Capital Appreciation Fund/CT · 485BPOS · On 4/25/95

Filed On 4/25/95   ·   SEC Files 2-76640, 811-03429   ·   Accession Number 908812-95-69

Post-Effective Amendment
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 485BPOS     Post-Effective Amendment                              51    265K 
 2: EX-8        Opinion re: Tax Matters                               15     71K 
 3: EX-11       Statement re: Computation of Earnings Per Share        1      6K 
 4: EX-11       Statement re: Computation of Earnings Per Share        6     13K 
 5: EX-27       Financial Data Schedule                                2±     8K 

485BPOS   ·   Post-Effective Amendment
Document Table of Contents

485BPOS
1st Page of 51
TOC
Top
Previous
Next
Bottom
Just 1st
 
Sponsored Ads...


SECURITIES AND EXCHANGE COMMISSION  
WASHINGTON, D.C.  20549 

FORM N-1A   

     REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 23 

and/or    

       REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 23  

CAPITAL APPRECIATION FUND 
(Exact name of Registrant)

ONE TOWER SQUARE, HARTFORD, CONNECTICUT  06183  
(Address of Principal Executive Offices)  

Registrant's Telephone Number, including Area Code: (203)277-0111   

ERNEST J. WRIGHT    
Secretary to the Board of Trustees      
Capital Appreciation Fund     
One Tower Square      
Hartford, Connecticut 06183       
(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)                          
_X__ on May 1, 1995 pursuant to paragraph (b)                                   
____                                                                            
____ 60 days after filing pursuant to paragraph (a)(i)                          
____ on __________ pursuant to paragraph (a)(i)                                 
____ 75 days after filing pursuant to paragraph (a)(ii)                         
____ on __________ pursuant to paragraph (a)(ii) of Rule 485.                   

If appropriate, check the following box:                                        
____ This Post-Effective Amendment designates a new effective date for a        
previously filed  post-effective amendment.                           

AN INDEFINITE NUMBER OF SHARES OF BENEFICIAL INTEREST OF THE REGISTRANT WERE    
REGISTERED PURSUANT TO RULE 24F-2 OF THE INVESTMENT COMPANY ACT OF 1940.  A     
RULE 24F-2 NOTICE FOR REGISTRANT'S FISCAL YEAR ENDED DECEMBER 31, 1994 WAS      
FILED ON FEBRUARY 27, 1995.                                                     

485BPOS
2nd Page of 51
TOC
1st
Previous
Next
Bottom
Just 2nd

         CAPITAL APPRECIATION FUND

Cross-Reference Sheet pursuant to Rule 495 under the Securities Act of 1933     

ITEM                                                                            
NO.                                            CAPTION IN PROSPECTUS            
-----                                          ---------------------            

1. Cover Page                                  Cover Page                       
2. Synopsis                                    Not Applicable                   
3. Condensed Financial Information             Financial Highlights             
4. General Description of Registrant           Cover Page; Fund Description;    
                                        Investment Objective and
                        Policies
5. Management of the Fund                      Board of Trustees, Investment    
                                              Advisers, Portfolio Turnover
                                          and Expenses; Additional
                             Information
6. Capital Stock and Other                     Fund Description; Dividends and  
Securities                                   Taxes; Fund Shares; Pricing
                        Shares
7. Purchase of Securities Being Offered        How to Buy Shares                
8. Redemption or Repurchase                    How to Redeem Shares             
9. Legal Proceedings                           Legal Proceedings                

                                     CAPTION IN STATEMENT OF
                                      ADDITIONAL INFORMATION
                                      ------------------------

10. Cover Page                                 Cover Page                       
11. Table of Contents                          Table of Contents                
12. General Information and History            Not Applicable                   
13. Investment Objectives and Policies         Fund Description; Investment     
                                         Objective and Policies;
                                          Investment Restrictions;
                          Appendix
14. Management of the Registrant               Trustees and Officers            
15. Control Persons and Principal              Additional Information           
Holders of Securities                                                   
16. Investment Advisory and                    Investment Adviser; Additional   
Other Services                               Information                
17. Brokerage Allocation                       Brokerage                        
18. Capital Stock and Other Securities         Declaration of Trust             
19. Purchase, Redemption and Pricing           Valuation of Securities          
of Securities Being Offered                                             
20. Tax Status                                 Distributions and Taxes          
21. Underwriters                               Not Applicable                   
22. Calculation of Performance Data            Not Applicable                   
23. Financial Statements                       Financial Statements             

485BPOS
3rd Page of 51
TOC
1st
Previous
Next
Bottom
Just 3rd

      PART A
    INFORMATION REQUIRED IN A PROSPECTUS

------------------------------------------------------------------------------- 
 CAPITAL APPRECIATION FUND
------------------------------------------------------------------------------- 

ONE TOWER SQUARE      
 HARTFORD, CONNECTICUT 06183
TELEPHONE 1-800-842-0125

Capital Appreciation Fund (the "Fund") is a diversified open-end management 
investment company (mutual fund) whose goal is growth of capital primarily      
through the use of common stocks. Income is not an objective. The Fund invests  
principally in common stocks of small to large companies that                   
characteristically move faster than the market during major price movements.    

Shares of the Fund are currently offered without a sales charge only to The 
Travelers Fund U for Variable Annuities ("Fund U") and The Travelers Fund UL    
for Variable Life Insurance ("Fund UL"), separate accounts of The Travelers     
Insurance Company (the "Company" or "Travelers Insurance"). The Fund serves as  
one of the investment vehicles for the variable annuity and variable life       
insurance contracts issued by the Company. Funds U and UL invest in shares of   
the Fund in accordance with allocation instructions received from owners of the 
variable annuity and variable life insurance contracts. Such allocation rights  
are described further in the accompanying prospectuses for Funds U and UL. The  
rights of Funds U and UL as shareholders should be distinguished from the       
rights of owners of the variable annuity and variable life insurance contracts. 
The term "shareholder" as used herein refers to Funds U and UL or to any other  
insurance company separate account that may use shares of the Fund as an        
investment vehicle in the future.                                               

This Prospectus concisely sets forth the information about the Fund that you
should know before investing. Please read and retain it for future reference.   
Additional information about the Fund is contained in a Statement of Additional 
Information dated May 1, 1995 which has been filed with the Securities and      
Exchange Commission and is incorporated by reference into this Prospectus. A    
copy may be obtained, without charge, by writing to Travelers Insurance,        
Annuity Services 5 SHS, One Tower Square, Hartford, Connecticut 06183-5030, or  
by calling 1-800-842-0125.                                                      

THIS PROSPECTUS MUST BE ACCOMPANIED BY A CURRENT PROSPECTUS FOR VARIABLE    
ANNUITY OR VARIABLE LIFE INSURANCE CONTRACTS ISSUED BY TRAVELERS INSURANCE AND  
ITS SEPARATE ACCOUNTS. BOTH THIS PROSPECTUS AND THE CONTRACT PROSPECTUS SHOULD  
BE READ CAREFULLY AND RETAINED FOR FUTURE REFERENCE.                            

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES   
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE      
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS  
A CRIMINAL OFFENSE.                                                             

   THE DATE OF THIS PROSPECTUS IS MAY 1, 1995.

485BPOS
4th Page of 51
TOC
1st
Previous
Next
Bottom
Just 4th


TABLE OF CONTENTS     

                                                                · Download Table
                                                                        

FINANCIAL HIGHLIGHTS..................................................3 
FUND DESCRIPTION......................................................4 
INVESTMENT OBJECTIVE AND POLICIES.....................................4 
INVESTMENT RESTRICTIONS...............................................4 
INVESTOR CONSIDERATIONS AND RISK FACTORS..............................5 
BOARD OF TRUSTEES.....................................................5 
INVESTMENT ADVISERS...................................................5 
        TIMCO.........................................................5 
                Advisory Fees.........................................6 
        JANUS CAPITAL CORPORATION.....................................6 
                Sub-Advisory Fees.....................................6 
                Portfolio Manager.....................................6 
        SECURITIES TRANSACTIONS.......................................6 
PORTFOLIO TURNOVER....................................................6 
FUND EXPENSES.........................................................6 
TRANSFER AGENT........................................................7 
FUND SHARES...........................................................7 
HOW TO BUY SHARES.....................................................7 
PRICING SHARES........................................................7 
HOW TO REDEEM SHARES..................................................7 
DIVIDENDS AND TAX STATUS..............................................8 
LEGAL PROCEEDINGS.....................................................8 
ADDITIONAL INFORMATION................................................8 
EXHIBIT A.............................................................9 


CAF-2             

485BPOS
5th Page of 51
TOC
1st
Previous
Next
Bottom
Just 5th


FINANCIAL HIGHLIGHTS    
CAPITAL APPRECIATION FUND   
PER SHARE DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR   

The following information on per share data for the five years ended December   
31, 1994 has been audited by Coopers & Lybrand L.L.P., Independent Accountants. 
All other periods presented have been audited by the Fund's prior auditors.     
Coopers & Lybrand L.L.P.'s report on the per share data for each of the five    
years in the period ended December 31, 1994 is contained in the 1994 Annual     
Report to Shareholders.  The Annual Report, which contains additional           
performance information, is incorporated by reference into the Statement of     
Additional Information. A copy of the Annual Report can be obtained without     
charge by writing to or calling the Company at the address and telephone number 
listed on the cover of this Prospectus. The following information should be     
read in conjunction with the financial statements contained in the 1994 Annual  
Report.                                                                         

                                                        · Enlarge/Download Table

                                                                                                   NOVEMBER 1,                      
                                                                                                      TO           YEAR ENDED       
                                              YEAR ENDED DECEMBER 31,                              DECEMBER 31,    OCTOBER 31,      
                        -------------------------------------------------------------------------  ------------  --------------     

PER SHARE DATA           1994   + 1993      1992    ++1991     1990      1989      1988      1987      1986      1986     #1985     
                        -----   ------      ----    ------     ----      ----      ----      ----      ----      ----     -----     
                                                                                                                                    
 Net asset value,                                                                                                                   
  beginning of year   $ 25.87  $ 22.72   $ 19.63   $ 14.62  $ 15.76   $ 13.62   $ 12.54   $ 17.11   $ 20.24    $ 16.06   $ 14.71    

Income from operations                                                                                                              
----------------------                                                                                                              
 Net investment income   0.19     0.19      0.28      0.36     0.09      0.14      0.11     (0.01)     0.02      (0.01)     0.03    

 Net gains or losses                                                                                                                
  on securities                                                                                                                     
  (realized and                                                                                                                     
  unrealized) ......    (1.41)    3.21      3.13      4.75    (1.08)     2.00      1.15     (1.35)     0.05       4.19      1.41    
                      --------  ------   -------   -------  --------  -------   -------   --------  -------    -------   -------    
   Total from                                                                                                                       
     investment                                                                                                                     
     operations ....    (1.22)    3.40      3.41      5.11    (0.99)     2.14      1.26     (1.36)     0.07       4.18      1.44    

Less distributions                                                                                                                  
------------------                                                                                                                  
 Distributions from net                                                                                                             
   investment income                                                                                                                
   and short-term                                                                                                                   
   realized gains ...   (0.15)   (0.25)    (0.32)    (0.10)   (0.15)       --     (0.18)       --        --         --     (0.09)   

 Distributions from                                                                                                                 
   long-term realized                                                                                                               
   gains ............      --       --        --        --       --        --        --     (3.21)    (3.20)        --        --    
                      -------  -------   -------   -------  -------   -------   -------   -------   -------    -------   -------    
     Total                                                                                                                          
     distributions ..   (0.15)   (0.25)    (0.32)    (0.10)   (0.15)       --     (0.18)    (3.21)    (3.20)        --     (0.09)   

 Net asset value,                                                                                                                   
   end of year .....  $ 24.50  $ 25.87   $ 22.72   $ 19.63  $ 14.62   $ 15.76   $ 13.62   $ 12.54   $ 17.11    $ 20.24   $ 16.06    
                      -------  -------   -------   -------  -------   -------   -------   -------   -------    -------   -------    
                      -------  -------   -------   -------  -------   -------   -------   -------   -------    -------   -------    
TOTAL RETURN*           (4.76)%  15.09%    17.60%    35.16%   (6.24)%   15.71%    10.06%  (8.12)%*** 10.05%*** 10.05%*** (27.11)%***

RATIOS/SUPPLEMENTAL DATA                                                                                                            

Net assets, end of                                                                                                                  
   year (thousands)   $78,494  $62,414   $29,506   $20,497  $13,494   $15,456   $42,470   $50,457   $67,156    $64,012   $51,053    

 Ratio of operating                                                                                                                 
   expenses to                                                                                                                      
   average net                                                                                                                      
   assets ..........     0.89%**  0.87%**   0.56%**   0.56%**  0.82%**   1.37%     1.01%     0.93%     0.97%***   0.91%     1.00%   

 Ratio of net                                                                                                                       
   investment income                                                                                                                
   to average                                                                                                                       
   net assets ......     0.79%    0.81%     1.39%     2.05%    0.58%     0.84%     0.83%    (0.05)%    0.75%***  (0.05)%    0.01%   

 Portfolio turnover                                                                                                                 
   rate**** ........      106%     155%      126%      205%      80%       75%      104%      170%        8%       166%      114%   

<FN>                                                                                                                                
*    Total return is determined by dividing the increase (decrease) in value of                                                     
     a share during the year, after reflecting the reinvestment of dividends                                                        
     declared during the year, by the beginning of year share price. Shares in                                                      
     the Fund are only sold to Travelers Insurance separate accounts in                                                             
     connection with the issuance of variable annuity and variable life                                                             
     insurance contracts. Total Return does not reflect the deduction of any                                                        
     contract charges or fees assessed by Travelers Insurance separate                                                              
     accounts.                                                                                                                      

**   The ratios of expenses to average net assets for 1990 and later years                                                          
     reflect an expense reimbursement by Travelers Insurance in connection with                                                     
     voluntary expense limitations. Without the expense reimbursement, the ratio                                                    
     of operating expenses to average net assets would have been 0.96%, 0.91%,                                                      
     1.28% and 1.56% for the years ended December 31, 1993, 1992, 1991 and 1990,                                                    
     respectively. For the year ended December 31, 1994, there was no expense                                                       
     reimbursement by Travelers Insurance in connection with the voluntary                                                          
     expense limitation.                                                                                                            

***  Annualized.                                                                                                                    

**** Portfolio turnover rates for periods ending on or after October 31, 1985                                                       
     include certain U.S. Government obligations.                                                                                   

+    Effective May 1, 1993, Janus Capital Corporation became subadviser for the                                                     
     Fund.                                                                                                                          

++   On May 1,1990, TIMCO replaced Keystone Custodian Funds, Inc. as the                                                            
     investment adviser for the Fund.                                                                                               

#    On August 16, 1985 the former Aggressive Stock Trust combined with Keystone                                                    
     Stock Trust. Simultaneously, the name of Keystone Stock Trust was changed                                                      
     to Aggressive Stock Trust. Amounts in this column include the income and                                                       
     capital charges of Aggressive Stock Trust (formerly Keystone Stock Trust)                                                      
     to August 16, 1985, and the activity in the combined funds from the date of                                                    
     the merger.                                                                                                                    


CAF-3             

485BPOS
6th Page of 51
TOC
1st
Previous
Next
Bottom
Just 6th


FUND DESCRIPTION      

Capital Appreciation Fund (the "Fund") is registered with the Securities and
Exchange Commission ("SEC") as a diversified open-end management investment     
company, commonly known as a mutual fund. The Fund was created under            
Massachusetts law as a Massachusetts business trust on March 18, 1982.          

