485BPOS 1 c26683_485bpos.htm

Registration No. 33-58131

811-07259

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM N-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 8

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 8

THE TRAVELERS FUND BD II FOR VARIABLE ANNUITIES
(Exact Name of Registrant)

THE TRAVELERS LIFE AND ANNUITY COMPANY
(Name of Depositor)

One Cityplace, Hartford, Connecticut 06103-3415
(Address of Depositor’s Principal Executive Offices)

Depositor’s Telephone Number, including area code: (860) 308-1000

ERNEST J. WRIGHT
Secretary
The Travelers Life and Annuity Company
One Cityplace
Hartford, Connecticut 06103-3415
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering: _____________________

It is proposed that this filing will become effective (check appropriate box):

[ ]	immediately upon filing pursuant to paragraph (b) of Rule 485.

[ X ]

on May 1, 2003 pursuant to paragraph (b) of Rule 485.

[ ]	__ days after filing pursuant to paragraph (a)(1) of Rule 485.

[ N/A ]

on ___________ pursuant to paragraph (a)(1) of Rule 485.

If appropriate, check the following box:

[ N/A ] this post-effective amendment designates a new effective date for a previously filed post-effective amendment.

PART A

Information Required in a Prospectus

Travelers Vintage Annuity Prospectus:

The Travelers Fund BD For Variable Annuities
The Travelers Fund BD II For Variable Annuities

This prospectus describes Travelers Vintage Annuity, a flexible premium deferred variable annuity contract (the “Contract”) issued by The Travelers Insurance Company or The Travelers Life and Annuity Company. Refer to your Contract for the name of your issuing Company. The Contract is available in connection with certain retirement plans that qualify for special federal income tax treatment (“Qualified Contracts”) as well as those that do not qualify for such treatment (“Nonqualified Contracts”). We may issue it as an individual contract or as a group contract. When we issue a group contract, you will receive a certificate summarizing the Contract’s provisions. For convenience, we refer to Contracts and certificates as “Contracts.”

You can choose to have your premium (“Purchase Payments”) accumulate on a variable and/or fixed basis in one of our funding options. Your Contract Value before the Maturity Date and the amount of monthly income afterwards will vary daily to reflect the investment experience of the Variable Funding Options you select. You bear the investment risk of investing in the Variable Funding Options. The Variable Funding Options are:

AIM Variable Insurance Funds, Inc.		The Travelers Series Trust
AIM V.I. Premier Equity Fund — Series I		Convertible Securities Portfolio
AllianceBernstein Variable Product Series Fund, Inc.		Disciplined Mid Cap Stock Portfolio
AllianceBernstein Premier Growth Portfolio — Class B(1)		MFS Emerging Growth Portfolio
American Funds Insurance Series		MFS Research Portfolio
Global Growth Fund — Class 2 Shares		Travelers Series Fund Inc.
Growth Fund — Class 2 Shares		AIM Capital Appreciation Portfolio
Growth-Income Fund — Class 2 Shares		Alliance Growth Portfolio
Dreyfus Variable Investment Fund		MFS Total Return Portfolio
Dreyfus Variable Investment Fund — Developing Leaders		Putnam Diversified Income Portfolio
Portfolio — Initial Shares(2)		Salomon Brothers Strategic Total Return Bond Portfolio
Greenwich Street Series Fund		Smith Barney High Income Portfolio
Equity Index Portfolio — Class II Shares		Smith Barney International All Cap Growth Portfolio
Fundamental Value Portfolio		Smith Barney Large Cap Value Portfolio
Salomon Brothers Variable Series Funds Inc.		Smith Barney Large Capitalization Growth Portfolio
Investors Fund — Class I		Smith Barney Money Market Portfolio
Total Return Fund — Class I		Travelers Managed Income Portfolio
Smith Barney Allocation Series Inc.		Van Kampen Enterprise Portfolio
Select Balanced Portfolio		Variable Annuity Portfolios
Select Growth Portfolio		Smith Barney Small Cap Growth Opportunities Portfolio
Select High Growth Portfolio
Smith Barney Investment Series
Smith Barney Large Cap Core Portfolio
Smith Barney Premier Selections All Cap Growth Portfolio

______________

(1)

Formerly Premier Growth Portfolio — Class B

(2)

Formerly Small Cap Portfolio — Initial Shares

The Contract, certain contract features and/or some of the funding options may not be available in all states.

This prospectus provides the information that you should know before investing in the Contract. You can receive additional information about your Contract by requesting a copy of the Statement of Additional Information (“SAI”) dated May 1, 2003. We filed the SAI with the Securities and Exchange Commission (“SEC”), and it is incorporated by reference into this prospectus. To request a copy, write to The Travelers Insurance Company, Annuity Investor Services, One Cityplace, Hartford, Connecticut 06103-3415, call 1-800-842-8573 or access the SEC’s website (http://www.sec.gov). See Appendix D for the SAI’s table of contents.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or the adequacy of this prospectus. Any representation to the contrary is a criminal offense.

Variable annuity contracts are not deposits of any bank, and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

Prospectus May 1, 2003

TABLE OF CONTENTS

Glossary	3	Payment Options	27
Summary	5	Election of Options	27
Fee Table	7	Annuity Options	27
Condensed Financial Information	11	Income Options	28
The Annuity Contract	11	Variable Liquidity Benefit	28
Contract Owner Inquiries	11	Miscellaneous Contract Provisions	28
Purchase Payments	12	Right to Return	28
Accumulation Units	12	Termination	28
The Variable Funding Options	12	Required Reports	29
The Fixed Account	15	Suspension of Payments	29
Charges and Deductions	15	The Separate Accounts	29
General	15	Performance Information	29
Withdrawal Charge	16	Federal Tax Considerations	30
Free Withdrawal Allowance	16	Non-Resident Aliens	30
Administrative Charges	16	General Taxation of Annuities	30
Mortality and Expense Risk Charge	17	Types of Contracts: Qualified or Nonqualified.	31
Variable Liquidity Benefit Charges	17	Nonqualified Annuity Contracts	31
Variable Funding Option Expenses	17	Puerto Rico Tax Considerations	31
Premium Tax	17	Qualified Annuity Contracts	32
Changes in Taxes Based Upon Premium or		Penalty Tax for Premature Distributions	32
Value	17	Diversification Requirements for
Transfers	18	Variable Annuities.	32
Dollar Cost Averaging.	18	Ownership of the Investment	32
Access to Your Money	19	Mandatory Distributions for Qualified Plans	32
Systematic Withdrawals	19	Taxation of Death Benefit Proceeds	33
Loans.	20	Other Information.	33
Ownership Provisions	20	The Insurance Companies.	33
Types of Ownership	20	Financial Statements	33
Contract Owner	20	Distribution of Variable Annuity Contracts	33
Beneficiary	20	Conformity with State and Federal Laws	33
Annuitant	20	Voting Rights.	33
Death Benefit	21	Legal Proceedings and Opinions	34
Death Proceeds Before the Maturity Date	21	Appendix A: Condensed Financial Information
Payment of Proceeds	23	for The Travelers Insurance Company: Fund BD	A-1
Beneficiary Contract Continuance	25	Appendix B: Condensed Financial Information
Planned Death Benefit	25	for The Travelers Life and Annuity Company: Fund BD II	B-1
Death Proceeds After the Maturity Date	25	Appendix C: The Fixed Account.	C-1
The Annuity Period	25	Appendix D: Contents of the Statement
Maturity Date	25	Of Additional Information.	D-1
Allocation of Annuity.	26	Appendix E: Enhanced Death Benefit for Contracts Issued
Variable Annuity	26	Before June 1, 1997	E-1
Fixed Annuity	27

Glossary

Accumulation Unit — an accounting unit of measure used to calculate the value of this Contract before Annuity payments begin.

Annuitant — the person on whose life the Maturity Date and Annuity Payments depend.

Annuity Payments — a series of periodic payments (a) for life; (b) for life with a minimum number of payments; (c) for the joint lifetime of the Annuitant and another person, and thereafter during the lifetime of the survivor; or (d) for a fixed period.

Annuity Unit — an accounting unit of measure used to calculate the amount of Annuity Payments.

Cash Surrender Value — the Contract Value less any withdrawal charge and premium tax not previously deducted.

Code — the Internal Revenue Code of 1986, as amended, and all related laws and regulations that are in effect during the term of this contract.

Contingent Annuitant — the individual who becomes the Annuitant when the Annuitant who is not the owner dies prior to the Maturity Date.

Contract Date — the date on which the Contract is issued.

Contract Owner (you) — the person named in the Contract (on the specifications page) as the owner of the contract.

Contract Value — Purchase Payments, plus or minus any investment experience on the amounts allocated to the variable funds or interest on amounts allocated to the Fixed Account, adjusted by any applicable charges and withdrawals.

Contract Years — twelve month periods beginning with the Contract Date.

Death Report Date — the day on which we have received 1) Due Proof of Death and 2) written payment instructions or election of spousal or beneficiary contract continuation.

Due Proof of Death — (I) a copy of a certified death certificate; (ii) a copy of a certified decree of a court of competent jurisdiction as to the finding of death; (iii) a written statement by a medical doctor who attended the deceased; or (iv) any other proof satisfactory to us.

Fixed Account — an account that consists of all of the assets under this Contract other than those in the Separate Account.

Home Office — the Home Office of The Travelers Insurance Company or The Travelers Life and Annuity Company or any other office that we may designate for the purpose of administering this contract.

Maturity Date — the date on which the Annuity Payments are to begin.

Payment Option — an Annuity or Income option elected under your Contract.

Purchase Payment — any premium paid by you to initiate or supplement this Contract.

Qualified Contract — a contract used in a retirement plan or program that is intended to qualify under Sections 401, 403, 408, or 414(d) of the Code.

Separate Account — a segregated account registered with the Securities and Exchange Commission (“SEC”), the assets of which are invested solely in the Variable Funding Options. The assets of the Separate Account are held exclusively for the benefit of Contract Owners.

Subaccount — that portion of the assets of a Separate Account that is allocated to a particular Variable Funding Option.

Underlying Fund — a portfolio of an open-end management investment company that is registered with the SEC in which the Subaccounts invest.

Valuation Date — a date on which a Sub-Account is valued.

Valuation Period — the period between successive valuations.

Variable Funding Option — an open-end diversified management investment company that serves as an investment option under the Separate Account.

We, us, our — The Travelers Insurance Company or the Travelers Life and Annuity Company.

Written Request — written information sent to us in a form and content satisfactory to us and received at our Home Office.

You, your — the Contract Owner.

Summary:
Travelers Vintage Variable Annuity

This summary details some of the more important points that you should know and consider before purchasing the Contract. Please read the entire prospectus carefully.

What company will issue my Contract? Your issuing company is either The Travelers Insurance Company or The Travelers Life and Annuity Company (“the Company,” “We” or “Us”). Refer to your Contract for the name of your issuing company. Each company sponsors its own segregated asset account (“Separate Account”). The Travelers Insurance Company sponsors the Travelers Fund BD for Variable Annuities (“Fund BD”); The Travelers Life and Annuity Company sponsors the Travelers Fund BD II for Variable Annuities (“Fund BD II”). When we refer to the Separate Account, we are referring to either Fund BD or Fund BD II, depending upon your issuing Company.

You may only purchase a Contract in states where the Contract has been approved for sale. The Contract may not currently be available for sale in all states.

Can you give me a general description of the Contract? We designed the Contract for retirement savings or other long-term investment purposes. The Contract provides a death benefit as well as guaranteed payout options. You direct your payment(s) to one or more of the Variable Funding Options and/or to the Fixed Account that is part of our general account (the “Fixed Account”). We guarantee money directed to the Fixed Account as to principal and interest. The Variable Funding Options are designed to produce a higher rate of return than the Fixed Account; however, this is not guaranteed. You can also lose money in the Variable Funding Options.

The Contract, like all deferred variable annuity contracts, has two phases: the accumulation phase and the payout phase (annuity period). During the accumulation phase generally, under a qualified contract, your pre-tax contributions accumulate on a tax-deferred basis and are taxed as income when you make a withdrawal, presumably when you are in a lower tax bracket. During the accumulation phase, under a nonqualified contract, earnings on your after-tax contributions accumulate on a tax-deferred basis and are taxed as income when you make a withdrawal. The payout phase occurs when you begin receiving payments from your Contract. The amount of money you accumulate in your Contract determines the amount of income (Annuity Payments) you receive during the payout phase.

During the payout phase, you may choose one of a number of annuity options. You may receive income payments from the Variable Funding Options and/or the Fixed Account. If you elect variable income payments, the dollar amount of your payments may increase or decrease. Once you choose one of the annuity options or income options and begin to receive payments, it cannot be changed.

Who should purchase this Contract? The Contract is currently available for use in connection with (1) individual nonqualified purchases; (2) rollovers from Individual Retirement Annuities (IRAs); (3) rollovers from other qualified retirement plans, and (4) beneficiary-directed transfer of proceeds from another Contract. Qualified contracts include contracts qualifying under Section 401(a), 403(b), or 408(b) of the Internal Revenue Code of 1986, as amended. Purchase of this Contract through a tax qualified retirement plan (“Plan”) does not provide any additional tax deferral benefits beyond those provided by the Plan. Accordingly, if you are purchasing this Contract through a Plan, you should consider purchasing this Contract for its Death Benefit, Annuity Option Benefits, and other non-tax-related benefits.

You may purchase the Contract with an initial payment of at least $5,000. You may make additional payments of at least $500 at any time during the accumulation phase. No additional payments are allowed if the Contract is purchased with a beneficiary-directed transfer of proceeds.

Can I exchange my current annuity contract for this Contract? The Code generally permits you to exchange one annuity contract for another in a “tax-free exchange.” Therefore, you can transfer the proceeds from another annuity contract to purchase this Contract. Before making an exchange to acquire this Contract, you should carefully compare this Contract to your current contract. You may have to pay a surrender charge under your current contract to exchange it for this Contract, and this Contract has its own surrender charges that would apply to you. The other fees and charges under this Contract may be higher or lower and the benefits may be different than those of your current contract. In addition, you may have to pay federal income or penalty taxes on the exchange if it does not qualify for tax-free treatment. You should not exchange another

contract for this Contract unless you determine, after evaluating all the facts, the exchange is in your best interests. Remember that the person selling you the Contract generally will earn a commission on the sale.

Is there a Right to Return Period? If you cancel the Contract within twenty days after you receive it, you will receive a full refund of your Contract Value plus any Contract charges and premium taxes you paid (but not fees and charges assessed by the Underlying Funds). Where state law requires a different right to return period, or the return of Purchase Payments, the Company will comply. You bear the investment risk on the Purchase Payment allocated to a Variable Funding Option during the right to return period; therefore, the Contract Value we return may be greater or less than your Purchase Payment.

If you purchased your Contract as an Individual Retirement Annuity, and you return it within the first seven days after delivery, or longer if your state law permits, we will refund your full Purchase Payment. During the remainder of the right to return period, we will refund your Contract Value (including charges we assessed). We will determine your Contract Value at the close of business on the day we receive a Written Request for a refund.

Can you give a general description of the Variable Funding Options and how they operate? The Variable Funding Options represent Subaccounts of The Separate Account. At your direction, the Separate Account, through its Subaccounts, uses your Purchase Payments to purchase units of one or more of the Underlying Funds that holds securities consistent with its own investment policy. Depending on market conditions, you may make or lose money in any of these Variable Funding Options.

You can transfer among the Variable Funding Options as frequently as you wish without any current tax implications. Currently there is no charge for transfers, nor a limit to the number of transfers allowed. We may, in the future, charge a fee for any transfer request, or limit the number of transfers allowed. At a minimum, we would always allow one transfer every six months. We reserve the right to restrict transfers that we determine will disadvantage other Contract Owners. You may transfer between the Fixed Account and the Variable Funding Options twice a year (during the 30 days after the six-month Contract Date anniversary), provided the amount is not greater than 15% of the Fixed Account value on that date.

What expenses will be assessed under the Contract? The Contract has insurance features and investment features, and there are costs related to each. We deduct an administrative expense charge and a mortality and expense risk (“M&E”) charge daily from amounts you allocate to the Separate Account. We deduct the administrative expense charge at an annual rate of 0.15% and deduct the M&E at an annual rate of 1.02% for the Standard Death Benefit and 1.30% for the Enhanced Death Benefit. For Contracts with a value of less than $40,000, we also deduct an annual contract administrative charge of $30. Each Underlying Fund also charges for management costs and other expenses.

We will apply a withdrawal charge to withdrawals from the Contract, and will calculate it as a percentage of the Purchase Payments withdrawn. The maximum percentage is 6%, decreasing to 0% in years seven and later.

Upon annuitization, if the Variable Liquidity Benefit is selected, there is a maximum surrender charge of 6% of the amounts withdrawn. Please refer to The Annuity Period for a description of this benefit.

How will my Purchase Payments and withdrawals be taxed? Generally, the payments you make to a qualified Contract during the accumulation phase are made with before-tax dollars. Generally, you will be taxed on your Purchase Payments and on any earnings when you make a withdrawal or begin receiving Annuity Payments. Under a nonqualified Contract, payments to the Contract are made with after-tax dollars, and any credits and earnings will generally accumulate tax-deferred. You will be taxed on these earnings when they are withdrawn from the Contract. If you are younger than 59 1/2 when you take money out, you may be charged a 10% federal penalty tax on the amount withdrawn.

For owners of Qualified Contracts, if you reach a certain age, you may be required by federal tax laws to begin receiving payments from your annuity or risk paying a penalty tax. In those cases, we can calculate and pay you the minimum required distribution amounts.

How may I access my money? You can take withdrawals any time during the accumulation phase. Withdrawal charges may apply, and income taxes, and/or a penalty tax may apply to taxable amounts withdrawn.

What is the Death Benefit under the Contract? You may choose to purchase the Standard or Enhanced Death Benefit. The death benefit applies upon the first death of the Contract Owner, joint owner, or Annuitant. Assuming you are the Annuitant, the death benefit is as follows: If you die before the Contract is in the payout phase, the person you have chosen as your beneficiary will receive a death benefit. We calculate the death

benefit value at the close of the business day on which our Home Office receives (1) Due Proof of Death and (2) written payment instructions. The Enhanced Death Benefit may not be available in all states. Please refer to the Death Benefit section in the prospectus for more details.

Where may I find out more about Accumulation Unit values? The Condensed Financial Information in Appendix A or Appendix B to this prospectus provides more information about Accumulation Unit values.

Are there any additional features? This Contract has other features you may be interested in. These include:

Dollar Cost Averaging. This is a program that allows you to invest a fixed amount of money in Variable Funding Options each month, theoretically giving you a lower average cost per unit over time than a single one-time purchase. Dollar Cost Averaging requires regular investments regardless of fluctuating price levels, and does not guarantee profits or prevent losses in a declining market. Potential investors should consider their financial ability to continue purchases through periods of low price levels.

Systematic Withdrawal Option. Before the Maturity Date, you can arrange to have money sent to you at set intervals throughout the year. Of course, any applicable income and penalty taxes will apply on amounts withdrawn. Withdrawals in excess of the annual free withdrawal allowance may be subject to a withdrawal charge

Automatic Rebalancing. You may elect to have the Company periodically reallocate the values in your Contract to match the rebalancing allocation selected.

Beneficiary Contract Continuance (not permitted for non-natural beneficiaries). If you die before the Maturity Date, and if the value of any beneficiary’s portion of the death benefit is between $20,000 and $1,000,000 as of the date of your death, that beneficiary(s) may elect to continue his/her portion of the Contract rather than have the death benefit paid to the beneficiary.

FEE TABLE

The purpose of this Fee Table is to assist Contract Owners in understanding the various costs and expenses that you will bear, directly or indirectly, if you purchase this Contract. See Charges and Deductions in this prospectus for additional information. Expenses shown do not include premium taxes, which may be applicable. Each Variable Funding Option purchases shares of the Underlying Fund at net asset value. The net asset value already reflects the deduction of each Underlying Fund’s Total Operating Expenses as shown in the table below; therefore, you are indirectly bearing the costs of Underlying Fund expenses.

We receive payments or offsets from some of the Underlying Funds, their affiliates or service providers for providing administrative or other services for a fund. These payments vary in amount and currently we receive payments at an annual rate of up to 0.50% of the average net amount invested in an Underlying Fund on behalf of the Separate Accounts. These payments by the funds do not result in any charge to you in addition to the Total Annual Operating Expenses disclosed below for each fund.

Transaction Expenses

Withdrawal Charge

(as a percentage of the Purchase Payments withdrawn):

Years Since Purchase Payment Made		Withdrawal Charge

Greater than or equal to	But less than
0 years	3 years	6%
3 years	4 years	3%
4 years	5 years	2%
5 years	6 years	1%
6+years		0%

*Annual Contract Administrative Charge:*		$30
(waived if Contract Value is $40,000 or more)

Annual Separate Account Charges:

(as a percentage of the average daily net assets of the Separate Account)

Standard Death Benefit		Enhanced Death Benefit
Mortality and Expense Risk Charge	1.02%	Mortality and Expense Risk Charge	1.30%
Administrative Expense Charge	0.15%	Administrative Expense Charge	0.15%

Total Separate Account Charges	1.17%	Total Separate Account Charges	1.45%

Variable Funding Option Expenses:

The first table below shows the minimum and maximum fees and expenses charged by any of the Funds as of December 31, 2002. The second table shows each Fund’s fees and expenses as of December 31, 2002. This information was provided by the Funds and we have not independently verified it. More detail concerning each Fund’s fees and expenses is contained in the prospectus for each Fund.

Minimum and Maximum Total Annual Fund Operating Expenses as of December 31, 2002

	Minimum (before reimbursement)		Maximum (before reimbursement)

Total Annual Fund Operating Expenses		0.42%		1.31%

Fund Fees and Expenses as of December 31, 2002 (unless otherwise indicated)

(as a percentage of average daily net assets of the funding option)

Funding Options	Management Fee (before expense reimbursement)		Distribution and/or Service Fees (12b-1)		Other Expenses (before expense reimbursement)		Total Annual Operating Expenses (before expense reimbursement)#

AIM Variable Insurance Funds, Inc.
AIM V.I. Premier Equity Fund — Series I		0.61%		—		0.24%		0.85%
AllianceBernstein Variable Product Series Fund, Inc.
AllianceBernstein Premier Growth Portfolio — Class B*		1.00%		0.25%		0.06%		1.31%
American Funds Insurance Series
Global Growth Fund — Class 2 Shares*		0.67%		0.25%		0.04%		0.96%
Growth Fund — Class 2 Shares*		0.38%		0.25%		0.02%		0.65%
Growth-Income Fund — Class 2 Shares*		0.34%		0.25%		0.01%		0.60%
Dreyfus Variable Investment Fund
Dreyfus Variable Investment Fund — Developing Leaders Portfolio — Initial Shares		0.75%		—		0.06%		0.81%
Greenwich Street Series Fund
Equity Index Portfolio — Class II Shares*		0.31%		0.25%		0.05%		0.61%(1)
Fundamental Value Portfolio		0.75%		—		0.03%		0.78%(4)
Salomon Brothers Variable Series Funds Inc.
Investors Fund — Class I		0.70%		—		0.11%		0.81%(2)
Total Return Fund — Class I		0.80%		—		0.21%		1.01%(5)

Funding Options	Management Fee (before expense reimbursement)		Distribution and/or Service Fees (12b-1)		Other Expenses (before expense reimbursement)		Total Annual Operating Expenses (before expense reimbursement)#

Smith Barney Allocation Series Inc.
Select Balanced Portfolio		0.35%		—		0.70%		1.05%(3)
Select Growth Portfolio		0.35%		—		0.79%		1.14%(3)
Select High Growth Portfolio		0.35%		—		0.84%		1.19%(3)
Smith Barney Investment Series
Smith Barney Large Cap Core Portfolio		0.75%		—		0.18%		0.93%
Smith Barney Premier Selections All Cap Growth Portfolio		0.75%		—		0.36%		1.11%
The Travelers Series Trust
Convertible Securities Portfolio		0.66%		—		0.15%		0.81%(4)
Disciplined Mid Cap Stock Portfolio		0.76%		—		0.09%		0.85%(4)
MFS Emerging Growth Portfolio		0.81%		—		0.08%		0.89%(4)
MFS Research Portfolio		0.86%		—		0.08%		0.94%(5)
Travelers Series Fund Inc.
AIM Capital Appreciation Portfolio		0.80%		—		0.05%		0.85%(7)
Alliance Growth Portfolio		0.80%		—		0.03%		0.83%(7)
MFS Total Return Portfolio		0.80%		—		0.03%		0.83%(7)
Putnam Diversified Income Portfolio		0.75%		—		0.18%		0.93%(7)
Salomon Brothers Strategic Total Return Bond Portfolio		0.80%		—		0.44%		1.24%(6)
Smith Barney High Income Portfolio		0.60%		—		0.09%		0.69%(7)
Smith Barney International All Cap Growth Portfolio		0.90%		—		0.10%		1.00%(6)
Smith Barney Large Cap Value Portfolio		0.65%		—		0.03%		0.68%(7)
Smith Barney Large Capitalization Growth Portfolio		0.75%		—		0.05%		0.80%
Smith Barney Money Market Portfolio		0.38%		—		0.04%		0.42%
Travelers Managed Income Portfolio		0.65%		—		0.04%		0.69%(7)
Van Kampen Enterprise Portfolio		0.70%		—		0.06%		0.76%(7)
Variable Annuity Portfolios
Smith Barney Small Cap Growth Opportunities Portfolio		0.75%		—		0.15%		0.90%

______________

	*		The 12b-1 fees deducted from these classes cover certain distribution, shareholder support and administrative services provided by intermediaries (the insurance company, broker dealer or other service provider).

	#		Expense reimbursements and waivers that are voluntary may be terminated at any time.

Notes

	(1)		Management fee includes administration fees. Effective June 24, 2002, the Advisory fee for GSS Equity Index Portfolio increased to 0.25% from 0.15%, therefore the actual Management fee for the year was a blended rate of 0.20% plus 0.06% in Administration fees.

	(2)		As a result of a voluntary expense limitation, expense ratios will not exceed 1.00%.

	(3)		Each Portfolio of the Smith Barney Allocation Series Inc. (a "fund of funds") invests in the shares of other mutual funds ("underlying funds"). The Management Fee for each Portfolio is 0.35%. While the Portfolios have no direct expenses, the "Other Expenses" figure represents a weighted average of the total expense ratios of the underlying funds as of 1/31/02 (the fiscal year end of the Portfolios).

	(4)		Management fee includes an administration fee. Fund has a voluntary expense cap of 0.80%.

	(5)		Management fee includes an administration fee. Fund has a voluntary expense cap of 1.00%.

	(6)		Fund has a voluntary expense cap of 1.50%.

	(7)		Fund has a voluntary expense cap of 1.25%.

EXAMPLE:

These examples show what your costs would be under certain hypothetical situations. The examples do not represent past or future expenses. Your actual expenses may be more or less than those shown. We base examples on the annual expenses of the Underlying Funds for the year ended December 31, 2002. The examples are based on the Funds’ Total Annual Operating Expenses before reimbursement, and do not reflect any waivers or reimbursements. If you have selected Variable Funding Options that have voluntarily or contractually agreed to limit the Total Annual Operating Expenses, your expenses may be lower.

You would pay the following expenses on a $10,000 investment, assuming a 5% annual return and the maximum charges shown in the table above. If you choose the Standard Death Benefit, your expenses would be lower.

	If Contract is surrendered at the end of period shown:								If Contract is NOT surrendered or annuitized at end of period shown:

Funding Option	1 year		3 years		5years		10 years		1 year		3 years		5 years		10 years

AIM Variable Insurance Funds, Inc.
AIM V.I. Premier Equity Fund — Series I		836		1326		1444		2663		236		726		1244		2663
AllianceBernstein Variable Product Series Fund, Inc.
AllianceBernstein Premier Growth Portfolio — Class B		882		1464		1673		3116		282		864		1473		3116
American Funds Insurance Series
Global Growth Fund — Class 2 Shares		847		1360		1499		2773		247		760		1299		2773
Growth Fund — Class 2 Shares		816		1266		1343		2459		216		666		1143		2459
Growth-Income Fund — Class 2 Shares		811		1251		1317		2407		211		651		1117		2407
Dreyfus Variable Investment Fund
Dreyfus Variable Investment Fund — Developing Leaders Portfolio — Initial Shares		832		1314		1424		2622		232		714		1224		2622
Greenwich Street Series Fund
Equity Index Portfolio — Class II Shares		812		1254		1322		2418		212		654		1122		2418
Fundamental Value Portfolio		829		1305		1408		2592		229		705		1208		2592
Salomon Brothers Variable Series Funds Inc.
Investors Fund — Class I		832		1314		1424		2622		232		714		1224		2622
Total Return Fund — Class I		852		1375		1524		2823		252		775		1324		2823
Smith Barney Allocation Series Inc.
Select Balanced Portfolio		856		1387		1544		2862		256		787		1344		2862
Select Growth Portfolio		865		1414		1589		2951		265		814		1389		2951
Select High Growth Portfolio		870		1428		1613		3000		270		828		1413		3000
Smith Barney Investment Series
Smith Barney Large Cap Core Portfolio		844		1351		1484		2743		244		751		1284		2743
Smith Barney Premier Selections All Cap Growth Portfolio		862		1405		1574		2922		262		805		1374		2922
The Travelers Series Trust
Convertible Securities Portfolio		832		1314		1424		2622		232		714		1224		2622
Disciplined Mid Cap Stock Portfolio		836		1326		1444		2663		236		726		1244		2663
MFS Emerging Growth Portfolio		840		1339		1464		2703		240		739		1264		2703
MFS Research Portfolio		845		1354		1489		2753		245		754		1289		2753

	If Contract is surrendered at the end of period shown:								If Contract is NOT surrendered or annuitized at end of period shown:

Funding Option	1 year		3 years		5years		10 years		1 year		3 years		5 years		10 years

Travelers Series Fund Inc.
AIM Capital Appreciation Portfolio		836		1326		1444		2663		236		726		1244		2663
Alliance Growth Portfolio		834		1320		1434		2643		234		720		1234		2643
MFS Total Return Portfolio		834		1320		1434		2643		234		720		1234		2643
Putnam Diversified Income Portfolio		844		1351		1484		2743		244		751		1284		2743
Salomon Brothers Strategic Total Return Bond Portfolio		875		1443		1638		3048		275		843		1438		3048
Smith Barney High Income Portfolio		820		1278		1363		2500		220		678		1163		2500
Smith Barney International All Cap Growth Portfolio		851		1372		1519		2813		251		772		1319		2813
Smith Barney Large Cap Value Portfolio		819		1275		1358		2490		219		675		1158		2490
Smith Barney Large Capitalization Growth Portfolio		831		1311		1419		2612		231		711		1219		2612
Smith Barney Money Market Portfolio		793		1196		1225		2219		193		596		1025		2219
Travelers Managed Income Portfolio		820		1278		1363		2500		220		678		1163		2500
Van Kampen Enterprise Portfolio		827		1299		1398		2572		227		699		1198		2572
Variable Annuity Portfolios
Smith Barney Small Cap Growth Opportunities Portfolio		841		1342		1469		2713		241		742		1269		2713

CONDENSED FINANCIAL INFORMATION

See Appendices A and B.

THE ANNUITY CONTRACT

Travelers Vintage Annuity is a contract between the Contract Owner (“you”) and the Company. This is the prospectus — it is not the Contract. The prospectus highlights many contract provisions to focus your attention on the Contract’s essential features. Your rights and obligations under the Contract will be determined by the language of the Contract itself. When you receive your Contract, we suggest you read it promptly and carefully. There may be differences in your Contract from the descriptions in this prospectus because of the requirements of the state where we issued your Contract. We will include any such differences in your Contract.

You make Purchase Payments to us and we credit them to your Contract. We promise to pay you an income, in the form of Annuity Payments, beginning on a future date that you choose, the Maturity Date. The Purchase Payments accumulate tax deferred in the funding options of your choice. We offer multiple Variable Funding Options. We may also offer a Fixed Account option. The Contract Owner assumes the risk of gain or loss according to the performance of the Variable Funding Options. The Contract Value is the amount of Purchase Payments, plus or minus any investment experience on the amounts you allocate to the Separate Account (“Separate Account Contract Value”) or interest on the amounts you allocate to the Fixed Account (“Fixed Account Contract Value”). The Contract Value also reflects all withdrawals made and charges deducted. There is generally no guarantee that at the Maturity Date the Contract Value will equal or exceed the total Purchase Payments made under t he Contract. The date the Contract and its benefits become effective is referred to as the Contract Date. Each 12-month period following the Contract Date is called a Contract Year.

Certain changes and elections must be made in writing to the Company. Where the term “Written Request” is used, it means that you must send written information to our Home Office in a form and content satisfactory to us.

Contract Owner Inquiries

Any questions you have about your Contract should be directed to our Home Office at 1-800-842-8573.

Purchase Payments

Your initial Purchase Payment is due and payable before the Contract becomes effective. The initial Purchase Payment must be at least $5,000. You may make additional payments of at least $500 at any time. No additional Purchase Payments are allowed if the Contract is purchased with beneficiary-directed proceeds from another contract. Under certain circumstances, we may waive the minimum Purchase Payment requirement. Purchase payments over $1,000,000 may be made only with our prior consent.

We will apply the initial Purchase Payment less any applicable premium tax (net Purchase Payment) within two business days after we receive it in good order at our Home Office. We will credit subsequent Purchase Payments to a Contract on the same business day we receive it, if it is received in good order by our Home Office by 4:00 p.m. Eastern time. A business day is any day that the New York Stock Exchange is open for regular trading (except when trading is restricted due to an emergency as defined by the Securities and Exchange Commission).

Accumulation Units

The period between the Contract Date and the Maturity Date is the Accumulation Period. During the Accumulation Period, an Accumulation Unit is used to calculate the value of a Contract. An Accumulation Unit works like a share of a mutual fund. Each Variable Funding Option has a corresponding Accumulation Unit value. The Accumulation Units are valued each business day and their values may increase or decrease from day to day. The number of Accumulation Units we will credit to your Contract once we receive a Purchase Payment is determined by dividing the amount directed to each Variable Funding Option by the value of its Accumulation Unit. We calculate the value of an Accumulation Unit for each Variable Funding Option each day the New York Stock Exchange is open. The values are calculated as of 4:00 p.m. Eastern time. After the value is calculated, we credit your Contract. During the Annuity Period (i.e., after the Maturity Date), you are credited with Annuity Units.

The Variable Funding Options

You choose the Variable Funding Options to which you allocate your Purchase Payments. These Variable Funding Options are Subaccounts of the Separate Account. The Subaccounts invest in the Underlying Funds. You are not investing directly in the Underlying Fund. Each Underlying Fund is a portfolio of an open-end management investment company that is registered with the SEC under the Investment Company Act of 1940. You will find detailed information about the funds and their inherent risks in the current fund prospectuses for the Underlying Funds. Since each option has varying degrees of risk, please read the prospectuses carefully. There is no assurance that any of the Underlying Funds will meet its investment objectives. Contact your registered representative or call 1-800-842-9406 to request additional copies of the prospectuses.

If any of the Underlying Funds become unavailable for allocating Purchase Payments, or if we believe that further investment in an Underlying Fund is inappropriate for the purposes of the Contract, we may substitute another funding option.However, we will not make any substitutions without notifying you and obtaining any state and SEC approval, if necessary. From time to time we may make new funding options available.

The current Variable Funding Options are listed below, along with their investment advisers and any subadviser:

Funding Option	Investment Objective	Investment Adviser/Subadviser

AIM Variable Insurance Funds, Inc.
AIM V.I. Premier Equity Fund — Series I	Seeks to achieve long term growth of capital. Income is a secondary objective. The Fund normally invests in equity securities, including convertible securities.	A I M Advisers, Inc.
AllianceBernstein Variable Product Series Fund, Inc.
AllianceBernstein Premier Growth Portfolio — Class B	Seeks growth of capital. The Fund normally invests in equity securities of a relatively small number of intensely researched U.S. companies.	Alliance Capital Management L.P.

Funding Option	Investment Objective	Investment Adviser/Subadviser

American Funds Insurance Series
Global Growth Fund — Class 2 Shares	Seeks capital appreciation. The Fund normally invests in common stocks of companies located around the world.	Capital Research and Management Co. (“CRM”)
Growth Fund — Class 2 Shares	Seeks capital appreciation. The Fund normally invests in common stocks of companies that appear to offer superior opportunities for growth of capital.	CRM
Growth-Income Fund — Class 2 Shares	Seeks capital appreciation and income. The Fund normally invests in common stocks or other securities that demonstrate the potential for appreciation and/or dividends.	CRM
Dreyfus Variable Investment Fund
Dreyfus Variable Investment Fund — Developing Leaders Portfolio — Initial Shares	Seeks to maximize capital appreciation. The Fund normally invests in companies with market capitalizations of less than $2 billion at the time of purchase.	The Dreyfus Corporation
Greenwich Street Series Fund
Equity Index Portfolio — Class II Shares	Seeks investment results that, before expenses, correspond to the price and yield performance of the S&P 500 Index. The Fund normally invests in equity securities, or other investments with similar economic characteristics that are included in the S&P 500 Index.	TIMCO
Fundamental Value Portfolio	Seeks long-term capital growth. Current income is a secondary consideration. The Fund normally invests in common stocks, and common stock equivalents of companies, believed to be undervalued.	SBFM
Salomon Brothers Variable Series Funds Inc.
Investors Fund — Class I	Seeks long term growth of capital. Secondarily seeks current income. The Fund normally invests in common stocks of established companies.	SBAM
Total Return Fund — Class I	Seeks above average income (compared to a portfolio invested entirely in equity securities). Secondarily seeks growth of capital and income. The Fund normally invests in a broad range of equity and fixed-income securities of U.S. and foreign issuers.	SBAM
Smith Barney Allocation Series Inc.
Select Balanced Portfolio	Seeks a balance of growth of capital and income. The Fund is a “fund of funds.” Rather than investing directly in securities, the Fund normally invests in other Smith Barney equity and fixed-income mutual funds.	Travelers Investment Adviser, Inc. (“TIA”)
Select Growth Portfolio	Seeks long-term growth of capital. The Fund is a “fund of funds.” Rather than investing directly in securities, the Fund normally invests in other Smith Barney mutual funds, which are primarily equity funds.	TIA
Select High Growth Portfolio	Seeks capital appreciation. The Fund is a “fund of funds.” Rather than investing directly in securities, the Fund normally invests in other Smith Barney mutual funds, which are primarily fixed-income funds.	TIA

Funding Option	Investment Objective	Investment Adviser/Subadviser

Smith Barney Investment Series
Smith Barney Large Cap Core Portfolio	Seeks capital appreciation. The Fund normally invests in the equity securities of U.S. companies with large market capitalizations.	SBFM
Smith Barney Premier Selections All Cap Growth Portfolio	Seeks long term capital growth. The Fund consists of a Large Cap Growth segment, Mid Cap Growth segment and Small Cap Growth segment. All three segments normally invest in equity securities. The Large Cap Growth segment invests in large sized companies. The Mid Cap Growth segment invests in medium sized companies. The Small Cap Growth segment invests in small sized companies.	SBFM
The Travelers Series Trust
Convertible Securities Portfolio	Seeks current income and capital appreciation. The Fund normally invests in convertible securities.	Travelers Asset Management International Company LLC (“TAMIC”)
Disciplined Mid Cap Stock Portfolio	Seeks growth of capital. The Fund normally invests in the equity securities of companies with mid-size market capitalizations.	TAMIC Subadviser: Travelers Investment Management Company (“TIMCO”)
MFS Emerging Growth Portfolio	Seeks long term growth of capital. The Fund normally invests in common stock and related securities of emerging growth companies.	TAMIC Subadviser: Massachusetts Financial Services (“MFS”)
MFS Research Portfolio	Seeks long term growth of capital and future income. The Fund normally invests in the common stocks of companies of any size.	TAMIC Subadviser: MFS
Travelers Series Fund Inc.
AIM Capital Appreciation Portfolio	Seeks capital appreciation. The Fund normally invests in common stocks of companies that are likely to benefit from new products, services or processes or have experienced above-average earnings growth.	TIA Subadviser: AIM Capital Management Inc.
Alliance Growth Portfolio	Seeks long term growth of capital. The Fund normally invests in the equity securities of U.S. companies.	TIA Subadviser: Alliance Capital Management L.P.
MFS Total Return Portfolio	Seeks above average income consistent with the prudent employment of capital. Secondarily, seeks growth of capital and income. The Fund normally invests in a broad range of equity and fixed-income securities of both U.S. and foreign issuers.	TIA Subadviser: MFS
Putnam Diversified Income Portfolio	Seeks high current income consistent with preservation of capital. The Fund normally invests in debt securities of U.S. and foreign governments and corporations.	TIA Subadviser: Putnam Investment Management, Inc.
Salomon Brothers Strategic Total Return Bond Portfolio	Seeks total return. The Fund normally invests in a globally diverse portfolio of fixed-income securities.	TIA
Smith Barney High Income Portfolio	Seeks high current income. Secondarily, seeks capital appreciation. The Fund normally invests in high yield corporate debt and preferred stock of U.S. and foreign issuers.	SBFM
Smith Barney International All Cap Growth Portfolio	Seeks total return on assets from growth of capital and income. The Fund normally invests in equity securities of foreign companies.	SBFM
Smith Barney Large Cap Value Portfolio	Seeks income and long-term growth of income and capital. The Fund normally invests in equities, or similar securities, of companies with large market capitalizations.	SBFM

Funding Option	Investment Objective	Investment Adviser/Subadviser

Smith Barney Large Capitalization Growth Portfolio	Seeks long term growth of capital. The Fund normally invests in equities, or similar securities, of companies with large market capitalizations.	SBFM
Smith Barney Money Market Portfolio	Seeks to maximize current income consistent with preservation of capital. The Fund seeks to maintain a stable $1 share price. The Fund normally invests in high quality U.S. short-term debt securities.	SBFM
Travelers Managed Income Portfolio	Seeks high current income consistent with prudent risk of capital. The Fund normally invests in U.S. corporate debt and U.S. government securities.	TAMIC
Van Kampen Enterprise Portfolio	Seeks capital appreciation. The Fund normally invests in common stocks of growth companies.	TIA Subadviser: Van Kampen Asset Management Inc.
Variable Annuity Portfolios
Smith Barney Small Cap Growth Opportunities Portfolio	Seeks long term capital growth. The Fund normally invests in equity securities of small cap companies and related investments.	Citi Fund Management, Inc.

FIXED ACCOUNT

We offer our Fixed Account as a funding option. Please see Appendix C for more information.

CHARGES AND DEDUCTIONS

General

We deduct the charges described below. The charges are for the service and benefits we provide, costs and expenses we incur, and risks we assume under the Contracts. Services and benefits we provide include:

the ability for you to make withdrawals and surrenders under the Contracts;

the death benefit paid on the death of the Contract Owner, Annuitant, or first of the joint owners,

the available funding options and related programs (including dollar-cost averaging, portfolio rebalancing, and systematic withdrawal programs);

administration of the annuity options available under the Contracts; and

the distribution of various reports to Contract Owners.

Costs and expenses we incur include:

losses associated with various overhead and other expenses associated with providing the services and benefits provided by the Contracts,

sales and marketing expenses including commission payments to your Smith Barney Financial Consultant, and

other costs of doing business.

Risks we assume include:

that Annuitants may live longer than estimated when the annuity factors under the Contracts were established;

that the amount of the death benefit will be greater than the Contract Value, and

that the costs of providing the services and benefits under the Contracts will exceed the charges deducted.

We may also deduct a charge for taxes.

Unless otherwise specified, charges are deducted proportionately from all funding options in which you are invested.

We may reduce or eliminate the withdrawal charge, the administrative charges and/or the mortality and expense risk charge under the Contract when certain sales or administration of the Contract result in savings or reduced expenses and/or risks .For certain trusts, we may change the order in which Purchase Payments and earnings are withdrawn in order to determine the withdrawal charge. We will not reduce or eliminate the withdrawal charge or the administrative charge where such reduction or elimination would be unfairly discriminatory to any person.

The amount of a charge may not necessarily correspond to the costs associated with providing the services or benefits indicated by the designated charge. For example, the withdrawal charge we collect may not fully cover all of the sales and distribution expenses we actually incur. We may also profit on one or more of the charges. We may use any such profits for any corporate purpose, including the payment of sales expenses.

Withdrawal Charge

We do not deduct a sales charge from Purchase Payments when they are made to the Contract. However, a withdrawal charge will apply if Purchase Payments are withdrawn before they have been in the Contract for seven years. We will assess the charge as a percentage of the Purchase Payment withdrawn as follows:

Years Since Purchase Payment Made		Withdrawal Charge

Greater than or equal to	But less than
0 years	3 years	6%
3 years	4 years	3%
4 years	5 years	2%
5 years	6 years	1%
6+years		0%

For purposes of the withdrawal charge calculation, withdrawals are deemed to be taken first from:

(a) any Purchase Payment to which no withdrawal charge applies then

(b) any remaining free withdrawal allowance (as described below) (after being reduced by (a)),then

(d) any Contract earnings.

Unless you instruct us otherwise, we will deduct the withdrawal charge from the amount requested.

We will not deduct a withdrawal charge if Purchase Payments are distributed:

due to the death of the Contract Owner or the Annuitant (with no contingent Annuitant surviving)

if an annuity payout has begun

due to a minimum distribution under our minimum distribution rules then in effect

if an income option of at least five year’s duration is begun after the first Contract Year.

Free Withdrawal Allowance

Beginning in the second Contract Year, you may withdraw up to 15% of the Contract Value annually. We calculate the available withdrawal amount as of the end of the previous Contract Year. The free withdrawal provision applies to partial withdrawals only.

Administrative Charges

There are two administrative charges: the $30 annual contract administrative charge and the administrative expense charge. We will deduct the annual contract administrative charge on the fourth Friday of each August. This charge compensates us for expenses incurred in establishing and maintaining the Contract and we will prorate this charge (i.e. calculate) from the date of purchase. We will also prorate this charge if you surrender

your Contract, or if we terminate your Contract. We will not deduct the contract administrative charge from the Fixed Account or:

(1) from the distribution of death proceeds;

(2) after an annuity payout has begun, or

(3) if the Contract Value on the date of assessment equals or is greater than $40,000.

We deduct the administrative expense charge (sometimes called “Subaccount administrative charge”) on each business day from amounts allocated to the Variable Funding Options to compensate the Company for certain related administrative and operating expenses. The charge equals, on an annual basis, 0.15% of the daily net asset value allocated to each of the Variable Funding Options, and is reflected in our accumulation and annuity unit value calculations.

Mortality and Expense Risk Charge

Each business day, we deduct a mortality and expense risk (“M&E”) charge from amounts we hold in the Variable Funding Options. We reflect the deduction in our calculation of accumulation and annuity unit values. The charges stated are the maximum for this product. We reserve the right to lower this charge at any time. If you choose the Standard Death Benefit, the M&E charge is 1.02% annually. If you choose the Enhanced Death Benefit, the M&E charge is 1.30% annually. This charge compensates the Company for risks assumed, benefits provided and expenses incurred, including the payment of commissions to your sales agent.

Variable Liquidity Benefit Charge

If the Variable Liquidity Benefit is selected, there is a maximum surrender charge of 6% of the amounts withdrawn. This charge is not assessed during the accumulation phase.

