TRAVELERS GROWTH & INCOME STOCK ACCT FOR VARIABLE ANNUITIES, N-30D, 1998-08-21

TRAVELERS GROWTH & INCOME STOCK ACCT FOR VARIABLE ANNUITIES
N-30D, 1998-08-21

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<PAGE> 1

UNIVERSAL ANNUITY
SEMI-ANNUAL REPORTS
JUNE 30, 1998

[UMBRELLA LOGO]

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

TRAVELERS LIFE & ANNUITY
A Member of Travelers Group [LOGO]

The Travelers Insurance Company
The Travelers Life and Annuity Company
One Tower Square
Hartford, CT 06183
<PAGE> 2

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
[TAMIC LOGO] Travelers Quality Bond Account for Variable Annuities,
The Travelers Money Market Account for Variable
Annuities and The Travelers Growth and Income Stock
Account for Variable Annuities.

The Travelers Investment Management Company ("TIMCO")
[TIMCO LOGO] provides equity management and subadvisory services for
The Travelers Growth and Income Stock Account for
Variable Annuities.
<PAGE> 3
[TRAVELERS LIFE & ANNUITY LOGO]

THE TRAVELERS VARIABLE PRODUCT SEPARATE ACCOUNTS
INVESTMENT ADVISORY COMMENTARY AS OF JUNE 30, 1998

ECONOMIC REVIEW AND OUTLOOK

The U.S. economy continues to provide the domestic capital markets with the
almost ideal conditions of low interest rates, lower inflation and steady
economic growth. First quarter Gross Domestic Product ("GDP") growth was well
ahead of expectations and led to the prospect of a Federal Reserve Board ("Fed")
tightening midway through the first half of 1998. Reported inflation, however,
remained low and the Asian currency crisis caused the Fed to lean towards a more
neutral stance.

Despite the strong first quarter, the U.S. economy recently showed signs of
slowing down. While industrial production and retail sales trended lower, the
most compelling evidence of the slowdown comes from the bond market. For the
first time since 1990, the portion of the Treasury yield curve showing the
spread between the 2-year and 10-year Treasury yields is now slightly inverted.
In the past, an inverted yield curve has been a harbinger of an economic
downturn.

Fed Chairman Alan Greenspan notes in his testimony on July 21, 1998 that the Fed
remains more concerned about inflation rather than an economic recession. We see
no indications of either an economic or earnings recession in the near future
and the risk in the stock market is largely mitigated by this outlook.

The U.S. stock market posted handsome returns in the first half of 1998. On a
year-to-date basis, the Dow Jones Industrial Average ("DJIA") rose 13.2% while
the broader Standard & Poor's 500 Stock Index ("S&P 500") gained 16.8%. At this
pace, the stock market would yet again produce another year of 30% or more of
appreciation, a 3 year run unprecedented in the history of equity markets. The
bond market produced healthy returns as yields on 30-year Treasury bonds fell to
their lowest level since the introduction of these securities in 1977.

We look ahead to a slower economy in the second half of 1998. The absence of
inflationary pressure should keep bond yields below 6% while the combination of
lofty valuations and slower earnings growth in 1998 could find stocks at the
upper end of a trading range for the rest of the year.

-1-
<PAGE> 4
EQUITY COMMENTARY

After three remarkable years of market appreciation averaging over 30% annually,
the first quarter's total return of the S&P 500 of almost 15% was that much more
impressive. Since 1995, the stock market's climb has also been supported by a
dramatic increase in money flows by domestic and foreign investors, as well as
corporate buybacks and merger activity. Low domestic inflation and steady
revenue gains have also contributed to the expansion in the price-to-earnings
multiple.

Consumer cyclical and technology stocks led the market higher during the first
quarter. Low interest rates, low stable inflation, and healthy economic growth
combined to support consumer confidence and generated strong sales growth and
stock price appreciation in the retail, housing, auto and airline industries.
Many technology stocks rebounded from a late 1997 decline, as investors grew
confident that the Asian economic crisis would not lead to a global economic
slowdown. Telecommunications equipment and software stocks performed the best,
while semiconductor stocks lagged due to ongoing oversupply and price weakness.

Stock market volatility increased significantly in the second quarter of 1998.
Investor focus shifted from the prospects of Fed monetary policy tightening to
the Asian crisis and eventually to hopes of reasonable corporate earnings growth
for the second quarter. Large cap stocks posted a gain for the second quarter
while small cap stocks declined to fall farther behind their large cap
counterparts.

A seesaw pattern in stock prices persisted at the beginning of the second
quarter, as stock prices remained almost unchanged at the end of April from a
month earlier. Interest rate concerns took center stage towards the end of April
as the Fed publicly discussed a shift to a tightening bias. Long-term interest
rates shot up above 6% while the S&P 500 fell 4.3% from April 23 to April 27.

Despite a strong first quarter GDP report, and continued low inflation a
slowdown in the second half of 1998 has become apparent. Bond prices stabilized
as a result of such evidence in late April and early May and stock prices
recovered to the levels established at the end of the first quarter.

Renewed concerns over Asia and slowing earnings growth rocked the stock market
in May. The S&P 500 index declined by almost 2% while the Russell 2000 Stock
Index fell nearly 5%. Several companies provided early guidance about lower
second quarter earnings during the month of May. Investors, already worried
about record valuations in the stock market, showed no mercy in their response
to such disappointments as some stock prices tumbled down by as much as 50%.

Growth stocks performed better than value stocks in the second quarter of 1998
in the large cap universe. In particular, the technology, health care and
consumer discretionary sectors performed quite well while the energy sector
underperformed significantly in the wake of falling oil prices.

The widely anticipated earnings pre-announcement season at the end of June, when
companies confess to upcoming earnings shortfalls, was not as severe as in prior
quarters. The stock market appears to have drawn a positive inference from this
event and the current outlook for second half earnings seems favorable.
Corporate earnings growth, however, is clearly slowing down and the recent
market strength and current valuations are both predicated on a healthy earnings
rebound in the second half of the year and into 1999.

Besides the historically high valuations for large cap stocks, we think the
principal risk to the U.S. stock market remains on the earnings front. If Asia
remains in a protracted recession, which is a likely scenario at this point, a
slowdown in the global economy could take its toll on U.S. corporate profits. A
prolonged period of anemic earnings growth would trigger a correction in the
stock market through a contraction in the price-to-earnings multiple. We remain
cautious about the U.S. stock market in the short term but bullish over the
intermediate to long term.

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<PAGE> 5
FIXED INCOME COMMENTARY

Just when many investors were getting somewhat more comfortable with risk again,
the Asian financial crisis re-erupted in May and June. Unrest in Indonesia and
further weakness in the Japanese yen were some of the latest highlights in the
latest chapter of the Asian crisis. The region's turmoil sent Asia's stock
markets down again and caused major setbacks in most emerging country stock and
bond markets. In addition, heightened investor concerns about greater risk
triggered yet another crisis in Russia's fragile markets.

In reaction to the renewed troubles in Asia, the U.S. bond market rallied as
many global investors sought refuge in U.S. Treasury securities during the
reporting period. Combined with the United States and Japanese intervention to
stabilize the yen, the rally in U.S. Treasuries helped to support the U.S. stock
and bond markets by the end of the second quarter of 1998. Within the U.S. bond
markets, investment grade bonds barely performed better than U.S. Treasuries.
Many longer-maturity bonds could not keep pace with the strong performance of
the 30-year U.S. Treasury bond. Mortgage-backed security spreads widened and
discount bonds performed better than premium bonds, as mortgage prepayments
remained high. Corporate bond spreads widened due to heavy issuance (i.e., more
supply) with the most widening occurring in bonds issued by corporations that
were more impacted by the Asian crisis.

Municipal bonds performed poorly as heavy issuance and investor "sticker shock"
kept tax-exempt bond yields from declining as much as U.S. Treasuries. High
yield bonds and emerging market bonds also lagged U.S. Treasuries during the
second quarter of 1998, although high yield bonds are still ahead of U.S.
Treasuries for the first six months of 1998.

We continue to believe that interest rates in the U.S. will slowly move lower as
the crisis in Asia pushes U.S. GDP down to a 1%-2% annual range in the second
half of 1998. Exports from the U.S. have declined sharply and the trade deficit
has widened rapidly. We expect even greater deterioration in the U.S. trade
deficit as Asian imports accelerate in the second half of the year. Inventory
growth in the U.S. was strong in the first half of 1998, and that condition
should slow projected U.S. economic growth in the second half of the year. In
addition, we expect that corporate profits will continue to be flat, which
combined with inventories and weak commodity prices, should help to weaken
capital spending during the next several quarters.

Within the U.S. bond market, we anticipated that the yield curve will be steeper
six to twelve months from now (The yield curve shows the difference between
short-and-long-term yields). However, we think that the yield curve will likely
stay flat until it becomes clearer that the inflationary risks from currently
tight U.S. labor markets have passed. As rates decline, bond spreads are likely
to widen. In addition, bond spreads should widen more because of a continuation
of the flight to quality as well as the fact that the supply of bonds should
remain high at these rate levels. The overall low inflationary environment and
the expected economic slowdown, along with the increased volatility in the stock
market, have created a favorable backdrop for fixed income investments.

