sector was
mixed. Drug stocks kept pace with the market due to strong earnings gains,
while the HMO group declined sharply on repeated earnings disappointments.
Utilities were the weakest overall sector during the year, held back by the
relatively poor performance of local telephone carriers and electrical
companies.

We are taking a more cautious position toward the U.S. stock market at this
point. Over the past year, the price-to-earnings ratio of the S&P 500 on
12-month forward earnings has increased from 15 to 17 times earnings per share.
This level of valuation is consistent with earlier periods of moderate growth
and low inflation, but leaves no cushion for earnings or inflation
disappointments. After a prolonged period of underperformance, relative
valuations for small company stocks are becoming more attractive. However, we
believe that caution should still be exercised since the small capitalization
segment of the equity market has a relatively high exposure to cyclical
industries and would be vulnerable to any combination of higher interest rates
and slower profit growth.

KENT A. KELLEY, CFA, THE TRAVELERS INVESTMENT MANAGEMENT COMPANY

DAVID A. TYSON, CFA, TRAVELERS ASSET MANAGEMENT INTERNATIONAL CORPORATION

-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 .. 18

THE TRAVELERS MONEY MARKET ACCOUNT FOR VARIABLE ANNUITIES .. 30
</TABLE>

-4-

<PAGE> 7

THE TRAVELERS
GROWTH AND INCOME
STOCK ACCOUNT
FOR VARIABLE ANNUITIES

The Travelers Growth and Income Stock Account for Variable Annuities ("Account
GIS") is managed by the Travelers Investment Management Company ("TIMCO") to
provide diversified exposure to the large company segment of the U.S. equity
market. Stock selection is based on a quantitative screening process favoring
companies that achieve earnings growth above consensus expectations and whose
stocks offer attractive relative value. In order to achieve consistent
relative performance, we manage Account GIS to mirror the overall risk, sector
weightings and growth/value style characteristics of the Standard & Poor's 500
Stock Index ("S&P 500"). The S&P 500 is a value-weighted equity index
comprised primarily of large company stocks.

For the year ended December 31, 1996, Account GIS achieved a total return of
23.4%, before fees and expenses, outperforming the S&P 500 total return of
23.1%. Net of fees and expenses, Account GIS had a total return of 21.4% for
the year, which compared favorably to the 19.9% average return for variable
annuity stock accounts in the Lipper Growth & Income category.

During the second half of 1996, stock selection in the energy and producer
durables sectors made the strongest positive contribution to the portfolio's
overall relative performance. In the energy sector, the portfolio benefited
from holdings in better performing stocks in the oilfield services group, such
as Ensco International and Cooper Cameron. In the exploration and production
group, an overweighted position in Anadarko Petroleum also helped performance.
In the producer durables sector, our largest relative gain came from holdings
in Harnischfeger, United Technologies and Honeywell. We lost ground relative
to the benchmark in the technology and consumer staples sectors. In the
technology sector, we were penalized by being underweight in a number of
computer and networking stocks that moved up sharply after reporting
surprisingly strong sales and earnings, including Compaq, Dell and 3COM. In
the consumer staples sector, performance was hurt by our position in PepsiCo.
which traded lower in reaction to weak international soft drink sales.

We continue to focus on stocks that exhibit improving earnings (primarily
measured by changes in analysts' earnings estimates and the trend of recent
earnings surprises), and which trade at a reasonable price-to-earnings ratios
relative to expected earnings growth rates. In the technology sector, we have
emphasized market leaders that are currently benefiting from strong pricing and
product demand, such as Intel in the semiconductor group and Cisco in the
client/server networking group. In the health care sector, we have an
overweight in Bristol-Myers Squibb which has improved earnings momentum from
its new drug therapy to combat high blood cholesterol. In the consumer
sectors, we are focusing on a number of retailers that have good sales momentum
and whose shares still trade at a reasonable multiple of earnings, such as The
Gap and Borders Group. In financial services, we have overweighted positions
in a number of banks and specialty insurance companies that combine
above-average earnings growth and low relative valuations, including
BankAmerica, Ambac and Transatlantic Holdings.

PORTFOLIO MANAGERS: SANDIP A. BHAGAT, CFA - JACOB E. HURWITZ, CFA - KENT A.
KELLEY, CFA

[TIMCO LOGO]

-5-

<PAGE> 8
THE TRAVELERS
GROWTH AND INCOME
STOCK ACCOUNT
FOR VARIABLE ANNUITIES

<TABLE>
<CAPTION>
NON-TIMED 12/96 1 YEAR 3 YEAR 5 YEAR
<S> <C> <C> <C>
The Travelers Growth and Income
Stock Account for Variable Annuities 21.37% 17.52% 12.02%
Lipper Growth and Income Category Average 19.92% 15.44% 12.82%
</TABLE>

This is a comparison of The Travelers Growth and Income Stock Account for
Variable Annuities versus Lipper Analytical Services' variable annuity
composite index, which provides the average performance of variable annuity
funds with similar objectives as of December 31, 1996. Lipper Analytical
Services is a leading independent Variable Insurance Product Performance
Analysis Service. The performance of the composite is net of all asset based
fees such as mortality and expense charges and portfolio management fees.
Performance reflects the charges associated with Universal Annuity, which
became available on May 16, 1983. Contracts issued prior to May 16, 1983, have
different contract charges that result in different performance than presented
above.

Universal Annuity fund performance information is net of: 1) the 1.25% annual
mortality and expense risk charge, and 2) portfolio management fees. The
deduction of the $15 semi-annual administrative charge and the contingent
deferred sales charge (5% maximum) is not reflected. The deduction of those
charges would reduce any percentage increase or make greater any percentage
decrease. Performance data quoted represents past performance. Investment
return and principal value of an investment will fluctuate so that an
investor's units, when redeemed, may be worth more or less than their original
cost.

The following is the performance data required by SEC rules governing uniform
performance reporting: one year 16.16%, five year 11.07% and ten year 11.45%.
This performance is based on a $1,000 hypothetical investment and reflects
deductions of all fees and charges including the semi-annual administrative
charge and the maximum deferred sales charge of 5%.

-6-

<PAGE> 9

THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996

<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (cost $380,011,106)...... $ 507,590,759
Cash............................................................ 2,623
Receivables:
Dividends.................................................... 546,452
Interest..................................................... 577
Investment securities sold................................... 2,034,612
Purchase payments and transfers from other Travelers
accounts................................................... 486,574
Other assets.................................................... 26,456
--------------

Total Assets............................................. 510,688,053
--------------

LIABILITIES:
Payables:
Investment securities purchased.............................. 2,059,125
Contract surrenders and transfers to other Travelers
accounts................................................... 275,701
Investment management and advisory fees...................... 25,507
Accrued liabilities............................................. 71,387
--------------

Total Liabilities......................................... 2,431,720
--------------

NET ASSETS......................................................... $ 508,256,333
==============

</TABLE>

See Notes to Financial Statements

-7-

<PAGE> 10

THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996

<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends...................................................... $ 8,866,836
Interest ...................................................... 598,573
--------------
Total income............................................... $ 9,465,409

EXPENSES:
Investment management and advisory fees........................ 2,079,020
Insurance charges.............................................. 5,316,715
--------------
Total expenses............................................. 7,395,735
-------------
Net investment income................................... 2,069,674
-------------
REALIZED GAIN AND CHANGE IN UNREALIZED GAIN ON
INVESTMENT SECURITIES:
Realized gain from investment security transactions:
Proceeds from investment securities sold................... 408,860,943
Cost of investment securities sold......................... 363,866,404
--------------
Net realized gain....................................... 44,994,539

Change in unrealized gain on investment securities:
Unrealized gain at December 31, 1995....................... 84,623,392
Unrealized gain at December 31, 1996....................... 127,579,653
--------------
Net change in unrealized gain for the year.............. 42,956,261
-------------

Net realized gain and change in unrealized gain..... 87,950,800
-------------

Net increase in net assets resulting from operations........... $ 90,020,474
=============