INVESTMENT OBJECTIVE AND POLICIES     

The Fund's investment objective is to provide shareholders with growth of   
capital primarily through the use of common stocks. The Fund invests            
principally in common stocks of small to large companies that                   
characteristically move faster than the market during major price movements. It 
is the policy of the Fund to invest its assets as fully as practicable in       
common stocks, securities convertible into common stocks and securities having  
common stock characteristics, including rights and warrants, selected primarily 
for prospective capital growth. The class of securities from which these        
selections are made may be expected to experience wide fluctuations in price in 
both rising and declining markets. While income is not an objective, securities 
appearing to offer attractive possibilities for future growth of income may be  
included in the portfolio whenever it seems possible to do so without           
conflicting with the Fund's objective of capital growth. The Fund may invest in 
domestic, foreign and restricted securities. While the Fund may occasionally    
invest in foreign securities, it is not anticipated that they will, at any      
time, account for more than twenty-five percent (25%) of the investment         
portfolio.                                                                      

Although the Fund normally invests primarily in equity securities, the Fund 
may increase its cash position when the investment adviser or the sub-adviser   
is unable to locate investment opportunities with desirable risk/reward         
characteristics and perceives an opportunity for capital growth from such       
securities so the Fund may receive a return on its idle cash. The Fund may      
invest in preferred stocks; warrants; corporate bonds and debentures; U.S.      
government securities; instruments of banks which are members of the Federal    
Deposit Insurance Corporation and have assets of at least $1 billion, such as   
certificates of deposit, demand and time deposits and bankers' acceptances;     
prime commercial paper, including master demand notes; repurchase agreements    
secured by U.S. government securities; or other debt securities. The Fund may   
invest in debt securities rated below investment grade. (See "High Yield/High   
Risk Bonds" in Exhibit A.)  When the Fund invests in debt securities,           
investment income will increase and may constitute a large portion of the       
return on the Fund and the Fund probably will not participate in market         
advances or declines to the extent that it would if it were fully invested in   
common stocks.                                                                  

The Fund may write covered call options on securities which it owns. Such an
option on an underlying security would obligate the Fund to sell, and give the  
purchaser of the option the right to buy, that security at a stated exercise    
price at any time until a stated expiration date of the option. The Fund may    
also purchase index or individual equity call or put options. The Fund will pay 
a premium to buy call (or put) options and thereby obtain the right to buy (or  
sell) a fixed number of shares of the underlying asset at the stated exercise   
price on or prior to the stated expiration date.                                

 The Fund may also use exchange-traded futures contracts as a hedge to protect
against changes in stock prices or interest rates. At no time will the Fund's   
transactions in such futures be employed for speculative purposes. A stock      
index futures contract is a contractual obligation to buy or sell a specified   
index of stocks at a future date for a fixed price. An interest rate futures    
contract is a contract to buy or sell specified debt securities at a future     
time for a fixed price.                                                         

For further information about the types of investments and investment       
techniques available to the Fund, including the risks associated with such      
investments and investment techniques, see Exhibit A to this Prospectus.        

INVESTMENT RESTRICTIONS 

The Fund has adopted the following fundamental investment restrictions which
may not be changed without a vote of a majority of the Fund's outstanding       
voting securities, as defined in the Investment Company Act of 1940, as         
amended. These restrictions and certain other fundamental restrictions are      
fully set forth in the Statement of Additional Information. Unless otherwise    
stated, all references to the Fund's assets are in terms of current market      
value.                                                                          

 The Fund will not: (1) invest more than 5% of its assets in the securities of
any one issuer; (2) borrow money, except that the Fund may borrow money from    
banks for temporary or emergency purposes in amounts of up to 10% of its gross  
assets computed at cost; assets pledged to secure borrowings shall be no more   
than the lesser of the amount borrowed or 10% of the Fund's gross assets        
computed at cost; (3) invest more than 25% of its assets in the securities of   
issuers in the same industry; and (4) invest more than 10% of its assets in     
securities for which market quotations are not readily available, including     
restricted securities.                                                          

CAF-4             

485BPOS
7th Page of 51
TOC
1st
Previous
Next
Bottom
Just 7th

The Fund has undertaken to a state insurance authority that so long as the  
state authority requires and shares of the Fund are offered for sale to fund    
variable life insurance policies in that state, the Fund will comply with       
certain foreign security diversification guidelines. These guidelines provide   
that (1) as the percentage of the Fund's net asset value invested in foreign    
securities increases, a corresponding increase will be made in the number of    
countries in whose securities the Fund invests; and (2) the Fund will invest no 
more than 20% of its net asset value in the securities of issuers located in    
any one country (other than the United States). Notwithstanding the above, the  
guidelines permit the Fund to invest any amount in the securities of issuers    
located in the United States, and to invest an additional 15% of its net asset  
value in the securities of issuers located in Australia, Canada, France, Japan, 
the United Kingdom or Germany. The guidelines also require that American        
Depository Receipts be treated as if they were foreign securities. This         
undertaking is not a fundamental investment restriction or policy and may be    
changed without a vote of Shareholders.                                         

INVESTOR CONSIDERATIONS AND RISK FACTORS          

The risk inherent in investing in the Fund is that the net asset value will 
fluctuate in response to changes in economic conditions, interest rates and the 
market's perception of the underlying portfolio securities of the Fund. There   
can, of course, be no assurance that the Fund will achieve its investment       
objective since there is uncertainty in every investment.                       

The investment experience of equity investments over time will tend to      
reflect levels of stock market prices and dividend payouts. Both are affected   
by diverse factors, including not only business conditions and investor         
confidence in the economy, but current conditions in a particular industry or   
company. The yield on a common stock is not contractually determined. Equity    
securities are subject to financial risks relating to the earning stability and 
overall financial soundness of an issue. They are also subject to market risks  
relating to the effect of general changes in the securities market on the price 
of a security. In addition, there may be more risk associated with the Fund to  
the extent that it invests in small or mid-sized companies. More risk is        
associated with investment in small or mid-sized companies than with larger     
companies because such companies may be dependent on only one or two products   
and may be more vulnerable to competition from larger companies with greater    
resources and to economic conditions affecting their market sector. Small or    
mid-sized companies may be new, without long business or management histories,  
and perceived by the market as unproven. Their securities may be held primarily 
by insiders or institutional investors, which may affect marketability. The     
prices of these stocks often fluctuate more than the overall stock market.      

 BOARD OF TRUSTEES

Under Massachusetts law, the Fund's Board of Trustees has absolute and      
exclusive control over the management and disposition of all assets of the      
Fund. Subject to the provisions of the Declaration of Trust, the business and   
affairs of the Fund shall be managed by the Trustees or other parties so        
designated by the Trustees. Information relating to the Board of Trustees,      
including its members and their compensation, is contained in the Statement of  
Additional Information.                                                         

 INVESTMENT ADVISERS

As described above, the Board of Trustees monitors the activities of those  
entities which provide investment advisory services to the Fund. The Travelers  
Investment Management Company (TIMCO) provides investment advice and, in        
general, supervises the management and investment program of the Fund. Janus    
Capital Corporation provides sub-advisory services to the Fund with respect to  
its daily investment operations, subject to the supervision of the Board of     
Trustees and TIMCO.                                                             

TIMCO                                                                           

TIMCO is a registered investment adviser which has provided investment      
advisory services since its incorporation in 1967. TIMCO is an indirect wholly  
owned subsidiary of Travelers Group Inc., and its principal offices are located 
at One Tower Square, Hartford, Connecticut 06183. In addition to serving as     
investment adviser for the Fund, TIMCO also acts as investment adviser or       
sub-adviser for other investment companies which fund variable contracts issued 
by the Company, including The Travelers Growth and Income Stock 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, The Travelers Timed Aggressive Stock Account for Variable Annuities  
and Managed Assets Trust. TIMCO also provides investment advice to individual   
and pooled pension and profit-sharing accounts, and affiliated companies of     
Travelers Insurance.                                                            

CAF-5             

485BPOS
8th Page of 51
TOC
1st
Previous
Next
Bottom
Just 8th


ADVISORY FEES                                                                   

Under the Investment Advisory Agreement, TIMCO will be paid an amount       
equivalent on an annual basis to 0.75% of the average daily net assets of the   
Fund. From that amount, TIMCO will in turn pay an amount equivalent on an       
annual basis to 0.55% of the average daily net assets of the Fund to Janus      
Capital Corporation for its services as sub-adviser, TIMCO thus retaining 0.20% 
as compensation for its services as described above. The fee is computed daily  
and paid weekly.                                                                

JANUS CAPITAL CORPORATION                                                       

Janus Capital Corporation (Janus Capital), 100 Fillmore Street, Suite 300,  
Denver, Colorado 80206, has been employed by TIMCO as a sub-adviser to manage   
the daily investment operations of the Fund, subject to the supervision of both 
TIMCO and the Board of Trustees. Kansas City Southern Industries, Inc., a       
publicly traded holding company whose primary subsidiaries are engaged in       
transportation, financial services and real estate, owns approximately 81% of   
the outstanding voting stock of Janus Capital. Janus Capital also acts as       
investment adviser to other investment companies not affiliated with the Fund,  
as well as to individual, corporate, charitable and retirement accounts.        

SUB-ADVISORY FEES                                                               

As described above, TIMCO, and not the Fund, will pay to Janus Capital an   
amount equivalent on an annual basis to 0.55% of the Fund's average daily net   
assets for its services as sub-adviser to the Fund.                             

PORTFOLIO MANAGER                                                               

The day-to-day portfolio management of the Fund is currently handled by     
Thomas F. Marsico, a Vice President and Portfolio Manager of Janus Capital      
Corporation, and has been since May 1993. Prior to joining Janus Capital in     
1986, Mr. Marsico was a Senior Portfolio Manager with Fred Alger Management     
and a partner with Boettcher and Company, Inc.                                  

SECURITIES TRANSACTIONS                                                         

Under policies established by the Board of Trustees, TIMCO or Janus Capital 
will select broker-dealers to execute transactions for the Fund subject to the  
receipt of best execution. Broker-dealers may from time to time be affiliated   
with the Fund, TIMCO, Janus Capital or their affiliates.                        

The Fund may pay higher commissions to broker-dealers which provide research
services. TIMCO and Janus Capital may use these services in advising the Fund,  
as well as in advising other clients for which they provide advisory services.  

PORTFOLIO TURNOVER

The Fund's portfolio turnover rates for the fiscal years ended December 31, 
1992, 1993 and 1994 were 126%, 155% and 106%, respectively. High portfolio      
turnover involves correspondingly greater brokerage commissions and other       
transaction costs, which will be borne directly by the Fund.                    

FUND EXPENSES 

In addition to the investment advisory fees discussed above, the other      
principal expenses of the Fund include the charges and expenses of the transfer 
agent, the custodian, the independent auditors, and any outside legal counsel   
employed by either the Fund or the Board of Trustees; the compensation for the  
disinterested members of the Board of Trustees; the costs of printing and       
mailing the Fund's prospectuses, proxy solicitation materials, and annual,      
semi-annual and periodic reports; brokerage commissions, interest charges and   
taxes; and any registration, filing and other fees payable to government        
agencies in connection with the registration of the Fund and its shares under   
federal and state securities laws.                                              

 Pursuant to a Management Agreement dated May 1, 1993 between the Fund and the
Company, the Company has agreed to reimburse the Fund for the amount by which   
the Fund's aggregate annual expenses, including investment advisory fees but    
excluding brokerage commissions, interest charges and taxes, exceed 1.25% of    
the Fund's average net assets for any fiscal year.                              

For the fiscal year ended December 31, 1994, the Fund paid .89% of its      
average net assets in expenses.                                                 

CAF-6             

485BPOS
9th Page of 51
TOC
1st
Previous
Next
Bottom
Just 9th


TRANSFER AGENT

Travelers Insurance, One Tower Square, Hartford, Connecticut  06183,        
serves as the Fund's transfer agent and dividend disbursing agent.              

 FUND SHARES

The Fund currently issues one class of shares which participate equally in  
dividends and distributions and have equal voting, liquidation and other        
rights. When issued and paid for, the shares will be fully paid and             
nonassessable by the Fund and will have no preference, conversion, exchange or  
preemptive rights.                                                              

Shareholders are entitled to one vote for each full share owned and         
fractional votes for fractional shares. Shares are redeemable, transferable and 
freely assignable as collateral. There are no sinking fund provisions. (See the 
accompanying separate account prospectus for a discussion of voting rights      
applicable to purchasers of variable annuity and variable life insurance        
contracts.)                                                                     

Under Massachusetts law it is possible that a Fund shareholder may be held  
personally liable for the Fund's obligations. However, the Fund's Declaration   
of Trust provides that shareholders shall not be subject to any personal        
liability for the Fund's obligations and provides indemnification from Fund     
assets for any shareholder held personally liable for the Fund's obligations.   
Disclaimers of such liability are included in each Fund agreement.              

HOW TO BUY SHARES     

Shares of the Fund are currently sold only to The Travelers Fund U for      
Variable Annuities and The Travelers Fund UL for Variable Life Insurance in     
connection with variable annuity and variable life insurance contracts issued   
by the Company. Shares of the Fund are not sold to the general public. Fund     
shares are sold on a continuing basis, without a sales charge, at the net asset 
value next computed after payment is made by the insurance company to the       
Fund's custodian. However, the separate accounts to which shares are sold may   
impose sales and other charges, as described in the appropriate contract        
prospectus.                                                                     

Although the Fund is not currently aware of any disadvantages to contract   
owners of either variable annuity or variable life insurance contracts because  
the Fund's shares are available with respect to both products, an               
irreconcilable material conflict may conceivably arise between contract owners  
of different separate accounts investing in the Fund due to differences in tax  
treatment, management of the Fund's investments, or other considerations. The   
Fund's Board of Trustees will monitor events in order to identify any material  
conflicts between variable annuity contract owners and variable life insurance  
policy owners, and will determine what action, if any, should be taken in the   
event of such a conflict.                                                       

PRICING SHARES        

 The net asset value of a Fund share is computed as of the close of trading on
each day on which the New York Stock Exchange is open, except on days when      
changes in the value of the Fund's securities do not affect the current net     
asset value of its shares. The New York Stock Exchange is currently closed on   
weekends, New Year's Day, Presidents' Day, Good Friday, Memorial Day,           
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. The net asset  
value per share is arrived at by determining the value of the Fund's assets,    
subtracting its liabilities, and dividing the result by the number of shares    
outstanding.                                                                    

The Fund values short-term money market instruments with maturities of sixty
days or less at amortized cost (original purchase cost as adjusted for          
amortization of premium or accretion of discount) which, when combined with     
accrued interest receivable, approximates market. All other investments are     
valued at market value or, where market quotations are not readily available,   
at fair value as determined in good faith by the Fund's Board of Trustees.      