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

SANDIP A. BHAGAT, CFA, PRESIDENT & CHIEF INVESTMENT OFFICER, THE TRAVELERS
INVESTMENT MANAGEMENT COMPANY

-3-
<PAGE> 6
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
- --------------------------------------------------------------------------------
<S> <C>
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES...................................................... 5

THE TRAVELERS QUALITY BOND ACCOUNT FOR VARIABLE ANNUITIES................... 18

THE TRAVELERS MONEY MARKET ACCOUNT FOR VARIABLE ANNUITIES................... 27
</TABLE>

-4-
<PAGE> 7
THE TRAVELERS
GROWTH AND INCOME
STOCK ACCOUNT
FOR VARIABLE ANNUITIES

The Travelers Growth and Income Stock Account For Variable Annuities ("Account
GIS") is managed by Travelers Asset Management International Corporation
("TAMIC") with The Travelers Investment Management Company ("TIMCO") serving as
subadvisory. 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 six months ended June 30, 1998, Account GIS achieved a total return of
19.0%, before fees and expenses, well ahead of the S&P 500's return of 16.8%.
Net of fees and expenses, Account GIS's total return of 17.7% for the first half
of 1998 compared favorably to the 11.6% average return for variable annuity
stock accounts in the Lipper Growth & Income Category. On a trailing twelve
month basis as of June 30, 1998, Account GIS had a total return of 29.4%, net of
fees and expenses, compared to the Lipper Growth & Income average of 21.6%.

During the first half of 1998, stock selection in the health care, consumer
discretionary, producer durables, autos and transportation sectors made the
strongest positive contribution to Account GIS's overall relative performance.
In the health care sector, Account GIS benefited from positions in companies
with strong diversified sources of earnings such as American Home Products,
Schering-Plough and Warner-Lambert. In the consumer discretionary sector, we
were helped by overweighted positions in media companies such as Chancellor
Media, New York Times, Meredith Corp. and a number of different retailers such
as Costco, Albertsons and Jones Apparel.

In the producer durables sector, our positions in Textron and United
Technologies helped performance in the first quarter. In the transportation
sector, our emphasis on the better performing airline and automobile industries
also made a positive contribution to performance. Our individual stock picks
here such as Delta Air Lines, AMR Corp. and Ford Motor all performed well during
the period. Our positions in The Equitable Companies and Morgan Stanley Dean
Witter helped performance in the financial services sector towards the end of
the second quarter.

We lost ground relative to the benchmark primarily in the technology sector. In
the technology sector, our relative performance was penalized by not holding a
number of better performing stocks such as EMC Corp. and Digital Equipment. We
were also hurt by overweighted positions in VLSI Technology and Oracle, which
both reported earnings disappointments.

Our disciplined approach to stock selection emphasizes stocks, that offer
improving fundamentals and relative earnings gains at discounted stock
valuations. In the technology sector, we focus on higher growth industries like
networking and software through our positions in Cisco and Intuit. We maintain
an underweight position in the weak performing semiconductor group by excluding
stocks such as Motorola which have produced a string of negative earnings
surprises. In the health care sector, we continue to emphasize Guidant, a
leading manufacturer of medical devices that regulate heart activity through
chest implants. Our focus among the financial services sector remains on the
securities industry where we have positions in Merrill Lynch, Morgan Stanley
Dean Witter and The Equitable Companies.

-5-
<PAGE> 8
We believe that the current economic expansion has further to go and that
inflation will remain low. These factors argue in favor of a continuation of the
current bull market. Earnings growth, however, is clearly slowing down and the
recent market strength and current valuations are both predicated on a healthy
earnings rebound in the second half of the year and into 1999. Besides the
historically high valuations for large capitalization stocks, the principal risk
to the U.S. stock market remains on the earnings front. A prolonged period of
anemic earnings growth would trigger a correction in the stock market through a
contraction in the price-to-earnings multiple. We remain cautious about the U.S.
stock market over the short term. In this environment, we believe that it is
particularly important to identify companies with sustainable earnings growth at
attractive valuations across a wide variety of industries.

PORTFOLIO MANAGER: SANDIP A. BHAGAT, CFA

[TAMIC LOGO] [TIMCO LOGO]

-6-
<PAGE> 9

THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 1998

<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (cost $530,365,501)................. $ 819,605,553
Cash....................................................................... 565,958
Receivables:
Dividends............................................................. 677,030
Investment securities sold............................................ 47,390,512
Purchase payments and transfers from other Travelers accounts......... 1,379,867
Other assets............................................................... 37,849
---------------

Total Assets..................................................... 869,656,769
---------------

LIABILITIES:
Payables:
Investment securities purchased....................................... 47,996,472
Contract surrenders and transfers to other Travelers accounts......... 760,972
Investment management and advisory fees............................... 68,481
Variation on futures margin........................................... 31,875
Accrued liabilities........................................................ 167,552
--------------

Total Liabilities................................................ 49,025,352
--------------

NET ASSETS...................................................................... $ 820,631,417
==============
</TABLE>

See Notes to Financial Statements

-7-
<PAGE> 10
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1998

<TABLE>

<S> <C> <C>
INVESTMENT INCOME:
Dividends.................................................................. $ 4,974,968
Interest................................................................... 324,438
--------------
Total income.......................................................... $ 5,299,406

EXPENSES:
Investment management and advisory fees.................................... 1,911,548
Insurance charges.......................................................... 4,391,432
--------------
Total expenses........................................................ 6,302,980
---------------

Net investment loss.............................................. (1,003,574)
---------------

REALIZED GAIN AND CHANGE IN UNREALIZED GAIN ON
INVESTMENT SECURITIES:
Realized gain from investment security transactions:
Proceeds from investment securities sold.............................. 221,535,420
Cost of investment securities sold.................................... 179,053,209
--------------

Net realized gain................................................ 42,482,211

Change in unrealized gain on investment securities:
Unrealized gain at December 31, 1997.................................. 208,374,317
Unrealized gain at June 30, 1998...................................... 289,240,052
--------------
Net change in unrealized gain for the period..................... 80,865,735
---------------

Net realized gain and change in unrealized gain ............ 123,347,946
---------------

Net increase in net assets resulting from operations....................... $ 122,344,372
===============
</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

<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1998 1997
---- ----
(UNAUDITED)
<S> <C> <C>
OPERATIONS:
Net investment income (loss).................................................... $ (1,003,574) $ 515,301
Net realized gain from investment security transactions......................... 42,482,211 80,067,798
Net change in unrealized gain on investment securities.......................... 80,865,735 80,794,664
----------------- -----------------

Net increase in net assets resulting from operations....................... 122,344,372 161,377,763
----------------- -----------------

UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 1,744,979 and 3,027,691 units, respectively)................ 28,854,055 40,692,594
Participant transfers from other Travelers accounts
(applicable to 2,936,816 and 5,078,380 units, respectively)................ 48,102,686 68,355,384
Administrative charges
(applicable to 14,871 and 30,500 units, respectively)...................... (261,352) (428,591)
Contract surrenders
(applicable to 1,505,713 and 3,044,510 units, respectively)................ (25,242,943) (41,682,919)
Participant transfers to other Travelers accounts
(applicable to 1,768,968 and 4,257,243 units, respectively)................ (29,343,160) (56,815,055)
Other payments to participants
(applicable to 79,593 and 166,399 units, respectively)..................... (1,342,032) (2,235,718)
----------------- -----------------
Net increase in net assets resulting from unit transactions................ 20,767,254 7,885,695
----------------- -----------------

Net increase in net assets............................................ 143,111,626 169,263,458

NET ASSETS:
Beginning of period............................................................. 677,519,791 508,256,333
----------------- -----------------

End of period................................................................... $ 820,631,417 $ 677,519,791
================= =================
</TABLE>

See Notes to Financial Statements

-9-
<PAGE> 12
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

1. SIGNIFICANT ACCOUNTING POLICIES

The Travelers Growth and Income Stock Account for Variable Annuities
("Account GIS") is a separate account of The Travelers Insurance Company
("The Travelers"), an indirect wholly owned subsidiary of Travelers Group
Inc., and is available for funding certain variable annuity contracts issued
by The Travelers. Account GIS is registered under the Investment Company Act
of 1940, as amended, as a diversified, open-end management investment
company.

The following is a summary of significant accounting policies consistently
followed by Account GIS in the preparation of its financial statements.

SECURITY VALUATION. Investments in securities traded on a national
securities exchange are valued at the last-reported sale price as of the
close of business of the New York Stock Exchange on the last business day of
the period; securities traded on the over-the-counter market and listed
securities with no reported sales are valued at the mean between the last
reported bid and asked prices or on the basis of quotations received from a
reputable broker or other recognized source.

When market quotations are not considered to be readily available for
long-term corporate bonds and notes, such investments are generally stated
at fair value on the basis of valuations furnished by a pricing service.
These valuations are determined for normal institutional-size trading units
of such securities using methods based on market transactions for comparable
securities and various relationships between securities which are generally
recognized by institutional traders. Securities, including restricted
securities, for which pricing services are not readily available are valued
by management at prices which it deems in good faith to be fair.

Short-term investments for which a quoted market price is available are
valued at market. Short-term investments for which there is no reliable
quoted market price are valued 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 the latest
sale price as of the close of business of the New York Stock Exchange, or in
the absence of such sale, the latest bid quotation.

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<PAGE> 13
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED

REPURCHASE AGREEMENTS. When Account GIS enters into a repurchase agreement
(a purchase of securities whereby the seller agrees to repurchase the
securities at a mutually agreed upon date and price), the repurchase price
of the securities will generally equal the amount paid by Account GIS plus a
negotiated interest amount. The seller under the repurchase agreement will
be required to provide to Account GIS securities (collateral) whose market
value, including accrued interest, will be at least equal to 102% of the
repurchase price. Account GIS monitors the value of collateral on a daily
basis. Repurchase agreements will be limited to transactions with national
banks and reporting broker dealers believed to present minimal credit risks.
Account GIS's custodian will take actual or constructive receipt of all
securities underlying repurchase agreements until such agreements expire.