</TABLE>

See Notes to Financial Statements

-8-

<PAGE> 11

THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
OPERATIONS:
Net investment income............................................. $ 2,069,674 $ 3,305,259
Net realized gain from investment security transactions........... 44,994,539 37,951,859
Net change in unrealized gain on investment securities............ 42,956,261 71,724,212
--------------- ---------------
Net increase in net assets resulting from operations.......... 90,020,474 112,981,330
--------------- ---------------

UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 2,813,343 and 2,505,561 units, respectively).... 28,931,829 20,576,327
Participant transfers from other Travelers accounts
(applicable to 3,490,521 and 2,758,216 units, respectively).... 35,759,376 23,120,885
Administrative charges
(applicable to 32,900 and 39,010 units, respectively).......... (358,274) (345,103)
Contract surrenders
(applicable to 3,057,943 and 3,134,685 units, respectively).... (31,680,018) (26,235,475)
Participant transfers to other Travelers accounts
(applicable to 3,458,474 and 3,616,329 units, respectively).... (35,315,088) (29,697,410)
Other payments to participants
(applicable to 207,886 and 138,390 units, respectively)........ (2,212,219) (1,142,807)
--------------- ---------------
Net decrease in net assets resulting from unit transactions.... (4,874,394) (13,723,583)
--------------- ---------------
Net increase in net assets................................. 85,146,080 99,257,747

NET ASSETS:
Beginning of year................................................. 423,110,253 323,852,506
--------------- ---------------
End of year....................................................... $ 508,256,333 $ 423,110,253
=============== ===============
</TABLE>

See Notes to Financial Statements

-9-

<PAGE> 12

NOTES TO FINANCIAL STATEMENTS

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 year; 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 at amortized cost which approximates market.

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 in an amount
at least equal to the notional value of outstanding purchased futures
contracts, less the initial margin. Cash and cash equivalents include cash
on hand, securities segregated under federal and brokerage regulations, and
short-term highly liquid investments with maturities generally three months
or less when purchased. 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.

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<PAGE> 13

NOTES TO FINANCIAL STATEMENTS - CONTINUED

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.

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. 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. Interest income is recorded on
the accrual basis. Effective July 1, 1996, premiums and discounts are
amortized to interest income utilizing the constant yield method.

2. INVESTMENTS

The aggregate costs of purchases and proceeds from sales of investments
(other than short-term securities) for the year ended December 31, 1996,
were $383,843,522 and $384,169,009, respectively. Realized gains and
losses from security transactions are reported on an identified cost basis.

Account GIS placed a portion of its security transactions with brokerage
firms which are affiliates of The Travelers. The commissions paid to these
affiliated firms were $125,284 and $70,759 for the years ended December 31,
1996 and 1995, respectively.

Net realized gains resulting from futures contracts were $504,688 and
$2,884,399 for the years ended December 31, 1996 and 1995, respectively.
These gains 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. At December 31, 1996, Account GIS did not hold any
open futures contracts.

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<PAGE> 14

NOTES TO FINANCIAL STATEMENTS - CONTINUED

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 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) 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 $43,814 and $40,106 for the years ended
December 31, 1996 and 1995, 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 include $163,657 and $189,214 of contingent deferred sales charges
for the years ended December 31, 1996 and 1995, respectively.

4. NET ASSETS HELD BY AFFILIATE

Approximately $11,931,000 and $10,733,000 of the net assets of Account GIS
were held on behalf of an affiliate of The Travelers as of December 31,
1996 and 1995, respectively. Transactions with this affiliate during the
years ended December 31, 1996 and 1995, were comprised of participant
purchase payments of approximately $1,077,000 and $427,000 and contract
surrenders of approximately $694,000 and $560,000, respectively.

5. NET CONTRACT OWNERS' EQUITY

<TABLE>
<CAPTION>
DECEMBER 31, 1996
---------------------------------------------------
UNIT NET
UNITS VALUE ASSETS
----- ----- ------
<S> <C> <C> <C>
Accumulation phase of contracts issued prior to May 16, 1983...... 16,167,393 $ 11.763 $ 190,162,991
Annuity phase of contracts issued prior to May 16, 1983........... 386,135 11.763 4,541,766
Accumulation phase of contracts issued on or after May 16, 1983... 27,510,470 11.371 312,786,250
Annuity phase of contracts issued on or after May 16, 1983........ 67,313 11.371 765,326
--------------

Net Contract Owners' Equity........................................ $ 508,256,333
==============
</TABLE>

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<PAGE> 15

NOTES TO FINANCIAL STATEMENTS - CONTINUED

6. SUPPLEMENTARY INFORMATION
(Selected data for a unit outstanding throughout each year.)

Contracts issued prior to May 16, 1983

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income..................... $ .216 $ .208 $ .192 $ .189 $ .192
Operating expenses.......................... .154 .123 .100 .092 .085
---------- ---------- --------- -------- ----------

Net investment income....................... .062 .085 .092 .097 .107

Unit value at beginning of year............. 9.668 7.120 7.194 6.664 6.587
Net realized and change in unrealized
gains (losses)............................ 2.033 2.463 (.166) .433 (.030)
---------- ---------- --------- -------- ----------

Unit value at end of year................... $ 11.763 $ 9.668 $ 7.120 $ 7.194 $ 6.664
========== ========== ========= ======== ==========

SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase (decrease) in unit value....... $ 2.10 $ 2.55 $ (.07) $ .53 $ .08
Ratio of operating expenses to average
net assets................................ 1.45 % 1.45 % 1.41 % 1.33 % 1.33 %
Ratio of net investment income to average
net assets................................ .60 % 1.02 % 1.30 % 1.40 % 1.67 %
Number of units outstanding at end of
year (thousands).......................... 16,554 17,896 19,557 21,841 22,516
Portfolio turnover rate..................... 85 % 96 % 103 % 81 % 189 %
Average commission rate paid+............... $ .047 - - - -
</TABLE>

Contracts issued on or after May 16, 1983

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income...................... $ .212 $ .205 $ .189 $ .184 $ .188
Operating expenses........................... .175 .140 .115 .106 .098
--------- ----------- ---------- -------- ----------

Net investment income........................ .037 .065 .074 .078 .090

Unit value at beginning of year.............. 9.369 6.917 7.007 6.507 6.447
Net realized and change in unrealized
gains (losses)............................. 1.965 2.387 (.164) .422 (.030)
--------- ----------- ---------- -------- ----------

Unit value at end of year.................... $ 11.371 $ 9.369 $ 6.917 $ 7.007 $ 6.507
========= =========== ========== ======== ==========

SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase (decrease) in unit value........ $ 2.00 $ 2.45 $ (.09) $ .50 $ .06
Ratio of operating expenses to average
net assets................................. 1.70 % 1.70 % 1.65 % 1.57 % 1.58 %
Ratio of net investment income to average
net assets................................. .36 % .79 % 1.05 % 1.15 % 1.43 %
Number of units outstanding at end of year
(thousands)................................ 27,578 26,688 26,692 28,497 29,661
Portfolio turnover rate...................... 85 % 96 % 103 % 81 % 189 %
Average commission rate paid+................ $ .047 - - - -
</TABLE>

+ The average commission rate paid is a required disclosure for fiscal years
beginning after September 1, 1995. It is calculated by dividing the total
dollar amount of commissions paid for equity securities by the total number of
shares purchased and sold during the year.