HOW TO REDEEM SHARES

Shareholders may redeem Fund shares at the redemption value next determined 
after the Company receives a proper redemption request. The redemption value is 
the net asset value adjusted for fractions of a cent and may be more or less    
than the shareholder's cost depending upon changes in the value of the Fund's   
portfolio securities between purchase and redemption.                           

CAF-7             

The Fund computes the redemption value at the close of the New York Stock   
Exchange at the end of the day on which it has received all proper              
documentation from the shareholder. Redemption proceeds are normally wired or   
mailed either the same or the next business day, but in no event later than     
seven days thereafter.                                                          

The Fund may temporarily suspend the right to redeem its shares when:  (1)  
the New York Stock Exchange is closed, other than customary weekend and holiday 
closings; (2) trading on the Exchange is restricted; (3) an emergency exists as 
determined by the Securities and Exchange Commission so that disposal of the    
Fund's investments or determination of its net asset value is not reasonably    
practicable; or (4) the Securities and Exchange Commission, for the protection  
of shareholders, so orders.                                                     

DIVIDENDS AND TAX STATUS        

The Fund has qualified, and intends to qualify in the future, as a regulated
investment company under Subchapter M of the Internal Revenue Code. The Fund    
qualifies if, among other things, it distributes to its shareholders at least   
90% of its net investment income for each fiscal year.                          

Capital gains and dividends are distributed in cash or reinvested in        
additional shares of the Fund, without a sales charge. Although purchasers of   
variable contracts are not subject to federal income taxes on distributions by  
the Fund, they may be subject to state and local taxes and should review the    
accompanying contract prospectus for a discussion of the tax treatment          
applicable to purchasers of variable annuity and variable life insurance        
contracts.                                                                      

LEGAL PROCEEDINGS           

There are no pending material legal proceedings affecting the Fund.         

ADDITIONAL INFORMATION          

 Except as otherwise stated in this Prospectus or as required by law, the Fund
reserves the right to change the terms of the offer stated in this Prospectus   
without shareholder approval, including the right to impose or change fees for  
services provided.                                                              

CAF-8             

485BPOS
10th Page of 51
TOC
1st
Previous
Next
Bottom
Just 10th


EXHIBIT A 

DESCRIPTION OF CERTAIN TYPES OF INVESTMENTS 
AND INVESTMENT TECHNIQUES AVAILABLE TO THE FUND 

FUTURES CONTRACTS                                                               

The Fund may use exchange-traded financial futures contracts either as a    
hedge to protect against anticipated changes in stock prices and interest       
rates, or as a hedge to facilitate the purchase or sale of securities.          
Financial futures contracts consist of stock index futures contracts and        
futures contracts on debt securities ("interest rate futures"). A stock index   
futures contract is a contractual obligation to buy or sell a specified index   
of stocks at a future date for a fixed price. An interest rate futures contract 
is a contract to buy or sell specified debt securities at a future time for a   
fixed price. At no time will the Fund's transactions in such financial futures  
be employed for speculative purposes. When a futures contract is purchased, the 
Fund will set aside, in an identifiable manner, an amount of cash and cash      
equivalents equal to the total market value of the futures contract, less the   
amount of the initial margin.                                                   

Hedging by use of interest rate futures seeks to establish, with more       
certainty than would otherwise be possible, the effective rate of return on     
portfolio securities. When hedging is successful, any depreciation in the value 
of portfolio securities will substantially be offset by appreciation in the     
value of the futures position. Conversely, any appreciation in the value of the 
portfolio securities will substantially be offset by depreciation in the value  
of the futures position.                                                        

 Positions taken in the futures markets are not normally held to maturity, but
instead are liquidated through offsetting transactions which may result in a    
profit or a loss. Closing out an open futures contract sale or purchase is      
effected by entering into an offsetting futures contract purchase or sale,      
respectively, for the same aggregate amount of the stock index or security and  
the same delivery date. If the offsetting purchase price is less than the       
original sale price, the Fund realizes a gain; if it is more, the Fund realizes 
a loss. Conversely, if the offsetting sale price is more than the original      
purchase price, the Fund realizes a gain; if less, a loss. While futures        
positions taken by the Fund will usually be liquidated in this manner, the Fund 
may instead make or take delivery of underlying securities whenever it appears  
economically advantageous for it to do so. In determining gain or loss,         
transaction costs must also be taken into account. There can be no assurance    
that the Fund will be able to enter into an offsetting transaction with respect 
to a particular contract at a particular time.                                  

The Fund will not purchase or sell futures contracts for which the aggregate
initial margin exceeds five percent (5%) of the fair market value of its        
assets, after taking into account unrealized profits and unrealized losses on   
any such contracts it has entered into.                                         

All stock index and interest rate futures contracts will be traded on       
exchanges that are licensed and regulated by the Commodity Futures Trading      
Commission ("CFTC"). To ensure that its futures transactions meet CFTC          
standards, the Fund will enter into futures contracts for hedging purposes      
only, i.e., for the purposes or with the intent specified in CFTC regulations   
and interpretations, subject to the requirements of the SEC. The Fund will      
further seek to assure that fluctuations in the price of any futures contracts  
that it uses for hedging purposes will be substantially related to fluctuations 
in the price of the securities held by it or which it expects to purchase, or   
for other risk reduction strategies, though there can be no assurance that the  
expected result will always be achieved.                                        

As evidence of its hedging intent, the Fund expects that on seventy-five    
percent (75%) or more of the occasions on which it purchases a long futures     
contract, it will effect the purchase of securities in the cash market or take  
delivery as it closes out a futures position. In particular cases, however,     
when it is economically advantageous, a long futures position may be terminated 
without the corresponding purchase of securities.                               

SPECIAL RISKS RELATING TO FUTURES CONTRACTS                                     

While certain futures contracts may be purchased and sold to reduce certain 
risks, these transactions may entail other risks. Thus, while the Fund may      
benefit from the use of such futures, changes in stock price movements or       
interest rates may result in a poorer overall performance for the Fund than if  
it had not entered into such futures contracts. Moreover, in the event of an    
imperfect correlation between the futures position and the portfolio position   
which is intended to be protected, the desired protection may not be obtained   
and the Fund may be exposed to risk of loss. TIMCO will attempt to reduce this  
risk by engaging in futures transactions, to the extent possible, where, in its 
judgment, there is a significant correlation between changes in the prices of   
the futures contracts and the prices of any portfolio securities sought to be   
hedged. Successful use of futures contracts for hedging purposes is also        
subject to TIMCO's ability to predict correctly movements in the direction of   
the market.                                                                     

CAF-9             

485BPOS
11th Page of 51
TOC
1st
Previous
Next
Bottom
Just 11th

BUYING PUT AND CALL OPTIONS                                                     

 The Fund may purchase put options on securities held, or on futures contracts
whose price volatility is expected to closely match that of securities held, as 
a defensive measure to preserve shareholders' capital when market conditions    
warrant. The Fund may purchase call options on specific securities, or on       
futures contracts whose price volatility is expected to closely match that of   
securities eligible for purchase by the Fund, in anticipation of or as a        
substitute for the purchase of the securities themselves. These options may be  
listed on a national exchange or executed "over-the-counter" with a             
broker-dealer as the counterparty. While TIMCO anticipates that the majority of 
option purchases and sales will be executed on a national exchange, put or call 
options on specific securities or for non-standard terms are likely to be       
executed directly with a broker-dealer when it is advantageous to do so. Option 
contracts will be short-term in nature, generally less than nine months in      
duration.                                                                       

The Fund will pay a premium in exchange for the right to purchase (call) or 
sell (put) a specific number of shares of an equity security or futures         
contract at a specified price (the strike price) on or before the expiration    
date of the option contract. In either case, the Fund's risk is limited to the  
option premium paid.                                                            

The Fund may sell the put and call options prior to their expiration and    
thereby realize a gain or loss. A call option will expire worthless if the      
price of the related security is below the contract strike price at the time of 
expiration; a put option will expire worthless if the price of the related      
security is above the contract strike price at the time of expiration.          

Put and call options will be employed for bona fide hedging purposes only.  
Liquid securities sufficient to fulfill the call option delivery obligation     
will be identified and segregated in an account; deliverable securities         
sufficient to fulfill the put option obligation will be similarly identified    
and segregated. In the case of put options on futures contracts, portfolio      
securities whose price volatility is expected to match that of the underlying   
futures contract will be identified and segregated.                             

WRITING COVERED CALL OPTIONS                                                    

The Fund may write or sell covered call options. By writing a call option,  
the Fund becomes obligated during the term of the option to deliver the         
securities underlying the option upon payment of the exercise price.            

The Fund may only write "covered" options. This means that as long as the   
Fund is obligated as the writer of a call option, it will own the underlying    
securities subject to the option or in the case of call options on U.S.         
Treasury bills, the Fund might own substantially similar U.S. Treasury bills.   

 The principal reason for writing call options is to obtain, through a receipt
of premiums, a greater current return than would be realized on the underlying  
securities alone. The Fund receives a premium from writing a call option which  
it retains whether or not the option is exercised. By writing a call option,    
the Fund might lose the potential for gain on the underlying security while the 
option is open.                                                                 

 Options on some securities are relatively new and it is impossible to predict
the amount of trading interest that will exist in such options. There can be no 
assurance that viable markets will develop or continue. The failure of such     
markets to develop or continue could impair the Fund's ability to use such      
options to achieve its investment objectives.                                   

LOANS OF SECURITIES TO BROKER DEALERS                                           

The Fund may lend securities to brokers and dealers pursuant to agreements  
requiring that the loans be continuously secured by cash, or securities of the  
U.S. government, its agencies or instrumentalities or any combination of cash   
and such securities, as collateral equal at all times in value to at least the  
market value of the securities loaned. Such securities loans will not be made   
with respect to the Fund if as a result the aggregate of all outstanding        
securities loans exceeds 15% of the value of the Fund's total assets taken at   
their current value. The Fund continues to receive interest or dividends on the 
securities loaned and simultaneously earns interest on the investment of the    
cash loan collateral in U.S. Treasury notes, certificates of deposit, other     
high grade, short-term obligations or interest bearing cash equivalents.        
Although voting rights attendant to securities loaned pass to the borrower,     
such loans may be called at any time and will be called so that the securities  
may be voted by the Fund if, in the opinion of the Fund, a material event       
affecting the investment is to occur. There may be risks of delay in receiving  
additional collateral or in recovering the securities loaned or even loss of    
rights in the collateral should the borrower of the securities fail             
financially. However, loans may be made only to borrowers deemed to be of good  
standing, under standards approved by the Board of Trustees, when the income to 
be earned from the loan justifies the attendant risks.                          

CAF-10            

485BPOS
12th Page of 51
TOC
1st
Previous
Next
Bottom
Just 12th

FOREIGN SECURITIES AND AMERICAN DEPOSITARY RECEIPTS                             

Investing in the securities of foreign companies involves special risks and 
considerations not typically associated with investing in U.S. companies. These 
risks include differences in accounting, auditing and financial reporting       
standards, generally higher commission rates on foreign portfolio transactions, 
the possibility of expropriation or confiscatory taxation, adverse changes in   
investment or exchange control regulations, political instability which could   
affect U.S. investments in foreign countries and potential restrictions on the  
flow of international capital. Additionally, dividends payable on foreign       
securities may be subject to foreign taxes withheld prior to distribution.      
Foreign securities often trade with less frequency and volume than domestic     
securities and therefore may exhibit greater price volatility. Changes in       
foreign exchange rates will affect the value of those securities which are      
denominated or quoted in currencies other than the U.S. dollar. Many of the     
foreign securities held by the Fund will not be registered with, nor will       
the issuers thereof be subject to the reporting requirements of, the SEC.       
Accordingly, there may be less publicly available information about the         
securities and the foreign company or government issuing them than is available 
about a domestic company of government entity. Moreover, individual foreign     
economies may differ favorably or unfavorably from the U.S. economy in such     
respects as growth of gross national product, rate of inflation, capital        
reinvestment, resource self-sufficiency and balance of payment positions.       

HIGH YIELD/HIGH RISK BONDS                                                      

The Fund has no pre-established minimum quality standards and may invest up 
to 35% of its assets in debt securities that are rated below investment grade   
(securities rated Ba or lower by Moody's Investors Service, Inc. ("Moody's")    
or BB or lower by Standard & Poor's Corporation ("S&P")). Such securities       
generally offer a higher yield, but may be subject to a higher risk of default  
in interest or principal payments and are considered speculative. The market    
prices of lower rated securities are generally less sensitive to interest rate  
changes than higher rated investments, but more sensitive to adverse economic   
or political changes, or in the case of corporate issuers, individual           
corporate developments. Lower rated securities may also have less liquid        
markets than higher rated securities, and their liquidity as well as their      
value may be more severely affected by adverse economic conditions, by adverse  
publicity and investor perceptions of the market or by new or proposed          
legislation. (See the Statement of Additional Information for a more detailed   
discussion of the bond ratings.)                                                

The Fund may also invest in unrated debt securities of foreign and domestic 
issuers. Unrated debt, while not necessarily of lower quality than rated        
securities, may not have as broad a market. Sovereign debt of foreign           
governments is generally rated by country. Because these ratings do not take    
into account individual factors relevant to each issue and may not be updated   
regularly, the investment adviser or sub-adviser may treat such securities as   
unrated debt. Unrated debt securities will be included in the 35% limit of the  
Fund, unless the investment adviser or the sub-adviser deems such securities to 
be the equivalent of investment-grade securities.                               

RISKS RELATING TO HIGH YIELD/HIGH RISK BONDS                                    

High yield bonds are typically lower rated securities; the lower the quality
of a debt security, the higher the yield it will provide, but the greater the   
risk that interest or principal payments will not be made when due. In the      
event of an unanticipated default, the Fund would experience a reduction in its 
income, and could expect a decline in the market value of the securities so     
affected.                                                                       

While providing opportunities to maximize return over time, investors should
be aware of the following market, economic and credit factors influencing high  
yield securities: (1) securities rated BB or lower by S&P or Ba or lower by     
Moody's are considered predominantly speculative with respect to the ability of 
the issuer to meet principal and interest payments; (2) the value of high yield 
securities may be more susceptible to real or perceived adverse economic,       
company or industry conditions than is the case for higher quality securities;  
(3) widespread economic downturn could result in increased defaults in the high 
yield market; (4) adverse market, credit or economic conditions could make it   
difficult at certain times to sell certain high yield securities held by the    
Fund; (5) the secondary market for high yield securities may be less liquid     
than the secondary market for higher quality securities which may affect the    
value of certain high yield securities held by the Fund at certain times; and   
(6) there may not always be readily available market quotations for certain     
securities. At these times, the investment adviser or sub-adviser will use its  
best judgment to assign values to those securities.                             

MONEY MARKET INSTRUMENTS                                                        

 Money market securities are instruments with remaining maturities of one year
or less such as bank certificates of deposit, bankers' acceptances, commercial  
paper (including master demand notes) and obligations issued or guaranteed      

CAF-11            

485BPOS
13th Page of 51
TOC
1st
Previous
Next
Bottom
Just 13th

by the United States government, its agencies or instrumentalities,             
some of which may be subject to repurchase agreements.                          

