<PAGE> 1
UNIVERSAL ANNUITY
ANNUAL REPORTS
DECEMBER 31, 1999
[ARTWORK]
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 & ANNUITY LOGO]
The Travelers Insurance Company
The Travelers Life and Annuity Company
One Tower Square
Hartford, CT 06183
<PAGE> 2
[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 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.
[TIMCO LOGO]
The Travelers Investment Management Company ("TIMCO") provides equity management
and subadvisory services for The Travelers Growth and Income Stock Account for
Variable Annuities.
<PAGE> 3
[TRAVELERSLIFE & ANNUITY LOGO]
THE TRAVELERS VARIABLE PRODUCT SEPARATE ACCOUNTS
INVESTMENT ADVISORY COMMENTARY AS OF DECEMBER 31, 1999
MARKET AND ECONOMIC OVERVIEW
The year began on a volatile note for global financial markets as a potential
new threat emerged in Latin America. The devaluation of Brazil's currency, the
Real, affected many U.S. corporations and investors with exposure to the Latin
American markets and negatively impacted the performance of the U.S. stock
market.
Concerns regarding the future direction of interest rates were prevalent
throughout 1999. Despite low inflation, the Federal Reserve Board ("Fed") opted
to raise interest rates three times during the year, effectively "taking back"
the interest-rate cuts imposed following the global economic crisis in 1998. The
Fed's change in monetary policy did not significantly deter the remarkable
growth of the U.S. economy. In fact, throughout the year, the U.S. Gross
Domestic Product ("GDP"), which represents the total output of goods and
services, continued to exceed expectations.
Despite the rise in interest rates, the U.S. stock market continued its stellar
performance. Evidence of stronger-than-expected economic growth prompted hopes
of a meaningful earnings recovery and at the same time, triggered concerns
regarding future rate hikes. These factors led to a rally in small cap and value
stocks. (Value stocks are securities of companies that are believed to be
undervalued in the market.) However, the trend of investing in small cap and
value stocks soon changed, as many investors took the view that a proactive
monetary policy by the Fed would preempt inflationary pressures.
Nevertheless, the small cap sector, as measured by the Russell 2000 Index,*
which returned 21.26% for the year, outperformed the large cap sector, as
measured by the Standard & Poor's 500 Index** ("S&P 500") which returned 21.03%.
As a result of investors' focus on the direction of interest rates, the stock
and bond markets were characterized by higher levels of volatility. Investors
became increasingly concerned, especially toward the end of the year, about not
only the direction of interest rates but also about future earnings growth and
the high market valuations of many stocks. In addition, the strength of the
overseas markets attracted U.S. capital, which had a somewhat negative impact on
the performance of the U.S. stock market through the third quarter of 1999.
By the end of the year however, the U.S. stock market rose sharply largely due
to the incredible performance of the technology sector. Y2K concerns decreased,
with the market's assessment of the risks associated with potential Year 2000
glitches proving to be correct.
The bond markets did not react positively to the actions of the Fed in 1999 and
experienced their worst year since 1994. The overall bond market recorded losses
in 1999 in response to the Fed's interest rate increases and concerns regarding
inflation. Bond market losses increased with the length of maturities. The yield
on the bellwether 30-year government bond increased 1.39 percentage points in
1999 to 6.48%. At the end of 1998, the 30-year Treasury Bond yielded 5.09%.
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<PAGE> 4
In our view, the strength of the U.S. economy should continue, prompting the Fed
to raise interest rates in 2000.+ In addition, overseas economies, many of which
are in the early stages of recovery, should continue to expand. This global
economic recovery should benefit the manufacturing sector of the U.S. market in
2000.
We predict that earnings should continue double-digit growth through the first
quarter of 2000. It is our belief that the recent performance of technology and
telecommunications stocks is not sustainable. However, we are confident that
most stocks are appropriately valued. Over the longer term, we think that the
fundamentals for both stocks and bonds remains favorable.
*The Russell 2000 measures the performance of the 2,000 smallest companies in
the Russell 3000 Index, which represents approximately 8% of the total market
capitalization of the Russell 3000 Index.
**The S&P 500 Index is market capitalization-weighted measure of 500 widely held
common stocks.
+On February 2, 2000, after this letter was written, the Federal Reserve Board
raised interest rates 0.25% to 5.25%.
DAVID A. TYSON, CFA, PRESIDENT & CHIEF INVESTMENT OFFICER, TRAVELERS ASSET
MANAGEMENT INTERNATIONAL CORPORATION
SANDIP A. BHAGAT, CFA, PRESIDENT & CHIEF INVESTMENT OFFICER, THE TRAVELERS
INVESTMENT MANAGEMENT COMPANY
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<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
- ----------------------------------------------------------------------
<S> <C>
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES..............................................4
THE TRAVELERS QUALITY BOND ACCOUNT FOR VARIABLE
ANNUITIES..........................................................19
THE TRAVELERS MONEY MARKET ACCOUNT FOR VARIABLE
ANNUITIES..........................................................30
</TABLE>
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<PAGE> 6
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 Asset Management International Corporation
("TAMIC") with The Travelers Investment Management Company ("TIMCO") serving as
subadvisor. Account GIS is managed 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 shares 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 twelve months ending December 31, 1999, net of fees and expenses,
Account GIS's total return of 21.7% was well ahead of the 13.1% average return
for variable annuity stock accounts in the Lipper Growth & Income Category. A
discussion of portfolio performance in 1999 is presented next with a closer look
at the third and fourth quarters.
The Technology sector was red-hot in 1999 and growth stocks handily outperformed
value stocks. Our stock selection was most favorable in the Technology, Consumer
Discretionary and Utilities sectors for most of the year and slightly adverse in
the other sectors.
During the third quarter, stock selection was favorable in every sector except
Producer Durables and Materials and Processing. The Technology and Consumer
Discretionary sectors provided the best stock selection.
In the Technology sector, our emphasis on good earnings prospects at reasonable
valuations lead to an overweight position in Sun Microsystems, Inc. which gained
from a steady stream of upward estimate revisions. The quarter also saw strong
rallies in Oracle Corp. and QUALCOMM, Inc., which benefited the portfolio.
In the Consumer Discretionary sector, performance was aided by underweights in
Avon, Gillette Co. and Sears. Avon and Gillette Co. frustrated investors with
lower than expected revenue growth. As a result, Avon was down 55.2% and
Gillette lost 17.2% for the quarter. Sears announced in early September that it
would not meet third quarter earnings and suffered a 29.6% decline for the
quarter.
During the fourth quarter, stock selection was favorable in most sectors and
particularly positive in the Technology, Utilities and Consumer Discretionary
sectors.
In the Technology sector, most of our stock picks performed well. Our positions
in Sun Microsystems, Inc. and Oracle Corp. as a result of upward earnings
revisions paid off as investors rewarded those stocks with a higher
price-to-earnings multiple. Semiconductor equipment stocks such as Applied
Materials Inc. and Teradyne, Inc. surged in expectation of a revival in the
capital spending cycle. We benefited from adding QUALCOMM, Inc. and Yahoo, Inc.
to our portfolios in advance of their inclusion in the S&P 500 index. Our pure
play on the Internet, America Online, Inc., enjoyed another strong quarter and,
finally, we avoided two of the bigger disappointments in the sector, Xerox and
Unisys.
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<PAGE> 7
In the Utilities sector, our emphasis on faster growing telecommunications
companies at the expense of electric utilities and gas distribution companies
continued to help performance. Our big winners here included Nextel
Communications, Inc. and Sprint Corp.-PCS Group. We also benefited from our
position in AES Corp., a global leader in electric power generation, which moved
up in price as it completed a successful Y2K rollover.
In the Consumer Discretionary sector, a number of our positions in the Media and
Broadcasting groups performed well. New York Times Co. and Gannett Company, Inc.
outperformed the Newspaper group while AMFM, Inc. and Times Mirror Co. enjoyed
the benefits of a strong U.S. economy. Kimberly Clark Corp. outperformed the
Household Products group while Cendant Corp., a consumer services company, rose
sharply on the heels of a $400 million investment by Liberty Media. Sears, J.C.
Penney and Tandy, which we did not own, continued to go down and, therefore,
contributed to relative performance.
Strong earnings growth in the third and fourth quarters suggests that the
earnings recovery of 1999 is well underway. However, the constant presence of
the Federal Reserve Board and the current love affair with Technology stocks may
prevent a broad-based market rally from materializing in the near future. In our
disciplined approach to stock selection, we continue to screen our research
universe of over 1,000 large cap securities for companies that offer improving
earnings fundamentals at discounted stock valuations.
PORTFOLIO MANAGER: SANDIP A. BHAGAT, CFA
[TAMIC LOGO]
[TIMCO LOGO]
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<PAGE> 8
THE TRAVELERS
GROWTH AND INCOME
STOCK ACCOUNT
FOR VARIABLE ANNUITIES
[BAR GRAPH]
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years
------ ------- -------
<S> <C> <C> <C>
The Travelers Growth and
Income Stock for Variable
Annuities 21.73% 27.26% 27.62%
Lipper Growth and Income
Category Averages 13.03% 17.32% 20.41%
</TABLE>
This is a comparison of The Travelers Growth and Income Stock Account for
Variable Annuities ("Account GIS") versus Lipper Analytical Services' variable
annuity composite index, which provides the average performance of variable
annuity funds with similar objectives as of December 31, 1999. 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 investment 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.