FEDERAL INCOME TAXES. The operations of Account GIS form a part of the total
operations of The Travelers and are not taxed separately. The Travelers is
taxed as a life insurance company under the Internal Revenue Code of 1986,
as amended (the "Code"). Under existing federal income tax law, no taxes are
payable on the investment income and capital gains of Account GIS. Account
GIS is not taxed as a "regulated investment company" under Subchapter M of
the Code.

OTHER. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

YEAR 2000. In 1996, The Travelers began the process of identifying,
evaluating and implementing changes to computer programs necessary to
address the year 2000 issue. This issue involves the ability of computer
systems that have time-sensitive programs to properly recognize the year
2000. The inability to do so could result in major failures or
miscalculations. The Travelers has a comprehensive plan in progress to
address its internal year 2000 issue with modifications to existing programs
and conversions to new programs to bring all of its critical business
systems into year 2000 compliance by year-end 1998. The total cost
associated with the required modifications and conversions, which are
expensed as incurred, is not expected to have a material effect on The
Travelers financial position, results of operations or liquidity. The
Travelers also has third party customers, financial institutions, vendors
and others with which it conducts business and is in the process of
confirming their plans to address year 2000 issues. While The Travelers has
been advised that these efforts by third party vendors and customers will be
successfully completed in a timely manner, it is possible that a series of
failures by third parties could have a material adverse effect on The
Travelers results of operations in future periods.

2. INVESTMENTS

The costs of purchases and proceeds from sales of investments (other than
short-term securities), were $225,053,696 and $197,107,557, respectively;
the costs of purchases and proceeds from sales of direct and indirect U.S.
government securities were $120,953 and $314,740, respectively, for the six
months ended June 30, 1998. 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 $54,063 and $94,251 for the six months ended June 30,
1998 and the year ended December 31, 1997, respectively.

At June 30, 1998, Account GIS held 15 open S&P 500 Stock Index futures
contracts expiring in September, 1998. The underlying face value, or
notional value, of these contracts at June 30, 1998 amounted to $4,286,250.
In connection with these contracts, short-term investments with a par value
of $670,000 had been pledged as margin deposits.

Net realized gains resulting from futures contracts were $1,229,629 and
$113,394 for the six months ended June 30, 1998 and the year ended December
31, 1997, 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 June 30,
1998 is shown on the Statement of Assets and Liabilities as a payable for
variation on futures margin.

-11-
<PAGE> 14
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED

3. CONTRACT CHARGES

Effective May 1, 1998, 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 Travelers Group Inc. Pursuant to a
subadvisory agreement between TAMIC and The Travelers Investment Management
Company ("TIMCO"), an indirect wholly owned subsidiary of Travelers Group
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.

Prior to May 1, 1998, investment management and advisory fees were
calculated daily at an annual rate of 0.45% of Account GIS's average net
assets. These fees were paid to TIMCO.

Insurance charges are paid for the mortality and expense risks assumed by
The Travelers. On contracts issued prior to May 16, 1983, these charges are
equivalent to 1.0017% of the average net assets of Account GIS on an annual
basis. On contracts issued on or after May 16, 1983, the charges for
mortality and expense risks are equivalent to 1.25% of the average net
assets of Account GIS on an annual basis. Additionally, for certain
contracts in the accumulation phase, a semi-annual charge of $15 (prorated
for partial periods) is deducted from participant account balances and paid
to The Travelers to cover administrative charges.

On contracts issued prior to May 16, 1983, The Travelers retained from
Account GIS sales charges of $14,475 and $30,718 for the six months ended
June 30, 1998 and the year ended December 31, 1997, 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 $100,043 and $143,351 of
contingent deferred sales charges for the six months ended June 30, 1998 and
the year ended December 31, 1997, respectively.

4. NET ASSETS HELD ON BEHALF OF AN AFFILIATE

Approximately $20,662,000 and $17,568,000 of the net assets of Account GIS
were held on behalf of an affiliate of The Travelers as of June 30, 1998 and
December 31, 1997, respectively. Transactions with this affiliate during the
six months ended June 30, 1998 and the year ended December 31, 1997 were
comprised of participant purchase payments of approximately $353,000 and
$425,000 and contract surrenders of approximately $354,000 and $466,000,
respectively.

5. NET CONTRACT OWNERS' EQUITY
<TABLE>
<CAPTION>
JUNE 30, 1998
----------------------------------------------
UNIT NET
UNITS VALUE ASSETS
----- ----- ------
<S> <C> <C> <C>
Accumulation phase of contracts issued prior to May 16, 1983.................... 14,265,104 $ 18.280 $ 260,785,012
Annuity phase of contracts issued prior to May 16, 1983......................... 344,007 18.280 6,288,904
Accumulation phase of contracts issued on or after May 16, 1983................. 31,374,959 17.604 552,372,473
Annuity phase of contracts issued on or after May 16, 1983...................... 67,310 17.604 1,185,028
---------------

Net Contract Owners' Equity.......................................................................... $ 820,631,417
===============
</TABLE>

-12-
<PAGE> 15
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED

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

<TABLE>
<CAPTION>
Contracts issued prior to May 16, 1983 SIX
MONTHS
ENDED FOR THE YEARS ENDED DECEMBER 31,
JUNE 30, (DERIVED FROM AUDITED FINANCIAL INFORMATION)
------------ -------------------------------------------------------------
1998 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income........................ $ .118 $ .233 $ .216 $ .208 $ .192 $ .189
Operating expenses............................. .128 .201 .154 .123 .100 .092
-------- ---------- --------- --------- --------- --------

Net investment income (loss)................... (.010) .032 .062 .085 .092 .097

Unit value at beginning of period.............. 15.510 11.763 9.668 7.120 7.194 6.664
Net realized and change in unrealized gains
(losses)..................................... 2.780 3.715 2.033 2.463 (.166) .433
--------- ---------- --------- --------- --------- --------

Unit value at end of period.................... $ 18.280 $ 15.510 $ 11.763 $ 9.668 $ 7.120 $ 7.194
========= ========== ========= ========= ========= ========

SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase (decrease) in unit value.......... $ 2.77 $ 3.75 $ 2.10 $ 2.55 $ (.07) $ .53
Ratio of operating expenses to average net
assets....................................... 1.50%* 1.45% 1.45% 1.45% 1.41% 1.33%
Ratio of net investment income (loss) to
average net assets........................... (.11)%* .24% .60% 1.02% 1.30% 1.40%
Number of units outstanding at end of
period (thousands)........................... 14,609 15,194 16,554 17,896 19,557 21,841
Portfolio turnover rate........................ 26% 64% 85% 96% 103% 81%
Average commission rate paid+.................. $ .052 $ .051 $ .047 - - -
</TABLE>

<TABLE>
<CAPTION>
Contracts issued on or after May 16, 1983 SIX
MONTHS
ENDED FOR THE YEARS ENDED DECEMBER 31,
JUNE 30, (DERIVED FROM AUDITED FINANCIAL INFORMATION)
---------- ------------------------------------------------------------
1998 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income........................ $ .113 $ .228 $ .212 $ .205 $ .189 $ .184
Operating expenses............................. .143 .228 .175 .140 .115 .106
--------- --------- --------- ---------- --------- ---------

Net investment income (loss)................... (.030) .000 .037 .065 .074 .078

Unit value at beginning of period.............. 14.955 11.371 9.369 6.917 7.007 6.507
Net realized and change in unrealized
gains (losses)............................... 2.679 3.584 1.965 2.387 (.164) .422
--------- --------- --------- ---------- --------- ---------

Unit value at end of period.................... $ 17.604 $ 14.955 $ 11.371 $ 9.369 $ 6.917 $ 7.007
========= ========= ========= ========== ========= =========

SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase (decrease) in unit value.......... $ 2.65 $ 3.58 $ 2.00 $ 2.45 $ (.09) $ .50
Ratio of operating expenses to average net
assets....................................... 1.75%* 1.70% 1.70% 1.70% 1.65% 1.57%
Ratio of net investment income (loss) to
average net assets........................... (.36)%* .00% .36% .79% 1.05% 1.15%
Number of units outstanding at end of
period (thousands)........................... 31,442 29,545 27,578 26,688 26,692 28,497
Portfolio turnover rate........................ 26% 64% 85% 96% 103% 81%
Average commission rate paid+.................. $ .052 $ .051 $ .047 - - -
</TABLE>

* Annualized.