We will assess the charge as a percentage of the total benefit received as follows:

Years Since Purchase Payment Made		Surrender Charge

Greater than or equal to	But less than
0 years	3 years	6%
3 years	4 years	3%
4 years	5 years	2%
5 years	6 years	1%
6+years		0%

Please refer to The Annuity Period for a description of this benefit.

Variable Funding Option Expenses

We summarized the charges and expenses of the Underlying Funds in the fee table. Please review the prospectus for each Underlying Fund for a more complete description of that fund and its expenses.

Premium Tax

Certain state and local governments charge premium taxes ranging from 0% to 5%, depending upon jurisdiction. We are responsible for paying these taxes and will determine the method used to recover premium tax expenses incurred. We will deduct any applicable premium taxes from your Contract Value either upon death, surrender, annuitization, or at the time you make Purchase Payments to the Contract, but no earlier than when we have a tax liability under state law.

Changes in Taxes Based upon Premium or Value

If there is any change in a law assessing taxes against the Company based upon premiums, contract gains or value of the Contract, we reserve the right to charge you proportionately for this tax.

TRANSFERS

Up to 30 days before the Maturity Date, you may transfer all or part of the Contract Value between Variable Funding Options. Please note that the contract is not designed to serve as a vehicle for frequent trading in response to short-term fluctuations in the stock market. Therefore, all transfers are subject to the following restrictions:

(1)

Excessive Transfers. We reserve the right to restrict transfers if we determine you are engaging in a pattern of transfers that may disadvantage Contract Owners. In making this determination, we will consider, among other things, the following factors:

the total dollar amount being transferred;

the number of transfers you made within the previous three months;

whether your transfers follow a pattern designed to take advantage of short term market fluctuations; and

whether your transfers are part of a group of transfers made by a third party on behalf of the individual Contract Owners in the group.

(2)

Market Timers. We reserve the right to restrict transfers by any market timing firm or any other third party authorized to initiate transfers on behalf of multiple Contract Owners. We may, among other things:

reject the transfer instructions of any agent acting under a power of attorney on behalf of more than one owner, or

reject the transfer or exchange instructions of individual owners who have executed pre-authorized transfer forms which are submitted by market timing firms or other third parties on behalf of more than one owner.

If we choose to enforce our contractual rights to restrict transfers to once every six months, we will so notify you in writing.

Future Modifications. We will continue to monitor the transfer activity occurring among the Variable Funding Options, and may modify these transfer restrictions at any time if we deem it necessary to protect the interest of all Contract Owners. These modifications may include curtailing or eliminating, without notice, the ability to use the Internet, facsimile or telephone in making transfers.

If, in our sole discretion, we determine you are engaging in activity as described above or similar activity which will potentially hurt the rights or interests of Contract Owners, we will exercise our contractual right to restrict your number of transfers to one every six months. None of these restrictions are applicable to transfers made under a Dollar Cost Averaging Program or a rebalancing program.

We will make transfers at the value(s) next determined after we receive your request in good order at our Home Office. After the Maturity Date, you may make transfers only if allowed by your contract or with our consent. These restrictions are subject to any state law requirements.

Dollar Cost Averaging

Dollar cost averaging or the pre-authorized transfer program (the “DCA Program”) allows you to transfer a set dollar amount to other funding options on a monthly or quarterly basis during the accumulation phase of the Contract. Using this method, you will purchase more Accumulation Units in a funding option if the value per unit is low and will purchase fewer Accumulation Units if the value per unit is high. Therefore, you may achieve a lower-than-average cost per unit in the long run if you have the financial ability to continue the program over a long enough period of time. Dollar cost averaging does not assure a profit or protect against a loss.

You may elect the DCA Program through Written Request or other method acceptable to us. You must have a minimum total Contract Value of $5,000 to enroll in the DCA Program. The minimum amount that may be transferred through this program is $400.

You may establish pre-authorized transfers of Contract Values from the Fixed Account, subject to certain restrictions. Under the DCA Program, automated transfers from the Fixed Account may not deplete your Fixed Account Value in less than twelve months from your enrollment in the DCA Program.

In addition to the DCA Program, we may credit increased interest rates to Contract Owners under an administrative Special DCA Program established at our discretion, depending on availability and state law. Under this program, the Contract Owner may pre-authorize level transfers to any of the funding options under either a 6 Month Program or 12 Month Program. The 6 Month Program and the 12 Month Program will generally have different credited interest rates. Under the 6 Month Program, the interest rate can accrue up to 6 months on amounts in the Special DCA Program and we must transfer all Purchase Payments and accrued interest on a level basis to the selected funding options in 6 months. Under the 12 Month Program, the interest rate can accrue up to 12 months on funds in the Special DCA Program and we must transfer all Purchase Payments and accrued interest in this Program on a level basis to the selected funding options in 12 months.

The pre-authorized transfers will begin after the initial Program Purchase Payment and complete enrollment instructions are received by the Company. If we do not receive complete Program enrollment instructions within 15 days of receipt of the initial Program Purchase Payment, the entire balance in the Program will be credited with the non-Program interest rate then in effect for the Fixed Account.

You may start or stop participation in the DCA Program at any time, but you must give the Company at least 30 days’ notice to change any automated transfer instructions that are currently in place. If you stop the Special DCA Program and elect to remain in the Fixed Account, we will credit your Contract Value for the remainder of 6 or 12 months with the interest rate for non-Program funds.

You may only have one DCA Program or Special DCA Program in place at one time. We will allocate any subsequent Purchase Payments we receive within the Program period selected to the current funding options over the remainder of that Program transfer period, unless you direct otherwise.

All provisions and terms of the Contract apply to the DCA and Special DCA Programs, including provisions relating to the transfer of money between funding options. We reserve the right to suspend or modify transfer privileges at any time and to assess a processing fee for this service.

ACCESS TO YOUR MONEY

Any time before the Maturity Date, you may redeem all or any portion of the Cash Surrender Value, that is, the Contract Value less any withdrawal charge, outstanding loans, and any premium tax not previously deducted. Unless you submit a Written Request specifying the fixed or Variable Funding Option(s) from which we are to withdraw amounts, we will make the withdrawal on a pro rata basis. We will determine the Cash Surrender Value as of the close of business after we receive your surrender request at our Home Office. The Cash Surrender Value may be more or less than the Purchase Payments you made. You may not make withdrawals during the annuity period.

For amounts allocated to the Variable Funding Options, we may defer payment of any Cash Surrender Value for a period of up to five business days after the Written Request is received. For amounts allocated to the fixed account, we may defer payment of any Cash Surrender Value for a period up to six months. In either case, it is our intent to pay as soon as possible. We cannot process requests for withdrawals that are not in good order. We will contact you if there is a deficiency causing a delay and will advise what is needed to act upon the withdrawal request.

Systematic Withdrawals

Before the Maturity Date, you may choose to withdraw a specified dollar amount (at least $100) on a monthly, quarterly, semiannual or annual basis. We will deduct any applicable premium taxes and withdrawal charge. To elect systematic withdrawals, you must have a Contract Value of at least $15,000 and you must make the election on the form we provide. We will surrender Accumulation Units pro rata from all funding options in which you have an interest, unless you instruct us otherwise. You may begin or discontinue systematic withdrawals at any time by notifying us in writing, but you must give at least 30 days’ notice to change any systematic withdrawal instructions that are currently in place.

We reserve the right to discontinue offering systematic withdrawals or to assess a processing fee for this service upon 30 days’ written notice to Contract Owners (where allowed by state law).

Each systematic withdrawal is subject to federal income taxes on the taxable portion. In addition, a 10% federal penalty tax may be assessed on systematic withdrawals if the Contract Owner is under age 591/2. You should consult with your tax adviser regarding the tax consequences of systematic withdrawals.

Loans

Loans may be available under your Contract. Loans may only be taken against funds allocated or transferred to the Fixed Account. If available, all loan provisions are described in your Contract or loan agreement.

OWNERSHIP PROVISIONS

Types of Ownership

Contract Owner

The Contract belongs to the Contract Owner named in the Contract (on the Contract Specifications page), or to any other person to whom you subsequently assign the Contract. You may only make an assignment of ownership or a collateral assignment for Nonqualified Contracts. You have sole power during the Annuitant’s lifetime to exercise any rights and to receive all benefits given in the Contract provided you have not named an irrevocable beneficiary and provided you have not assigned the Contract.

You receive all payments while the Annuitant is alive unless you direct them to an alternate recipient. An alternate recipient does not become the Contract Owner.

Joint Owner. For Nonqualified Contracts only, you may name joint owners (e.g., spouses) in a Written Request before the Contract is in effect. Joint owners may independently exercise transfers allowed under the Contract. All other rights of ownership must be exercised by both owners. Joint owners own equal shares of any benefits accruing or payments made to them.

Succeeding Owner. For nonqualified contracts only, if joint owners are not named, the Contract Owner may name a succeeding owner in a Written Request. The succeeding owner becomes the Contract Owner if living when the Contract Owner dies. The succeeding owner has no interest in the Contract before then. The Contract Owner may change or delete a succeeding owner by Written Request.

Beneficiary

You name the beneficiary in a Written Request. The beneficiary has the right to receive any death benefit proceeds remaining under the Contract upon the death of the Annuitant or the Contract Owner. If more than one beneficiary survives the Annuitant or Contract Owner, they will share equally in benefits unless you recorded different shares with the Company by Written Request before the death of the Annuitant or Contract Owner. In the case of a non-spousal beneficiary or a spousal beneficiary who has not chosen to assume the Contract, we will not transfer or otherwise remove the death benefit proceeds from either the Variable Funding Options or the Fixed Account, as most recently elected by the Contract Owner, until the Death Report Date.

Unless you have named an irrevocable beneficiary you have the right to change any beneficiary by Written Request during the lifetime of the Annuitant and while the Contract continues.

Annuitant

The Annuitant is designated in the Contract (on the Contract Specifications page), and is the individual on whose life the Maturity Date and the amount of the monthly Annuity Payments depend. You may not change the Annuitant after your Contract is in effect.

Contingent Annuitant

You may name one individual as a contingent Annuitant. A contingent Annuitant may not be changed, deleted or added to the Contract after the Contract Date. If the Annuitant who is not the owner dies prior to the Maturity Date, and the contingent Annuitant is still living;

the death benefit will not be payable upon the Annuitant’s death

the contingent Annuitant becomes the Annuitant

all other rights and benefits will continue in effect

When a contingent Annuitant becomes the Annuitant, the Maturity Date remains the same as previously in effect.

If the Annuitant is also the owner, a death benefit is paid to the beneficiary regardless of whether or not there is a contingent Annuitant.

You may not change, delete or add a contingent Annuitant after the Contract becomes effective.

DEATH BENEFIT

Before the Maturity Date, generally, a death benefit is payable when either the Annuitant or a Contract Owner dies. At purchase, you elect either the Standard Death Benefit, or the Enhanced Death Benefit (also referred to as the “Roll-Up Death Benefit”). The death benefit is calculated at the close of the business day on which the Company’s Home Office receives Due Proof of Death and written payment instructions or election of beneficiary contract continuance (“Death Report Date”).

Death Proceeds Before the Maturity Date

STANDARD DEATH BENEFIT

Death of any owner or the Annuitant before age 75. We will pay to the beneficiary a death benefit in an amount equal to the greatest of (1), (2) or (3) below, each reduced by any applicable premium tax, withdrawals or outstanding loans not previously deducted:

	(1)		the Contract Value;

	(2)		the total Purchase Payments made under the Contract; or

	(3)		the Contract Value on the latest fifth Contract Year anniversary immediately preceding the date on which the Company receives Due Proof of Death.

Death of any owner or the Annuitant on or after age 75. We will pay to the beneficiary a death benefit in an amount equal to the greatest of (1), (2) or (3) below, each reduced by any applicable premium tax, withdrawals or outstanding loans not previously deducted:

	(1)		the Contract Value;

	(2)		the total Purchase Payments made under the Contract; or

	(3)		the Contract Value on the latest fifth Contract Year anniversary occurring on or before the Annuitant’s 75th birthday.

ENHANCED DEATH BENEFIT (ROLL-UP DEATH BENEFIT)
(not available when either the Annuitant or owner is age 76 or older on the Contract Date)

(please Refer to Appendix E for a description of the Enhanced Death Benefit for contracts purchased prior to June 1,1997.)

All death benefits described below are reduced by any applicable premium tax, prior withdrawals or outstanding loans not previously deducted.

Age at time of Death			Death Benefit

If the Annuitant dies before age 80, the death benefit will be the greatest of:			the Contract Value on the Death Report Date
			the roll-up death benefit value on the Death Report Date (as described below)
			the maximum of all step-up death benefit values (as described below) available on the Death Report Date
If the Annuitant dies on or after age 80, the death benefit will be the greatest of:			the Contract Value on the Death Report Date
			the roll-up death benefit value (as described below) on the Annuitant’s 80th birthday, plus any additional Purchase Payments and minus any partial surrender reductions (as described below) that occur after the Annuitant’s 80th birthday; or
			The maximum of all step-up death benefit values (as described below) in effect on the Death Report Date which are associated with any Contract Date anniversary occurring on or before the Annuitant’s 80th birthday

The Roll-Up Death Benefit Value. On the Contract Date, the roll-up death benefit value is equal to the Purchase Payment. On each Contract Date anniversary, the roll-up death benefit value will be recalculated to equal (a) plus (b) minus (c), increased by 5%, where:

(a) is the roll-up death benefit value as of the previous Contract Date anniversary

(b) is any Purchase Payment during the previous Contract Year

On dates other than the Contract Date anniversary, the roll-up death benefit value equals (a) plus (b) minus (c) where:

(a) is the roll-up death benefit value as of the previous Contract Date anniversary

(b) is any Purchase Payment made since the previous Contract Date anniversary

(c)

is any partial surrender reduction (as described below) since the previous Contract Date anniversary.

The maximum roll-up death benefit payable equals 200% of the difference between all Purchase Payments and all partial surrender reductions (as described below).

Step-Up Value. We will establish a separate death benefit value on each anniversary of the Contract Date which occurs on or prior to the Death Report Date. The step-up value will initially equal the Contract Value on that anniversary. Whenever you make a Purchase Payment, we will increase the step-up value by the amount of that Purchase Payment. Whenever you take a withdrawal, we will reduce the step-up value by a partial surrender reduction as described below. Recalculations of step-up death benefit values related to any Purchase Payments or any withdrawals will be made in the order that such Purchase Payments or withdrawals occur.

The Partial Surrender Reduction referenced above is equal to (1) the amount of a death benefit value (step-up or roll-up) immediately prior to the reduction for the withdrawal, multiplied by (2) the amount of the withdrawal divided by the Contract Value immediately prior to the withdrawal.

For example, assume your current Contract Value is $55,000. If your original step-up value is $50,000, and you decide to make a withdrawal of $10,000, we would reduce the step-up value as follows:

50,000 ( (10,000/55,000) = $9,090

Your new step-up value would be 50,000 — 9,090 or $40,910.

The following example shows what would happen in a declining market. Assume your current Contract Value is $30,000. If your original step-up value is $50,000, and you decide to make a withdrawal of $10,000, we would reduce the step-up value as follows:

50,000 ( (10,000/30,000) = $16,666

Your new step-up value would be 50,000 — 16,666, or $33,334.

Payment of Proceeds

We describe the process of paying death benefit proceeds before the Maturity Date in the charts below. The charts do not encompass every situation and are merely intended as a general guide. More detailed information is provided in your Contract. Generally, the person(s) receiving the benefit may request that the proceeds be paid in a lump sum, or be applied to one of the settlement options available under the Contract.

Nonqualified Contracts

Before the Maturity Date, upon the Death of the	The Company Will Pay the Proceeds to:	unless. . .	Mandatory Payout Rules Apply*

Owner (who is not the Annuitant) (with no joint owner)	The beneficiary (ies), or if none, to the Contract Owner’s estate.	Unless the beneficiary elects to continue the Contract rather than receive the distribution.	Yes

Owner (who is the Annuitant) (with no joint owner)	The beneficiary (ies), or if none, to the Contract Owner’s estate.	Unless the beneficiary elects to continue the Contract rather than receive the distribution.	Yes

Joint Owner (who is not the Annuitant)	The surviving joint owner.	Unless the surviving joint elects to continue the Contract rather than receive the distribution.	Yes

Joint Owner (who is the Annuitant)	The beneficiary (ies), or if none, to the surviving joint owner.	Unless the beneficiary/surviving joint owner elects to continue the Contract rather than receive the distribution.	Yes

Annuitant (who is not the Contract Owner)	The beneficiary (ies), or if none, to the Contract Owner.	Unless the beneficiary elects to continue the Contract rather than receive the distribution. Or, unless there is a contingent Annuitant. Then, the contingent Annuitant becomes the Annuitant and the contract continues in effect (generally using the original Maturity Date). The proceeds will then be paid upon the death of the contingent Annuitant or owner.	Yes

Annuitant (who is the Contract Owner)	See death of “owner who is the Annuitant” above.		Yes

Before the Maturity Date, upon the Death of the	The Company Will Pay the Proceeds to:	unless. . .	Mandatory Payout Rules Apply*

Annuitant (where owner is a nonnatural person/trust)	The beneficiary (ies) (e.g. the trust) or if none, to the owner.		Yes (Death of Annuitant is treated as death of the owner in these circumstances.)

Contingent Annuitant (assuming Annuitant is still alive)	No death proceeds are payable; contract continues.		N/A

Beneficiary	No death proceeds are payable; contract continues.		N/A

Contingent Beneficiary	No death proceeds are payable; contract continues.		N/A

______________________

* Certain payout rules of the Internal Revenue Code (IRC) are triggered upon the death of any Owner. Non-spousal beneficiaries (as well as spousal beneficiaries who choose not to assume the Contract) must begin taking distributions based on the beneficiary’s life expectancy within one year of death or take a complete distribution of Contract proceeds within 5 years of death. If mandatory distributions have begun, the 5 year payout option is not available.

Qualified Contracts

Before the Maturity Date, upon the Death of the	The Company Will Pay the Proceeds to:	unless. . .	Mandatory Payout Rules Apply*

Owner / Annuitant	The beneficiary (ies), or if none, to the Contract Owner’s estate.	Unless the beneficiary elects to continue the Contract rather than receive a distribution.	Yes

Beneficiary	No death proceeds are payable; Contract continues.		N/A

Contingent Beneficiary	No death proceeds are payable; Contract continues.		N/A

Beneficiary Contract Continuance (Not permitted for non-natural beneficiaries)

If you die before the Maturity Date, and if the value of any beneficiary’s portion of the death benefit is between $20,000 and $1,000,000 as of the Death Report Date, (more than $1,000,000 is subject to home office approval), your beneficiary(s) may elect to continue his/her portion of the Contract subject to applicable Internal Revenue Code distribution requirements, rather than receive the death benefit in a lump sum.

If your beneficiary elects to continue the Contract, the death benefit will be calculated as of the Death Report Date. The initial Contract Value of the continued contract (the “adjusted Contract Value”) will equal the greater of the Contract Value or the death benefit calculated on the Death Report Date and will be allocated to the funding options in the same proportion as prior to the Death Report Date.

The beneficiary who continues the Contract will be granted the same rights as the owner under the original Contract, except the beneficiary cannot:

transfer ownership

take a loan

make additional Purchase Payments

The beneficiary may also name his/her own beneficiary (“succeeding beneficiary”) and has the right to take withdrawals at any time after the Death Report Date without a withdrawal charge. All other fees and charges applicable to the original contract will also apply to the continued contract. All benefits and features of the continued contract will be based on the beneficiary’s age on the Death Report Date as if the beneficiary had purchased the Contract with the adjusted Contract Value on the Death Report Date

Planned Death Benefit

You may request that rather than receive a lump-sum death benefit, the beneficiary(ies) receive all or a portion of the death benefit proceeds either:

through an annuity for life or a period that does not exceed the beneficiary’s life expectancy; or

under the terms of the Beneficiary Continuance provision described above. If the Beneficiary Continuance provision is selected as the planned death benefit, no surrenders will be allowed other than payments meant to satisfy minimum distribution amounts or systematic withdrawal amounts, if greater.

You must make the planned death benefit request as well as any revocation of this request in writing. Upon your death, your beneficiary(s) cannot revoke or modify this request. If the death benefit at the time we receive Due Proof of Death is less than $2,000, we will only pay a lump sum to the beneficiary. If periodic payments due under the planned death benefit election are less than $100, we reserve the right to make Annuity Payments at less frequent intervals, resulting in a payment of at least $100 per year. If no beneficiary is alive when death benefits become payable, we will pay the death benefit as provided in your Contract.

Death Proceeds after the Maturity Date

If any Contract Owner or the Annuitant dies on or after the Maturity Date, the Company will pay the beneficiary a death benefit consisting of any benefit remaining under the annuity or income option then in effect.

THE ANNUITY PERIOD

Maturity Date

Under the Contract, you can receive regular payments (“Annuity Payments”). You can choose the month and the year in which those payments begin (“Maturity Date”). You can also choose among payout options (annuity r income options) or elect a lump sum distribution. While the Annuitant is alive, you can change your selection any time up to the Maturity Date. Annuity or income payments will begin on the Maturity Date stated in the Contract unless (1) you fully surrendered the Contract; (2) we paid the proceeds to the beneficiary before that

date; or (3) you elected another date. Annuity payments are a series of periodic payments (a) for life; (b) for life with a minimum number of payments; or (c) for the joint lifetime of the Annuitant and another person, and thereafter during the lifetime of the survivor. We may require proof that the Annuitant is alive before we make Annuity Payments. Not all options may be available in all states.

You may choose to annuitize at any time after you purchase your Contract. Unless you elect otherwise, the Maturity Date will be the Annuitant’s 70th birthday for Qualified Contracts, or for Nonqualified Contracts, the Annuitant’s 75th birthday or ten years after the effective date of the Contract, if later. (For Contracts issued in Florida and New York, the Maturity Date you elect may not be later than the Annuitant’s 90th birthday.)

At least 30 days before the original Maturity Date, you may elect to extend the Maturity Date to any time prior to the Annuitant’s 85th birthday for Nonqualified Contracts, or 70th birthday for Qualified Contracts, or for all Contracts, to a later date with our consent. You may use certain annuity options taken at the Maturity Date to meet the minimum required distribution requirements of federal tax law, or you may use a program of withdrawals instead. These mandatory distribution requirements take effect generally upon the death of the Contract Owner, or with certain Qualified Contracts upon either the later of the Contract Owner’s attainment of age 701/2 or year of retirement; or the death of the Contract Owner. You should seek independent tax advice regarding the election of minimum required distributions.

Allocation of Annuity

You may elect to receive your Annuity Payments in the form of a variable annuity, a fixed annuity, or a combination of both. If, at the time Annuity Payments begin, you have not made an election, we will apply your Cash Surrender Value to provide an annuity funded by the same funding options as you have selected during the accumulation period. At least 30 days before the Maturity Date, you may transfer the Contract Value among the funding options in order to change the basis on which we will determine Annuity Payments. (See “Transfers.”)

Variable Annuity

You may choose an annuity payout that fluctuates depending on the investment experience of the Variable Funding Options. We determine the number of annuity units credited to the Contract by dividing the first monthly Annuity Payment attributable to each Variable Funding Option by the corresponding Accumulation Unit value as of 14 days before the date Annuity Payments begin. We use an annuity unit to measure the dollar value of an Annuity Payment. The number of annuity units (but not their value) remains fixed during the annuity period.

Determination of First Annuity Payment. Your Contract contains the tables we use to determine your first monthly Annuity Payment. If you elect a variable annuity, the amount we apply to it will be the Cash Surrender Value as of 14 days before the date Annuity Payments begin, less any applicable premium taxes not previously deducted.

The amount of your first monthly payment depends on the annuity option you elected and the Annuitant’s adjusted age. Your Contract contains the formula for determining the adjusted age. We determine the total first monthly Annuity Payment by multiplying the benefit per $1,000 of value shown in the Contract tables by the number of thousands of dollars of Contract Value you apply to that annuity option. The contract tables factor in an assumed daily net investment factor. We call this your net investment rate. Your net investment rate corresponds to an annual interest rate of 3%. This means that if the annualized investment performance, after expenses, of your Variable Funding Options is less than 3%, then the dollar amount of your variable Annuity Payments will decrease. However, if the annualized investment performance, after expenses, of your Variable Funding Options is greater than 3%, then the dollar amount of your variable Annuity Payments will increase.

Determination of Second and Subsequent Annuity Payments. The dollar amount of all subsequent Annuity Payments changes from month to month based on the investment experience, as described above, of the applicable funding options. The total amount of each Annuity Payment will equal the sum of the basic payments in each funding option. We determine the actual amounts of these payments by multiplying the number of annuity units we credited to each funding option by the corresponding annuity unit value as of the date 14 days before the date the payment is due.

Fixed Annuity

You may choose a fixed annuity that provides payments that do not vary during the annuity period. We will calculate the dollar amount of the first fixed Annuity Payment as described under “Variable Annuity,” except that the amount we apply to begin the annuity will be your Cash Surrender Value as of the date Annuity Payments begin. Payout rates will not be lower than that shown in the Contract. If it would produce a larger payment, the first fixed Annuity Payment will be determined using the Life Annuity Tables in effect on the Maturity Date.

PAYMENT OPTIONS

Election of Options

While the Annuitant is alive, you can change your annuity or income option selection any time up to the Maturity Date. Once annuity or income payments have begun, no further elections are allowed.

During the Annuitant’s lifetime, if you do not elect otherwise before the Maturity Date, we will pay you (or another designated payee) the first of a series of monthly annuity or income payments based on the life of the Annuitant, in accordance with Annuity Option 2 (Life Annuity with 120 monthly payments assured). For certain qualified contracts, Annuity Option 4 (Joint and Last Survivor Life Annuity — Annuity Reduced on Death of Primary Payee) will be the automatic option as described in the Contract.

The minimum amount that can be placed under an annuity or income option will be $1,000 unless we agree to a lesser amount. If any monthly periodic payment due is less than $100, the Company reserves the right to make payments at less frequent intervals, or to pay the Contract Value in a lump-sum.

On the Maturity Date, we will pay the amount due under the Contract in accordance with the payment option that you select. You may choose to receive a single lump-sum payment. You must elect an option in writing, in a form satisfactory to the Company. Any election made during the lifetime of the Annuitant must be made by the Contract Owner.

Annuity Options

Subject to the conditions described in “Election of Options” above, we may pay all or any part of the Cash Surrender Value under one or more of the following annuity options. Payments under the annuity options are generally made on a monthly basis. We may offer additional options.

Option 1 — Life Annuity — No Refund. The Company will make Annuity Payments during the lifetime of the Annuitant ending with the last payment before death. This option offers the maximum periodic payment, since there is no assurance of a minimum number of payments or provision for a death benefit for beneficiaries.

Option 2 — Life Annuity with 120, 180 or 240 Monthly Payments Assured. The Company will make monthly Annuity Payments during the lifetime of the Annuitant, with the agreement that if, at the death of that person, payments have been made for less than 120, 180 or 240 months, as elected, we will continue making payments to the beneficiary during the remainder of the period.

Option 3 — Joint and Last Survivor Life Annuity — No Refund. The Company will make regular Annuity Payments during the lifetime of the Annuitant and a second person. When either person dies, we will continue making payments to the survivor. No further payments will be made following the death of the survivor.

Option 4 — Joint and Last Survivor Life Annuity — Annuity Reduced on Death of Primary Payee. The Company will make Annuity Payments during the lifetimes of the Annuitant and a second person. You will designate one as primary payee, and the other will be designated as secondary payee. On the death of the secondary payee, the Company will continue to make monthly Annuity Payments to the primary payee in the same amount that would have been payable during the joint lifetime of the two persons. On the death of the primary payee, the Company will continue to make Annuity Payments to the secondary payee in an amount equal to 50% of the payments, which would have been made during the lifetime of the primary payee. No further payments will be made once both payees have died.

Option 5 — Other Annuity Options. The Company will make any other arrangements for Annuity Payments as may be mutually agreed upon.

Income Options

Instead of one of the annuity options described above, and subject to the conditions described under “Election of Options,” all or part of the Contract’s Cash Surrender Value (or, if required by state law, Contract Value) may be paid under one or more of the following income options, provided that they are consistent with federal tax law qualification requirements. Payments under the income options may be elected on a monthly, quarterly, semiannual or annual basis:

Option 1 — Payments of a Fixed Amount. We will make equal payments of the amount elected until the Cash Surrender Value applied under this option has been exhausted. We will pay the first payment and all later payments from each funding option or the Fixed Account in proportion to the Cash Surrender Value attributable to each funding option and/or Fixed Account. The final payment will include any amount insufficient to make another full payment.

Option 2 — Payments for a Fixed Period. We will make payments for the period selected.

Option 3 — Other Income Options. We will make any other arrangements for income options as may be mutually agreed upon.

Variable Liquidity Benefit

This benefit is only offered with the income option Payments for a Fixed Period.

At any time after annuitization and before death, the Contract Owner may surrender and receive a payment equal to (A) minus (B), where (A) equals the present value of remaining certain payments, and (B) equals a surrender charge not to exceed the maximum surrender charge rate shown on the specifications page of the contract multiplied by (A). The interest rate used to calculate the present value is a rate 1% higher than the Assumed (Daily) Net Investment Factor used to calculate the Annuity Payments. The remaining period certain payments are assumed to be level payments equal to the most recent period certain payment prior to the request for this liquidity benefit.

MISCELLANEOUS CONTRACT PROVISIONS

Right to Return

You may return the Contract for a full refund of the Contract Value plus any contract charges and premium taxes you paid (but not any fees and charges the Underlying Fund assessed) within ten days after you receive it (the “right to return period”). You bear the investment risk of investing in the Variable Funding Options during the right to return period; therefore, the Contract Value we return may be greater or less than your Purchase Payment.

If you purchase the Contract as an Individual Retirement Annuity, and return it within the first seven days after delivery, or longer if your state law permits, we will refund your Purchase Payment in full; during the remainder of the right to return period, we will refund the Contract Value (including charges).

We will determine the Contract Value following the close of the business day on which we receive your Contract and a Written Request for a refund. Where state law requires a different period, or the return of Purchase Payments or other variations of this provision, we will comply. Refer to your Contract for any state-specific information.

Termination

You do not need to make any Purchase Payments after the first to keep the Contract in effect. However, we reserve the right to terminate the Contract on any business day if your Contract Value as of that date is less than $2,000 and you have not made Purchase Payments for at least two years, unless otherwise specified by state law. Termination will not occur until 31 days after we have mailed notice of termination to your last known address and to any assignee of record. If we terminate the Contract, we will pay you the Cash Surrender Value less any applicable taxes.

Required Reports

As often as required by law, but at least once in each Contract Year before the due date of the first Annuity Payment, we will furnish a report showing the number of Accumulation Units credited to the Contract and the corresponding Accumulation Unit value(s) as of the report date for each funding option to which the Contract Owner has allocated amounts during the applicable period. The Company will keep all records required under federal and state laws.

Suspension of Payments

The Company reserves the right to suspend or postpone the date of any payment or determination of values on any business day (1) when the New York Stock Exchange (“the Exchange”) is closed; (2) when trading on the Exchange is restricted; (3) when an emergency exists as determined by the SEC so that the sale of securities held in the Separate Account may not reasonably occur or so that the Company may not reasonably determine the value the Separate Account’s net assets; or (4) during any other period when the SEC, by order, so permits for the protection of security holders. Payments from the Fixed Account may be delayed up to 6 months.

THE SEPARATE ACCOUNTS

The Travelers Insurance Company and the Travelers Life and Annuity Company each sponsor Separate Accounts: Fund BD and Fund BD II, respectively. Fund BD was established on October 22, 1993 and Fund BD II was established on February 22, 1995, and both are registered with the SEC as unit investment trusts (Separate Account) under the Investment Company Act of 1940, as amended. We will invest Separate Account assets attributable to the Contracts exclusively in the shares of the Variable Funding Options.

We hold the assets of Fund BD and Fund BD II for the exclusive and separate benefit of the owners of each Separate Account, according to the laws of Connecticut. Income, gains and losses, whether or not realized, from assets allocated to the Separate Account are, in accordance with the Contracts, credited to or charged against the Separate Account without regard to other income, gains and losses of the Company. The assets held by the Separate Account are not chargeable with liabilities arising out of any other business that we may conduct. Obligations under the Contract are obligations of the Company.

All investment income and other distributions of the funding options are payable to the Separate Account. We reinvest all such income and/or distributions in shares of the respective funding option at net asset value. Shares of the funding options are currently sold only to life insurance company Separate Accounts to fund variable annuity and variable life insurance contracts.

Certain variable annuity Separate Accounts and variable life insurance Separate Accounts may invest in the funding options simultaneously (called “mixed” and “shared” funding). It is conceivable that in the future it may be disadvantageous to do so. Although the Company and the Variable Funding Options do not currently foresee any such disadvantages either to variable annuity Contract Owners or variable life policy owners, each Underlying Fund’s Board of Directors intends to monitor events in order to identify any material conflicts between them and to determine what action, if any, should be taken. If a Board of Directors was to conclude that separate funds should be established for variable life and variable annuity Separate Accounts, the variable annuity Contract Owners would not bear any of the related expenses, but variable annuity Contract Owners and variable life insurance policy owners would no longer have the economies of scale resulting fro m a larger combined fund.

Performance Information

From time to time, we may advertise several types of historical performance for the Contract’s Variable Funding Options. We may advertise the “standardized average annual total returns” of the Variable Funding Option, calculated in a manner prescribed by the SEC, and the “nonstandardized total return,” as described below. Specific examples of the performance information appear in the SAI.

Standardized Method. We compute quotations of average annual total returns according to a formula in which a hypothetical initial investment of $1,000 is applied to the Variable Funding Option, and then related to ending redeemable values over one-, five-, and ten-year periods, or for a period covering the time during which the funding option has been in existence, if less. These quotations reflect the deduction of all recurring charges during each period (on a pro rata basis in the case of fractional periods). We convert the deduction for the annual contract administrative charge to a percentage of assets based on the actual fee collected, divided by the average net assets for Contracts sold. Each quotation assumes a total redemption at the end of each period with the applicable withdrawal charge deducted at that time.

Nonstandardized Method. We calculate nonstandardized “total returns” in a similar manner based on the performance of the funding options over a period of time, usually for the calendar year-to-date, and for the past one-, three-, five- and ten-year periods. Nonstandardized total returns will not reflect the deduction of the annual contract administrative charge, which, if reflected, would decrease the level of performance shown. These returns also do not reflect the withdrawal charge because we designed the Contract for long-term investment.

For Underlying Funds that were in existence before they became available as a funding option, the nonstandardized average annual total return quotations reflects the investment performance that such funding options would have achieved (reduced by the applicable charges) had the Underlying Fund been held under the Contract for the period quoted. The total return quotations are based upon historical earnings and are not necessarily representative of future performance.

General. Within the guidelines prescribed by the SEC and the National Association of Securities Dealers, Inc. (“NASD”), performance information may be quoted numerically or may be presented in a table, graph or other illustration. Advertisements may include data comparing performance to well-known indices of market performance (including, but not limited to, the Dow Jones Industrial Average, the Standard & Poor’s (S&P) 500 Index, the S&P 400 Index, the Lehman Brothers Long T-Bond Index, the Russell 1000, 2000 and 3000 Indices, the Value Line Index, and the Morgan Stanley Capital International’s EAFE Index). Advertisements may also include published editorial comments and performance rankings compiled by independent organizations (including, but not limited to, Lipper Analytical Services, Inc. and Morningstar, Inc.) and publications that monitor the performance of the Separate Account and the Variable Funding Options.

FEDERAL TAX CONSIDERATIONS

The following general discussion of the federal income tax consequences under this Contract is not intended to cover all situations, and is not meant to provide tax or legal advice. Because of the complexity of the law and the fact that the tax results will vary depending on many factors, you should consult your tax and/or legal adviser regarding your personal situation. For your information, a more detailed tax discussion is contained in the SAI.

Non-Resident Aliens

Distributions to non-resident aliens (“NRAs”) are subject to special and complex tax and withholding rules under the Code, some of which are based upon the particular facts and circumstances of the contract owner, the beneficiary and the transaction itself. In addition, annuity payments to NRAs in many countries are exempt from U.S. tax (or subject to lower rates) based upon a tax treaty. NRAs should seek guidance from a tax adviser regarding their personal situation.

General Taxation of Annuities

Congress has recognized the value of saving for retirement by providing certain tax benefits, in the form of tax deferral, for money put into an annuity. The Internal Revenue Code (Code) governs how this money is ultimately taxed, depending upon the type of Contract, qualified or non-qualified, and the manner in which the money is distributed, as briefly described below.

Tax-Free Exchanges: The Internal Revenue Code provides that, generally, no gain or loss is recognized when an annuity

Contract is received in exchange for a life, endowment, or annuity Contract. Since different annuity Contracts have different expenses, fees and benefits, a tax-free exchange could result in your investment becoming subject to higher or lower fees and/or expenses.

Types of Contracts: Qualified or Nonqualified

If you purchase an annuity Contract with proceeds of an eligible rollover distribution from any qualified employee pension plan or individual retirement annuity (IRA), your Contract is referred to as a qualified Contract. Some examples of Qualified Contracts are: IRAs, tax-sheltered annuities established by public school systems or certain tax-exempt organizations under Code Section 403(b), corporate sponsored pension and profit-sharing plans (including 401(k) plans), Keogh Plans (for self-employed individuals), and certain other qualified deferred compensation plans. Another type of qualified contract is a Roth IRA, under which after-tax contributions accumulate until maturity, when amounts (including earnings) may be withdrawn tax-free. The rights and benefits under a qualified Contract may be limited by the terms of the retirement plan, regardless of the terms and conditions of the Contract. If you purchase the Contract on an individual basis with after-tax dollars and not under one of the programs described above, your Contract is referred to as nonqualified.

Nonqualified Annuity Contracts

As the owner of a nonqualified annuity, you do not receive any tax benefit (deduction or deferral of income) on purchase payments, but you will not be taxed on increases in the value of your Contract until a distribution occurs — either as a withdrawal (distribution made prior to the maturity date), or as annuity payments. When a withdrawal is made, you are taxed on the amount of the withdrawal that is considered earnings under applicable tax laws. Similarly, when you receive an annuity payment, part of each payment is considered a return of your purchase payments and will not be taxed. The remaining portion of the annuity payment (i.e., any earnings) will be considered ordinary income for tax purposes.

If a nonqualified annuity is owned by other than an individual, however, (e.g., by a corporation), increases in the value of the Contract attributable to purchase payments made after February 28, 1986 are includible in income annually. Furthermore, for Contracts issued after April 22, 1987, if you transfer the Contract to another person or entity without adequate consideration, all deferred increases in value will be includable in your income at the time of the transfer.

If you make a partial withdrawal, this money will generally be taxed as first coming from earnings, (income in the contract), and then from your purchase payments. These withdrawn earnings are includable in your taxable income. (See “Penalty Tax for Premature Distributions” below.) There is income in the Contract to the extent the contract value exceeds your investment in the Contract. The investment in the Contract equals the total purchase payments you paid less any amount received previously which was excludible from gross income. Any direct or indirect borrowing against the value of the Contract or pledging of the Contract as security for a loan will be treated as a cash distribution under the tax law, and will have tax consequences in the year taken.

Federal tax law requires that nonqualified annuity Contracts meet minimum mandatory distribution requirements upon the death of the contract owner, including the first of joint owners. If these requirements are

not met, the Contract will not be treated as an annuity Contract for Federal income tax purposes and earnings under the Contract will be taxable currently, not when distributed. The distribution required depends, among other things, upon whether an annuity option is elected or whether the succeeding contract owner is the surviving spouse. We will administer Contracts in accordance with these rules and we will notify you when you should begin receiving payments. There is a more complete discussion of these rules in the SAI.

Puerto Rico Tax Considerations

The Puerto Rico Internal Revenue Code of 1994 (the “1994 Code”) taxes distributions from nonqualified annuity contracts differently than in the U.S. Distributions that are not in the form of an annuity (including partial surrenders and period certain payments) are treated under the 1994 Code first as a return of investment. Therefore, no taxable income is recognized for Puerto Rico tax purposes until the cumulative amount paid exceeds your tax basis. Similarly, the amount of income on annuity distributions (payable over your lifetime) is calculated differently. Since Puerto Rico residents are also subject to U.S. income tax on all income other than income sourced to Puerto Rico, the timing of recognition of income from an annuity contract could vary between the two jurisdictions. Although the 1994 Code provides a credit against the Puerto Rico income tax for U.S. income taxes, an individual may not get full credit because of the timing differences. You should consult w ith a personal tax adviser regarding the tax consequences of purchasing an annuity contract and/or any proposed distribution, particularly a partial distribution or election to annuitize.

Qualified Annuity Contracts

Under a qualified annuity, since amounts paid into the Contract have generally not yet been taxed, the full amount of such distributions, including lump-sum withdrawals and annuity payments, are generally taxed at the ordinary income tax rate unless the distribution is transferred to an eligible rollover account or Contract. The Contract is available as a vehicle for IRA rollovers and for other Qualified Contracts. There are special rules which govern the taxation of Qualified Contracts, including withdrawal restrictions, requirements for mandatory distributions, and contribution limits. We have provided a more complete discussion in the SAI.

Note to participants in qualified plans including 401, 403(b), 457 as well as IRA owners: While annual plan contribution limits may be increased from time to time by Congress and the IRS for federal income tax purposes, these limits must be adopted by each state for the higher limits to be effective at a state income tax level. In other words, the permissible contribution limit for income tax purposes may be different at the federal level from your state's income tax laws. Please consult your employer or tax adviser regarding this issue.

Penalty Tax for Premature Distributions

For both qualified and nonqualified contracts, taxable distributions taken before the contract owner has reached the age of 59½ will be subject to a 10% additional tax penalty unless the distribution is taken in a series of periodic distributions, for life or life expectancy, or unless the distribution follows the death or disability of the contract owner. Other exceptions may be available in certain qualified plans. The 10% additional tax is in addition to any penalties that may apply under your Contract and the normal income taxes due on the distribution.

Diversification Requirements for Variable Annuities

The Code requires that any nonqualified variable annuity Contracts based on a separate account shall not be treated as an annuity for any period if investments made in the account are not adequately diversified. Final tax regulations define how separate accounts must be diversified. The Company monitors the diversification of investments constantly and believes that its accounts are adequately diversified. The consequence of any failure to diversify is essentially the loss to the Contract owner of tax-deferred treatment. The Company intends to administer all Contracts subject to this provision of law in a manner that will maintain adequate diversification.

Ownership of the Investments

In certain circumstances, owners of variable annuity Contracts have been considered to be the owners of the assets of the underlying separate account for Federal income tax purposes due to their ability to exercise investment control over those assets. When this is the case, the contract owners have been currently taxed on income and gains attributable to the variable account assets. There is little guidance in this area, and some features of the Contract, such as the number of funds available and the flexibility of the contract owner to allocate premium payments and transfer amounts among the funding options, have not been addressed in public rulings. While we believe that the Contract does not give the contract owner investment control over separate account assets, we reserve the right to modify the Contract as necessary to prevent a contract owner from being treated as the owner of the separate account assets supporting the Contract.

Mandatory Distributions For Qualified Plans

Federal tax law requires that minimum annual distributions begin by April 1st of the calendar year following the calendar year in which an IRA owner attains age 70½. Participants in qualified plans and 403(b) annuities may defer minimum distributions until the later of April 1st of the calendar year following the calendar year in which they attain age 70½ or the year of retirement.

Minimum Distributions For Beneficiaries When a death benefit becomes due upon the death of the owner and/or annuitant, minimum distributions may be taken over the life expectancy of the beneficiary not less than annually within one year from the date of death or the funds remaining in the Contract must be completely withdrawn within five years from the date of death.

Taxation of Death Benefit Proceeds

Amounts may be distributed from a Contract because of the death of an owner or annuitant. Generally, such amounts are includible in the income of the recipient as follows: (i) if distributed in a lump sum, they are taxed in the same manner as a full surrender of the contract; or (ii) if distributed under a payment option, they are taxed in the same way as annuity payments.

OTHER INFORMATION

The Insurance Companies

Please refer to your Contract to determine which Company issued your Contract.

The Travelers Insurance Company is a stock insurance company chartered in 1863 in Connecticut and continuously engaged in the insurance business since that time. It is licensed to conduct life insurance business in all states of the United States, the District of Columbia, Puerto Rico, Guam, the U.S. and British Virgin Islands and the Bahamas. The Company is an indirect wholly-owned subsidiary of Citigroup Inc. The Company’s Home Office is located at One Cityplace, Hartford, Connecticut 06103-3415.

The Travelers Life and Annuity Company is a stock insurance company chartered in 1973 in Connecticut and continuously engaged in the insurance business since that time. It is licensed to conduct life insurance business in all states of the United States (except New York), the District of Columbia and Puerto Rico. The Company is an indirect wholly owned subsidiary of Citigroup Inc. The Company’s Home Office is located at One Cityplace, Hartford, Connecticut 06103-3415.

Financial Statements

The financial statements for the Company and its Separate Account are located in the Statement of Additional Information.

Distribution of Variable Annuity Contracts

We intend to sell the Contracts in all jurisdictions where we are licensed to do business and where the Contract is approved. Any registered representative of affiliated or independent broker-dealers who sell the Contracts will be qualified to sell variable annuities under applicable federal and state laws. Each broker-dealer is registered with the SEC under the Securities Exchange Act of 1934, and all are members of the NASD. The principal underwriter of the Contracts is our affiliate, Travelers Distribution LLC, One Cityplace, Hartford, CT.

Up-front compensation paid to sales representatives will not exceed 10% of the Purchase Payments made under the Contracts. If asset based compensation is paid, it will not exceed 2% of the average account value annually. Also, we may pay additional compensation or permit other promotional incentives in cash, credit or other compensation for, among other things, training, marketing and services provided.

Conformity with State and Federal Laws

The laws of the state in which we deliver a Contract govern that Contract. Where a state has not approved a Contract feature or funding option, it will not be available in that state. Any paid-up annuity, Cash Surrender Value or death benefits that are available under the Contract are not less than the minimum benefits required by the statutes of the state in which we delivered the Contract. We reserve the right to make any changes, including retroactive changes, in the Contract to the extent that the change is required to meet the requirements of any law or regulation issued by any governmental agency to which the Company, the Contract or the Contract Owner is subject.

Voting Rights

The Company is the legal owner of the shares of the Underlying Funds. However, we believe that when an Underlying Fund solicits proxies in conjunction with a vote of shareholders we are required to obtain from you and from other owners instructions on how to vote those shares. We will vote all shares, including those we

may own on our own behalf, and those where we have not received instructions from Contract Owners, in the same proportion as shares for which we received voting instructions. Should we determine that we are no longer required to comply with the above, we will vote on the shares in our own right. In certain limited circumstances, and when permitted by law, we may disregard voting instructions. If we do disregard voting instructions, a summary of that action and the reasons for such action would be included in the next annual report to Contract Owners.

Legal Proceedings and Opinions

Legal matters in connection with the federal laws and regulations affecting the issue and sale of the contract described in this prospectus, as well as the organization of the Companies, their authority to issue variable annuity contracts under Connecticut law and the validity of the forms of the variable annuity contracts under Connecticut law, have been passed on by the Deputy General Counsel of the Companies.

There are no pending legal proceedings affecting either Separate Account or the principal underwriter. There are no pending legal proceedings against either Company likely to have a material adverse effect on the ability of either Company to meet its obligations under the applicable Contract.