-13-

<PAGE> 16

THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF INVESTMENTS
DECEMBER 31, 1996

NO. OF MARKET
SHARES VALUE
-------- -----------
<S> <C> <C>
COMMON STOCKS (99.3%)

AGRICULTURE (0.5%)
Pioneer Hi Bred International 33,500 $ 2,345,000
-------------
AMUSEMENTS (0.8%)
Walt Disney Co. 61,555 4,285,767
-------------
BANKING (7.9%)
Banc One Corp. 35,740 1,536,820
Bank of Boston Corp. 35,800 2,300,150
BankAmerica Corp. 51,100 5,097,225
Barnett Banks Inc. 17,500 719,687
Chase Manhattan Corp. 62,552 5,582,766
Citicorp 67,200 6,921,600
First Bank Systems, Inc. 12,500 853,125
First Chicago NBD 29,200 1,569,500
Golden West Financial Corp. 23,400 1,477,125
Mellon Bank Corp. 40,900 2,903,900
NationsBank Corp. 29,800 2,912,950
Northern Trust Corp. 41,400 1,503,338
Norwest Corp. 79,600 3,462,600
SunTrust Banks, Inc. 19,900 980,075
Wells Fargo & Co. 9,133 2,463,627
-------------
40,284,488
-------------
CHEMICALS, PHARMACEUTICALS AND
ALLIED PRODUCTS (13.0%)
Abbott Laboratories 44,700 2,268,525
American Home Products Corp. 34,400 2,016,700
Amgen (A) 49,000 2,667,438
Bristol-Myers Squibb Co. 64,400 7,003,500
Colgate-Palmolive 13,700 1,263,825
Cytec Industries, Inc. (A) 43,100 1,750,937
E.I. Dupont de Nemours & Co. 50,000 4,718,750
Eli Lilly & Co. 31,200 2,277,600
Johnson & Johnson 145,400 7,233,650
Merck & Co. 127,100 10,072,675
Monsanto Co. 88,500 3,440,438
Morton International 47,700 1,943,775
Pfizer, Inc. 57,500 4,765,312
Procter & Gamble Co. 63,900 6,869,250
Schering-Plough Corp. 56,000 3,626,000
Union Carbide Corp. 50,900 2,080,538
Warner-Lambert Co. 24,600 1,845,000
-------------
65,843,913
-------------
COMMUNICATION (6.9%)
Ameritech Corp. 51,300 3,110,063
AT&T Corp. 108,100 4,702,350
Bell Atlantic Corp. 41,300 2,674,175
BellSouth Corp. 92,800 3,746,800
Clear Channel Communications (A) 51,600 1,864,050
GTE Corp. 77,000 3,503,500
MCI Communications Corp. 111,700 3,651,194
NYNEX Corp. 40,800 1,963,500
Pacific Telesis Group 32,100 1,179,675
Sprint Corp. 31,400 1,252,075
SBC Communications, Inc. 76,000 3,933,000
TCI Satellite Entertainment (A) 6,120 60,817
Tele-Communications Inc. (A) 61,200 799,425
U.S. West Communications Group 16,900 545,025
WorldCom, Inc. (A) 74,100 1,931,231
-------------
34,916,880
-------------
CONTRACTORS (0.8%)
Fluor Corp. 30,300 1,901,325
Halliburton Co. 33,400 2,012,350
-------------
3,913,675
-------------
ELECTRICAL AND
ELECTRONIC MACHINERY (8.1%)
Andrew Corp. (A) 30,200 1,602,486
Atmel Corp. (A) 54,600 1,815,450
Duracell International, Inc. 25,600 1,788,800
General Electric Corp. 152,900 15,117,988
Intel Corp. 85,600 11,208,250
Motorola, Inc. 52,100 3,197,638
Raychem Corp. 23,150 1,854,894
Texas Instruments, Inc. 16,200 1,032,750
Time Warner, Inc. 49,200 1,845,000
U.S. Robotics, Inc. (A) 24,000 1,729,500
-------------
41,192,756
-------------
FINANCE (3.3%)
American Express Co. 45,100 2,548,150
Federal Home Loan Mortgage Corp. 17,300 1,905,162
Federal National Mortgage Association 100,900 3,758,525
HFS Inc. (A) 43,200 2,581,200
Household International 24,100 2,223,225
Merrill Lynch & Co. 15,200 1,238,800
Morgan Stanley Group, Inc. 14,600 834,025
Student Loan Marketing Association 17,200 1,601,750
-------------
16,690,837
-------------
FOOD (8.0%)
Anheuser-Busch Cos. 45,200 1,808,000
Campbell Soup Co. 9,600 770,400
Coca-Cola Co. 220,300 11,593,287
ConAgra, Inc. 68,400 3,402,900
CPC International, Inc. 31,600 2,449,000
Dean Foods Co. 57,500 1,854,375
General Mills, Inc. 14,400 912,600
PepsiCo, Inc. 142,700 4,173,975
Philip Morris, Inc. 88,700 9,989,838
Sara Lee Corp. 44,300 1,650,175
Unilever N.V. 12,400 2,173,100
-------------
40,777,650
-------------
FURNITURE AND FIXTURES (0.3%)
Lear Corp. (A) 38,300 1,306,987
-------------
HOTELS & LODGING (0.4%)
Hilton Hotels Corp. 67,500 1,763,438
-------------
INSURANCE (4.4%)
Allstate Corp. 40,575 2,348,278
Ambac, Inc. 40,100 2,661,638
American International Group 43,350 4,692,638
Chubb Corp. 33,500 1,800,625
Cigna Corp. 17,600 2,404,600
General Reinsurance Corp. 7,300 1,151,575
ITT Hartford Group, Inc. 35,400 2,389,500
MedPartners, Inc. (A) 62,100 1,304,100
SunAmerica, Inc. 33,900 1,504,312
Transatlantic Holdings, Inc. 26,500 2,133,250
-------------
22,390,516
-------------
LUMBER AND WOOD PRODUCTS (0.5%)
Georgia-Pacific Corp. 23,900 1,720,800
Weyerhaeuser Co. 18,200 862,225
-------------
2,583,025
-------------
</TABLE>