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

-13-
<PAGE> 16
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF INVESTMENTS (UNAUDITED)
JUNE 30, 1998

<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------------ -------------
<S> <C> <C>
COMMON STOCKS (99.4%)

AEROSPACE (1.2%)
Boeing Co. 82,730 $ 3,686,656
General Dynamics Corp. 44,200 2,055,300
United Technologies Corp. 47,600 4,403,000
-------------
10,144,956
-------------
AIRLINES (1.5%)
AMR Corp. (A) 49,180 4,094,235
Continental Airlines (A) 50,600 3,080,275
Delta Air Lines 21,600 2,791,800
US Airways Group Inc. (A) 30,500 2,417,125
-------------
12,383,435
-------------
AUTOMOTIVE (2.4%)
Chrysler Corp. 58,100 3,275,388
Ford Motor Co. 147,600 8,708,400
General Motors Corp. 65,300 4,362,856
Navistar International Corp. (A) 120,800 3,488,100
-------------
19,834,744
-------------
BANKING (9.2%)
Banc One Corp. 27,064 1,510,509
BankAmerica Corp. 78,500 6,785,344
BankBoston Corp. 70,200 3,904,875
Bankers Trust Corp. 19,400 2,251,612
Chase Manhattan Corp. 73,804 5,572,202
Citicorp 39,300 5,865,525
Comerica Inc. 38,650 2,560,563
First Union Corp. 27,300 1,590,225
Fleet Financial Group Inc. 44,600 3,724,100
Golden West Financial Corp. 25,800 2,742,863
M & T Bank Corp. 3,031 1,679,174
J.P. Morgan & Company 15,500 1,815,437
NationsBank Corp. 103,612 7,926,318
Norwest Corp. 111,300 4,159,837
PNC Bank Corp. 26,700 1,436,794
Republic New York Corp. 49,200 3,096,525
State Street Corp. 38,800 2,696,600
Summit Bancorp. 66,200 3,144,500
SunTrust Banks Inc. 47,600 3,870,475
Washington Mutual 89,600 3,889,196
Wells Fargo & Co. 14,433 5,325,777
-------------
75,548,451
-------------
BEVERAGE (2.4%)
Adolph Coors Co. 69,200 2,361,450
Anheuser-Busch Cos. 600 28,312
Coca-Cola Co. 203,400 17,390,700
-------------
19,780,462
-------------
BROKERAGE (2.2%)
MGIC Investment Corp. 45,000 2,567,813
Marsh & McLennan Cos. 46,200 2,792,212
Merrill Lynch & Co. 54,600 5,036,850
Morgan Stanley Dean Witter & Co. 83,525 7,632,097
-------------
18,028,972
-------------
BUILDING MATERIALS (0.6%)
Kaufman & Broad Home Corp. 59,400 1,885,950
Masco Corp. 54,900 3,321,450
-------------
5,207,400
-------------

CAPITAL GOODS (2.2%)
Cordant Technologies Inc. 48,300 2,227,838
Crane Co. 54,861 2,664,187
Deere & Co. 51,800 2,738,925
Emerson Electric Co. 37,200 2,245,950
Pitney Bowes, Inc. 56,500 2,719,062
Tellabs, Inc. (A) 38,900 2,784,995
Thomas & Betts Corp. 57,500 2,831,875
-------------
18,212,832
-------------
CHEMICALS (1.8%)
Crompton & Knowles Corp. 77,100 1,941,956
Dow Chemical Co. 20,500 1,982,094
DuPont Co. 91,500 6,828,187
Lyondell Petrochemical 53,700 1,634,494
Monsanto Co. 48,900 2,732,288
-------------
15,119,019
-------------
CONSTRUCTION MACHINERY (0.6%)
Caterpillar, Inc. 34,100 1,803,038
Ingersoll-Rand Co. 60,800 2,679,000
-------------
4,482,038
-------------
CONSUMER (5.7%)
Colgate-Palmolive Co. 44,200 3,889,600
General Electric Cop. 256,500 23,341,500
Gillette Co. 64,384 3,649,768
Procter & Gamble Co. 116,300 10,590,569
Unilever N.V. 45,800 3,615,338
Whirlpool Corp. 29,300 2,014,375
-------------
47,101,150
-------------
CONSUMER SERVICES (0.3%)
Kimberly-Clark Corp. 46,460 2,131,352
-------------

CONTAINERS (0.3%)
Owens-Illinois, Inc. (A) 49,200 2,201,700
-------------

DEFENSE (0.3%)
Raytheon Co. Class B 34,400 2,033,900
-------------

ENTERTAINMENT (1.1%)
Time Warner, Inc. 47,900 4,092,456
Walt Disney Co. 45,155 4,744,097
-------------
8,836,553
-------------
FINANCE (1.4%)
American Express Co. 41,600 4,742,400
Associates First Capital Corp. 38,710 2,975,831
Countrywide Credit Industries, Inc. 41,800 2,121,350
Pulte Corp. 68,000 2,031,500
-------------
11,871,081
-------------
</TABLE>

-14-
<PAGE> 17
STATEMENT OF INVESTMENTS (UNAUDITED) - CONTINUED

<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------------ --------------
<S> <C> <C>
FOOD (3.7%)
Dean Foods Co. 33,780 $ 1,855,789
H. J. Heinz Co. 76,800 4,310,400
Interstate Bakeries Corp. 64,800 2,150,550
Kellogg Co. 34,900 1,310,931
McDonalds Corp. 60,400 4,167,600
PepsiCo, Inc. 131,700 5,424,394
Sara Lee Corp. 85,400 4,777,063
Suiza Foods Corp. (A) 56,300 3,360,406
Sysco Corp. 115,900 2,969,937
--------------
30,327,070
--------------
HEALTHCARE (1.9%)
Abbott Laboratories 139,700 5,710,237
Guidant Corp. 50,200 3,579,888
HEALTHSOUTH Corp. (A) 148,800 3,971,100
Health Management
Associates, Inc. (A) 61,950 2,071,453
--------------
15,332,678
--------------
INDEPENDENT ENERGY (0.6%)
Burlington Resources, Inc. 48,100 2,071,306
Entergy Corp. 69,100 1,986,625
Halliburton Co. 23,200 1,033,850
--------------
5,091,781
--------------
INDUSTRIAL (1.2%)
AccuStaff, Inc. (A) 61,500 1,921,875
Mercury General Corp. 27,200 1,752,700
Tyco International Ltd. 95,300 6,003,900
--------------
9,678,475
--------------
INSURANCE (4.0%)
Allstate Corp. 60,375 5,528,086
Ambac Financial Group, Inc. 30,600 1,790,100
American International Group 73,125 10,676,250
Equitable Companies, Inc. 42,500 3,184,844
Everest Reinsurance Holdings 48,000 1,845,000
Hartford Financial Services Group 25,100 2,870,813
SunAmerica, Inc. 67,850 3,897,134
Transatlantic Holdings, Inc. 17,940 1,386,986
20th Century Industries 54,900 1,574,944
--------------
32,754,157
--------------
INTEGRATED ENERGY (6.2%)
Amoco Corp. 142,400 5,927,400
Atlantic Richfield Co. 28,000 2,187,500
Chevron Corp. 54,500 4,526,906
Exxon Corp. 223,700 15,952,606
Mobil Corp. 90,500 6,934,563
Royal Dutch Petroleum Co. 147,000 8,057,438
Texaco, Inc. 76,400 4,560,125
Unocal Corp. 64,400 2,302,300
--------------
50,448,838
--------------

MEDIA (2.4%)
A.H. Belo Corp. 900 21,937
Chancellor Media Corp. (A) 43,000 2,135,217
Clear Channel
Communications, Inc. (A) 37,215 4,061,087
Gannett Co., Inc. 48,100 3,418,106
Meredith Corp. 62,300 2,924,206
New York Times Co. 42,800 3,391,900
Tele-Communications, Inc. (A) 43,000 1,651,467
Viacom, Inc. (A) 30,813 1,794,857
--------------
19,398,777
--------------
METALS (1.3%)
Aeroquip-Vickers, Inc. 27,909 1,629,188
Alumax Inc. 53,600 2,485,700
Bethlehem Steel Corp. (A) 135,100 1,680,306
Illinois Tool Works 44,800 2,987,600
USX-U.S. Steel Group 53,100 1,752,300
--------------
10,535,094
--------------
NATURAL GAS PIPELINE (1.1%)
Columbia Energy Group 32,400 1,802,250
Enron Corp. 26,800 1,448,875
Sonat, Inc. 39,600 1,529,550
Williams Cos. 113,100 3,817,125
--------------
8,597,800
--------------
OIL FIELD (0.5%)
BJ Services Co. (A) 43,560 1,265,962
Schlumberger Ltd. 40,600 2,773,488
Union Pacific Resources Group 1 18
--------------
4,039,468
--------------
PAPER (0.9%)
Georgia-Pacific Group 40,000 2,357,500
International Paper Co. 24,800 1,066,400
Mead Corp. 49,250 1,563,688
Weyerhaeuser Co. 16,700 771,331
Willamette Industries, Inc. 51,200 1,638,400
--------------
7,397,319
--------------
PHARMACEUTICALS (9.6%)
American Home Products Corp. 148,800 7,700,400
Bristol-Myers Squibb Co. 99,900 11,482,256
CVS Corp. 94,700 3,687,381
Eli Lilly & Co. 100,300 6,626,069
Johnson & Johnson 98,400 7,257,000
Merck & Co. 85,200 11,395,500
Pfizer, Inc. 115,530 12,556,667
Schering-Plough Corp. 88,300 8,090,488
Warner-Lambert Co. 99,000 6,868,125
Watson Pharmaceuticals, Inc. (A) 58,700 2,740,556
--------------
78,404,442
--------------
RAILROADS (0.3%)
CSX Corp. 44,100 2,006,550
Union Pacific Corp. 18,000 794,250
--------------
2,800,800
--------------
</TABLE>