Appendix A
CONDENSED FINANCIAL INFORMATION

THE TRAVELERS FUND BD FOR VARIABLE ANNUITIES
Accumulation Unit Values (in dollars)

The following tables provide the Accumulation Unit Value information for the variable charge of 1.17% = Standard Death Benefit and the variable charge of 1.45% = Enhanced Death Benefit

Minimum Expense
1.02 M&E, .15 Adm. = 1.17% Net Expense

Portfolio Name	Year		Unit Value at Beginning of Year		Unit Value at End of Year		Number of Units Outstanding at End of Year

AIM Variable Insurance Funds
AIM V.I. Premier Equity Fund — Series I (5/01)		2002		0.886		0.611		450,377
		2001		1.000		0.886		668,710

Alliance Variable Product Series Fund, Inc.
Premier Growth Portfolio — Class B (5/01)		2002		0.857		0.585		546,050
		2001		1.000		0.857		297,549

American Funds Insurance Series
Global Growth Fund — Class 2 (5/01)		2002		0.876		0.739		2,231,042
		2001		1.000		0.876		802,933

Growth Fund — Class 2 (5/01)		2002		0.852		0.636		5,528,439
		2001		1.000		0.852		1,775,888

Growth-Income Fund — Class 2 (5/01)		2002		0.967		0.781		6,543,536
		2001		1.000		0.967		2,371,512

Dreyfus Variable Investment Fund
Small Cap Portfolio — Initial Shares (5/98)		2002		1.078		0.862		3,595,868
		2001		1.162		1.078		3,233,826
		2000		1.038		1.162		3,583,484
		1999		0.852		1.038		2,129,773
		1998		1.000		0.852		1,024,905

Greenwich Street Series Fund
Equity Index Portfolio — Class II Shares (5/99)		2002		0.845		0.648		2,780,694
		2001		0.976		0.845		3,052,737
		2000		1.088		0.976		2,024,943
		1999		1.000		1.088		1,741,701

Fundamental Value Portfolio (11/94)		2002		2.497		1.942		36,718,095
		2001		2.667		2.497		46,360,039

A-1

Accumulation Unit Values (in dollars)

Minimum Expense
1.02 M&E, .15 Adm. = 1.17% Net Expense (continued)

Portfolio Name	Year		Unit Value at Beginning of Year		Unit Value at End of Year		Number of Units Outstanding at End of Year

Fundamental Value Portfolio (continued)		2000		2.240		2.667		55,492,831
		1999		1.857		2.240		65,203,019
		1998		1.790		1.857		73,467,726

Salomon Brothers Variable Series Fund Inc.
Investors Fund — Class I (5/98)		2002		1.207		0.918		3,952,134
		2001		1.275		1.207		4,597,550
		2000		1.119		1.275		1,901,624
		1999		1.014		1.119		1,845,539
		1998		1.000		1.014		704,294

Total Return Fund — Class I (5/98)		2002		1.039		0.956		1,278,668
		2001		1.060		1.039		1,200,238
		2000		0.994		1.060		845,563
		1999		0.997		0.994		769,348
		1998		1.000		0.997		397,259

Smith Barney Allocation Series Inc.
Select Balanced Portfolio (3/97)		2002		1.270		1.174		3,121,798
		2001		1.303		1.270		3,742,546
		2000		1.258		1.303		3,561,033
		1999		1.183		1.258		3,958,544
		1998		1.093		1.183		4,046,998
		1997		1.000		1.093		3,114,900

Select Growth Portfolio (3/97)		2002		1.192		0.965		2,169,501
		2001		1.338		1.192		2,631,461
		2000		1.421		1.338		2,951,806
		1999		1.238		1.421		3,487,443
		1998		1.099		1.238		3,135,267
		1997		1.000		1.099		2,261,767

Select High Growth Portfolio (3/97)		2002		1.242		0.936		574,369
		2001		1.429		1.242		618,220
		2000		1.558		1.429		707,214
		1999		1.242		1.558		807,243
		1998		1.090		1.242		723,814
		1997		1.000		1.090		602,892

A-2

Accumulation Unit Values (in dollars)

Minimum Expense
1.02 M&E, .15 Adm. = 1.17% Net Expense (continued)

Portfolio Name	Year		Unit Value at Beginning of Year		Unit Value at End of Year		Number of Units Outstanding at End of Year

Smith Barney Investment Series
Smith Barney Large Cap Core Portfolio (5/01)		2002		0.895		0.655		364,889
		2001		1.000		0.895		441,029

Smith Barney Premier Selections All Cap Growth Portfolio (5/01)		2002		0.896		0.648		680,370
		2001		1.000		0.896		233,523

The Travelers Series Trust
Convertible Securities Portfolio (6/98)		2002		1.280		1.177		1,982,316
		2001		1.306		1.280		2,206,650
		2000		1.175		1.306		1,168,231
		1999		1.001		1.175		626,884
		1998		1.000		1.001		248,991

Disciplined Mid Cap Stock Portfolio (5/98)		2002		1.305		1.105		4,509,768
		2001		1.376		1.305		4,124,695
		2000		1.194		1.376		3,158,686
		1999		1.064		1.194		1,843,199
		1998		1.000		1.064		397,554

MFS Emerging Growth Portfolio (11/96)		2002		1.391		0.904		14,406,268
		2001		2.205		1.391		20,409,633
		2000		2.793		2.205		26,758,940
		1999		1.599		2.793		28,192,848
		1998		1.204		1.599		25,199,790
		1997		1.005		1.204		19,165,838
		1996		1.000		1.005		4,789,844

MFS Research Portfolio (5/98)		2002		0.906		0.671		2,067,818
		2001		1.183		0.906		3,143,694
		2000		1.267		1.183		3,989,985
		1999		1.037		1.267		3,898,421
		1998		1.000		1.037		1,353,759

Travelers Series Fund Inc.
AIM Capital Appreciation Portfolio (10/95)		2002		1.317		0.991		43,597,234
		2001		1.748		1.317		58,613,993
		2000		1.974		1.748		74,130,562

A-3

Accumulation Unit Values (in dollars)

Minimum Expense
1.02 M&E, .15 Adm. = 1.17% Net Expense (continued)

Portfolio Name	Year		Unit Value at Beginning of Year		Unit Value at End of Year		Number of Units Outstanding at End of Year

AIM Capital Appreciation Portfolio (continued)		1999		1.397		1.974		81,401,202
		1998		1.206		1.397		90,905,019
		1997		1.088		1.206		91,233,697
		1996		0.958		1.088		71,085,132
		1995		1.000		0.958		20,366,025

Alliance Growth Portfolio (6/94)		2002		2.627		1.724		60,860,309
		2001		3.068		2.627		84,551,493
		2000		3.795		3.068		110,497,118
		1999		2.903		3.795		131,228,285
		1998		2.276		2.903		142,801,580
		1997		1.785		2.276		144,292,812
		1996		1.396		1.785		123,293,902
		1995		1.047		1.396		79,333,827
		1994		1.000		1.047		16,522,104

MFS Total Return Portfolio (6/94)		2002		2.103		1.969		44,972,133
		2001		2.127		2.103		54,056,696
		2000		1.845		2.127		64,462,637
		1999		1.819		1.845		78,484,497
		1998		1.648		1.819		86,949,854
		1997		1.376		1.648		83,810,525
		1996		1.216		1.376		68,235,801
		1995		0.979		1.216		41,813,313
		1994		1.000		0.979		9,098,534

Putnam Diversified Income Portfolio (6/94)		2002		1.344		1.406		23,732,550
		2001		1.304		1.344		28,854,109
		2000		1.325		1.304		37,822,306
		1999		1.326		1.325		45,594,724
		1998		1.332		1.326		53,053,274
		1997		1.252		1.332		51,751,252
		1996		1.170		1.252		43,898,066
		1995		1.009		1.170		26,077,726
		1994		1.000		1.009		5,803,299

Salomon Brothers Strategic Total Return Bond Fund (6/94)		2002		1.450		1.553		5,507,970
		2001		1.378		1.450		5,251,702

A-4

Accumulation Unit Values (in dollars)

Minimum Expense
1.02 M&E, .15 Adm. = 1.17% Net Expense (continued)

Portfolio Name	Year		Unit Value at Beginning of Year		Unit Value at End of Year		Number of Units Outstanding at End of Year

Salomon Brothers Strategic Total Return Bond Fund (continued)		2000		1.319		1.378		6,890,789
		1999		1.359		1.319		8,990,726
		1998		1.397		1.359		11,299,081
		1997		1.316		1.397		12,826,830
		1996		1.121		1.316		11,505,498
		1995		0.945		1.121		6,839,747
		1994		1.000		0.945		2,399,733

Smith Barney High Income Portfolio (6/94)		2002		1.273		1.217		17,114,943
		2001		1.338		1.273		22,158,369
		2000		1.472		1.338		28,815,814
		1999		1.452		1.472		38,357,097
		1998		1.463		1.452		44,406,204
		1997		1.300		1.463		42,964,010
		1996		1.162		1.300		33,737,040
		1995		0.988		1.162		20,136,397
		1994		1.000		0.988		3,105,349

Smith Barney International All Cap Growth Portfolio (6/94)		2002		1.109		0.814		36,517,428
		2001		1.630		1.109		49,462,447
		2000		2.164		1.630		63,128,882
		1999		1.305		2.164		72,748,400
		1998		1.240		1.305		82,330,241
		1997		1.222		1.240		87,384,895
		1996		1.050		1.222		77,554,062
		1995		0.955		1.050		47,316,609
		1994		1.000		0.955		14,141,474

Smith Barney Large Cap Value Portfolio (6/94)		2002		2.083		1.536		33,420,816
		2001		2.296		2.083		45,558,878
		2000		2.053		2.296		55,091,429
		1999		2.076		2.053		67,687,987
		1998		1.913		2.076		71,417,242
		1997		1.528		1.913		71,149,294
		1996		1.291		1.528		57,479,117
		1995		0.981		1.291		31,342,864
		1994		1.000		0.981		6,653,987

A-5

Accumulation Unit Values (in dollars)

Minimum Expense
1.02 M&E, .15 Adm. = 1.17% Net Expense (continued)

Portfolio Name	Year		Unit Value at Beginning of Year		Unit Value at End of Year		Number of Units Outstanding at End of Year

Smith Barney Large Capitalization Growth Portfolio (5/98)		2002		1.272		0.945		14,669,240
		2001		1.471		1.272		23,676,786
		2000		1.599		1.471		27,150,090
		1999		1.237		1.599		25,851,563
		1998		1.000		1.237		12,224,352

Smith Barney Money Market Portfolio (6/94)		2002		1.317		1.318		34,637,166
		2001		1.285		1.317		40,479,011
		2000		1.226		1.285		33,979,597
		1999		1.184		1.226		45,052,907
		1998		1.140		1.184		47,120,777
		1997		1.098		1.140		38,096,919
		1996		1.058		1.098		49,671,947
		1995		1.016		1.058		36,636,843
		1994		1.000		1.016		7,171,388

Travelers Managed Income Portfolio (6/94)		2002		1.469		1.483		11,833,198
		2001		1.392		1.469		13,910,891
		2000		1.306		1.392		13,842,174
		1999		1.309		1.306		17,250,745
		1998		1.261		1.309		20,492,138
		1997		1.163		1.261		17,886,675
		1996		1.142		1.163		15,376,353
		1995		0.997		1.142		11,294,401
		1994		1.000		0.997		2,849,032

Van Kampen Enterprise Portfolio (6/94)		2002		2.125		1.484		24,341,031
		2001		2.731		2.125		32,559,084
		2000		3.238		2.731		43,294,726
		1999		2.601		3.238		50,445,762
		1998		2.103		2.601		55,902,505
		1997		1.655		2.103		55,871,473
		1996		1.362		1.655		45,338,023
		1995		1.039		1.362		26,472,613
		1994		1.000		1.039		2,941,129
Variable Annuity Portfolios
Smith Barney Small Cap Growth Opportunities Portfolio (5/01)		2002		0.947		0.696		529,979
		2001		1.000		0.947		443,888

A-6

Accumulation Unit Values (in dollars)

Minimum Expense
1.02 M&E, .15 Adm. = 1.17% Net Expense (continued)

Variable Annuity Portfolios
Smith Barney Small Cap Growth Opportunities Portfolio (5/01)	2002	0.947	0.696	529,979
	2001	1.000	0.947	443,888

A-7

Accumulation Unit Values (in dollars)

Maximum Expense
1.30 M&E, .15 Adm. = 1.45% Net Expense

Portfolio Name	Year		Unit Value at Beginning of Year		Unit Value at End of Year		Number of Units Outstanding at End of Year

AIM Variable Insurance Funds
AIM V.I. Premier Equity Fund — Series I (5/01)		2002		0.885		0.608		—
		2001		1.000		0.885		62,490

Alliance Variable Product Series Fund, Inc.
Premier Growth Portfolio — Class B (5/01)		2002		0.855		0.583		98,794
		2001		1.000		0.855		220,509

American Funds Insurance Series
Global Growth Fund — Class 2 (5/01)		2002		0.874		0.735		186,424
		2001		1.000		0.874		42,484

Growth Fund — Class 2 (5/01)		2002		0.850		0.633		1,169,096
		2001		1.000		0.850		249,033

Growth-Income Fund — Class 2 (5/01)		2002		0.965		0.777		1,363,147
		2001		1.000		0.965		735,883

Dreyfus Variable Investment Fund
Small Cap Portfolio — Initial Shares (5/98)		2002		1.067		0.851		569,457
		2001		1.153		1.067		333,484
		2000		1.033		1.153		475,404
		1999		0.851		1.033		301,650
		1998		1.000		0.851		49,426

Greenwich Street Series Fund
Equity Index Portfolio — Class II Shares (5/99)		2002		0.839		0.642		647,264
		2001		0.971		0.839		199,427
		2000		1.086		0.971		172,120
		1999		1.000		1.086		78,197

Fundamental Value Portfolio (11/94)		2002		2.448		1.899		5,662,520
		2001		2.622		2.448		6,985,229
		2000		2.208		2.622		8,605,537
		1999		1.836		2.208		10,465,245
		1998		1.775		1.836		11,653,902
		1997		1.541		1.775		11,852,617
		1996		1.247		1.541		9,168,615
		1995		1.013		1.247		4,873,580

A-8

Accumulation Unit Values (in dollars)

Maximum Expense
1.30 M&E, .15 Adm. = 1.45% Net Expense (continued)

Portfolio Name	Year		Unit Value at Beginning of Year		Unit Value at End of Year		Number of Units Outstanding at End of Year

Salomon Brothers Variable Series Fund Inc.
Investors Fund — Class I (5/98)		2002		1.195		0.906		646,567
		2001		1.265		1.195		766,415
		2000		1.114		1.265		250,413
		1999		1.012		1.114		171,466
		1998		1.000		1.012		75,864

Total Return Fund — Class I (5/98)		2002		1.028		0.944		196,277
		2001		1.052		1.028		255,785
		2000		0.989		1.052		112,585
		1999		0.996		0.989		115,789
		1998		1.000		0.996		69,952

Smith Barney Allocation Series Inc.
Select Balanced Portfolio (3/97)		2002		1.253		1.155		839,760
		2001		1.290		1.253		893,618
		2000		1.248		1.290		778,489
		1999		1.177		1.248		922,423
		1998		1.091		1.177		1,086,882
		1997		1.000		1.091		777,806

Select Growth Portfolio (3/97)		2002		1.176		0.950		989,634
		2001		1.323		1.176		1,678,477
		2000		1.410		1.323		1,838,058
		1999		1.232		1.410		1,847,452
		1998		1.097		1.232		1,838,554
		1997		1.000		1.097		1,403,455

Select High Growth Portfolio (3/97)		2002		1.225		0.921		222,093
		2001		1.414		1.225		225,839
		2000		1.546		1.414		226,088
		1999		1.236		1.546		319,187
		1998		1.087		1.236		325,871
		1997		1.000		1.087		230,988

Smith Barney Investment Series
Smith Barney Large Cap Core Portfolio (5/01)		2002		0.893		0.652		17,317
		2001		1.000		0.893		—

A-9

Accumulation Unit Values (in dollars)

Maximum Expense
1.30 M&E, .15 Adm. = 1.45% Net Expense (continued)

Portfolio Name	Year		Unit Value at Beginning of Year		Unit Value at End of Year		Number of Units Outstanding at End of Year

Smith Barney Premier Selections All Cap Growth Portfolio (5/01)		2002		0.894		0.645		426,644
		2001		1.000		0.894		90,901

The Travelers Series Trust
Convertible Securities Portfolio (6/98)		2002		1.267		1.162		302,585
		2001		1.297		1.267		314,155
		2000		1.169		1.297		141,023
		1999		0.999		1.169		181,058
		1998		1.000		0.999		24,086

Disciplined Mid Cap Stock Portfolio (5/98)		2002		1.292		1.091		977,077
		2001		1.366		1.292		965,597
		2000		1.188		1.366		801,701
		1999		1.063		1.188		330,146
		1998		1.000		1.063		54,397

MFS Emerging Growth Portfolio (11/96)		2002		1.371		0.888		2,794,759
		2001		2.180		1.371		4,160,492
		2000		2.769		2.180		5,768,911
		1999		1.589		2.769		6,685,207
		1998		1.200		1.589		6,078,936
		1997		1.005		1.200		4,600,192
		1996		1.000		1.005		780,369

MFS Research Portfolio (5/98)		2002		0.897		0.662		339,786
		2001		1.174		0.897		613,613
		2000		1.261		1.174		1,310,179
		1999		1.035		1.261		1,159,613
		1998		1.000		1.035		1,038,696

Travelers Series Fund Inc.
AIM Capital Appreciation Portfolio (10/95)		2002		1.294		0.971		6,512,841
		2001		1.723		1.294		9,370,593
		2000		1.951		1.723		12,252,599
		1999		1.385		1.951		14,474,829
		1998		1.198		1.385		15,792,402
		1997		1.084		1.198		15,590,753
		1996		0.957		1.084		12,861,969
		1995		1.000		0.957		5,394,325

A-10

Accumulation Unit Values (in dollars)

Maximum Expense
1.30 M&E, .15 Adm. = 1.45% Net Expense (continued)

Portfolio Name	Year		Unit Value at Beginning of Year		Unit Value at End of Year		Number of Units Outstanding at End of Year

Alliance Growth Portfolio (6/94)		2002		2.572		1.684		10,451,939
		2001		3.012		2.572		15,076,327
		2000		3.737		3.012		20,965,025
		1999		2.867		3.737		26,575,989
		1998		2.254		2.867		28,709,572
		1997		1.772		2.254		30,063,293
		1996		1.390		1.772		27,251,039
		1995		1.046		1.390		20,570,511
		1994		1.000		1.046		7,338,494

MFS Total Return Portfolio (6/94)		2002		2.059		1.922		9,194,869
		2001		2.089		2.059		10,752,298
		2000		1.817		2.089		12,764,698
		1999		1.796		1.817		16,859,973
		1998		1.632		1.796		18,458,912
		1997		1.366		1.632		17,373,326
		1996		1.211		1.366		14,689,857
		1995		0.977		1.211		9,472,924
		1994		1.000		0.977		3,479,312

Putnam Diversified Income Portfolio (6/94)		2002		1.316		1.373		5,513,126
		2001		1.281		1.316		6,907,426
		2000		1.304		1.281		8,635,386
		1999		1.309		1.304		11,060,448
		1998		1.319		1.309		12,925,220
		1997		1.243		1.319		12,723,780
		1996		1.165		1.243		11,788,520
		1995		1.007		1.165		8,650,123
		1994		1.000		1.007		3,683,176

Salomon Brothers Strategic Total Return Bond Fund (6/94)		2002		1.420		1.516		1,391,400
		2001		1.353		1.420		1,096,011
		2000		1.299		1.353		1,562,190
		1999		1.342		1.299		2,350,837
		1998		1.383		1.342		2,624,158
		1997		1.306		1.383		2,883,105
		1996		1.116		1.306		2,795,018
		1995		0.944		1.116		2,179,955
		1994		1.000		0.944		1,062,722

A-11

Accumulation Unit Values (in dollars)

Maximum Expense
1.30 M&E, .15 Adm. = 1.45% Net Expense (continued)

Portfolio Name	Year		Unit Value at Beginning of Year		Unit Value at End of Year		Number of Units Outstanding at End of Year

Smith Barney High Income Portfolio (6/94)		2002		1.246		1.189		3,806,067
		2001		1.314		1.246		4,788,057
		2000		1.450		1.314		5,829,717
		1999		1.434		1.450		8,209,532
		1998		1.448		1.434		9,311,914
		1997		1.291		1.448		8,926,610
		1996		1.157		1.291		6,931,775
		1995		0.986		1.157		3,771,792
		1994		1.000		0.986		1,162,372

Smith Barney International All Cap Growth Portfolio (6/94)		2002		1.086		0.795		6,526,506
		2001		1.601		1.086		8,902,580
		2000		2.131		1.601		11,816,707
		1999		1.289		2.131		15,530,355
		1998		1.228		1.289		17,670,056
		1997		1.213		1.228		18,730,554
		1996		1.046		1.213		16,661,870
		1995		0.954		1.046		12,187,268
		1994		1.000		0.954		5,897,670

Smith Barney Large Cap Value Portfolio (6/94)		2002		2.040		1.499		6,591,070
		2001		2.254		2.040		8,282,092
		2000		2.022		2.254		10,588,184
		1999		2.050		2.022		13,629,236
		1998		1.894		2.050		14,890,673
		1997		1.517		1.894		15,382,871
		1996		1.285		1.517		12,169,907
		1995		0.980		1.285		7,140,022
		1994		1.000		0.980		3,014,766

Smith Barney Large Capitalization Growth Portfolio (5/98)		2002		1.259		0.933		2,575,008
		2001		1.460		1.259		3,245,914
		2000		1.592		1.460		3,984,628
		1999		1.234		1.592		3,416,335
		1998		1.000		1.234		1,022,328

Smith Barney Money Market Portfolio (6/94)		2002		1.289		1.287		5,718,355
		2001		1.262		1.289		5,797,292

A-12

Accumulation Unit Values (in dollars)

Maximum Expense
1.30 M&E, .15 Adm. = 1.45% Net Expense (continued)

Portfolio Name	Year		Unit Value at Beginning of Year		Unit Value at End of Year		Number of Units Outstanding at End of Year

Smith Barney Money Market Portfolio (continued)		2000		1.207		1.262		4,483,256
		1999		1.169		1.207		6,608,638
		1998		1.129		1.169		8,253,674
		1997		1.090		1.129		8,609,673
		1996		1.054		1.090		10,176,442
		1995		1.014		1.054		9,062,842
		1994		1.000		1.014		3,747,874

Travelers Managed Income Portfolio (6/94)		2002		1.438		1.448		3,344,464
		2001		1.367		1.438		3,524,194
		2000		1.286		1.367		3,447,356
		1999		1.293		1.286		4,233,630
		1998		1.248		1.293		3,895,003
		1997		1.154		1.248		3,090,967
		1996		1.137		1.154		2,501,925
		1995		0.995		1.137		1,782,544
		1994		1.000		0.995		980,035

Van Kampen Enterprise Portfolio (6/94)		2002		2.081		1.449		4,915,422
		2001		2.682		2.081		7,087,006
		2000		3.188		2.682		9,306,589
		1999		2.568		3.188		11,751,851
		1998		2.083		2.568		12,560,574
		1997		1.643		2.083		13,032,150
		1996		1.356		1.643		10,651,957
		1995		1.037		1.356		6,569,199
		1994		1.000		1.037		1,617,614

Variable Annuity Portfolios
Smith Barney Small Cap Growth Opportunities Portfolio (5/01)		2002		0.945		0.692		70,815
		2001		1.000		0.945		52,916

Notes

Effective June 7,2002, the Travelers Series Fund Inc.: Salomon Brother Strategic Bond Portfolio (f/k/a/ Salomon Brothers Global High Yield Portfolio) changed its name to Salomon Brothers Strategic Total Return Bond Portfolio.

A-13

Notes (continued)

Effective January 2, 2003, Dreyfus Variable Investment Fund: Small Cap Portfolio changed its name to Developing Leaders Portfolio.

The number of units outstanding for the 2001 yearend have been restated to include Annuity Units, where appropriate.

The date next to each funding option’s name reflects the date money first came into the funding option through the Separate Account.

Funding options not listed above had no amounts allocated to them or were not available as of December 31, 2002.

“Number of Units outstanding at end of period” may include units for Contract Owners in payout phase, where appropriate.

Smith Barney Allocation Series Inc.: Select High Growth Portfolio is no longer available to new Contract Owners.

A-14

Appendix B
CONDENSED FINANCIAL INFORMATION

THE TRAVELERS FUND BD II FOR VARIABLE ANNUITIES
Accumulation Unit Values (in dollars)

The following tables provide the Accumulation Unit Value information for the variable charge of 1.17% = Standard Death Benefit and the variable charge of 1.45% = Enhanced Death Benefit

Minimum Expense
1.02 M&E, .15 Adm. = 1.17% Net Expense

Portfolio Name	Year		Unit Value at Beginning of Year		Unit Value at End of Year		Number of Units Outstanding at End of Year

AIM Variable Insurance Funds
AIM V.I. Premier Equity Fund — Series I (5/01)		2002		0.886		0.611		452,916
		2001		1.000		0.886		784,729

Alliance Variable Product Series Fund, Inc.
Premier Growth Portfolio — Class B (5/01)		2002		0.857		0.585		591,301
		2001		1.000		0.857		1,599,889

American Funds Insurance Series
Global Growth Fund — Class 2 (5/01)		2002		0.876		0.739		1,531,673
		2001		1.000		0.876		302,319

Growth Fund — Class 2 (5/01)		2002		0.852		0.636		5,204,523
		2001		1.000		0.852		1,775,006

Growth-Income Fund — Class 2 (5/01)		2002		0.967		0.781		8,045,731
		2001		1.000		0.967		4,182,477

Dreyfus Variable Investment Fund
Small Cap Portfolio — Initial Shares (5/98)		2002		1.078		0.862		7,558,046
		2001		1.162		1.078		8,367,551
		2000		1.038		1.162		8,748,382
		1999		0.852		1.038		4,918,004
		1998		1.000		0.852		1,712,698

Greenwich Street Series Fund
Equity Index Portfolio — Class II Shares (5/99)		2002		0.845		0.648		5,023,828
		2001		0.976		0.845		5,290,969
		2000		1.088		0.976		5,833,689
		1999		1.000		1.088		4,474,800

Fundamental Value Portfolio (11/95)		2002		2.497		1.942		28,541,086
		2001		2.667		2.497		35,936,645

B-1

Accumulation Unit Values (in dollars)

Minimum Expense
1.02 M&E, .15 Adm. = 1.17% Net Expense (continued)

Portfolio Name	Year		Unit Value at Beginning of Year		Unit Value at End of Year		Number of Units Outstanding at End of Year

Fundamental Value Portfolio (continued)		2000		2.240		2.667		39,497,603
		1999		1.857		2.240		42,818,333
		1998		1.790		1.857		42,829,917

Salomon Brothers Variable Series Fund Inc.
Investors Fund — Class I (5/98)		2002		1.207		0.918		7,175,121
		2001		1.275		1.207		8,630,494
		2000		1.119		1.275		3,800,664
		1999		1.014		1.119		2,903,384
		1998		1.000		1.014		1,024,070

Total Return Fund — Class I (5/98)		2002		1.039		0.956		1,661,014
		2001		1.060		1.039		1,775,865
		2000		0.994		1.060		1,806,836
		1999		0.997		0.994		1,619,636
		1998		1.000		0.997		761,112

Smith Barney Allocation Series Inc.
Select Balanced Portfolio (3/97)		2002		1.270		1.174		7,016,157
		2001		1.303		1.270		8,521,339
		2000		1.258		1.303		7,372,296
		1999		1.183		1.258		8,078,329
		1998		1.093		1.183		7,215,935
		1997		1.000		1.093		4,148,291

Select Growth Portfolio (3/97)		2002		1.192		0.965		3,477,779
		2001		1.338		1.192		4,058,208
		2000		1.421		1.338		4,479,543
		1999		1.238		1.421		5,037,394
		1998		1.099		1.238		5,355,940
		1997		1.000		1.099		3,396,120

Select High Growth Portfolio (3/97)		2002		1.242		0.936		2,145,452
		2001		1.429		1.242		2,532,075
		2000		1.558		1.429		2,672,371
		1999		1.242		1.558		2,931,329
		1998		1.090		1.242		3,434,814
		1997		1.000		1.090		2,656,918

B-2

Accumulation Unit Values (in dollars)

Minimum Expense
1.02 M&E, .15 Adm. = 1.17% Net Expense (continued)

Portfolio Name	Year		Unit Value at Beginning of Year		Unit Value at End of Year		Number of Units Outstanding at End of Year

Smith Barney Investment Series
Smith Barney Large Cap Core Portfolio (5/01)		2002		0.895		0.655		107,552
		2001		1.000		0.895		49,350

Smith Barney Premier Selections All Cap Growth Portfolio (5/01)		2002		0.896		0.648		945,291
		2001		1.000		0.896		165,628

The Travelers Series Trust
Convertible Securities Portfolio (5/98)		2002		1.280		1.177		2,836,081
		2001		1.306		1.280		3,229,548
		2000		1.175		1.306		2,705,832
		1999		1.001		1.175		1,597,497
		1998		1.000		1.001		418,194

Disciplined Mid Cap Stock Portfolio (5/98)		2002		1.305		1.105		7,539,227
		2001		1.376		1.305		7,464,051
		2000		1.194		1.376		7,288,284
		1999		1.064		1.194		3,984,156
		1998		1.000		1.064		550,487

MFS Emerging Growth Portfolio (11/96)		2002		1.391		0.904		22,916,965
		2001		2.205		1.391		31,323,073
		2000		2.793		2.205		38,334,240
		1999		1.599		2.793		38,199,495
		1998		1.204		1.599		29,936,769
		1997		1.005		1.204		17,294,943
		1996		1.000		1.005		2,505,629

MFS Research Portfolio (5/98)		2002		0.906		0.671		5,179,705
		2001		1.183		0.906		7,294,912
		2000		1.267		1.183		8,594,088
		1999		1.037		1.267		7,720,777
		1998		1.000		1.037		3,295,301

Travelers Series Fund Inc.
AIM Capital Appreciation Portfolio (11/95)		2002		1.317		0.991		36,609,088
		2001		1.748		1.317		48,759,536
		2000		1.974		1.748		58,458,248

B-3

Accumulation Unit Values (in dollars)

Minimum Expense
1.02 M&E, .15 Adm. = 1.17% Net Expense (continued)

Portfolio Name	Year		Unit Value at Beginning of Year		Unit Value at End of Year		Number of Units Outstanding at End of Year

AIM Capital Appreciation Portfolio (continued)		1999		1.397		1.974		59,794,915
		1998		1.206		1.397		59,823,732
		1997		1.088		1.206		48,942,402
		1996		0.958		1.088		29,460,488
		1995		1.000		0.958		2,536,733

Alliance Growth Portfolio (11/95)		2002		2.627		1.724		43,888,761
		2001		3.068		2.627		61,361,661
		2000		3.795		3.068		72,884,231
		1999		2.903		3.795		76,734,335
		1998		2.276		2.903		67,639,943
		1997		1.785		2.276		47,935,239
		1996		1.396		1.785		24,031,009
		1995		1.325		1.396		1,573,668

MFS Total Return Portfolio (11/95)		2002		2.103		1.969		44,055,402
		2001		2.127		2.103		51,925,016
		2000		1.845		2.127		55,043,368
		1999		1.819		1.845		64,327,238
		1998		1.648		1.819		58,653,278
		1997		1.376		1.648		34,927,832
		1996		1.216		1.376		16,650,570
		1995		1.113		1.216		912,547

Putnam Diversified Income Portfolio (11/95)		2002		1.344		1.406		20,779,858
		2001		1.304		1.344		24,095,134
		2000		1.325		1.304		27,997,652
		1999		1.326		1.325		31,303,028
		1998		1.332		1.326		29,566,111
		1997		1.252		1.332		19,504,257
		1996		1.170		1.252		10,424,494
		1995		1.109		1.170		823,783

Salomon Brothers Strategic Total Return Bond Fund (11/95)		2002		1.450		1.553		6,048,142
		2001		1.378		1.450		5,041,930
		2000		1.319		1.378		4,408,007
		1999		1.359		1.319		5,149,182
		1998		1.397		1.359		5,481,141

B-4

Accumulation Unit Values (in dollars)

Minimum Expense
1.02 M&E, .15 Adm. = 1.17% Net Expense (continued)

Portfolio Name	Year		Unit Value at Beginning of Year		Unit Value at End of Year		Number of Units Outstanding at End of Year

Salomon Brothers Strategic Total Return Bond Fund (continued)		1997		1.316		1.397		5,016,054
		1996		1.121		1.316		1,832,502
		1995		1.038		1.121		32,765

Smith Barney High Income Portfolio (11/95)		2002		1.273		1.217		17,052,242
		2001		1.338		1.273		22,082,482
		2000		1.472		1.338		25,994,496
		1999		1.452		1.472		30,633,089
		1998		1.463		1.452		31,054,135
		1997		1.300		1.463		21,213,238
		1996		1.162		1.300		7,719,068
		1995		1.098		1.162		242,593

Smith Barney International All Cap Growth Portfolio (11/95)		2002		1.109		0.814		31,080,395
		2001		1.630		1.109		37,365,581
		2000		2.164		1.630		39,840,894
		1999		1.305		2.164		40,313,454
		1998		1.240		1.305		38,529,419
		1997		1.222		1.240		31,311,119
		1996		1.050		1.222		16,854,894
		1995		1.077		1.050		556,129

Smith Barney Large Cap Value Portfolio (11/95)		2002		2.083		1.536		28,614,647
		2001		2.296		2.083		36,896,310
		2000		2.053		2.296		41,043,900
		1999		2.076		2.053		45,773,195
		1998		1.913		2.076		40,967,323
		1997		1.528		1.913		27,117,422
		1996		1.291		1.528		11,905,953
		1995		1.167		1.291		596,201

Smith Barney Large Capitalization Growth Portfolio (5/98)		2002		1.272		0.945		32,882,101
		2001		1.471		1.272		41,629,754
		2000		1.599		1.471		48,151,480
		1999		1.237		1.599		46,287,883
		1998		1.000		1.237		12,176,408

B-5

Accumulation Unit Values (in dollars)

Minimum Expense
1.02 M&E, .15 Adm. = 1.17% Net Expense (continued)

Portfolio Name	Year		Unit Value at Beginning of Year		Unit Value at End of Year		Number of Units Outstanding at End of Year

Smith Barney Money Market Portfolio (11/95)		2002		1.317		1.318		45,287,737
		2001		1.285		1.317		49,324,087
		2000		1.226		1.285		45,585,702
		1999		1.184		1.226		48,631,112
		1998		1.140		1.184		41,370,187
		1997		1.098		1.140		25,661,233
		1996		1.058		1.098		22,961,508
		1995		1.040		1.058		2,373,923

Travelers Managed Income Portfolio (11/95)		2002		1.469		1.483		15,554,389
		2001		1.392		1.469		18,765,083
		2000		1.306		1.392		18,462,379
		1999		1.309		1.306		20,425,251
		1998		1.261		1.309		11,544,261
		1997		1.163		1.261		4,488,528
		1996		1.142		1.163		2,635,535
		1995		1.080		1.142		225,876

Van Kampen Enterprise Portfolio (11/95)		2002		2.125		1.484		22,699,674
		2001		2.731		2.125		30,008,237
		2000		3.238		2.731		37,059,764
		1999		2.601		3.238		39,297,380
		1998		2.103		2.601		35,643,545
		1997		1.655		2.103		24,635,450
		1996		1.362		1.655		11,360,286
		1995		1.318		1.362		764,534

Variable Annuity Portfolios
Smith Barney Small Cap Growth Opportunities Portfolio (6/01)		2002		0.947		0.696		565,103
		2001		1.000		0.947		471,861

B-6

Accumulation Unit Values (in dollars)

1.30 M&E, .15 Adm. = 1.45% Net Expense

Portfolio Name	Year		Unit Value at Beginning of Year		Unit Value at End of Year		Number of Units Outstanding at End of Year

AIM Variable Insurance Funds
AIM V.I. Premier Equity Fund — Series I (5/01)		2002		0.885		0.608		—
		2001		1.000		0.885		2,179

Alliance Variable Product Series Fund, Inc.
Premier Growth Portfolio — Class B (5/01)		2002		0.855		0.583		8,838
		2001		1.000		0.855		234,311

American Funds Insurance Series
Global Growth Fund — Class 2 (5/01)		2002		0.874		0.735		326,225
		2001		1.000		0.874		78,492

Growth Fund — Class 2 (5/01)		2002		0.850		0.633		1,310,595
		2001		1.000		0.850		438,782

Growth-Income Fund — Class 2 (5/01)		2002		0.965		0.777		1,645,336
		2001		1.000		0.965		719,119

Dreyfus Variable Investment Fund
Small Cap Portfolio — Initial Shares (5/98)		2002		1.067		0.851		963,891
		2001		1.153		1.067		739,152
		2000		1.033		1.153		804,861
		1999		0.851		1.033		449,652
		1998		1.000		0.851		252,461

Greenwich Street Series Fund
Equity Index Portfolio — Class II Shares (5/99)		2002		0.839		0.642		367,027
		2001		0.971		0.839		98,319
		2000		1.086		0.971		88,601
		1999		1.000		1.086		157,335

Fundamental Value Portfolio (11/95)		2002		2.448		1.899		6,612,767
		2001		2.622		2.448		7,518,471
		2000		2.208		2.622		7,852,821
		1999		1.836		2.208		8,588,178
		1998		1.775		1.836		9,424,781
		1997		1.541		1.775		5,975,192
		1996		1.247		1.541		2,043,711

B-7

Accumulation Unit Values (in dollars)

1.30 M&E, .15 Adm. = 1.45% Net Expense (continued)

Portfolio Name	Year		Unit Value at Beginning of Year		Unit Value at End of Year		Number of Units Outstanding at End of Year

Salomon Brothers Variable Series Fund Inc.
Investors Fund — Class I (5/98)		2002		1.195		0.906		1,141,039
		2001		1.265		1.195		1,342,374
		2000		1.114		1.265		858,755
		1999		1.012		1.114		529,114
		1998		1.000		1.012		199,078

Total Return Fund — Class I (5/98)		2002		1.028		0.944		461,333
		2001		1.052		1.028		241,087
		2000		0.989		1.052		214,225
		1999		0.996		0.989		208,331
		1998		1.000		0.996		127,726

Smith Barney Allocation Series Inc.
Select Balanced Portfolio (3/97)		2002		1.253		1.155		1,984,327
		2001		1.290		1.253		2,337,583
		2000		1.248		1.290		2,325,059
		1999		1.177		1.248		2,374,648
		1998		1.091		1.177		2,594,418
		1997		1.000		1.091		1,788,610

Select Growth Portfolio (3/97)		2002		1.176		0.950		1,312,996
		2001		1.323		1.176		1,443,925
		2000		1.410		1.323		1,580,482
		1999		1.232		1.410		2,157,254
		1998		1.097		1.232		2,329,431
		1997		1.000		1.097		1,191,019

Select High Growth Portfolio (3/97)		2002		1.225		0.921		107,009
		2001		1.414		1.225		389,634
		2000		1.546		1.414		403,429
		1999		1.236		1.546		447,062
		1998		1.087		1.236		622,357
		1997		1.000		1.087		391,357

Smith Barney Investment Series
Smith Barney Large Cap Core Portfolio (5/01)		2002		0.893		0.652		26,571
		2001		1.000		0.893		10,809

B-8

Accumulation Unit Values (in dollars)

1.30 M&E, .15 Adm. = 1.45% Net Expense (continued)

Portfolio Name	Year		Unit Value at Beginning of Year		Unit Value at End of Year		Number of Units Outstanding at End of Year

Smith Barney Premier Selections All Cap Growth Portfolio (5/01)		2002		0.894		0.645		506,203
		2001		1.000		0.894		80,062

The Travelers Series Trust
Convertible Securities Portfolio (5/98)		2002		1.267		1.162		418,382
		2001		1.297		1.267		293,689
		2000		1.169		1.297		425,068
		1999		0.999		1.169		429,444
		1998		1.000		0.999		22,352

Disciplined Mid Cap Stock Portfolio (5/98)		2002		1.292		1.091		1,005,471
		2001		1.366		1.292		856,513
		2000		1.188		1.366		833,708
		1999		1.063		1.188		256,491
		1998		1.000		1.063		28,077

MFS Emerging Growth Portfolio (11/96)		2002		1.371		0.888		4,731,917
		2001		2.180		1.371		6,228,366
		2000		2.769		2.180		7,629,810
		1999		1.589		2.769		7,824,809
		1998		1.200		1.589		7,521,739
		1997		1.005		1.200		4,255,983
		1996		1.000		1.005		466,025

MFS Research Portfolio (5/98)		2002		0.897		0.662		1,168,058
		2001		1.174		0.897		1,505,832
		2000		1.261		1.174		1,788,003
		1999		1.035		1.261		1,494,593
		1998		1.000		1.035		1,243,396

Travelers Series Fund Inc.
AIM Capital Appreciation Portfolio (11/95)		2002		1.294		0.971		7,425,616
		2001		1.723		1.294		9,242,361
		2000		1.951		1.723		10,759,671
		1999		1.385		1.951		10,757,693
		1998		1.198		1.385		11,522,469
		1997		1.084		1.198		8,844,768
		1996		0.957		1.084		4,246,308
		1995		1.000		0.957		908,266

B-9

Accumulation Unit Values (in dollars)

1.30 M&E, .15 Adm. = 1.45% Net Expense (continued)

Portfolio Name	Year		Unit Value at Beginning of Year		Unit Value at End of Year		Number of Units Outstanding at End of Year

Alliance Growth Portfolio (11/95)		2002		2.572		1.684		8,423,446
		2001		3.012		2.572		10,948,574
		2000		3.737		3.012		12,646,207
		1999		2.867		3.737		13,423,385
		1998		2.254		2.867		13,083,045
		1997		1.772		2.254		8,482,408
		1996		1.390		1.772		3,613,086
		1995		1.321		1.390		452,738

MFS Total Return Portfolio (11/95)		2002		2.059		1.922		8,750,063
		2001		2.089		2.059		9,333,303
		2000		1.817		2.089		10,057,270
		1999		1.796		1.817		11,574,413
		1998		1.632		1.796		11,645,845
		1997		1.366		1.632		6,138,961
		1996		1.211		1.366		1,810,076
		1995		1.109		1.211		101,549

Putnam Diversified Income Portfolio (11/95)		2002		1.316		1.373		4,163,745
		2001		1.281		1.316		4,654,411
		2000		1.304		1.281		5,666,775
		1999		1.309		1.304		7,148,635
		1998		1.319		1.309		7,312,474
		1997		1.243		1.319		3,953,118
		1996		1.165		1.243		1,460,865
		1995		1.106		1.165		126,460

Salomon Brothers Strategic Total Return Bond Fund (11/95)		2002		1.420		1.516		946,999
		2001		1.353		1.420		659,392
		2000		1.299		1.353		733,479
		1999		1.342		1.299		849,705
		1998		1.383		1.342		973,254
		1997		1.306		1.383		953,563
		1996		1.116		1.306		463,308
		1995		1.035		1.116		79,526

Smith Barney High Income Portfolio (11/95)		2002		1.246		1.189		2,717,395
		2001		1.314		1.246		3,063,554
		2000		1.450		1.314		3,605,109

B-10

Accumulation Unit Values (in dollars)

1.30 M&E, .15 Adm. = 1.45% Net Expense (continued)

Portfolio Name	Year		Unit Value at Beginning of Year		Unit Value at End of Year		Number of Units Outstanding at End of Year

Smith Barney High Income Portfolio (continued)		1999		1.434		1.450		4,266,126
		1998		1.448		1.434		4,739,592
		1997		1.291		1.448		2,639,907
		1996		1.157		1.291		970,188
		1995		1.095		1.157		331,521

Smith Barney International All Cap Growth Portfolio (11/95)		2002		1.086		0.795		4,109,539
		2001		1.601		1.086		5,041,565
		2000		2.131		1.601		5,396,144
		1999		1.289		2.131		5,906,915
		1998		1.228		1.289		6,198,702
		1997		1.213		1.228		4,871,826
		1996		1.046		1.213		2,009,974
		1995		1.074		1.046		200,939

Smith Barney Large Cap Value Portfolio (11/95)		2002		2.040		1.499		5,136,381
		2001		2.254		2.040		6,460,230
		2000		2.022		2.254		7,279,633
		1999		2.050		2.022		8,114,092
		1998		1.894		2.050		8,248,925
		1997		1.517		1.894		4,645,333
		1996		1.285		1.517		1,606,074
		1995		1.164		1.285		146,470

Smith Barney Large Capitalization Growth Portfolio (5/98)		2002		1.259		0.933		3,026,159
		2001		1.460		1.259		3,755,140
		2000		1.592		1.460		4,219,549
		1999		1.234		1.592		3,491,177
		1998		1.000		1.234		1,447,309

Smith Barney Money Market Portfolio (11/95)		2002		1.289		1.287		4,582,342
		2001		1.262		1.289		4,926,672
		2000		1.207		1.262		3,371,813
		1999		1.169		1.207		5,840,571
		1998		1.129		1.169		6,023,674
		1997		1.090		1.129		2,416,649
		1996		1.054		1.090		2,362,442
		1995		1.037		1.054		819,856

B-11

Accumulation Unit Values (in dollars)

1.30 M&E, .15 Adm. = 1.45% Net Expense (continued)

Portfolio Name	Year		Unit Value at Beginning of Year		Unit Value at End of Year		Number of Units Outstanding at End of Year

Travelers Managed Income Portfolio (11/95)		2002		1.438		1.448		2,934,020
		2001		1.367		1.438		3,093,511
		2000		1.286		1.367		2,585,253
		1999		1.293		1.286		2,551,368
		1998		1.248		1.293		2,823,113
		1997		1.154		1.248		1,001,269
		1996		1.137		1.154		265,598
		1995		1.077		1.137		89,569

Van Kampen Enterprise Portfolio (11/95)		2002		2.081		1.449		4,362,576
		2001		2.682		2.081		5,412,388
		2000		3.188		2.682		6,225,353
		1999		2.568		3.188		6,615,143
		1998		2.083		2.568		6,741,005
		1997		1.643		2.083		4,384,827
		1996		1.356		1.643		1,644,330
		1995		1.314		1.356		329,130

Variable Annuity Portfolios
Smith Barney Small Cap Growth Opportunities Portfolio (6/01)		2002		0.945		0.692		45,580
		2001		1.000		0.945		8,130

Notes

Effective January 2, 2003, Dreyfus Variable Investment Fund: Small Cap Portfolio changed its name to Developing Leaders Portfolio.

The number of units outstanding for the 2001 yearend have been restated to include Annuity Units, where appropriate.

The date next to each funding option’s name reflects the date money first came into the funding option through the Separate Account.

Funding options not listed above had no amounts allocated to them or were not available as of December 31, 2002.

“Number of Units outstanding at end of period” may include units for Contract Owners in payout phase, where appropriate.

Smith Barney Allocation Series Inc.: Select High Growth Portfolio is no longer available to new Contract Owners.

B-12

APPENDIX C

THE FIXED ACCOUNT

The Fixed Account is part of the Company’s general account assets. These general account assets include all assets of the Company other than those held in the Separate Accounts sponsored by the Company or its affiliates.