-14-

<PAGE> 17

STATEMENT OF INVESTMENTS - CONTINUED

<TABLE>
<Captioin>
NO. OF MARKET
SHARES VALUE
-------- ----------
<S> <C> <C>
MACHINERY (6.5%)
Black & Decker Corp. 63,200 $ 1,903,900
Caterpillar, Inc. 18,500 1,392,125
Cisco Systems, Inc. (A) 92,500 5,891,094
Compaq Computer Corp. (A) 26,600 1,975,050
Deere & Co. 56,100 2,279,063
Gateway 2000, Inc. (A) 27,600 1,478,325
Hewlett-Packard Co. 91,400 4,592,850
International Business Machines Corp. 46,800 7,066,800
Lucent Technologies 56,323 2,604,939
Sun Microsystems (A) 95,800 2,460,862
3Com Corp. (A) 15,500 1,136,344
-------------
32,781,352
-------------
METAL PRODUCTS (1.5%)
Aluminum Co. of America 24,800 1,581,000
Gillette Co. 62,300 4,843,825
Nucor Corp. 8,100 413,100
USX-U.S. Steel Group 25,200 790,650
-------------
7,628,575
-------------
MINING (0.7%)
Freeport-McMoRan Copper & Gold 68,500 2,046,437
Homestake Mining Co. 88,700 1,263,975
-------------
3,310,412
-------------
MISCELLANEOUS MANUFACTURING (2.3 %)
American Brands 15,200 754,300
Eastman Kodak Co. 29,700 2,383,425
Emerson Electric Co. 20,100 1,944,675
Guidant Corp. 33,500 1,909,500
Honeywell, Inc. 32,900 2,163,175
Medtronics, Inc. 21,900 1,489,200
Xerox Corp. 27,900 1,468,238
-------------
12,112,513
-------------
OIL & GAS (0.9%)
Chesapeake Energy Corp. (A) 28,100 1,563,062
Louisiana Land & Exploration 31,300 1,678,463
Schlumberger Ltd. 13,600 1,358,300
Union Pacific Resources Group 1 29
-------------
4,599,854
-------------
PAPER AND ALLIED PRODUCTS (0.9%)
Kimberly Clark Corp. 25,730 2,450,782
Willamette Industries, Inc. 28,800 2,005,200
-------------
4,455,982
-------------
PETROLEUM REFINING AND
RELATED INDUSTRIES (8.2%)
Amerada Hess 34,900 2,019,838
Amoco Corp. 44,200 3,558,100
Ashland Oil, Inc. 39,600 1,737,450
Atlantic Richfield Co. 10,500 1,391,250
Chevron Corp. 58,900 3,828,500
Exxon Corp. 95,700 9,378,600
Mobil Corp. 48,300 5,904,675
Royal Dutch Petroleum Co. 38,600 6,590,950
Texaco, Inc. 50,000 4,906,250
Unocal Corp. 54,600 2,218,125
-------------
41,533,738
-------------
PRINTING, PUBLISHING AND
ALLIED INDUSTRIES (0.8%)
Gannet Co. 32,300 2,418,462
New York Times Co. 48,300 1,835,400
-------------
4,253,862
-------------
RETAIL (4.5%)
American Stores 50,100 2,047,837
Borders Group, Inc. (A) 40,500 1,452,938
Dollar General Corp. 47,400 1,516,800
Federated Department Stores, Inc. (A) 59,500 2,030,437
Home Depot, Inc. 45,966 2,304,046
Lowe's Cos. 55,200 1,959,600
McDonalds Corp. 57,500 2,601,875
Sears Roebuck & Co. 34,300 1,582,088
The GAP, Inc. 76,200 2,295,525
Tiffany & Co. 42,600 1,560,225
Wal-Mart Stores, Inc. 159,700 3,653,137
-------------
23,004,508
-------------
RUBBER AND PLASTIC PRODUCTS (1.4%)
Armstrong World Industries 24,600 1,709,700
Illinois Tool Works 31,300 2,500,088
Nike, Inc. 52,500 3,136,875
-------------
7,346,663
-------------
SERVICES (5.2%)
AccuStaff, Inc. (A) 75,600 1,597,050
Automatic Data Process 28,400 1,217,650
Columbia/HCA Healthcare Corp. 60,900 2,481,675
Computer Associates International 56,675 2,819,581
Corrections Corp. of America (A) 49,000 1,500,625
First Data Corp. 40,400 1,474,600
HBO & Co. 38,900 2,309,688
Microsoft (A) 109,000 9,012,937
Oracle Corp. (A) 58,850 2,453,309
Vencor, Inc. (A) 47,000 1,486,375
-------------
26,353,490
-------------
STONE, CLAY, GLASS, AND
CONCRETE PRODUCTS (0.6%)
Minnesota Mining & Manufacturing Co. 38,500 3,190,687
-------------
TEXTILE MILL PRODUCTS (0.4%)
V.F. Corp. 28,100 1,896,750
-------------
TRANSPORTATION (1.2%)
Burlington Northern Santa Fe 31,100 2,686,262
Conrail, Inc. 7,241 721,384
Continental Air, Inc. (A) 54,900 1,550,925
Union Pacific Corp. 19,500 1,172,438
-------------
6,131,009
-------------
TRANSPORTATION MANUFACTURING (4.3%)
Allied Signal, Inc. 25,400 1,701,800
Boeing Co. 48,400 5,148,550
Chrysler Corp. 86,900 2,867,700
Ford Motor Co. 104,100 3,318,187
General Motors Corp. 63,300 3,528,975
Lockheed Martin Corp. 18,139 1,659,719
United Technologies Corp. 53,400 3,524,400
-------------
21,749,331
-------------
</TABLE>

-15-

<PAGE> 18

STATEMENT OF INVESTMENTS - CONTINUED

<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
-------- -----------
<S> <C> <C>
UTILITIES (4.0%)
AES Corp. (A) 41,200 $ 1,915,800
Allegheny Power Systems 47,500 1,442,812
Baltimore Gas & Electric Co. 48,900 1,308,075
CalEnergy Co. (A) 49,600 1,667,800
Columbia Gas Systems, Inc. 29,200 1,857,850
Consolidated Natural Gas Co. 35,700 1,972,425
CMS Energy Corp. 31,700 1,065,913
Duke Power Co. 18,500 855,625
Florida Power & Light Co. 15,900 731,400
Houston Industries 24,100 545,263
Pacific Enterprises 20,800 631,800
Sonat, Inc. 38,900 2,003,350
Southern Co. 99,600 2,253,450
Texas Utilities Co. 55,900 2,277,925
--------------
20,529,488
--------------
WHOLESALE TRADE (1.0%)
Crane Co. 68,700 1,992,300
Enron Corp. 23,100 996,188
Grainger (W.W.) 24,500 1,966,125
--------------
4,954,613
--------------
TOTAL COMMON STOCKS
(COST $376,548,106) 504,127,759
--------------
<CAPTION>
PRINCIPAL
AMOUNT
---------
<S> <C> <C>
SHORT-TERM INVESTMENTS (0.7%)

REPURCHASE AGREEMENTS (0.7%)
Merrill Lynch Government Securities, Inc.,
6.00% Repurchase Agreement
dated December 31, 1996 due January 2,
1997, collateralized by: United
States of America Treasury, $3,200,000,
7.875% due November 15, 2004 $ 3,463,000 3,463,000
--------------
TOTAL SHORT-TERM
INVESTMENTS (COST $3,463,000) 3,463,000
--------------

TOTAL INVESTMENTS (100%)
(COST $380,011,106) (B) $ 507,590,759
==============
</TABLE>

NOTES

(A) Non-income Producing Security.

(B) At December 31, 1996, net unrealized appreciation for all securities was
$127,579,653. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over cost of
$130,553,071 and aggregate gross unrealized depreciation for all securities
in which there was an excess of cost over market value of $2,973,418.

See Notes to Financial Statements

-16-

<PAGE> 19

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Managers and Owners of Variable Annuity Contracts of
The Travelers Growth and Income Stock Account for Variable Annuities:

We have audited the accompanying statement of assets and liabilities of The
Travelers Growth and Income Stock Account for Variable Annuities including the
statement of investments as of December 31, 1996, and the related statement of
operations for the year then ended, the statement of changes in net assets for
each of the two years in the period then ended, and the per unit data for each
of the five years in the period then ended. These financial statements and per
unit data are the responsibility of management. Our responsibility is to
express an opinion on these financial statements and per unit data based on our
audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and per unit
data 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 securities owned as of
December 31, 1996, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements and per unit data referred to above
present fairly, in all material respects, the financial position of The
Travelers Growth and Income Stock Account for Variable Annuities as of December
31, 1996, the results of its operations for the year then ended, the changes in
its net assets for each of the two years in the period then ended, and the per
unit data for each of the five years in the period then ended, in conformity
with generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

Hartford, Connecticut
February 12, 1997

-17-

<PAGE> 20

THE TRAVELERS
QUALITY BOND ACCOUNT
FOR VARIABLE ANNUITIES

The year 1996 started out with the Federal Government shut down and investor
concerns about a possible recession. The bond market clearly expected the
Federal Reserve Board ("Fed") to cut interest rates significantly as the two
year Treasury yield was lower than the federal funds rate. The Fed did cut
their federal funds rate target 0.25% in January but then strong employment
growth over the next several months sent bonds into a tailspin reminiscent of
1994. Rates hit their highest levels for the year in the June to September
period as investors prepared for the Fed to raise interest rates at their
September meeting. The Fed decided to hold steady at the September meeting and
interest rates declined from then until December as economic growth slowed in
the fourth quarter. The market also responded positively to the election
results as the Republicans maintained control of Congress despite President
Clinton's re-election. Going into December, the markets were reflecting a best
case scenario of moderate economic growth with low inflation and low
unemployment coupled with a benign to positive political landscape. Rates
started rising again in December as some economic indicators strengthened but
ended the year well below the levels seen in the second and third quarters.

U.S. bonds had their best quarter of the year in the fourth quarter. The
Lehman Intermediate Government/Corporate Index returned 2.45% for the quarter
and 4.06% for the full year. The Travelers Quality Bond Account for Variable
Annuities ("Account QB") had a 2.34% return in the quarter which was 0.11 ahead
of the index. For the full year, Treasuries with maturities longer than 10
years had negative total returns. Returns were worse the longer the average
duration with the Salomon 1 month CD index returning 5.51%, the Lehman
Intermediate Government/Corporate Index returning 4.06%, and the Lehman Long
Government/Corporate Index returning 0.13%. For the full year Account QB
returned 4.95%, before fees and expenses, 89 basis points better than the
Lehman Intermediate Government/Corporate Index, which is its benchmark. Net of
fees and expenses, total return of Account QB was 3.38% for the year. Account
QB was helped by the strong performance of its position in corporate and asset
backed securities relative to Treasuries.