Account GIS performance information is net of: 1) the 1.25% annual mortality and
expense risk charge, and 2) investment 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 16.54%, five year 27.06% and ten year 15.63%.
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%.
The Lipper Growth and Income Category 5 year average return for fiscal years
ending 1998 and 1997 were misstated in previous reports. The actual 5 year
average for 1998 was 18.08% and 16.65% for 1997.
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<PAGE> 9
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (cost $747,130,849) .......................... $ 1,076,626,784
Receivables:
Dividends ......................................................................... 971,373
Investment securities sold ........................................................ 28,110
Purchase payments and transfers from other Travelers accounts ..................... 303,882
Variation on futures margin ....................................................... 85,000
Other assets ........................................................................ 67,941
----------------
Total Assets .................................................................... 1,078,083,090
----------------
LIABILITIES:
Cash overdraft ...................................................................... 477,421
Payables:
Investment securities purchased ................................................... 1,905,493
Contract surrenders and transfers to other Travelers accounts ..................... 1,115,259
Investment management and advisory fees ........................................... 155,707
Insurance charges ................................................................. 308,827
Accrued liabilities ................................................................. 62,535
----------------
Total Liabilities ............................................................... 4,025,242
----------------
NET ASSETS: $ 1,074,057,848
================
</TABLE>
See Notes to Financial Statements
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<PAGE> 10
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,327,579
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 640,493
--------------------
Total income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,968,072
EXPENSES:
Investment management and advisory fees . . . . . . . . . . . . . . . . . . . 5,840,016
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,420,141
--------------------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,260,157
----------------------
Net investment loss . . . . . . . . . . . . . . . . . . . . . . . . . . (5,292,085)
----------------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED GAIN (LOSS)
ON INVESTMENT SECURITIES:
Realized gain (loss) from investment security transactions:
Proceeds from investment securities sold . . . . . . . . . . . . . . . . . 556,397,281
Cost of investment securities sold . . . . . . . . . . . . . . . . . . . . 372,968,391
--------------------
Net realized gain (loss) . . . . . . . . . . . . . . . . . . . . . . . 183,428,890
Change in unrealized gain (loss) on investment securities:
Unrealized gain at December 31, 1998 . . . . . . . . . . . . . . . . . . . 313,449,599
Unrealized gain at December 31, 1999 . . . . . . . . . . . . . . . . . . . 329,495,935
--------------------
Net change in unrealized gain (loss) for the year . . . . . . . . . . . 16,046,336
----------------------
Net realized gain (loss) and change in unrealized gain (loss) . . . 199,475,226
----------------------
Net increase in net assets resulting from operations . . . . . . . . . . . . $ 194,183,141
======================
</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, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
OPERATIONS:
Net investment loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (5,292,085) $ (2,586,058)
Net realized gain (loss) from investment security transactions . . . . . . . 183,428,890 95,655,131
Net change in unrealized gain (loss) on investment securities . . . . . . . . 16,046,336 105,075,282
----------------------- -----------------------
Net increase in net assets resulting from operations . . . . . . . . . . . 194,183,141 198,144,355
----------------------- -----------------------
UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 2,777,936 and 3,313,169 units, respectively) . . . . . . . . 57,722,048 55,597,200
Participant transfers from other Travelers accounts
(applicable to 4,293,186 and 5,422,153 units, respectively) . . . . . . . . 88,841,951 90,631,767
Administrative charges
(applicable to 28,450 and 29,915 units, respectively) . . . . . . . . . . . (620,057) (549,312)
Contract surrenders
(applicable to 3,595,965 and 3,114,020 units, respectively) . . . . . . . . (75,854,139) (53,155,177)
Participant transfers to other Travelers accounts
(applicable to 3,893,858 and 4,220,307 units, respectively) . . . . . . . . (80,968,008) (70,289,825)
Other payments to participants
(applicable to 203,710 and 164,728 units, respectively) . . . . . . . . . . (4,323,110) (2,822,777)
----------------------- -----------------------
Net increase (decrease) in net assets resulting from unit transactions. . . (15,201,315) 19,411,876
----------------------- -----------------------
Net increase in net assets . . . . . . . . . . . . . . . . . . . . . . 178,981,826 217,556,231
NET ASSETS:
Beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 895,076,022 677,519,791
----------------------- -----------------------
End of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,074,057,848 $ 895,076,022
======================= =======================
</TABLE>
See Notes to Financial Statements
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<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 Citigroup 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 4:00 p.m. Eastern Standard Time price
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.
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.
SECURITY TRANSACTIONS. 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. Premiums and discounts are amortized to
interest income utilizing the constant yield method.
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 based on the
4:00 p.m. Eastern Standard Time price of the New York Stock Exchange, or in
the absence of such price, the latest bid quotation.
REPURCHASE AGREEMENTS. When Account GIS enters into a repurchase agreement
(a purchase of securities whereby the seller agrees to repurchase the
securities at a mutually agreed upon date and price), the repurchase price
of the securities will generally equal the amount paid by Account GIS plus a
negotiated interest amount. The seller under the repurchase agreement will
be required to provide to Account GIS securities (collateral) whose market
value, including accrued interest, will be at least equal to 102% of the
repurchase price. Account GIS monitors the value of collateral on a daily
basis. Repurchase agreements will be limited to transactions with national
banks and reporting broker dealers believed to present minimal credit risks.
Account GIS's custodian will take actual or constructive receipt of all
securities underlying repurchase agreements until such agreements expire.
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<PAGE> 13
NOTES TO FINANCIAL STATEMENTS - CONTINUED
FEDERAL INCOME TAXES. The operations of Account GIS form a part of the total
operations of The Travelers and are not taxed separately. The Travelers is
taxed as a life insurance company under the Internal Revenue Code of 1986,
as amended (the "Code"). Under existing federal income tax law, no taxes are
payable on the investment income and capital gains of Account GIS. Account
GIS is not taxed as a "regulated investment company" under Subchapter M of
the Code.
OTHER. 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 year. Actual results could differ from those estimates.
2. INVESTMENTS
The aggregate costs of purchases and proceeds from sales of investments
(other than short-term securities), were $448,158,682 and $508,559,481,
respectively; the costs of purchases and proceeds from sales of direct and
indirect U.S. government securities were $4,991,875 and $4,087,252,
respectively, for the year ended December 31, 1999. Realized gains and
losses from investment 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 $58,130 and $97,735 for the years ended December 31,
1999 and 1998, respectively.
At December 31, 1999, Account GIS held 100 open S&P 500 Stock Index futures
contracts expiring in March, 2000. The underlying face value, or notional
value, of these contracts at December 31, 1999 amounted to $37,105,000. In
connection with these contracts, short-term investments with a par value of
$2,085,000 had been pledged as margin deposits.
Net realized gains resulting from futures contracts were $3,444,687 and
$2,690,651 for the years ended December 31, 1999 and 1998, 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. The cash settlement for December 31, 1999 is shown on
the Statement of Assets and Liabilities as a receivable for variation on
futures margin.
3. CONTRACT CHARGES
Investment management and advisory fees are calculated daily at annual rates
which start at 0.65% and decrease, as net assets increase, to 0.40% of
Account GIS's average net assets. These fees are paid to Travelers Asset
Management International Corporation ("TAMIC"), an indirect wholly owned
subsidiary of Citigroup Inc. Pursuant to a subadvisory agreement between
TAMIC and The Travelers Investment Management Company ("TIMCO"), an indirect
wholly owned subsidiary of Citigroup Inc., TAMIC pays TIMCO a subadvisory
fee calculated daily at annual rates which start at 0.45% and decrease, as
net assets increase, to 0.20% of Account GIS's average net assets.
Insurance charges are paid for the mortality and expense risks assumed by
The Travelers. Each business day, The Travelers deducts a mortality and
expense risk charge which is reflected in our calculation of accumulation
and annuity unit values. This charge equals, on an annual basis, 1.0017% for
contracts issued prior to May 16, 1983 and 1.25% on an annual basis for
contracts issued on or after May 16, 1983. Additionally, for certain
contracts in the accumulation phase, a semi-annual charge of $15 (prorated
for partial years) is deducted from participant account balances and paid to
The Travelers to cover administrative charges.
On contracts issued prior to May 16, 1983, The Travelers retained from
Account GIS sales charges of $25,099 and $24,080 for the years ended
December 31, 1999 and 1998, 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 $296,975 and $246,946 of contingent deferred sales charges
for the years ended December 31, 1999 and 1998, respectively.
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<PAGE> 14
NOTES TO FINANCIAL STATEMENTS - CONTINUED
4. NET ASSETS HELD ON BEHALF OF AN AFFILIATE
Approximately $22,919,000 and $21,175,000 of the net assets of Account GIS
were held on behalf of an affiliate of The Travelers as of December 31, 1999
and 1998, respectively. Transactions with this affiliate during the years
ended December 31, 1999 and 1998, were comprised of participant purchase
payments of approximately $761,000 and $675,000 and contract surrenders of
approximately $2,546,000 and $1,930,000, respectively.