The staff of the SEC does not generally review the disclosure in the prospectus relating to the Fixed Account. Disclosure regarding the Fixed Account and the general account may, however, be subject to certain provisions of the federal securities laws relating to the accuracy and completeness of statements made in the prospectus.

Under the Fixed Account, the Company assumes the risk of investment gain or loss, guarantees a specified interest rate, and guarantees a specified periodic Annuity Payment. The investment gain or loss of the Separate Account or any of the funding options does not affect the Fixed Account Contract Value, or the dollar amount of fixed Annuity Payments made under any payout option.

We guarantee that, at any time, the Fixed Account Contract Value will not be less than the amount of the Purchase Payments allocated to the Fixed Account, plus interest credited as described below, less any applicable premium taxes or prior withdrawals.

Purchase payments allocated to the Fixed Account and any transfers made to the Fixed Account become part of the Company’s general account, which supports insurance and annuity obligations. The general account and any interest therein is not registered under, or subject to the provisions of, the Securities Act of 1933 or Investment Company Act of 1940. We will invest the assets of the Fixed Account at our discretion. Investment income from such Fixed Account assets will be allocated to us and to the Contracts participating in the Fixed Account.

Investment income from the Fixed Account allocated to us includes compensation for mortality and expense risks borne by us in connection with Fixed Account Contracts. The amount of such investment income allocated to the Contracts will vary from year to year in our sole discretion at such rate or rates as we prospectively declare from time to time.

We guarantee the initial rate for any allocations into the Fixed Account for one year from the date of such allocation. We guarantee subsequent renewal rates for the calendar quarter. We also guarantee that for the life of the Contract we will credit interest at not less than 3% per year. We will determine any interest we credit to amounts allocated to the Fixed Account in excess of 3% per year in our sole discretion. You assume the risk that interest credited to the Fixed Account may not exceed the minimum guarantee of 3% for any given year.

Transfers

You may make transfers from the Fixed Account to any other available Variable Funding Option(s) twice a year during the 30 days following the semiannual anniversary of the Contract Date. We limit transfers to an amount of up to 15% of the Fixed Account Contract Value on the semiannual Contract Date anniversary. (This restriction does not apply to transfers under the Dollar Cost Averaging Program.) Amounts previously transferred from the Fixed Account to Variable Funding Options may not be transferred back to the Fixed Account for a period of at least six months from the date of transfer. We reserve the right to waive either of these restrictions.

Automated transfers from the Fixed Account to any of the Variable Funding Options may begin at any time. Automated transfers from the Fixed Account may not deplete your Fixed Account value in a period of less than twelve months from your enrollment in the Dollar Cost Averaging Program.

C-1

APPENDIX D

CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION

The Statement of Additional Information contains more specific information and financial statements relating to The Travelers Insurance Company or The Travelers Life and Annuity Company. A list of the contents of the Statement of Additional Information is set forth below:

The Insurance Company
Principal Underwriter
Distribution and Principal Underwriting Agreement
Valuation of Assets
Performance Information
Federal Tax Considerations
Independent Accountants
Financial Statements

Copies of the Statement of Additional Information dated May 1, 2003 are available without charge. To request a copy, please clip this coupon on the line above, enter your name and address in the spaces provided below, and mail to: The Travelers Life and Annuity Company, Annuity Investor Services, One Cityplace, Hartford, Connecticut 06103-3415. The Travelers Insurance Company Statement of Additional Information is printed on Form L-12253S, and The Travelers Life and Annuity Statement of Additional Information is printed on Form L-12250S.

Name:	________________________________________________________
Address:	________________________________________________________
	________________________________________________________

D-1

APPENDIX E

Enhanced Death Benefit for Contracts Issued Before June 1, 1997

If the Annuitant dies before age 75 and before the Maturity Date, the Company will pay to the beneficiary a death benefit equal to the greater of (1) the guaranteed death benefit, or (2) the Contract Value less any applicable premium tax or outstanding loans.

If the Annuitant dies on or after age 75 and before the Maturity Date, the Company will pay to the beneficiary a death benefit in an amount equal to the greater of (1) the guaranteed death benefit as of the Annuitant's 75th birthday, plus additional Purchase Payments, minus surrenders, outstanding loans and applicable premium tax; or (2) the Contract Value less any applicable premium tax and outstanding loans.

The guaranteed death benefit is equal to the Purchase Payments made to the Contract (minus surrenders, outstanding loans and applicable premium tax) increased by 5% on each Contract Date anniversary, but not beyond the Contract Date anniversary following the Annuitant's 75th birthday, with a maximum guaranteed death benefit of 200% of the total Purchase Payments minus surrenders and outstanding loans and applicable premium tax.

E-1

THIS PAGE INTENTIONALLY LEFT BLANK.

L-12253

May 1, 2003

PART B

Information Required in a Statement of Additional Information

VINTAGE

STATEMENT OF ADDITIONAL INFORMATION

dated

May 1, 2003

for

THE TRAVELERS FUND BD II FOR VARIABLE ANNUITIES

ISSUED BY

THE TRAVELERS LIFE AND ANNUITY COMPANY

This Statement of Additional Information (“SAI”) is not a prospectus but relates to, and should be read in conjunction with, the Individual Variable Annuity Contract Prospectus dated May 1, 2003. A copy of the Prospectus may be obtained by writing to The Travelers Life and Annuity Company, Annuity Investor Services, One Cityplace, Hartford, Connecticut 06103-3415, or by calling (800) 842-8573 or by accessing the Securities and Exchange Commission’s website at http://www.sec.gov.

TABLE OF CONTENTS

THE INSURANCE COMPANY		2
PRINCIPAL UNDERWRITER		2
DISTRIBUTION AND PRINCIPAL UNDERWRITING AGREEMENT		2
VALUATION OF ASSETS		2
PERFORMANCE INFORMATION		3
FEDERAL TAX CONSIDERATIONS		9
INDEPENDENT AUDITORS		12
FINANCIAL STATEMENTS		F-1

THE INSURANCE COMPANY

The Travelers Life and Annuity Company (the “Company”) is a stock insurance company chartered in 1973 in Connecticut and continuously engaged in the insurance business since that time. The Company is licensed to conduct a life insurance business in all states (except New York) and the District of Columbia and Puerto Rico. The Company’s Home Office is located at One Cityplace Hartford, Connecticut 06103-3415 and its telephone number is (860) 308-1000.

The Company is a wholly owned subsidiary of The Travelers Insurance Company, an indirect, wholly owned subsidiary of Citigroup Inc. (“Citigroup”), a diversified holding company whose businesses provide a broad range of financial services to consumer and corporate customers around the world. Citigroup’s activities are conducted through the Global Consumer, Global Corporate and Investment Bank, Global Investment Management and Private Banking, and Investment Activities segments.

State Regulation. The Company is subject to the laws of the state of Connecticut governing insurance companies and to regulation by the Insurance Commissioner of the state of Connecticut (the “Commissioner”). An annual statement covering the operations of the Company for the preceding year, as well as its financial conditions as of December 31 of such year, must be filed with the Commissioner in a prescribed format on or before March 1 of each year. The Company’s books and assets are subject to review or examination by the Commissioner or his agents at all times, and a full examination of its operations is conducted at least once every four years.

The Company is also subject to the insurance laws and regulations of all other states in which it is licensed to operate. However, the insurance departments of each of these states generally apply the laws of the home state (jurisdiction of domicile) in determining the field of permissible investments.

The Separate Account. The Travelers Fund BD II for Variable Annuities (“Fund BD II”) meets the definition of a separate account under the federal securities laws, and will comply with the provisions of the 1940 Act. Additionally, the operations of Fund BD II are subject to the provisions of Section 38a-433 of the Connecticut General Statutes, which authorizes the Commissioner to adopt regulations under it. Section 38a-433 contains no restrictions on the investments of Fund BD II, and the Commissioner has adopted no regulations under the Section that affect Fund BD II.

PRINCIPAL UNDERWRITER

Travelers Distribution LLC (“TDLLC”) serves as principal underwriter for Fund BD II and the Contracts. The offering is continuous. TDLLC’s principal executive offices are located at One Cityplace, Hartford, Connecticut. TDLLC is affiliated with the Company and Fund BD II.

DISTRIBUTION AND PRINCIPAL UNDERWRITING AGREEMENT

Under the terms of the Distribution and Principal Underwriting Agreement among Fund BD II, TDLLC and the Company, TDLLC acts as agent for the distribution of the Contracts and as principal underwriter for the Contracts. The Company reimburses TDLLC for certain sales and overhead expenses connected with sales functions.

VALUATION OF ASSETS

Funding Options: The value of the assets of each Funding Option is determined at 4:00 p.m. eastern time on each business day, unless we need to close earlier due to an emergency. A business day is any day the New York Stock Exchange is open. It is expected that the Exchange will be closed on Saturdays and Sundays and on the observed holidays of New Year’s Day, Martin Luther King, Jr. Day, President’s Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Each security traded on a national securities exchange is valued at the last reported sale price on the business day. If there has been no sale on that day, then the value of the security is taken to be the mean between the reported bid and asked prices on the business day or on the basis of quotations received from a reputable broker or any other recognized source.

Any security not traded on a securities exchange but traded in the over-the-counter-market and for which market quotations are readily available is valued at the mean between the quoted bid and asked prices on the business day or on the basis of quotations received from a reputable broker or any other recognized source.

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 maturing in more than sixty days for which there is no reliable quoted market price are valued by “marking to market” (computing a market value based upon quotations from dealers or issuers for securities of a similar type, quality and maturity.) “Marking to market” takes into account unrealized appreciation or depreciation due to changes in interest rates or other factors which would influence the current fair values of such securities. Short-term investments maturing in sixty days or less for which there is no reliable quoted market price are valued at amortized cost which approximates market.

The Contract Value: The value of an Accumulation Unit on any business day is determined by multiplying the value on the preceding business day by the net investment factor for the valuation period just ended. The net investment factor is used to measure the investment performance of a Funding Option from one valuation period to the next. The net investment factor for a Funding Option for any valuation period is equal to the sum of 1.000000 plus the net investment rate (the gross investment rate less any applicable Funding Option deductions during the valuation period relating to the mortality and expense risk charge and the administrative expense charge). The gross investment rate of a Funding Option is equal to (a) minus (b), divided by (c) where:

(a) = investment income plus capital gains and losses (whether realized or unrealized);

(b) = any deduction for applicable taxes (presently zero); and

The gross investment rate may be either positive or negative. A Funding Option’s investment income includes any distribution whose ex-dividend date occurs during the valuation period.

Accumulation Unit Value. The value of the accumulation unit for each Funding Option was initially established at $1.00. The value of an accumulation unit on any business day is determined by multiplying the value on the preceding business day by the net investment factor for the valuation period just ended. The net investment factor is calculated for each Funding Option and takes into account the investment performance, expenses and the deduction of certain expenses.

Annuity Unit Value. The initial Annuity Unit Value applicable to each Funding Option was established at $1.00. An Annuity Unit Value as of any business day is equal to (a) the value of the Annuity Unit on the preceding business day, multiplied by (b) the corresponding net investment factor for the business day just ended, divided by (c) the assumed net investment factor for the valuation period. (For example, the assumed net investment factor based on an annual assumed net investment rate of 3.0% for a valuation period of one day is 1.000081 and, for a period of two days, is 1.000081 x 1.000081.)

PERFORMANCE INFORMATION

From time to time, the Company may advertise several types of historical performance for the Funding Options of Fund BD II. The Company may advertise the “standardized average annual total returns” of the Funding Options available through Fund BD II, calculated in a manner prescribed by the Securities and Exchange Commission, as well as the “nonstandardized total returns,” as described below:

STANDARDIZED METHOD. Quotations of average annual total returns are computed according to a formula in which a hypothetical initial investment of $1,000 is allocated to the Funding Option, and then related to ending redeemable values over one-, five- and ten-year periods, or for a period covering the time during which the Funding Option has been in existence, if less. If a Funding Option has been in existence for less than one year, the “since inception” total return performance quotations are year-to-date and are not average annual total returns. These quotations reflect the deduction of all recurring charges during each period (on a pro rata basis in the case of fractional periods). The deduction for the annual contract administrative charge is converted to a percentage of assets based on the actual fee collected, divided by the average net assets per contract sold under the Prospectus to which this SAI relates. Each quotation assumes a total redemption at the en d of each period with any applicable withdrawal charge deducted at that time.

NONSTANDARDIZED METHOD. Nonstandardized “total returns” will be calculated in a similar manner based on the performance of the Funding Options over a period of time, usually for the calendar year-to-date, and for the past one-, three-, five- and ten-year periods. Nonstandardized total returns will not reflect the deduction of any applicable withdrawal charge or the annual contract administrative charge, which, if reflected, would decrease the level of performance shown. The withdrawal charge is not reflected because the Contract is designed for long-term investment.

For Funding Options that were in existence before they became available under Fund BD II, the nonstandardized average annual total return quotations will reflect the investment performance that such Funding Options would have achieved (reduced by the applicable charges) had they been held under the Contract for the period quoted. The total return quotations are based upon historical earnings and are not necessarily representative of future performance.

Average annual total returns for each of the Funding Options computed according to the standardized and nonstandardized methods for the period ending December 31, 2002 are set forth in the following tables.

TRAVELERS VINTAGE
STANDARDIZED PERFORMANCE AS OF 12/31/02

	Standard Death Benefit Option								Enhanced Death Benefit Option+

	Inception Date		1 Year			5 Years			Inception			1 Year			5 Years			Inception

STOCK ACCOUNTS:
AIM Capital Appreciation Portfolio		10/10/95		-29.29	%		-4.24	%		-0.14	%		-29.48	%		-4.51	%		-0.42	%
AIM V.I. Premier Equity Fund		5/1/01		-35.22	%		—			-28.29	%		-35.40	%		—			-28.49	%
Alliance Growth Portfolio		6/20/94		-38.30	%		-5.79	%		6.57	%		-38.47	%		-6.05	%		6.27	%
Alliance Premier Growth Portfolio — Class B*		5/1/01		-35.76	%		—			-30.10	%		-35.94	%		—			-30.30	%
American Funds Global Growth Fund — Class 2*		5/1/01		-20.70	%		—			-19.65	%		-20.93	%		—			-19.87	%
American Funds Growth Fund — Class 2*		5/1/01		-29.82	%		—			-26.53	%		-30.02	%		—			-26.73	%
American Funds Growth — Income Fund — Class 2*		5/1/01		-24.15	%		—			-16.95	%		-24.36	%		—			-17.18	%
Dreyfus VIF Small Cap Portfolio		5/6/98		-24.87	%		—			-3.57	%		-25.08	%		—			-3.84	%
Equity Index Portfolio — Class II		5/5/99		-27.89	%		—			-11.91	%		-28.09	%		—			-12.16	%
MFS Emerging Growth Portfolio		11/3/96		-38.92	%		-5.96	%		-1.64	%		-39.09	%		-6.23	%		-1.91	%
MFS Research Portfolio		5/4/98		-30.46	%		—			-8.62	%		-30.66	%		—			-8.88	%
Salomon Brothers Variable Investors Fund		5/4/98		-28.52	%		—			-2.25	%		-28.72	%		—			-2.52	%
Smith Barney Fundamental Value Portfolio		11/21/94		-26.90	%		1.26	%		8.51	%		-27.10	%		0.97	%		8.21	%
Smith Barney International All Cap Growth Portfolio		6/20/94		-30.97	%		-8.44	%		-2.40	%		-31.17	%		-8.70	%		-2.67	%
Smith Barney Large Cap Core Portfolio		5/1/01		-31.25	%		—			-25.25	%		-31.44	%		—			-25.46	%
Smith Barney Large Cap Growth Portfolio		5/6/98		-30.11	%		—			-1.63	%		-30.31	%		—			-1.91	%
Smith Barney Large Cap Value Portfolio		6/20/94		-30.72	%		-4.69	%		5.13	%		-30.91	%		-4.95	%		4.84	%
Smith Barney Premier Selection All Cap Growth Portfolio		5/1/01		-31.99	%		—			-25.70	%		-32.18	%		—			-25.91	%
Smith Barney Small Cap Growth Opportunities Portfolio		5/1/01		-30.94	%		—			-22.49	%		-31.13	%		—			-22.71	%
Travelers Disciplined Mid Cap Stock Portfolio		5/18/98		-20.41	%		—			1.77	%		-20.64	%		—			1.48	%
Van Kampen Enterprise Portfolio		6/21/94		-34.38	%		-7.12	%		4.71	%		-34.57	%		-7.38	%		4.42	%
BOND ACCOUNTS:
Putnam Diversified Income Portfolio		6/20/94		-1.36	%		0.69	%		4.05	%		-1.65	%		0.40	%		3.76	%
Salomon Brothers Strategic Total Return Bond Fund		6/21/94		1.07	%		1.75	%		5.27	%		0.77	%		1.47	%		4.97	%
Smith Barney High Income Portfolio		6/22/94		-10.12	%		-4.00	%		2.31	%		-10.37	%		-4.27	%		2.02	%
Travelers Convertible Securities Portfolio		5/8/98		-13.60	%		—			3.18	%		-13.84	%		—			2.88	%
Travelers Managed Income Portfolio		6/28/94		-5.01	%		2.94	%		4.72	%		-5.29	%		2.65	%		4.43	%

TRAVELERS VINTAGE
STANDARDIZED PERFORMANCE AS OF 12/31/02

	Standard Death Benefit Option											Enhanced Death Benefit Option+

	Inception Date		1 Year			5 Years			Inception			1 Year			5 Years			Inception

BALANCED ACCOUNTS:
MFS Total Return Portfolio		6/20/94		-11.99	%		3.26	%		8.24	%		-12.24	%		2.96	%		7.93	%
Salomon Brothers Variable Total Return Fund		5/6/98		-13.48	%		—			-1.39	%		-13.73	%		—			-1.67	%
Smith Barney Allocation Select Balanced Portfolio		3/10/97		-13.14	%		1.05	%		2.64	%		-13.38	%		0.76	%		2.35	%
Smith Barney Allocation Select Growth Portfolio		5/1/01		-23.89	%		—			-18.99	%		-24.10	%		—			-19.22	%
MONEY MARKET ACCOUNTS:
Smith Barney Money Market Portfolio		6/20/94		-5.92	%		2.57	%		3.27	%		-6.18	%		2.28	%		2.98	%

The inception date used to calculate standardized performance is based on the date that the investment option became active in the product.

*These funds offer multiple classes of shares. The performance above may reflect the fees and performance of another class of the same fund for period before the current class existed. If the current class’s 12b-1 fee and other expenses were higher, the performance shown would be lower. They may not be available in every jurisdiction.

An investment in the Money Market Portfolio is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the fund.

TRAVELERS VINTAGE
NONSTANDARDIZED PERFORMANCE AS OF 12/31/02

	Standard Death Benefit Option														Enhanced Death Benefit Option+

	Inception Date		YTD			1 Year			3 Years			5 Years			Since Inception			YTD			1 Year			3 Years			5 Years			Since Inception

STOCK ACCOUNTS:
AIM Capital Appreciation Portfolio		10/10/95		-24.76	%		-24.76	%		-20.51	%		-3.85	%		-0.12	%		-24.97	%		-24.97	%		-20.73	%		-4.12	%		-0.40	%
AIM V.I. Premier Equity Fund		5/5/93		-31.07	%		-31.07	%		-20.48	%		-3.33	%		6.58	%		-31.27	%		-31.27	%		-20.70	%		-3.60	%		6.28	%
Alliance Growth Portfolio		6/20/94		-34.35	%		-34.35	%		-23.10	%		-5.40	%		6.59	%		-34.53	%		-34.53	%		-23.32	%		-5.66	%		6.29	%
Alliance Premier Growth Portfolio — Class B*		6/26/92		-31.65	%		-31.65	%		-22.85	%		-2.60	%		8.82	%		-31.84	%		-31.84	%		-23.06	%		-2.87	%		8.51	%
American Funds Global Growth Fund — Class 2*		4/30/97		-15.63	%		-15.63	%		-16.90	%		4.14	%		4.97	%		-15.87	%		-15.87	%		-17.13	%		3.84	%		4.67	%
American Funds Growth Fund — Class 2*		2/8/84		-25.33	%		-25.33	%		-14.55	%		5.33	%		12.30	%		-25.55	%		-25.55	%		-14.79	%		5.03	%		11.98	%
American Funds Growth — Income Fund — Class 2*		2/28/85		-19.29	%		-19.29	%		-4.43	%		2.29	%		10.77	%		-19.52	%		-19.52	%		-4.70	%		2.00	%		10.45	%
Dreyfus VIF Small Cap Portfolio		8/31/90		-20.06	%		-20.06	%		-5.99	%		-0.85	%		22.79	%		-20.29	%		-20.29	%		-6.25	%		-1.13	%		22.45	%
Equity Index Portfolio — Class II		11/30/91		-23.28	%		-23.28	%		-15.85	%		-2.03	%		8.88	%		-23.50	%		-23.50	%		-16.09	%		-2.31	%		8.58	%
MFS Emerging Growth Portfolio		8/30/96		-35.01	%		-35.01	%		-31.32	%		-5.57	%		-0.81	%		-35.19	%		-35.19	%		-31.52	%		-5.84	%		-1.09	%
MFS Research Portfolio		3/23/98		-26.01	%		-26.01	%		-19.10	%		—			-7.78	%		-26.22	%		-26.22	%		-19.33	%		—			-8.04	%
Salomon Brothers Variable Investors Fund		2/17/98		-23.95	%		-23.95	%		-6.37	%		—			-0.18	%		-24.16	%		-24.16	%		-6.63	%		—			-0.46	%
Smith Barney Fundamental Value Portfolio		12/3/93		-22.22	%		-22.22	%		-4.64	%		1.64	%		8.44	%		-22.44	%		-22.44	%		-4.90	%		1.36	%		8.20	%
Smith Barney International All Cap Growth Portfolio		6/20/94		-26.56	%		-26.56	%		-27.78	%		-8.06	%		-2.38	%		-26.76	%		-26.76	%		-27.99	%		-8.32	%		-2.65	%
Smith Barney Large Cap Core Portfolio		9/14/99		-26.86	%		-26.86	%		-16.64	%		—			-10.84	%		-27.06	%		-27.06	%		-16.87	%		—			-11.09	%
Smith Barney Large Cap Growth Portfolio		5/1/98		-25.64	%		-25.64	%		-16.06	%		—			-1.19	%		-25.85	%		-25.85	%		-16.29	%		—			-1.47	%
Smith Barney Large Cap Value Portfolio		6/20/94		-26.29	%		-26.29	%		-9.22	%		-4.29	%		5.15	%		-26.49	%		-26.49	%		-9.47	%		-4.56	%		4.86	%
Smith Barney Premier Selection All Cap Growth Portfolio		9/14/99		-27.64	%		-27.64	%		-10.56	%		—			-4.76	%		-27.84	%		-27.84	%		-10.81	%		—			-5.02	%
Smith Barney Small Cap Growth Opportunities Portfolio		2/7/97		-26.52	%		-26.52	%		-13.12	%		-3.25	%		-1.04	%		-26.73	%		-26.73	%		-13.36	%		-3.52	%		-1.31	%
Travelers Disciplined Mid Cap Stock Portfolio		4/1/97		-15.32	%		-15.32	%		-2.53	%		3.71	%		8.49	%		-15.56	%		-15.56	%		-2.81	%		3.42	%		8.19	%
Van Kampen Enterprise Portfolio		6/21/94		-30.19	%		-30.19	%		-22.88	%		-6.74	%		4.73	%		-30.38	%		-30.38	%		-23.10	%		-7.00	%		4.44	%
BOND ACCOUNTS:
Putnam Diversified Income Portfolio		6/20/94		4.66	%		4.66	%		2.01	%		1.08	%		4.07	%		4.36	%		4.36	%		1.72	%		0.80	%		3.78	%
Salomon Brothers Strategic Total Return Bond Fund		6/21/94		7.08	%		7.08	%		5.57	%		2.14	%		5.29	%		6.78	%		6.78	%		5.27	%		1.85	%		5.00	%
Smith Barney High Income Portfolio		6/22/94		-4.37	%		-4.37	%		-6.14	%		-3.60	%		2.33	%		-4.64	%		-4.64	%		-6.40	%		-3.87	%		2.05	%
Travelers Convertible Securities Portfolio		5/1/98		-8.07	%		-8.07	%		0.07	%		—			3.55	%		-8.33	%		-8.33	%		-0.21	%		—			3.26	%
Travelers Managed Income Portfolio		6/28/94		1.00	%		1.00	%		4.35	%		3.30	%		4.74	%		0.72	%		0.72	%		4.05	%		3.02	%		4.45	%

TRAVELERS VINTAGE
NONSTANDARDIZED PERFORMANCE AS OF 12/31/02 (cont’d)

	Standard Death Benefit Option														Enhanced Death Benefit Option+

	Inception Date		YTD			1 Year			3 Years			5 Years			Since Inception			YTD			1 Year			3 Years			5 Years			Since Inception

BALANCED ACCOUNTS:
MFS Total Return Portfolio		6/20/94		-6.36	%		-6.36	%		2.18	%		3.62	%		8.26	%		-6.63	%		-6.63	%		1.90	%		3.33	%		7.96	%
Salomon Brothers Variable Total Return Fund		2/17/98		-7.95	%		-7.95	%		-1.26	%		—			0.05	%		-8.21	%		-8.21	%		-1.54	%		—			-0.23	%
Smith Barney Allocation Select Balanced Portfolio		3/10/97		-7.58	%		-7.58	%		-2.27	%		1.44	%		2.80	%		-7.84	%		-7.84	%		-2.54	%		1.16	%		2.51	%
Smith Barney Allocation Select Growth Portfolio		3/11/97		-19.02	%		-19.02	%		-12.08	%		-2.56	%		-0.60	%		-19.25	%		-19.25	%		-12.33	%		-2.83	%		-0.88	%
MONEY MARKET ACCOUNTS:
Smith Barney Money Market Portfolio		6/20/94		0.10	%		0.10	%		2.45	%		2.94	%		3.29	%		-0.18	%		-0.18	%		2.16	%		2.65	%		3.00	%
Smith Barney Money Market Portfolio — 7 Day Yield				-0.27	%		This yield quotation more closely reflects the current earnings of this fund.												-0.55	%		This yield quotation more closely reflects the current earnings of this fund.

The inception date is the date that the underlying fund commenced operations

FEDERAL TAX CONSIDERATIONS

The following description of the federal income tax consequences under this Contract is general in nature and is therefore not exhaustive and is not intended to cover all situations. Because of the complexity of the law and the fact that the tax results will vary according to the factual status of the individual involved, a person contemplating purchase of an annuity contract and by a contract owner or beneficiary who may make elections under a contract should consult with a qualified tax or legal adviser.

Mandatory Distributions for Qualified Plans

Federal tax law requires that minimum annual distributions begin by April 1st of the calendar year following the later of calendar year in which a participant under a qualified plan or a Section 403(b) annuity attains age 70½ or retires. Minimum annual distributions under an IRA must begin by April 1st of the calendar year in which the contract owner attains 70½ regardless of when he or she retires. Distributions must also begin or be continued according to the minimum distribution rules under the Code following the death of the contract owner or the annuitant.

Nonqualified Annuity Contracts

Individuals may purchase tax-deferred annuities without any limits. The purchase payments receive no tax benefit, deduction or deferral, but taxes on the increases in the value of the contract are generally deferred until distribution. Generally, if an annuity contract is owned by other than an individual (or an entity such as a trust or other “look-through” entity which owns for an individual’s benefit), the owner will be taxed each year on the increase in the value of the contract. An exception applies for purchase payments made before March 1, 1986.

If two or more annuity contracts are purchased from the same insurer within the same calendar year, such annuity contract will be aggregated for federal income tax purposes. As a result, distributions from any of them will be taxed based upon the amount of income in all of the same calendar year series of annuities. This will generally have the effect of causing taxes to be paid sooner on the deferred gain in the contracts.

Those receiving partial distributions made before the maturity date will generally be taxed on an income-first basis to the extent of income in the contract. If you are exchanging another annuity contract for this annuity, certain pre-August 14, 1982 deposits into an annuity contract that have been placed in the contract by means of a tax-deferred exchange under Section 1035 of the Code may be withdrawn first without income tax liability. This information on deposits must be provided to the Company by the other insurance company at the time of the exchange. There is income in the contract generally to the extent the cash value exceeds the investment in the contract. The investment in the contract is equal to the amount of premiums paid less any amount received previously which was excludable from gross income. Any direct or indirect borrowing against the value of the contract or pledging of the contract as security for a loan will be treated as a cash distribution under the tax law .

In order to be treated as an annuity contract for federal income tax purposes, Section 72(s) of the Code requires any non-qualified contract to contain certain provisions specifying how your interest in the contract will be distributed in the event of the death of an owner of the contract. Specifically, Section 72(s) requires that (a) if an owner dies on or after the annuity starting date, but prior to the time the entire interest in the contract has been distributed, the entire interest in the contract will be distributed at least as rapidly as under the method of distribution being used as of the date of such owner’s death; and (b) if any owner dies prior to the annuity starting date, the entire interest in the contract will be distributed within five years after the date of such owner’s death. These requirements will be considered satisfied as to any portion of an owner’s interest which is payable to or for the benefit of a designated beneficiary and which is dist ributed over the life of such designated beneficiary or over a period not extending beyond the life expectancy of that beneficiary, provided that such distributions begin within one year of the owner’s death. The designated beneficiary refers to a natural person designated by the owner as a beneficiary and to whom ownership of the contract passes by reason of death. However, if the designated beneficiary is the surviving spouse of the deceased owner, the contract may be continued with the surviving spouse as the successor-owner. Contracts will be administered by the Company in accordance with these rules and the Company will make a notification when payments should be commenced. Special rules apply regarding distribution requirements when an annuity is owned by a trust or other entity for the benefit of one or more individuals.

Individual Retirement Annuities

To the extent of earned income for the year and not exceeding the applicable limit for the taxable year, an individual may make deductible contributions to an individual retirement annuity (IRA). The applicable limit ($2,000 per year prior to 2002) has been increased by the Economic Growth and Tax Relief Reconciliation Act of 2001 (“EGTRRA”). The limit is $3,000 for calendar years 2002 – 2004, $4,000 for calendar years 2005-2007, and $5,000 for 2008, and will be indexed for inflation in years subsequent to 2008. There are certain limits on the deductible amount based on the adjusted gross income of the individual and spouse and based on their participation in a retirement plan. If an individual is married and the spouse does not have earned income, the individual may establish IRAs for the individual and spouse. Purchase payments may then be made annually into IRAs for both spouses in the maximum amount of 100% of earned income up to a combined limit based on the ind ividual limits outlined above.

The Code provides for the purchase of a Simplified Employee Pension (SEP) plan. A SEP is funded through an IRA with an annual employer contribution limit of up to $40,000 for each participant. The Internal Revenue Services has not reviewed the contract for qualifications as an IRA, and has not addressed in a ruling of general applicability whether a death benefit provision such as the optional enhanced death benefit in the contract comports with IRA qualification requirements.

SIMPLE Plan IRA Form

Effective January 1, 1997, employers may establish a savings incentive match plan for employees (“SIMPLE plan”) under which employees can make elective salary reduction contributions to an IRA based on a percentage of compensation of up to the applicable limit for the taxable year. The applicable limit was increased under EGTRRA. The applicable limit was increased under EGTRRA to $7,000 for 2002, $8,000 for 2003, $9,000 in 2004, $10,000 in 2005 (which will be indexed for inflation for years after 2005. (Alternatively, the employer can establish a SIMPLE cash or deferred arrangement under IRS Section 401(k)). Under a SIMPLE plan IRA, the employer must either make a matching contribution or a nonelective contribution based on the prescribed formulas for all eligible employees. Early withdrawals are subject to the 10% early withdrawal penalty generally applicable to IRAs, except that an early withdrawal by an employee under a SIMPLE plan IRA, within the first two years of pa rticipation, shall be subject to a 25% early withdrawal tax.

Roth IRAs

Effective January 1, 1998, Section 408A of the Code permits certain individuals to contribute to a Roth IRA. Eligibility to make contributions is based upon income, and the applicable limits vary based on marital status and/or whether the contribution is a rollover contribution from another IRA or an annual contribution. Contributions to a Roth IRA, which are subject to certain limitations (similar to the annual limits for the traditional IRA’s), are not deductible and must be made in cash or as a rollover or transfer from another Roth IRA or other IRA. A conversion of a “traditional” IRA to a Roth IRA may be subject to tax and other special rules apply. You should consult a tax adviser before combining any converted amounts with other Roth IRA contributions, including any other conversion amounts from other tax years.

Qualified distributions from a Roth IRA are tax-free. A qualified distribution requires that the Roth IRA has been held for at least 5 years, and the distribution is made after age 59½, on death or disability of the owner, or for a limited amount ($10,000) for a qualified first time home purchase for the owner or certain relatives. Income tax and a 10% penalty tax may apply to distributions made (1) before age 59½ (subject to certain exceptions) or (2) during five taxable years starting with the year in which the first contribution is made to any Roth IRA of the individual.

Qualified Pension and Profit-Sharing Plans

Like most other contributions made under a qualified pension or profit-sharing plan, purchase payments made by an employer are not currently taxable to the participant and increases in the value of a contract are not subject to taxation until received by a participant or beneficiary.

Distributions are generally taxable to the participant or beneficiary as ordinary income in the year of receipt. Any distribution that is considered the participant’s “investment in the contract” is treated as a return of capital and is not taxable. Under a qualified plan, the investment in the contract may be zero.

The annual limits that apply to the amounts that may be contributed to a defined contribution plan each year were increased by EGTRRA. The maximum total annual limit was increased from $35,000 to $40,000. The limit on employee salary reduction deferrals (commonly referred to as “401(k) contributions”) increase on a graduated basis; $11,000 in 2002, $12,000 in 2003, $13,000 in 2004, $14,000 in 2005 and $15,000 in 2005. The $15,000 annual limit will be indexed for inflation after 2005.

Section 403(b) Plans

Under Code section 403(b), payments made by public school systems and certain tax exempt organizations to purchase annuity contracts for their employees are excludable from the gross income of the employee, subject to certain limitations. However, these payments may be subject to FICA (Social Security) taxes. A qualified contract issued as a tax-sheltered annuity under section 403(b) will be amended as necessary to conform to the requirements of the Code. The annual limits under Code Section 403(b) for employee salary reduction deferrals are increased under the same rules applicable to 401(k) plans ($11,000 in 2002, $12,000 in 2003, etc.)

Code section 403(b)(11) restricts this distribution under Code section 403(b) annuity contracts of: (1) elective contributions made in years beginning after December 31, 1998; (2) earnings on those contributions; and (3) earnings in such years on amounts held as of the last year beginning before January 1, 1989. Distribution of those amounts may only occur upon death of the employee, attainment of age 59½, separation from service, disability, or financial hardship. In addition, income attributable to elective contributions may not be distributed in the case of hardship.

Federal Income Tax Withholding

The portion of a distribution, which is taxable income to the recipient, will be subject to federal income tax withholding as follows:

1. Eligible Rollover Distribution from Section 403(b) Plans or Arrangements, from Qualified Pension and Profit-Sharing Plans, or from 457
Plans Sponsored by Governmental Entities

There is a mandatory 20% tax withholding for plan distributions that are eligible for rollover to an IRA or to another qualified retirement plan (including a 457 plan sponsored by a governmental entity) but that are not directly rolled over. A distribution made directly to a participant or beneficiary may avoid this result if:

(a) a periodic settlement distribution is elected based upon a life or life expectancy calculation, or

(b) a term-for-years settlement distribution is elected for a period of ten years or more, payable at least annually, or

(c) a minimum required distribution as defined under the tax law is taken after the attainment of the age of 70½ or as otherwise required by law, or

(d) the distribution is a hardship distribution.

A distribution including a rollover that is not a direct rollover will be subject to the 20% withholding, and the 10% additional tax penalty on premature withdrawals may apply to any amount not added back in the rollover. The 20% withholding may be recovered when the participant or beneficiary files a personal income tax return for the year if a rollover was completed within 60 days of receipt of the funds, except to the extent that the participant or spousal beneficiary is otherwise underwithheld or short on estimated taxes for that year.

2. Other Non-Periodic Distributions (full or partial redemptions)

To the extent not subject to 20% mandatory withholding as described in 1. above, the portion of a non-periodic distribution, which constitutes taxable income, will be subject to federal income tax withholding, if the aggregate distributions exceed $200 for the year, unless the recipient elects not to have taxes withheld. If no such election is made, 10% of the taxable portion of the distribution will be withheld as federal income tax; provided that the recipient may elect any other percentage. Election forms will be provided at the time distributions are requested. This form of withholding applies to all annuity programs.

3. Periodic Distributions (distributions payable over a period greater than one year)

The portion of a periodic distribution, which constitutes taxable income, will be subject to federal income tax withholding under the wage withholding tables as if the recipient were married claiming three exemptions. A recipient may elect not to have income taxes withheld or have income taxes withheld at a different rate by providing a completed election form. Election forms will be provided at the time distributions are requested. This form of withholding applies to all annuity programs. As of January 1, 2003, a recipient receiving periodic payments (e.g., monthly or annual payments under an annuity option) which total $15,600 or less per year, will generally be exempt from periodic withholding.

Recipients who elect not to have withholding made are liable for payment of federal income tax on the taxable portion of the distribution. Recipients may also be subject to penalties under the estimated tax payment rules if withholding and estimated tax payments are not sufficient to cover tax liabilities.

Recipients who do not provide a social security number or other taxpayer identification number will not be permitted to elect out of withholding. Additionally, U.S citizens residing outside of the country, or U.S. legal residents temporarily residing outside the country, are subject to different withholding rules and cannot elect out of withholding.

INDEPENDENT AUDITORS

KPMG LLP, One Financial Plaza, Hartford, CT 06103 has been selected as independent auditors to examine and report on the fund’s financial statements.

The financial statements and schedules of The Travelers Life and Annuity Company as of December 31, 2002 and 2001, and for each of the years in the three-year period ended December 31, 2002, included herein, and the financial statements of The Travelers Fund BD II for Variable Annuities as of December 31, 2002, and for each of the years in the two-year period ended December 31, 2002, also included herein, have been included in reliance upon the reports of KPMG LLP, independent accountants, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing. The audit reports covering the December 31, 2002, financial statements and schedules of The Travelers Life and Annuity Company refer to changes in the Company’s methods of accounting for goodwill and other intangible assets in 2002, and for derivative instruments and hedging activities and for securitized financial assets in 2001.

VINTAGE

STATEMENT OF ADDITIONAL INFORMATION

THE TRAVELERS FUND BD II FOR VARIABLE ANNUITIES

Individual Variable Annuity Contract
issued by

The Travelers Life and Annuity Company
One Cityplace
Hartford, Connecticut 06103-3415

L-12540S

May 2003

ANNUAL REPORT
DECEMBER 31, 2002

                           THE TRAVELERS FUND BD II
                           FOR VARIABLE ANNUITIES

[TRAVELERS LOGO]

The Travelers Insurance Company
The Travelers Life and Annuity Company
One Cityplace
Hartford, CT 06103





                            THE TRAVELERS FUND BD II
                             FOR VARIABLE ANNUITIES

                       STATEMENT OF ASSETS AND LIABILITIES
                                DECEMBER 31, 2002


                                        AIM V.I.        PREMIER GROWTH
                                     PREMIER EQUITY       PORTFOLIO -      GLOBAL GROWTH      GROWTH FUND -
                                    FUND - SERIES I        CLASS B         FUND - CLASS 2        CLASS 2
                                    ---------------     --------------     --------------     -------------
ASSETS:
  Investments at market value:         $  276,742         $  351,373         $1,371,433         $4,141,594

  Receivables:
    Dividends ................                 --                 --                 --                 --
                                       ----------         ----------         ----------         ----------

      Total Assets ...........            276,742            351,373          1,371,433          4,141,594
                                       ----------         ----------         ----------         ----------


LIABILITIES:
  Payables:
    Insurance charges ........                 31                 39                160                487
    Administrative fees ......                  4                  6                 22                 68
                                       ----------         ----------         ----------         ----------

      Total Liabilities ......                 35                 45                182                555
                                       ----------         ----------         ----------         ----------

NET ASSETS:                            $  276,707         $  351,328         $1,371,251         $4,141,039
                                       ==========         ==========         ==========         ==========



                        See Notes to Financial Statements


                                      -1-


                            THE TRAVELERS FUND BD II
                             FOR VARIABLE ANNUITIES

                 STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
                                DECEMBER 31, 2002


                                                            SMALL CAP         EQUITY INDEX
                                      GROWTH-INCOME        PORTFOLIO -         PORTFOLIO -         FUNDAMENTAL
                                      FUND - CLASS 2     INITIAL SHARES      CLASS II SHARES     VALUE PORTFOLIO
                                      --------------     --------------      ---------------     ---------------
ASSETS:
  Investments at market value:         $ 7,559,596         $ 7,335,119         $ 3,492,738         $68,006,907

  Receivables:
    Dividends ................                  --                  --                  --                  --
                                       -----------         -----------         -----------         -----------

      Total Assets ...........           7,559,596           7,335,119           3,492,738          68,006,907
                                       -----------         -----------         -----------         -----------


LIABILITIES:
  Payables:
    Insurance charges ........                 879                 843                 396               7,925
    Administrative fees ......                 124                 120                  57               1,109
                                       -----------         -----------         -----------         -----------

      Total Liabilities ......               1,003                 963                 453               9,034
                                       -----------         -----------         -----------         -----------

NET ASSETS:                            $ 7,558,593         $ 7,334,156         $ 3,492,285         $67,997,873
                                       ===========         ===========         ===========         ===========



                        See Notes to Financial Statements


                                      -2-


                            THE TRAVELERS FUND BD II
                             FOR VARIABLE ANNUITIES

                 STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
                                DECEMBER 31, 2002


                                                                                                       SMITH BARNEY
 INVESTORS FUND -      TOTAL RETURN      SELECT BALANCED      SELECT GROWTH        SELECT HIGH          LARGE CAP
     CLASS I          FUND - CLASS I        PORTFOLIO           PORTFOLIO        GROWTH PORTFOLIO     CORE PORTFOLIO
 ----------------     --------------     ---------------      -------------      ----------------     --------------
   $ 7,624,130         $ 2,024,273         $10,531,773         $ 4,605,653         $ 2,106,692         $    87,743


            --                  --                  --                  --                  --                  --
   -----------         -----------         -----------         -----------         -----------         -----------

     7,624,130           2,024,273          10,531,773           4,605,653           2,106,692              87,743
   -----------         -----------         -----------         -----------         -----------         -----------




           877                 239               1,244                 552                 238                  10
           124                  33                 173                  76                  34                   2
   -----------         -----------         -----------         -----------         -----------         -----------

         1,001                 272               1,417                 628                 272                  12
   -----------         -----------         -----------         -----------         -----------         -----------

   $ 7,623,129         $ 2,024,001         $10,530,356         $ 4,605,025         $ 2,106,420         $    87,731
   ===========         ===========         ===========         ===========         ===========         ===========



                        See Notes to Financial Statements


                                      -3-


                            THE TRAVELERS FUND BD II
                             FOR VARIABLE ANNUITIES

                 STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
                                DECEMBER 31, 2002


                                      SMITH BARNEY
                                   PREMIER SELECTIONS      CONVERTIBLE         DISCIPLINED
                                     ALL CAP GROWTH         SECURITIES           MID CAP          MFS EMERGING
                                        PORTFOLIO           PORTFOLIO        STOCK PORTFOLIO    GROWTH PORTFOLIO
                                   ------------------      -----------       ---------------    ----------------
ASSETS:
  Investments at market value:         $   939,531         $ 3,824,901         $ 9,429,910         $24,920,562

  Receivables:
    Dividends ................                  --                  --                  --                  --
                                       -----------         -----------         -----------         -----------

      Total Assets ...........             939,531           3,824,901           9,429,910          24,920,562
                                       -----------         -----------         -----------         -----------


LIABILITIES:
  Payables:
    Insurance charges ........                 115                 440               1,083               2,903
    Administrative fees ......                  15                  63                 154                 408
                                       -----------         -----------         -----------         -----------

      Total Liabilities ......                 130                 503               1,237               3,311
                                       -----------         -----------         -----------         -----------

NET ASSETS:                            $   939,401         $ 3,824,398         $ 9,428,673         $24,917,251
                                       ===========         ===========         ===========         ===========



                        See Notes to Financial Statements


                                      -4-


                            THE TRAVELERS FUND BD II
                             FOR VARIABLE ANNUITIES

                 STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
                                DECEMBER 31, 2002


                         AIM CAPITAL                                                                      SALOMON BROTHERS
   MFS RESEARCH         APPRECIATION        ALLIANCE GROWTH        MFS TOTAL        PUTNAM DIVERSIFIED    STRATEGIC TOTAL
     PORTFOLIO            PORTFOLIO           PORTFOLIO         RETURN PORTFOLIO     INCOME PORTFOLIO     RETURN BOND FUND
   ------------         ------------        ---------------     ----------------    ------------------    ----------------
   $  4,246,923         $ 43,499,739         $ 89,878,494         $103,565,564         $ 34,940,316         $ 10,826,989


             --                   --                   --                   --                   --                   --
   ------------         ------------         ------------         ------------         ------------         ------------

      4,246,923           43,499,739           89,878,494          103,565,564           34,940,316           10,826,989
   ------------         ------------         ------------         ------------         ------------         ------------




            496                5,089               10,427               12,095                4,079                1,254
             69                  716                1,470                1,703                  574                  178
   ------------         ------------         ------------         ------------         ------------         ------------

            565                5,805               11,897               13,798                4,653                1,432
   ------------         ------------         ------------         ------------         ------------         ------------

   $  4,246,358         $ 43,493,934         $ 89,866,597         $103,551,766         $ 34,935,663         $ 10,825,557
   ============         ============         ============         ============         ============         ============



                        See Notes to Financial Statements


                                      -5-


                            THE TRAVELERS FUND BD II
                             FOR VARIABLE ANNUITIES

                 STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
                                DECEMBER 31, 2002


                                                          SMITH BARNEY
                                      SMITH BARNEY        INTERNATIONAL       SMITH BARNEY        SMITH BARNEY
                                       HIGH INCOME          ALL CAP            LARGE CAP      LARGE CAPITALIZATION
                                        PORTFOLIO       GROWTH PORTFOLIO     VALUE PORTFOLIO    GROWTH PORTFOLIO
                                      ------------      ----------------     ---------------  --------------------
ASSETS:
  Investments at market value:         $23,991,817         $28,583,384         $51,653,134         $33,917,914

  Receivables:
    Dividends ................                  --                  --                  --                  --
                                       -----------         -----------         -----------         -----------

      Total Assets ...........          23,991,817          28,583,384          51,653,134          33,917,914
                                       -----------         -----------         -----------         -----------


LIABILITIES:
  Payables:
    Insurance charges ........               2,778               3,266               5,993               3,881
    Administrative fees ......                 394                 465                 847                 558
                                       -----------         -----------         -----------         -----------

      Total Liabilities ......               3,172               3,731               6,840               4,439
                                       -----------         -----------         -----------         -----------

NET ASSETS:                            $23,988,645         $28,579,653         $51,646,294         $33,913,475
                                       ===========         ===========         ===========         ===========