CERTIFICATES OF DEPOSIT                                                         

Certificates of deposit are receipts issued by a bank in exchange for the   
deposit of funds. The issuer agrees to pay the amount deposited plus interest   
to the bearer of the receipt on the date specified on the certificate. The      
certificate can usually be traded in the secondary market prior to maturity.    

Certificates of deposit will be limited to U.S. dollar-denominated          
certificates of United States banks which have at least $1 billion in deposits  
as of the date of their most recently published financial statements (including 
foreign branches of U.S. banks, U.S. branches of foreign banks which are        
members of the Federal Reserve System or the Federal Deposit Insurance          
Corporation, and savings and loan associations which are insured by the Federal 
Deposit Insurance Corporation).                                                 

The Fund will not acquire time deposits or obligations issued by the        
International Bank for Reconstruction and Development, the Asian Development    
Bank or the Inter-American Development Bank. Additionally, the Fund does not    
currently intend to purchase such foreign securities (except to the extent that 
certificates of deposit of foreign branches of U.S. banks may be deemed foreign 
securities) or purchase certificates of deposit, bankers' acceptances or other  
similar obligations issued by foreign banks.                                    

BANKERS' ACCEPTANCES                                                            

Bankers' acceptances typically arise from short-term credit arrangements    
designed to enable businesses to obtain funds to finance commercial             
transactions. Generally, an acceptance is a time draft drawn on a bank by an    
exporter or an importer to obtain a stated amount of funds to pay for specific  
merchandise. The draft is then "accepted" by the bank which, in effect,         
unconditionally guarantees to pay the face value of the instrument on its       
maturity date. The acceptance may then be held by the accepting bank as an      
earning asset or it may be sold in the secondary market at the going rate of    
discount for a specific maturity. Although maturities for acceptances can be as 
long as 270 days, most acceptances have maturities of six months or less.       
Bankers' acceptances acquired by the Fund must have been accepted by U.S.       
commercial banks, including foreign branches of U.S. commercial banks, having   
total deposits at the time of purchase in excess of $1 billion and must be      
payable in U.S. dollars.                                                        

COMMERCIAL PAPER                                                                

Commercial paper will consist of issues rated at the time of purchase A-1 or
higher by S&P or Prime-1 by Moody's; or, if not rated, will be issued by        
companies which have an outstanding debt issue rated at the time of purchase    
Aaa, Aa or A by Moody's, or AAA, AA or A by S&P, or will be determined by TIMCO 
to be of comparable quality.                                                    

Commercial paper rated A-1 by S&P has the following characteristics:        
Liquidity ratios are adequate to meet cash requirements. The issuer's long-term 
senior debt is rated "A" or better, although in some cases "BBB" credits may be 
allowed. The issuer has access to at least two additional channels of           
borrowing. Basic earnings and cash flow have an upward trend with allowance     
made for unusual circumstances. Typically, the issuer's industry is well        
established and the issuer has a strong position within the industry.           

The rating Prime-1 is the highest commercial paper rating assigned by       
Moody's. Among the factors considered by Moody's in assigning ratings are the   
following:  (1) evaluation of the management of the issuer; (2) economic        
evaluation of the issuer's industry or industries and an appraisal of           
speculative-type risks which may be inherent in certain areas; (3) evaluation   
of the issuer's products in relation to competition and customer acceptance;    
(4) liquidity; (5) amount and quality of long-term debt; (6) trend of earnings  
over a period of ten years; (7) financial strength of a parent company and the  
relationships which exist with the issuer; and (8) recognition by the           
management of obligations which may be present or may arise as a result of      
public preparations to meet such obligations. Relative strength or weakness of  
the above factors determines how the issuer's commercial paper is rated within  
various categories.                                                             

UNITED STATES GOVERNMENT SECURITIES                                             

Securities issued or guaranteed by the United States Government include a   
variety of Treasury securities that differ only in their interest rates,        
maturities and dates of issuance. Treasury bills have maturities of one year or 
less; Treasury notes have maturities of one to ten years; and Treasury bonds    
generally have maturities of greater than ten years at the date of issuance.    

Securities issued or guaranteed by the United States Government or its      
agencies or instrumentalities include direct obligations of the United States   
Treasury and securities issued or guaranteed by the Federal Housing             
Administration,                                                                 

CAF-12            

485BPOS
14th Page of 51
TOC
1st
Previous
Next
Bottom
Just 14th

Farmers Home Administration, Export-Import Bank of the United                   
States, Small Business Administration, Government National Mortgage             
Association, General Services Administration, Central Bank for Cooperatives,    
Federal Home Loan Banks, Federal Loan Mortgage Corporation, Federal             
Intermediate Credit Banks, Federal Land Banks, Maritime Administration, The     
Tennessee Valley Authority, District of Columbia Armory Board and Federal       
National Mortgage Association.                                                  

Some obligations of U.S. government agencies and instrumentalities, such as 
Treasury bills and Government National Mortgage Association pass-through        
certificates, are supported by the full faith and credit of the United States;  
others, such as securities of Federal Home Loan Banks, are supported by the     
right of the issuer to borrow from the Treasury; still others, such as bonds    
issued by the Federal National Mortgage Association, a private corporation, are 
supported only by the credit of the instrumentality. Because the U.S.           
government is not obligated by law to provide support to an instrumentality it  
sponsors, the Fund will invest in the securities issued by such an              
instrumentality only when TIMCO determines that the credit risk with respect to 
the instrumentality does not make its securities unsuitable investments. U.S.   
government securities will not include international agencies or                
instrumentalities in which the U.S. government, its agencies or                 
instrumentalities participate, such as the World Bank, Asian Development Bank   
or the Inter-American Development Bank, or issues insured by the Federal        
Deposit Insurance Corporation.                                                  

REPURCHASE AGREEMENTS                                                           

Interim cash balances may be invested from time to time in repurchase       
agreements with approved counterparties. Approved counterparties are limited to 
national banks or reporting broker-dealers meeting TIMCO's credit quality       
standards as presenting minimal risk of default. All repurchase transactions    
must be collateralized by U.S. Government securities with market value no less  
than 102% of the amount of the transaction, including accrued interest.         
Repurchase transactions generally mature the next business day but, in the      
event of a transaction of longer maturity, collateral will be marked to         
market daily and, when required, additional cash or qualifying collateral will  
be required from the counterparty.                                              

In executing a repurchase agreement, the Fund purchases eligible securities 
subject to the seller's simultaneous agreement to repurchase them on a mutually 
agreed upon date and at a mutually agreed upon price. The purchase and resale   
prices are negotiated with the counterparty on the basis of current short-term  
interest rates, which may be more or less than the rate on the securities       
collateralizing the transaction. Physical delivery or, in the case of "book     
entry" securities, segregation in the counterparty's account at the Federal     
Reserve for the benefit of the Fund is required to establish a perfected claim  
to the collateral for the term of the agreement in the event the counterparty   
fails to fulfill its obligation.                                                

As the securities collateralizing a repurchase transaction are generally of 
longer maturity than the term of the transaction, in the event of default by    
the counterparty on its obligation, the Fund would bear the risks of delay,     
adverse market fluctuation and transaction costs in disposing of the            
collateral.                                                                     

CAF-13            

485BPOS
15th Page of 51
TOC
1st
Previous
Next
Bottom
Just 15th

THIS PAGE INTENTIONALLY LEFT BLANK.   

CAF-14            

485BPOS
16th Page of 51
TOC
1st
Previous
Next
Bottom
Just 16th

THIS PAGE INTENTIONALLY LEFT BLANK.   

CAF-15            

485BPOS
17th Page of 51
TOC
1st
Previous
Next
Bottom
Just 17th

CAPITAL APPRECIATION FUND       

PROSPECTUS      

                                                                TIC Ed. 5-95
L-11171                                                       Printed in U.S.A. 

485BPOS
18th Page of 51
TOC
1st
Previous
Next
Bottom
Just 18th

      PART B

     INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION

485BPOS
19th Page of 51
TOC
1st
Previous
Next
Bottom
Just 19th

STATEMENT OF ADDITIONAL INFORMATION   

CAPITAL APPRECIATION FUND   

MAY 1, 1995   

This Statement of Additional Information is not a prospectus but relates to,
and should be read in conjunction with, the Fund's prospectus dated May 1,      
1995. A copy of the prospectus may be obtained by writing to The Travelers      
Insurance Company, Annuity Services 5 SHS, One Tower Square, Hartford,          
Connecticut 06183-5030.                                                         

TABLE OF CONTENTS   

                                                                · Download Table

                                                                    Page
                                                                        
INVESTMENT OBJECTIVE AND POLICIES.....................................1 
INVESTMENT RESTRICTIONS...............................................1 
VALUATION OF SECURITIES...............................................2 
DISTRIBUTIONS AND TAXES...............................................2 
TRUSTEES AND OFFICERS.................................................3 

DECLARATION OF TRUST..................................................4 
INVESTMENT ADVISORY SERVICES..........................................4 
        The Investment Adviser........................................4 
        Advisory Fees.................................................5 
        The Sub-Adviser...............................................5 

REDEMPTIONS IN KIND...................................................5 
BROKERAGE.............................................................6 
ADDITIONAL INFORMATION................................................6 
FINANCIAL STATEMENTS..................................................7 
APPENDIX..............................................................8 

485BPOS
20th Page of 51
TOC
1st
Previous
Next
Bottom
Just 20th


INVESTMENT OBJECTIVE AND POLICIES   

The investment objective of the Capital Appreciation Fund (the "Fund") is to
provide shareholders with growth of capital primarily through the use of common 
stocks. The Fund invests principally in common stocks of small to large         
companies that characteristically move faster than the market during major      
price movements. It is the policy of the Fund to invest its assets as fully as  
practicable in common stocks, securities convertible into common stocks and     
securities having common stock characteristics, including rights and warrants,  
selected primarily for prospective capital growth. The Fund may also invest in  
debt instruments and money market instruments. The Fund may enter into          
repurchase agreements, write covered call options and purchase call or put      
options.                                                                        

INVESTMENT RESTRICTIONS   

None of the restrictions enumerated in this paragraph may be changed without
a vote of the holders of a majority of the Fund's outstanding shares, as        
defined in the Investment Company Act of 1940 (the "1940 Act"). The Fund will   
not:                                                                            

(1)  invest more than 5% of its total assets, computed at market        
value, in the securities of any one issuer;                   

  (2)  invest in more than 10% of any class of securities of any one issuer;

(3)  invest more than 5% of the value of its total assets in            
   companies which have been in operation for less than three years;

(4)  borrow money, except to facilitate redemptions or for emergency    
      or extraordinary purposes and then only from banks and in amounts of
      up to 10% of its gross assets computed at cost; while outstanding, a
   borrowing may not exceed one-third of the value of the Fund's net
     assets, including the amount borrowed; the Fund has no intention of
     attempting to increase its net income by means of borrowing and all
   borrowings will be repaid before additional investments are made;
      assets pledged to secure borrowings shall be no more than the lesser
      of the amount borrowed or 10% of the Fund's gross assets computed at
cost;                                                         

(5)  underwrite securities, except that the Fund may purchase securities
    from issuers thereof or others and dispose of such securities in a
manner consistent with its other investment policies; in the  
   disposition of restricted securities the Fund may be deemed to be
     an underwriter, as defined in the Securities Act of 1933 (the "1933
Act");                                                        

(6)  purchase real estate investment trusts that deal in real estate or 
  interests therein, or commodities or commodity contracts, except
         transactions involving financial futures in order to limit transactions
and borrowing costs, and for hedging purposes;                

(7)  invest for the primary purpose of control or management;           

(8)  make margin purchases or short sales of securities, except that the
        Fund may place up to 5% of the value of its net assets in total margin
deposits for positions in futures contracts;                  

   (9)  make loans, except that the Fund may purchase money market securities,
 buy publicly and privately distributed debt securities and lend
    limited amounts of its portfolio securities to broker-dealers; all
such investments must be consistent with the Fund's investment
objective and policies;                                       

(10)  invest more than 25% of its total assets in the securities of       
issuers in any single industry;                               

(11)  purchase the securities of any other investment company except in   
  the open market and at customary brokerage rates and in no event
  more than 3% of the voting securities of any investment company;

(12)  invest in interests in oil, gas or other mineral exploration or     
development programs; or                                      

(13)  invest more than 5% of its net assets in warrants, valued at        
     the lower of cost or market; warrants acquired by the Fund in units
   or attached to securities will be deemed to be without value with
    regard to this restriction. The Fund is subject to restrictions in
       the sale of portfolio securities to, and in its purchase or retention
  of securities of, companies in which the management personnel of
   The Travelers Investment Management Company Inc. ("TIMCO") have a
substantial interest.                                         

The Fund has undertaken to a state insurance authority that, so long as the 
state authority requires and shares of the Fund are offered for sale to fund    
variable life insurance policies in that state, the Fund will comply with       
certain foreign security diversification guidelines. These guidelines provide   
that (1) as the percentage of the Fund's net asset value invested in foreign    
securities increases, a corresponding increase will be made in the number of    
countries in whose securities the Fund invests;                                 

-1-   

485BPOS
21st Page of 51
TOC
1st
Previous
Next
Bottom
Just 21st

and (2) the Fund will invest no more than 20% of its net asset value in         
securities of issuers located in any one country (other than the United         
States). Notwithstanding the above, these guidelines permit the Fund to invest  
any amount in securities of issuers located in the United States, and an        
additional 15% of its net asset value in securities of issuers located in       
Australia, Canada, France, Japan, the United Kingdom or Germany. These          
guidelines require that American Depository Receipts be treated as if they were 
foreign securities. This undertaking is not a fundamental investment            
restriction or policy and may be changed without a vote of shareholders.        

The Fund may make investments in an amount of up to 10% of the value of the 
Fund's net assets in restricted securities which may not be publicly sold       
without registration under the 1933 Act. In most instances such securities are  
traded at a discount from the market value of unrestricted securities of the    
same issuer until the restriction is eliminated. If and when the Fund sells     
such portfolio securities, it may be deemed an underwriter, as such term is     
defined in the 1933 Act, with respect thereto, and registration of such         
securities under the 1933 Act may be required. The Fund will not bear the       
expense of such registration. The Fund intends to reach agreements with all     
such issuers whereby they will pay all expenses of registration. In determining 
securities subject to the 10% limitation, the Fund will include, in addition to 
restricted securities, repurchase agreements maturing in more than seven days   
and other securities not having readily available market quotations.            

VALUATION OF SECURITIES   

Current value for the Fund's portfolio securities is determined as follows. 
Securities that are traded on an established exchange are valued on the basis   
of the last sales price on the exchange where primarily traded prior to the     
time of valuation. Securities traded in the over-the-counter market, for which  
complete quotations are readily available, are valued at the mean of the bid    
and asked prices at the time of valuation. Short-term money market instruments  
having maturities of sixty days or less are valued at amortized cost (original  
purchase cost as adjusted for amortization of premium or accretion of discount) 
which, when combined with accrued interest, approximates market; should this    
valuation of a security not approximate market, TIMCO will value the security   
at a price deemed in good faith to be fair by the Board of Trustees. Short-term 
money market instruments having maturities of more than sixty days, for which   
complete quotations are readily available, are valued at market. The Board of   
Trustees of the Fund values the following at prices it deems in good faith to   
be fair: (1) securities, including restricted securities, for which complete    
quotations are not readily available, (2) listed securities if in the Fund's    
opinion the last sales price does not reflect a current market value or if no   
sale occurred, and (3) other assets.                                            

DISTRIBUTIONS AND TAXES   

The Fund has qualified, and intends to qualify in the future, as a regulated
investment company under Subchapter M of the Internal Revenue Code. Thus the    
Fund is relieved of any federal income tax liability by distributing all of its 
net investment income and net capital gains, if any, to its shareholders.       