-15-
<PAGE> 18
STATEMENT OF INVESTMENTS (UNAUDITED) - CONTINUED

<TABLE>
<CAPTION>
NO. OF MARKET
SHARES VALUE
------------ -------------
<S> <C> <C>
RETAILERS (6.1%)
Borders Group, Inc. (A) 44,900 $ 1,661,300
Costco Cos. (A) 64,600 4,075,853
Dayton Hudson Corp. 94,900 4,602,650
Federated Department
Stores, Inc.,(A) 47,700 2,566,856
Gap Inc. 37,000 2,280,125
General Nutrition Cos., Inc. (A) 107,900 3,365,131
Home Depot, Inc. 85,049 7,064,383
Jones Apparel Group Inc. (A) 47,200 1,725,750
Kmart Corp. (A) 130,700 2,515,975
Office Depot, Inc. (A) 82,600 2,607,062
J. C. Penney Co., Inc. 22,700 1,641,494
Ross Stores, Inc. 37,200 1,604,250
Stride Rite Corp. 1,400 21,087
TJX Companies, Inc. 110,000 2,653,750
Wal-Mart Stores, Inc. 194,500 11,815,875
-------------
50,201,541
-------------
SERVICES (4.3%)
HBO & Co. 112,400 3,965,607
Lincare Holdings, Inc. (A) 52,700 2,215,044
Medtronic, Inc. 42,200 2,690,250
Microsoft Corp. (A) 228,200 24,738,295
Oracle Corp. (A) 81,525 1,999,906
-------------
35,609,102
-------------
SUPERMARKETS (0.7%)
Kroger Co. (A) 54,600 2,340,975
Safeway Inc. (A) 78,730 3,203,327
-------------
5,544,302
-------------
TECHNOLOGY (9.0%)
Berg Electronics Corp. (A) 37,300 729,681
Ceridian Corp. (A) 48,000 2,820,000
Cisco Systems, Inc. (A) 119,650 11,019,011
Compaq Computer Corp. 182,569 5,180,381
Computer Associates International 29,462 1,636,982
Compuware Corp. (A) 33,500 1,711,639
Dell Computer Corp. (A) 60,400 5,603,984
EMC Corp. (A) 95,200 4,266,150
Eastman Kodak Co. 28,780 2,102,739
Hewlett-Packard Co. 67,300 4,029,588
Intel Corp. 145,600 10,788,043
International Business
Machines Corp. 102,600 11,779,762
Intuit Inc. (A) 33,400 2,046,792
Sun Microsystems Inc. (A) 64,100 2,786,344
Symbol Technologies, Inc. 67,400 2,544,350
Texas Instruments, Inc. 33,300 1,941,806
Xerox Corp. 28,300 2,875,988
-------------
73,863,240
-------------
TELECOMMUNICATIONS (8.4%)
AT&T Corp. 131,100 7,489,088
AirTouch Communications, Inc. (A) 44,300 2,588,781
Ameritech Corp. 94,700 4,249,662
Bell Atlantic Corp. 134,058 6,116,396
BellSouth Corp. 85,700 5,752,613
GTE Corp. 83,100 4,622,438
Lucent Technologies Inc. 144,074 11,985,156
MCI Communications Corp. 57,800 3,357,816
MediaOne Group, Inc. (A) 50,200 2,205,662
Northern Telecom Ltd. 43,000 2,440,250
SBC Communications, Inc. 166,520 6,660,800
Sprint Corp. 37,106 2,615,973
U S West, Inc. 40,071 1,883,335
WorldCom Inc. (A) 142,400 6,884,143
-------------
68,852,113
-------------
TEXTILE (0.3%)
Fruit of The Loom (A) 78,000 2,588,625
-------------

TOBACCO (1.1%)
Loews Corp. 21,500 1,873,187
Philip Morris Cos. 176,900 6,965,438
-------------
8,838,625
-------------
U.S. AGENCY (0.8%)
Federal Home Loan Mortgage Corp. 63,900 3,007,294
Federal National
Mortgage Association 62,600 3,802,950
-------------
6,810,244
-------------
UTILITIES (1.8%)
Duke Energy Corp. 300 17,775
Edison International 104,000 3,074,500
FPL Group Inc. 44,700 2,816,100
Houston Industries 22,400 691,600
MidAmerican Energy Holdings Co. 114,200 2,469,575
PacifiCorp 23,600 533,950
Southern Co. 57,600 1,594,800
Texas Utilities Co. 80,500 3,350,812
-------------
14,549,112
-------------
TOTAL COMMON STOCKS
(COST $525,341,597) 814,581,648
-------------
</TABLE>

-16-
<PAGE> 19
STATEMENT OF INVESTMENTS (UNAUDITED) - CONTINUED

<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
-------------- -------------
SHORT-TERM INVESTMENTS (0.6%)

<S> <C> <C>
COMMERCIAL PAPER (0.5%)
J.P. Morgan & Company,
5.64% due July 21, 1998 $ 1,266,000 $ 1,261,869
PepsiCo Inc.,
6.08% due July 1, 1998 3,089,000 3,089,000
-------------
4,350,869
-------------
U.S. TREASURY (0.1%)
United States of America Treasury,
5.42% due July 23, 1998 (B) 675,000 673,036
-------------

TOTAL SHORT-TERM
INVESTMENTS (COST $5,023,904) 5,023,905
-------------

NOTIONAL
VALUE
--------------
FUTURES CONTRACTS (0.0%)

S&P 500 Stock Index,
Exp. September, 1998 (C) $ 4,286,250 -
-------------

TOTAL INVESTMENTS (100%)
(COST $530,365,501) (D) $ 819,605,553
=============
</TABLE>

NOTES

(A) Non-income Producing Security.

(B) Par value of $670,000 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 June 30, 1998, net unrealized appreciation for all securities was
$289,240,052. This consisted of aggregate gross unrealized appreciation
for all securities in which there was an excess of market value over
cost of $295,136,809 and aggregate gross unrealized depreciation for all
securities in which there was an excess of cost over market value of
$5,896,757.

See Notes to Financial Statements

-17-
<PAGE> 20
THE TRAVELERS
QUALITY BOND ACCOUNT
FOR VARIABLE ANNUITIES

For the six months ended June 30, 1998, The Travelers Quality Bond Account for
Variable Annuities ("Account QB") posted a 3.86% return before expenses versus
The Lehman Government / Corporate Bond Index of 3.47%, (The Lehman Government /
Corporate Bond Index is a combination of publicly issued intermediate and
long-term U.S. government bonds and corporate bonds). Our long duration position
had a positive effect as the 5-year Treasury yield fell 9 basis points and the
10-year Treasury yield dropped by 11 basis points, thereby increasing the value
of Account QB's portfolio. Yield spread widening in the corporate sector negated
our duration benefits as corporate bond yields increased by 5-15 basis points.
While we continue to see reasonable value in the corporate sector, a huge supply
of new issue products could keep yield spreads from narrowing dramatically.

The Federal Reserve Board's ("Fed") policy remains neutral. The Fed continues
to weigh the dilemma of too rapid economic growth as Gross Domestic Product
("GDP") grew by 5.4% in the first quarter, versus continued economic weakness in
Asia. Recently, evidence has surfaced to indicate that the Pacific Rim is
starting to create some drag on our economy. The trade deficit jumped to $14.5
billion in April, for example, and the unemployment rate inched up to 4.5% from
4.3%. Our current estimate at this time is that these factors should help second
quarter GDP to slow to a more sustainable 2%.

We expect inflation to remain muted, but will watch closely for upward pressures
on wages and prices in the service sector. We also will monitor the activities
of Asia closely. Stability in that area should enable the Fed to more closely
follow U.S. economic activity. Lastly, Japan's ability to deal with its banking
crisis could stem the flow of assets out of that country thereby reducing their
demand for U.S. Treasury securities.

PORTFOLIO MANAGER: F. DENNEY VOSS

[TAMIC LOGO]

-18-
<PAGE> 21
THE TRAVELERS QUALITY BOND ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 1998

<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (cost $157,091,039)................. $ 157,950,974
Cash ...................................................................... 8,907
Receivables:
Interest.............................................................. 1,630,113
Investment securities sold............................................ 62,238,294
Purchase payments and transfers from other Travelers accounts......... 52,084
Other assets............................................................... 8,951
----------------

Total Assets..................................................... 221,889,323
----------------

LIABILITIES:
Payables:
Investment securities purchased....................................... 64,317,038
Contract surrenders and transfers to other Travelers accounts......... 320,136
Investment management and advisory fees............................... 6,997
Accrued liabilities........................................................ 25,485
----------------

Total Liabilities................................................ 64,669,656
----------------

NET ASSETS...................................................................... $ 157,219,667
================
</TABLE>

See Notes to Financial Statements

-19-
<PAGE> 22
THE TRAVELERS QUALITY BOND ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1998

<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest............................................................ $ 5,291,286

EXPENSES:
Investment management and advisory fees............................. $ 255,231
Insurance charges................................................... 929,221
----------------
Total expenses................................................. 1,184,452
---------------

Net investment income..................................... 4,106,834
---------------

REALIZED GAIN AND CHANGE IN UNREALIZED GAIN ON
INVESTMENT SECURITIES:
Realized gain from investment security transactions:
Proceeds from investment securities sold....................... 298,481,994
Cost of investment securities sold............................. 296,926,106
----------------

Net realized gain......................................... 1,555,888

Change in unrealized gain on investment securities:
Unrealized gain at December 31, 1997........................... 1,695,113
Unrealized gain at June 30, 1998............................... 859,935
----------------

Net change in unrealized gain for the period.............. (835,178)
---------------

Net realized gain and change in unrealized gain...... 720,710
---------------

Net increase in net assets resulting from operations................ $ 4,827,544
===============