                        See Notes to Financial Statements


                                      -6-


                            THE TRAVELERS FUND BD II
                             FOR VARIABLE ANNUITIES

                 STATEMENT OF ASSETS AND LIABILITIES - CONTINUED
                                DECEMBER 31, 2002


                                                                  SMITH BARNEY
   SMITH BARNEY                                                 SMALL CAP GROWTH
   MONEY MARKET      TRAVELERS MANAGED        VAN KAMPEN         OPPORTUNITIES
     PORTFOLIO        INCOME PORTFOLIO   ENTERPRISE PORTFOLIO      PORTFOLIO             COMBINED
   ------------      -----------------   --------------------   ----------------       ------------
   $ 65,578,734         $ 27,327,152         $ 40,008,528         $    424,665         $717,074,023


         21,293                   --                   --                   --               21,293
   ------------         ------------         ------------         ------------         ------------

     65,600,027           27,327,152           40,008,528              424,665          717,095,316
   ------------         ------------         ------------         ------------         ------------




          7,470                3,194                4,655                   48               83,186
          1,072                  451                  656                    7               11,752
   ------------         ------------         ------------         ------------         ------------

          8,542                3,645                5,311                   55               94,938
   ------------         ------------         ------------         ------------         ------------

   $ 65,591,485         $ 27,323,507         $ 40,003,217         $    424,610         $717,000,378
   ============         ============         ============         ============         ============



                        See Notes to Financial Statements


                                      -7-


                            THE TRAVELERS FUND BD II
                             FOR VARIABLE ANNUITIES

                             STATEMENT OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 2002


                                                         AIM V.I.          PREMIER GROWTH
                                                      PREMIER EQUITY         PORTFOLIO -         GLOBAL GROWTH        GROWTH FUND -
                                                      FUND - SERIES I         CLASS B1           FUND - CLASS 2          CLASS 2
                                                      ---------------      --------------        --------------       -------------
INVESTMENT INCOME:
  Dividends ...................................         $     1,130          $        --          $    10,774          $     1,333
                                                        -----------          -----------          -----------          -----------

EXPENSES:
  Insurance charges ...........................               4,974                8,915               10,132               38,198
  Administrative fees .........................                 731                1,268                1,432                5,384
                                                        -----------          -----------          -----------          -----------

    Total expenses ............................               5,705               10,183               11,564               43,582
                                                        -----------          -----------          -----------          -----------

      Net investment income (loss) ............              (4,575)             (10,183)                (790)             (42,249)
                                                        -----------          -----------          -----------          -----------

REALIZED GAIN (LOSS) AND UNREALIZED
  GAIN (LOSS) ON INVESTMENTS:
    Realized gain distribution ................                  --                   --                   --                   --
    Realized gain (loss) on sale of investments            (121,991)            (263,377)             (86,964)            (370,869)
                                                        -----------          -----------          -----------          -----------

      Realized gain (loss) ....................            (121,991)            (263,377)             (86,964)            (370,869)
                                                        -----------          -----------          -----------          -----------

    Change in unrealized gain (loss)
      on investments ..........................             (75,418)            (115,307)            (105,096)            (693,465)
                                                        -----------          -----------          -----------          -----------


  Net increase (decrease) in net assets
    resulting from operations .................         $  (201,984)         $  (388,867)         $  (192,850)         $(1,106,583)
                                                        ===========          ===========          ===========          ===========



                        See Notes to Financial Statements


                                      -8-


                            THE TRAVELERS FUND BD II
                             FOR VARIABLE ANNUITIES

                       STATEMENT OF OPERATIONS - CONTINUED
                      FOR THE YEAR ENDED DECEMBER 31, 2002


                           SMALL CAP           EQUITY INDEX                                 INVESTORS
  GROWTH-INCOME          PORTFOLIO -            PORTFOLIO -          FUNDAMENTAL             FUND -              TOTAL RETURN
  FUND - CLASS 2        INITIAL SHARES        CLASS II SHARES      VALUE PORTFOLIO           CLASS I            FUND - CLASS I
  --------------        --------------        ---------------      ---------------         ------------         --------------
   $     78,229          $      4,036          $     69,832          $    845,840          $    101,527          $     30,507
   ------------          ------------          ------------          ------------          ------------          ------------


         68,237                95,978                40,659               945,237               104,481                21,874
          9,630                13,736                 5,936               132,580                14,804                 3,095
   ------------          ------------          ------------          ------------          ------------          ------------

         77,867               109,714                46,595             1,077,817               119,285                24,969
   ------------          ------------          ------------          ------------          ------------          ------------

            362              (105,678)               23,237              (231,977)              (17,758)                5,538
   ------------          ------------          ------------          ------------          ------------          ------------



             --                    --                    --             1,419,023                    --                    --
       (360,397)           (1,458,302)             (416,238)           (1,662,557)             (451,317)              (34,602)
   ------------          ------------          ------------          ------------          ------------          ------------

       (360,397)           (1,458,302)             (416,238)             (243,534)             (451,317)              (34,602)
   ------------          ------------          ------------          ------------          ------------          ------------


     (1,168,184)             (657,631)             (669,817)          (22,226,493)           (2,353,007)             (149,060)
   ------------          ------------          ------------          ------------          ------------          ------------



   $ (1,528,219)         $ (2,221,611)         $ (1,062,818)         $(22,702,004)         $ (2,822,082)         $   (178,124)
   ============          ============          ============          ============          ============          ============



                        See Notes to Financial Statements


                                      -9-


                            THE TRAVELERS FUND BD II
                             FOR VARIABLE ANNUITIES

                       STATEMENT OF OPERATIONS - CONTINUED
                      FOR THE YEAR ENDED DECEMBER 31, 2002


                                                                                                                     SMITH BARNEY
                                                      SELECT BALANCED      SELECT GROWTH         SELECT HIGH          GROWTH AND
                                                         PORTFOLIO           PORTFOLIO         GROWTH PORTFOLIO    INCOME PORTFOLIO
                                                      ---------------      -------------       ----------------    ----------------
INVESTMENT INCOME:
  Dividends ...................................         $   768,999          $   588,286          $    30,255          $         4
                                                        -----------          -----------          -----------          -----------

EXPENSES:
  Insurance charges ...........................             128,501               61,006               29,851                   31
  Administrative fees .........................              17,833                8,368                4,238                    5
                                                        -----------          -----------          -----------          -----------

    Total expenses ............................             146,334               69,374               34,089                   36
                                                        -----------          -----------          -----------          -----------

      Net investment income (loss) ............             622,665              518,912               (3,834)                 (32)
                                                        -----------          -----------          -----------          -----------

REALIZED GAIN (LOSS) AND UNREALIZED
  GAIN (LOSS) ON INVESTMENTS:
    Realized gain distribution ................                  --              313,209                   --                   --
    Realized gain (loss) on sale of investments            (272,226)            (204,042)            (172,650)               4,920
                                                        -----------          -----------          -----------          -----------

      Realized gain (loss) ....................            (272,226)             109,167             (172,650)               4,920
                                                        -----------          -----------          -----------          -----------

    Change in unrealized gain (loss)
      on investments ..........................          (1,367,774)          (1,866,619)            (629,004)              (3,811)
                                                        -----------          -----------          -----------          -----------


  Net increase (decrease) in net assets
    resulting from operations .................         $(1,017,335)         $(1,238,540)         $  (805,488)         $     1,077
                                                        ===========          ===========          ===========          ===========



                        See Notes to Financial Statements


                                      -10-


                            THE TRAVELERS FUND BD II
                             FOR VARIABLE ANNUITIES

                       STATEMENT OF OPERATIONS - CONTINUED
                      FOR THE YEAR ENDED DECEMBER 31, 2002


                         SMITH BARNEY
   SMITH BARNEY       PREMIER SELECTIONS        CONVERTIBLE          DISCIPLINED
     LARGE CAP          ALL CAP GROWTH          SECURITIES             MID CAP             MFS EMERGING          MFS RESEARCH
  CORE PORTFOLIO           PORTFOLIO             PORTFOLIO         STOCK PORTFOLIO       GROWTH PORTFOLIO         PORTFOLIO
  --------------      ------------------       ------------        ---------------       ----------------        ------------
   $        528          $        493          $    297,865          $     57,987          $         --          $     29,957
   ------------          ------------          ------------          ------------          ------------          ------------


            723                 8,051                43,183               111,755               381,693                62,512
            103                 1,106                 6,177                15,965                53,725                 8,767
   ------------          ------------          ------------          ------------          ------------          ------------

            826                 9,157                49,360               127,720               435,418                71,279
   ------------          ------------          ------------          ------------          ------------          ------------

           (298)               (8,664)              248,505               (69,733)             (435,418)              (41,322)
   ------------          ------------          ------------          ------------          ------------          ------------



             --                    --                27,793                11,266                    --                    --
         (8,763)              (75,776)             (108,806)             (403,433)           (8,535,808)             (912,216)
   ------------          ------------          ------------          ------------          ------------          ------------

         (8,763)              (75,776)              (81,013)             (392,167)           (8,535,808)             (912,216)
   ------------          ------------          ------------          ------------          ------------          ------------


        (14,357)             (188,854)             (544,015)           (1,492,131)           (7,682,266)             (884,802)
   ------------          ------------          ------------          ------------          ------------          ------------



   $    (23,418)         $   (273,294)         $   (376,523)         $ (1,954,031)         $(16,653,492)         $ (1,838,340)
   ============          ============          ============          ============          ============          ============



                        See Notes to Financial Statements


                                      -11-


                            THE TRAVELERS FUND BD II
                             FOR VARIABLE ANNUITIES

                       STATEMENT OF OPERATIONS - CONTINUED
                      FOR THE YEAR ENDED DECEMBER 31, 2002


                                                    AIM CAPITAL
                                                    APPRECIATION       ALLIANCE GROWTH         MFS TOTAL         PUTNAM DIVERSIFIED
                                                      PORTFOLIO           PORTFOLIO         RETURN PORTFOLIO      INCOME PORTFOLIO
                                                    ------------       ---------------      ----------------     ------------------
INVESTMENT INCOME:
  Dividends ...................................     $         --        $    665,342          $  6,482,138          $  8,102,461
                                                    ------------        ------------          ------------          ------------

EXPENSES:
  Insurance charges ...........................          619,622           1,352,323             1,235,595               386,813
  Administrative fees .........................           87,297             190,922               174,316                54,476
                                                    ------------        ------------          ------------          ------------

    Total expenses ............................          706,919           1,543,245             1,409,911               441,289
                                                    ------------        ------------          ------------          ------------

      Net investment income (loss) ............         (706,919)           (877,903)            5,072,227             7,661,172
                                                    ------------        ------------          ------------          ------------

REALIZED GAIN (LOSS) AND UNREALIZED
  GAIN (LOSS) ON INVESTMENTS:
    Realized gain distribution ................               --                  --             4,105,244                    --
    Realized gain (loss) on sale of investments       (6,649,715)        (22,477,851)              351,851            (1,159,505)
                                                    ------------        ------------          ------------          ------------

      Realized gain (loss) ....................       (6,649,715)        (22,477,851)            4,457,095            (1,159,505)
                                                    ------------        ------------          ------------          ------------

    Change in unrealized gain (loss)
      on investments ..........................       (9,893,905)        (36,450,559)          (17,418,040)           (4,889,005)
                                                    ------------        ------------          ------------          ------------


  Net increase (decrease) in net assets
    resulting from operations .................     $(17,250,539)       $(59,806,313)         $ (7,888,718)         $  1,612,662
                                                    ============        ============          ============          ============



                        See Notes to Financial Statements


                                      -12-


                            THE TRAVELERS FUND BD II
                             FOR VARIABLE ANNUITIES

                       STATEMENT OF OPERATIONS - CONTINUED
                      FOR THE YEAR ENDED DECEMBER 31, 2002


                                               SMITH BARNEY                                SMITH BARNEY
 SALOMON BROTHERS        SMITH BARNEY         INTERNATIONAL         SMITH BARNEY              LARGE              SMITH BARNEY
  STRATEGIC TOTAL        HIGH INCOME          ALL CAP GROWTH          LARGE CAP           CAPITALIZATION         MONEY MARKET
 RETURN BOND FUND         PORTFOLIO             PORTFOLIO          VALUE PORTFOLIO       GROWTH PORTFOLIO         PORTFOLIO
 ----------------        ------------         --------------       ---------------       ----------------        ------------
   $    976,747          $  6,040,071          $    304,750          $  2,435,668          $    141,211          $    895,856
   ------------          ------------          ------------          ------------          ------------          ------------


         85,164               288,863               366,407               734,420               468,709               739,367
         12,080                41,053                52,138               103,756                67,396               106,159
   ------------          ------------          ------------          ------------          ------------          ------------

         97,244               329,916               418,545               838,176               536,105               845,526
   ------------          ------------          ------------          ------------          ------------          ------------

        879,503             5,710,155              (113,795)            1,597,492              (394,894)               50,330
   ------------          ------------          ------------          ------------          ------------          ------------



             --                    --                    --                    --                    --                    --
       (273,182)           (4,111,137)           (8,320,285)           (3,008,872)           (2,837,405)                   --
   ------------          ------------          ------------          ------------          ------------          ------------

       (273,182)           (4,111,137)           (8,320,285)           (3,008,872)           (2,837,405)                   --
   ------------          ------------          ------------          ------------          ------------          ------------


         46,694            (3,077,874)             (359,195)          (20,089,930)          (10,834,123)                   --
   ------------          ------------          ------------          ------------          ------------          ------------



   $    653,015          $ (1,478,856)         $ (8,793,275)         $(21,501,310)         $(14,066,422)         $     50,330
   ============          ============          ============          ============          ============          ============



                        See Notes to Financial Statements


                                      -13-


                            THE TRAVELERS FUND BD II
                             FOR VARIABLE ANNUITIES

                       STATEMENT OF OPERATIONS - CONTINUED
                      FOR THE YEAR ENDED DECEMBER 31, 2002


                                                                                                SMITH BARNEY
                                                                            VAN KAMPEN        SMALL CAP GROWTH
                                                   TRAVELERS MANAGED        ENTERPRISE         OPPORTUNITIES
                                                    INCOME PORTFOLIO         PORTFOLIO            PORTFOLIO             COMBINED
                                                   -----------------       -------------      ----------------       -------------
INVESTMENT INCOME:
  Dividends ...................................       $   3,011,694        $     377,507        $          --        $  32,351,027
                                                      -------------        -------------        -------------        -------------

EXPENSES:
  Insurance charges ...........................             295,406              584,951                5,850            9,329,481
  Administrative fees .........................              41,731               82,550                  849            1,319,606
                                                      -------------        -------------        -------------        -------------

    Total expenses ............................             337,137              667,501                6,699           10,649,087
                                                      -------------        -------------        -------------        -------------

      Net investment income (loss) ............           2,674,557             (289,994)              (6,699)          21,701,940
                                                      -------------        -------------        -------------        -------------

REALIZED GAIN (LOSS) AND UNREALIZED
  GAIN (LOSS) ON INVESTMENTS:
    Realized gain distribution ................             213,207                   --                   --            6,089,742
    Realized gain (loss) on sale of investments             200,466          (11,638,964)             (86,859)         (75,926,872)
                                                      -------------        -------------        -------------        -------------

      Realized gain (loss) ....................             413,673          (11,638,964)             (86,859)         (69,837,130)
                                                      -------------        -------------        -------------        -------------

    Change in unrealized gain (loss)
      on investments ..........................          (2,739,689)          (8,556,387)            (108,925)        (157,258,049)
                                                      -------------        -------------        -------------        -------------


  Net increase (decrease) in net assets
    resulting from operations .................       $     348,541        $ (20,485,345)       $    (202,483)       $(205,393,239)
                                                      =============        =============        =============        =============



                        See Notes to Financial Statements


                                      -14-


                       This page intentionally left blank


                                      -15-


                            THE TRAVELERS FUND BD II
                             FOR VARIABLE ANNUITIES

                       STATEMENT OF CHANGES IN NET ASSETS
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001


                                                  AIM V.I. PREMIER               PREMIER GROWTH                GLOBAL GROWTH
                                              EQUITY FUND - SERIES I          PORTFOLIO - CLASS B             FUND - CLASS 2
                                            --------------------------    --------------------------    --------------------------
                                                2002           2001           2002           2001           2002           2001
                                            -----------    -----------    -----------    -----------    -----------    -----------
OPERATIONS:
  Net investment income (loss) ..........   $    (4,575)   $    (4,074)   $   (10,183)   $    (2,511)   $      (790)   $      (908)
  Realized gain (loss) ..................      (121,991)       (47,757)      (263,377)         1,572        (86,964)           666
  Change in unrealized gain (loss)
    on investments ......................       (75,418)       (79,450)      (115,307)        50,800       (105,096)         8,188
                                            -----------    -----------    -----------    -----------    -----------    -----------

    Net increase (decrease) in net assets
      resulting from operations .........      (201,984)      (131,281)      (388,867)        49,861       (192,850)         7,946
                                            -----------    -----------    -----------    -----------    -----------    -----------

UNIT TRANSACTIONS:
  Participant purchase payments .........            --         21,125          6,400             --         12,409             --
  Participant transfers from other
    funding options .....................        89,715      1,145,173        707,221      1,541,265      1,983,675        361,934
  Administrative charges ................           (76)           (17)          (182)            (9)          (265)           (33)
  Contract surrenders ...................       (68,628)       (52,108)      (215,741)       (20,351)      (127,224)        (2,663)
  Participant transfers to other
    funding options .....................      (239,815)      (285,397)    (1,328,164)          (105)      (637,779)       (33,899)
  Other payments to participants ........            --             --             --             --             --             --
                                            -----------    -----------    -----------    -----------    -----------    -----------

    Net increase (decrease) in net assets
      resulting from unit transactions ..      (218,804)       828,776       (830,466)     1,520,800      1,230,816        325,339
                                            -----------    -----------    -----------    -----------    -----------    -----------

    Net increase (decrease) in net assets      (420,788)       697,495     (1,219,333)     1,570,661      1,037,966        333,285


NET ASSETS:
    Beginning of year ...................       697,495             --      1,570,661             --        333,285             --
                                            -----------    -----------    -----------    -----------    -----------    -----------
    End of year .........................   $   276,707    $   697,495    $   351,328    $ 1,570,661    $ 1,371,251    $   333,285
                                            ===========    ===========    ===========    ===========    ===========    ===========



                        See Notes to Financial Statements


                                      -16-


                            THE TRAVELERS FUND BD II
                             FOR VARIABLE ANNUITIES

                 STATEMENT OF CHANGES IN NET ASSETS - CONTINUED
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001


                                           GROWTH-INCOME              SMALL CAP PORTFOLIO -          EQUITY INDEX PORTFOLIO -
       GROWTH FUND - CLASS 2              FUND - CLASS 2                  INITIAL SHARES                 CLASS II SHARES
   ----------------------------    ----------------------------    ----------------------------    ----------------------------
        2002            2001           2002            2001            2002            2001            2002            2001
   ------------    ------------    ------------    ------------    ------------    ------------    ------------    ------------
   $    (42,249)   $     (3,474)   $        362    $       (242)   $   (105,678)   $    (74,197)   $     23,237    $    (25,006)
       (370,869)         30,525        (360,397)         67,463      (1,458,302)       (793,381)       (416,238)       (147,712)

       (693,465)        (55,073)     (1,168,184)         10,358        (657,631)       (155,256)       (669,817)       (600,850)
   ------------    ------------    ------------    ------------    ------------    ------------    ------------    ------------


     (1,106,583)        (28,022)     (1,528,219)         77,579      (2,221,611)     (1,022,834)     (1,062,818)       (773,568)
   ------------    ------------    ------------    ------------    ------------    ------------    ------------    ------------


            750              --         123,015          43,800          41,291          76,971          14,000           2,700

      5,837,367       2,210,218       7,407,581       5,771,868       3,358,317       3,190,641       1,143,246         471,988
           (800)           (157)         (1,658)           (372)         (2,385)         (1,605)           (952)           (808)
     (1,277,593)        (36,128)       (866,571)       (174,490)     (1,453,822)       (456,824)       (245,782)       (214,039)

     (1,188,123)       (248,670)     (2,289,919)       (944,936)     (2,026,084)     (3,015,000)       (811,349)       (710,012)
         (9,598)        (11,622)        (25,129)        (33,956)       (172,569)        (54,372)        (97,231)             --
   ------------    ------------    ------------    ------------    ------------    ------------    ------------    ------------


      3,362,003       1,913,641       4,347,319       4,661,914        (255,252)       (260,189)          1,932        (450,171)
   ------------    ------------    ------------    ------------    ------------    ------------    ------------    ------------

      2,255,420       1,885,619       2,819,100       4,739,493      (2,476,863)     (1,283,023)     (1,060,886)     (1,223,739)



      1,885,619              --       4,739,493              --       9,811,019      11,094,042       4,553,171       5,776,910
   ------------    ------------    ------------    ------------    ------------    ------------    ------------    ------------
   $  4,141,039    $  1,885,619    $  7,558,593    $  4,739,493    $  7,334,156    $  9,811,019    $  3,492,285    $  4,553,171
   ============    ============    ============    ============    ============    ============    ============    ============



                        See Notes to Financial Statements


                                      -17-


                            THE TRAVELERS FUND BD II
                             FOR VARIABLE ANNUITIES

                 STATEMENT OF CHANGES IN NET ASSETS - CONTINUED
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001


                                                  FUNDAMENTAL VALUE                                           TOTAL RETURN FUND -
                                                      PORTFOLIO              INVESTORS FUND - CLASS I               CLASS I
                                            ----------------------------    --------------------------     -------------------------
                                                2002            2001            2002          2001            2002          2001
                                            ------------    ------------    -----------    -----------     ----------    -----------
OPERATIONS:
  Net investment income (loss) ..........   $   (231,977)   $   (618,933)   $   (17,758)   $   (20,075)    $    5,538    $   18,229
  Realized gain (loss) ..................       (243,534)     13,865,381       (451,317)       (58,898)       (34,602)       (5,756)
  Change in unrealized gain (loss)
    on investments ......................    (22,226,493)    (21,444,377)    (2,353,007)      (482,672)      (149,060)      (63,418)
                                            ------------    ------------    -----------    -----------     ----------    ----------

    Net increase (decrease) in net assets
      resulting from operations .........    (22,702,004)     (8,197,929)    (2,822,082)      (561,645)      (178,124)      (50,945)
                                            ------------    ------------    -----------    -----------     ----------    ----------

UNIT TRANSACTIONS:
  Participant purchase payments .........         70,415         373,848         22,795        164,594          6,137        12,526
  Participant transfers from other
    funding options .....................      7,305,675      11,975,370      1,912,238      9,568,204        620,088       504,273
  Administrative charges ................        (23,810)        (20,356)        (2,605)        (1,688)          (571)         (377)
  Contract surrenders ...................    (11,315,089)    (11,489,790)    (1,086,847)      (652,904)       (84,406)     (144,291)
  Participant transfers to other
    funding options .....................    (11,228,598)     (8,803,783)    (2,134,240)    (2,212,050)      (395,649)     (221,224)
  Other payments to participants ........     (2,262,875)     (1,625,720)      (291,059)      (209,870)       (36,476)     (146,943)
                                            ------------    ------------    -----------    -----------     ----------    ----------

    Net increase (decrease) in net assets
      resulting from unit transactions ..    (17,454,282)     (9,590,431)    (1,579,718)     6,656,286        109,123         3,964
                                            ------------    ------------    -----------    -----------     ----------    ----------

    Net increase (decrease) in net assets    (40,156,286)    (17,788,360)    (4,401,800)     6,094,641        (69,001)      (46,981)


NET ASSETS:
    Beginning of year ...................    108,154,159     125,942,519     12,024,929      5,930,288      2,093,002     2,139,983
                                            ------------    ------------    -----------    -----------     ----------    ----------
    End of year .........................   $ 67,997,873    $108,154,159    $ 7,623,129    $12,024,929     $2,024,001    $2,093,002
                                            ============    ============    ===========    ===========     ==========    ==========




                        See Notes to Financial Statements


                                      -18-


                            THE TRAVELERS FUND BD II
                             FOR VARIABLE ANNUITIES

                 STATEMENT OF CHANGES IN NET ASSETS - CONTINUED
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001


         SELECT BALANCED               SELECT CONSERVATIVE                                                SELECT HIGH
            PORTFOLIO                      PORTFOLIO               SELECT GROWTH PORTFOLIO              GROWTH PORTFOLIO
   ----------------------------    --------------------------    ----------------------------    ----------------------------
       2002            2001            2002          2001            2002            2001            2002            2001
   ------------    ------------    -----------   ------------    ------------    ------------    ------------    ------------
   $    622,665    $    337,126    $        --   $    147,443    $    518,912    $    (87,957)   $     (3,834)   $    144,624
       (272,226)        431,660             --       (117,887)        109,167         (19,344)       (172,650)        190,032

     (1,367,774)     (1,172,309)            --          4,182      (1,866,619)       (772,507)       (629,004)       (902,658)
   ------------    ------------    -----------   ------------    ------------    ------------    ------------    ------------


     (1,017,335)       (403,523)            --         33,738      (1,238,540)       (879,808)       (805,488)       (568,002)
   ------------    ------------    -----------   ------------    ------------    ------------    ------------    ------------


         19,931          57,561             --            (10)          4,500          17,650              --           3,973

        247,865       3,295,394             --        128,147         149,546           3,645          57,067          25,879
         (1,960)         (1,866)            --             --          (1,851)         (1,663)           (690)           (660)
     (1,037,411)       (721,783)            --        (50,632)       (349,281)       (336,364)       (151,961)       (165,383)

     (1,260,783)       (919,023)            --     (2,173,144)       (289,711)       (246,226)       (590,314)        (63,372)
       (176,143)       (157,567)            --             --        (206,554)       (103,499)        (23,806)             --
   ------------    ------------    -----------   ------------    ------------    ------------    ------------    ------------


     (2,208,501)      1,552,716             --     (2,095,639)       (693,351)       (666,457)       (709,704)       (199,563)
   ------------    ------------    -----------   ------------    ------------    ------------    ------------    ------------

     (3,225,836)      1,149,193             --     (2,061,901)     (1,931,891)     (1,546,265)     (1,515,192)       (767,565)



     13,756,192      12,606,999             --      2,061,901       6,536,916       8,083,181       3,621,612       4,389,177
   ------------    ------------    -----------   ------------    ------------    ------------    ------------    ------------
   $ 10,530,356    $ 13,756,192    $        --   $         --    $  4,605,025    $  6,536,916    $  2,106,420    $  3,621,612
   ============    ============    ===========   ============    ============    ============    ============    ============



                        See Notes to Financial Statements


                                      -19-


                            THE TRAVELERS FUND BD II
                             FOR VARIABLE ANNUITIES

                 STATEMENT OF CHANGES IN NET ASSETS - CONTINUED
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001


                                                  SELECT INCOME              SMITH BARNEY GROWTH         SMITH BARNEY LARGE CAP
                                                    PORTFOLIO               AND INCOME PORTFOLIO            CORE PORTFOLIO
                                            -------------------------    --------------------------    --------------------------
                                                2002          2001           2002           2001           2002           2001
                                            -----------   -----------    -----------    -----------    -----------    -----------
OPERATIONS:
  Net investment income (loss) ..........   $        --   $    75,326    $       (32)   $      (111)   $      (298)   $      (328)
  Realized gain (loss) ..................            --      (103,515)         4,920              5         (8,763)           (62)
  Change in unrealized gain (loss)
    on investments ......................            --        45,865         (3,811)         3,811        (14,357)        (3,642)
                                            -----------   -----------    -----------    -----------    -----------    -----------

    Net increase (decrease) in net assets
      resulting from operations .........            --        17,676          1,077          3,705        (23,418)        (4,032)
                                            -----------   -----------    -----------    -----------    -----------    -----------

UNIT TRANSACTIONS:
  Participant purchase payments .........            --             5          1,174             --             --         10,000
  Participant transfers from other
    funding options .....................            --            --             --         81,419         90,851         48,283
  Administrative charges ................            --            --             (3)            --            (23)            (6)
  Contract surrenders ...................            --       (35,377)            --             --        (11,441)          (416)
  Participant transfers to other
    funding options .....................            --      (972,703)       (87,372)            --        (22,067)            --
  Other payments to participants ........            --            --             --             --             --             --
                                            -----------   -----------    -----------    -----------    -----------    -----------

    Net increase (decrease) in net assets
      resulting from unit transactions ..            --    (1,008,075)       (86,201)        81,419         57,320         57,861
                                            -----------   -----------    -----------    -----------    -----------    -----------

    Net increase (decrease) in net assets            --      (990,399)       (85,124)        85,124         33,902         53,829


NET ASSETS:
    Beginning of year ...................            --       990,399         85,124             --         53,829             --
                                            -----------   -----------    -----------    -----------    -----------    -----------
    End of year .........................   $        --   $        --    $        --    $    85,124    $    87,731    $    53,829
                                            ===========   ===========    ===========    ===========    ===========    ===========



                        See Notes to Financial Statements


                                      -20-


                            THE TRAVELERS FUND BD II
                             FOR VARIABLE ANNUITIES

                 STATEMENT OF CHANGES IN NET ASSETS - CONTINUED
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001


  SMITH BARNEY PREMIER SELECTIONS     CONVERTIBLE SECURITIES           DISCIPLINED MID CAP           DISCIPLINED SMALL CAP
     ALL CAP GROWTH PORTFOLIO               PORTFOLIO                    STOCK PORTFOLIO                STOCK PORTFOLIO
  -------------------------------  ----------------------------    ----------------------------    --------------------------
       2002            2001            2002            2001            2002            2001            2002           2001
   ------------    ------------    ------------    ------------    ------------    ------------    -----------   ------------
   $     (8,664)   $     (1,156)   $    248,505    $     31,563    $    (69,733)   $    (98,611)   $        --   $    (15,213)
        (75,776)         (4,301)        (81,013)        227,213        (392,167)        520,912             --       (113,557)

       (188,854)         (6,517)       (544,015)       (410,432)     (1,492,131)     (1,254,420)            --        (90,736)
   ------------    ------------    ------------    ------------    ------------    ------------    -----------   ------------


       (273,294)        (11,974)       (376,523)       (151,656)     (1,954,031)       (832,119)            --       (219,506)
   ------------    ------------    ------------    ------------    ------------    ------------    -----------   ------------


          4,006          11,907          26,637           6,522          17,446          34,387             --            984

      1,430,751         260,109         679,367       2,450,053       4,984,279       5,124,612             --        479,691
           (124)            (17)           (703)           (525)         (3,296)         (2,287)            --           (338)
        (30,173)           (319)       (413,158)       (788,666)     (1,607,313)       (772,417)            --        (90,412)

       (411,739)        (39,732)       (509,490)     (1,039,656)     (2,712,453)     (3,628,984)            --     (2,031,799)
             --              --         (89,358)        (54,131)       (143,847)       (241,353)            --             --
   ------------    ------------    ------------    ------------    ------------    ------------    -----------   ------------


        992,721         231,948        (306,705)        573,597         534,816         513,958             --     (1,641,874)
   ------------    ------------    ------------    ------------    ------------    ------------    -----------   ------------

        719,427         219,974        (683,228)        421,941      (1,419,215)       (318,161)            --     (1,861,380)



        219,974              --       4,507,626       4,085,685      10,847,888      11,166,049             --      1,861,380
   ------------    ------------    ------------    ------------    ------------    ------------    -----------   ------------
   $    939,401    $    219,974    $  3,824,398    $  4,507,626    $  9,428,673    $ 10,847,888    $        --   $         --
   ============    ============    ============    ============    ============    ============    ===========   ============



                        See Notes to Financial Statements


                                      -21-


                            THE TRAVELERS FUND BD II
                             FOR VARIABLE ANNUITIES

                 STATEMENT OF CHANGES IN NET ASSETS - CONTINUED
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001


                                                    MFS EMERGING                   MFS RESEARCH                STRATEGIC STOCK
                                                  GROWTH PORTFOLIO                  PORTFOLIO                     PORTFOLIO
                                           -----------------------------   -----------------------------   -----------------------
                                                2002            2001            2002            2001         2002         2001
                                           -------------   -------------   -------------   -------------   --------  -------------
OPERATIONS:
  Net investment income (loss) ..........  $    (435,418)  $    (788,115)  $     (41,322)  $    (111,845)  $     --  $     101,112
  Realized gain (loss) ..................     (8,535,808)     11,938,081        (912,216)        261,320         --       (282,332)
  Change in unrealized gain (loss)
    on investments ......................     (7,682,266)    (47,169,912)       (884,802)     (2,983,236)        --       (158,398)
                                           -------------   -------------   -------------   -------------   --------  -------------

    Net increase (decrease) in net assets
      resulting from operations .........    (16,653,492)    (36,019,946)     (1,838,340)     (2,833,761)        --       (339,618)
                                           -------------   -------------   -------------   -------------   --------  -------------

UNIT TRANSACTIONS:
  Participant purchase payments .........        110,327         225,167           8,925          89,718         --            (38)
  Participant transfers from other
    funding options .....................        469,141       1,789,061         174,899         894,865         --      1,571,749
  Administrative charges ................        (13,626)        (14,734)         (1,961)         (1,878)        --           (541)
  Contract surrenders ...................     (3,776,055)     (4,898,316)       (539,974)       (560,163)        --       (246,805)
  Participant transfers to other
    funding options .....................     (6,986,320)     (9,476,038)     (1,414,400)     (1,546,022)        --     (4,206,266)
  Other payments to participants ........       (333,626)       (658,027)       (105,131)       (341,997)        --        (28,309)
                                           -------------   -------------   -------------   -------------   --------  -------------

    Net increase (decrease) in net assets
      resulting from unit transactions ..    (10,530,159)    (13,032,887)     (1,877,642)     (1,465,477)        --     (2,910,210)
                                           -------------   -------------   -------------   -------------   --------  -------------

    Net increase (decrease) in net assets    (27,183,651)    (49,052,833)     (3,715,982)     (4,299,238)        --     (3,249,828)


NET ASSETS:
    Beginning of year ...................     52,100,902     101,153,735       7,962,340      12,261,578         --      3,249,828
                                           -------------   -------------   -------------   -------------   --------  -------------
    End of year .........................  $  24,917,251   $  52,100,902   $   4,246,358   $   7,962,340   $     --  $          --
                                           =============   =============   =============   =============   ========  =============



                        See Notes to Financial Statements


                                      -22-


                            THE TRAVELERS FUND BD II
                             FOR VARIABLE ANNUITIES

                 STATEMENT OF CHANGES IN NET ASSETS - CONTINUED
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001


             AIM CAPITAL                   ALLIANCE GROWTH                    MFS TOTAL                  PUTNAM DIVERSIFIED
       APPRECIATION PORTFOLIO                PORTFOLIO                    RETURN PORTFOLIO                INCOME PORTFOLIO
   -----------------------------   -----------------------------   -----------------------------   -----------------------------
        2002            2001            2002            2001            2002            2001            2002            2001
   -------------   -------------   -------------   -------------   -------------   -------------   -------------   -------------
   $    (706,919)  $  (1,093,878)  $    (877,903)  $  (2,276,088)  $   5,072,227   $   2,041,073   $   7,661,172   $   2,721,011
      (6,649,715)     23,829,488     (22,477,851)     31,420,566       4,457,095       5,733,859      (1,159,505)     (1,039,663)

      (9,893,905)    (51,592,363)    (36,450,559)    (64,523,429)    (17,418,040)     (9,753,178)     (4,889,005)       (416,675)
   -------------   -------------   -------------   -------------   -------------   -------------   -------------   -------------


     (17,250,539)    (28,856,753)    (59,806,313)    (35,378,951)     (7,888,718)     (1,978,246)      1,612,662       1,264,673
   -------------   -------------   -------------   -------------   -------------   -------------   -------------   -------------


          51,224         236,534          86,655         580,499         184,493         472,434          32,219         111,949

       1,125,253       1,264,359       2,172,401       6,527,776       9,902,788      14,315,368       3,225,206         829,169
         (21,753)        (21,340)        (47,331)        (51,820)        (29,832)        (23,746)        (10,002)         (8,036)
      (7,183,840)     (7,678,309)    (17,300,364)    (18,317,583)    (12,733,318)     (9,710,042)     (4,394,147)     (3,471,111)

      (8,381,204)     (8,375,152)    (21,966,712)    (21,747,943)    (11,858,388)     (8,922,945)     (3,247,595)     (2,353,468)
      (1,038,848)     (1,117,900)     (2,612,432)     (3,921,988)     (2,412,907)     (3,859,148)       (778,717)     (1,647,756)
   -------------   -------------   -------------   -------------   -------------   -------------   -------------   -------------


     (15,449,168)    (15,691,808)    (39,667,783)    (36,931,059)    (16,947,164)     (7,728,079)     (5,173,036)     (6,539,253)
   -------------   -------------   -------------   -------------   -------------   -------------   -------------   -------------

     (32,699,707)    (44,548,561)    (99,474,096)    (72,310,010)    (24,835,882)     (9,706,325)     (3,560,374)     (5,274,580)



      76,193,641     120,742,202     189,340,693     261,650,703     128,387,648     138,093,973      38,496,037      43,770,617
   -------------   -------------   -------------   -------------   -------------   -------------   -------------   -------------
   $  43,493,934   $  76,193,641   $  89,866,597   $ 189,340,693   $ 103,551,766   $ 128,387,648   $  34,935,663   $  38,496,037
   =============   =============   =============   =============   =============   =============   =============   =============



                        See Notes to Financial Statements


                                      -23-


                            THE TRAVELERS FUND BD II
                             FOR VARIABLE ANNUITIES

                 STATEMENT OF CHANGES IN NET ASSETS - CONTINUED
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001


                                           SALOMON BROTHERS STRATEGIC        SMITH BARNEY HIGH        SMITH BARNEY INTERNATIONAL ALL
                                              TOTAL RETURN BOND FUND          INCOME PORTFOLIO             CAP GROWTH PORTFOLIO
                                           ---------------------------   ---------------------------  ------------------------------
                                               2002           2001           2002           2001            2002           2001
                                           ------------   ------------   ------------   ------------   -------------   ------------
OPERATIONS:
  Net investment income (loss) ..........  $    879,503   $    361,114   $  5,710,155   $  3,813,606   $    (113,795)  $   (678,043)
  Realized gain (loss) ..................      (273,182)      (238,254)    (4,111,137)    (2,127,703)     (8,320,285)   (23,676,887)
  Change in unrealized gain (loss)
    on investments ......................        46,694        255,293     (3,077,874)    (3,387,085)       (359,195)     3,163,229
                                           ------------   ------------   ------------   ------------   -------------   ------------

    Net increase (decrease) in net assets
      resulting from operations .........       653,015        378,153     (1,478,856)    (1,701,182)     (8,793,275)   (21,191,701)
                                           ------------   ------------   ------------   ------------   -------------   ------------

UNIT TRANSACTIONS:
  Participant purchase payments .........         7,719         11,387         55,001        238,300          13,296        154,679
  Participant transfers from other
    funding options .....................     6,553,676      2,674,984      2,426,426      1,251,823     321,317,501    399,385,272
  Administrative charges ................        (2,252)        (1,035)        (7,331)        (6,544)        (11,064)       (11,016)
  Contract surrenders ...................      (983,410)      (667,619)    (5,887,129)    (3,078,287)     (4,783,430)    (5,350,910)
  Participant transfers to other
    funding options .....................    (3,288,552)    (1,196,931)    (2,485,892)    (3,081,579)   (325,625,525)   398,934,625)
  Other payments to participants ........      (360,725)       (18,584)      (563,408)    (1,212,331)       (447,790)      (725,233)
                                           ------------   ------------   ------------   ------------   -------------   ------------

    Net increase (decrease) in net assets
      resulting from unit transactions ..     1,926,456        802,202     (6,462,333)    (5,888,618)     (9,537,012)    (5,481,833)
                                           ------------   ------------   ------------   ------------   -------------   ------------

    Net increase (decrease) in net assets     2,579,471      1,180,355     (7,941,189)    (7,589,800)    (18,330,287)   (26,673,534)


NET ASSETS:
    Beginning of year ...................     8,246,086      7,065,731     31,929,834     39,519,634      46,909,940     73,583,474
                                           ------------   ------------   ------------   ------------   -------------   ------------
    End of year .........................  $ 10,825,557   $  8,246,086   $ 23,988,645   $ 31,929,834   $  28,579,653   $ 46,909,940
                                           ============   ============   ============   ============   =============   ============



                        See Notes to Financial Statements


                                      -24-


                            THE TRAVELERS FUND BD II
                             FOR VARIABLE ANNUITIES

                 STATEMENT OF CHANGES IN NET ASSETS - CONTINUED
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001


       SMITH BARNEY LARGE CAP            SMITH BARNEY LARGE              SMITH BARNEY MONEY           SMITH BARNEY PACIFIC
           VALUE PORTFOLIO        CAPITALIZATION GROWTH PORTFOLIO         MARKET PORTFOLIO               BASIN PORTFOLIO
   -----------------------------  -------------------------------  -----------------------------   --------------------------
        2002            2001            2002            2001            2002            2001           2002          2001
   -------------   -------------   -------------   -------------   -------------   -------------   -----------  -------------
   $   1,597,492   $     156,210   $    (394,894)  $    (770,275)  $      50,330   $   1,597,927   $        --  $     (16,365)
      (3,008,872)      4,073,256      (2,837,405)       (249,861)             --              --            --     (1,562,296)

     (20,089,930)    (14,413,770)    (10,834,123)     (9,403,285)             --              --            --      1,355,542
   -------------   -------------   -------------   -------------   -------------   -------------   -----------  -------------


     (21,501,310)    (10,184,304)    (14,066,422)    (10,423,421)         50,330       1,597,927            --       (223,119)
   -------------   -------------   -------------   -------------   -------------   -------------   -----------  -------------


          93,448         281,965          80,641         298,699          89,533         945,213            --             69

       1,426,424       5,423,351       2,818,617       6,162,683     372,437,468     436,798,257            --      2,529,945
         (22,239)        (21,228)        (16,311)        (15,758)        (11,005)         (4,596)           --             (9)
      (8,423,238)     (7,561,092)     (3,969,500)     (4,700,036)    (28,780,698)    (11,027,965)           --       (105,315)

      (7,934,465)     (6,144,183)     (7,975,332)     (9,422,618)   (348,483,804)   (417,737,811)           --     (7,000,960)
      (2,038,665)     (2,365,563)       (620,057)     (1,212,308)     (1,015,470)     (2,089,973)           --             --
   -------------   -------------   -------------   -------------   -------------   -------------   -----------  -------------


     (16,898,735)    (10,386,750)     (9,681,942)     (8,889,338)     (5,763,976)      6,883,125            --     (4,576,270)
   -------------   -------------   -------------   -------------   -------------   -------------   -----------  -------------

     (38,400,045)    (20,571,054)    (23,748,364)    (19,312,759)     (5,713,646)      8,481,052            --     (4,799,389)



      90,046,339     110,617,393      57,661,839      76,974,598      71,305,131      62,824,079            --      4,799,389
   -------------   -------------   -------------   -------------   -------------   -------------   -----------  -------------
   $  51,646,294   $  90,046,339   $  33,913,475   $  57,661,839   $  65,591,485   $  71,305,131   $        --  $          --
   =============   =============   =============   =============   =============   =============   ===========  =============



                        See Notes to Financial Statements


                                      -25-


                            THE TRAVELERS FUND BD II
                             FOR VARIABLE ANNUITIES

                 STATEMENT OF CHANGES IN NET ASSETS - CONTINUED
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001


                                                TRAVELERS MANAGED            VAN KAMPEN ENTERPRISE     SMITH BARNEY SMALL CAP GROWTH
                                                 INCOME PORTFOLIO                  PORTFOLIO              OPPORTUNITIES PORTFOLIO
                                          ---------------------------   -----------------------------  -----------------------------
                                               2002          2001            2002            2001           2002          2001
                                          -------------  ------------   -------------   -------------   -----------   -----------
OPERATIONS:
  Net investment income (loss) .......... $   2,674,557  $    916,980   $    (289,994)  $  (1,042,880)  $    (6,699)  $    (2,007)
  Realized gain (loss) ..................       413,673       618,225     (11,638,964)     17,210,118       (86,859)         (336)
  Change in unrealized gain (loss)
    on investments ......................    (2,739,689)      (29,351)     (8,556,387)    (41,976,814)     (108,925)        6,049
                                          -------------  ------------   -------------   -------------   -----------   -----------

    Net increase (decrease) in net assets
      resulting from operations .........       348,541     1,505,854     (20,485,345)    (25,809,576)     (202,483)        3,706
                                          -------------  ------------   -------------   -------------   -----------   -----------

UNIT TRANSACTIONS:
  Participant purchase payments .........        27,010       119,927          44,606         248,163           500         2,775
  Participant transfers from other
    funding options .....................     9,804,890    16,109,012         634,590       1,345,951       699,169       451,734
  Administrative charges ................        (4,281)       (2,509)        (19,330)        (18,997)          (84)           (3)
  Contract surrenders ...................    (4,814,252)   (4,443,503)     (5,755,300)     (6,661,331)     (230,581)         (125)
  Participant transfers to other
    funding options .....................    (9,540,535)   (9,896,912)     (8,398,826)    (10,681,931)     (296,259)       (3,739)
  Other payments to participants ........      (507,155)     (617,854)     (1,060,255)     (1,280,685)           --            --
                                          -------------  ------------   -------------   -------------   -----------   -----------

    Net increase (decrease) in net assets
      resulting from unit transactions ..    (5,034,323)    1,268,161     (14,554,515)    (17,048,830)      172,745       450,642
                                          -------------  ------------   -------------   -------------   -----------   -----------

    Net increase (decrease) in net assets    (4,685,782)    2,774,015     (35,039,860)    (42,858,406)      (29,738)      454,348


NET ASSETS:
    Beginning of year ...................    32,009,289    29,235,274      75,043,077     117,901,483       454,348            --
                                          -------------  ------------   -------------   -------------   -----------   -----------
    End of year ......................... $  27,323,507  $ 32,009,289   $  40,003,217   $  75,043,077   $   424,610   $   454,348
                                          =============  ============   =============   =============   ===========   ===========



                        See Notes to Financial Statements


                                      -26-


                            THE TRAVELERS FUND BD II
                             FOR VARIABLE ANNUITIES

                 STATEMENT OF CHANGES IN NET ASSETS - CONTINUED
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

               COMBINED
   ---------------------------------
         2002              2001
   ---------------   ---------------

   $    21,701,940   $     4,731,052
       (69,837,130)       79,830,840

      (157,258,049)     (268,398,496)
   ---------------   ---------------


      (205,393,239)     (183,836,604)
   ---------------   ---------------


         1,256,503         4,855,983

       773,193,298       947,963,525
          (260,356)         (236,574)
      (129,897,677)     (104,683,869)

      (796,047,458)     (948,318,838)
       (17,429,831)      (23,736,689)
   ---------------   ---------------


      (169,185,521)     (124,156,462)
   ---------------   ---------------

      (374,578,760)     (307,993,066)



     1,091,579,138     1,399,572,204
   ---------------   ---------------
   $   717,000,378   $ 1,091,579,138
   ===============   ===============



                        See Notes to Financial Statements


                                      -27-


                          NOTES TO FINANCIAL STATEMENTS

1.    SIGNIFICANT ACCOUNTING POLICIES

The  Travelers  Fund BD II for Variable  Annuities  ("Fund BD II") is a separate
account of The Travelers Life and Annuity  Company ("The  Company"),  which is a
wholly owned subsidiary of The Travelers  Insurance Company,  an indirect wholly
owned  subsidiary  of  Citigroup  Inc.,  and is  available  for funding  certain
variable annuity contracts issued by The Company. Fund BD II is registered under
the Investment Company Act of 1940, as amended, as a unit investment trust. Fund
BD II is comprised of the Travelers Vintage Annuity product.