When the Fund makes a distribution, it intends to distribute only its net   
capital gains and such income as has been predetermined to the best of the      
Fund's ability to be taxable as ordinary income. Therefore, net investment      
income distributions will not be made on the basis of distributable income as   
computed on the Fund's books, but will be made on a federal taxation basis.     

As of December 31, 1994, the Fund had a capital loss carryover of           
approximately $4,875,708 which expires in 1998-2002. The Fund intends           
not to distribute realized gains until the carryover is exhausted. The Fund may 
not realize gains sufficient to use the carryover before it expires with the    
passage of time.                                                                

-2-   

485BPOS
22nd Page of 51
TOC
1st
Previous
Next
Bottom
Just 22nd


TRUSTEES AND OFFICERS   

Name          Present Position and Principal Occupation During Last Five Years  
----          ----------------------------------------------------------------  

*Heath B. McLendon                                                              
Chairman and Member                                                             
388 Greenwich Street                                                            
New York, New York                                                              
Age 61                                                                          

Managing Director (1993-present), Smith Barney Inc. ("Smith Barney");           
Chairman (1993-present), Smith Barney Strategy Advisors, Inc.; President        
(1994-present), Smith Barney Mutual Funds Management Inc.; Chairman and/or      
Director and President of thirty investment companies associated with Smith     
Barney; Chairman, Board of Trustees, Drew University; Trustees, The East New    
York Savings Bank; Advisory Director, First Empire State Corporation; Chairman, 
Board of Managers, seven Variable Annuity Separate Accounts of The Travelers    
Insurance Company+; Chairman, Board of Trustees, five Mutual Funds sponsored by 
The Travelers Insurance Company.++                                              

Knight Edwards                                                                  
Member                                                                          
2700 Hospital Trust Tower                                                       
Providence, Rhode Island                                                        
Age 71                                                                          

Of Counsel (1988-present), Partner (1956-1988), Edwards & Angell, Attorneys;    
Member, Advisory Board, (1973-1994) thirty-one mutual funds sponsored by        
Keystone Group, Inc.; Member, Board of Managers, seven Variable Annuity         
Separate Accounts of The Travelers Insurance Company+; Trustee, five Mutual     
Funds sponsored by The Travelers Insurance Company.++                           

Robert E. McGill, III                                                           
Member                                                                          
One Elm Street                                                                  
Windsor Locks, Connecticut                                                      
Age 63                                                                          

Director (1983-present), Executive Vice President (1989-1994), Senior Vice      
President, Finance and Administration (1983-1989), The Dexter Corporation       
(manufacturer of specialty chemicals and materials); Vice Chairman (1990-1992), 
Director (1983-present), Life Technologies, Inc. (life science/present          
products); Director (1993-present), Analytical Technology, Inc. (manufacturer   
of measurement instruments); Director (1994-present), The Connecticut Surety    
Corporation (insurance); Member, Board of Managers, seven Variable Annuity      
Separate Accounts of The Travelers Insurance Company+; Trustee, five Mutual     
Funds sponsored by The Travelers Insurance Company.++                           

Lewis Mandell                                                                   
Member                                                                          
368 Fairfield Road, U41F                                                        
Storrs, Connecticut                                                             
Age 52                                                                          

Professor of Finance (1980-present) and Associate Dean (1993-present), School   
of Business Administration, and Director, Center for Research and Development   
in Financial Services (1980-present), University of Connecticut; Director       
(1992-present), GZA Geoenvironmental Tech, Inc. (engineering services); Member, 
Board of Managers, seven Variable Annuity Separate Accounts of The Travelers    
Insurance Company+; Trustee, five Mutual Funds sponsored by The Travelers       
Insurance Company.++                                                            

Frances M. Hawk                                                                 
Member                                                                          
222 Berkeley Street                                                             
Boston, Massachusetts                                                           
Age 47                                                                          

Portfolio Manager (1992-present), HLM Management Company, Inc. (investment      
management); Assistant Treasurer, Pensions and Benefits Management (1989-1992), 
United Technologies Corporation (broad-based designer and manufacturer of high  
technology products); Member, Board of Managers, seven Variable Annuity         
Separate Accounts of The Travelers Insurance Company+; Trustee, five Mutual     
Funds sponsored by The Travelers Insurance Company.++                           

Ernest J. Wright                                                                
Secretary to the Board                                                          
One Tower Square                                                                
Hartford, Connecticut                                                           
Age 54                                                                          

Assistant Secretary (1994-present), Counsel (1987-present), The Travelers       
Insurance Company; Secretary, Board of Managers, seven Variable Annuity         
Separate Accounts of The Travelers Insurance Company+; Secretary, Board of      
Trustees, five Mutual Funds sponsored by The Travelers Insurance Company.++     

Ian R. Stuart                                                                   
Treasurer                                                                       
One Tower Square                                                                
Hartford, Connecticut                                                           
Age 38                                                                          

Vice President and Financial Officer, Financial Services Department             
(1994-present), Second Vice President and Financial Officer, Financial Services 
Department (1991-1994), The Travelers Insurance Company; Senior Manager         
(1986-1991), Price Waterhouse; Treasurer, Board of Trustees, five Mutual Funds  
sponsored by The Travelers Insurance Company.++                                 

+  These seven Variable Annuity Separate Accounts are: 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, The Travelers Timed Aggressive Stock Account for Variable Annuities  
and The Travelers Timed Bond Account for Variable Annuities.                    

-3-   

485BPOS
23rd Page of 51
TOC
1st
Previous
Next
Bottom
Just 23rd

++  These five Mutual Funds are: Capital Appreciation Fund, Cash Income         
Trust, High Yield Bond Trust, Managed Assets Trust and The Travelers Series     
Trust.                                                                          

*  Mr. McLendon is an "interested person" within the meaning of the 1940        
Act by virtue of his position as director of TIMCO which serves as investment   
adviser to the Fund. Mr. McLendon also owns shares and options to purchase      
shares of Travelers Group Inc., the indirect parent of The Travelers Insurance  
Company.                                                                        

The Dexter Corporation, of which Mr. McGill is a director, entered into     
contracts with The Travelers Insurance Company to provide short-term disability 
and life insurance benefits to employees of The Dexter Corporation, and to      
administer the health and dental benefit programs for employees of The Dexter   
Corporation.                                                                    

Members of the Board of Trustees who are also officers or employees of      
Travelers Group Inc. or its subsidiaries are not entitled to any fee. Members   
of the Board of Trustees who are not affiliated as employees of Travelers Group 
Inc. or its subsidiaries receive an aggregate annual retainer of $10,000 for    
service on the Boards of the five Mutual Funds sponsored by The Travelers       
Insurance Company and the seven Variable Annuity Separate Accounts established  
by The Travelers Insurance Company. They also receive an aggregate annual fee   
of $1,800 for each meeting of such Boards attended.                             

DECLARATION OF TRUST  

The Fund is organized as a Massachusetts business trust. Pursuant to certain
decisions of the Supreme Judicial Court of Massachusetts, shareholders of such  
a trust may, under certain circumstances, be held personally liable as partners 
for the obligations of the trust. However, even if the Fund were held to be a   
partnership, the possibility of its shareholders incurring financial loss for   
that reason appears remote because the Fund's Declaration of Trust contains an  
express disclaimer of shareholder liability for obligations of the Fund and     
requires that notice of such disclaimer be given in each agreement, obligation  
or instrument entered into or executed by the Fund or the Trustees, and because 
the Declaration of Trust provides for indemnification out of Fund property for  
any shareholder held personally liable for the obligations of the Fund.         

 The Declaration of Trust provides that a Trustee shall be liable only for his
own willful defaults and, if reasonable care has been exercised in the          
selection of officers, agents, employees or investment advisers, a Trustee      
shall not be liable for the neglect or wrongdoing of any such person; provided, 
however, that nothing in the Declaration of Trust shall protect a Trustee       
against any liability for his willful misfeasance, bad faith, gross negligence  
or the reckless disregard of his duties.                                        

 Shareholders first elected Trustees at a meeting held on August 16, 1985, and
most recently elected Trustees on April 23, 1993. No further meetings of        
shareholders for the purpose of electing Trustees will be held, unless required 
by law, and unless and until such time as less than a majority of the Trustees  
holding office have been elected by shareholders, at which time the Trustees    
then in office will call a shareholders' meeting for the election of Trustees.  

Except as set forth above, the Trustees shall continue to hold office       
indefinitely, unless otherwise required by law, and may appoint successor       
Trustees. Trustees may voluntarily resign from office, or a Trustee may be      
removed from office (1) at any time by two-thirds vote of the Trustees; (2) by  
a majority vote of Trustees where any Trustee becomes mentally or physically    
incapacitated; and (3) either by declaration in writing or at a meeting called  
for such purpose by the holders of not less than two-thirds of the outstanding  
shares or other voting interests of the Fund. The Trustees are required to call 
a meeting for the purpose of considering the removal of a person serving as     
trustee, if requested in writing to do so by the holders of not less than 10%   
of the outstanding shares or other voting interests of the Fund. The Fund is    
required to assist in Shareholders' communications. In accordance with current  
laws, insurance companies using the Fund as an underlying investment option     
within their variable contracts will request voting instructions from contract  
owners participating in such contracts and will vote shares of the Fund in the  
same proportion as the voting instructions received.                            

 Voting rights are not cumulative, so that the holders of more than 50% of the
shares voting in the election of Trustees can, if they choose to do so, elect   
all of the Trustees of the Fund, in which event the holders of the remaining    
shares will be unable to elect any person as a Trustee.                         

No amendment may be made to the Declaration of Trust without a "vote of a   
majority of the outstanding voting securities" of the Fund (as defined in the   
1940 Act).                                                                      

INVESTMENT ADVISORY SERVICES  

THE INVESTMENT ADVISER                                                          

 The Travelers Investment Management Company (TIMCO), an indirect wholly owned
subsidiary of Travelers Group Inc., furnishes investment management and         
advisory services to the Fund in accordance with the terms of an Investment     
Advisory Agreement which was approved by shareholders on April 23, 1993. As     
required by the 1940 Act, the Advisory Agreement will                           

-4-   

485BPOS
24th Page of 51
TOC
1st
Previous
Next
Bottom
Just 24th

continue in effect for a period more than two years from the date of its        
execution only so long as its continuance is specifically approved at least     
annually (i) by a vote of a majority of the Board of Trustees, or (ii) by a     
vote of a majority of the outstanding voting securities of the Fund. In         
addition, and in either event, the terms of the Advisory Agreement must be      
approved annually by a vote of a majority of the Board of Trustees who are not  
parties to, or interested persons of any party to, the Advisory Agreement, cast 
in person at a meeting called for the purpose of voting on such approval and at 
which the Board of Trustees is furnished such information as may be reasonably  
necessary to evaluate the terms of the Advisory Agreement. The Advisory         
Agreement further provides that it will terminate automatically upon            
assignment; may be amended only with prior approval of a majority of the        
outstanding voting securities of the Fund; may be terminated without the        
payment of any penalty at any time upon sixty days' notice by the Board of      
Trustees or by a vote of a majority of the outstanding voting securities of the 
Fund; and may not be terminated by TIMCO without prior approval of a new        
investment advisory agreement by a vote of a majority of the outstanding voting 
securities of the Fund.                                                         

Under the terms of the Advisory Agreement, TIMCO shall:                 

(1)  obtain and evaluate pertinent economic, statistical and financial  
     data and other information relevant to the investment policy of the
  Fund affecting the economy generally and individual companies or
industries, the securities of which are included in the Fund's
portfolio or are under consideration for inclusion therein;   

(2)  be authorized to purchase supplemental research and other          
services from brokers at an additional cost to the Fund;      

(3)  regularly furnish recommendations to the Board of Trustees with    
respect to an investment program for approval, modification or
rejection by the Board of Trustees;                           

(4)  take such steps as are necessary to implement the investment       
program approved by the Board of Trustees;                    

(5)  regularly report to the Board of Trustees with respect to          
 implementation of the approved investment program and any other
   activities in connection with the administration of the assets of
the Fund; and                                                 

(6)  be authorized to engage a sub-adviser to furnish investment        
   management information and advice to assist TIMCO in carrying out
its responsibilities under this agreement.                    

ADVISORY FEES                                                                   

 For furnishing investment management and advisory services to the Fund, TIMCO
is paid an amount equivalent on an annual basis to 0.75% of the average daily   
net assets of the Fund. From that amount, TIMCO pays to Janus Capital           
Corporation an amount equivalent on an annual basis to 0.55% of the average     
daily net assets of the Fund for Janus Capital's services as sub-adviser, TIMCO 
thus retaining 0.20% as compensation for its services (see "sub-adviser"        
below). The advisory fee is computed daily and paid to TIMCO weekly.            

For the fiscal years ended December 31, 1992, 1993 and 1994 were $109,783,  
$292,573 and $526,483, respectively.                                            

THE SUB-ADVISER                                                                 

Janus Capital Corporation (Janus Capital), 100 Fillmore Street, Suite 300,  
Denver, Colorado, has been employed by TIMCO as a sub-adviser to manage the     
daily investment operations of the Fund, subject to the supervision of both     
TIMCO and the Board of Trustees. Kansas City Southern Industries, Inc., a       
publicly traded holding company whose primary subsidiaries are engaged in       
transportation, financial services and real estate, owns approximately 82.7% of 
the outstanding voting stock of Janus Capital. Janus Capital also acts as       
investment adviser to other investment companies not affiliated with the Fund,  
as well as to individual, corporate, charitable and retirement accounts.        

As described above, TIMCO, and not the Fund, will pay to Janus Capital an   
amount equivalent on an annual basis to 0.55% of the Fund's average daily net   
assets for its services as a sub-adviser to the Fund. For the period May 1,     
1993 to December 31, 1993, and for the year ended December 31, 1994 Janus       
Capital Corporation received $182,573 and $263,242, respectively in advisory    
fees.                                                                           

REDEMPTIONS IN KIND   

If conditions arise that would make it undesirable for the Fund to pay for  
all redemptions in cash, the Fund may authorize payment to be made in portfolio 
securities or other property.                                                   

However, the Fund has obligated itself under the 1940 Act to redeem for cash
all shares presented for redemption by any one shareholder up to $250,000, or   
1% of the Fund's net assets if that is less, in any 90-day period. Securities   
delivered in payment of redemptions would be valued at the same value assigned  
to them in computing the net asset value per share. Shareholders receiving such 
securities would incur brokerage costs when these securities are sold.          