</TABLE>
See Notes to Financial Statements

-20-
<PAGE> 23
THE TRAVELERS QUALITY BOND ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1998 1997
---- ----
(UNAUDITED)
<S> <C> <C>
OPERATIONS:
Net investment income................................................................ $ 4,106,834 $ 8,282,982
Net realized gain from investment security transactions.............................. 1,555,888 692,660
Net change in unrealized gain on investment securities............................... (835,178) 1,496,038
--------------- ---------------

Net increase in net assets resulting from operations............................ 4,827,544 10,471,680
--------------- ---------------

UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 1,076,475 and 2,595,588 units, respectively)..................... 5,909,419 13,459,247
Participant transfers from other Travelers accounts
(applicable to 1,200,661 and 1,981,335 units, respectively)..................... 6,587,389 10,315,973
Administrative charges
(applicable to 9,208 and 21,863 units, respectively)............................ (51,389) (116,102)
Contract surrenders
(applicable to 1,351,348 and 2,897,282 units, respectively)..................... (7,478,073) (15,167,293)
Participant transfers to other Travelers accounts
(applicable to 2,024,876 and 5,631,496 units, respectively)..................... (11,099,143) (29,216,683)
Other payments to participants
(applicable to 91,707 and 175,168 units, respectively).......................... (507,379) (923,875)
--------------- ---------------

Net decrease in net assets resulting from unit transactions..................... (6,639,176) (21,648,733)
--------------- ---------------

Net decrease in net assets................................................. (1,811,632) (11,177,053)

NET ASSETS:
Beginning of period.................................................................. 159,031,299 170,208,352
--------------- ---------------

End of period........................................................................ $ 157,219,667 $ 159,031,299
=============== ===============
</TABLE>

See Notes to Financial Statements

-21-
<PAGE> 24
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

1. SIGNIFICANT ACCOUNTING POLICIES

The Travelers Quality Bond Account for Variable Annuities ("Account QB") is
a separate account of The Travelers Insurance Company ("The Travelers"), an
indirect wholly owned subsidiary of Travelers Group Inc., and is available
for funding certain variable annuity contracts issued by The Travelers.
Account QB is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company.

The following is a summary of significant accounting policies consistently
followed by Account QB in the preparation of its financial statements.

SECURITY VALUATION. Investments in securities traded on a national
securities exchange are valued at the last-reported sale price as of the
close of business of the New York Stock Exchange on the last business day of
the period; securities traded on the over-the-counter market and listed
securities with no reported sales are valued at the mean between the
last-reported bid and asked prices or on the basis of quotations received
from a reputable broker or other recognized source.

When market quotations are not considered to be readily available for
long-term corporate bonds and notes, such investments are generally stated
at fair value on the basis of valuations furnished by a pricing service.
These valuations are determined for normal institutional-size trading units
of such securities using methods based on market transactions for comparable
securities and various relationships between securities which are generally
recognized by institutional traders. Securities, including restricted
securities, for which pricing services are not readily available, are valued
by management at prices which it deems in good faith to be fair.

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.

-22-
<PAGE> 25
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - 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.

2. INVESTMENTS

The costs of purchases and proceeds from sales of investments (other than
short-term securities) were $175,103,243 and $182,358,416, respectively; the
costs of purchases and proceeds from sales of direct and indirect U.S.
government obligations were $110,263,258 and $106,591,908, respectively, for
the six months ended June 30, 1998. 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 Travelers Group Inc.

Insurance charges are paid for the mortality and expense risks assumed by
The Travelers. On contracts issued prior to May 16, 1983, these charges are
equivalent to 1.0017% of the average net assets of Account QB on an annual
basis. On contracts issued on or after May 16, 1983, the charges for
mortality and expense risks are equivalent to 1.25% of the average net
assets of Account QB on an annual basis. Additionally, for certain contracts
in the accumulation phase, a semi-annual charge of $15 (prorated for partial
periods) is deducted from participant account balances and paid to The
Travelers to cover administrative charges.

On contracts issued prior to May 16, 1983, The Travelers retained from
Account QB sales charges of $5,239 and $12,423 for the six months ended June
30, 1998 and the year ended December 31, 1997, 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 $30,449 and $86,884 of contingent
deferred sales charges for the six months ended June 30, 1998 and the year
ended December 31, 1997, respectively.

-23-
<PAGE> 26
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED

4. NET ASSETS HELD ON BEHALF OF AN AFFILIATE

Approximately $480,000 and $966,000 of the net assets of Account QB were
held on behalf of an affiliate of The Travelers as of June 30, 1998 and
December 31, 1997, respectively. Transactions with this affiliate during the
six months ended June 30, 1998 and the year ended December 31, 1997 were
comprised of participant purchase payments of approximately $83,000 and
$106,000 and contract surrenders of approximately $6,000 and $120,000,
respectively.

5. NET CONTRACT OWNERS' EQUITY

<TABLE>
<CAPTION>
JUNE 30, 1998
-----------------------------------------------------
UNIT NET
UNITS VALUE ASSETS
----- ----- ------
<S> <C> <C> <C>
Accumulation phase of contracts issued prior to May 16, 1983........... 7,185,952 $ 5.771 $ 41,474,753
Annuity phase of contracts issued prior to May 16, 1983................ 142,056 5.771 819,898
Accumulation phase of contracts issued on or after May 16, 1983........ 20,667,569 5.557 114,875,879
Annuity phase of contracts issued on or after May 16, 1983............. 8,841 5.557 49,137
-----------------

Net Contract Owners' Equity...................................................................... $ 157,219,667
=================
</TABLE>

-24-
<PAGE> 27
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED

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

<TABLE>
<CAPTION>
Contracts issued prior to May 16, 1983 SIX
MONTHS
ENDED FOR THE YEARS ENDED DECEMBER 31,
JUNE 30, (DERIVED FROM AUDITED FINANCIAL INFORMATION)
----------- -------------------------------------------------------
1998 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income........................ $ .189 $ .353 $ .379 $ .328 $ .318 $ .306
Operating expenses............................. .037 .071 .067 .063 .059 .058
-------- -------- -------- --------- -------- --------

Net investment income.......................... .152 .282 .312 .265 .259 .248

Unit value at beginning of period.............. 5.593 5.234 5.050 4.400 4.498 4.150

Net realized and change in unrealized
gains (losses)............................... .026 .077 (.128) .385 (.357) .100
-------- -------- -------- --------- -------- --------

Unit value at end of period.................... $ 5.771 $ 5.593 $ 5.234 $ 5.050 $ 4.400 $ 4.498
======== ======== ======== ========= ======== ========

SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase (decrease) in unit value.......... $ .18 $ .36 $ .18 $ .65 $ (.10) $ .35
Ratio of operating expenses to average
net assets................................... 1.33%* 1.33% 1.33% 1.33% 1.33% 1.33%
Ratio of net investment income to average
net assets................................... 5.39%* 5.25% 6.12% 5.54% 5.87% 5.66%
Number of units outstanding at end of period
(thousands).................................. 7,328 7,683 8,549 9,325 10,694 12,489
Portfolio turnover rate........................ 195% 196% 176% 138% 27% 24%
</TABLE>

<TABLE>
<CAPTION>
Contracts issued on or after May 16, 1983 SIX
MONTHS
ENDED FOR THE YEARS ENDED DECEMBER 31,
JUNE 30, (DERIVED FROM AUDITED FINANCIAL INFORMATION)
----------- -----------------------------------------------------
1998 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income........................ $ .182 $ .342 $ .368 $ .319 $ .310 $ .299
Operating expenses............................. .043 .082 .078 .073 .069 .067
-------- --------- -------- --------- --------- --------

Net investment income.......................... .139 .260 .290 .246 .241 .232

Unit value at beginning of period.............. 5.393 5.060 4.894 4.274 4.381 4.052

Net realized and change in unrealized gains
(losses)..................................... .025 .073 (.124) .374 (.348) .097
-------- --------- -------- --------- --------- --------

Unit value at end of period.................... $ 5.557 $ 5.393 $ 5.060 $ 4.894 $ 4.274 $ 4.381
======== ========= ======== ========= ========= ========

SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase (decrease) in unit value.......... $ .16 $ .33 $ .17 $ .62 $ (.11) $ .33
Ratio of operating expenses to average
net assets................................... 1.57%* 1.57% 1.57% 1.57% 1.57% 1.57%
Ratio of net investment income to average
net assets................................... 5.14%* 5.00% 5.87% 5.29% 5.62% 5.41%
Number of units outstanding at end of period
(thousands).................................. 20,676 21,521 24,804 27,066 27,033 28,472
Portfolio turnover rate........................ 195% 196% 176% 138% 27% 24%
</TABLE>

* Annualized.