5. NET CONTRACT OWNERS' EQUITY
<TABLE>
<CAPTION>
DECEMBER 31, 1999
--------------------------------------------
UNIT NET
UNITS VALUE ASSETS
----- ----- ------
<S> <C> <C> <C>
Accumulation phase of contracts issued prior to May 16, 1983 . . . . . 12,336,655 $ 24.427 $ 301,351,437
Annuity phase of contracts issued prior to May 16, 1983 . . . . . . . . 309,288 24.427 7,555,070
Accumulation phase of contracts issued on or after May 16, 1983 . . . . 32,564,037 23.436 763,177,055
Annuity phase of contracts issued on or after May 16, 1983 . . . . . . 84,241 23.436 1,974,286
------------------
Net Contract Owners' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,074,057,848
==================
</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,
--------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income . . . . . . . . . . . . . . . . . . . . . $ .267 $ .243 $ .233 $ .216 $ .208
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . .347 .272 .201 .154 .123
--------- --------- --------- --------- ----------
Net investment income (loss) . . . . . . . . . . . . . . . . . . (.080) (.029) .032 .062 .085
Unit value at beginning of year . . . . . . . . . . . . . . . . . 20.017 15.510 11.763 9.668 7.120
Net realized and change in unrealized gains . . . . . . . . . . . 4.490 4.536 3.715 2.033 2.463
--------- --------- --------- --------- ----------
Unit value at end of year . . . . . . . . . . . . . . . . . . . . $24.427 $20.017 $15.510 $11.763 $ 9.668
========= ========= ========= ========= ==========
SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase in unit value . . . . . . . . . . . . . . . . . . . $ 4.41 $ 4.51 $ 3.75 $ 2.10 $ 2.55
Ratio of operating expenses to average net assets . . . . . . . . 1.60% 1.56% 1.45% 1.45% 1.45%
Ratio of net investment income (loss) to average net assets . . . (.37)% (.16)% .24% .60% 1.02%
Number of units outstanding at end of year (thousands) . . . . . 12,646 13,894 15,194 16,554 17,896
Portfolio turnover rate . . . . . . . . . . . . . . . . . . . . . 47% 50% 64% 85% 96%
<CAPTION>
Contracts issued on or after May 16, 1983
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income . . . . . . . . . . . . . . . . . . . . . $ .256 $ .234 $ .228 $ .212 $ .205
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . .385 .303 .228 .175 .140
--------- --------- --------- --------- ----------
Net investment income (loss) . . . . . . . . . . . . . . . . . . (.129) (.069) .000 .037 .065
Unit value at beginning of year . . . . . . . . . . . . . . . . . 19.253 14.955 11.371 9.369 6.917
Net realized and change in unrealized gains . . . . . . . . . . . 4.312 4.367 3.584 1.965 2.387
--------- --------- --------- --------- ----------
Unit value at end of year . . . . . . . . . . . . . . . . . . . . $23.436 $19.253 $14.955 $11.371 $ 9.369
========= ========= ========= ========= ==========
SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase in unit value . . . . . . . . . . . . . . . . . . . $ 4.18 $ 4.30 $ 3.58 $ 2.00 $ 2.45
Ratio of operating expenses to average net assets . . . . . . . . 1.85% 1.81% 1.70% 1.70% 1.70%
Ratio of net investment income (loss) to average net assets . . . (.62)% (.41)% .00% .36% .79%
Number of units outstanding at end of year (thousands) . . . . . 32,648 32,051 29,545 27,578 26,688
Portfolio turnover rate . . . . . . . . . . . . . . . . . . . . . 47% 50% 64% 85% 96%
</TABLE>
-13-
<PAGE> 16
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------------ ------------
<S> <C> <C>
COMMON STOCKS (95.4%)
AEROSPACE (0.6%)
Boeing Co. 108,430 $ 4,506,622
General Dynamics Corp. 30,400 1,603,600
--------------
6,110,222
--------------
AIRLINES (0.2%)
AMR Corp. (A) 10,980 735,660
Delta Airlines, Inc. 33,200 1,653,775
--------------
2,389,435
--------------
AUTOMOTIVE (1.3%)
Ford Motor Co. 95,300 5,092,594
General Motors Corp. 73,000 5,306,187
Lear Corporation (A) 46,800 1,497,600
Navistar International
Corp. (A) 46,900 2,221,888
--------------
14,118,269
--------------
BANKING (5.7%)
AmSouth Bancorporation 131,400 2,537,663
Bank of America Corp. 124,224 6,234,492
Bank of New York 93,000 3,720,000
Bank One Corp. 118,664 3,804,664
Capital One Financial Corp. 45,300 2,182,894
Chase Manhattan Corp. 93,804 7,287,398
Comerica, Inc. 25,150 1,174,191
Fifth Third BanCorp. 24,600 1,804,257
First Union Corp. 115,700 3,796,406
Firstar Corp. 105,000 2,218,125
FleetBoston Financial Corp. 110,822 3,857,991
J.P. Morgan & Company, Inc. 14,200 1,798,075
MBNA Corp. 133,300 3,632,425
National City Corp. 73,600 1,743,400
SouthTrust Corp. 57,500 2,172,425
State Street Corp. 27,300 1,994,606
Summit BanCorp 42,600 1,304,625
SunTrust Banks, Inc. 36,100 2,484,131
Washington Mutual 70,000 1,820,000
Wells Fargo & Co. 139,230 5,630,113
--------------
61,197,881
--------------
BEVERAGE (1.8%)
Anheuser-Busch Cos. 60,100 4,259,588
Coca-Cola Co. 185,800 10,822,850
PepsiCo, Inc. 115,700 4,078,425
--------------
19,160,863
--------------
BROKERAGE (2.3%)
Charles Schwab Corp. 71,600 2,747,650
Lehman Brothers Holdings, Inc. 51,900 4,395,281
Merrill Lynch & Co. 71,800 5,995,300
Morgan Stanley Dean
Witter & Co. 80,925 11,552,044
--------------
24,690,275
--------------
BUILDING MATERIALS (0.2%)
Masco Corp. 70,800 1,796,550
--------------
CAPITAL GOODS (1.5%)
Applied Materials, Inc. (A) 48,100 6,092,168
Honeywell International, Inc. 91,812 5,296,405
Nucor Corp. 15,500 849,594
Tellabs, Inc. (A) 23,400 1,501,257
TRW, Inc. 45,200 2,347,575
--------------
16,086,999
--------------
CHEMICALS (1.3%)
Dow Chemical Co. 23,900 3,193,637
E.I Dupont de Nemours & Co. 92,456 6,090,539
Monsanto Co. 73,700 2,625,562
Praxair, Inc. 15,000 754,688
Rohm & Haas Co. 41,900 1,704,806
--------------
14,369,232
--------------
CONGLOMERATES (5.3%)
Emerson Electric Co. 24,000 1,377,000
General Electric Co. 271,600 42,030,100
Minnesota Mining &
Manufacturing Co. 21,600 2,114,100
Tyco International Ltd. 235,700 9,162,838
United Technologies Corp. 37,900 2,463,500
--------------
57,147,538
--------------
CONSTRUCTION MACHINE (0.5%)
Briggs & Stratton Corp. 38,900 2,086,013
Caterpillar, Inc. 22,300 1,049,494
Ingersoll-Rand Co. 39,300 2,163,956
--------------
5,299,463
--------------
CONSUMER (2.3%)
Black & Decker Corp. 12,200 637,450
Clorox Co. 44,000 2,216,500
Colgate-Palmolive Co. 35,100 2,281,500
Gillette Co. 56,184 2,314,079
Kimberly Clark Corp. 58,660 3,827,565
Maytag Corp. 29,200 1,401,600
Pall Corp. 70,700 1,524,469
Procter & Gamble Co. 84,000 9,203,250
Unilever N V 36,721 1,998,999
--------------
25,405,412
--------------
DEFENSE (0.4%)
Lockheed Martin Corp. 149,300 3,265,937
Raytheon Co. 36,300 964,219
--------------
4,230,156
--------------
ENTERTAINMENT (1.3%)
Carnival Corp. 46,300 2,213,719
Seagram Co. Ltd. 66,700 2,997,331
Viacom, Inc. (A) 40,426 2,443,246
Walt Disney Co. 234,265 6,852,251
--------------
14,506,547
--------------
</TABLE>
-14-
<PAGE> 17
STATEMENT OF INVESTMENTS - CONTINUED
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------------ ------------
<S> <C> <C>
FINANCE (1.5%)
American Express Co. 55,800 $ 9,276,750
Countrywide Credit 40,200 1,015,050
Household International 79,700 2,968,825
Providian Financial Corp. 36,500 3,323,781
--------------
16,584,406
--------------
FOOD (1.5%)
General Mills, Inc. 64,300 2,298,725
H.J. Heinz Co. 45,400 1,807,487
Kellogg Co. 53,300 1,642,306
McDonalds Corp. 105,000 4,232,813
Sara Lee Corp. 105,000 2,316,563
Sysco Corp. 74,600 2,951,363
Tricon Global Restaurants (A) 31,000 1,197,375
--------------
16,446,632
--------------
HEALTHCARE (0.8%)
Abbott Laboratories 90,000 3,268,125
Cardinal Health, Inc. 30,900 1,479,338
Columbia/HCA Healthcare Corp. 103,800 3,042,637
Wellpoint Health Networks Inc. (A) 14,500 956,094