-5-   

485BPOS
25th Page of 51
TOC
1st
Previous
Next
Bottom
Just 25th


BROKERAGE   

Subject to approval of the Board of Trustees, and in accordance with the    
Advisory Agreement and Sub-Advisory Agreement, TIMCO or Janus Capital will      
place purchase and sale orders for portfolio securities of the Fund through     
brokerage firms which it may select from time to time with the objective of     
seeking the best execution by responsible brokerage firms at reasonably         
competitive rates. To the extent consistent with this policy, certain brokerage 
transactions may be placed with firms which provide brokerage and research      
services to TIMCO or Janus Capital, and such services may be paid for at higher 
rates than other firms would charge. The term "brokerage and research services" 
includes advice as to the value of securities, the advisability of investing    
in, purchasing or selling securities, and the availability of securities for    
purchasers or sellers of securities; furnishing analyses and reports concerning 
issues, industries, securities, economic factors and trends, portfolio strategy 
and performance of accounts; and effecting securities transactions and          
performing functions incidental thereto (such as clearance and settlement).     
These brokerage and research services may be utilized in providing investment   
advice to the Fund, and they may also be utilized in providing investment       
advice and management to all accounts over which TIMCO or Janus Capital         
exercise investment discretion, but not all of such services will necessarily   
be utilized in providing investment advice to the Fund. This practice may be    
expected to result in greater costs to the Fund than might otherwise be the     
case if brokers whose charges were based on execution alone were used for such  
transactions. TIMCO and Janus Capital believe that brokers' research services   
are very important in providing investment advice to the Fund but are unable to 
give the services a dollar value. While research services are not expected to   
reduce the expenses of TIMCO or Janus Capital, either would, through the use of 
these services, avoid the additional expenses which would be incurred if they   
should attempt to develop comparable information through their own staff.       

Transactions in the over-the-counter market are placed with the principal   
market makers unless better price and execution may be obtained otherwise.      
Brokerage fees will be incurred in connection with futures transactions and the 
Fund will be required to deposit and maintain funds with brokers as margin to   
guarantee performance of future obligations.                                    

The overall reasonableness of brokerage commissions paid is evaluated by the
personnel of TIMCO or Janus Capital responsible for trading and managing the    
Fund's portfolio by comparing brokerage firms utilized by TIMCO or Janus        
Capital and other firms with respect to the following factors: the prices paid  
or received in securities transactions; the speed of execution and settlement;  
the size and difficulty of the brokerage transactions; the financial soundness  
of the firms; and the quality, timeliness and quantity of research information  
and reports.                                                                    

The total brokerage commissions paid by the Fund for the fiscal years ended 
December 31, 1992, 1993 and 1994 were $105,987, $202,557 and $132,061,          
respectively. For the fiscal year ended December 31, 1994, portfolio            
transactions in the amount of $137,000,828 were directed to certain brokers     
because of research services, of which $132,061 was paid in commissions with    
respect to these transactions. No formula was used in placing such transactions 
and no specific amount of transactions was allocated for research services. No  
brokerage business was placed with any brokers affiliated with the Fund's       
investment adviser during the past three fiscal years.                          

ADDITIONAL INFORMATION  

The Travelers Insurance Company (the "Company") acts as transfer agent and  
dividend disbursing agent for the Fund. The Company is a stock insurance        
company chartered in 1864 in Connecticut and continuously engaged in the        
insurance business since that time. The Company is a wholly owned subsidiary of 
The Travelers Insurance Group Inc., which is indirectly owned, through a wholly 
owned subsidiary, by Travelers Group Inc. On April 1, 1995, the Company's       
separate accounts (Fund U and Fund UL) owned 100% of the Fund's outstanding     
shares. The Company's Home Office is located at One Tower Square, Hartford,     
Connecticut 06183, telephone (203) 277-0111.                                    

 Chase Manhattan Bank, N.A., Chase MetroTech Center, Brooklyn, New York 11245,
is custodian of all securities and cash of the Fund.                            

Coopers & Lybrand L.L.P., Independent Accountants, 100 Pearl Street,        
Hartford, Connecticut 06103, are the independent auditors for the Fund. The     
services provided to the Fund include primarily the examination of the Fund's   
financial statements. The financial statements included or incorporated by      
reference in the Prospectus, Statement of Additional Information and            
Registration Statement have been audited by Coopers & Lybrand L.L.P., as        
indicated in their reports thereon, and are incorporated herein by reference in 
reliance upon the authority of said firm as experts in accounting and auditing. 

Except as otherwise stated in its prospectus or as required by law, the Fund
reserves the right to change the terms of the offer stated in its prospectus    
without shareholder approval, including the right to impose or change fees for  
services provided.                                                              

-6-   

485BPOS
26th Page of 51
TOC
1st
Previous
Next
Bottom
Just 26th

No dealer, salesman or other person is authorized to give any information or
to make any representation not contained in the Fund's prospectus, this         
Statement of Additional Information or any supplemental sales literature issued 
by the Fund, and no person is entitled to rely on any information or            
representation not contained therein.                                           

The Fund's prospectus and this Statement of Additional Information omit     
certain information contained in the Fund's registration statement filed with   
the Securities and Exchange Commission which may be obtained from the           
Commission's principal office in Washington, D.C. upon payment of the fee       
prescribed by the Rules and Regulations promulgated by the Commission.          

FINANCIAL STATEMENTS  

The financial statements contained in the Fund's December 31, 1994 Annual   
Report to Shareholders are incorporated herein by reference. A copy may be      
obtained by writing to The Travelers Insurance Company, Annuity Services--5 SHS,
One Tower Square, Hartford, Connecticut 06183-5030, or by calling               
1-800-842-0125.                                                                 

-7-   

485BPOS
27th Page of 51
TOC
1st
Previous
Next
Bottom
Just 27th


APPENDIX  

CORPORATE BOND RATINGS  

S&P CORPORATE BOND RATINGS                                                      

A Standard & Poor's Corporation (S&P) corporate bond rating is a current    
assessment of the creditworthiness of an obligor, including obligors outside    
the United States, with respect to a specific obligation. This assessment may   
take into consideration obligors such as guarantors, insurers, or lessees.      
Ratings of foreign obligors do not take into account currency exchange and      
related uncertainties. The ratings are based on current information furnished   
by the issuer or obtained by S&P from other sources it considers reliable.      

The ratings are based, in varying degrees, on the following considerations: 

a. Likelihood of default capacity and willingness of the obligor as to the  
  timely payment of interest and repayment of principal in accordance with
the terms of the obligation;                                          

b. Nature of and provisions of the obligation; and                          

c. Protection afforded by and relative position of the obligation in the    
 event of bankruptcy, reorganization or other arrangement under the laws
of bankruptcy and other laws affecting creditors' rights.             

PLUS (+) OR MINUS (-): To provide more detailed indications of credit       
quality, ratings from "AA" to "A" may be modified by the addition of a plus or  
minus sign to show relative standing within the major rating categories.        

Bond ratings are as follows:                                                

1. AAA - Debt rated AAA has the highest rating assigned by S&P. Capacity to 
pay interest and repay principal is extremely strong.                 

2. AA - Debt rated AA has a very strong capacity to pay interest and repay  
  principal and differs from the higher rated issues only in small degree.

 3. A - Debt rated A has a strong capacity to pay interest and repay principal
    although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than debt in higher rated    
categories.                                                           

4. BBB - Debt rated BBB is regarded as having an adequate capacity to pay   
interest and repay principal. Although it normally exhibits adequate  
protection parameters, adverse economic conditions or changing        
circumstances are more likely to lead to a weakened capacity to pay   
interest and repay principal for debt in this category than in higher 
rated categories.                                                     

5. BB, B, CCC, CC and C - Debt rated BB, B, CCC, CC and C is regarded, on   
balance, as predominantly speculative with respect to capacity to pay 
interest and repay principal in accordance with the terms of the      
obligation. BB indicates the lowest degree of speculation, and C the  
highest degree of speculation. While such debt will likely have some  
quality and protective characteristics, these are outweighed by large 
uncertainties or major risk exposures to adverse conditions.          

MOODY'S CORPORATE BOND RATINGS ARE AS FOLLOWS:                                  

 1. Aaa - Bonds which are rated Aaa are judged to be of the best quality. They
    carry the smallest degree of investment risk and are generally referred to
as "gilt-edge." Interest payments are protected by a large or by an   
exceptionally stable margin and principal is secure. While the various
  protective elements are likely to change, such changes are not likely to
impair the fundamentally strong position of such issues.              

2. Aa - Bonds which are rated Aa are judged to be of high quality by all    
 standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds   
 because margins of protection may not be as large as in Aaa securities,
or there may be other ements present which make the long term risks   
appear somewhat larger than in Aaa securities.                        

3. A - Bonds which are rated A possess many favorable investment attributes 
    and are to be considered as upper medium grade obligations. Factors giving
     security to principal and interest are considered adequate but elements may
 be present which suggest a susceptibility to impairment sometime in the
future.                                                               

4. Baa - Bonds which are rated Baa are considered as medium grade           
  obligations, i.e., they are neither highly protected nor poorly secured.
  Interest payments and principal security appear adequate for the present
     but certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding 
    investment characteristics and in fact have speculative characteristics as
well.                                                                 

5. Ba - Bonds which are rated Ba are judged to have speculative elements.   
 Their future cannot be considered as well assured. Often the protection
 of interest and principal payments may be very moderate and thereby not
well safeguarded during both good and bad times over the future.      
Uncertainty of position characterizes bonds in this class.            

-8-   

485BPOS
28th Page of 51
TOC
1st
Previous
Next
Bottom
Just 28th

6. B - Bonds which are rated B generally lack characteristics of the        
desirable investment. Assurance of interest and principal payments or 
 maintenance of other terms of the contract over any long period of time
may be small.                                                         

7. Caa - Bonds which are rated Caa are of poor standing. Such issues may be 
in default or there may be present elements of danger with respect to 
principal or interest.                                                

8. Ca - Bonds which are rated Ca represent obligations which are speculative
 in a high degree. Such issues are often in default or have other market
shortcomings.                                                         

9. C - Bonds which are rated as C are the lowest rated class of bonds and   
issues so rated can be regarded as having extremely poor prospects of 
ever attaining any real investment standing.                          

Moody's applies numerical modifiers 1, 2 and 3 in each generic rating       
classification from Aa through B in its corporate bond rating system. The       
modifier 1 indicates that the security ranks in the higher end of its generic   
rating category; the modifier 2 indicates a midrange ranking; and the modifier  
3 indicates that the issue ranks in the lower end of its generic rating         
category.                                                                       

-9-   

485BPOS
29th Page of 51
TOC
1st
Previous
Next
Bottom
Just 29th

CAPITAL APPRECIATION FUND   

STATEMENT OF ADDITIONAL INFORMATION   

L-11171S                                                           TIC Ed. 5-95 
                                                               Printed in U.S.A.

485BPOS
30th Page of 51
TOC
1st
Previous
Next
Bottom
Just 30th

   COPY OF ANNUAL REPORT DATED DECEMBER 31, 1994
  TO WHICH THE REGISTRANT'S FINANCIAL STATEMENTS ARE
   INCORPORATED IN THE PROSPECTUS/STATEMENT OF
   ADDITIONAL INFORMATION BY REFERENCE TO THIS FILING.

THE TRAVELERS VARIABLE PRODUCTS MUTUAL FUNDS        

ANNUAL REPORT       

CAPITAL APPRECIATION FUND       

DECEMBER 31, 1994     

               THETRAVELERS (logo with umbrella)
 THE TRAVELERS INSURANCE COMPANY
ONE TOWER SQUARE  
HARTFORD, CONNECTICUT 06183 

485BPOS
31st Page of 51
TOC
1st
Previous
Next
Bottom
Just 31st

TIMCO (logo with globe)                                                         
A COMPANY OF THETRAVELERS (logo with umbrella)                                  
The Travelers Investment Management Company ("TIMCO")                           
provides equity management and advisory services for the following              
Travelers Variable Product Mutual Funds contained in this report:               
The Capital Appreciation Fund and the Social Awareness Stock                    
Portfolio.  Additionally, TIMCO is the sub-adviser for Managed                  
Assets Trust.                                                                   

TAMIC (logo with globe and lines)                                               
TRAVELERS ASSET MANAGEMENT                                                      
INTERNATIONAL CORPORATION                                                       
Travelers Asset Management International Corporation                            
("TAMIC") provides fixed income management and advisory services                
for the following Travelers Variable Product Mutual Funds contained             
in this report: U.S. Government Securities Portfolio, High Yield                
Bond Trust, Managed Assets Trust and Cash Income Trust.                         

JANUS CAPITAL                                                                   
CORPORATION (logo with two faces)                                               
Janus Capital Corporation ("Janus") is the sub-adviser for Capital              
Appreciation Fund.  As sub-adviser, Janus is responsible for the                
daily management of Capital Appreciation Fund.                                  

SMITH BARNEY (logo)                                                             
An asset management group of Smith Barney, Greenwich Street                     
Advisors provides management services for the Utilities Portfolio.              

485BPOS
32nd Page of 51
TOC
1st
Previous
Next
Bottom
Just 32nd

THETRAVELERS (logo with umbrella)                                               

THE TRAVELERS VARIABLE PRODUCTS MUTUAL FUNDS                                    
INVESTMENT ADVISORY COMMENTARY AS OF DECEMBER 31, 1994                          

ECONOMIC REVIEW AND OUTLOOK                                                     

Economic growth kicked into high gear in 1994, and the economy used             
up any excess capacity in product and labor markets.  The fitful                
recovery of the previous three years was replaced by a broad-based              
expansion.  Unemployment fell to 5.4% at year-end, from 7.0% at the             
end of 1993.  This robust economic activity was accompanied by few              
signs of higher inflation.  The Consumer Price Index rose just 2.7%             
during 1994, the same as during the prior year.  However, certain               
commodity prices showed large gains, and there was evidence by                  
year-end of a modest acceleration in wage gains.                                

The Federal Reserve ("Fed") started a tightening policy in                      
February, while there still appeared to be slack in the economy.                
Fed actions served to push 3-month T-bill rates up from 3.1% at the             
start of the year to 5.7% at year-end.  The yield curve rose and                
flattened significantly during the year.  Yields on one-year                    
Treasury bills rose by over 350 basis points, while yields on the               
30-year bond were up over 150 basis points.   At year-end, there                
was little evidence that Fed tightening had started to slow growth.             
In the fourth quarter, the economy grew at an annual rate of 4.5%,              
well above the 2.0-2.5% pace that many economists think is                      
compatible with price stability.                                                

There is normally a lag of 6-12 months between Federal Reserve                  
actions and the resulting impact on the economy.  Coming into 1994,             
Fed policy was very accommodative of economic growth, with real                 
money market interest rates (adjusted for inflation) close to zero.             
Monetary policy became truly restrictive only with the last 2 or 3              
rates hikes.  With unemployment at levels that many economists view             
as inflationary, we expect the Fed to push money market interest                
rates somewhat higher in 1995.  We think that the Federal Reserve               
will succeed in slowing economic growth, and that inflation will                
stay below 4% during 1995 and into 1996.   However, convincing                  
evidence of the slowdown may take a while longer to emerge.                     