-25-
<PAGE> 28
THE TRAVELERS QUALITY BOND ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF INVESTMENTS (UNAUDITED)
JUNE 30, 1998

<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
-------------- ------------
<S> <C> <C>
BONDS (67.3%)

AIRLINES (1.1%)
Delta Air Lines
9.25% Sinking Fund, 2007 (A) $ 1,673,236 $ 1,695,088
--------------

CHEMICALS (3.3%)
Praxair, Inc.,
6.15% Debentures, 2003 5,250,000 5,249,895
--------------

FOREIGN AGENCY (9.6%)
Province of Manitoba,
6.75% Bonds, 2003 7,500,000 7,751,400
Republic of Panama,
7.88% Notes, 2002 7,500,000 7,378,447
--------------
15,129,847
--------------
FINANCE (4.7%)
Telecom New Zealand
Finance Corp.,
6.25% Debentures, 2003 7,500,000 7,502,392
--------------

FOOD (5.0%)
Nabisco Inc.,
6.70% Notes, 2002 7,800,000 7,899,310
--------------

HEALTHCARE (4.6%)
Columbia/HCA Healthcare Corp.,
8.70% Notes, 2010 2,250,000 2,409,464
Columbia/HCA Healthcare Corp.,
6.87% Notes, 2003 5,000,000 4,806,145
--------------
7,215,609
--------------
NATURAL GAS PIPELINE (4.8%)
The Australian Gas Light Co.,
6.40% Debentures, 2008 7,500,000 7,618,808
--------------

RAILROADS (4.9%)
CSX Corp.,
7.25% Debentures, 2004 7,350,000 7,710,297
--------------

REAL ESTATE (4.6%)
Nationwide Health Properties, Inc.,
6.90% Debentures, 2037 7,000,000 7,204,309
--------------

RETAILERS (4.7%)
Tommy Hilfiger Corp.,
6.50% Debentures, 2003 7,500,000 7,517,528
--------------

TOBACCO (5.8%)
Philip Morris Cos.,
6.95% Debentures, 2006 8,800,000 9,096,938
--------------

UTILITIES (14.2%)
Niagara Mohawk Power Corp.,
7.63% Debentures, 2005 7,250,000 7,395,000
SCANA Corp.,
6.25% Debentures, 2003 7,100,000 7,100,000
United Utilities PLC,
6.45% Debentures, 2008 7,800,000 7,928,591

--------------
22,423,591
--------------
TOTAL BONDS
(COST $105,421,721) 106,263,612
--------------

U.S. GOVERNMENT
SECURITIES (26.0%)

United States of America Treasury,
5.63% Notes, 1999 41,000,000 41,064,042
--------------

TOTAL U.S. GOVERNMENT
SECURITIES
(COST $41,044,770) 41,064,042
--------------

SHORT-TERM INVESTMENTS (6.7%)

COMMERCIAL PAPER (6.7%)
Merrill Lynch & Co.,
5.69% due July 7, 1998 6,900,000 6,892,320
Mobil Corp.,
6.14% due July 1, 1998 3,731,000 3,731,000
--------------

TOTAL SHORT-TERM
INVESTMENTS (COST $10,624,548) 10,623,320
--------------

TOTAL INVESTMENTS (100%)
(COST $157,091,039) (B) $ 157,950,974
==============
</TABLE>

NOTES

(A) Restricted Security.

(B) At June 30, 1998, net unrealized appreciation for all securities was
$859,935. This consisted of aggregate gross unrealized appreciation for
all securities in which there was an excess of market value over cost of
$1,064,208 and aggregate gross unrealized depreciation for all
securities in which there was an excess of cost over market value of
$204,273.

See Notes to Financial Statements

-26-
<PAGE> 29
THE TRAVELERS
MONEY MARKET ACCOUNT
FOR VARIABLE ANNUITIES

For the six months ended June 30, 1998 the economy continued to expand at a
greater than expected pace. However, growth slowed somewhat in the second
quarter as the result of dislocations produced by the ongoing crisis in Asia,
and more recently by the impact of the General Motors strike. Inflation for the
most part continued to be nonexistent. As a result, the financial markets
rallied and the 30-year Treasury bond yield ended at 5.62%, down 30 basis points
from year-end. In addition, the federal funds rate remained unchanged at 5.50%.

It is anticipated that Gross Domestic Product growth will approximate 2% for the
second quarter after a sizzling 5.4% rate for the first quarter. Accordingly,
the Federal Reserve Board ("Fed") appears to be remaining on the sidelines for
the foreseeable future. However, if there is any significant change in the
economy the Fed will take the necessary action.

The strategy in management of The Travelers Money Market Account For Variable
Annuities' short-term assets will be to extend maturates from the current
average of 26 days to between 60 and 90 days. At June 30, 1998 the asset size of
the portfolio was $92.6 million with an average yield of 5.58%.

PORTFOLIO MANAGER: EMIL J. MOLINARO JR.

[TAMIC LOGO]

-27-
<PAGE> 30
THE TRAVELERS MONEY MARKET ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 1998

<TABLE>
<S> <C>
ASSETS:
Investment securities, at market value (cost $92,595,079)............ $ 92,579,411
Receivables:
Interest........................................................ 71,645
Investment securities sold...................................... 1,016,000
Purchase payments and transfers from other Travelers accounts... 956,878
Other assets......................................................... 2,918
---------------

Total Assets............................................... 94,626,852
---------------

LIABILITIES:
Cash overdraft....................................................... 16,314
Payables:
Investment securities purchased................................. 997,783
Contract surrenders and transfers to other Travelers accounts... 1,717,584
Investment management and advisory fees......................... 4,120
Accrued liabilities.................................................. 15,847
---------------

Total Liabilities.......................................... 2,751,648
---------------

NET ASSETS................................................................ $ 91,875,204
===============
</TABLE>

See Notes to Financial Statements

-28-
<PAGE> 31
THE TRAVELERS MONEY MARKET ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1998

<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest ................................................... $ 2,476,964

EXPENSES:
Investment management and advisory fees...................... $ 143,802
Insurance charges............................................ 553,166
--------------
Total expenses.......................................... 696,968
--------------

Net investment income.............................. 1,779,996
--------------

Net increase in net assets resulting from operations......... $ 1,779,996
==============
</TABLE>

See Notes to Financial Statements

-29-
<PAGE> 32
THE TRAVELERS MONEY MARKET ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF CHANGES IN NET ASSETS

Net increase in net assets resulting from operations.......................... 1,779,996 3,600,931
---------------- ----------------

UNIT TRANSACTIONS:
Participant purchase payments
(applicable to 3,017,430 and 14,166,450 units, respectively).................. 7,175,482 32,465,312
Participant transfers from other Travelers accounts
(applicable to 44,672,013 and 94,922,947 units, respectively)................. 106,353,931 219,247,840
Administrative charges
(applicable to 18,413 and 37,992 units, respectively)......................... (44,230) (88,495)
Contract surrenders
(applicable to 3,522,129 and 6,094,352 units, respectively)................... (8,378,597) (14,060,055)
Participant transfers to other Travelers accounts
(applicable to 42,071,282 and 104,773,969 units, respectively)................ (100,177,269) (241,734,934)
Other payments to participants
(applicable to 94,254 and 170,332 units, respectively)........................ (225,042) (395,081)
---------------- ----------------

Net increase (decrease) in net assets resulting from unit transactions........ 4,704,275 (4,565,413)
---------------- ----------------

Net increase (decrease) in net assets.................................... 6,484,271 (964,482)

NET ASSETS:
Beginning of period................................................................ 85,390,933 86,355,415
---------------- ----------------

End of period...................................................................... $ 91,875,204 $ 85,390,933
================ ================
</TABLE>

See Notes to Financial Statements

-30-
<PAGE> 33
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

1. SIGNIFICANT ACCOUNTING POLICIES

The Travelers Money Market Account for Variable Annuities ("Account MM") is
a separate account of The Travelers Insurance Company ("The Travelers"), an
indirect wholly owned subsidiary of Travelers Group Inc., and is available
for funding certain variable annuity contracts issued by The Travelers.
Account MM is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company.

The following is a summary of significant accounting policies consistently
followed by Account MM in the preparation of its financial statements.

SECURITY VALUATION. Short-term investments for which a quoted market price
is available are valued at market. Short-term investments for which there
is no reliable quoted market price are valued at amortized cost which
approximates market.

REPURCHASE AGREEMENTS. When Account MM enters into a repurchase agreement
(a purchase of securities whereby the seller agrees to repurchase the
securities at a mutually agreed upon date and price), the repurchase price
of the securities will generally equal the amount paid by Account MM plus a
negotiated interest amount. The seller under the repurchase agreement will
be required to provide to Account MM securities (collateral) whose market
value, including accrued interest, will be at least equal to 102% of the
repurchase price. Account MM monitors the value of collateral on a daily
basis. Repurchase agreements will be limited to transactions with national
banks and reporting broker dealers believed to present minimal credit
risks. Account MM's custodian will take actual or constructive receipt of
all securities underlying repurchase agreements until such agreements
expire.

FEDERAL INCOME TAXES. The operations of Account MM form a part of the total
operations of The Travelers and are not taxed separately. The Travelers is
taxed as a life insurance company under the Internal Revenue Code of 1986,
as amended (the "Code"). Under existing federal income tax law, no taxes
are payable on the investment income and capital gains of Account MM.
Account MM is not taxed as a "regulated investment company" under
Subchapter M of the Code.

OTHER. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.

YEAR 2000. In 1996, The Travelers began the process of identifying,
evaluating and implementing changes to computer programs necessary to
address the year 2000 issue. This issue involves the ability of computer
systems that have time-sensitive programs to properly recognize the year
2000. The inability to do so could result in major failures or
miscalculations. The Travelers has a comprehensive plan in progress to
address its internal year 2000 issue with modifications to existing
programs and conversions to new programs to bring all of its critical
business systems into year 2000 compliance by year-end 1998. The total cost
associated with the required modifications and conversions, which are
expensed as incurred, is not expected to have a material effect on The
Travelers financial position, results of operations or liquidity. The
Travelers also has third party customers, financial institutions, vendors
and others with which it conducts business and is in the process of
confirming their plans to address year 2000 issues. While The Travelers has
been advised that these efforts by third party vendors and customers will
be successfully completed in a timely manner, it is possible that a series
of failures by third parties could have a material adverse effect on The
Travelers results of operations in future periods.

-31-
<PAGE> 34
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED

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 Travelers Group Inc.