--------------
8,746,194
--------------
INDEPENDENT ENERGY (0.1%)
Apache Corp 36,900 1,362,994
--------------
INSURANCE (2.8%)
Aetna, Inc. 26,600 1,484,613
Allstate Corp. 122,950 2,950,800
Ambac Financial Group, Inc. 31,000 1,617,812
American General Corp. 21,200 1,608,550
American International Group, Inc. 138,792 15,006,885
Everest Reinsurance Holdings 31,000 691,688
Hartford Financial Services Group 32,400 1,534,950
Jefferson Pilot Corp. 35,800 2,443,350
MBIA, Inc. 38,900 2,054,406
20th Century Industries 35,200 679,800
--------------
30,072,854
--------------
INTEGRATED ENERGY (4.4%)
Atlantic Richfield Co. 35,300 3,053,450
Chevron Corp. 53,700 4,651,762
Conoco, Inc. 55,904 1,390,612
Exxon Mobil Corp. 286,198 23,056,826
Kerr Mcgee Corp. 46,900 2,907,800
Royal Dutch Petroleum Co. 167,700 10,135,369
Texaco, Inc. 44,700 2,427,769
--------------
47,623,588
--------------
MEDIA (3.1%)
AMFM, Inc. (A) 25,500 1,995,375
CBS Corp. (A) 63,800 4,079,212
Clear Channel
Communications, Inc. (A) 26,730 2,385,653
Comcast Corp. 61,200 3,092,516
Gannett Company, Inc. 40,500 3,303,281
Interpublic Group Companies, Inc. 50,600 2,918,987
Meredith Corp. 40,300 1,680,006
New York Times Co. 57,500 2,824,688
Time Warner, Inc. 118,400 8,576,600
Times Mirror Co. 32,600 2,184,200
--------------
33,040,518
--------------
METALS (0.7%)
Alcoa, Inc. 41,972 3,483,676
Barrick Gold Corp. 69,200 1,223,975
Phelps Dodge Corp. 24,200 1,624,425
W.R. Grace & Co. (A) 108,200 1,501,275
--------------
7,833,351
--------------
NATURAL GAS PIPELINE (0.5%)
El Paso Energy Corp. 25,800 1,001,362
Enron Corp. 74,500 3,305,938
Williams Cos. 46,400 1,418,100
--------------
5,725,400
--------------
OIL FIELD (0.4%)
Baker Hughes Inc. 31,000 652,938
Halliburton Co. 35,900 1,444,975
Schlumberger Ltd. 43,300 2,435,625
--------------
4,533,538
--------------
PAPER (0.7%)
Georgia-Pacific Group 47,400 2,405,550
International Paper Co. 46,700 2,635,631
Mead Corp. 29,150 1,266,203
Weyerhaeuser Co. 10,800 775,575
--------------
7,082,959
--------------
PHARMACEUTICALS (7.1%)
Allergan, Inc. 62,000 3,084,500
American Home Products Corp. 77,400 3,052,463
Amgen, Inc. (A) 122,500 7,353,834
Baxter International, Inc. 58,700 3,687,094
Bristol-Myers Squibb Co. 139,900 8,979,831
CVS Corp. 61,100 2,440,181
Eli Lilly & Co. 67,700 4,502,050
Johnson & Johnson 132,500 12,339,062
Merck & Co, Inc. 193,100 12,949,769
Pfizer, Inc. 258,490 8,384,769
Pharmacia & Upjohn, Inc. 21,300 958,500
Schering-Plough Corp. 78,900 3,328,594
Warner-Lambert Co. 63,800 5,227,612
--------------
76,288,259
--------------
RAILROADS (0.1%)
Union Pacific Corp. 35,800 1,561,775
--------------
REFINING (0.1%)
Tosco Corp. 25,400 690,563
--------------
RETAILERS (5.4%)
Bed Bath & Beyond, Inc. (A) 47,200 1,635,777
Circuit City Stores, Inc. 44,600 2,009,787
Costco Wholesale Corp. (A) 29,500 2,690,955
Dayton Hudson Corp. 61,300 4,501,719
Federated Department Stores,
Inc. (A) 53,200 2,689,925
Gap, Inc. 53,350 2,454,100
Home Depot, Inc. 190,047 13,030,097
Lowe's Cos., Inc. 48,000 2,868,000
TJX Companies Inc. 70,900 1,449,019
Wal-Mart Stores, Inc. 354,200 24,484,075
--------------
57,813,454
--------------
</TABLE>
-15-
<PAGE> 18
STATEMENT OF INVESTMENTS - CONTINUED
<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------------ -------------
<S> <C> <C>
SERVICES (6.9%)
Cendant Corp. (A) 148,500 $ 3,944,531
Medtronic, Inc. 97,300 3,545,369
Microsoft (A) 435,000 50,772,678
Oracle Corp. (A) 139,987 15,682,926
--------------
73,945,504
--------------
SUPERMARKETS (0.4%)
Kroger Co. (A) 70,300 1,326,912
Safeway, Inc. (A) 68,830 2,447,767
--------------
3,774,679
--------------
TECHNOLOGY (19.7%)
America Online, Inc. (A) 207,200 15,630,650
Analog Devices, Inc. (A) 30,800 2,864,400
Automatic Data Processing 41,400 2,230,425
BMC Software, Inc. (A) 50,300 4,019,287
Cisco Systems, Inc. (A) 267,650 28,663,656
Compaq Computer Corp. 131,868 3,568,678
Computer Associates International 42,800 2,993,325
Compuware Corp. (A) 85,100 3,167,320
Corning, Inc. 26,500 3,416,844
Dell Computer Corp. (A) 185,320 9,445,538
Eastman Kodak Co. 23,400 1,550,250
Electronic Data Systems Corp. 56,200 3,761,888
EMC Corp. (A) 70,600 7,713,050
Gateway Inc. (A) 19,800 1,426,837
Hewlett Packard Co. 87,200 9,935,350
Intel Corp. 285,720 23,509,413
International Business
Machines Corp. 150,000 16,200,000
Lexmark International Group,
Inc. (A) 28,900 2,615,450
Micron Technologies, Inc. (A) 27,800 2,161,450
Motorola, Inc. 57,100 8,407,975
PerkinElmer, Inc. 70,400 2,934,800
QUALCOMM, Inc. (A) 70,000 12,326,566
Safeguard Scientifics, Inc. 12,800 2,074,400
Seagate Technology, Inc. (A) 44,800 2,086,000
Solectron Corp. (A) 24,500 2,330,562
Sun Microsystems, Inc. (A) 156,800 12,137,308
Teradyne, Inc. (A) 46,300 3,055,800
Texas Instruments, Inc. 71,500 6,926,562
3Com Corp. (A) 49,400 2,320,259
Xilinx, Inc. (A) 53,000 2,409,846
Yahoo, Inc. (A) 22,720 9,831,371
--------------
211,715,260
--------------
TELECOMMUNICATIONS (11.4%)
ALLTEL Corp. 37,800 3,125,588
AT&T Corp. 266,545 13,527,159
Bell Atlantic Corp. 103,858 6,393,758
BellSouth Corp. 92,700 4,339,519
CenturyTel, Inc. 78,250 3,707,094
Global Crossing, Ltd. 64,800 3,237,978
GTE Corp. 54,000 3,810,375
Lucent Technologies, Inc. 258,098 19,308,957
MCI Worldcom, Inc. (A) 248,627 13,184,986
MediaOne Group, Inc. (A) 56,900 4,370,631
Nextel Communications, Inc. (A) 61,500 6,340,269
Nortel Networks Corp. 105,300 10,635,300
SBC Communications, Inc. 284,718 13,880,003
Sprint Corp. - Fon Group 101,012 6,799,370
Sprint Corp. - PCS Group (A) 67,553 6,924,182
US West, Inc. 43,870 3,158,640
--------------
122,743,809
--------------
TEXTILE (0.2%)
Nike Inc. 44,100 2,185,706
--------------
TOBACCO (0.5%)
Loews Corp. 13,800 837,487
Philip Morris Cos. 217,300 5,038,644
--------------
5,876,131
--------------
TRANSPORTATION SERVICES (0.2%)
FDX Corp. (A) 48,300 1,977,281
--------------
U.S. AGENCY (1.0%)
Federal Home Loan Mortgage Corp. 80,400 3,783,825
Federal National Mortgage
Association 101,100 6,312,431
--------------
10,096,256
--------------
UTILITIES (1.2%)
AES Corp. (A) 36,500 2,728,375
Central & South West Corp. 71,200 1,424,000
Edison International 83,600 2,189,275
FPL Group, Inc. 40,200 1,721,062
Peco Energy Co. 70,500 2,449,875
Southern Co. 37,100 871,850
Texas Utilities Co. 51,800 1,842,138
--------------
13,226,575
--------------
TOTAL COMMON STOCK
(COST $697,976,696) 1,027,456,528
--------------
</TABLE>
-16-
<PAGE> 19
STATEMENT OF INVESTMENTS - CONTINUED
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
------------ ------------
<S> <C> <C>
SHORT-TERM INVESTMENTS (4.6%)
COMMERCIAL PAPER (4.4%)
Ford Motor Credit Co.,
6.73% due January 13, 2000 $ 15,000,000 $ 14,969,985
G.E. Capital Corp.,
6.53% due February 2, 2000 15,750,000 15,669,313
Harvard University,
5.07% due January 4, 2000 2,500,000 2,498,472
Household Financial Corp.,
4.06% due January 3, 2000 2,309,000 2,308,487
Morgan Stanley Dean Witter & Co.,
6.41% due February 28, 2000 10,000,000 9,906,580
Tampa Electric Co.,
6.36% due January 18, 2000 1,730,000 1,725,194
--------------
47,078,031
--------------
U.S. TREASURY (0.2%)
United States of America Treasury,
5.40% due March 16, 2000 (B) 650,000 642,105
United States of America Treasury,
4.83% due April 27, 2000 (B) 1,475,000 1,450,120
--------------
2,092,225
--------------
TOTAL SHORT-TERM
INVESTMENTS (COST $49,154,153) 49,170,256
--------------
<CAPTION>
NOTIONAL
VALUE
------------
<S> <C> <C>
FUTURES CONTRACTS (0.0%)
S&P 500 Stock Index,
Exp. March, 2000 (C) $ 37,105,000 -
---------------
TOTAL INVESTMENTS (100%)
(COST $747,130,849) (D) $1,076,626,784
==============
</TABLE>
NOTES
(A) Non-income Producing Security.