We expect interest rates to stay in the trading range established in 1996 (the
30 year ranged between 5.95% and 7.19%). Low unemployment creates the
potential for strong consumer spending growth and for cyclical upward inflation
pressure through wages, putting a lower limit on where rates can go. On the
higher rate side, the 7% level has proven to be a sufficient level to draw
increased interest in bonds and depress high risk asset classes and interest
sensitive sectors of the economy. We feel that central bank vigilance against
inflation, globalization, and productivity improvements will keep inflation
under control, preventing interest rates from rising much above their 1996
high. The yield curve was fairly steady at average slopes throughout 1996. We
do not see anything that would cause that to change significantly. We are
keeping Account QB's duration and maturity structure relatively close to that
of the index.

Within the fixed income markets, demand for spread product continued to be high
in 1996. Along with tight spreads against Treasuries, spreads for lower
quality corporates are compressed with the spreads on higher quality
corporates. The mortgage backed and asset backed markets are similarly
compressed, with previous opportunities in B-piece credit cards, commercial
mortgage backed securities, and seasoned mortgage product squeezed by investors
digging for yield. There is nothing in our economic outlook which is likely to
change the tight spread environment in the near future. We are being careful,
however, to weed out riskier credits and issues that don't offer enough yield
premium to offset their potential for negative surprises. The foreign area
continues to offer opportunities, particularly foreign corporates that
sometimes have very strong balance sheets but are capped by the rating of their
home country.

PORTFOLIO MANAGER: F. DENNEY VOSS

[TAMIC LOGO]

-18-

<PAGE> 21

THE TRAVELERS
QUALITY BOND ACCOUNT
FOR VARIABLE ANNUITIES

<TABLE>
<CAPTION>
NON-TIMED 12/96 1 YEAR 3 YEAR 5 YEAR
<S> <C> <C> <C>
The Travelers Quality Bond Account for Variable Annuities 3.38% 4.92% 5.9%
Lipper Short Intermediate Investment Grade Debt Category Average 2.84% 3.74% 4.58%

</TABLE>

This is a comparison of The Travelers Quality Bond Account for Variable
Annuities versus Lipper Analytical Services' variable annuity composite index,
which provides the average performance of variable annuity funds with similar
objectives as of December 31, 1996. Lipper Analytical Services is a leading
independent Variable Insurance Product Performance Analysis Service. The
performance of the composite is net of all asset based fees such as mortality
and expense charges and portfolio management fees. Performance reflects the
charges associated with Universal Annuity, which became available on May 16,
1983. Contracts issued prior to May 16, 1983, have different contract charges
that result in different performance than presented above.

The following is the performance data required by SEC rules governing uniform
performance reporting: one year -1.80%, five year 4.80% and ten year 6.46%.
This performance is based on a $1,000 hypothetical investment and reflects
deductions of all fees and charges including the semi-annual administrative
charge and the maximum deferred sales charge of 5%.

-19-

<PAGE> 22

THE TRAVELERS QUALITY BOND ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996

<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (cost $168,903,822).......... $ 169,102,897
Receivables:
Interest......................................................... 1,310,828
Purchase payments and transfers from other Travelers accounts.... 46,873
Other assets........................................................ 1,519
--------------

Total Assets................................................. 170,462,117
--------------

LIABILITIES:
Cash overdraft...................................................... 4,052
Payables:
Contract surrenders and transfers to other Travelers accounts.... 213,078
Investment management and advisory fees.......................... 6,078
Accrued liabilities................................................. 30,557
--------------

Total Liabilities............................................ 253,765
--------------

NET ASSETS............................................................. $ 170,208,352
==============
</TABLE>

See Notes to Financial Statements

-20-

<PAGE> 23

THE TRAVELERS QUALITY BOND ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Interest................................................... $ 13,160,431

EXPENSES:
Investment management and advisory fees.................... $ 576,329
Insurance charges.......................................... 2,103,316
---------------
Total expenses.......................................... 2,679,645
---------------

Net investment income................................ 10,480,786
---------------

REALIZED GAIN AND CHANGE IN UNREALIZED GAIN ON
INVESTMENT SECURITIES:
Realized gain from investment security transactions:
Proceeds from investment securities sold................ 343,310,465
Cost of investment securities sold...................... 342,244,839
---------------

Net realized gain.................................... 1,065,626

Change in unrealized gain on investment securities:
Unrealized gain at December 31, 1995.................... 6,087,673
Unrealized gain at December 31, 1996.................... 199,075
---------------

Net change in unrealized gain for the year........... (5,888,598)
---------------

Net realized gain and change in unrealized gain... (4,822,972)
---------------

Net increase in net assets resulting from operations $ 5,657,814
===============
</TABLE>

See Notes to Financial Statements

-21-

<PAGE> 24

THE TRAVELERS QUALITY BOND ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
1996 1995
----------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income.............................................. $ 10,480,786 $ 9,023,430
Net realized gain from investment security transactions............ 1,065,626 1,019,178
Net change in unrealized gain (loss) on investment securities...... (5,888,598) 12,716,988
----------------- ----------------

Net increase in net assets resulting from operations............ 5,657,814 22,759,596
----------------- ----------------

UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 3,643,171 and 3,283,550 units, respectively)..... 17,905,073 15,219,291
Participant transfers from other Travelers accounts
(applicable to 3,024,146 and 4,374,714 units, respectively)..... 14,870,447 20,342,504
Administrative charges
(applicable to 27,353 and 30,577 units, respectively)........... (135,785) (146,591)
Contract surrenders
(applicable to 2,968,208 and 3,514,833 units, respectively)..... (14,715,900) (16,280,761)
Participant transfers to other Travelers accounts
(applicable to 6,532,400 and 5,302,454 units, respectively)..... (32,090,166) (24,324,600)
Other payments to participants
(applicable to 177,391 and 146,460 units, respectively)......... (884,681) (686,680)
----------------- ----------------

Net decrease in net assets resulting from unit transactions..... (15,051,012) (5,876,837)
----------------- ----------------

Net increase (decrease) in net assets........................ (9,393,198) 16,882,759

NET ASSETS:
Beginning of year................................................. 179,601,550 162,718,791
----------------- ----------------

End of year....................................................... $ 170,208,352 $ 179,601,550
================= ================
</TABLE>

See Notes to Financial Statements

-22-

<PAGE> 25

NOTES TO FINANCIAL STATEMENTS

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 year; 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.

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 in an amount
at least equal to the notional value of outstanding purchased futures
contracts, less the initial margin. Cash and cash equivalents include cash
on hand, securities segregated under federal and brokerage regulations, and
short-term highly liquid investments with maturities generally three months
or less when purchased. 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.

-23-

<PAGE> 26

NOTES TO FINANCIAL STATEMENTS - CONTINUED

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.

Security transactions are accounted for on the trade date. Interest
income is recorded on the accrual basis. Effective July 1, 1996, premiums
and discounts are amortized to interest income utilizing the constant yield
method.

2. INVESTMENTS

The costs of purchases and proceeds from sales of bonds (other than
short-term securities) were $183,257,990 and $192,416,249, respectively; the
costs of purchases and proceeds from sales of direct and indirect U.S.
government obligations were $116,946,574 and $114,368,811, respectively, for
the year ended December 31, 1996. Realized gains and losses from security
transactions are reported on an identified cost basis.

Account QB placed a portion of its security transactions with brokerage
firms which are affiliates of The Travelers. The commission paid to these
affiliated firms was $14,250 for the year ended December 31, 1995. There
were no commissions paid to affiliated firms for the year ended December 31,
1996.

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 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) 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 $13,748 and $20,292 for the years ended December
31, 1996 and 1995, 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 include $70,089 and $108,615 of contingent deferred sales charges
for the years ended December 31, 1996 and 1995, respectively.

-24-

<PAGE> 27

NOTES TO FINANCIAL STATEMENTS - CONTINUED

4. NET ASSETS HELD BY AFFILIATE

Approximately $760,000 and $755,000 of the net assets of Account QB were
held on behalf of an affiliate of The Travelers as of December 31, 1996 and
1995, respectively. Transactions with this affiliate during the years ended
December 31, 1996 and 1995, were comprised of participant purchase payments
of approximately $276,000 and $17,000, and contract surrenders of
approximately $141,000 and $86,000, respectively.