FIXED-INCOME MARKET COMMENTARY                                                  

Like a neutron bomb, which kills people but leaves buildings                    
intact, rising interest rates in 1994 decimated complicated                     
strategies much more than it hurt broad market averages.  During                
the fourth quarter, Orange County and emerging markets investors                
were added to the casualty list, joining the hedge funds and                    
various corporate users of derivatives that were hurt earlier in                
the year.  While derivatives and mortgage backed securities have                
taken much of the blame for these incidents, the rise in short-term             
interest rates hurt any strategy that was based on leverage or                  
benefited from the prior three years of low short-term rates.                   

For the year, cash was the best performing asset, while stocks                  
treaded water and bonds had their worst year in recent history.                 
The Lehman Long Treasuries index showed a negative return of 7.6%               
for the full year 1994.  The long end of the yield curve stabilized             
late in the year, allowing long Treasuries to outperform cash                   
during the fourth quarter.  For the year as a whole, mortgage                   
backed securities and corporates outperformed similar duration                  
Treasuries.  Late in the year, corporate spreads widened modestly               
with growing concerns over the 1995 economic outlook; as a result,              
long corporates underperformed similar duration Treasuries in the               
fourth quarter.                                                                 

485BPOS
33rd Page of 51
TOC
1st
Previous
Next
Bottom
Just 33rd

We have been concerned by tight spreads on corporate issues                     
throughout 1994.  We expect issuance of new corporates to be light              
in the first half of 1995;  this will help to support prices of                 
corporate issues.  Corporates are still likely to underperform                  
Treasuries if a significant economic slowdown develops.  We think               
inflation will stay below 4% in 1995.  We also expect stable to                 
modestly lower yields on Treasuries with maturities of 5 years or               
longer.  If we are correct, bond investors will enjoy real returns,             
after inflation, of 4-7% in 1995.  If the Federal Reserve is                    
successful in containing economic growth and inflation, lower                   
interest rates (stronger bond prices) are likely in 1996.                       

EQUITY MARKET COMMENTARY                                                        

Despite increased pressure by the Federal Reserve Board and a                   
string of potentially dangerous financial crises, the U.S. stock                
market managed to achieve a broad-based gain in the second half of              
1994.  Surprisingly strong corporate earnings offset the negative               
effect of higher interest rates on equity valuations.  During the               
final six months of 1994, the S&P 500 Stock Index provided a total              
return of 4.9%, including dividends.  The stocks of small and                   
medium sized companies provided comparable returns over that                    
period, but with considerably higher volatility.                                

Technology stocks led the market during the second half.  The                   
office and business equipment group was up over 25%, owing to                   
continued booming sales of personal computers and a sharp rebound               
in networking stocks.  Semi conductor stocks advanced in concert,               
reflecting strong demand for memory chips and microprocessors.                  
Investors also returned to many defensive and recently out-of-favor             
"growth" groups in the second half.  In the consumer staples                    
sector, for example, beverage stocks rose 24% on earnings                       
surprising and improving international growth prospects.  In the                
health care sector, drug and medical product stocks rebounded over              
20%.                                                                            

On the negative side, rising interest rates and fears of an                     
impending economic slowdown hurt many interest sensitive and early              
cycle groups.  Airline, trucking and railroad stocks were down over             
10%. Auto stocks were off 8%.  Regional banks declined 12%.  In the             
energy sector, independent producers and drilling companies were                
down 12%, due to weaker oil and gas prices and the poor outlook for             
new production.                                                                 

We remain constructive, but cautious, in our outlook for stocks in              
1995.  With the S&P 500 Stock Index trading at only 14.5 times                  
operating earnings, the equity market starts the year with                      
reasonable valuation support.  A more stable interest rate                      
environment could even help to reverse the broad-based market price             
to earnings ratio contraction that has occurred over the past year.             
Where we think the stock market is most likely to run into problems             
is on the earnings front.  Corporate earnings are expected to grow              
8-10% in 1995, but most of that growth is expected to occur in the              
first half of the year.  By the third quarter, we expect a                      
noticeable deceleration in earnings growth.  With equity indices                
near their all-time highs, the stock market is probably more                    
vulnerable than the bond market to negative surprises, given the                
relative performance of the two asset classes over the past year.               

TIMCO (logo of globe)                 TAMIC (logo globe with lines)             
A COMPANY OF THETRAVELERS(logo        TRAVELERS ASSET MANAGEMENT                
with umbrella)                       INTERNATIONAL CORPORATION                

CAPITAL APPRECIATION FUND                         

The Travelers Capital Appreciation Fund encountered a difficult                 
market in 1994.  Although the S&P 500 Stock Index managed a gain of             
1.3%, bonds had one of their worst years on record.  Much of the                
damage was done during the first half, when the market sold off in              
response to the Federal Reserve Board's initial increase in                     
short-term interest rates.  After allowing short rates to approach              
zero in real terms, taking inflation into account, the Board raised             
rates six times from February through November for a total of 250               
basis points.  The stock market settled down in the second half of              
the year, despite the continuing weakness in bonds.  Strong, and                
often exceptional, earnings reports supported stock prices.                     

Going forward, Portfolio Manager Tom Marsico, of Janus Capital,                 
believes the prospects for equities are mixed.  If 1994 was any                 
indication, the market could continue to vacillate between                      
enthusiasm for stocks during reporting periods and fear of                      
inflation and higher rates in between.  Higher interest rates do                
profoundly affect earnings multiples and valuation models.                      
However, inflation has proved to be a perceived rather than an                  
actual threat to date.  Furthermore, the number of values among                 
large growth stocks is increasing.  Many of these are 12%-15%                   
growers, yet their multiples continue to compress.  In some cases,              
prices are close to where they were two years ago while earnings                
have grown substantially.                                                       

The Fund is now focused more heavily in the technology sector, with             
special emphasis on the client server and personal computer areas,              
and on cellular telecommunications services and equipment.  The                 
Fund continues to hold a number of financial services companies,                
such as Federal Home Loan Mortgage Corporation, and Federal                     
National Mortgage Association.  These companies are experiencing                
solid earnings increases and sell at low multiples.  In the retail              
area, Mr. Marsico likes the home improvement chain Home Depot, and              
in the area of health care the emphasis is on pharmaceutical                    
companies and HMOs, the low-cost service providers.                             

                                                        · Enlarge/Download Table
                                                                                       

                    Capital             S&P 500 Stock Index  Russell     Consumer Price
                    Appreciation Fund                        2000 Index  Index         

                    10000               10000                10000       10000         
12/85               12711               13203                13105       10379         
12/86               13988               15652                13849       10503         
12/87               12853               16469                12633       10967         
12/88               14146               19239                15780       11450         
12/89               16368               25305                18343       11982         
12/90               15346               24501                14763       12731         
12/91               20742               31991                21559       13110         
12/92               24393               34451                25530       13501         
12/93               28074               37892                30356       13870         
12/94               26738               38381                29803       14251         

Average Annual Total Returns Ended on December 31, 1994:                               

1 year     -4.76%                                                                      
5 years    10.31%                                                                      
10 years   10.33%                                                                      


This chart assumes an initial investment of $10,000                             
made on December 31, 1984.  Returns include the reinvestment of all             
distributions at Net Asset Value and the change in share price for              
the stated period, but exclude insurance and administration charges             
assessed by Travelers Insurance separate accounts.                              

The Russell 2000 is a broad based small stock index.                            

Past performance is not predictive of future performance.                       
Investment return and principal value of an investment will                     
fluctuate so that an investor's shares, when redeemed, may be worth             
more or less than their original cost.                                          

485BPOS
34th Page of 51
TOC
1st
Previous
Next
Bottom
Just 34th
                                                        · Enlarge/Download Table

                        CAPITAL APPRECIATION FUND                                            

                   STATEMENT OF ASSETS AND LIABILITIES                                       
                            DECEMBER 31, 1994                                                

                                                                                             
ASSETS:                                                                                      
 Investment securities, at market value (identified cost $73,146,224)         $   77,942,558 
 Receivables:                                                                                
  Dividends                                                                           44,549 
  Interest                                                                            63,368 
  Investment securities sold                                                         515,277 
                                                                                 ----------- 
   Total Assets                                                                   78,565,752 
                                                                                 ----------- 
LIABILITIES:                                                                                 
 Cash overdraft                                                                       51,199 
 Payable for investment management and advisory fees                                   6,452 
 Accrued expenses                                                                     14,499 
                                                                                 ----------- 
   Total Liabilities                                                                  72,150 
                                                                                 ----------- 

NET ASSETS                                                                    $   78,493,602 
                                                                                 ----------- 
                                                                                 ----------- 
NET ASSETS REPRESENTED BY:                                                                   
 Paid-in capital                                                              $   78,152,717 
 Undistributed net investment income                                                 559,581 
 Accumulated net realized gains (losses) on investment security transactions      (5,015,030)
 Net unrealized appreciation on investment securities                              4,796,334 
                                                                                 ----------- 
   Total net assets (applicable to 3,204,308 shares outstanding at $24.50                    
    per share)                                                                $   78,493,602 
                                                                                 ----------- 
                                                                                 ----------- 
                    See Notes to Financial Statements                                        

485BPOS
35th Page of 51
TOC
1st
Previous
Next
Bottom
Just 35th
                                                        · Enlarge/Download Table
                        CAPITAL APPRECIATION FUND                                       

                         STATEMENT OF OPERATIONS                                        
                  FOR THE YEAR ENDED DECEMBER 31, 1994                                  

                                                                                        
INVESTMENT INCOME:                                                                      
 Dividends                                              $      656,679                  
 Interest                                                      529,146                  
                                                           -----------                  
  Total income                                                            $   1,185,825 

EXPENSES:                                                                               
 Investment management and advisory fees                       526,483                  
 Accounting and audit fees                                      77,592                  
 Custodian fees                                                 (3,858)                 
 Printing and postage                                           17,385                  
 Trustees' fees                                                  5,745                  
 Registration fees                                               2,897                  
                                                           -----------                  
   Total expenses                                                               626,244 
                                                                            ----------- 
    Net investment income                                                       559,581 
                                                                            ----------- 

REALIZED AND CHANGE IN UNREALIZED GAIN ON                                               
  INVESTMENT SECURITIES:                                                                
 Realized loss from investment security transactions:                                   
  Proceeds from investment securities sold                  87,260,305                  
   Cost of investment securities sold                       91,858,877                  
                                                           -----------                  
    Net realized loss                                                        (4,598,572)
 Change in unrealized gain on investment securities:                                    
  Unrealized gain at December 31, 1993                       4,043,684                  
  Unrealized gain at December 31, 1994                       4,796,334                  
                                                           -----------                  
   Net change in unrealized gain for the year                                   752,650 
                                                                            ----------- 
    Net realized and change in unrealized gain                               (3,845,922)
                                                                            ----------- 
 Net decrease in net assets resulting from operations                    $   (3,286,341)
                                                                            ----------- 
                                                                            ----------- 
                    See Notes to Financial Statements                                   

485BPOS
36th Page of 51
TOC
1st
Previous
Next
Bottom
Just 36th
                                                        · Enlarge/Download Table
                        CAPITAL APPRECIATION FUND                                                        
                   STATEMENT OF CHANGES IN NET ASSETS                                                    
             FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993                                              

                                                                               1994              1993    
                                                                               ----              ----    
                                                                                                         
OPERATIONS:                                                                                              
 Net investment income                                                   $      559,581   $      340,369 
 Net realized gain (loss) from investment security transactions              (4,598,572)       4,891,079 
 Net change in unrealized gain on investment securities                         752,650          474,099 
                                                                            -----------      ----------- 
  Net increase (decrease) in net assets resulting from operations            (3,286,341)       5,705,547 
                                                                            -----------      ----------- 
DISTRIBUTION TO SHAREHOLDERS FROM NET INVESTMENT INCOME                        (359,166)        (333,836)
                                                                            -----------      ----------- 

CAPITAL SHARE TRANSACTIONS:                                                                              
 Proceeds from shares sold                                                   29,010,545       38,021,938 
 Dividend reinvestment                                                          359,166          333,836 
 Payments for shares redeemed                                                (9,644,753)     (10,819,519)
                                                                            -----------      ----------- 
   Net increase in net assets resulting from capital share transactions      19,724,958       27,536,255 
                                                                            -----------      ----------- 
    Net increase in net assets                                               16,079,451       32,907,966 

NET ASSETS:                                                                                              
 Beginning of year                                                           62,414,151       29,506,185 
                                                                            -----------      ----------- 
 End of year (including undistributed net investment income as follows:                                  
   December, 1994 $559,581 and December, 1993 $340,369)                  $   78,493,602   $   62,414,151 
                                                                            -----------      ----------- 
                                                                            -----------      ----------- 
                                See Notes to Financial Statements                                        

485BPOS
37th Page of 51
TOC
1st
Previous
Next
Bottom
Just 37th

NOTES TO FINANCIAL STATEMENTS                     

1. SIGNIFICANT ACCOUNTING POLICIES                                              
Capital Appreciation Fund ("Fund CA"), formerly Aggressive Stock                
Trust, is a Massachusetts business trust registered under the                   
Investment Company Act of 1940, as amended, as a diversified,                   
open-end management investment company.  Shares of Fund CA are                  
currently offered, without a sales charge, to separate accounts of              
The Travelers Insurance Company ("Travelers Insurance"), an                     
indirect wholly owned subsidiary of The Travelers Inc., in                      
connection with the issuance of certain variable annuity and                    
variable life insurance contracts.                                              

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

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

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

Short-term investments for which a quoted market price is available             
are valued at market.  Short-term investments for which there is no             
reliable quoted market price are valued by computing a market value             
based upon quotations from dealers or issuers for securities of a               
similar type, quality and maturity.                                             

FUTURES CONTRACTS. Fund CA uses stock index futures contracts, and              
may also use interest rate futures contracts, as a substitute for               
the purchase or sale of individual securities.  When Fund CA enters             
into a futures contract, it agrees to buy or sell a specified index             
of stocks or debt securities at a future time for a fixed price,                
unless the contract is closed prior to expiration.  Fund CA is                  
obligated to deposit with a broker an "initial margin" equivalent               
to a percentage of the face, or notional value of the contract.                 

It is Fund CA's practice to hold short-term investments in an                   
amount at least equal to the notional value of outstanding                      
purchased futures contracts.  Generally, futures contracts are                  
closed prior to expiration.                                                     

Futures contracts purchased by Fund CA are priced and settled                   
daily; accordingly, changes in daily prices are recorded as                     
realized gains or losses and no asset is recorded in the Statement              
of Investments.  However, when Fund CA holds open futures                       
contracts, it assumes a market risk generally equivalent to the                 
underlying market risk of changes in the value of the specified                 
indexes associated with the futures contract.                                   