(B) Par value of $2,085,000 pledged to cover margin deposits on futures
contracts.
(C) As more fully discussed in Note 1 to the financial statements, it is
Account GIS's practice to hold cash and cash equivalents (including
short-term investments) at least equal to the underlying face value, or
notional value, of outstanding purchased futures contracts, less the
initial margin. Account GIS uses futures contracts as a substitute for
holding individual securities.
(D) At December 31, 1999, net unrealized appreciation for all securities was
$329,495,935. This consisted of aggregate gross unrealized appreciation
for all securities in which there was an excess of market value over cost
of $362,297,427 and aggregate gross unrealized depreciation for all
securities in which there was an excess of cost over market value of
$32,801,492.
See Notes to Financial Statements
-17-
<PAGE> 20
INDEPENDENT AUDITORS' REPORT
To the Board of Managers and the 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, 1999, and the related statements of
operations, changes in net assets and the selected per unit data and ratios for
the year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit. The accompanying statement of changes
in net assets for the year ended December 31, 1998 and selected per unit data
and ratios for each of the years in the four-year period ended December 31, 1998
were audited by other auditors whose report thereon dated February 15, 1999,
expressed an unqualified opinion on that statement of changes in net assets and
those selected per unit data and ratios.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of investment securities owned as of December 31, 1999, 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 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, 1999, and the results of
its operations, changes in net assets and the selected per unit data and ratios
for the year then ended, in conformity with generally accepted accounting
principles.
/s/ KPMG LLP
Hartford, Connecticut
February 18, 2000
-18-
<PAGE> 21
THE TRAVELERS
QUALITY BOND ACCOUNT
FOR VARIABLE ANNUITIES
The Travelers Quality Bond Account for Variable Annuities ("Account QB")
returned 0.78% for the year versus 0.39% for The Lehman Intermediate
Government/Corporate Bond Index (The Lehman Intermediate Government/Corporate
Bond Index is a combination of publicly issued intermediate and long-term U.S.
government bonds and corporate bonds). Account QB outperformed it's benchmark by
39 basis points for the year.
In the U.S., the decade closed out with peace and prosperity. Rolling 12-month
core inflation and unemployment both hit 30-year lows, while consumer confidence
hit a 30-year high and productivity a 7-year high. Housing and auto activity
broke records, but both contributed to some small inflationary signs and began
to taper as interest rates had some minor impact. Consumers continued to drive
the economy by spending. The savings rate dropped to negative territory, as
compared to income, but this is justified in consumers' minds by enormous wealth
creation powered by the stock market. Spending as a fraction of assets is
actually low. The budget surplus and trade deficit both widened, while the
dollar hit euro parity. The year pulled the U.S. economic expansion to within
two months of shattering an all-time longevity record. In the process, it
brought the Treasury curve higher by 179 basis points at the 10-year level to
6.44% and surged equities once again, the Standard & Poor's 500 Stock Index
exceeding a 20% total return for the fifth year in a row. The Federal Open
Market Committee which has responded to the worldwide spread of an Asian
economic crisis in 1998 with three decreases in the overnight lending rate,
reversed those moves with three 25 basis point tightenings in 1999, as economies
recovered from 1998's downturn and no longer put outside pressure on the U. S.'s
safe dollar investments. Thus, while rates rose substantially throughout this
past year, much of it was a cancellation of a temporary loose-money policy from
the prior year that was driven by international, not domestic, forces. Prior to
the Asian crisis, the Federal Reserve Board ("Fed") already had a tightening
bias due to America's own high speed economy.
The bond market is therefore bearish, having priced in 75 more points of Fed
tightening in the first six months of the year. Higher rates are not drawing as
much attention to bonds as they normally would, given the type of equity returns
seen recently. This complacency indicates that rate-increase anticipation is
warranted. We are therefore of a slightly short-duration mindset, remaining very
close to neutral due to the negative sentiment that has already been priced in.
The risk to an upward rate surprise lies in the potential for the market to view
the Fed as being behind the curve in the control of inflation. Additionally, a
weakening of the dollar would also contribute to rising rates.
Spreads have tightened since their wide levels last summer but remain
historically high and therefore could continue to tighten 20-25 basis points in
the next 6-12 months. Dealer appetite bouncing back after position-reductions
following 1998's crisis and Y2K should push this trend. An opposing spread force
remains the fact that government debt will probably continue to decrease,
thereby lowering treasury yields. We maintain our overweight position in spread
product, as the above-normal spread advantage should outweigh any spread
volatility.
PORTFOLIO MANAGER: F. DENNEY VOSS
[TAMIC LOGO]
-19-
<PAGE> 22
THE TRAVELERS
QUALITY BOND ACCOUNT
FOR VARIABLE ANNUITIES
[BAR GRAPH]
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years
------ ------- -------
<S> <C> <C> <C>
The Travelers Quality Bond
Account for Variable
Annuities 0.78% 4.72% 6.33%
Lipper Short Intermediate
Investment Grade Debt
Category Average 0.53% 3.49% 4.67%
</TABLE>
This is a comparison of The Travelers Quality Bond Account for Variable
Annuities ("Account QB") versus Lipper Analytical Services' variable annuity
composite index, which provides the average performance of variable annuity
funds with similar objectives as of December 31, 1999. 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 investment 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.
Account QB performance information is net of: 1) the 1.25% annual mortality and
expense risk charge, and 2) investment 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 -4.39%, five year 5.36% and ten year 5.84%. 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%.
-20-
<PAGE> 23
THE TRAVELERS QUALITY BOND ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (cost $139,481,975) . . . . . . . . . . . . . . . . . . . $ 136,287,761
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 203,921
Receivables:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,557,887
Purchase payments and transfers from other Travelers accounts . . . . . . . . . . . . . . . . 115,240
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,842
--------------------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139,166,651
--------------------
LIABILITIES:
Payables:
Contract surrenders and transfers to other Travelers accounts . . . . . . . . . . . . . . . . 247,964
Investment management and advisory fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,106
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,319
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 938
--------------------
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 300,327
--------------------
NET ASSETS: $ 138,866,324
====================
</TABLE>
See Notes to Financial Statements
-21-
<PAGE> 24
THE TRAVELERS QUALITY BOND ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,993,418
EXPENSES:
Investment management and advisory fees . . . . . . . . . . . . . . . . . . . . . . . . $ 495,204
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,815,678
-----------------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,310,882
-----------------
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,682,536
-----------------
REALIZED GAIN (LOSS) AND CHANGE IN UNREALIZED GAIN (LOSS)
ON INVESTMENT SECURITIES:
Realized gain (loss) from investment security transactions:
Proceeds from investment securities sold . . . . . . . . . . . . . . . . . . . . . . 522,959,789
Cost of investment securities sold . . . . . . . . . . . . . . . . . . . . . . . . . 526,224,337
-----------------
Net realized gain (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,264,548)
Change in unrealized gain (loss) on investment securities:
Unrealized loss at December 31, 1998 . . . . . . . . . . . . . . . . . . . . . . . . (6,261)
Unrealized loss at December 31, 1999 . . . . . . . . . . . . . . . . . . . . . . . . (3,194,214)
-----------------
Net change in unrealized gain (loss) for the year . . . . . . . . . . . . . . . . . (3,187,953)
-----------------
Net realized gain (loss) and change in unrealized gain (loss) . . . . . . . (6,452,501)
-----------------
Net increase in net assets resulting from operations . . . . . . . . . . . . . . . . . $ 1,230,035
=================
</TABLE>
See Notes to Financial Statements
-22-
<PAGE> 25
THE TRAVELERS QUALITY BOND ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
OPERATIONS:
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,682,536 $ 7,612,761
Net realized gain (loss) from investment security transactions . . . . . (3,264,548) 4,823,305
Net change in unrealized gain (loss) on investment securities . . . . . . (3,187,953) (1,701,374)
----------------------- -----------------------
Net increase in net assets resulting from operations . . . . . . . . . 1,230,035 10,734,692
----------------------- -----------------------
UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 1,784,107 and 2,278,275 units, respectively) . . . . . 10,308,965 12,701,859
Participant transfers from other Travelers accounts
(applicable to 2,515,938 and 3,679,128 units, respectively) . . . . . 14,547,000 20,644,939
Administrative charges
(applicable to 15,591 and 17,717 units, respectively) . . . . . . . . . (90,289) (100,331)
Contract surrenders
(applicable to 3,295,199 and 2,743,477 units, respectively) . . . . . . (19,155,386) (15,435,681)
Participant transfers to other Travelers accounts
(applicable to 5,288,415 and 4,063,248 units, respectively) . . . . . . (30,584,506) (22,650,450)
Other payments to participants
(applicable to 194,998 and 206,656 units, respectively) . . . . . . . (1,142,207) (1,173,615)
----------------------- -----------------------
Net decrease in net assets resulting from unit transactions . . . . . . (26,116,423) (6,013,279)
----------------------- -----------------------
Net increase (decrease) in net assets . . . . . . . . . . . . . . . (24,886,388) 4,721,413
NET ASSETS:
Beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163,752,712 159,031,299
----------------------- -----------------------
End of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 138,866,324 $ 163,752,712
======================= =======================
</TABLE>
See Notes to Financial Statements
-23-
<PAGE> 26
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 Citigroup 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 4:00 p.m. Eastern Standard Time price
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.