5. NET CONTRACT OWNERS' EQUITY

DECEMBER 31, 1996
-----------------------------------------------
UNIT NET
UNITS VALUE ASSETS
----- ----- ------
<S> <C> <C> <C>
Accumulation phase of contracts issued prior to May 16, 1983......... 8,497,114 $ 5.234 $ 44,465,564
Annuity phase of contracts issued prior to May 16, 1983.............. 52,065 5.234 272,458
Accumulation phase of contracts issued on or after May 16, 1983...... 24,794,468 5.060 125,421,467
Annuity phase of contracts issued on or after May 16, 1983........... 9,660 5.060 48,863
--------------

Net Contract Owners' Equity.................................................................. $ 170,208,352
==============
</TABLE>

-25-

<PAGE> 28

NOTES TO FINANCIAL STATEMENTS - CONTINUED

6. SUPPLEMENTARY INFORMATION
(Selected data for a unit outstanding throughout each year.)

Contracts issued prior to May 16, 1983

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income..................... $ .379 $ .328 $ .318 $ .306 $ .317
Operating expenses.......................... .067 .063 .059 .058 .050
----------- ---------- ----------- ----------- ------------

Net investment income....................... .312 .265 .259 .248 .267

Unit value at beginning of year............. 5.050 4.400 4.498 4.150 3.880
Net realized and change in unrealized
gains (losses)............................ (.128) .385 (.357) .100 .003
----------- ---------- ----------- ----------- ------------

Unit value at end of year................... $ 5.234 $ 5.050 $ 4.400 $ 4.498 $ 4.150
=========== ========== =========== =========== ============

SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase (decrease) in unit value....... $ .18 $ .65 $ (.10) $ .35 $ .27
Ratio of operating expenses to average
net assets................................ 1.33 % 1.33 % 1.33 % 1.33 % 1.33 %
Ratio of net investment income to average
net assets................................ 6.12 % 5.54 % 5.87 % 5.66 % 6.61 %
Number of units outstanding at end of year
(thousands)............................... 8,549 9,325 10,694 12,489 13,416
Portfolio turnover rate..................... 176 % 138 % 27 % 24 % 23 %
</TABLE>

Contracts issued on or after May 16, 1983

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income....................... $ .368 $ .319 $ .310 $ .299 $ .311
Operating expenses............................ .078 .073 .069 .067 .061
---------- ---------- ---------- ------------ -----------

Net investment income......................... .290 .246 .241 .232 .250

Unit value at beginning of year............... 4.894 4.274 4.381 4.052 3.799
Net realized and change in unrealized
gains (losses).............................. (.124) .374 (.348) .097 .003
---------- ---------- ---------- ------------ -----------

Unit value at end of year..................... $ 5.060 $ 4.894 $ 4.274 $ 4.381 $ 4.052
========== ========== ========== ============ ===========

SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase (decrease) in unit value......... $ .17 $ .62 $ (.11) $ .33 $ .25
Ratio of operating expenses to average
net assets.................................. 1.57 % 1.57 % 1.57 % 1.57 % 1.58 %
Ratio of net investment income to average
net assets.................................. 5.87 % 5.29 % 5.62 % 5.41 % 6.38 %
Number of units outstanding at end of year
(thousands)................................. 24,804 27,066 27,033 28,472 20,250
Portfolio turnover rate....................... 176 % 138 % 27 % 24 % 23 %
</TABLE>

-26-

<PAGE> 29

THE TRAVELERS QUALITY BOND ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF INVESTMENTS
DECEMBER 31, 1996

<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- ----------
<S> <C> <C>
BONDS (75.4%)

AMUSEMENTS (4.2%)
Six Flags Entertainment,
0.00% Notes, 1999 $ 8,850,000 $ 7,168,500
--------------
COMMUNICATION (16.0%)
BellSouth Capital Funding,
6.04% Debentures, 2026 4,500,000 4,479,062
Continental Cablevision, Inc.,
11.00% Debentures, 2007 5,000,000 5,715,165
MCI Communications Corp.,
7.125% Debentures, 2027 8,500,000 8,811,627
Tele-Communications, Inc.,
9.65% Debentures, 2003 7,500,000 7,993,980
--------------
26,999,834
--------------
COLLATERALIZED MORTGAGE OBLIGATIONS (5.3%)
Grand Met Investment Corp.,
0.00% Notes, 2004 10,000,000 6,194,550
Kidder Peabody Mortgage
Asset Trust 23,
9.88% Pass Through, 2019 349,856 354,096
PB CMO Trust II,
9.20% Pass Through, 2018 390,595 393,279
Prudential Home Mortgage 1992-17,
8.00% Pass Through, 2007 2,000,000 2,028,504
--------------
8,970,429
--------------
CREDIT CARD RECEIVABLES (3.3%)
Household Private Label
CC MT 1994-2 B Certificate,
8.00% Pass Through, 1999 3,500,000 3,637,298
Signet Credit Card
Master Trust, 1993-4 B,
5.80% Pass Through, 1999 2,000,000 1,983,240
--------------
5,620,538
--------------
FINANCE (7.7%)
Alco Capital Resources,
7.33% Notes, 1998 6,000,000 6,091,020
New Plan Realty Trust,
5.95% Notes, 2026 7,000,000 6,988,282
--------------
13,079,302
--------------
FOREIGN NATIONAL GOVERNMENT (6.1%)
Kingdom of Sweden,
0.00% Notes, 2000 10,000,000 8,056,250
Republic of Austria,
0.00% Debentures, 2000 3,000,000 2,336,250
--------------
10,392,500
--------------
MACHINERY (5.0%)
Hewlett-Packard Co.,
6.50% Notes, 1999 8,425,000 8,503,984
--------------

TOBACCO MANUFACTURERS (9.1%)
Philip Morris, Inc.,
6.95% Notes, 2006 8,800,000 8,925,294
RJR Nabisco, Inc.,
8.30% Notes, 1999 6,200,000 6,440,157
--------------
15,365,451
--------------
TRANSPORTATION (2.3%)
American Airlines, Inc., 1993-A4,
6.50% Notes, 1997 1,896,000 1,898,840
Delta Airlines, Inc.,
9.25% Sinking Fund, 2007 1,858,510 1,920,752
--------------
3,819,592
--------------
UTILITIES (16.4%)
DQU II Funding,
7.23% Bonds, 1999 5,692,000 5,756,451
Gulf States Utilities Co.,
7.35% Notes, 1998 7,000,000 7,107,870
Illinois Power Co.,
6 .50% Notes, 1999 7,000,000 6,995,856
NIPSCO Capital Market, Inc.,
0.00% Bonds, 1997 4,500,000 4,260,150
United Illuminating Company
7.375% Debentures, 1998 3,500,000 3,544,713
--------------
27,665,040
--------------
TOTAL BONDS
(COST $127,502,319) 127,585,170
--------------
U.S. GOVERNMENT AGENCY
SECURITIES (9.4%)

FHLMC Gold 24yr ZC,
5.15% Pass Through, 2012 4,686,782 4,617,886
FNMA Principal Strip,
0.00% Debentures, 2002 5,000,000 4,950,440
GNMA 1996-22 Va,
7.00% Pass Through, 2005 4,284,069 4,338,978
GNMA 30yr Single Family Issue,
7.00% Pass Through, 2023 1,957,284 1,917,526
--------------
TOTAL U.S. GOVERNMENT
AGENCY SECURITIES
(COST $15,621,363) 15,824,830
--------------
U.S. GOVERNMENT
SECURITIES (14.7%)

United States of America Treasury,
5.625% Notes, 2000 1,000,000 982,187
United States of America Treasury,
5.875% Notes, 2000 16,500,000 16,381,398
United States of America Treasury,
6.25% Notes, 2003 7,500,000 7,495,312
--------------
TOTAL U.S. GOVERNMENT
SECURITIES
(COST $24,946,140) 24,858,897
--------------

SHORT-TERM INVESTMENTS (0.5%)

REPURCHASE AGREEMENTS (0.5%)
Merrill Lynch Government Securities, Inc.,
6.00% Repurchase Agreement
dated December 31, 1996 due January 2,
1997, collateralized by: United
States of America Treasury, $775,000,
7.875% due November 15, 2004 834,000 834,000
--------------
TOTAL SHORT-TERM
INVESTMENTS (COST $834,000) 834,000
--------------
TOTAL INVESTMENTS (100%)
(COST $168,903,822) (A) $ 169,102,897
==============
</TABLE>

-27-

<PAGE> 30

STATEMENT OF INVESTMENTS - CONTINUED

NOTES

(A) At December 31, 1996, net unrealized appreciation for all
securities was $199,075. This consisted of aggregate gross
unrealized appreciation for all securities in which there was an
excess of market value over cost of $983,140 and aggregate gross
unrealized depreciation for all securities in which there was an
excess of cost over market value of $784,065.