     Participant purchase payments applied to Fund BD II are invested in one  or
     more  sub-accounts  in accordance  with the selection made by the  contract
     owner.  As of December 31, 2002,  the  investments  comprising  Fund  BD II
     were:

     AIM Variable Insurance Funds, Delaware business trust
         AIM V.I. Premier Equity Fund - Series I (Formerly AIM V.I. Value Fund)
     Alliance Variable Product Series Fund, Inc., Maryland business trust
         Premier Growth Portfolio - Class B
     American Funds Insurance Series (Formerly American Variable Insurance
       Series), Massachusetts business trust
         Global Growth Fund - Class 2
         Growth Fund - Class 2
         Growth-Income Fund - Class 2
     Dreyfus Variable Investment Fund, Maryland business trust
         Small Cap Portfolio - Initial Shares
     Greenwich Street Series Fund, Massachusetts business trust, Affiliate of
       The Company
         Equity Index Portfolio - Class II Shares
         Fundamental Value Portfolio
     Salomon Brothers Variable Series Fund Inc., Maryland business trust,
       Affiliate of The Company
         Investors Fund - Class I (Formerly Investors Fund)
         Total Return Fund - Class I (Formerly Total Return Fund)
     Smith Barney Allocation Series Inc., Maryland business trust, Affiliate of
       The Company
         Select Balanced Portfolio
         Select Growth Portfolio
         Select High Growth Portfolio
     Smith Barney Investment Series, Massachusetts business trust, Affiliate of
       The Company
         Smith Barney Large Cap Core Portfolio
         Smith Barney Premier Selections All Cap Growth Portfolio
     The Travelers Series Trust, Massachusetts business trust, Affiliate of The
       Company
         Convertible Securities Portfolio (Formerly Convertible Bond Portfolio)
         Disciplined Mid Cap Stock Portfolio
         MFS Emerging Growth Portfolio
         MFS Research Portfolio


                                      -28-


                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

1.   SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

     Travelers Series Fund Inc., Maryland business trust, Affiliate of The
       Company
         AIM Capital Appreciation Portfolio
         Alliance Growth Portfolio
         MFS Total Return Portfolio
         Putnam Diversified Income Portfolio
         Salomon Brothers Strategic Total Return Bond Fund (Formerly Salomon
           Brothers Global High Yield Portfolio)
         Smith Barney High Income Portfolio
         Smith Barney International All Cap Growth Portfolio
         Smith Barney Large Cap Value Portfolio
         Smith Barney Large Capitalization Growth Portfolio
         Smith Barney Money Market Portfolio
         Travelers Managed Income Portfolio
         Van Kampen Enterprise Portfolio
     Variable Annuity Portfolios, Massachusetts business trust, Affiliate of The
       Company
         Smith Barney Small Cap Growth Opportunities Portfolio

Not all funds may be available in all states or to all contract owners.

Growth and Income Portfolio of Smith Barney Investment Series is not an approved
sub-account  for Fund BD II for the  year  ended  December  31,  2001.  This was
communicated  to all the affected  contract  holders.  At December 31, 2001 this
sub-account had assets of $85,124  requiring  instructions from contract holders
to be moved to  approved  sub-accounts.  In February  2002,  all the monies were
transferred  out as per the  instructions of the contract  holder.  All realized
gains were given to the contract  holders.  There were no  significant  realized
losses.

Effective  April 20, 2001, the assets of Smith Barney Pacific Basin Portfolio of
the Travelers Series Fund Inc. were combined into Smith Barney International All
Cap Growth  Portfolio of Travelers  Series Fund Inc. At the effective date, Fund
BD II held  643,721  shares of Smith Barney  Pacific  Basin  Portfolio  having a
market value of  $4,285,874,  which were  exchanged for 289,782  shares of Smith
Barney International All Cap Growth Portfolio equal in value.

Effective April 27, 2001, the assets of Select Income  Portfolio of Smith Barney
Allocation  Series Inc. were combined  into Select  Balanced  Portfolio of Smith
Barney  Allocation  Series Inc. At the  effective  date,  Fund BD II held 91,076
shares of Select Income Portfolio having a market value of $917,530,  which were
exchanged for 75,642 shares of Select Balanced Portfolio equal in value.

Effective April 27, 2001, the assets of Select  Conservative  Portfolio of Smith
Barney  Allocation  Series Inc. were combined into Select Balanced  Portfolio of
Smith  Barney  Allocation  Series Inc. At the  effective  date,  Fund BD II held
203,398  shares  of  Select  Conservative  Portfolio  having a  market  value of
$2,168,059, which were exchanged for 178,735 shares of Select Balanced Portfolio
equal in value.

Effective  October 26,  2001,  the assets of  Strategic  Stock  Portfolio of The
Travelers  Series Trust were combined into  Investors  Fund of Salomon  Brothers
Variable  Series Fund Inc. At the effective  date Fund BD II held 348,172 shares
of Strategic  Stock  Portfolio  having a market value of $3,116,949,  which were
exchanged for 255,069 shares of Investors Fund equal in value.

Effective  October 26, 2001, the assets of Disciplined Small Cap Stock Portfolio
of The Travelers Series Trust were liquidated. At the effective date, Fund BD II
held 134,309 shares of  Disciplined  Small Cap Stock  Portfolio  having a market
value of  $1,179,214,  which  were used to  purchase  1,179,214  shares of Smith
Barney Money Market Portfolio of the Travelers Series Fund Inc., equal in value.


                                      -29-


                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

1.    SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The  following  is a summary of  significant  accounting  policies  consistently
followed by Fund BD II in the preparation of its financial statements.

SECURITY  VALUATION.  Investments  are valued  daily at the net asset values per
share of the underlying funds.

SECURITY  TRANSACTIONS.  Security  transactions  are  accounted for on the trade
date. Income from dividends and realized gain (loss) distributions, are recorded
on the ex-distribution date.

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

FINANCIAL  HIGHLIGHTS.  In 2001,  Fund BD II adopted  the  financial  highlights
disclosure recommended by the American Institute of Certified Public Accountants
Audit Guide for Investment Companies ("AICPA Guide"). The AICPA Guide allows for
the prospective application of this disclosure,  which will ultimately display a
five year period. It is comprised of the units,  unit values,  investment income
ratio,  expense  ratios  and total  returns  for each  sub-account.  Since  each
sub-account offers multiple contract charges, certain information is provided in
the form of a range.  The range  information may reflect varying time periods if
assets did not exist with all contract charge options of the sub-account for the
entire year.

OTHER.  The  preparation of financial  statements in conformity  with accounting
principles   generally  accepted  in  the  United  States  of  America  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.

2.    INVESTMENTS

The aggregate  costs of purchases and proceeds  from sales of  investments  were
$712,745,610  and  $854,140,257,  respectively,  for the year ended December 31,
2002. Realized gains and losses from investment  transactions are reported on an
average cost basis.  The cost of investments in eligible funds was  $986,080,430
at December 31, 2002.  Gross  unrealized  depreciation  for all  investments  at
December 31, 2002 was $269,006,407.

3.    CONTRACT CHARGES

Insurance  charges are paid for the  mortality  and expense risks assumed by The
Company.  Each business day, The Company deducts a mortality and expense charge,
which is reflected in the calculation of  accumulation  and annuity unit values.
This charge equals, on an annual basis,  1.02% and 1.30%, of the amounts held in
each  funding  option for the  Standard  Death  Benefit and the  Enhanced  Death
Benefit, respectively.

Administrative  fees  are  paid for  administrative  expenses.  This fee is also
deducted each business day and reflected in the calculation of accumulation  and
annuity  unit  values.  This charge  equals,  on an annual  basis,  0.15% of the
amounts held in each funding option.

For contracts in the accumulation phase with a contract value less than $40,000,
an annual  charge  of $30  (prorated  for  partial  periods)  is  deducted  from
participant  account  balances  and  paid  to  The  Company  to  cover  contract
administrative charges.

No sales charge is deducted  from  participant  purchase  payments when they are
received.  However,  The Company generally assesses a contingent  deferred sales
charge of up to 6% if a participant's purchase payment is surrendered within six
years of its payment date.  Contract  surrender  payments include $1,255,121 and
$1,566,006 of contingent deferred sales charges for the years ended December 31,
2002 and 2001, respectively.


                                      -30-


                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

4.    NET CONTRACT OWNERS' EQUITY


                                                                                     DECEMBER 31, 2002
                                                             -------------------------------------------------------------------
                                                             ACCUMULATION        ANNUITY     UNIT    ACCUMULATION      ANNUITY
                                                                 UNITS            UNITS     VALUE     NET ASSETS      NET ASSETS
                                                             ------------        -------    ------   -------------    ----------
AIM Variable Insurance Funds
  AIM V.I. Premier Equity Fund - Series I
    Standard Death Benefit ...............................        452,916             --    $0.611    $   276,707    $        --
    Enhanced Death Benefit ...............................             --             --     0.608             --             --

Alliance Variable Product Series Fund, Inc.
  Premier Growth Portfolio - Class B
    Standard Death Benefit ...............................        591,301             --     0.585        346,178             --
    Enhanced Death Benefit ...............................          8,838             --     0.583          5,150             --

American Funds Insurance Series
  Global Growth Fund - Class 2
    Standard Death Benefit ...............................      1,531,673             --     0.739      1,131,400             --
    Enhanced Death Benefit ...............................        326,225             --     0.735        239,851             --
  Growth Fund - Class 2
    Standard Death Benefit ...............................      5,204,522             --     0.636      3,311,143             --
    Enhanced Death Benefit ...............................      1,310,595             --     0.633        829,896             --
  Growth-Income Fund - Class 2
    Standard Death Benefit ...............................      8,045,731             --     0.781      6,280,293             --
    Enhanced Death Benefit ...............................      1,645,336             --     0.777      1,278,300             --

Dreyfus Variable Investment Fund
  Small Cap Portfolio - Initial Shares
    Standard Death Benefit ...............................      7,558,045             --     0.862      6,514,159             --
    Enhanced Death Benefit ...............................        963,891             --     0.851        819,997             --

Greenwich Street Series Fund
  Equity Index Portfolio - Class II Shares
    Standard Death Benefit ...............................      5,023,829             --     0.648      3,256,786             --
    Enhanced Death Benefit ...............................        367,027             --     0.642        235,499             --
  Fundamental Value Portfolio
    Standard Death Benefit ...............................     28,537,587          3,499     1.942     55,434,220          6,796
    Enhanced Death Benefit ...............................      6,594,908         17,859     1.899     12,522,945         33,912

Salomon Brothers Variable Series Fund Inc.
  Investors Fund - Class I
    Standard Death Benefit ...............................      7,167,419          7,701     0.918      6,581,825          7,072
    Enhanced Death Benefit ...............................      1,141,039             --     0.906      1,034,232             --
  Total Return Fund - Class I
    Standard Death Benefit ...............................      1,661,015             --     0.956      1,588,526             --
    Enhanced Death Benefit ...............................        461,333             --     0.944        435,475             --

Smith Barney Allocation Series Inc.
  Select Balanced Portfolio
    Standard Death Benefit ...............................      7,016,158             --     1.174      8,238,079             --
    Enhanced Death Benefit ...............................      1,984,327             --     1.155      2,292,277             --
  Select Growth Portfolio
    Standard Death Benefit ...............................      3,477,779             --     0.965      3,357,784             --
    Enhanced Death Benefit ...............................      1,312,996             --     0.950      1,247,241             --



                                      -31-


                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

4.    NET CONTRACT OWNERS' EQUITY (CONTINUED)


                                                                                     DECEMBER 31, 2002
                                                             -------------------------------------------------------------------
                                                             ACCUMULATION        ANNUITY     UNIT    ACCUMULATION      ANNUITY
                                                                 UNITS            UNITS     VALUE     NET ASSETS      NET ASSETS
                                                             ------------        -------    ------   -------------    ----------
Smith Barney Allocation Series Inc. (continued)
  Select High Growth Portfolio
    Standard Death Benefit ...............................      2,145,452             --    $0.936    $ 2,007,890    $        --
    Enhanced Death Benefit ...............................        107,009             --     0.921         98,530             --

Smith Barney Investment Series
  Smith Barney Growth and Income Portfolio
    Standard Death Benefit ...............................             --             --     1.024             --             --
    Enhanced Death Benefit ...............................             --             --     1.022             --             --
  Smith Barney Large Cap Core Portfolio
    Standard Death Benefit ...............................        107,552             --     0.655         70,416             --
    Enhanced Death Benefit ...............................         26,571             --     0.652         17,315             --
  Smith Barney Premier Selections All Cap Growth Portfolio
    Standard Death Benefit ...............................        945,291             --     0.648        612,786             --
    Enhanced Death Benefit ...............................        506,203             --     0.645        326,615             --

The Travelers Series Trust
  Convertible Securities Portfolio
    Standard Death Benefit ...............................      2,836,081             --     1.177      3,338,302             --
    Enhanced Death Benefit ...............................        418,383             --     1.162        486,096             --
  Disciplined Mid Cap Stock Portfolio
    Standard Death Benefit ...............................      7,539,228             --     1.105      8,331,824             --
    Enhanced Death Benefit ...............................      1,005,471             --     1.091      1,096,849             --
  MFS Emerging Growth Portfolio
    Standard Death Benefit ...............................     22,916,966             --     0.904     20,713,544             --
    Enhanced Death Benefit ...............................      4,731,917             --     0.888      4,203,707             --
  MFS Research Portfolio
    Standard Death Benefit ...............................      5,179,705             --     0.671      3,473,278             --
    Enhanced Death Benefit ...............................      1,168,058             --     0.662        773,080             --

Travelers Series Fund Inc.
  AIM Capital Appreciation Portfolio
    Standard Death Benefit ...............................     36,602,383          6,705     0.991     36,275,480          6,645
    Enhanced Death Benefit ...............................      7,425,616             --     0.971      7,211,809             --
  Alliance Growth Portfolio
    Standard Death Benefit ...............................     43,874,187         14,574     1.724     75,658,934         25,133
    Enhanced Death Benefit ...............................      8,423,446             --     1.684     14,182,530             --
  MFS Total Return Portfolio
    Standard Death Benefit ...............................     44,047,571          7,832     1.969     86,716,365         15,418
    Enhanced Death Benefit ...............................      8,732,137         17,926     1.922     16,785,524         34,459
  Putnam Diversified Income Portfolio
    Standard Death Benefit ...............................     20,779,858             --     1.406     29,219,155             --
    Enhanced Death Benefit ...............................      4,140,180         23,565     1.373      5,684,155         32,353



                                      -32-


                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

4.    NET CONTRACT OWNERS' EQUITY (CONTINUED)


                                                                                     DECEMBER 31, 2002
                                                             -------------------------------------------------------------------
                                                             ACCUMULATION        ANNUITY     UNIT    ACCUMULATION      ANNUITY
                                                                 UNITS            UNITS     VALUE     NET ASSETS      NET ASSETS
                                                             ------------        -------    ------   -------------    ----------
Travelers Series Fund Inc. (continued)
  Salomon Brothers Strategic Total Return Bond Fund
    Standard Death Benefit ...............................      6,048,141             --    $1.553   $  9,389,995    $        --
    Enhanced Death Benefit ...............................        946,999             --     1.516      1,435,562             --
  Smith Barney High Income Portfolio
    Standard Death Benefit ...............................     17,052,242             --     1.217     20,758,740             --
    Enhanced Death Benefit ...............................      2,695,690         21,705     1.189      3,204,106         25,799
  Smith Barney International All Cap Growth Portfolio
    Standard Death Benefit ...............................     31,080,395             --     0.814     25,311,909             --
    Enhanced Death Benefit ...............................      4,083,192         26,347     0.795      3,246,794         20,950
  Smith Barney Large Cap Value Portfolio
    Standard Death Benefit ...............................     28,606,771          7,875     1.536     43,932,388         12,094
    Enhanced Death Benefit ...............................      5,120,141         16,240     1.499      7,677,460         24,352
  Smith Barney Large Capitalization Growth Portfolio
    Standard Death Benefit ...............................     32,874,717          7,384     0.945     31,082,404          6,981
    Enhanced Death Benefit ...............................      3,026,159             --     0.933      2,824,090             --
  Smith Barney Money Market Portfolio
    Standard Death Benefit ...............................     45,287,737             --     1.318     59,694,202             --
    Enhanced Death Benefit ...............................      4,582,343             --     1.287      5,897,283             --
  Travelers Managed Income Portfolio
    Standard Death Benefit ...............................     15,554,389             --     1.483     23,073,606             --
    Enhanced Death Benefit ...............................      2,910,501         23,519     1.448      4,215,834         34,067
  Van Kampen Enterprise Portfolio
    Standard Death Benefit ...............................     22,696,471          3,203     1.484     33,677,990          4,754
    Enhanced Death Benefit ...............................      4,348,437         14,140     1.449      6,299,988         20,485

Variable Annuity Portfolios
  Smith Barney Small Cap Growth Opportunities Portfolio
    Standard Death Benefit ...............................        565,103             --     0.696        393,055             --
    Enhanced Death Benefit ...............................         45,580             --     0.692         31,555             --
                                                                                                     ------------    -----------

Net Contract Owners' Equity ..............................                                           $716,689,108    $   311,270
                                                                                                     ============    ===========



                                      -33-


                   NOTES TO FINANCIAL STATEMENTS - CONTINUED


5.   STATEMENT OF INVESTMENTS                                                           FOR THE YEAR ENDED DECEMBER 31, 2002
                                                                               -----------------------------------------------------

INVESTMENTS                                                                      NO. OF        MARKET        COST OF       PROCEEDS
                                                                                 SHARES         VALUE       PURCHASES     FROM SALES
                                                                               -----------   -----------   -----------   -----------
AIM VARIABLE INSURANCE FUNDS (0.0%)
  AIM V.I. Premier Equity Fund - Series I
    Total (Cost $431,610) ..................................................        17,062   $   276,742   $    80,532   $   303,944
                                                                               -----------   -----------   -----------   -----------

ALLIANCE VARIABLE PRODUCT SERIES FUND, INC. (0.1%)
  Premier Growth Portfolio - Class B
    Total (Cost $415,880) ..................................................        20,322       351,373       674,280     1,515,041
                                                                               -----------   -----------   -----------   -----------

AMERICAN FUNDS INSURANCE SERIES (1.8%)
  Global Growth Fund - Class 2 (Cost $1,468,342) ...........................       121,151     1,371,433     1,850,986       620,809
  Growth Fund - Class 2 (Cost $4,890,132) ..................................       124,410     4,141,594     5,271,175     1,951,050
  Growth-Income Fund - Class 2 (Cost $8,717,421) ...........................       296,222     7,559,596     6,401,664     2,053,448
                                                                               -----------   -----------   -----------   -----------
    Total (Cost $15,075,895) ...............................................       541,783    13,072,623    13,523,825     4,625,307
                                                                               -----------   -----------   -----------   -----------

DREYFUS VARIABLE INVESTMENT FUND (1.0%)
  Small Cap Portfolio - Initial Shares
    Total (Cost $11,487,584) ...............................................       258,279     7,335,119     2,550,296     2,911,230
                                                                               -----------   -----------   -----------   -----------

GREENWICH STREET SERIES FUND (10.0%)
  Equity Index Portfolio - Class II Shares (Cost $5,027,162) ...............       162,984     3,492,738     1,087,213     1,062,036
  Fundamental Value Portfolio (Cost $82,024,776) ...........................     4,670,804    68,006,907     5,378,376    21,647,465
                                                                               -----------   -----------   -----------   -----------
    Total (Cost $87,051,938) ...............................................     4,833,788    71,499,645     6,465,589    22,709,501
                                                                               -----------   -----------   -----------   -----------

SALOMON BROTHERS VARIABLE SERIES FUND INC. (1.4%)
  Investors Fund - Class I (Cost $9,817,613) ...............................       785,183     7,624,130     1,610,637     3,208,313
  Total Return Fund - Class I (Cost $2,186,986) ............................       212,411     2,024,273       663,101       548,375
                                                                               -----------   -----------   -----------   -----------
    Total (Cost $12,004,599) ...............................................       997,594     9,648,403     2,273,738     3,756,688
                                                                               -----------   -----------   -----------   -----------

SMITH BARNEY ALLOCATION SERIES INC. (2.4%)
  Select Balanced Portfolio (Cost $12,442,428) .............................     1,093,642    10,531,773       976,243     2,562,080
  Select Growth Portfolio (Cost $6,589,029) ................................       606,007     4,605,653     1,060,271       921,545
  Select High Growth Portfolio (Cost $2,940,096) ...........................       255,047     2,106,692        86,452       800,080
                                                                               -----------   -----------   -----------   -----------
    Total (Cost $21,971,553) ...............................................     1,954,696    17,244,118     2,122,966     4,283,705
                                                                               -----------   -----------   -----------   -----------

SMITH BARNEY INVESTMENT SERIES (0.1%)
  Smith Barney Growth and Income Portfolio (Cost $0) .......................            --            --         1,178        87,419
  Smith Barney Large Cap Core Portfolio (Cost $105,742) ....................        12,446        87,743        90,789        33,760
  Smith Barney Premier Selections All Cap Growth Portfolio (Cost $1,134,901)       107,008       939,531     1,384,304       400,140
                                                                               -----------   -----------   -----------   -----------
    Total (Cost $1,240,643) ................................................       119,454     1,027,274     1,476,271       521,319
                                                                               -----------   -----------   -----------   -----------

THE TRAVELERS SERIES TRUST (5.9%)
  Convertible Securities Portfolio (Cost $4,459,316) .......................       395,543     3,824,901       964,988       995,334
  Disciplined Mid Cap Stock Portfolio (Cost $11,012,446) ...................       719,291     9,429,910     3,731,310     3,254,804
  MFS Emerging Growth Portfolio (Cost $51,558,725) .........................     3,442,067    24,920,562       168,072    11,135,607
  MFS Research Portfolio (Cost $6,993,952) .................................       651,368     4,246,923       122,688     2,041,892
                                                                               -----------   -----------   -----------   -----------
    Total (Cost $74,024,439) ...............................................     5,208,269    42,422,296     4,987,058    17,427,637
                                                                               -----------   -----------   -----------   -----------



                                      -34-


                    NOTES TO FINANCIAL STATEMENTS - CONTINUED


5.   STATEMENT OF INVESTMENTS (CONTINUED)                                            FOR THE YEAR ENDED DECEMBER 31, 2002
                                                                           ---------------------------------------------------------
                                                                              NO. OF        MARKET         COST OF        PROCEEDS
                                                                              SHARES         VALUE        PURCHASES      FROM SALES
                                                                           ------------   ------------   ------------   ------------
TRAVELERS SERIES FUND INC. (77.2%)
  AIM Capital Appreciation Portfolio (Cost $68,028,593) ................      5,591,226   $ 43,499,739   $    242,697   $ 16,400,681
  Alliance Growth Portfolio (Cost $159,851,620) ........................      7,385,250     89,878,494        790,122     41,342,958
  MFS Total Return Portfolio (Cost $112,942,734) .......................      7,283,092    103,565,564     13,392,283     21,160,995
  Putnam Diversified Income Portfolio (Cost $45,993,905) ...............      4,219,845     34,940,316     10,070,355      7,581,399
  Salomon Brothers Strategic Total Return Bond Fund (Cost $11,614,936) .      1,080,538     10,826,989      6,704,702      3,898,122
  Smith Barney High Income Portfolio (Cost $39,978,441) ................      3,832,559     23,991,817      7,965,188      8,717,346
  Smith Barney International All Cap Growth Portfolio (Cost $28,991,711)      3,251,807     28,583,384    303,158,860    312,810,579
  Smith Barney Large Cap Value Portfolio (Cost $70,910,532) ............      3,907,196     51,653,134      2,822,808     18,126,237
  Smith Barney Large Capitalization Growth Portfolio (Cost $45,971,896)       3,482,332     33,917,914      1,330,241     11,408,380
  Smith Barney Money Market Portfolio (Cost $65,578,734) ...............     65,578,734     65,578,734    320,131,282    325,829,886
  Travelers Managed Income Portfolio (Cost $29,190,920) ................      2,470,809     27,327,152     10,934,108     13,080,192
  Van Kampen Enterprise Portfolio (Cost $82,794,726) ...................      4,386,900     40,008,528        441,477     15,288,234
                                                                           ------------   ------------   ------------   ------------
    Total (Cost $761,848,748) ..........................................    112,470,288    553,771,765    677,984,123    795,645,009
                                                                           ------------   ------------   ------------   ------------

VARIABLE ANNUITY PORTFOLIOS (0.1%)
  Smith Barney Small Cap Growth Opportunities Portfolio
    Total (Cost $527,541) ..............................................         59,812        424,665        606,932        440,876
                                                                           ------------   ------------   ------------   ------------

TOTAL INVESTMENTS (100%)
  (COST $986,080,430) ..................................................                  $717,074,023   $712,745,610   $854,140,257
                                                                                          ============   ============   ============



                                      -35-


                    NOTES TO FINANCIAL STATEMENTS - CONTINUED


6.    FINANCIAL HIGHLIGHTS


                                            YEAR              UNIT VALUE       NET      INVESTMENT  EXPENSE RATIO    TOTAL RETURN
                                            ENDED   UNITS     LOWEST TO      ASSETS       INCOME       LOWEST TO       LOWEST TO
                                           DEC 31  (000S)     HIGHEST ($)    ($000S)     RATIO (%)    HIGHEST (%)     HIGHEST (%)*
                                           ------  ------   -------------    -------    ----------  -------------  -----------------
AIM VARIABLE INSURANCE FUNDS
  AIM V.I. Premier Equity Fund - Series I   2002      453           0.611        277         0.23            1.17            (31.04)
                                            2001      787   0.885 - 0.886        697         0.14     1.17 - 1.45     (10.95) - 4.49
ALLIANCE VARIABLE PRODUCT SERIES FUND, INC.
  Premier Growth Portfolio - Class B        2002      600   0.583 - 0.585        351            -     1.17 - 1.45  (31.81) - (31.74)
                                            2001    1,834   0.855 - 0.857      1,570            -     1.17 - 1.45   (16.55) - (7.17)
AMERICAN FUNDS INSURANCE SERIES
  Global Growth Fund - Class 2              2002    1,858   0.735 - 0.739      1,371         1.12     1.17 - 1.45  (15.90) - (15.64)
                                            2001      381   0.874 - 0.876        333         0.20     1.17 - 1.45   (11.43) - (6.32)

  Growth Fund - Class 2                     2002    6,515   0.633 - 0.636      4,141         0.04     1.17 - 1.45  (25.53) - (25.35)
                                            2001    2,214   0.850 - 0.852      1,887         0.29     1.17 - 1.45  (15.59) - (15.39)

  Growth-Income Fund - Class 2              2002    9,691   0.777 - 0.781      7,559         1.22     1.17 - 1.45  (19.48) - (19.23)
                                            2001    4,901   0.965 - 0.967      4,739         0.77     1.17 - 1.45    (3.11) - (2.33)
DREYFUS VARIABLE INVESTMENT FUND
  Small Cap Portfolio - Initial Shares      2002    8,522   0.851 - 0.862      7,334         0.04     1.17 - 1.45  (20.24) - (20.04)
                                            2001    9,107   1.067 - 1.078      9,811         0.44     1.17 - 1.45    (7.46) - (7.23)
GREENWICH STREET SERIES FUND
  Equity Index Portfolio - Class II Shares  2002    5,391   0.642 - 0.648      3,492         1.77     1.17 - 1.45  (23.48) - (23.31)
                                            2001    5,389   0.839 - 0.845      4,553         0.67     1.17 - 1.45  (13.59) - (13.42)

  Fundamental Value Portfolio               2002   35,154   1.899 - 1.942     67,998         0.96     1.17 - 1.45  (22.43) - (22.23)
                                            2001   43,455   2.448 - 2.497    108,154         0.68     1.17 - 1.45    (6.64) - (6.37)
SALOMON BROTHERS VARIABLE SERIES FUND INC.
  Investors Fund - Class I                  2002    8,316   0.906 - 0.918      7,623         1.03     1.17 - 1.45  (24.18) - (23.94)
                                            2001    9,972   1.195 - 1.207     12,025         0.99     1.17 - 1.45    (5.53) - (5.33)

  Total Return Fund - Class I               2002    2,122   0.944 - 0.956      2,024         1.48     1.17 - 1.45    (8.17) - (7.99)
                                            2001    2,017   1.028 - 1.039      2,093         2.04     1.17 - 1.45    (2.28) - (1.98)
SMITH BARNEY ALLOCATION SERIES INC.
  Select Balanced Portfolio                 2002    9,000   1.155 - 1.174     10,530         6.47     1.17 - 1.45    (7.82) - (7.56)
                                            2001   10,859   1.253 - 1.270     13,756         3.70     1.17 - 1.45    (2.87) - (2.53)

  Select Growth Portfolio                   2002    4,791   0.950 - 0.965      4,605        10.56     1.17 - 1.45  (19.22) - (19.04)
                                            2001    5,502   1.176 - 1.192      6,537            -     1.17 - 1.45  (11.11) - (10.91)

  Select High Growth Portfolio              2002    2,252   0.921 - 0.936      2,106         1.07     1.17 - 1.45  (24.82) - (24.64)
                                            2001    2,922   1.225 - 1.242      3,622         5.05     1.17 - 1.45  (13.37) - (13.09)

  Smith Barney Large Cap Core Portfolio     2002      134   0.652 - 0.655         88         0.77     1.17 - 1.45  (26.99) - (26.82)
                                            2001       60   0.893 - 0.895         54            -     1.17 - 1.45   (11.65) - (3.46)
  Smith Barney Premier Selections All
    Cap Growth Portfolio                    2002    1,451   0.645 - 0.648        939         0.07     1.17 - 1.45  (27.85) - (27.68)
                                            2001      246   0.894 - 0.896        220            -     1.17 - 1.45   (10.13) - (4.79)
THE TRAVELERS SERIES TRUST
  Convertible Securities Portfolio          2002    3,254   1.162 - 1.177      3,824         7.24     1.17 - 1.45    (8.29) - (8.05)
                                            2001    3,523   1.267 - 1.280      4,508         1.85     1.17 - 1.45    (2.31) - (1.99)

  Disciplined Mid Cap Stock Portfolio       2002    8,545   1.091 - 1.105      9,429         0.55     1.17 - 1.45  (15.56) - (15.33)
                                            2001    8,321   1.292 - 1.305     10,848         0.29     1.17 - 1.45    (5.42) - (5.16)



                                      -36-


                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

6.    FINANCIAL HIGHLIGHTS (CONTINUED)


                                            YEAR              UNIT VALUE       NET      INVESTMENT  EXPENSE RATIO    TOTAL RETURN
                                            ENDED   UNITS     LOWEST TO      ASSETS       INCOME       LOWEST TO       LOWEST TO
                                           DEC 31  (000S)     HIGHEST ($)    ($000S)     RATIO (%)    HIGHEST (%)     HIGHEST (%)*
                                           ------  ------   -------------    -------    ----------  -------------  -----------------
THE TRAVELERS SERIES TRUST (CONTINUED)
  MFS Emerging Growth Portfolio             2002   27,649   0.888 - 0.904     24,917            -     1.17 - 1.45  (35.23) - (35.01)
                                            2001   37,551   1.371 - 1.391     52,101            -     1.17 - 1.45  (37.11) - (36.92)

  MFS Research Portfolio                    2002    6,348   0.662 - 0.671      4,246         0.51     1.17 - 1.45  (26.20) - (25.94)
                                            2001    8,801   0.897 - 0.906      7,962         0.04     1.17 - 1.45  (23.59) - (23.42)
TRAVELERS SERIES FUND INC.
  AIM Capital Appreciation Portfolio        2002   44,035   0.971 - 0.991     43,494            -     1.17 - 1.45  (24.96) - (24.75)
                                            2001   58,002   1.294 - 1.317     76,194            -     1.17 - 1.45  (24.90) - (24.66)

  Alliance Growth Portfolio                 2002   52,312   1.684 - 1.724     89,867         0.52     1.17 - 1.45  (34.53) - (34.37)
                                            2001   72,310   2.572 - 2.627    189,341         0.20     1.17 - 1.45  (14.61) - (14.37)

  MFS Total Return Portfolio                2002   52,805   1.922 - 1.969    103,552         5.58     1.17 - 1.45    (6.65) - (6.37)
                                            2001   61,258   2.059 - 2.103    128,388         2.76     1.17 - 1.45    (1.44) - (1.13)

  Putnam Diversified Income Portfolio       2002   24,944   1.373 - 1.406     34,936        22.32     1.17 - 1.45        4.33 - 4.61
                                            2001   28,750   1.316 - 1.344     38,496         7.80     1.17 - 1.45        2.73 - 3.07
  Salomon Brothers Strategic Total
    Return Bond Fund                        2002    6,995   1.516 - 1.553     10,826        12.12     1.17 - 1.45        6.76 - 7.10
                                            2001    5,701   1.420 - 1.450      8,246         6.20     1.17 - 1.45        4.95 - 5.22

  Smith Barney High Income Portfolio        2002   19,770   1.189 - 1.217     23,989        22.09     1.17 - 1.45    (4.57) - (4.40)
                                            2001   25,146   1.246 - 1.273     31,930        11.74     1.17 - 1.45    (5.18) - (4.86)
  Smith Barney International All Cap
    Growth Portfolio                        2002   35,190   0.795 - 0.814     28,580         0.88     1.17 - 1.45  (26.80) - (26.60)
                                            2001   42,407   1.086 - 1.109     46,910            -     1.17 - 1.45  (32.17) - (31.96)

  Smith Barney Large Cap Value Portfolio    2002   33,751   1.499 - 1.536     51,646         3.53     1.17 - 1.45  (26.52) - (26.26)
                                            2001   43,357   2.040 - 2.083     90,046         1.37     1.17 - 1.45    (9.49) - (9.28)
  Smith Barney Large Capitalization
    Growth Portfolio                        2002   35,908   0.933 - 0.945     33,913         0.31     1.17 - 1.45  (25.89) - (25.71)
                                            2001   45,385   1.259 - 1.272     57,662            -     1.17 - 1.45  (13.77) - (13.53)

  Smith Barney Money Market Portfolio       2002   49,870   1.287 - 1.318     65,591         1.26     1.17 - 1.45      (0.16) - 0.08
                                            2001   54,251   1.289 - 1.317     71,305         3.50     1.17 - 1.45        2.14 - 2.49

  Travelers Managed Income Portfolio        2002   18,488   1.448 - 1.483     27,324        10.83     1.17 - 1.45        0.70 - 0.95
                                            2001   21,859   1.438 - 1.469     32,009         4.01     1.17 - 1.45        5.19 - 5.53

  Van Kampen Enterprise Portfolio           2002   27,062   1.449 - 1.484     40,003         0.69     1.17 - 1.45  (30.37) - (30.16)
                                            2001   35,421   2.081 - 2.125     75,043            -     1.17 - 1.45  (22.41) - (22.19)
VARIABLE ANNUITY PORTFOLIOS
  Smith Barney Small Cap Growth
    Opportunities Portfolio                 2002      611   0.692 - 0.696        425            -     1.17 - 1.45  (26.77) - (26.50)
                                            2001      480   0.945 - 0.947        454            -     1.17 - 1.45     (2.17) - 20.38


*     Total return  lowest and highest range  displayed is  calculated  from the
      beginning  of the fiscal year to the end of the fiscal year except where a
      unit value inception date occurred during the course of the current fiscal
      year.  In  this  case,  the  inception  date  unit  value  is  used in the
      computation.


                                      -37-


                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

7.   SCHEDULE OF ACCUMULATION AND ANNUITY UNITS FOR FUND BD II
     FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001


                                            AIM V.I. PREMIER EQUITY           PREMIER GROWTH               GLOBAL GROWTH
                                                FUND - SERIES I             PORTFOLIO - CLASS B           FUND - CLASS 2
                                          ---------------------------   --------------------------  ---------------------------
                                              2002           2001           2002          2001          2002           2001
                                          ------------   ------------   ------------  ------------  ------------   ------------
Accumulation and annuity units
  beginning of year ....................       786,908             --      1,834,200            --       380,811             --
Accumulation units purchased and
  transferred from other funding options       114,800      1,183,458      1,058,951     1,858,211     2,518,660        422,767
Accumulation units redeemed and
  transferred to other funding options .      (448,792)      (396,550)    (2,293,012)      (24,011)   (1,041,573)       (41,956)
Annuity units ..........................            --             --             --            --            --             --
                                          ------------   ------------   ------------  ------------  ------------   ------------
Accumulation and annuity units
  end of year ..........................       452,916        786,908        600,139     1,834,200     1,857,898        380,811
                                          ============   ============   ============  ============  ============   ============



                                                                              GROWTH-INCOME             SMALL CAP PORTFOLIO -
                                             GROWTH FUND - CLASS 2            FUND - CLASS 2               INITIAL SHARES
                                          ---------------------------   --------------------------  ---------------------------
                                              2002           2001           2002          2001          2002           2001
                                          ------------   ------------   ------------  ------------  ------------   ------------
Accumulation and annuity units
  beginning of year ....................     2,213,788             --      4,901,596            --     9,106,702      9,553,243
Accumulation units purchased and
  transferred from other funding options     7,915,753      2,572,909      8,667,017     6,165,636     3,290,821      3,064,380
Accumulation units redeemed and
  transferred to other funding options .    (3,614,424)      (359,121)    (3,877,546)   (1,264,040)   (3,875,587)    (3,510,921)
Annuity units ..........................            --             --             --            --            --             --
                                          ------------   ------------   ------------  ------------  ------------   ------------
Accumulation and annuity units
  end of year ..........................     6,515,117      2,213,788      9,691,067     4,901,596     8,521,936      9,106,702
                                          ============   ============   ============  ============  ============   ============



                                           EQUITY INDEX PORTFOLIO -         FUNDAMENTAL VALUE             INVESTORS FUND -
                                               CLASS II SHARES                   PORTFOLIO                   CLASS I
                                          ---------------------------   --------------------------  ---------------------------
                                              2002           2001           2002          2001          2002           2001
                                          ------------   ------------   ------------  ------------  ------------   ------------
Accumulation and annuity units
  beginning of year ....................     5,389,289      5,922,291     43,455,117    47,350,425     9,972,868      4,659,419
Accumulation units purchased and
  transferred from other funding options     1,663,029        535,428      3,188,724     4,917,351     1,717,909      7,998,674
Accumulation units redeemed and
  transferred to other funding options .    (1,661,462)    (1,068,430)   (11,487,286)   (8,809,880)   (3,373,065)    (2,685,225)
Annuity units ..........................            --             --         (2,702)       (2,779)       (1,553)            --
                                          ------------   ------------   ------------  ------------  ------------   ------------
Accumulation and annuity units
  end of year ..........................     5,390,856      5,389,289     35,153,853    43,455,117     8,316,159      9,972,868
                                          ============   ============   ============  ============  ============   ============



                                               TOTAL RETURN FUND -            SELECT BALANCED           SELECT CONSERVATIVE
                                                    CLASS I                      PORTFOLIO                   PORTFOLIO
                                          ---------------------------   --------------------------  ---------------------------
                                              2002           2001           2002          2001          2002           2001
                                          ------------   ------------   ------------  ------------  ------------   ------------
Accumulation and annuity units
  beginning of year ....................     2,016,953      2,021,062     10,858,923     9,697,356            --      1,673,214
Accumulation units purchased and
  transferred from other funding options       636,826        499,907        225,928     2,569,832            --        103,059
Accumulation units redeemed and
  transferred to other funding options .      (531,431)      (504,016)    (2,084,366)   (1,408,265)           --     (1,776,273)
Annuity units ..........................            --             --             --            --            --             --
                                          ------------   ------------   ------------  ------------  ------------   ------------
Accumulation and annuity units
  end of year ..........................     2,122,348      2,016,953      9,000,485    10,858,923            --             --
                                          ============   ============   ============  ============  ============   ============



                                      -38-


                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

7.   SCHEDULE OF ACCUMULATION AND ANNUITY UNITS FOR FUND BD II
     FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001 (CONTINUED)


                                                 SELECT GROWTH              SELECT HIGH GROWTH             SELECT INCOME
                                                   PORTFOLIO                     PORTFOLIO                   PORTFOLIO
                                          ---------------------------   --------------------------  ---------------------------
                                              2002           2001           2002          2001          2002           2001
                                          ------------   ------------   ------------  ------------  ------------   ------------
Accumulation and annuity units
  beginning of year ....................     5,502,134      6,060,026      2,921,709     3,075,801            --        840,839
Accumulation units purchased and
  transferred from other funding options       142,998         17,367         49,740        23,072            --             --
Accumulation units redeemed and
  transferred to other funding options .      (854,357)      (575,259)      (718,988)     (177,164)           --       (840,839)
Annuity units ..........................            --             --             --            --            --             --
                                          ------------   ------------   ------------  ------------  ------------   ------------
Accumulation and annuity units
  end of year ..........................     4,790,775      5,502,134      2,252,461     2,921,709            --             --
                                          ============   ============   ============  ============  ============   ============



                                            SMITH BARNEY GROWTH AND       SMITH BARNEY LARGE CAP    SMITH BARNEY PREMIER SELECTIONS
                                                INCOME PORTFOLIO               CORE PORTFOLIO           ALL CAP GROWTH PORTFOLIO
                                          ---------------------------   --------------------------  -------------------------------
                                              2002           2001           2002          2001           2002           2001
                                          ------------   ------------   ------------  ------------   ------------   ------------
Accumulation and annuity units
  beginning of year ....................        78,122             --         60,159            --        245,690             --
Accumulation units purchased and
  transferred from other funding options         1,136         78,122        122,252        60,634      1,826,999        292,863
Accumulation units redeemed and
  transferred to other funding options .       (79,258)            --        (48,288)         (475)      (621,195)       (47,173)
Annuity units ..........................            --             --             --            --             --             --
                                          ------------   ------------   ------------  ------------   ------------   ------------
Accumulation and annuity units
  end of year ..........................            --         78,122        134,123        60,159      1,451,494        245,690
                                          ============   ============   ============  ============   ============   ============



                                            CONVERTIBLE SECURITIES          DISCIPLINED MID CAP        DISCIPLINED SMALL CAP
                                                   PORTFOLIO                  STOCK PORTFOLIO             STOCK PORTFOLIO
                                          ---------------------------   --------------------------  ---------------------------
                                              2002           2001           2002          2001          2002           2001
                                          ------------   ------------   ------------  ------------  ------------   ------------
Accumulation and annuity units
  beginning of year ....................     3,523,238      3,130,901      8,320,565     8,121,992            --      1,731,937
Accumulation units purchased and
  transferred from other funding options       590,579      1,849,481      4,014,430     4,010,010            --        472,164
Accumulation units redeemed and
  transferred to other funding options .      (859,353)    (1,457,144)    (3,790,296)   (3,811,437)           --     (2,204,101)
Annuity units ..........................            --             --             --            --            --             --
                                          ------------   ------------   ------------  ------------  ------------   ------------
Accumulation and annuity units
  end of year ..........................     3,254,464      3,523,238      8,544,699     8,320,565            --             --
                                          ============   ============   ============  ============  ============   ============



                                                  MFS EMERGING                 MFS RESEARCH               STRATEGIC STOCK
                                                GROWTH PORTFOLIO                PORTFOLIO                    PORTFOLIO
                                          ---------------------------   --------------------------  ---------------------------
                                              2002           2001           2002          2001          2002           2001
                                          ------------   ------------   ------------  ------------  ------------   ------------
Accumulation and annuity units
  beginning of year ....................    37,551,439     45,964,049      8,800,744    10,382,091            --      3,073,788
Accumulation units purchased and
  transferred from other funding options       500,447      1,270,408        229,508       974,865            --      1,493,624
Accumulation units redeemed and
  transferred to other funding options .   (10,403,003)    (9,683,018)    (2,682,489)   (2,556,212)           --     (4,567,412)
Annuity units ..........................            --             --             --            --            --             --
                                          ------------   ------------   ------------  ------------  ------------   ------------
Accumulation and annuity units
  end of year ..........................    27,648,883     37,551,439      6,347,763     8,800,744            --             --
                                          ============   ============   ============  ============  ============   ============



                                      -39-


                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

7.   SCHEDULE OF ACCUMULATION AND ANNUITY UNITS FOR FUND BD II
     FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001 (CONTINUED)


                                                  AIM CAPITAL                ALLIANCE GROWTH                 MFS TOTAL
                                             APPRECIATION PORTFOLIO             PORTFOLIO                RETURN PORTFOLIO
                                          ---------------------------   --------------------------  ---------------------------
                                              2002           2001           2002          2001          2002           2001
                                          ------------   ------------   ------------  ------------  ------------   ------------
Accumulation and annuity units
  beginning of year ....................    58,001,897     69,217,919     72,310,235    85,530,438    61,258,319     65,100,637
Accumulation units purchased and
  transferred from other funding options     1,032,775      1,037,032      1,098,215     2,448,045     4,986,615      7,081,262
Accumulation units redeemed and
  transferred to other funding options .   (14,996,341)   (12,249,332)   (21,093,917)  (15,665,859)  (13,435,635)   (10,920,383)
Annuity units ..........................        (3,627)        (3,722)        (2,326)       (2,389)       (3,833)        (3,197)
                                          ------------   ------------   ------------  ------------  ------------   ------------
Accumulation and annuity units
  end of year ..........................    44,034,704     58,001,897     52,312,207    72,310,235    52,805,466     61,258,319
                                          ============   ============   ============  ============  ============   ============



                                              PUTNAM DIVERSIFIED        SALOMON BROTHERS STRATEGIC       SMITH BARNEY HIGH
                                               INCOME PORTFOLIO           TOTAL RETURN BOND FUND          INCOME PORTFOLIO
                                          ---------------------------   --------------------------  ---------------------------
                                              2002           2001           2002          2001          2002           2001
                                          ------------   ------------   ------------  ------------  ------------   ------------
Accumulation and annuity units
  beginning of year ....................    28,749,545     33,664,427      5,701,322     5,141,486    25,146,036     29,599,606
Accumulation units purchased and
  transferred from other funding options     2,406,899        711,095      4,435,589     1,874,240     2,029,418      1,110,345
Accumulation units redeemed and
  transferred to other funding options .    (6,211,774)    (5,624,874)    (3,141,771)   (1,314,404)   (7,404,834)    (5,562,899)
Annuity units ..........................        (1,067)        (1,103)            --            --          (983)        (1,016)
                                          ------------   ------------   ------------  ------------  ------------   ------------
Accumulation and annuity units
  end of year ..........................    24,943,603     28,749,545      6,995,140     5,701,322    19,769,637     25,146,036
                                          ============   ============   ============  ============  ============   ============



                                          SMITH BARNEY INTERNATIONAL        SMITH BARNEY LARGE             SMITH BARNEY LARGE
                                           ALL CAP GROWTH PORTFOLIO         CAP VALUE PORTFOLIO     CAPITALIZATION GROWTH PORTFOLIO
                                          ---------------------------   --------------------------  -------------------------------
                                              2002           2001           2002          2001            2002           2001
                                          ------------   ------------   ------------  ------------    ------------   ------------
Accumulation and annuity units
  beginning of year ....................    42,407,146     45,237,038     43,356,539    48,323,533      45,384,894     52,371,029
Accumulation units purchased and
  transferred from other funding options   365,092,376    310,471,865        844,152     2,623,103       2,575,605      4,922,971
Accumulation units redeemed and
  transferred to other funding options .  (372,308,426)  (313,300,554)   (10,445,980)   (7,587,110)    (12,050,750)   (11,909,106)
Annuity units ..........................        (1,162)        (1,203)        (3,684)       (2,987)         (1,489)            --
                                          ------------   ------------   ------------  ------------    ------------   ------------
Accumulation and annuity units
  end of year ..........................    35,189,934     42,407,146     33,751,027    43,356,539      35,908,260     45,384,894
                                          ============   ============   ============  ============    ============   ============



                                               SMITH BARNEY MONEY           SMITH BARNEY PACIFIC         TRAVELERS MANAGED
                                                MARKET PORTFOLIO              BASIN PORTFOLIO             INCOME PORTFOLIO
                                          ---------------------------   --------------------------  ---------------------------
                                              2002           2001           2002          2001          2002           2001
                                          ------------   ------------   ------------  ------------  ------------   ------------
Accumulation and annuity units
  beginning of year ....................    54,250,759     48,957,515             --     7,219,967    21,858,594     21,047,633
Accumulation units purchased and
  transferred from other funding options   282,822,531    336,200,152             --     3,939,938     6,869,420     11,062,898
Accumulation units redeemed and
  transferred to other funding options .  (287,203,210)  (330,906,908)            --   (11,159,905)  (10,238,542)   (10,250,836)
Annuity units ..........................            --             --             --            --        (1,063)        (1,101)
                                          ------------   ------------   ------------  ------------  ------------   ------------
Accumulation and annuity units
  end of year ..........................    49,870,080     54,250,759             --            --    18,488,409     21,858,594
                                          ============   ============   ============  ============  ============   ============



                                      -40-


                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

7.   SCHEDULE OF ACCUMULATION AND ANNUITY UNITS FOR FUND BD II
     FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001 (CONTINUED)


                                                   VAN KAMPEN              SMITH BARNEY SMALL CAP
                                              ENTERPRISE PORTFOLIO     GROWTH OPPORTUNITIES PORTFOLIO           COMBINED
                                          ---------------------------  ------------------------------  ---------------------------
                                              2002           2001            2002          2001            2002           2001
                                          ------------   ------------    ------------  ------------    ------------   ------------
Accumulation and annuity units
  beginning of year ....................    35,420,625     43,285,117         479,991            --     652,246,857    717,954,779
Accumulation units purchased and
  transferred from other funding options       390,544        713,682         824,595       484,478     713,885,241    727,115,328
Accumulation units redeemed and
  transferred to other funding options .    (8,746,545)    (8,575,734)       (693,903)       (4,487)   (822,317,399)  (792,801,313)
Annuity units ..........................        (2,373)        (2,440)             --            --         (25,862)       (21,937)
                                          ------------   ------------    ------------  ------------    ------------   ------------
Accumulation and annuity units
  end of year ..........................    27,062,251     35,420,625         610,683       479,991     543,788,837    652,246,857
                                          ============   ============    ============  ============    ============   ============



                                      -41-


                          INDEPENDENT AUDITORS' REPORT

The Board of Directors of the Travelers Life and Annuity Company and
    Owners of Variable Annuity Contracts of The Travelers Fund BD II
    for Variable Annuities:

We have audited the  accompanying  statements of assets and  liabilities  of The
Travelers  Fund BD II for Variable  Annuities  as of December 31, 2002,  and the
related  statements  of  operations  for the year then ended,  the  statement of
changes in net assets for each of the two years then  ended,  and the  financial
highlights for each of the two years then ended. These financial  statements and
financial  highlights are the  responsibility of the Account's  management.  Our
responsibility  is to  express  an opinion  on these  financial  statements  and
financial highlights based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements and financial highlights are free of material misstatement.  An audit
includes  examining,  on a test  basis,  evidence  supporting  the  amounts  and
disclosures in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 2002, by correspondence  with the underlying
funds.  An audit also includes  assessing  the  accounting  principles  used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements and financial  highlights referred to
above present fairly, in all material  respects,  the financial  position of The
Travelers Fund BD II for Variable Annuities as of December 31, 2002, the results
of its  operations  for the year then  ended,  the changes in its net assets for
each of the two years in the period then ended, and the financial highlights for
each of the two years in the period then ended,  in conformity  with  accounting
principles generally accepted in the United States of America.