SECURITY TRANSACTIONS. Security transactions are accounted for on the trade
date. Interest income is recorded on the accrual basis. Premiums and
discounts are amortized to interest income utilizing the constant yield
method.
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.
-24-
<PAGE> 27
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.
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 year. Actual results could differ from those estimates.
2. INVESTMENTS
The aggregate costs of purchases and proceeds from sales of investments
(other than short-term securities) were $237,492,487 and $212,423,379,
respectively; the costs of purchases and proceeds from sales of direct and
indirect U.S. government securities were $239,438,684 and $268,866,956,
respectively, for the year ended December 31, 1999. Realized gains and
losses from investment security transactions are reported on an identified
cost basis.
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 Citigroup Inc.
Insurance charges are paid for the mortality and expense risks assumed by
The Travelers. Each business day, The Travelers deducts a mortality and
expense risk charge which is reflected in our calculation of accumulation
and annuity unit values. This charge equals, on an annual basis, 1.0017% for
contracts issued prior to May 16, 1983 and 1.25% on an annual basis for
contracts issued on or after May 16, 1983. Additionally, for certain
contracts in the accumulation phase, a semi-annual charge of $15 (prorated
for partial years) 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 $7,024 and $8,940 for the years ended December
31, 1999 and 1998, 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 $85,184 and $70,717 of contingent deferred sales charges
for the years ended December 31, 1999 and 1998, respectively.
-25-
<PAGE> 28
NOTES TO FINANCIAL STATEMENTS - CONTINUED
4. NET ASSETS HELD ON BEHALF OF AN AFFILIATE
Approximately $310,000 and $457,000 of the net assets of Account QB were
held on behalf of an affiliate of The Travelers as of December 31, 1999 and
1998, respectively. Transactions with this affiliate during the years ended
December 31, 1999 and 1998, were comprised of participant purchase payments
of approximately $105,000 and $112,000 and contract surrenders of
approximately $249,000 and $74,000, respectively.
5. NET CONTRACT OWNERS' EQUITY
<TABLE>
<CAPTION>
DECEMBER 31, 1999
----------------------------------------------------
UNIT NET
UNITS VALUE ASSETS
----- ----- ------
<S> <C> <C> <C>
Accumulation phase of contracts issued prior to May 16, 1983 . . . . . . . 6,108,924 $ 6.055 $ 36,996,241
Annuity phase of contracts issued prior to May 16, 1983 . . . . . . . . . . 115,366 6.055 698,668
Accumulation phase of contracts issued on or after May 16, 1983 . . . . . . 17,404,205 5.810 101,124,507
Annuity phase of contracts issued on or after May 16, 1983 . . . . . . . . 8,073 5.810 46,908
--------------------
Net Contract Owners' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 138,866,324
====================
</TABLE>
-26-
<PAGE> 29
NOTES TO FINANCIAL STATEMENTS - CONTINUED
6. SUPPLEMENTARY INFORMATION
(Selected data for a unit outstanding throughout each year.)
<TABLE>
<CAPTION>
Contracts issued prior to May 16, 1983
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income . . . . . . . . . . . . . . . . . . . . . $ .393 $ .363 $ .353 $ .379 $ .328
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . .080 .076 .071 .067 .063
--------- --------- --------- --------- ----------
Net investment income . . . . . . . . . . . . . . . . . . . . . . .313 .287 .282 .312 .265
Unit value at beginning of year . . . . . . . . . . . . . . . . . 5.994 5.593 5.234 5.050 4.400
Net realized and change in unrealized gains (losses) . . . . . . (.252) .114 .077 (.128) .385
--------- --------- --------- --------- ----------
Unit value at end of year . . . . . . . . . . . . . . . . . . . . $ 6.055 $ 5.994 $ 5.593 $ 5.234 $ 5.050
========= ========= ========= ========= ==========
SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase in unit value . . . . . . . . . . . . . . . . . . . $ .06 $ .40 $ .36 $ .18 $ .65
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 . . . . . . 5.22% 4.96% 5.25% 6.12% 5.54%
Number of units outstanding at end of year (thousands) . . . . . 6,224 6,880 7,683 8,549 9,325
Portfolio turnover rate . . . . . . . . . . . . . . . . . . . . . 340% 438% 196% 176% 138%
<CAPTION>
Contracts issued on or after May 16, 1983
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income . . . . . . . . . . . . . . . . . . . . . $ .378 $ .350 $ .342 $ .368 $ .319
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . .091 .088 .082 .078 .073
--------- --------- --------- --------- ----------
Net investment income . . . . . . . . . . . . . . . . . . . . . . .287 .262 .260 .290 .246
Unit value at beginning of year . . . . . . . . . . . . . . . . . 5.765 5.393 5.060 4.894 4.274
Net realized and change in unrealized gains (losses) . . . . . . (.242) .110 .073 (.124) .374
--------- --------- --------- --------- ----------
Unit value at end of year . . . . . . . . . . . . . . . . . . . . $ 5.810 $ 5.765 $ 5.393 $ 5.060 $ 4.894
========= ========= ========= ========= ==========
SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase in unit value . . . . . . . . . . . . . . . . . . . $ .04 $ .37 $ .33 $ .17 $ .62
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 . . . . . . 4.97% 4.71% 5.00% 5.87% 5.29%
Number of units outstanding at end of year (thousands) . . . . . 17,412 21,251 21,521 24,804 27,066
Portfolio turnover rate . . . . . . . . . . . . . . . . . . . . . 340% 438% 196% 176% 138%
</TABLE>
-27-
<PAGE> 30
THE TRAVELERS QUALITY BOND ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
------------ ------------
<S> <C> <C>
BONDS (86.7%)
AIRLINES (1.2%)
Delta Airlines, Inc.,
9.25% Sinking Fund, 2007 $ 1,575,087 $ 1,577,955
--------------
BANKING (4.1%)
Banponce Financial Corp.,
7.30% Debentures, 2002 4,100,000 4,094,293
MBNA American Bank NA,
6.00% Debentures, 2000 1,500,000 1,482,259
--------------
5,576,552
--------------
FINANCE (19.2%)
Comdisco, Inc.,
7.25% Debentures, 2001 6,800,000 6,755,752
FINOVA Capital Corp.,
6.25% Debentures, 2002 7,500,000 7,288,845
Orix Credit Alliance,
6.78% Debentures, 2001 5,900,000 5,843,431
Osprey Holdings, Inc.,
8.31% Debentures, 2003 6,300,000 6,259,548
--------------
26,147,576
--------------
FOOD (5.6%)
Nabisco, Inc.,
6.70% Debentures, 2002 7,800,000 7,647,377
--------------
GAMING (5.1%)
Park Place Entertainment,
7.95% Debentures, 2003 7,000,000 6,937,658
--------------
HEALTHCARE (3.4%)
Columbia/HCA Healthcare Corp.,
6.87% Debentures, 2003 5,000,000 4,655,915
--------------
INSURANCE (3.4%)
USAA Capital Corp.,
7.05 Debentures, 2006 4,700,000 4,601,897
--------------
INTEGRATED ENERGY (5.3%)
Noram Energy Corp.,
7.50% Debentures, 2000 7,250,000 7,282,321
--------------
LODGING (4.9%)
Marriott International, Inc.,
7.88% Debentures, 2009 6,800,000 6,689,650
--------------
RAILROADS (1.3%)
Union Pacific Corp.,
6.80% Debentures, 2000 1,700,000 1,722,110
--------------
REAL ESTATE (8.3%)
CarrAmerica Realty Corp.,
6.63% Debentures, 2000 5,200,000 5,167,120
Nationwide Health Properties, Inc.