Insurance charges are paid for the mortality and expense risks assumed by
The Travelers. On contracts issued prior to May 16, 1983, these charges are
equivalent to 1.0017% of the average net assets of Account MM on an annual
basis. On contracts issued on or after May 16, 1983, the charges for
mortality and expense risks are equivalent to 1.25% of the average net
assets of Account MM on an annual basis. Additionally, for certain
contracts in the accumulation phase, a semi-annual charge of $15 (prorated
for partial periods) is deducted from participant account balances and paid
to The Travelers to cover administrative charges.

The Travelers assesses a 5% contingent deferred sales charge if a
participant's purchase payment is surrendered within five years of its
payment date. Contract surrender payments include $49,882 and $90,325 of
contingent deferred sales charges for the six months ended June 30, 1998
and the year ended December 31, 1997, respectively.

3. NET ASSETS HELD ON BEHALF OF AN AFFILIATE

Approximately $3,381,000 and $2,883,000 of the net assets of Account MM
were held on behalf of an affiliate of The Travelers as of June 30, 1998
and December 31, 1997, respectively. Transactions with this affiliate
during the six months ended June 30, 1998 and the year ended December 31,
1997 were comprised of participant purchase payments of approximately
$1,120,000 and $320,000 and contract surrenders of approximately $498,000
and $1,367,000, respectively.

4. NET CONTRACT OWNERS' EQUITY
<TABLE>
<CAPTION>
JUNE 30, 1998
----------------------------------------------
UNIT NET
UNITS VALUE ASSETS
----- ----- ------
<S> <C> <C> <C>
Accumulation phase of contracts issued prior to May 16, 1983.......... 23,895 $ 2.495 $ 59,632
Annuity phase of contracts issued prior to May 16, 1983............... 72,822 2.495 181,735
Accumulation phase of contracts issued on or after May 16, 1983....... 38,005,795 2.403 91,345,095
Annuity phase of contracts issued on or after May 16, 1983............ 120,137 2.403 288,742
-------------

Net Contract Owners' Equity................................................................. $ 91,875,204
=============
</TABLE>

-32-
<PAGE> 35
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED

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

<TABLE>
<CAPTION>
Contracts issued prior to May 16, 1983 SIX
MONTHS
ENDED FOR THE YEARS ENDED DECEMBER 31,
JUNE 30, (DERIVED FROM AUDITED FINANCIAL INFORMATION)
----------- -------------------------------------------------------
1998 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ----
<C> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income............................ $ .06 $ .13 $ .12 $ .130 $ .091 $ .067
Operating expenses................................. .01 .03 .03 .030 .028 .027
------- ------ ------- --------- -------- --------

Net investment income.............................. .05 .10 .09 .100 .063 .040

Unit value at beginning of period.................. 2.44 2.34 2.24 2.146 2.083 2.043
------- ------ ------- -------- -------- --------

Unit value at end of period........................ $ 2.49 $ 2.44 $ 2.34 $ 2.246 $ 2.146 $ 2.083
======= ======= ======= ======== ======== ========

SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase in unit value......................... $ .05 $ .10 $ .10 $ .10 $ .06 $ .04
Ratio of operating expenses to average
net assets....................................... 1.33%* 1.33% 1.33% 1.33% 1.33% 1.33%
Ratio of net investment income to average
net assets....................................... 4.29%* 4.27% 4.10% 4.61% 2.98% 1.93%
Number of units outstanding at end of period
(thousands)................ 97 105 112 206 206 218
</TABLE>

<TABLE>
<CAPTION>
Contracts issued on or after May 16, 1983 SIX
MONTHS
ENDED FOR THE YEARS ENDED DECEMBER 31,
JUNE 30, (DERIVED FROM AUDITED FINANCIAL INFORMATION)
--------- ---------------------------------------------------------
1998 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
SELECTED PER UNIT DATA:
Total investment income............................ $ .066 $ .128 $ .121 $ .127 $ .087 $ .065
Operating expenses................................. .018 .036 .035 .034 .032 .031
------- -------- -------- -------- -------- -------

Net investment income.............................. .048 .092 .086 .093 .055 .034

Unit value at beginning of period.................. 2.355 2.263 2.177 2.084 2.029 1.995
------- -------- -------- -------- -------- -------

Unit value at end of period........................ $ 2.403 $ 2.355 $ 2.263 $ 2.177 $ 2.084 $ 2.029
======= ======== ======== ======== ======== =======

SIGNIFICANT RATIOS AND ADDITIONAL DATA:
Net increase in unit value......................... $ .05 $ .09 $ .09 $ .09 $ .06 $ .03
Ratio of operating expenses to average
net assets....................................... 1.57%* 1.57% 1.57% 1.57% 1.57% 1.57%
Ratio of net investment income to average
net assets....................................... 4.04%* 4.02% 3.84% 4.36% 2.72% 1.68%
Number of units outstanding at end of period
(thousands)...................................... 38,126 36,134 38,044 35,721 39,675 34,227
</TABLE>

* Annualized.

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<PAGE> 36
THE TRAVELERS MONEY MARKET ACCOUNT
FOR VARIABLE ANNUITIES

STATEMENT OF INVESTMENTS (UNAUDITED)
JUNE 30, 1998

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

<S> <C> <C>
COMMERCIAL PAPER (100%)
American Home Products Corp.,
5.64% due August 21, 1998 $ 1,367,000 $ 1,356,068
Bell Atlantic Financial Services Inc.,
5.63% due July 10, 1998 1,345,000 1,342,875
BellSouth Capital Funding,
5.61% due July 1, 1998 2,460,000 2,459,601
Corporate Asset Funding Co.,
5.64% due July 7, 1998 4,315,000 4,310,197
Dakota Certificates Program,
5.66% due August 14, 1998 3,610,000 3,584,997
Deutsche Bank Financial, Inc.,
5.62% due July 7, 1998 1,385,000 1,383,459
Diageo PLC,
5.64% due July 13, 1998 5,000,000 4,989,805
E.I. Dupont de Nemours & Co.,
5.65% due August 25, 1998 2,950,000 2,924,606
General Electric Capital Corp.,
5.60% due July 6, 1998 4,500,000 4,495,694
J.P. Morgan & Company,
5.64% due July 21, 1998 4,500,000 4,485,317
Marsh & McLennan Cos.,
5.70% due July 28, 1998 2,080,000 2,071,006
May Department Stores,
5.64% due July 24, 1998 4,075,000 4,059,845
Merrill Lynch & Co.,
5.67% due August 24, 1998 3,190,000 3,163,029
Motorola, Inc.,
5.62% due July 23, 1998 2,165,000 2,157,277
National Rural Utilities Co-Op
Financial Corp.,
5.62% due July 16, 1998 1,807,000 1,802,490
National Rural Utilities Co-Op
Financial Corp.,
5.64% due August 6, 1998 2,140,000 2,127,802
Norwest Financial, Inc.,
5.78% due September 1, 1998 3,450,000 3,452,471
Potomac Electric Power Co.,
5.64% due July 28, 1998 4,104,000 4,086,254
Private Export Funding Corp.,
5.64% due July 7, 1998 4,100,000 4,095,437
Procter & Gamble Co.,
5.61% due July 20, 1998 4,500,000 4,486,005
Progress Capital Holdings, Inc.,
5.79% due July 14, 1998 1,000,000 997,809
Prudential Funding Corp.,
5.63% due July 22, 1998 2,927,000 2,917,004
Rubbermaid Inc.,
5.65% due July 30, 1998 4,500,000 4,479,183
Sherwin Williams Co.,
5.63% due August 7, 1998 5,000,000 4,970,735
Southern New England Telephone,
5.65% due July 20, 1998 4,338,000 4,324,509
TECO Financial, Inc.,
5.63% due July 28, 1998 2,100,000 2,090,920
Transamerica Financial Corp.,
5.64% due July 24, 1998 3,930,000 3,915,384
Tribune Co.,
5.65% due August 26, 1998 2,170,000 2,150,991
TRW, Inc.,
5.66% due July 17, 1998 3,909,000 3,898,641
---------------

TOTAL INVESTMENTS (100%)
(COST $92,595,079) $ 92,579,411
===============
</TABLE>

See Notes to Financial Statements

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<PAGE> 37

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<PAGE> 38

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<PAGE> 39
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
----------------------
TRAVELERS INVESTMENT MANAGEMENT COMPANY
Hartford, Connecticut
THE TRAVELERS GROWTH AND INCOME STOCK ACCOUNT FOR VARIABLE ANNUITIES

Independent Accountants
-----------------------
COOPERS & LYBRAND L.L.P.
Hartford, Connecticut

Custodian
---------
THE CHASE MANHATTAN BANK, N.A.
New York, New York

The financial information included herein has been taken from the records of The
Travelers Growth and Income Stock Account for Variable Annuities, The Travelers
Quality Bond Account for Variable Annuities, and The Travelers Money Market
Account for Variable Annuities. This financial information has not been audited
by the Accounts' independent accountants, who therefore express no opinion
concerning its accuracy. However, it is management's opinion that all proper
adjustments have been made.

This report is prepared for the general information of contract owners and is
not an offer of units of The Travelers Growth and Income Stock Account for
Variable Annuities, The Travelers Quality Bond Account for Variable Annuities
and The Travelers Money Market Account for Variable Annuities. It should not be
used in connection with any offer except in conjunction with the Universal
Annuity Prospectus which contains all pertinent information, including the
applicable sales commissions.

VG-137 (Semi-Annual) (6-98) Printed in U.S.A.