See Notes to Financial Statements

-28-

<PAGE> 31

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Managers and Owners of Variable Annuity Contracts of
The Travelers Quality Bond Account for Variable Annuities:

We have audited the accompanying statement of assets and liabilities of The
Travelers Quality Bond Account for Variable Annuities including the statement
of investments as of December 31, 1996, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and the per unit data for each of the five
years in the period then ended. These financial statements and per unit data
are the responsibility of management. Our responsibility is to express an
opinion on these financial statements and per unit data based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and per unit
data 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 securities owned as of
December 31, 1996, by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements and per unit data referred to above
present fairly, in all material respects, the financial position of The
Travelers Quality Bond Account for Variable Annuities as of December 31, 1996,
the results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the per unit
data for each of the five years in the period then ended, in conformity with
generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

Hartford, Connecticut
February 12, 1997

-29-

<PAGE> 32

THE TRAVELERS
MONEY MARKET ACCOUNT
FOR VARIABLE ANNUITIES

The year 1996 started out with investor concerns about a possible recession.
The market expected the Federal Reserve Board ("Fed") to cut interest rates
significantly and in January there was a 0.25% reduction to 5.25%. However,
strong employment growth in the first and second quarters shifted concerns from
recession to inflation. Due to mixed economic data for the balance of 1996,
the Fed maintained a steady course and inacted no other rate changes.

A "Do Not Disturb" sign hung over the financial markets for most of the fourth
quarter. The federal funds rate remained unchanged at 5.25% and for most of
the quarter economic data exhibited modest growth and subdued inflation.
Long-term bond yields started the quarter at 6.97% and ended the quarter at
6.64%. However, the January, 1997 release of December, 1996 employment data
reflected the creation of 262,000 new jobs which was significantly above
estimates, an increase in the average work week and the average hours worked
index increased .9% created further inflation concerns.

Our expectation is for the Fed to continue to stifle any potential increase in
inflation and if economic data continues to reflect above average growth the
Fed will take action and increase the federal funds rate.

In light of this the strategy in the management of The Travelers Money Market
Account for Variable Annuities' short-term assets will be to maintain
maturities in the 30 to 60 day range. At year end the asset size of the
portfolio was $84.7 million with an average yield of 5.47% and an average life
of 50.4 days.

PORTFOLIO MANAGER: EMIL J. MOLINARO JR.

[TAMIC LOGO]

-30-

<PAGE> 33

THE TRAVELERS
MONEY MARKET ACCOUNT
FOR VARIABLE ANNUITIES

<TABLE>
<CAPTION>
NON-TIMED 12/96 1 YEAR 3 YEAR 5 YEAR
<S> <C> <C> <C>
The Travelers Money Market Account for Variable Annuities 3.94% 3.71% 3.03%
Lipper Money Market Category Average 3.82% 3.60% 2.94%

</TABLE>

This is a comparison of The Travelers Money Market Account for Variable
Annuities versus Lipper Analytical Services' variable annuity composite index,
which provides the average performance of variable annuity funds with similar
objectives as of December 31, 1996. Lipper Analytical Services is a leading
independent Variable Insurance Product Performance Analysis Service. The
performance of the composite is net of all asset based fees such as mortality
and expense charges and portfolio management fees. Performance reflects the
charges associated with Universal Annuity, which became available on May 16,
1983. Contracts issued prior to May 16, 1983, have different contract charges
that result in different performance than presented above.

The following is the performance data required by SEC rules governing uniform
performance reporting: one year -1.25%, five year 1.84% and ten year 4.32%.
This performance is based on a $1,000 hypothetical investment and reflects
deductions of all fees and charges including the semi-annual administrative
charge and the maximum deferred sales charge of 5%.

-31-

<PAGE> 34

THE TRAVELERS MONEY MARKET ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996

<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (cost $84,682,870).......... $ 84,664,467
Cash............................................................... 1,455
Receivables:
Interest........................................................ 568,428
Purchase payments and transfers from other Travelers accounts... 1,495,715
Other assets....................................................... 380
-------------
Total Assets................................................. 86,730,445
-------------

LIABILITIES:
Payables:
Contract surrenders and transfers to other Travelers accounts... 360,210
Investment management and advisory fees......................... 3,027
Accrued liabilities................................................ 11,793
-------------

Total Liabilities............................................ 375,030
-------------

NET ASSETS............................................................ $ 86,355,415
=============
</TABLE>

See Notes to Financial Statements

-32-

<PAGE> 35

THE TRAVELERS MONEY MARKET ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996

<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest.................................................. $ 4,217,448

EXPENSES:
Investment management and advisory fees................... $ 253,092
Insurance charges......................................... 973,645
----------
Total expenses......................................... 1,226,737
------------

Net investment income............................... 2,990,711
------------

Net increase in net assets resulting from operations...... $ 2,990,711
============
</TABLE>

See Notes to Financial Statements

-33-

<PAGE> 36

THE TRAVELERS MONEY MARKET ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995

<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
OPERATIONS:
Net investment income....................................................... $ 2,990,711 $ 3,427,447
----------------- ----------------
Net increase in net assets resulting from operations..................... 2,990,711 3,427,447
----------------- ----------------

UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 9,424,587 and 6,970,794 units, respectively).............. 20,964,777 14,864,399
Participant transfers from other Travelers accounts
(applicable to 55,407,340 and 39,907,908 units, respectively)............ 123,185,617 85,226,642
Administrative charges
(applicable to 39,967 and 44,021 units, respectively).................... (89,466) (94,696)
Contract surrenders
(applicable to 4,688,797 and 5,220,626 units, respectively).............. (10,410,253) (11,137,360)
Participant transfers to other Travelers accounts
(applicable to 57,859,014 and 45,205,495 units, respectively)............ (128,506,136) (96,405,902)
Other payments to participants
(applicable to 14,133 and 363,303 units, respectively)................... (31,246) (782,623)
----------------- ----------------
Net increase (decrease) in net assets resulting from unit transactions... 5,113,293 (8,329,540)
----------------- ----------------
Net increase (decrease) in net assets................................. 8,104,004 (4,902,093)

NET ASSETS:
Beginning of year........................................................... 78,251,411 83,153,504
----------------- ----------------
End of year................................................................. $ 86,355,415 $ 78,251,411
================= ================
</TABLE>

See Notes to Financial Statements

-34-

<PAGE> 37

NOTES TO FINANCIAL STATEMENTS

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 at amortized cost which
approximates market.

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.

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 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) 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 include $77,935 and $142,783 of
contingent deferred sales charges for the years ended December 31, 1996 and
1995, respectively.

-35-

<PAGE> 38

NOTES TO FINANCIAL STATEMENTS - CONTINUED

3. NET ASSETS HELD BY AFFILIATE

Approximately $4,150,000 and $1,816,000 of the net assets of Account MM
were held on behalf of an affiliate of The Travelers as of December 31,
1996 and 1995, respectively. Transactions with this affiliate during the
years ended December 31, 1996 and 1995, were comprised of participant
purchase payments of approximately $3,085,000 and $965,000 and contract
surrenders of approximately $826,000 and $72,000, respectively.