6.90% Debentures, 2037 7,000,000 6,204,023
--------------
11,371,143
--------------
RETAILERS (5.5%)
Dayton Hudson Corp.,
6.80% Debentures, 2001 1,800,000 1,799,224
Saks, Inc.,
7.25% Debentures, 2004 4,000,000 3,811,628
Saks, Inc.,
7.50% Debentures, 2010 2,000,000 1,827,946
--------------
7,438,798
--------------
TELECOMMUNICATIONS (9.9%)
AT&T Capital Corp.,
6.25% Debentures, 2001 6,250,000 6,186,438
Telecom New Zealand Financial
Corp.,
6.25% Debentures, 2003 7,500,000 7,347,173
--------------
13,533,611
--------------
UTILITIES (9.5%)
CilCorp, Inc.,
9.38% Debentures, 2029 3,300,000 3,415,764
CMS Energy Corp.,
7.63% Debentures, 2004 1,750,000 1,658,279
CMS Energy Corp.,
6.75% Debentures, 2004 2,000,000 1,855,730
UtiliCorp United, Inc.,
6.88% Debentures, 2004 6,300,000 6,054,917
--------------
12,984,690
--------------
TOTAL BONDS
(COST $121,015,474) 118,167,253
--------------
U.S. GOVERNMENT SECURITIES (13.3%)
United States of America
Treasury,
11.25% Notes, 2015 5,300,000 7,491,221
United States of America Treasury
6.00% Notes, 2009 5,300,000 5,136,034
United States of America Treasury
5.88% Notes, 2004 5,600,000 5,493,253
--------------
TOTAL U.S. GOVERNMENT
SECURITIES (COST $18,466,501) 18,120,508
--------------
TOTAL INVESTMENTS (100%)
(COST $139,481,975) (A) $ 136,287,761
==============
</TABLE>
NOTES
(A) At December 31, 1999, net unrealized depreciation for all securities was
$3,194,214. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over cost of
$127,012 and aggregate gross unrealized depreciation for all securities in
which there was an excess of cost over market value of $3,321,226.
See Notes to Financial Statements
-28-
<PAGE> 31
INDEPENDENT AUDITORS' REPORT
To the Board of Managers and the 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, 1999, and the related statements of
operations, changes in net assets and the selected per unit data and ratios for
the year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit. The accompanying statement of changes
in net assets for the year ended December 31, 1998 and selected per unit data
and ratios for each of the years in the four-year period ended December 31, 1998
were audited by other auditors whose report thereon dated February 15, 1999,
expressed an unqualified opinion on that statement of changes in net assets and
those selected per unit data and ratios.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of investment securities owned as of December 31, 1999, 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 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, 1999, and the results of its
operations, changes in net assets and the selected per unit data and ratios for
the year then ended, in conformity with generally accepted accounting
principles.
/s/ KPMG LLP
Hartford, Connecticut
February 18, 2000
-29-
<PAGE> 32
THE TRAVELERS
MONEY MARKET ACCOUNT
FOR VARIABLE ANNUITIES
The year 1999 began with little signs of softening in business activity, as the
U.S. economy embarked on its ninth year of business expansion. As the year
concluded, the robust economy continued with stronger than expected retail sales
and industrial production. Unemployment remained low at 4.1% in December and it
is estimated that real Gross Domestic Product growth for the fourth quarter will
be 5.0%.
The year ended with the 30-year Treasury Bond yield at 6.48% and the federal
funds rate at 5.50%. The 30-year Treasury Bond yield was up 42 basis points from
the September 30 level of 6.05% and 139 basis points from the December 31, 1998
level of 5.09%. During the fourth quarter, the Federal Open Market Committee
("FOMC") increased the federal funds rate by 25 basis points to 5.50%. This
brought the total increase for the year to 75 basis points. Currently, the FOMC
is expected to tighten 25 basis points on February 2 and possibly another 25
basis points on March 21. Beyond the first quarter, further tightening seems
unlikely assuming inflation remains tame.
The strategy in management of The Travelers Money Market Account for Variable
Annuities will be to reduce maturities from the current average life of 47 days,
to approximately 35 to 40 days. At December 31, 1999 the asset size of the
portfolio was $181.2 million, with an average yield of 5.99%.
PORTFOLIO MANAGER: EMIL J. MOLINARO JR.
[TAMIC LOGO]
-30-
<PAGE> 33
THE TRAVELERS
MONEY MARKET ACCOUNT
FOR VARIABLE ANNUITIES
[BAR GRAPH]
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years
------ ------- -------
<S> <C> <C> <C>
The Travelers Money Market
Account for Variable
Annuities 3.72% 3.95% 4.04%
Lipper Money Market
Category Average 3.58% 3.86% 3.98%
</TABLE>
This is a comparison of The Travelers Money Market Account for Variable
Annuities ("Account MM") versus Lipper Analytical Services' variable annuity
composite index, which provides the average performance of variable annuity
funds with similar objectives as of December 31, 1999. 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 investment 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.
Account MM performance information is net of: 1) the 1.25% annual mortality and
expense risk charge, and 2) investment 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 -1.46%, five year 3.00% and ten year 3.24%. 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, 1999
<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (cost $181,233,157) . . . . . . . . . . . . . . . . . . $ 181,259,014
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,109
Receivables:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168,933
Purchase payments and transfers from other Travelers accounts . . . . . . . . . . . . . . . . 784,905
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250
---------------------
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182,215,211
---------------------
LIABILITIES:
Payables:
Contract surrenders and transfers to other Travelers accounts . . . . . . . . . . . . . . . . 2,614,344
Investment management and advisory fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,237
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,030
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,079
---------------------
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,684,690
---------------------
NET ASSETS: $ 179,530,521
=====================
</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, 1999
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,655,238
EXPENSES:
Investment management and advisory fees . . . . . . . . . . . . . . . . . $ 407,307
Insurance charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,574,244
-------------------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,981,551
-----------------
Net investment income . . . . . . . . . . . . . . . . . . . . . . . 4,673,687
-----------------
Net increase in net assets resulting from operations . . . . . . . . . . $ 4,673,687
=================
</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, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
OPERATIONS:
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,673,687 $ 3,950,167
----------------------- -----------------------
Net increase in net assets resulting from operations . . . . . . . . . . 4,673,687 3,950,167
----------------------- -----------------------
UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 7,727,238 and 6,095,251 units, respectively) . . . . . 19,296,081 14,649,623
Participant transfers from other Travelers accounts
(applicable to 137,148,554 and 118,152,715 units, respectively) . . . . 342,447,640 284,523,651
Administrative charges
(applicable to 44,123 and 37,011 units, respectively) . . . . . . . . . (111,002) (89,783)
Contract surrenders
(applicable to 11,795,197 and 8,681,249 units, respectively) . . . . . (29,442,632) (20,899,693)
Participant transfers to other Travelers accounts
(applicable to 103,863,953 and 109,964,438 units, respectively) . . . (258,947,037) (265,042,626)
Other payments to participants
(applicable to 207,463 and 143,957 units, respectively) . . . . . . . . (521,752) (346,736)
----------------------- -----------------------
Net increase in net assets resulting from unit transactions . . . . . . 72,721,298 12,794,436
----------------------- -----------------------
Net increase in net assets . . . . . . . . . . . . . . . . . . . . 77,394,985 16,744,603
NET ASSETS:
Beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102,135,536 85,390,933
----------------------- -----------------------
End of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 179,530,521 $ 102,135,536
======================= =======================
</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 Citigroup 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.
SECURITY TRANSACTIONS. Security transactions are accounted for on the trade
date. Interest income is recorded on the accrual basis. Premiums and
discounts are amortized to interest income utilizing the constant yield
method.
REPURCHASE AGREEMENTS. When Account MM enters into a repurchase agreement (a
purchase of securities whereby the seller agrees to repurchase the
securities at a mutually agreed upon date and price), the repurchase price
of the securities will generally equal the amount paid by Account MM plus a
negotiated interest amount. The seller under the repurchase agreement will
be required to provide to Account MM securities (collateral) whose market
value, including accrued interest, will be at least equal to 102% of the
repurchase price. Account MM monitors the value of collateral on a daily
basis. Repurchase agreements will be limited to transactions with national
banks and reporting broker dealers believed to present minimal credit risks.
Account MM's custodian will take actual or constructive receipt of all
securities underlying repurchase agreements until such agreements expire.
FEDERAL INCOME TAXES. The operations of Account MM form a part of the total
operations of The Travelers and are not taxed separately. The Travelers is
taxed as a life insurance company under the Internal Revenue Code of 1986,
as amended (the "Code"). Under existing federal income tax law, no taxes are
payable on the investment income and capital gains of Account MM. Account MM
is not taxed as a "regulated investment company" under Subchapter M of the
Code.
OTHER. 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 year. Actual results could differ from those estimates.
2. CONTRACT CHARGES
Investment management and advisory fees are calculated daily at an annual
rate of 0.3233% of Account MM's average net assets. These fees are paid to
Travelers Asset Management International Corporation, an indirect wholly
owned subsidiary of Citigroup Inc.
Insurance charges are paid for the mortality and expense risks assumed by
The Travelers. Each business day, The Travelers deducts a mortality and
expense risk charge which is reflected in our calculation of accumulation
and annuity unit values. This charge equals, on an annual basis, 1.0017% for
contracts issued prior to May 16, 1983 and 1.25% on an annual basis for
contracts issued on or after May 16, 1983. Additionally, for certain
contracts in the accumulation phase, a semi-annual charge of $15 (prorated
for partial years) 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 $191,288 and $153,043 of
contingent deferred sales charges for the years ended December 31, 1999 and
1998, respectively.