                                          /s/ KPMG LLP

Hartford, Connecticut
March 28, 2003


                       This page intentionally left blank



                       This page intentionally left blank




                              INDEPENDENT AUDITORS
                              --------------------
                                    KPMG LLP
                              Hartford, Connecticut

This report is prepared for the general  information  of contract  owners and is
not an offer of units of The  Travelers  Fund BD II for  Variable  Annuities  or
shares of Fund BD II's  underlying  funds.  It should not be used in  connection
with any offer except in conjunction  with the Prospectus for The Travelers Fund
BD II for  Variable  Annuities  product(s)  offered  by The  Travelers  Life and
Annuity Company and the Prospectuses of the underlying funds, which collectively
contain all pertinent information, including the applicable sales commissions.



FNDBDII (Annual) (12-02) Printed in U.S.A.

                          INDEPENDENT AUDITORS' REPORT



The Board of Directors and Shareholder
The Travelers Life and Annuity Company:


We have audited the accompanying balance sheets of The Travelers Life and
Annuity Company as of December 31, 2002 and 2001, and the related statements of
income, changes in shareholder's equity and cash flows for each of the years in
the three-year period ended December 31, 2002. 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 audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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. 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 Life and Annuity
Company as of December 31, 2002 and 2001, and the results of its operations and
its cash flows for each of the years in the three-year period ended December 31,
2002, in conformity with accounting principles generally accepted in the United
States of America.

As discussed in Note 1 to the financial statements, the Company changed its
method of accounting for goodwill and other intangible assets in 2002, and its
methods of accounting for derivative instruments and hedging activities and for
securitized financial assets in 2001.


/s/ KPMG LLP

Hartford, Connecticut
January 21, 2003








                                       F-1



                     THE TRAVELERS LIFE AND ANNUITY COMPANY

                              STATEMENTS OF INCOME
                                ($ IN THOUSANDS)


FOR THE YEAR ENDED DECEMBER 31,                                     2002         2001         2000
                                                                 ---------    ---------    ---------
REVENUES
Premiums                                                         $  42,893    $  39,222    $  33,941
Net investment income                                              311,946      251,054      214,174
Realized investment gains (losses)                                 (30,584)      26,144       (7,396)
Fee income                                                         189,686      173,113      127,378
Other revenues                                                      19,530       14,317        9,625
----------------------------------------------------------------------------------------------------
     Total Revenues                                                533,471      503,850      377,722
----------------------------------------------------------------------------------------------------

BENEFITS AND EXPENSES
Current and future insurance benefits                               94,513       88,842       78,403
Interest credited to contractholders                               180,610      125,880       77,579
Amortization of deferred acquisition costs                          66,972       89,475       68,254
Operating expenses                                                  32,352       23,404       14,095
----------------------------------------------------------------------------------------------------
     Total Benefits and Expenses                                   374,447      327,601      238,331
----------------------------------------------------------------------------------------------------

Income before federal income taxes and cumulative effect of
   change in accounting principle                                  159,024      176,249      139,391

Federal income taxes
     Current                                                       (31,143)     (19,007)      11,738
     Deferred                                                       86,797       80,096       36,748
----------------------------------------------------------------------------------------------------
     Total Federal Income Taxes                                     55,654       61,089       48,486
----------------------------------------------------------------------------------------------------

Income before cumulative effect of change in accounting
     principle                                                     103,370      115,160       90,905

Cumulative effect of change in accounting for derivative
     instruments and hedging activities, net of tax                     --          (62)          --
----------------------------------------------------------------------------------------------------

Net Income                                                       $ 103,370    $ 115,098    $  90,905
====================================================================================================










                       See Notes to Financial Statements.



                                       F-2



                     THE TRAVELERS LIFE AND ANNUITY COMPANY

                                 BALANCE SHEETS
                                ($ IN THOUSANDS)


AT DECEMBER 31,                                                       2002           2001
---------------------------------------------------------------------------------------------

ASSETS
Fixedmaturities, available for sale at fair value
     (including $144,284 and $102,347 subject to securities
     lending agreements) (cost $4,385,801 and $3,308,142)         $ 4,520,299   $ 3,352,227
Equity securities, at fair value (cost $14,939 and $16,251)            14,495        15,738
Mortgage loans                                                        134,078       125,629
Short-term securities                                                 475,365       206,759
Other invested assets                                                 384,616       238,429
---------------------------------------------------------------------------------------------
      Total Investments                                             5,528,853     3,938,782
---------------------------------------------------------------------------------------------
Separate accounts                                                   6,862,009     7,681,791
Deferred acquisition costs                                          1,064,118       814,369
Premiums and fees receivable                                           59,636        56,207
Other assets                                                          179,558       165,118
---------------------------------------------------------------------------------------------
     Total Assets                                                 $13,694,174   $12,656,267
---------------------------------------------------------------------------------------------

LIABILITIES
Future policy benefits and claims                                  $1,145,692    $1,040,856
Contractholder funds                                                3,886,083     2,624,570
Separate accounts                                                   6,862,009     7,681,791
Other liabilities                                                     441,249       261,395
Deferred federal income taxes                                         199,350        70,091
---------------------------------------------------------------------------------------------
     Total Liabilities                                             12,534,383    11,678,703
---------------------------------------------------------------------------------------------

SHAREHOLDER'S EQUITY
Common stock, par value $100; 100,000 shares authorized,
   30,000 issued and outstanding                                        3,000         3,000
Additional paid-in capital                                            417,316       417,316
Retained earnings                                                     644,534       541,164
Accumulated other changes in equity from nonowner sources              94,941        16,084
---------------------------------------------------------------------------------------------
     Total Shareholder's Equity                                     1,159,791       977,564
---------------------------------------------------------------------------------------------

     Total Liabilities and Shareholder's Equity                   $13,694,174   $12,656,267
=============================================================================================











                       See Notes to Financial Statements.



                                       F-3



                     THE TRAVELERS LIFE AND ANNUITY COMPANY

                  STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
                                ($ IN THOUSANDS)


                                                                          FOR THE YEAR ENDED
                                                                             DECEMBER 31,
------------------------------------------------------------------------------------------------------
COMMON STOCK                                                        2002         2001          2000
------------------------------------------------------------------------------------------------------
Balance, beginning of year                                       $    3,000   $    3,000    $    3,000
Changes in common stock                                                  --           --            --
------------------------------------------------------------------------------------------------------
Balance, end of year                                             $    3,000   $    3,000    $    3,000
======================================================================================================

------------------------------------------------------------------------------------------------------
ADDITIONAL PAID-IN CAPITAL
------------------------------------------------------------------------------------------------------
Balance, beginning of year                                       $  417,316   $  417,316    $  167,316
Contribution from Parent Company                                         --           --       250,000
------------------------------------------------------------------------------------------------------
Balance, end of year                                             $  417,316   $  417,316    $  417,316
======================================================================================================

------------------------------------------------------------------------------------------------------
RETAINED EARNINGS
------------------------------------------------------------------------------------------------------

Balance, beginning of year                                       $  541,164   $  426,066    $  335,161
Net income                                                          103,370      115,098        90,905
------------------------------------------------------------------------------------------------------
Balance, end of year                                             $  644,534   $  541,164    $  426,066
======================================================================================================

------------------------------------------------------------------------------------------------------
ACCUMULATED OTHER CHANGES
IN EQUITY FROM NONOWNER SOURCES
------------------------------------------------------------------------------------------------------

Balance, beginning of year                                       $   16,084   $   13,622    $  (39,312)
Cumulative effect of change in accounting principle for
   derivative instruments and hedging activities, net of tax             --           62            --
Unrealized gains (losses), net of tax                                73,750         (924)       52,934
Derivative instrument hedging activity gains,
    net of tax                                                        5,107        3,324            --
------------------------------------------------------------------------------------------------------
Balance, end of year                                             $   94,941   $   16,084    $   13,622
======================================================================================================

------------------------------------------------------------------------------------------------------
SUMMARY OF CHANGES IN EQUITY
FROM NONOWNER SOURCES
------------------------------------------------------------------------------------------------------

Net income                                                       $  103,370   $  115,098    $   90,905
Other changes in equity from nonowner sources                        78,857        2,462        52,934
------------------------------------------------------------------------------------------------------
Total changes in equity from nonowner sources                    $  182,227   $  117,560    $  143,839
======================================================================================================

------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY
------------------------------------------------------------------------------------------------------
Changes in total shareholder's equity                            $  182,227   $  117,560    $  393,839
Balance, beginning of year                                          977,564      860,004       466,165
------------------------------------------------------------------------------------------------------
Balance, end of year                                             $1,159,791   $  977,564    $  860,004
======================================================================================================





                       See Notes to Financial Statements.



                                       F-4



                     THE TRAVELERS LIFE AND ANNUITY COMPANY

                            STATEMENTS OF CASH FLOWS
                           INCREASE (DECREASE) IN CASH
                                ($ IN THOUSANDS)


FOR THE YEARS ENDED DECEMBER 31,                                 2002             2001            2000
------------------------------------------------------------------------------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES
     Premiums collected                                      $    43,490    $    37,915    $    33,609
     Net investment income received                              276,813        211,179        186,362
     Fee and other income received                               238,970        211,885        136,194
     Benefits and claims paid                                   (103,513)      (103,224)       (96,890)
     Interest credited to contractholders                       (180,610)      (125,880)       (77,579)
     Operating expenses paid                                    (343,932)      (354,506)      (325,180)
     Income taxes (paid) received                                 88,888         45,257        (38,548)
      Other                                                      (21,047)       (31,175)        40,628
------------------------------------------------------------------------------------------------------
         Net cash used in operating activities                      (941)      (108,549)      (141,404)
------------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
     Proceeds from maturities of investments
         Fixed maturities                                        255,009         97,712        220,841
         Mortgage loans                                           36,193         20,941         28,477
     Proceeds from sales of investments
         Fixed maturities                                      1,689,931        938,987        843,856
         Equity securities                                        35,556          6,363         30,772
         Mortgage loans                                               --             --         15,260
         Real estate held for sale                                    --            (36)         2,115

     Purchases of investments
         Fixed maturities                                     (3,018,069)    (2,022,618)    (1,564,237)
         Equity securities                                       (35,735)        (2,274)       (20,361)
         Mortgage loans                                          (44,632)       (14,494)       (17,016)
     Policy loans, net                                           (11,201)        (3,395)        (2,675)
     Short-term securities (purchases) sales, net               (268,606)        40,618       (166,259)
     Other investment (purchases) sales, net                     (20,915)        (6,334)           327
     Securities transactions in course of settlement, net        117,806         64,698         21,372
------------------------------------------------------------------------------------------------------
         Net cash used in investing activities                (1,264,663)      (879,832)      (607,528)
------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
     Contractholder fund deposits                              1,486,056      1,178,421        629,138
     Contractholder fund withdrawals                            (224,542)      (185,464)      (115,289)
     Contribution from parent company                                 --             --        250,000
------------------------------------------------------------------------------------------------------
         Net cash provided by financing activities             1,261,514        992,957        763,849
------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash                                   (4,090)         4,576         14,917
Cash at beginning of year                                         19,514         14,938             21
------------------------------------------------------------------------------------------------------
Cash at December 31,                                         $    15,424    $    19,514    $    14,938
======================================================================================================




                       See Notes to Financial Statements.



                                      F-5



                     THE TRAVELERS LIFE AND ANNUITY COMPANY

                          NOTES TO FINANCIAL STATEMENTS


1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Significant accounting policies used in the preparation of the accompanying
financial statements follow.

BASIS OF PRESENTATION

The Travelers Life and Annuity Company (the Company) is a wholly owned
subsidiary of The Travelers Insurance Company (TIC), an indirect wholly owned
subsidiary of Citigroup Inc. (Citigroup). On March 27, 2002, Travelers Property
Casualty Corp. (TPC), TIC's parent at December 31, 2001, completed its initial
public offering (IPO). On August 20, 2002, Citigroup made a tax-free
distribution to its stockholders of the majority of its remaining interest in
TPC. Prior to the IPO, the common stock of TIC was distributed by TPC to
Citigroup Insurance Holding Corporation (CIHC) so that TIC and the Company would
remain indirect wholly owned subsidiaries of Citigroup.

The financial statements and accompanying footnotes of the Company are prepared
in conformity with accounting principles generally accepted in the United States
of America (GAAP). The preparation of financial statements in conformity with
GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and benefits and expenses during the reporting period. Actual
results could differ from those estimates.

The Company offers a variety of variable annuity products where the investment
risk is borne by the contractholder, not the Company, and the benefits are not
guaranteed. The premiums and deposits related to these products are reported in
separate accounts. The Company considers it necessary to differentiate, for
financial statement purposes, the results of the risks it has assumed from those
it has not.

Certain prior year amounts have been reclassified to conform to the 2002
presentation.

ACCOUNTING CHANGES

BUSINESS COMBINATIONS, GOODWILL AND OTHER INTANGIBLE ASSETS

Effective January 1, 2002, the Company adopted the Financial Accounting
Standards Board (FASB) Statements of Financial Accounting Standards No. 141,
"Business Combinations" (FAS 141) and No. 142, "Goodwill and Other Intangible
Assets" (FAS 142). These standards change the accounting for business
combinations by, among other things, prohibiting the prospective use of
pooling-of-interests accounting and requiring companies to stop amortizing
goodwill and certain intangible assets with an indefinite useful life created by
business combinations accounted for using the purchase method of accounting.
Instead, goodwill and intangible assets deemed to have an indefinite useful life
will be subject to an annual review for impairment. All goodwill was fully
amortized at December 31, 2001 and the Company did not have any other intangible
assets with an indefinite useful life. Other intangible assets that are not
deemed to have an indefinite useful life will continue to be amortized over
their useful lives. See Note 4.



                                       F-6



                     THE TRAVELERS LIFE AND ANNUITY COMPANY

                          NOTES TO FINANCIAL STATEMENTS
                                   (CONTINUED)


IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS

Effective January 1, 2002, the Company adopted FASB Statement of Financial
Accounting Standards No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets" (FAS 144). FAS 144 establishes a single accounting model for
long-lived assets to be disposed of by sale. A long-lived asset classified as
held for sale is to be measured at the lower of its carrying amount or fair
value less cost to sell. Depreciation (amortization) is to cease. Impairment is
recognized only if the carrying amount of a long-lived asset is not recoverable
from its undiscounted cash flows and is measured as the difference between the
carrying amount and fair value of the asset. Long-lived assets to be abandoned,
exchanged for a similar productive asset, or distributed to owners in a spin-off
are considered held and used until disposed of. Accordingly, discontinued
operations are no longer to be measured on a net realizable value basis, and
future operating losses are no longer recognized before they occur. The
provisions of the new standard are to be applied prospectively. There has been
no impact as of December 31, 2002 on the Company's results of operations,
financial condition or liquidity due to this standard. The Company does not
expect the impact of this standard to be significant in future reporting
periods.

ACCOUNTING STANDARDS NOT YET ADOPTED

COSTS ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES

On January 1, 2003, the Company adopted Statement of Financial Accounting
Standards No. 146, "Accounting for Costs Associated with Exit or Disposal
Activities" (FAS 146). FAS 146 requires that a liability for costs associated
with exit or disposal activities, other than in a business combination, be
recognized when the liability is incurred. Previous generally accepted
accounting principles provided for the recognition of such costs at the date of
management's commitment to an exit plan. In addition, FAS 146 requires that the
liability be measured at fair value and be adjusted for changes in estimated
cash flows. The provisions of the new standard are effective for exit or
disposal activities initiated after December 31, 2002. It is not expected that
FAS 146 will materially affect the Company's financial statements.

STOCK-BASED COMPENSATION

On January 1, 2003, the Company adopted the fair value recognition provisions of
Statement of Financial Accounting Standards No. 123 (FAS 123), prospectively for
all awards granted, modified, or settled after December 31, 2002. The
prospective method is one of the adoption methods provided for under FAS No.
148, "Accounting for Stock-Based Compensation-Transition and Disclosure", issued
in December 2002. FAS 123 requires that compensation cost for all stock awards
be calculated and recognized over the service period (generally equal to the
vesting period). This compensation cost is determined using option pricing
models, intended to estimate the fair value of the awards at the grant date.
Similar to APB 25, the alternative method of accounting, an offsetting increase
to stockholders' equity under FAS 123 is recorded equal to the amount of
compensation expense charged. The adoption of this change in accounting
principle will not have a significant impact on the Company's results of
operations, financial condition or liquidity.



                                       F-7



                     THE TRAVELERS LIFE AND ANNUITY COMPANY

                          NOTES TO FINANCIAL STATEMENTS
                                   (CONTINUED)


CONSOLIDATION OF VARIABLE INTEREST ENTITIES

In January 2003, the FASB released FASB Interpretation No. 46, "Consolidation of
Variable Interest Entities" (FIN 46). This Interpretation changes the method of
determining whether certain entities should be included in the Company's
Consolidated Financial Statements. An entity is subject to FIN 46 and is called
a variable interest entity (VIE) if it has (1) equity that is insufficient to
permit the entity to finance its activities without additional subordinated
financial support from other parties, or (2) equity investors that cannot make
significant decisions about the entity's operations, or that do not absorb the
expected losses or receive the expected returns of the entity. All other
entities are evaluated for consolidation under FAS No. 94, "Consolidation of All
Majority-Owned Subsidiaries." A VIE is consolidated by its primary beneficiary,
which is the party involved with the VIE that has a majority of the expected
losses or a majority of the expected residual returns or both.

The provisions of FIN 46 are to be applied immediately to VIEs created after
January 31, 2003, and to VIEs in which an enterprise obtains an interest after
that date. For VIEs in which an enterprise holds a variable interest that it
acquired before February 1, 2003, FIN 46 applies in the first fiscal period
beginning after June 15, 2003. For any VIEs that must be consolidated under FIN
46 that were created before February 1, 2003, the assets, liabilities and
noncontrolling interest of the VIE would be initially measured at their carrying
amounts with any difference between the net amount added to the balance sheet
and any previously recognized interest being recognized as the cumulative effect
of an accounting change. If determining the carrying amounts is not practicable,
fair value at the date FIN 46 first applies may be used to measure the assets,
liabilities and noncontrolling interest of the VIE. FIN 46 also mandates new
disclosures about VIEs, some of which are required to be presented in financial
statements issued after January 31, 2003.

The Company has investments in entities that may be considered to be variable
interests. The carrying value of these investments is approximately $121.9
million and primarily consists of interests in security and real estate
investment funds and below investment grade asset-backed and mortgage-backed
securities. The Company is evaluating the impact of applying FIN 46 to existing
VIEs in which it has variable interests and has not yet completed this analysis.
However, at this time, it is anticipated that the effect on the Company's
Balance Sheets would be insignificant. As the Company continues to evaluate the
impact of applying FIN 46, additional entities may be identified that would need
to be consolidated.










                                       F-8



                     THE TRAVELERS LIFE AND ANNUITY COMPANY

                          NOTES TO FINANCIAL STATEMENTS
                                   (CONTINUED)

ACCOUNTING POLICIES

INVESTMENTS

Fixed maturities include bonds, notes and redeemable preferred stocks. Fixed
maturities, including instruments subject to securities lending agreements (see
Note 2), are classified as "available for sale" and are reported at fair value,
with unrealized investment gains and losses, net of income taxes, credited or
charged directly to shareholder's equity. Fair values of investments in fixed
maturities are based on quoted market prices or dealer quotes. If these are not
available, discounted expected cash flows using market rates commensurate with
the credit quality and maturity of the investment are used to record fair value.
Changes in the assumptions could affect the fair values of investments.
Impairments are realized when investment losses in value are deemed
other-than-temporary. The Company conducts regular reviews to assess whether
other-than-temporary impairments exist. Changing economic conditions - global,
regional, or related to specific issuers or industries - could adversely affect
these investments.

Also included in fixed maturities are loan-backed and structured securities,
which are amortized using the retrospective method. The effective yield used to
determine amortization is calculated based upon actual historical and projected
future cash flows, which are obtained from a widely accepted securities data
provider.

Equity securities, which include common and non-redeemable preferred stocks, are
classified as "available-for-sale" and are carried at fair value based primarily
on quoted market prices. Changes in fair values of equity securities are charged
or credited directly to shareholder's equity, net of income taxes.

Mortgage loans are carried at amortized cost. A mortgage loan is considered
impaired when it is probable that the Company will be unable to collect
principal and interest amounts due. For mortgage loans that are determined to be
impaired, a reserve is established for the difference between the amortized cost
and fair market value of the underlying collateral. In estimating fair value,
the Company uses interest rates reflecting the current real estate financing
market.

Short-term securities, consisting primarily of money market instruments and
other debt issues purchased with a maturity of less than one year, are carried
at amortized cost, which approximates fair value.

Other invested assets include partnership investments and real estate joint
ventures which are accounted for on the equity method of accounting.
Undistributed income of these investments is reported in net investment income.
Also included in other invested assets are policy loans which are carried at the
amount of the unpaid balances that are not in excess of the net cash surrender
values of the related insurance policies. The carrying value of policy loans,
which have no defined maturities, is considered to be fair value.

Accrual of investment income, included in other assets, is suspended on fixed
maturities or mortgage loans that are in default, or on which it is likely that
future payments will not be made as scheduled. Interest income on investments in
default is recognized only as payment is received.



                                       F-9



                     THE TRAVELERS LIFE AND ANNUITY COMPANY

                          NOTES TO FINANCIAL STATEMENTS
                                   (CONTINUED)


DERIVATIVE FINANCIAL INSTRUMENTS

The Company uses derivative financial instruments, including financial futures
contracts, swaps, options and forward contracts as a means of hedging exposure
to interest rate changes, equity price change and foreign currency risk. The
Company does not hold or issue derivative instruments for trading purposes. (See
Note 9 for a more detailed description of the Company's derivative use.)
Derivative financial instruments in a gain position are reported in the balance
sheet in other assets, derivative financial instruments in a loss position are
reported in the balance sheet in other liabilities and derivatives purchased to
offset embedded derivatives on variable annuity contracts are reported in other
invested assets.

To qualify for hedge accounting, the hedge relationship is designated and
formally documented at inception detailing the particular risk management
objective and strategy for the hedge which includes the item and risk that is
being hedged, the derivative that is being used, as well as how effectiveness is
being assessed. A derivative has to be highly effective in accomplishing the
objective of offsetting either changes in fair value or cash flows for the risk
being hedged.

For fair value hedges, in which derivatives hedge the fair value of assets and
liabilities, changes in the fair value of derivatives are reflected in realized
investment gains and losses, together with changes in the fair value of the
related hedged item. The net amount is reflected in current earnings. The
Company's fair value hedges are primarily of available-for-sale securities.

For cash flow hedges, the accounting treatment depends on the effectiveness of
the hedge. To the extent that derivatives are effective in offsetting the
variability of the hedged cash flows, changes in the derivatives' fair value
will not be included in current earnings but are reported in the accumulated
other changes in equity from nonowner sources. These changes in fair value will
be included in earnings of future periods when earnings are also affected by the
variability of the hedged cash flows. To the extent these derivatives are not
effective, changes in their fair values are immediately included in realized
investment gains and losses. The Company's cash flow hedges primarily include
hedges of foreign denominated funding agreements and floating rate
available-for-sale securities. Derivatives that are either hedging instruments
that are carried at fair value or do not qualify as hedges under the new rules
are also carried at fair value with changes in value reflected in realized
investment gains and losses.

For those hedge relationships that are terminated, hedge designations removed,
or forecasted transactions that are no longer expected to occur, the hedge
accounting treatment described in the paragraphs above will no longer apply. For
fair value hedges, any changes to the hedged item remain as part of the basis of
the asset or liability and are ultimately reflected as an element of the yield.
For cash flow hedges, any changes in fair value of the end-user derivative
remain in the accumulated other changes in equity from nonowner sources and are
included in earnings of future periods when earnings are also affected by the
variability of the hedged cash flow. If the hedged relationship is discontinued
because a forecasted transaction will not occur when scheduled, any changes in
fair value of the end-user derivative are immediately reflected in realized
investment gains and losses.

The Company also purchases investments that have embedded derivatives, primarily
convertible debt securities. These embedded derivatives are carried at fair
value with changes in value reflected in realized gains and losses. The Company
bifurcates an embedded derivative where the economic characteristics and risks
of the embedded instrument are not clearly and closely related to the economic
characteristics and risk of the host contract, the entire instrument would not
otherwise



                                       F-10



                     THE TRAVELERS LIFE AND ANNUITY COMPANY

                          NOTES TO FINANCIAL STATEMENTS
                                   (CONTINUED)


be re-measured at fair value and a separate instrument with the same terms of
the embedded instrument would meet the definition of a derivative under FAS 133.
Derivatives embedded in convertible debt securities are classified as fixed
maturity securities, consistent with the host instruments.

Prior to the adoption of FAS 133 on January 1, 2001, end-user derivatives
designated as qualifying hedges were accounted for consistently with the risk
management strategy as follows. Hedge accounting was generally used to account
for derivatives. To qualify for hedge accounting the change in value of the
derivative was expected to substantially offset the changes in value of the
hedged item. Hedges were monitored to ensure that there was a high correlation
between the derivative instruments and the hedged investment. Derivatives that
did not qualify for hedge accounting were marked to market with changes in
market value reflected in the statement of income.

Payments to be received or made under interest rate swaps were accrued and
recognized in net investment income. Swaps hedging investments were carried at
fair value with unrealized gains and losses, net of taxes, charged directly to
shareholder's equity. Interest rate and currency swaps hedging liabilities were
treated as off-balance sheet instruments.

INVESTMENT GAINS AND LOSSES

Realized investment gains and losses are included as a component of pre-tax
revenues based upon specific identification of the investments sold on the trade
date. Impairments are realized when investment losses in value are deemed
other-than-temporary. The Company conducts regular reviews to assess whether
other-than-temporary impairments exist. Changing economic conditions-global,
regional, or related to specific issuers or industries-could adversely affect
these investments. Also included are gains and losses arising from the
remeasurement of the local currency value of foreign investments to U.S.
dollars, the functional currency of the Company.

SEPARATE ACCOUNTS

The Company has separate accounts that primarily represent funds for which
investment income and investment gains and losses accrue directly to, and
investment risk is borne by, the contractholders. Each of these accounts has
specific investment objectives. The assets of each account are legally
segregated and are not subject to claims that arise out of any other business of
the Company. The assets of these accounts are carried at fair value.

Amounts assessed to the separate account contractholders for management services
are included in revenues. Deposits, net investment income and realized
investment gains and losses for these accounts are excluded from revenues, and
related liability increases are excluded from benefits and expenses.

DEFERRED ACQUISITION COSTS

Costs of acquiring traditional life, universal life, deferred annuities and
payout annuities are deferred. These deferred acquisition costs (DAC) include
principally commissions and certain expenses related to policy issuance,
underwriting and marketing, all of which vary with and are primarily related to
the production of new business. The method for determining amortization of DAC
varies by product



                                       F-11



                     THE TRAVELERS LIFE AND ANNUITY COMPANY

                          NOTES TO FINANCIAL STATEMENTS
                                   (CONTINUED)


type based upon three different accounting pronouncements: Statement of
Financial Accounting Standards No. 60, "Accounting and Reporting by Insurance
Enterprises" (FAS 60), Statement of Financial Accounting Standards No. 91,
"Accounting for Nonrefundable Fees and Costs Associated with Originating or
Acquiring Loans and Initial Direct Costs of Leases" (FAS 91) and Statement of
Financial Accounting Standards No. 97, "Accounting and Reporting by Insurance
Enterprises for Certain Long Duration Contracts and for Realized Gains and
Losses from the Sale of Investments" (FAS 97).

DAC for deferred annuities, both fixed and variable, and payout annuities are
amortized employing a level effective yield methodology per FAS 91 as permitted
by AICPA Practice Bulletin 8. An amortization rate is developed using the
outstanding DAC balance and projected account balances and is applied to actual
account balances to determine the amount of DAC amortization. The projected
account balances are derived using a model that contains assumptions related to
investment returns and persistency. The model rate is evaluated periodically, at
least annually, and the actual rate is reset in the following quarter and
applied prospectively. A new amortization pattern is developed so that the DAC
balances will be amortized over the remaining estimated life of the business.
DAC for these products is currently being amortized over 10-15 years. DAC for
universal life is amortized in relation to estimated gross profits from
surrender charges, investment, mortality, and expense margins per FAS 97. Actual
profits can vary from management's estimates resulting in increases or decreases
in the rate of amortization. Re-estimates of gross profits result in
retrospective adjustments to earnings by a cumulative charge or credit to
income. DAC for this product is currently being amortized over 16-25 years.

DAC relating to traditional life, including term insurance, is amortized in
relation to anticipated premiums per FAS 60. Assumptions as to the anticipated
premiums are made at the date of policy issuance or acquisition and are
consistently applied over the life of the policy. DAC for this product is
currently being amortized over 5-20 years.

DAC is reviewed to determine if it is recoverable from future income, including
investment income, and, if not recoverable, is charged to expense. All other
acquisition expenses are charged to operations as incurred. See Note 4.

VALUE OF INSURANCE IN FORCE

The value of insurance in force, reported in other assets, is an asset that was
recorded in 1993 at the time of acquisition of TIC and the Company by
Citigroup's predecessor. It represents the actuarially determined present value
of anticipated profits to be realized from annuity contracts at the date of
acquisition using the same assumptions that were used for computing related
liabilities, where appropriate. The value of insurance in force was the
actuarially determined present value of the projected future profits discounted
at an interest rate of 16% for the annuity business acquired. The annuity
contracts are amortized employing a level yield method. The value of insurance
in force is reviewed periodically for recoverability to determine if any
adjustment is required. Adjustments, if any, are charged to income. See Note 4.




                                       F-12



                     THE TRAVELERS LIFE AND ANNUITY COMPANY

                          NOTES TO FINANCIAL STATEMENTS
                                   (CONTINUED)


FUTURE POLICY BENEFITS

Future policy benefits represent liabilities for future insurance policy
benefits. The annuity payout reserves are calculated using the mortality and
interest assumptions used in the actual pricing of the benefit. Mortality
assumptions are based on Company experience and are adjusted to reflect
deviations such as substandard mortality in structured settlement benefits. The
interest rates range from 2.1% to 7.9% for these annuity products with a
weighted average interest rate of 7.2%, including adverse deviation. Traditional
life products include whole life and term insurance. Future policy benefits for
traditional life products are estimated on the basis of actuarial assumptions as
to mortality, persistency and interest, established at policy issue. Interest
assumptions applicable to traditional life products range from 3.0% to 7.0%,
with a weighted average of 6.0%. Assumptions established at policy issue as to
mortality and persistency are based on the Company's experience, which, together
with interest assumptions, include a margin for adverse deviation. Appropriate
recognition has been given to experience rating and reinsurance.

CONTRACTHOLDER FUNDS

Contractholder funds represent receipts from the issuance of universal life,
certain deferred annuity contracts and structured settlement contracts. For
universal life contracts, contractholder fund balances are increased by receipts
for mortality coverage, contract administration, surrender charges and interest
accrued where one or more elements are not fixed or guaranteed. These balances
are decreased by withdrawals, mortality charges and administrative expenses
charged to the contractholder. Interest rates credited to contractholder funds
related to universal life range from 4.1% to 6.5%, with a weighted average
interest rate of 5.7%.

Pension investment and certain annuity contracts do not contain significant
insurance risk and are considered investment type contracts. Contractholder fund
balances are increased by receipts and credited interest, and reduced by
withdrawals and administrative expenses charged to the contractholder. Interest
rates credited to these investment-type contracts range from 3.0% to 10.0% with
a weighted average interest rate of 5.8%.

GUARANTY FUND AND OTHER INSURANCE-RELATED ASSESSMENTS

Included in other liabilities is the Company's estimate of its liability for
guaranty fund and other insurance-related assessments. State guaranty fund
assessments are based upon the Company's share of premiums written or received
in one or more years prior to an insolvency occurring in the industry. Once an
insolvency has occurred, the Company recognizes a liability for such assessments
if it is probable that an assessment will be imposed and the amount of the
assessment can be reasonably estimated. At December 31, 2002 and 2001, the
Company's liability for guaranty fund assessments was not significant.

PERMITTED STATUTORY ACCOUNTING PRACTICES

The Company, domiciled in the State of Connecticut, prepares statutory financial
statements in accordance with the accounting practices prescribed or permitted
by the State of Connecticut Insurance Department. Prescribed statutory
accounting practices are those practices that are incorporated directly or by
reference in state laws, regulations, and general administrative rules
applicable to all insurance enterprises domiciled in a particular state.
Permitted statutory accounting



                                       F-13



                     THE TRAVELERS LIFE AND ANNUITY COMPANY

                          NOTES TO FINANCIAL STATEMENTS
                                   (CONTINUED)


practices include practices not prescribed by the domiciliary state, but allowed
by the domiciliary state regulatory authority. The Company does not have any
permitted statutory accounting practices.

PREMIUMS

Premiums are recognized as revenues when due. Premiums for contracts with a
limited number of premium payments, due over a significantly shorter period than
the period over which benefits are provided, are considered income when due. The
portion of premium which is not required to provide for benefits and expenses is
deferred and recognized in income in a constant relationship to insurance
benefits in force.

FEE INCOME

Fee income is recognized on deferred annuity and universal life contracts for
mortality, administrative and equity protection charges according to contract
due dates. Fee income is recognized on variable annuity and universal life
separate accounts either daily, monthly, quarterly or annually as per contract
terms.

OTHER REVENUES

Other revenues include surrender penalties collected at the time of a contract
surrender, and other miscellaneous charges related to annuity and universal life
contracts recognized when received.

INTEREST CREDITED TO CONTRACTHOLDERS

Interest credited to contractholders represents amounts earned by universal
life, pension investment and certain deferred annuity contracts in accordance
with contract provisions.

FEDERAL INCOME TAXES

The provision for federal income taxes is comprised of two components, current
income taxes and deferred income taxes. Deferred federal income taxes arise from
changes during the year in cumulative temporary differences between the tax
basis and book basis of assets and liabilities.





                                       F-14



                     THE TRAVELERS LIFE AND ANNUITY COMPANY

                          NOTES TO FINANCIAL STATEMENTS
                                   (CONTINUED)


2.  INVESTMENTS

FIXED MATURITIES

The amortized cost and fair values of investments in fixed maturities were as
follows:


                                                                        GROSS         GROSS
DECEMBER 31, 2002                                      AMORTIZED      UNREALIZED    UNREALIZED         FAIR
($ IN THOUSANDS)                                          COST          GAINS         LOSSES          VALUE
-------------------------------------------------------------------------------------------------------------

AVAILABLE FOR SALE:
     Mortgage-backed securities - CMOs and
     pass-through securities                          $  423,318     $   21,809     $       90     $  445,037
     U.S. Treasury securities and obligations
     of U.S. Government and government agencies
     and authorities                                     217,602          5,958          2,115        221,445
     Obligations of states and political
     subdivisions                                         49,472          7,170              0         56,642
     Debt securities issued by foreign
     governments                                          21,530          2,146            296         23,380
     All other corporate bonds                         2,932,069        157,225         82,175      3,007,119
     All other debt securities                           737,215         35,255         10,926        761,544
     Redeemable preferred stock                            4,595          1,785          1,248          5,132
-------------------------------------------------------------------------------------------------------------
         Total Available For Sale                     $4,385,801     $  231,348     $   96,850     $4,520,299
-------------------------------------------------------------------------------------------------------------

-------------------------------------------------------------------------------------------------------------
                                                                        GROSS         GROSS
DECEMBER 31, 2001                                      AMORTIZED      UNREALIZED    UNREALIZED         FAIR
($ IN THOUSANDS)                                          COST          GAINS         LOSSES          VALUE
-------------------------------------------------------------------------------------------------------------

AVAILABLE FOR SALE:
     Mortgage-backed securities - CMOs and
     pass-through securities                          $  281,583     $    4,744     $    3,577     $  282,750
     U.S. Treasury securities and obligations
     of U.S. Government and government agencies
     and authorities                                     197,703          2,310         10,883        189,130
     Obligations of states and political
     subdivisions                                         44,587          1,903            355         46,135
     Debt securities issued by foreign
     governments                                          53,207          2,454            716         54,945
     All other corporate bonds                         2,112,121         62,649         25,784      2,148,986
     All other debt securities                           613,451         21,378         10,109        624,720
     Redeemable preferred stock                            6,090            365            894          5,561
-------------------------------------------------------------------------------------------------------------
         Total Available For Sale                     $3,308,742     $   95,803     $   52,318     $3,352,227
-------------------------------------------------------------------------------------------------------------


Proceeds from sales of fixed maturities classified as available for sale were
$1.7 billion, $939 million and $844 million in 2002, 2001 and 2000,
respectively. Gross gains of $85.6 million, $67.0 million



                                       F-15



                     THE TRAVELERS LIFE AND ANNUITY COMPANY

                          NOTES TO FINANCIAL STATEMENTS
                                   (CONTINUED)


and $22.4 million and gross losses of $29.9 million, $22.4 million and $31.2
million in 2002, 2001 and 2000, respectively, were realized on those sales.
Additional losses of $66.9 million, $11.5 million and $2.9 million were realized
due to other-than-temporary losses in value in 2002, 2001 and 2000,
respectively. Impairment activity increased significantly beginning the fourth
quarter of 2001 and continued through 2002. Impairments were concentrated in
telecommunication and energy company investments.

Fair values of investments in fixed maturities are based on quoted market prices
or dealer quotes or, if these are not available, discounted expected cash flows
using market rates commensurate with the credit quality and maturity of the
investment. The fair value of investments for which a quoted market price or
dealer quote is not available amounted to $840.4 million and $628.2 million at
December 31, 2002 and 2001, respectively.

The amortized cost and fair value of fixed maturities available for sale at
December 31, 2002, by contractual maturity, are shown below. Actual maturities
will differ from contractual maturities because borrowers may have the right to
call or prepay obligations with or without call or prepayment penalties.

     -----------------------------------------------------------------------
                                                  AMORTIZED        FAIR
     ($ IN THOUSANDS)                               COST           VALUE
     -----------------------------------------------------------------------

     MATURITY:
          Due in one year or less                  $178,198       $180,542
          Due after 1 year through 5 years        1,239,752      1,275,526
          Due after 5 years through 10 years      1,689,810      1,731,046
          Due after 10 years                        856,436        888,148
     -----------------------------------------------------------------------
                                                  3,964,196      4,075,262
     -----------------------------------------------------------------------

          Mortgage-backed securities                423,318        445,037
     -----------------------------------------------------------------------
              Total Maturity                     $4,387,514     $4,520,229
     -----------------------------------------------------------------------

The Company makes significant investments in collateralized mortgage obligations
(CMOs). CMOs typically have high credit quality, offer good liquidity, and
provide a significant advantage in yield and total return compared to U.S.
Treasury securities. The Company's investment strategy is to purchase CMO
tranches, which are protected against prepayment risk, including planned
amortization class tranches and last cash flow tranches. Prepayment protected
tranches are preferred because they provide stable cash flows in a variety of
interest rate scenarios. The Company does invest in other types of CMO tranches
if an assessment indicates a favorable risk/return tradeoff. The Company does
not purchase residual interests in CMOs.

At December 31, 2002 and 2001, the Company held CMOs with a fair value of $265.5
million and $212.5 million, respectively. The Company's CMO holdings were 33.4%
and 49.5% collateralized by GNMA, FNMA or FHLMC securities at December 31, 2002
and 2001, respectively. In addition, the Company held $177.8 million and $64.8
million of GNMA, FNMA or FHLMC mortgage-backed pass-through securities at
December 31, 2002 and 2001, respectively. All of these securities are rated AAA.



                                       F-16



                     THE TRAVELERS LIFE AND ANNUITY COMPANY

                          NOTES TO FINANCIAL STATEMENTS
                                   (CONTINUED)


The Company engages in securities lending whereby certain securities from its
portfolio are loaned to other institutions for short periods of time. The
Company generally receives cash collateral from the borrower, equal to at least
the market value of the loaned securities plus accrued interest, and reinvests
in a short-term investment pool. See Note 10. The loaned securities remain a
recorded asset of the Company, however, the Company records a liability for the
amount of the cash collateral held, representing its obligation to return the
cash collateral related to these loaned securities, and reports that liability
as part of other liabilities in the consolidated balance sheet. At December 31,
2002 and 2001, the Company held cash collateral of $149.0 million and $104.3
million, respectively.

EQUITY SECURITIES

The cost and fair values of investments in equity securities were as follows:


----------------------------------------------------------------------------------------
                                                          GROSS       GROSS
                                                        UNREALIZED  UNREALIZED     FAIR
($ IN THOUSANDS)                               COST       GAINS       LOSSES      VALUE
----------------------------------------------------------------------------------------

DECEMBER 31, 2002
     Common stocks                           $ 2,599     $    37     $   699     $ 1,937
     Non-redeemable preferred stocks          12,340         394         176      12,558
----------------------------------------------------------------------------------------
         Total Equity Securities             $14,939     $   431     $   875     $14,495
----------------------------------------------------------------------------------------

DECEMBER 31, 2001
     Common stocks                           $ 2,643     $    97     $   671     $ 2,069
     Non-redeemable preferred stocks          13,608         439         378      13,669
----------------------------------------------------------------------------------------
         Total Equity Securities             $16,251     $   536     $ 1,049     $15,738
----------------------------------------------------------------------------------------


Proceeds from sales of equity securities were $35.6 million, $6.4 million and
$30.8 million in 2002, 2001 and 2000, respectively. Gross gains and losses on
sales and impairments were insignificant.

MORTGAGE LOANS

Underperforming assets include delinquent mortgage loans over 90 days past due,
loans in the process of foreclosure and loans modified at interest rates below
market.

At December 31, 2002 and 2001, the Company's mortgage loan portfolios consisted
of the following:

    ------------------------------------------------------------------
    ($ IN THOUSANDS)                              2002         2001
    ------------------------------------------------------------------
    Current Mortgage Loans                      $130,303     $125,131
    Underperforming Mortgage Loans                 3,775          498
    ------------------------------------------------------------------
         Total                                  $134,078     $125,629
    ------------------------------------------------------------------






                                       F-17



                     THE TRAVELERS LIFE AND ANNUITY COMPANY

                          NOTES TO FINANCIAL STATEMENTS
                                   (CONTINUED)


Aggregate annual maturities on mortgage loans at December 31, 2002 are as shown
below. Actual maturities will differ from contractual maturities because
borrowers may have the right to prepay obligations with or without prepayment
penalties.


       -----------------------------------------------------
       ($ IN THOUSANDS)
       -----------------------------------------------------
       2003                                       $  5,017
       2004                                          8,690
       2005                                          6,380
       2006                                         15,892
       2007                                          6,049
       Thereafter                                   92,050
       -----------------------------------------------------
            Total                                 $134,078
       =====================================================


CONCENTRATIONS

The Company participates in a short-term investment pool maintained by TIC. See
Note 11.

The Company's industry concentrations of investments (primarily fixed
maturities), excluding those in federal and government agencies, were as follows
at fair value:

       ----------------------------------------------------------------
       ($ IN THOUSANDS)                           2002          2001
       ----------------------------------------------------------------
       Finance                                  $562,179     $286,824
       Electric Utilities                        512,950      447,355
       Media                                     324,008      235,790
       Telecommunications                        304,171      213,644
       Banking                                   265,442      222,581
       ----------------------------------------------------------------

The Company held investments in foreign banks in the amount of $147 million and
$144 million at December 31, 2002 and 2001, respectively, which are included in
the table above. The Company defines its below investment grade assets as those
securities rated Ba1 by Moody's Investor Services (or its equivalent) or below
by external rating agencies, or the equivalent by internal analysts when a
public rating does not exist. Such assets include publicly traded below
investment grade bonds and certain other privately issued bonds and notes that
are classified as below investment grade. Below investment grade assets included
in the preceding table include $109 million and $38 million in Electric
Utilities, $35 million and $21 million in Media, and $53 million and $5 million
in telecommunications at December 31, 2002 and 2001, respectively; and total
below investment grade assets were $413.7 million and $182.3 million at December
31, 2002 and 2001, respectively.