4. NET CONTRACT OWNERS' EQUITY

<TABLE>
<CAPTION>
DECEMBER 31, 1996
-------------------------------------------------
NET
UNITS UNIT VALUE ASSETS
----- ---------- ------
<S> <C> <C> <C>
Accumulation phase of contracts issued prior to May 16, 1983........ 112,316 $ 2.341 $ 262,867
Accumulation phase of contracts issued on or after May 16, 1983..... 37,952,473 2.263 85,884,938
Annuity phase of contracts issued on or after May 16, 1983.......... 91,743 2.263 207,610
-------------
Net Contract Owners' Equity..................................................................... $ 86,355,415
=============
</TABLE>

-36-

<PAGE> 39

NOTES TO FINANCIAL STATEMENTS - CONTINUED

5. SUPPLEMENTARY INFORMATION
(Selected data for a unit outstanding throughout each year.)

Contracts issued prior to May 16, 1983

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
------------------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income..................... $ .125 $ .130 $ .091 $ .067 $ .079
Operating expenses.......................... .030 .030 .028 .027 .027
---------- ---------- ---------- ---------- ----------
Net investment income....................... .095 .100 .063 .040 .052

Unit value at beginning of year............. 2.246 2.146 2.083 2.043 1.991
---------- ---------- ---------- ---------- ----------

Unit value at end of year................... $ 2.341 $ 2.246 $ 2.146 $ 2.083 $ 2.043
========== ========== ========== ========== ==========

SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase in unit value.................. $ .10 $ .10 $ .06 $ .04 $ .05
Ratio of operating expenses to average
net assets................................ 1.33 % 1.33 % 1.33 % 1.33 % 1.33 %
Ratio of net investment income to average
net assets................................ 4.10 % 4.61 % 2.98 % 1.93 % 2.58 %
Number of units outstanding at end of year
(thousands)............................... 112 206 206 218 227

</TABLE>

Contracts issued on or after May 16, 1983

<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income.................... $ .121 $ .127 $ .087 $ .065 $ .077
Operating expenses......................... .035 .034 .032 .031 .031
---------- ---------- ---------- ---------- ----------
Net investment income...................... .086 .093 .055 .034 .046

Unit value at beginning of year............ 2.177 2.084 2.029 1.995 1.949
---------- ---------- ---------- ---------- ----------
Unit value at end of year.................. $ 2.263 $ 2.177 $ 2.084 $ 2.029 $ 1.995
========== ========== ========== ========== ==========

SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase in unit value................. $ .09 $ .09 $ .06 $ .03 $ .05
Ratio of operating expenses to average
net assets............................... 1.57 % 1.57 % 1.57 % 1.57 % 1.57 %
Ratio of net investment income to average
net assets............................... 3.84 % 4.36 % 2.72 % 1.68 % 2.33 %
Number of units outstanding at end of year
(thousands).............................. 38,044 35,721 39,675 34,227 42,115
</TABLE>

-37-

<PAGE> 40

THE TRAVELERS MONEY MARKET ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF INVESTMENTS
DECEMBER 31, 1996

<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- ----------
<S> <C> <C>
SHORT-TERM INVESTMENTS (100%)

COMMERCIAL PAPER (95.5%)
Abbott Laboratories,
5.34% due January 3, 1997 $ 3,500,000 $ 3,498,058
Allied Signal, Inc.,
5.53% due January 22, 1997 2,500,000 2,491,302
American Express Credit Corp.,
5.37% due February 6, 1997 2,000,000 1,988,748
Bankers Trust NY Corp.,
5.55% due February 19, 1997 1,400,000 1,389,448
BHP Finance (USA), Inc.,
5.39% due February 4, 1997 3,000,000 2,984,016
Chase Manhattan Bank,
5.37% due January 31, 1997 2,885,901 2,873,148
Ciesco LP,
5.40% due January 9, 1997 3,000,000 2,995,314
Cincinnati Gas & Electric,
6.21% due September 1, 1997 2,000,000 1,992,916
CIT Group Holdings, Inc.,
5.20% due September 30, 1997 500,000 502,187
Eastman Kodak Co.,
6.08% due April 15, 1997 3,000,000 3,020,535
Engelhard Corp.,
5.38% due February 14, 1997 3,500,000 3,476,179
Federal Home Loan Banks,
5.93% due October 2, 1997 400,000 400,458
General Electric Capital Corp.,
5.31% due January 16, 1997 3,500,000 3,499,776
Heinz H. J. Co.,
5.43% due January 6, 1997 1,600,000 1,598,280
Heinz H. J. Co.,
5.54% due January 30, 1997 2,000,000 1,990,806
Household Finance Corp.,
5.45% due January 7, 1997 2,500,000 2,496,898
PacifiCorp,
5.61% due January 27, 1997 2,000,000 2,002,542
Penney JC Funding Corp.,
5.74% due October 15, 1997 2,000,000 2,064,970
Phillip Morris, Inc.,
5.34% due January 15, 1997 2,700,000 2,693,423
Potomac Electric Power Co.,
5.61% due January 15, 1997 3,500,000 3,491,474
Potomac Electric Power Co.,
5.66% due January 15, 1997 500,000 498,782
Prudential Funding Corp.,
5.35% due January 6, 1997 3,000,000 2,996,775
PACCAR Financial Corp.,
5.40% due January 2, 1997 3,500,000 3,498,691
Raytheon Co.,
5.37% due January 14, 1997 3,500,000 3,491,954
Sara Lee Corp.,
5.79% due January 13, 1997 3,000,000 2,999,445
Seagram Joseph E. & Sons Inc.,
5.44% due January 8, 1997 3,500,000 3,495,086
Societe Generale,
5.21% due February 21, 1997 3,500,000 3,498,988
Southern California Edison Co.,
5.36% due January 28, 1997 3,000,000 2,987,025
Toyota Motor Credit Corp.,
5.35% due February 12, 1997 3,000,000 2,980,464
Weyerhaeuser Co.,
5.35% due February 13, 1997 3,500,000 3,476,693
Xerox Corp.,
5.34% due January 8, 1997 3,500,000 3,495,086
-------------
80,869,467
-------------
REPURCHASE AGREEMENTS (4.5%)
Merrill Lynch Government Securities, Inc.,
6.00% Repurchase Agreement
dated December 31, 1996 due
January 2, 1997, collateralized
by: United States of America
Treasury, $3,510,000, 7.875%
due November 15, 2004 3,795,000 3,795,000
-------------
TOTAL INVESTMENTS (100%)
(COST $84,682,870) $ 84,664,467
=============
</TABLE>

See Notes to Financial Statements

-38-

<PAGE> 41

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Managers and Owners of Variable Annuity Contracts of
The Travelers Money Market Account for Variable Annuities:

We have audited the accompanying statement of assets and liabilities of The
Travelers Money Market Account for Variable Annuities including the statement
of investments as of December 31, 1996, and the related statement of operations
for the year then ended, the statement of changes in net assets for each of the
two years in the period then ended, and the per unit data for each of the five
years in the period then ended. These financial statements and per unit data
are the responsibility of management. Our responsibility is to express an
opinion on these financial statements and per unit data based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and per unit
data 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 securities owned as of
December 31, 1996, by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements and per unit data referred to above
present fairly, in all material respects, the financial position of The
Travelers Money Market Account for Variable Annuities as of December 31, 1996,
the results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended, and the per unit
data for each of the five years in the period then ended, in conformity with
generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

Hartford, Connecticut
February 12, 1997

-39-

<PAGE> 42

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<PAGE> 43

Investment Advisers
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT FOR VARIABLE ANNUITIES
THE TRAVELERS INVESTMENT MANAGEMENT COMPANY
Hartford, Connecticut

THE TRAVELERS QUALITY BOND ACCOUNT FOR VARIABLE ANNUITIES
THE TRAVELERS MONEY MARKET ACCOUNT FOR VARIABLE ANNUITIES
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

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 Account for
Variable Annuities, The Travelers Quality Bond Account for Variable Annuities
and The Travelers Money Market Account for Variable Annuities. 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 sales commissions.

VG-137 (Annual) (12-96) Printed in U.S.A.