-35-
<PAGE> 38
NOTES TO FINANCIAL STATEMENTS - CONTINUED
3. NET ASSETS HELD ON BEHALF OF AN AFFILIATE
Approximately $3,431,000 and $3,434,000 of the net assets of Account MM were
held on behalf of an affiliate of The Travelers as of December 31, 1999 and
1998, respectively. Transactions with this affiliate during the years ended
December 31, 1999 and 1998, were comprised of participant purchase payments
of approximately $2,249,000 and $2,874,000 and contract surrenders of
approximately $2,377,000 and $2,269,000, respectively.
4. NET CONTRACT OWNERS' EQUITY
<TABLE>
<CAPTION>
DECEMBER 31, 1999
-----------------------------------------------------
UNIT NET
UNITS VALUE ASSETS
----- ----- ------
<S> <C> <C> <C>
Accumulation phase of contracts issued prior to May 16, 1983 . . . . 24,211 $ 2.649 $ 64,141
Annuity phase of contracts issued prior to May 16, 1983 . . . . . . . 56,054 2.649 148,502
Accumulation phase of contracts issued on or after May 16, 1983 . . . 70,434,197 2.541 179,035,248
Annuity phase of contracts issued on or after May 16, 1983 . . . . . 111,189 2.541 282,630
-----------------
Net Contract Owners' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 179,530,521
=================
</TABLE>
-36-
<PAGE> 39
NOTES TO FINANCIAL STATEMENTS - CONTINUED
5. SUPPLEMENTARY INFORMATION
(Selected data for a unit outstanding throughout each year.)
<TABLE>
<CAPTION>
Contracts issued prior to May 16, 1983
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income . . . . . . . . . . . . . . . . . . . $ .135 $ .138 $ .134 $ .125 $ .130
Operating expenses . . . . . . . . . . . . . . . . . . . . . .034 .033 .032 .030 .030
--------- --------- --------- --------- ----------
Net investment income . . . . . . . . . . . . . . . . . . . . .101 .105 .102 .095 .100
Unit value at beginning of year . . . . . . . . . . . . . . . 2.548 2.443 2.341 2.246 2.146
--------- --------- --------- --------- ----------
Unit value at end of year . . . . . . . . . . . . . . . . . . $ 2.649 $ 2.548 $ 2.443 $ 2.341 $ 2.246
========= ========= ========= ========= ==========
SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase in unit value . . . . . . . . . . . . . . . . . $ .10 $ .11 $ .10 $ .10 $ .10
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 . . . . 3.87% 4.20% 4.27% 4.10% 4.61%
Number of units outstanding at end of year (thousands) . . . 80 91 105 112 206
<CAPTION>
Contracts issued on or after May 16, 1983
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income . . . . . . . . . . . . . . . . . . . $ .130 $ .133 $ .128 $ .121 $ .127
Operating expenses . . . . . . . . . . . . . . . . . . . . . .039 .038 .036 .035 .034
--------- --------- --------- --------- ----------
Net investment income . . . . . . . . . . . . . . . . . . . . .091 .095 .092 .086 .093
Unit value at beginning of year . . . . . . . . . . . . . . . 2.450 2.355 2.263 2.177 2.084
--------- --------- --------- --------- ----------
Unit value at end of year . . . . . . . . . . . . . . . . . . $ 2.541 $ 2.450 $ 2.355 $ 2.263 $ 2.177
========= ========= ========= ========= ==========
SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase in unit value . . . . . . . . . . . . . . . . . $ .09 $ .10 $ .09 $ .09 $ .09
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 . . . . 3.62% 3.95% 4.02% 3.84% 4.36%
Number of units outstanding at end of year (thousands) . . . 70,545 41,570 36,134 38,044 35,721
</TABLE>
-37-
<PAGE> 40
THE TRAVELERS MONEY MARKET ACCOUNT
FOR VARIABLE ANNUITIES
STATEMENT OF INVESTMENTS
DECEMBER 31, 1999
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
------------ ------------
<S> <C> <C>
SHORT-TERM INVESTMENTS (100%)
COMMERCIAL PAPER (100%)
Albertsons, Inc.,
6.57% due July 14, 2000 $ 5,000,000 $ 4,998,924
Alcoa Inc.,
6.11% due January 31, 2000 3,100,000 3,085,104
AlliedSignal, Inc.,
6.07% due February 28, 2000 4,570,000 4,537,781
American Home Products Corp.,
6.43% due January 28, 2000 1,000,000 995,664
American Honda Financial,
6.08% due February 17, 2000 7,000,000 6,947,234
Asset Securitization Corp.,
6.07% due January 28, 2000 5,000,000 4,979,100
Asset Securitization Corp.,
6.09% due February 28, 2000 3,000,000 2,971,974
AT&T Corp.,
6.20% due July 13, 2000 5,000,000 4,996,920
Bell Atlantic Financial
Services, Inc.
6.03% due January 20, 2000 8,230,000 8,204,578
BHF Finance, Inc.,
6.46% due January 7, 2000 1,500,000 1,498,392
BHF Finance, Inc.,
6.00% due February 24, 2000 6,750,000 6,691,390
Coca-Cola Co.,
6.14% due March 3, 2000 6,500,000 6,435,020
DE Funding Corp.,
6.14% due February 4, 2000 2,000,000 1,989,116
DE Funding Corp.,
6.05% due February 22, 2000 6,200,000 6,148,205
Deere & Co.,
6.07% due January 31, 2000 6,300,000 6,287,394
Equitable Life Assurance,
5.99% due February 10, 2000 6,500,000 6,458,374
Federal Home Loan Bank,
5.77% due February 2, 2000 8,475,000 8,437,922
Federal National Mortgage
5.74% due January 14, 2000 7,525,000 7,509,656
Ford Motor Credit Co.,
5.62% due February 3, 2000 2,000,000 1,989,434
General Dynamics Corp.,
6.18% due February 29, 2000 5,975,000 5,918,202
General Motors Acceptance,
5.17% due April 17, 2000 3,500,000 3,508,438
Goldman Sachs Group LP,
6.64% due January 31, 2000 2,500,000 2,487,987
Goldman Sachs Group LP,
6.11% due March 1, 2000 5,000,000 5,000,000
Household Financial Corp.,
4.06% due January 3, 2000 3,688,000 3,687,180
J.P. Morgan & Company,
6.19% due February 8, 2000 4,900,000 4,870,193
J.P. Morgan & Company,
6.11% due February 28, 2000 1,000,000 990,658
Merrill Lynch & Co., Inc.,
6.11% due February 29, 2000 7,000,000 6,933,458
Morgan Stanley Dean Witter & Co.
6.11% due January 19, 2000 7,000,000 6,979,462
Motorola, Inc.,
6.22% due March 30, 2000 5,000,000 4,927,535
National Rural Utilities Coop
Financial Corp.,
5.91% due January 26, 2000 2,300,000 2,290,745
PG&E Corp.,
6.15% due February 3, 2000 8,000,000 7,957,736
PacifiCorp.,
5.99% due February 7, 2000 5,250,000 5,218,910
Pfizer, Inc.,
5.86% due February 2, 2000 2,917,000 2,902,056
Preferred Resources Funding Corp.,
6.28% due January 20, 2000 4,300,000 4,286,717
Preferred Resources Funding Corp.,
6.24% due January 27, 2000 3,700,000 3,684,534
Providian Master Trust,
6.73% due January 18, 2000 7,500,000 7,479,165
Riverwood Funding,
6.62% due January 11, 2000 5,000,000 4,991,550
Transamerica Financial Corp.,
6.40% due February 25, 2000 2,000,000 1,982,306
--------------
TOTAL INVESTMENTS (100%)
(COST $181,233,157) $ 181,259,014
==============
</TABLE>
See Notes to Financial Statements
-38-
<PAGE> 41
INDEPENDENT AUDITORS' REPORT
To the Board of Managers and the 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, 1999, and the related statements of
operations, changes in net assets and the selected per unit data and ratios for
the year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit. The accompanying statement of changes
in net assets for the year ended December 31, 1998 and selected per unit data
and ratios for each of the years in the four-year period ended December 31, 1998
were audited by other auditors whose report thereon dated February 15, 1999,
expressed an unqualified opinion on that statement of changes in net assets and
those selected per unit data and ratios.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of investment securities owned as of December 31, 1999, 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 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, 1999, and the results of its
operations, changes in net assets and the selected per unit data and ratios for
the year then ended, in conformity with generally accepted accounting
principles.
/s/ KPMG LLP
Hartford, Connecticut
February 18, 2000
-39-
<PAGE> 42
This page intentionally left blank.
<PAGE> 43
Investment Adviser
------------------
TRAVELERS ASSET MANAGEMENT INTERNATIONAL CORPORATION
Hartford, Connecticut
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
Investment Sub-Adviser
----------------------
THE TRAVELERS INVESTMENT MANAGEMENT COMPANY
Hartford, Connecticut
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT FOR VARIABLE ANNUITIES
Independent Accountants
-----------------------
KPMG LLP
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 units of The Travelers Growth and Income Stock Account for
Variable Annuities, The Travelers Quality Bond Account for Variable Annuities or
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) (12-99) Printed in U.S.A.