                                       F-18



                     THE TRAVELERS LIFE AND ANNUITY COMPANY

                          NOTES TO FINANCIAL STATEMENTS
                                   (CONTINUED)


Included in mortgage loans were the following group concentrations:

        ($ IN THOUSANDS)
        -------------------------------------------------------------
        At December 31,                            2002         2001
        -------------------------------------------------------------
        STATE
        California                              $42,169      $43,700
        New York                                 22,636       23,129
        -------------------------------------------------------------
        PROPERTY TYPE
        Agricultural                            $79,075      $66,459
        Office                                   44,094       37,243
        -------------------------------------------------------------


The Company monitors creditworthiness of counterparties to all financial
instruments by using controls that include credit approvals, credit limits and
other monitoring procedures. Collateral for fixed maturities often includes
pledges of assets, including stock and other assets, guarantees and letters of
credit. The Company's underwriting standards with respect to new mortgage loans
generally require loan to value ratios of 75% or less at the time of mortgage
origination.

RESTRUCTURED INVESTMENTS

Mortgage loan and debt securities which were restructured at below market terms
at December 31, 2002 and 2001 were insignificant. The new terms of restructured
investments typically defer a portion of contract interest payments to varying
future periods. Gross interest income on restructured assets that would have
been recorded in accordance with the original terms of such assets was
insignificant. Interest on these assets, included in net investment income, was
insignificant.

NET INVESTMENT INCOME

  ------------------------------------------------------------------------------
  FOR THE YEAR ENDED DECEMBER 31,
  ($ IN THOUSANDS)                              2002         2001         2000
  ------------------------------------------------------------------------------
  GROSS INVESTMENT INCOME
         Fixed maturities                     $276,818     $217,813     $163,091
         Joint ventures and partnerships        25,746       21,481       34,574
         Mortgage loans                         10,578       11,327       14,776
         Other                                   3,542        3,288        4,398
  ------------------------------------------------------------------------------
           Total gross investment income       316,684      253,909      216,839
  ------------------------------------------------------------------------------
   Investment expenses                           4,738        2,855        2,665
  ------------------------------------------------------------------------------
  Net investment income                       $311,946     $251,054     $214,174
  ------------------------------------------------------------------------------






                                       F-19



                     THE TRAVELERS LIFE AND ANNUITY COMPANY

                          NOTES TO FINANCIAL STATEMENTS
                                   (CONTINUED)


REALIZED AND UNREALIZED INVESTMENT GAINS (LOSSES)

Net realized investment gains (losses) for the periods were as follows:


--------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
($ IN THOUSANDS)                                              2002         2001        2000
--------------------------------------------------------------------------------------------
REALIZED
       Fixed maturities                                     $(11,185)   $ 33,061    $(11,742)
       Joint ventures and partnerships                       (19,423)     (4,980)     (1,909)
       Mortgage Loans                                            (61)       (707)      3,825
       Other                                                      85      (1,230)      2,430
--------------------------------------------------------------------------------------------
         Total realized investment gains (losses)           $(30,584)   $ 26,144    $ (7,396)
--------------------------------------------------------------------------------------------


Changes in net unrealized investment gains (losses) that are included as
accumulated other changes in equity from nonowner sources in shareholder's
equity were as follows:


--------------------------------------------------------------------------------------------
FOR THE YEAR ENDED DECEMBER 31,
($ IN THOUSANDS)                                               2002        2001        2000
--------------------------------------------------------------------------------------------
UNREALIZED
     Fixed maturities                                       $ 91,013    $ 14,761    $ 78,278
     Other invested assets                                    22,449     (16,182)      3,159
--------------------------------------------------------------------------------------------
         Total unrealized investment gains (losses)          113,462      (1,421)     81,437
     Related taxes                                            39,712        (497)     28,503
--------------------------------------------------------------------------------------------
     Change in unrealized investment gains (losses)           73,750        (924)     52,934
     Balance beginning of year                                12,698      13,622     (39,312)
--------------------------------------------------------------------------------------------
         Balance end of year                                $ 86,448    $ 12,698    $ 13,622
--------------------------------------------------------------------------------------------



3.  REINSURANCE

The Company uses reinsurance in order to limit losses, minimize exposure to
large risks, provide additional capacity for future growth and to effect
business-sharing arrangements. Reinsurance is accomplished through various plans
of reinsurance, primarily yearly renewable term coinsurance and modified
coinsurance. The Company remains primarily liable as the direct insurer on all
risks reinsured.

Since 1997 universal life business has been reinsured under an 80%/20% quota
share reinsurance program and term life business has been reinsured under a
90%/10% quota share reinsurance program. Maximum retention of $2.5 million for
universal life, and in excess of $25.0 million for term insurance is generally
reached on policies in excess of $12.5 million. For other plans of insurance, it
is the policy of the Company to obtain reinsurance for amounts above certain
retention limits on individual life policies, which limits vary with age and
underwriting classification. Generally, the maximum retention on an ordinary
life risk is $2.5 million.



                                       F-20



                     THE TRAVELERS LIFE AND ANNUITY COMPANY

                          NOTES TO FINANCIAL STATEMENTS
                                   (CONTINUED)

Total life insurance in-force ceded under reinsurance contracts was $29.3
billion and $23.8 billion at December 31, 2002 and 2001, including $6.0 million
and $8.8 million, respectively to TIC. Total life insurance premiums ceded were
$14.9 million, $11.9 million and $8.9 million in 2002, 2001 and 2000,
respectively. Ceded premiums paid to TIC were immaterial for these same periods.

The Company also reinsures the guaranteed minimum death benefit (GMDB) on its
variable annuity product. Total variable annuity account balances with GMDB is
$7.1 billion, of which $4.9 billion or 69% is reinsured at December 31, 2002.
GMDB is payable upon the death of a contractholder. When the benefit payable is
greater than the account value of the variable annuity, the difference is called
the net amount at risk (NAR). NAR totals $2.2 billion at December 31, 2002, of
which $1.9 billion or 86% is reinsured. During 2002, substantially all new
contracts written were not reinsured.

4.  DEFERRED ACQUISITION COSTS AND VALUE OF INSURANCE IN FORCE

The Company has two intangible, amortizable assets, DAC and the value of
insurance in force. A summary of DAC follows:

                                  Traditional   Deferred
   ($ IN MILLIONS)                   Life       Annuity       UL        Total
   -----------------------------------------------------------------------------

   Beginning balance
   December 31, 2000                $36.8       $384.4      $158.3    $  579.5

   Commissions and expenses          18.4        202.9       103.0       324.3
   deferred
   Amortization expense              (7.5)       (75.8)       (6.1)      (89.4)

   -----------------------------------------------------------------------------
   Balance December 31, 2001         47.7        511.5       255.2       814.4

   Commissions and expenses          16.5        169.4       130.8       316.7
   deferred
   Amortization expense              (8.9)       (48.8)       (9.3)      (67.0)
   -----------------------------------------------------------------------------
   Balance December 31, 2002        $55.3       $632.1      $376.7    $1,064.1
   -----------------------------------------------------------------------------

The value of insurance in force totaled $12.5 million and $13.4 million at
December 31, 2002 and 2001, respectively, and was reported in other assets.
Amortization expense of value of insurance in force was insignificant for 2002
and 2001.

5.  DEPOSIT FUNDS AND RESERVES

At December 31, 2002 and 2001, the Company had $5.0 billion and $3.7 billion of
life and annuity deposit funds and reserves, respectively. Of that total, $1.6
billion and $1.5 billion, respectively, were not subject to discretionary
withdrawal based on contract terms. The remaining amounts were life and annuity
products that were subject to discretionary withdrawal by the contractholders.
Included in the amounts that are subject to discretionary withdrawal were $2.4
billion and $1.6 billion of liabilities that are surrenderable with market value
adjustments. Also included are an additional $.9 billion and $.6 billion of life
insurance and individual annuity liabilities which are subject to discretionary
withdrawals with an average surrender charge of 4.2% and 4.9%, respectively. In
the payout stage these funds are credited at significantly reduced credited
rates. The remaining $.1 billion in 2002 is surrenderable without charge. The
life insurance risks would have to be underwritten again if transferred to
another carrier, which is considered a significant deterrent for



                                       F-21



                     THE TRAVELERS LIFE AND ANNUITY COMPANY

                          NOTES TO FINANCIAL STATEMENTS
                                   (CONTINUED)


long-term policyholders. Insurance liabilities that are surrendered or withdrawn
from the Company are reduced by outstanding policy loans and related accrued
interest prior to payout.

6.  FEDERAL INCOME TAXES

The net deferred tax liabilities at December 31, 2002 and 2001 were comprised of
the tax effects of temporary differences related to the following assets and
liabilities:

  ($ IN THOUSANDS)                                        2002          2001
  ------------------------------------------------------------------------------
  Deferred Tax Assets:
       Benefit, reinsurance and other reserves          $151,454      $180,468
       Other                                               2,286         1,904
  ------------------------------------------------------------------------------
           Total                                         153,740       182,372
  ------------------------------------------------------------------------------

  Deferred Tax Liabilities:
       Investments, net                                  (48,363)      (19,938)
       Deferred acquisition costs and value of
         insurance in force                             (303,652)     (231,454)
       Other                                              (1,075)       (1,071)
  ------------------------------------------------------------------------------
           Total                                        (353,090)     (252,463)
  ------------------------------------------------------------------------------

  Net Deferred Tax Liability                           $(199,350)     $(70,091)
  ------------------------------------------------------------------------------

TIC and its subsidiaries, including the Company, file a consolidated federal
income tax return with Citigroup Inc. Federal income taxes are allocated to each
member of the consolidated group, according to the Tax Sharing Agreement, on a
separate return basis adjusted for credits and other amounts required by the
Agreement.

At December 31, 2002 and 2001, the Company had no ordinary or capital loss
carryforwards.

The policyholders' surplus account, which arose under prior tax law, is
generally that portion of the gain from operations that has not been subjected
to tax, plus certain deductions. The balance of this account is approximately
$2.1 million. Income taxes are not provided for on this amount because under
current U.S. tax rules such taxes will become payable only to the extent such
amounts are distributed as a dividend or exceed limits prescribed by federal
law. Distributions are not contemplated from this account. At current rates the
maximum amount of such tax would be approximately $700 thousand.

7.  SHAREHOLDER'S EQUITY

SHAREHOLDER'S EQUITY AND DIVIDEND AVAILABILITY

The Company's statutory net loss was $133.9 million, $73.4 million and $66.2
million for the years ended December 31, 2002, 2001 and 2000, respectively.

Statutory capital and surplus was $397 million and $407 million at December 31,
2002 and 2001, respectively.




                                       F-22



                     THE TRAVELERS LIFE AND ANNUITY COMPANY

                          NOTES TO FINANCIAL STATEMENTS
                                   (CONTINUED)


Effective January 1, 2001, the Company began preparing its statutory basis
financial statements in accordance with the National Association of Insurance
Commissioners' ACCOUNTING PRACTICES AND PROCEDURES MANUAL - VERSION EFFECTIVE
JANUARY 1, 2001, subject to any deviations prescribed or permitted by its
domicilary insurance commissioner (see Note 1, Summary of Significant Accounting
Policies, Permitted Statutory Accounting Practices). The impact of this change
on statutory capital and surplus was not significant.

The Company is currently subject to various regulatory restrictions that limit
the maximum amount of dividends available to be paid to its parent without prior
approval of insurance regulatory authorities. The Company does not have surplus
available to pay dividends to TIC in 2003 without prior approval of the State of
Connecticut Insurance Department.

ACCUMULATED OTHER CHANGES IN EQUITY FROM NONOWNER SOURCES, NET OF TAX

Changes in each component of Accumulated Other Changes in Equity from Nonowner
Sources were as follows:


                                                                NET                         ACCUMULATED
                                                             UNREALIZED      DERIVATIVE    OTHER CHANGES
                                                           GAIN (LOSS) ON    INSTRUMENTS   IN EQUITY FROM
                                                             INVESTMENT      & HEDGING        NONOWNER
($ IN THOUSANDS)                                             SECURITIES      ACTIVITIES       SOURCES
---------------------------------------------------------------------------------------------------------

BALANCE, DECEMBER 31, 1999                                     $(39,312)      $     --       $(39,312)
Unrealized gains on investment securities,
   net of tax of $25,914                                         48,127             --         48,127
Reclassification adjustment for losses
    included in net income, net of tax of $2,589                  4,807             --          4,807
---------------------------------------------------------------------------------------------------------
PERIOD CHANGE                                                    52,934             --         52,934
---------------------------------------------------------------------------------------------------------

BALANCE, DECEMBER 31, 2000                                       13,622             --         13,622
Cumulative effect of change in accounting for derivative
   instruments and hedging activities, net of tax of $33             --             62             62
Unrealized gains on investment securities,
   net of tax of $8,653                                          16,070             --         16,070
Reclassification adjustment for gains
    included in net income, net of tax of $(9,150)              (16,994)            --        (16,994)
Derivative instrument hedging activity gains, net of
    tax of $1,789                                                    --          3,324          3,324
---------------------------------------------------------------------------------------------------------
PERIOD CHANGE                                                      (924)         3,386          2,462
---------------------------------------------------------------------------------------------------------

BALANCE, DECEMBER 31, 2001                                       12,698          3,386         16,084
Unrealized gains on investment securities,
   net of tax of $29,008                                         53,871             --         53,871
Reclassification adjustment for losses
   included in net income, net of tax of $10,704                 19,879             --         19,879
Derivative instrument hedging activity gains, net of
   tax of $2,750                                                     --          5,107          5,107
---------------------------------------------------------------------------------------------------------
PERIOD CHANGE                                                    73,750          5,107         78,857
---------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2002                                     $ 86,448       $  8,493       $ 94,941
=========================================================================================================





                                       F-23



                     THE TRAVELERS LIFE AND ANNUITY COMPANY

                          NOTES TO FINANCIAL STATEMENTS
                                   (CONTINUED)


8.  BENEFIT PLANS

PENSION AND OTHER POSTRETIREMENT BENEFITS

The Company participates in a qualified, noncontributory defined benefit pension
plan, a non-qualified pension plan and other postretirement benefits to retired
employees through plans sponsored by Citigroup. The Company's share of net
expense for these plans was not significant for 2002, 2001 and 2000.

401(k) SAVINGS PLAN

Substantially all of the Company's employees are eligible to participate in a
401(k) savings plan sponsored by Citigroup. See Note 11. The Company's expenses
in connection with the 401(k) savings plan were not significant in 2002, 2001
and 2000.


9.  DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE OF FINANCIAL INSTRUMENTS

DERIVATIVE FINANCIAL INSTRUMENTS

The Company uses derivative financial instruments, including financial futures,
interest rate swaps, options and forward contracts, as a means of hedging
exposure to foreign currency, equity price changes and/or interest rate risk on
anticipated transactions or existing assets and liabilities. The Company does
not hold or issue derivative instruments for trading purposes.

The Company uses exchange traded financial futures contracts to manage its
exposure to changes in interest rates that arise from the sale of certain
insurance and investment products, or the need to reinvest proceeds from the
sale or maturity of investments. To hedge against adverse changes in interest
rates, the Company enters long or short positions in financial futures
contracts, which offset asset price changes resulting from changes in market
interest rates until an investment is purchased, or a product is sold. Futures
contracts are commitments to buy or sell at a future date a financial
instrument, at a contracted price, and may be settled in cash or through
delivery.

The Company uses equity option contracts to manage its exposure to changes in
equity market prices that arise from the sale of certain insurance products. To
hedge against adverse changes in the equity market prices, the Company enters
long positions in equity option contracts with major financial institutions.
These contracts allow the Company, for a fee, the right to receive a payment if
the Standard and Poor's 500 Index falls below agreed upon strike prices.

The Company enters into interest rate swaps in connection with other financial
instruments to provide greater risk diversification and better match assets and
liabilities. Under interest rate swaps, the Company agrees with other parties to
exchange, at specified intervals, the difference between fixed rate and floating
rate interest amounts calculated by reference to an agreed notional principal
amount. Generally, no cash is exchanged at the outset of the contract and no
principal payments are made by either party. A single net payment is usually
made by one counterparty at each due date.





                                       F-24



                     THE TRAVELERS LIFE AND ANNUITY COMPANY

                          NOTES TO FINANCIAL STATEMENTS
                                   (CONTINUED)


Forward contracts are used on an ongoing basis to hedge the Company's exposure
to foreign currency exchange rates that result from the net investment in the
Company's direct foreign currency investments. To hedge against adverse changes
in exchange rates, the Company enters contracts to exchange foreign currency for
U.S. Dollars with major financial institutions. These contracts cannot be
settled prior to maturity. At the maturity date the Company must purchase the
foreign currency necessary to settle the contracts.

The Company monitors creditworthiness of counterparties to these financial
instruments by using criteria of acceptable risk that are consistent with
on-balance-sheet financial instruments. The controls include credit approvals,
limits and other monitoring procedures.

The following table summarizes certain information related to the Company's
hedging activities for the years ended December 31, 2002 and 2001:

                                        Year Ended          Year Ended
   ($ IN MILLIONS)                      December 31, 2002   December 31, 2001
   --------------------------------------------------------------------------
   Hedge ineffectiveness recognized
     related to fair value hedges             $(5.2)              $1.9
   Hedge ineffectiveness recognized
     related to cash flow hedges                1.1                (.4)

During the year ended December 31, 2002 the Company recorded a gain of $.3
million from discontinued forecasted transactions. During the year ended
December 31, 2001 there were no discontinued forecasted transactions.

Cash flow transaction amounts expected to be reclassified from accumulated other
changes in equity from nonowner sources into pre-tax earnings within twelve
months from December 31, 2002 is not significant.

In 2000, these derivative financial instruments were treated as off-balance
sheet instruments. Financial instruments with off-balance sheet risk involve, to
varying degrees, elements of credit and market risk in excess of the amount
recognized in the balance sheet. The contract or notional amounts of these
instruments reflect the extent of involvement the Company has in a particular
class of financial instrument. However, the maximum loss of cash flow associated
with these instruments can be less than these amounts. For swaps, options and
forward contracts, credit risk is limited to the amount that it would cost the
Company to replace the contacts. Financial futures contracts and purchased
listed option contracts have very little credit risk since organized exchanges
are the counterparties.

The Company had interest rate and equity options, net of intercompany balances,
with fair values of $161.7 million and $67.4 million, at December 31, 2002 and
2001, respectively.

FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

In the normal course of business, the Company issues fixed and variable rate
loan commitments and has unfunded commitments to partnerships and joint
ventures. All of these commitments are to unaffiliated entities. The notional
values of loan commitments at December 31, 2002 and 2001 were $23.9 million and
$0 respectively. The notional values of unfunded commitments were $35.5 million
and $43.8 million at December 31, 2002 and 2001, respectively.



                                       F-25



                     THE TRAVELERS LIFE AND ANNUITY COMPANY

                          NOTES TO FINANCIAL STATEMENTS
                                   (CONTINUED)


FAIR VALUE OF CERTAIN FINANCIAL INSTRUMENTS

The Company uses various financial instruments in the normal course of its
business. Fair values of financial instruments that are considered insurance
contracts are not required to be disclosed and are not included in the amounts
discussed.

At December 31, 2002, investments in fixed maturities had a carrying value and a
fair value of $4.5 billion compared with a carrying value and a fair value of
$3.4 billion at December 31, 2001. See Notes 1 and 2.

At December 31, 2002, mortgage loans had a carrying value of $134.1 million and
a fair value of $148.0 million and at December 31, 2001 had a carrying value of
$125.6 million and a fair value of $131.6 million. In estimating fair value, the
Company used interest rates reflecting the current real estate financing market.

The carrying values of short-term securities were $475.4 million and $206.8
million in 2002 and 2001, respectively, which approximated their fair values.
Policy loans which are included in other invested assets had carrying values of
$27.4 million and $16.3 million in 2002 and 2001, respectively, which also
approximated their fair values.

The carrying values of $151.5 million and $133.7 million of financial
instruments classified as other assets approximated their fair values at
December 31, 2002 and 2001, respectively. The carrying values of $319.8 million
and $208.1 million of financial instruments classified as other liabilities also
approximated their fair values at December 31, 2002 and 2001, respectively. Fair
value is determined using various methods, including discounted cash flows, as
appropriate for the various financial instruments.

At December 31, 2002, contractholder funds with defined maturities had a
carrying value of $2.7 billion and a fair value of $2.9 billion, compared with a
carrying value of $1.9 billion and a fair value of $1.9 billion at December 31,
2001. The fair value of these contracts is determined by discounting expected
cash flows at an interest rate commensurate with the Company's credit risk and
the expected timing of cash flows. Contractholder funds without defined
maturities had a carrying value of $1.1 billion and a fair value of $926 million
at December 31, 2002, compared with a carrying value of $806 million and a fair
value of $675 million at December 31, 2001. These contracts generally are valued
at surrender value.

10.  COMMITMENTS AND CONTINGENCIES

LITIGATION

In the ordinary course of business, the Company is a defendant or co-defendant
in various litigation matters incidental to and typical of the businesses in
which it is engaged. In the opinion of the Company's management, the ultimate
resolution of these legal proceedings would not be likely to have a material
adverse effect on the Company's results of operations, financial condition or
liquidity.




                                       F-26



                     THE TRAVELERS LIFE AND ANNUITY COMPANY

                          NOTES TO FINANCIAL STATEMENTS
                                   (CONTINUED)


11.  RELATED PARTY TRANSACTIONS

TIC handles banking functions, including payment of salaries and expenses for
the Company and some of its non-insurance affiliates. In addition, Citigroup and
certain of its subsidiaries provide investment management and accounting
services, data processing services, benefit management and administration,
property management and investment technology services to the Company as of
December 31, 2002. At December 31, 2001 the majority of these services were
provided by either Citigroup and its subsidiaries or TPC. Charges for these
services are shared by the Company and TIC on cost allocation methods, based
generally on estimated usage by department and were insignificant in 2002, 2001
and 2000.

TIC maintains a short-term investment pool in which the Company participates.
The position of each company participating in the pool is calculated and
adjusted daily. At December 31, 2002 and 2001, the pool totaled approximately
$4.2 billion and $5.6 billion, respectively. The Company's share of the pool
amounted to $356.0 million and $90.6 million at December 31, 2002 and 2001,
respectively, and is included in short-term securities in the balance sheet.

At December 31, 2002 and 2001, the Company had investments in Tribeca Citigroup
Investments Ltd., an affiliate of the Company, in the amounts of $26.7 million
and $34.0 million, respectively. Income of $1.9 million, $4.5 million and $7.2
million was earned on these investments in 2002, 2001 and 2000, respectively.
The Company also had investments in an affiliated joint venture, Tishman Speyer,
in the amount of $24.1 million and $40.1 million at December 31, 2002 and 2001,
respectively. Income of $19.8 million, $8.5 million and $6.8 million was earned
on these investments in 2002, 2001 and 2000, respectively.

In the ordinary course of business, the Company purchases and sells securities
through affiliated broker-dealers. These transactions are conducted on an arm's
length basis.

At December 31, 2002 and 2001 the Company had outstanding loaned securities to
SSB in the amount of $10.2 million and $6.5 million, respectively.

The Company has other affiliated investments. The individual investment with any
one affiliate was insignificant at December 31, 2002 and 2001.

The Company's Travelers Target Maturity (TTM) Modified Guaranteed Annuity
Contracts are subject to a limited guarantee agreement by TIC in a principal
amount of up to $450 million. TIC's obligation is to pay in full to any owner or
beneficiary of the TTM Modified Guaranteed Annuity Contracts principal and
interest as and when due under the annuity contract to the extent that the
Company fails to make such payment. In addition, TIC guarantees that the Company
will maintain a minimum statutory capital and surplus level.

The Company sold structured settlement annuities to its former property casualty
insurance affiliates. Policy reserves and contractholder fund liabilities
associated with these structured settlements were $607 million at December 31,
2001.

The Company distributes fixed and variable annuity products through its
affiliate, Salomon Smith Barney (SSB). Premiums and deposits related to these
products were $.8 billion, $1.2 billion and $1.6 billion in 2002, 2001 and 2000,
respectively. The Company also markets term and universal life products through
SSB. Premiums related to such products were $87.2 million, $74.5 million and
$59.3 million in 2002, 2001 and 2000, respectively.



                                       F-27



                     THE TRAVELERS LIFE AND ANNUITY COMPANY

                          NOTES TO FINANCIAL STATEMENTS
                                   (CONTINUED)


The Company also distributes deferred annuity products through its affiliates
Primerica Financial Services (PFS), CitiStreet Retirement Services and Citibank,
N.A. (Citibank). Deposits received from PFS were $662 million, $738 million and
$844 million in 2002, 2001 and 2000, respectively. Deposits from Citibank and
CitiStreet Retirement Services were $117 million and $184 million respectively
for 2002, $166 million and $136 million, respectively, for 2001, and $131
million and $220 million, respectively, for 2000.

The Company participates in a stock option plan sponsored by Citigroup that
provides for the granting of stock options in Citigroup common stock to officers
and other employees. To further encourage employee stock ownership, Citigroup
introduced the WealthBuilder stock option program during 1997 and the Citigroup
Ownership Program in 2001. Under these programs, all employees meeting
established requirements have been granted Citigroup stock options. During 2000
and 2001, Citigroup introduced the Citigroup 2000 Stock Purchase Plan and
Citigroup 2001 Stock Purchase Program for new employees, which allowed eligible
employees of Citigroup, including the Company's employees, to enter into fixed
subscription agreements to purchase shares at the market value on the date of
the agreements. Enrolled employees are permitted to make one purchase prior to
the expiration date. The Company's charge to income was insignificant in 2002,
2001 and 2000.

Prior to the IPO of TPC, most leasing functions for TIC and its subsidiaries,
including the Company, were handled by its property casualty insurance
subsidiaries. Rent expense related to these leases was shared by the companies
on a cost allocation method based generally on estimated usage by department. In
2002, TIC sold its home office buildings in Hartford, Connecticut and now leases
space from a third party. The Company's rent expense was insignificant in 2002,
2001 and 2000.

12.  RECONCILIATION OF NET INCOME TO NET CASH USED IN OPERATING ACTIVITIES

The following table reconciles net income to net cash used in operating
activities:


  -------------------------------------------------------------------------------------------------
  FOR THE YEAR ENDED DECEMBER 31,                               2002          2001          2000
  ($ IN THOUSANDS)
  -------------------------------------------------------------------------------------------------
  Net Income                                                 $ 103,370     $ 115,160     $  90,905
     Adjustments to reconcile net income to cash used in
     operating activities:
         Realized (gains) losses                                30,584       (26,144)        7,396
         Deferred federal income taxes                          86,797        80,096        36,748
         Amortization of deferred policy acquisition costs      66,972        89,475        68,254
         Additions to deferred policy acquisition costs       (316,721)     (324,277)     (297,733)
         Investment income accrued                             (35,133)      (39,875)      (27,812)
         Insurance reserves                                     (9,000)      (14,382)      (18,487)
         Other                                                  72,190        11,398          (675)
  -------------------------------------------------------------------------------------------------
         Net cash used in operations                         $    (941)    $(108,549)    $(141,404)
  -------------------------------------------------------------------------------------------------



ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

     None.




                                       F-28

         INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES


                                                                                               PAGE
The Travelers Life and Annuity Company
     Independent Auditors' Report                                                               F-1
     Statements of Income                                                                       F-2
     Balance Sheets                                                                             F-3
     Statements of Changes in Shareholder's Equity                                              F-4
     Statements of Cash Flows                                                                   F-5
     Notes to Financial Statements                                                              F-6

Independent Auditors' Report                                                                   F-30

Schedule I - Summary of Investments - Other than Investments in Related Parties 2002           F-31

Schedule III - Supplementary Insurance Information 2000-2002                                   F-32

Schedule IV - Reinsurance 2000-2002                                                            F-33



All other schedules are inapplicable for this filing.


                                      F-29



                          INDEPENDENT AUDITORS' REPORT



The Board of Directors and Shareholder
The Travelers Life and Annuity Company:


Under date of January 21, 2003, we reported on the balance sheets of The
Travelers Life and Annuity Company as of December 31, 2002 and 2001, and the
related statements of income, changes in shareholder's equity and cash flows for
each of the years in the three-year period ended December 31, 2002, which are
included in this Form 10-K. In connection with our audits of the aforementioned
financial statements, we also audited the related financial statement schedules
as listed in the accompanying index. These financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statement schedules based on our audits.

In our opinion, such financial statement schedules, when considered in relation
to the basic financial statements taken as a whole, present fairly, in all
material respects, the information set forth therein.

As discussed in Note 1 to the financial statements, the Company changed its
method of accounting for goodwill and other intangible assets in 2002, and its
methods of accounting for derivative instruments and hedging activities and for
securitized financial assets in 2001.


/s/ KPMG LLP

Hartford, Connecticut
January 21, 2003
















                                       F-30



                     THE TRAVELERS LIFE AND ANNUITY COMPANY

                                   SCHEDULE I
       SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN RELATED PARTIES
                                DECEMBER 31, 2002
                                ($ IN THOUSANDS)


-------------------------------------------------------------------------------------------------------
                                                                                      AMOUNT SHOWN IN
TYPE OF INVESTMENT                                              COST        VALUE     BALANCE SHEET (1)
-------------------------------------------------------------------------------------------------------

Fixed Maturities:
     Bonds:
         U.S. Government and government agencies and
            authorities                                      $  470,768   $  486,651    $  486,651
         States, municipalities and political subdivisions       49,472       56,642        56,642
         Foreign governments                                     21,530       23,380        23,380
         Public utilities                                       425,661      398,706       398,706
         Convertible bonds and bonds with warrants attached      30,170       31,063        31,063
         All other corporate bonds                            3,381,892    3,518,725     3,518,725
-------------------------------------------------------------------------------------------------------
              Total Bonds                                     4,379,493    4,515,167     4,515,167
     Redeemable Preferred Stocks                                  4,595        5,132         5,132
-------------------------------------------------------------------------------------------------------
         Total Fixed Maturities                               4,384,088    4,520,299     4,520,299
-------------------------------------------------------------------------------------------------------

Equity Securities:
     Common Stocks:
         Industrial, miscellaneous and all other                  2,599        1,937         1,937
-------------------------------------------------------------------------------------------------------
              Total Common Stocks                                 2,599        1,937         1,937
     Non-Redeemable Preferred Stocks                             12,340       12,558        12,558
-------------------------------------------------------------------------------------------------------
         Total Equity Securities                                 14,939       14,495        14,495
-------------------------------------------------------------------------------------------------------

Mortgage Loans                                                  134,078                    134,078
Policy Loans                                                     27,491                     27,491
Short-Term Securities                                           475,365                    475,365
Other Investments (2) (3)                                       303,621                    302,996
-------------------------------------------------------------------------------------------------------
         Total Investments                                   $5,339,582                 $5,474,724
=======================================================================================================


(1) Determined in accordance with methods described in Notes 1 and 2 of Notes to
    Financial Statements.

(2) Excludes cost and carrying value of investments in related parties of
    $53,106 and $54,129, respectively.

(3) Includes derivatives marked to market and recorded at fair value in the
    balance sheet.







                                       F-31



                     THE TRAVELERS LIFE AND ANNUITY COMPANY

                                  SCHEDULE III
                       SUPPLEMENTARY INSURANCE INFORMATION
                                    2000-2002
                                ($ IN THOUSANDS)


---------------------------------------------------------------------------------------------------------------
                                       FUTURE POLICY                                        BENEFITS, CLAIMS,
                                       BENEFITS, LOSSES,                   NET INVESTMENT   LOSSES AND
                 DEFERRED POLICY       CLAIMS AND LOSS       PREMIUM       INCOME           SETTLEMENT
                 ACQUISITION COSTS     EXPENSES (1)          REVENUE                        EXPENSES (2)
---------------------------------------------------------------------------------------------------------------

     2002           $1,064,118           $5,031,775          $42,893         $311,946         $275,123

     2001             $814,369           $3,665,426          $39,222         $251,054         $214,722

     2000             $579,567           $2,621,187          $33,941         $214,174         $155,982



---------------------------------------------------------

                                 OTHER
 AMORTIZATION OF DEFERRED        OPERATING     PREMIUMS
 POLICY ACQUISITION COSTS        EXPENSES      WRITTEN
---------------------------------------------------------


        $66,972                  $32,352       $42,893

        $89,475                  $23,404       $39,222

        $68,254                  $14,095       $33,941



(1) Includes contractholder funds.

(2) Includes interest credited on contractholder funds.








                                       F-32



                     THE TRAVELERS LIFE AND ANNUITY COMPANY

                                   SCHEDULE IV
                                   REINSURANCE
                                ($ IN THOUSANDS)


----------------------------------------------------------------------------------------------------
                                                                ASSUMED                   PERCENTAGE
                                                 CEDED TO        FROM                     OF AMOUNT
                                    GROSS          OTHER         OTHER         NET         ASSUMED
                                    AMOUNT       COMPANIES     COMPANIES      AMOUNT       TO NET
----------------------------------------------------------------------------------------------------

2002
----

Life Insurance In Force            $35,807,212   $29,261,075     $  --       $6,546,137       --%
Premiums:
     Annuity                           $ 4,515       $    --     $  --          $ 4,515
     Individual life                    53,310        14,932        --           38,378
                                       -------       -------     -----          -------
         Total Premiums                $57,825       $14,932     $  --          $42,893       --%
                                       =======       =======     =====          =======

2001
----

Life Insurance In Force            $28,793,622   $23,818,768     $  --       $4,974,854       --%
Premiums:
     Annuity                           $ 3,319       $    --     $  --          $ 3,319
     Individual Life                    47,826        11,923                     35,903
                                       -------       -------     -----          -------
         Total Premiums                $51,145       $11,923     $  --          $39,222       --%
                                       =======       =======     =====          =======

2000
----

Life Insurance In Force            $21,637,160   $17,355,206     $  --       $4,281,954       --%
Premiums:
     Annuity                           $ 6,034       $    --     $  --          $ 6,034
     Individual life                    36,770         8,863        --           27,907
                                       -------       -------     -----          -------
         Total Premiums                $42,804       $ 8,863     $  --          $33,941       --%
                                       =======       =======     =====          =======









                                       F-33

PART C

Other Information

Item 24.

Financial Statements and Exhibits

(a)		The financial statements of the Registrant and the Report of Independent Auditors thereto are contained in the Registrant’s Annual Report and are included in the Statement of Additional Information. The financial statements of the Registrant include:

		Statement of Assets and Liabilities as of December 31, 2002 Statement of Operations for the year ended December 31, 2002 Statement of Changes in Net Assets for the years ended December 31, 2002 and 2001 Statement of Investments as of December 31, 2002 Notes to Financial Statements

		The financial statements and schedules of The Travelers Life and Annuity Company and the report of Independent Auditors, are contained in the Statement of Additional Information. The financial statements of The Travelers Life and Annuity Company include:

		Statements of Income for the years ended December 31, 2002, 2001 and 2000 Balance Sheets as of December 31, 2002 and 2001 Statements of Changes in Retained Earnings and Accumulated Other Changes in Equity from Non-Owner Sources for the years ended December 31, 2002, 2001 and 2000 Statements of Cash Flows for the years ended December 31, 2002, 2001 and 2000 Notes to Financial Statements

(b)		Exhibits

	Exhibit Number		Description

	1.		Resolution of The Travelers Life and Annuity Company Board of Directors authorizing the establishment of the Registrant. (Incorporated herein by reference to Registration Statement on Form N-4, File No. 33-58131, filed via Edgar on March 17, 1995.)

	2.		Not Applicable.

	3(a)		Distribution and Principal Underwriting Agreement among the Registrant, The Travelers Life and Annuity Company and Travelers Distribution LLC (Incorporated herein by reference to Exhibit 3(a) to the Registration Statement on Form N-4, File No. 333-58809 filed February 26, 2001.)

	3(b)		Selling Agreement. (Incorporated herein by reference to Exhibit 3(b) to Post-Effective Amendment No. 2 the Registration Statement on Form N-4, File No. 333-65942 filed April 15, 2003.)

	4		Variable Annuity Contracts. (Incorporated herein by reference to Registration Statement on Form N-4, File No. 33-58131, filed via Edgar on March 17, 1995.)

	5.		Form of Applications. (Incorporated herein by reference to Pre-Effective Amendment No. 1 to the Registration Statement on Form N-4, filed September 8, 1995.)

	6(a)		Charter of The Travelers Life and Annuity Company, as amended on April 10, 1990. (Incorporated herein by reference to Registration Statement on Form N-4, File No. 33-58131, filed via Edgar on March 17, 1995.)

	6(b)		By-Laws of The Travelers Life and Annuity Company, as amended on October 20, 1994. (Incorporated herein by reference to Registration Statement on Form N-4, File No. 33-58131, filed via Edgar on March 17, 1995.)

	7.		Specimen Reinsurance Contract. (Incorporated herein by reference to Exhibit 7 to Post-Effective Amendment No. 2 the Registration Statement on Form N-4, File No. 333-65942 filed April 15, 2003.)

	8		Participation Agreements. (Incorporated herein by reference to Exhibit h to Post-Effective Amendment No. 5 to the Registration Statement on Form N-6, File No. 333-69773 filed February 19, 2003.)

	Exhibit Number		Description

	9.		Opinion of Counsel as to the legality of securities being registered. (Incorporated herein by reference to Exhibit 9 to Post-Effective Amendment No. 3 to the Registration Statement on Form N-4 filed April 29, 1997.)

	10.		Consent of KPMG LLP, Independent Auditors. Filed herewith.

	11		Not applilcable.

	12		Not applicable.

	13.		Schedule for computation of each performance quotation - Standardized and Non-Standardized. (Incorporated herein by reference to Exhibit No. 13 to Post-Effective Amendment No. 2 to the Registration Statement on Form N-4, filed April 29, 1997.)

	15.		Powers of Attorney authorizing Ernest J. Wright or Kathleen A. McGah as signatory for George C. Kokulis, Katherine M. Sullivan and Glenn D. Lammey. (Incorporated herein by reference to Exhibit 15(b) to Post-Effective Amendment No. 5 to the Registration Statement on Form N-4, filed April 18, 2000.

			Power of Attorney authorizing Ernest J. Wright or Kathleen A. McGah as signatory for Glenn D. Lammey, Marla Berman Lewitus and William R. Hogan. (Incorporated herein by reference to Exhibit 15 to Post-Effective Amendment No. 6 to the Registration Statement on Form N-4 filed April 19, 2001.)

			Power of Attorney authorizing Ernest J. Wright or Kathleen A. McGah as signatory for Kathleen A. Preston. (Incorporated herein by reference to Exhibit 15 to Post-Effective Amendment No. 7 to the Registration Statement on Form N-4, File No. 33-58131 filed April 24, 2002.)

Item 25.

Directors and Officers of the Depositor

Name and Principal Business Address				Positions and Offices with Insurance Company

George C. Kokulis*				Director, Chairman, President and Chief Executive Officer

Glenn D. Lammey*				Director, Executive Vice President, Chief Financial Officer, Chief Accounting Officer

Kathleen L. Preston*				Director and Executive Vice President

Edward W. Cassidy*				Senior Vice President

Madelyn J. Lankton*				Senior Vice President

Marla Berman Lewitus*				Director, Senior Vice President and General Counsel

Brendan Lynch*				Senior Vice President

Laura A. Pantaleo***				Senior Vice President

David A. Tyson*				Senior Vice President

F. Denney Voss*				Senior Vice President

David A. Golino*				Vice President and Controller

Donald R. Munson, Jr.*				Vice President

Mark Remington*				Vice President

Tim W. Still*				Vice President

Linn K. Richardson*				Second Vice President and Actuary

Paul Weissman*				Second Vice President and Actuary

Ernest J.Wright*				Vice President and Secretary

Kathleen A. McGah*				Assistant Secretary and Deputy General Counsel

Principal Business Address:


*	The Travelers Insurance Company One Cityplace Hartford, CT 06103-3415	**	Citigroup Inc. 399 Park Avenue New York, N.Y. 10022

***	Travelers Financial Distributors 2 Tower Center East Brunswick, NJ 08816

Item 26.

Persons Controlled by or Under Common Control with the Depositor or Registrant

Incorporated herein by reference to Exhibit 16 to Post-Effective Amendment No. 2 to the Registration Statement on Form N-4, File No. 333-65942, filed April 15, 2003.

Item 27.

Number of Contract Owners

As of February 28, 2003, 14,095 contract owners held qualified and non-qualified contracts offered by the Registrant.

Item 28.

Indemnification

Sections 33-770 to 33-778, inclusive of the Connecticut General Statutes (“C.G.S.”) regarding indemnification of directors and officers of Connecticut corporations provides in general that Connecticut corporations shall indemnify their officers, directors and certain other defined individuals against judgments, fines, penalties, amounts paid in settlement and reasonable expenses actually incurred in connection with proceedings against the corporation. The corporation’s obligation to provide such indemnification generally does not apply unless (1) the individual is wholly successful on the merits in the defense of any such proceeding; or (2) a

determination is made (by persons specified in the statute) that the individual acted in good faith and in the best interests of the corporation and in all other cases, his conduct was at least not opposed to the best interests of the corporation, and in a criminal case he had no reasonable cause to believe his conduct was unlawful; or (3) the court, upon application by the individual, determines in view of all of the circumstances that such person is fairly and reasonably entitled to be indemnified, and then for such amount as the court shall determine. With respect to proceedings brought by or in the right of the corporation, the statute provides that the corporation shall indemnify its officers, directors and certain other defined individuals, against reasonable expenses actually incurred by them in connection with such proceedings, subject to certain limitations.

Citigroup Inc. also provides liability insurance for its directors and officers and the directors and officers of its subsidiaries, including the Registrant. This insurance provides for coverage against loss from claims made against directors and officers in their capacity as such, including, subject to certain exceptions, liabilities under the federal securities laws.

Rule 484 Undertaking

Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

Item 29.

Principal Underwriter

(a)

Travelers Distribution LLC
One Cityplace
Hartford, CT 06103-3415

Travelers Distribution LLC also serves as principal underwriter and distributor for the following funds:

The Travelers Fund U for Variable Annuities, The Travelers Fund VA for Variable Annuities, The Travelers Fund BD for Variable Annuities, The Travelers Fund BD III for Variable Annuities, Travelers Fund BD IV for Variable Annuities, The Travelers Fund ABD for Variable Annuities, The Travelers Fund ABD II for Variable Annuities,The Travelers Separate Account PF for Variable Annuities, The Travelers Separate Account PF II for Variable Annuities, The Travelers Separate Account QP for Variable Annuities, The Travelers Separate Account TM for Variable Annuities, The Travelers Separate Account TM II for Variable Annuities, The Travelers Separate Account Five for Variable Annuities, The Travelers Separate Account Six for Variable Annuities, The Travelers Separate Account Seven for Variable Annuities, The Travelers Separate Account Eight for Variable Annuities, The Travelers Separate Account Nine for Variable Annuities, The Travelers Separate Account Ten for Variable Annuities, The Travele rs Fund UL for Variable Life Insurance, The Travelers Fund UL II for Variable Life Insurance, The Travelers Fund UL III for Variable Life Insurance, The Travelers Variable Life Insurance Separate Account One, The Travelers Variable Life Insurance Separate Account Two, The Travelers Variable Life Insurance Separate Account Three, The Travelers Variable Life Insurance Separate Account Four, The Travelers Separate Account MGA, The Travelers Separate Account MGA II, 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, The Travelers Timed Growth and Income Stock Account for Variable Annuities, The Travelers Timed Short-Term Bond Account for Variable Annuities and The Travelers Timed Aggressive Stock Account for Variable Annuities, Citicorp Life Variable Annuity Separate Account and First Citicorp Life Variable Annuity Separate Account,TIC Separate Account Eleven for Variable Annui ties, TLAC Separate Account Twelve for Variable Annuities, TIC Separate Account Thirteen for Variable Annuities, TLAC Separate Account Fourteen for Variable Annuities, TIC Variable Annuity Separate Account 2002, and TLAC Variable Annuity Separate Account 2002.

(b)	Name and Principal Business Address*	Positions and Offices With Underwriter

	Kathleen L. Preston	Board of Manager

	Glenn D. Lammey	Board of Manager

	William F. Scully III	Board of Manager

	Donald R. Munson, Jr.	Board of Manager, President, Chief Executive Officer and Chief Operating Officer

	Tim W. Still	Vice President

	Anthony Cocolla	Vice President

	John M. Laverty	Treasurer and Chief Financial Officer

	Alison K. George	Chief Compliance Officer

	Ernest J. Wright	Secretary

	Kathleen A. McGah	Assistant Secretary

	William D. Wilcox	Assistant Secretary

* The business address for all the above is: One Cityplace, Hartford, CT 06103-3415.

(c)

Not Applicable

Item 30.

Location of Accounts and Records

(1)

The Travelers Life and Annuity Company
One Cityplace
Hartford, Connecticut 06103-3415

Item 31.

Management Services

Not applicable.

Item 32.

Undertakings

The undersigned Registrant hereby undertakes:

(a)		To file a post-effective amendment to this registration statement as frequently as is necessary to ensure that the audited financial statements in the registration statement are never more than sixteen months old for so long as payments under the variable annuity contracts may be accepted;

(b)		To include either (1) as part of any application to purchase a contract offered by the prospectus, a space that an applicant can check to request a Statement of Additional Information, or (2) a post card or similar written communication affixed to or included in the prospectus that the applicant can remove to send for a Statement of Additional Information; and

(c)		To deliver any Statement of Additional Information and any financial statements required to be made available under this Form N-4 promptly upon written or oral request.

The Company hereby represents:

(a)

That the aggregate charges under the Contracts of the Registrant described herein are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by the Company.

SIGNATURES

As required by the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant certifies that it meets the requirements of Securities Act Rule 485(b) for effectiveness of this post-effective amendment to this registration statement and has duly caused this post-effective amendment to this registration statement to be signed on its behalf, in the City of Hartford, State of Connecticut, on this 29th day of April 2003.

THE TRAVELERS FUND BD II FOR VARIABLE ANNUITIES
(Registrant)

THE TRAVELERS LIFE AND ANNUITY COMPANY
(Depositor)


		By:	*GLENN D. LAMMEY

			Glenn D. Lammey, Chief Financial Officer, Chief Accounting Officer

As required by the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities indicated on the 29th day of April 2003.


*GEORGE C. KOKULIS (George C. Kokulis)		Director, President and Chief Executive Officer (Principal Executive Officer)

*GLENN D. LAMMEY (Glenn D. Lammey)		Director, Chief Financial Officer, Chief Accounting Officer (Principal Financial Officer)

*MARLA BERMAN LEWITUS (Marla Berman Lewitus)		Director

*KATHLEEN L. PRESTON (Kathleen L. Preston)		Director

*By: /s/Ernest J. Wright, Attorney-in-Fact

EXHIBIT INDEX

Exhibit No.	Description	Method of Filing
10.	Consent of KPMG LLP, Independent Auditors.	Electronically