OPTIONS. Fund CA may purchase index or individual equity put or call            
options, thereby obtaining the right to sell or buy a fixed number              
of shares of the underlying asset at the stated price on or before              
the stated expiration date.  Fund CA may sell the options before                
expiration.  Options held by Fund CA are listed on either national              
securities exchanges or on over-the-counter markets, and are                    
short-term contracts with a duration of less than nine months.  The             
market value of the options will be the latest sale price at the                
close of the New York Stock Exchange, or, in the absence of such                
sale, the latest bid quotation.                                                 

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

485BPOS
38th Page of 51
TOC
1st
Previous
Next
Bottom
Just 38th

            NOTES TO FINANCIAL STATEMENTS -- CONTINUED

TAXES. Fund CA has qualified, and intends to continue to qualify each           
year, as a "regulated investment company" under Subchapter M of the             
Internal Revenue Code of 1986, as amended.  As a regulated                      
investment company, Fund CA is relieved of any federal income tax               
liability by distributing all of its net taxable investment income              
and net taxable capital gains, if any, to its shareholders.                     
Fund CA further intends to avoid excise tax liability by                        
distributing substantially all of its investment income.                        
Therefore, no federal income tax provision has been made by Fund CA             
in its financial statements.  As of December 31, 1994, Fund CA had              
capital loss carryovers totalling $4,875,708, which may be                      
available to offset any future realized taxable capital gains, to               
the extent provided by regulations.  These amounts expire during                
the period 1998-2002.                                                           

OTHER. Security transactions are accounted for on the trade date.               
Interest income is recorded on the accrual basis and dividend                   
income is recorded on the ex-dividend date.  Distributions to                   
shareholders are recorded at the close of business on the record                
date.                                                                           

2.INVESTMENTS                                                                   

Purchases and sales of securities other than short-term investments             
aggregated $75,136,840 and $62,924,192, respectively, for the year              
ended December 31, 1994.  Realized gains and losses from security               
transactions are reported on an identified-cost basis.                          

3.FUND CHARGES                                                                  

Investment management and advisory fees are calculated daily at an              
annual rate of 0.75% of Fund CA's average net asset value.  These               
fees are paid to The Travelers Investment Management Company                    
("TIMCO"), an indirect wholly owned subsidiary of The Travelers                 
Inc.                                                                            

Pursuant to a sub-advisory agreement between TIMCO and Janus                    
Capital Corporation ("Janus Capital"), TIMCO pays Janus Capital an              
amount equivalent on an annual basis to 0.55% of Fund CA's average              
net asset value for investment management and advisory services as              
sub-adviser.                                                                    

Travelers Insurance has agreed to reimburse Fund CA for the amount              
by which all of Fund CA's aggregate annualized operating expenses,              
excluding brokerage commissions and any interest charges and taxes,             
exceed 1.25% of Fund CA's average net assets.  Trustees and                     
officers of Fund CA who are also officers or employees of The                   
Travelers Inc. or its subsidiaries receive no compensation directly             
from Fund CA.                                                                   

4. SHARES OF BENEFICIAL INTEREST                                                
The Declaration of Trust authorizes the issuance of an unlimited                
number of shares of beneficial interest without par value.                      
Transactions in shares of Fund CA were as follows:                              

                                                                · Download Table
                                          FOR THE YEARS ENDED DECEMBER 31, 
                                          -------------------------------- 
                                                                           
                                               1994                1993    
                                               ----                ----    
Shares sold                                  1,167,145           1,549,985 
Shares redeemed                               (388,338)           (451,028)
Shares issued in reinvestment of                                           
distributions from net investment income        13,442              14,484 
                                             ---------           --------- 

Net                                            792,249           1,113,441 
                                            ----------           --------- 
                                            ----------           --------- 

As of December 31, 1994, all outstanding shares of beneficial                   
interest were owned by The Travelers Fund U for Variable Annuities              
and The Travelers Fund UL for Variable Life Insurance, both of                  
which are separate accounts of Travelers Insurance.                             

5. SUBSEQUENT EVENT                                                             
On January 27, 1995, the Board of Trustees declared a distribution              
of net investment income of $0.17 per share, payable on                         
January 30, 1995, to shareholders of record as of January 27, 1995.             
This distribution is not reflected in the accompanying financial                
statements.                                                                     

485BPOS
39th Page of 51
TOC
1st
Previous
Next
Bottom
Just 39th
                                                        · Enlarge/Download Table

                                      NOTES TO FINANCIAL STATEMENTS - CONTINUED                                                 

6.  FINANCIAL HIGHLIGHTS*                                                                                                       
     (Per share data for a share outstanding                                                                                    
      throughout each year.)                                                                                                    

                                                                           FOR THE YEARS ENDED DECEMBER 31,                     
                                                                        --------------------------------------                  
                                                                                                                                

                                                                               1994            1993#                            
                                                                               ----            ----                             
PER SHARE DATA                                                                                                                  
--------------                                                                                                                  
Net asset value, beginning of year ...................................... $    25.87      $     22.72                           

         Income from operations                                                                                                 
         ----------------                                                                                                       
         Net investment income ..........................................       0.19             0.19                           
         Net gains or losses on securities (realized and unrealized)           (1.41)            3.21                           
                                                                          ----------          -------                           
              Total from investment operations...........................      (1.22)            3.40                           

         Less distributions                                                                                                     
         -------------                                                                                                          
         Distributions from net investment income .......................      (0.15)           (0.25)                          

                                                                          ----------          -------                           
Net asset value, end of year ............................................ $    24.50       $    25.87                           
                                                                          ----------          -------                           
                                                                          ----------          -------                           

TOTAL RETURN***                                                                (4.76)%          15.09%                          
------------                                                                                                                    

RATIOS/SUPPLEMENTAL DATA                                                                                                        
------------------------                                                                                                        
         Net assets, end of year (thousands) ............................   $ 78,494     $     62,414                           
         Ratio of expenses to average net assets ........................       0.89%**          0.87%**                        
         Ratio of net investment income to average net assets ...........       0.79%            0.81%                          
         Portfolio turnover rate  .......................................        106%             155%                          

                                                                                                                                

                                                                                          1992            1991        1990##    
                                                                                          ----            ----        ----      
PER SHARE DATA                                                                                                                  
--------------                                                                                                                  
Net asset value, beginning of year ..............................................  $     19.63     $     14.62     $    15.76   

         Income from operations                                                                                                 
         ----------------------                                                                                                 
         Net investment income ..................................................         0.28            0.36           0.09   
         Net gains or losses on securities (realized and unrealized)                      3.13            4.75          (1.08)  
                                                                                   -----------     -----------     ----------   
              Total from investment operations...................................         3.41            5.11          (0.99)  

         Less distributions                                                                                                     
         ------------------                                                                                                     
         Distributions from net investment income ...............................        (0.32)          (0.10)         (0.15)  

                                                                                   -----------     -----------     ----------   
Net asset value, end of year ....................................................  $     22.72     $     19.63     $    14.62   
                                                                                   -----------     -----------     ----------   
                                                                                   -----------     -----------     ----------   

TOTAL RETURN***                                                                          17.60%          35.16%         (6.24)% 
-----------                                                                                                                     

RATIOS/SUPPLEMENTAL DATA                                                                                                        
------------------------                                                                                                        
         Net assets, end of year (thousands) ....................................     $ 29,506       $  20,497      $  13,494   
         Ratio of expense to average net assets .................................         0.56%**         0.56%**        0.82%**
         Ratio of net investment income to average net assets ...................         1.39%           2.05%          0.58%  
         Portfolio turnover rate  ...............................................          126%            205%            80%  


* The information set forth in Note 6 replaces the data                         
presented in prior years as supplementary information.                          

** The ratio of expenses to average net assets for 1990-1993                    
reflects an expense reimbursement by Travelers Insurance in                     
connection with voluntary expense limitations.  Without the expense             
reimbursement, the ratios of operating expenses to average net                  
assets would have been 0.96%, 0.91%, 1.28% and 1.56% for the years              
ended December 31, 1993, 1992, 1991 and 1990, respectively.                     
For the year ended December 31, 1994, there was no expense                      
reimbursement by Travelers Insurance in connection with the                     
voluntary expense limitations described in Note 3.                              

*** Total return is determined by dividing the increase (decrease)              
in value of a share during the year, after reflecting the                       
reinvestment of dividends declared during the year, by the                      
beginning of year share price.  As described in Note 1, shares in               
Fund CA are only sold to Travelers Insurance separate accounts in               
connection with the issuance of variable annuity and variable life              
insurance contracts.  The total return does not reflect the                     
deduction of any contract charges or fees assessed by Travelers                 
Insurance separate accounts.                                                    

# Effective May 1, 1993, Janus Capital Corporation became                       
sub-adviser for Fund CA.                                                        

##  On May 1, 1990, TIMCO replaced Keystone Custodian Funds, Inc.               
as the investment adviser for Fund CA.                                          

485BPOS
40th Page of 51
TOC
1st
Previous
Next
Bottom
Just 40th
                                                                · Download Table

                                CAPITAL APPRECIATION FUND                 
                                STATEMENT OF INVESTMENTS                  
                                  DECEMBER 31, 1994                       

                                                                          
                                                    NO. OF          MARKET
                                                    SHARES           VALUE
                                                    ------          ------

COMMON STOCKS (76.4%)                                                     
BANKING (3.3%)                                                            
       Citicorp                                     55,815     $ 2,309,346
       First Bank Systems, Inc.                      7,125         236,906
                                                                ----------
                                                                 2,546,252
                                                                ----------

CHEMICALS, PHARMACEUTICALS AND                                            
          ALLIED PRODUCTS (4.6%)                                          
       Amgen (A)                                    21,350       1,258,305
       Hercules, Inc.                                  225          25,959
       Lynx Therapeutics (A) (C)                     1,056             211
       Pfizer, Inc.                                 30,375       2,346,469
                                                                ----------
                                                                 3,630,944

COMMUNICATION (3.8%)                                                      
       AirTouch Communications (A)                  46,085       1,342,226
       Infinity Broadcasting (A)                     4,500         142,313
       Lin Broadcasting (A)                            550          73,838
       Lin Television (A)                              275           6,188
       Paging Network, Inc. (A)                     41,525       1,401,469
                                                                ----------
                                                                 2,966,034
                                                                ----------

ELECTRICAL AND                                                            
          ELECTRONIC MACHINERY (18.3%)                                    
       Exide Corp.                                  15,025         845,156
       General Instrument Corp. (A)                 26,500         795,000
       Microtouch Systems, Inc. (A)                 50,000       2,243,750
       Motorola, Inc.                               54,600       3,159,975
       Nokia Corp.                                  33,700       2,527,500
       Philips NV                                   66,675       1,958,578
       Polygram NV                                   7,900         364,388
       Tellabs, Inc. (A)                            15,000         834,375
       Texas Instruments, Inc.                      20,700       1,549,913
                                                                ----------
                                                                14,278,635
                                                                ----------

FINANCE (7.1%)                                                            
       Federal Home Loan Mortgage Corp.             30,075       1,518,787
       Federal National Mortgage Assoc.             25,670       1,870,701
       Merrill Lynch & Co., Inc.                    60,165       2,150,899
                                                                ----------
                                                                 5,540,387
                                                                ----------

FOOD (3.8%)                                                               
       Coca-Cola Co.                                57,425       2,957,387
                                                                ----------

INSURANCE (4.1%)                                                          
       Oxford Health Plan, Inc. (A)                 13,600       1,082,900
       U.S. Healthcare, Inc.                         9,865         405,698
       United Healthcare Corp.                      38,100       1,719,263
                                                                ----------
                                                                 3,207,861
                                                                ----------

                                                    No. of        Market  
                                                    Shares         Value  
                                                    ------      ----------
MACHINERY (8.1%)                                                          
       Applied Materials (A)                        25,375      $1,065,750
       Ceridian Corp. (A)                            4,925         132,359
       Compaq Computer Corp. (A)                    38,250       1,510,875
       Dell Computer Corp. (A)                      44,900       1,838,071
       Digital Equipment Corp. (A)                  52,975       1,761,419
                                                                ----------
                                                                 6,308,474
                                                                ----------

MISCELLANEOUS MANUFACTURING (0.2%)                                        
       Aldila, Inc. (A)                             10,770         123,176
                                                                ----------

RETAIL (6.8%)                                                             
       Home Depot, Inc.                             24,110       1,109,060
       Lone Star Steak House & Saloon (A)           30,000         588,750
       Lowe's Co's, Inc.                           103,600       3,600,100
                                                                ----------
                                                                 5,297,910
                                                                ----------

SERVICES (9.4%)                                                           
       Columbia HCA Healthcare Corp.                33,950       1,239,175
       First Data Corp.                             62,625       2,966,859
       Gartner Group, Inc. (A)                      12,500         484,375
       Microsoft (A)                                27,525       1,685,906
       Oracle Systems Corp. (A)                     21,165         936,551
                                                                ----------
                                                                 7,312,866
                                                                ----------

TRANSPORTATION (2.4%)                                                     
       Conrail, Inc.                                36,500       1,843,250
                                                                ----------

TRANSPORTATION MANUFACTURING (2.4%)                 28,505       1,396,745
       Chrysler Corp.                               12,375         476,438
       General Motors Corp., Cl. E                              ----------
                                                                 1,873,183
                                                                ----------

UTILITIES (2.1%)                                                          
       Browning and Ferris Ind.                     57,550       1,632,981
       WMX Technologies, Inc.                        1,775          46,594
                                                                ----------
                                                                 1,679,575
                                                                ----------

TOTAL COMMON STOCKS                                                       
       (COST $54,780,488)                                       59,565,934
                                                                ----------

PREFERRED STOCKS (0.0%)                                                   

PHARMACEUTICAL AND                                                        
          HEALTH CARE PRODUCTS (0.0%)                                     
       Lynx Therapeutics (A) (C)                     1,536           1,536
                                                                ----------

TOTAL PREFERRED STOCKS                                               1,536
       (COST $1,536)                                            ----------

485BPOS
41st Page of 51
TOC
1st
Previous
Next
Bottom
Just 41st
                                                        · Enlarge/Download Table

                                              STATEMENT OF INVESTMENTS - CONTINUED               


                                                 PRINCIPAL          MARKET                       
                                                    AMOUNT           VALUE                       
                                                   -------         -------                       

                                                                                                 

SHORT-TERM INVESTMENTS (23.6%)                                                                   
  U.S. GOVERNMENT SECURITIES (23.6%)                                                             
       United States of America Treasury,                                                        
          4.52% due February 9, 1995          $  3,500,000    $  3,483,035                       
       United States of America Treasury,                                                        
          4.88% due February 9, 1995             3,000,000       2,982,196                       
       United States of America Treasury,                                                        
          5.06% due January 12, 1995             2,000,000       1,990,753                       
       United States of America Treasury,                                                        
          5.15% due January 19, 1995             4,000,000       3,966,088                       
       United States of America Treasury,                                                        
          5.20% due January 26, 1995             2,000,000       1,984,430                       
       United States of America Treasury,                                                        
          5.38% due February 2, 1995             2,000,000       1,983,316                       
       United States of America Treasury,                                                        
          5.47% due February 2, 1995             2,000,000       1,985,270                       
                                                                ----------                       

TOTAL SHORT-TERM                                                                                 
   INVESTMENTS                                                                                   
   (COST $18,364,199)                                           18,375,088                       
                                                                ----------                       

TOTAL INVESTMENTS (100%)                                                                         
   (COST $73,146,224) (B) (D)                                  $77,942,558                       
                                                                ----------                       
                                                                ----------                       

NOTES                                                                                            
(A) Non-income Producing Security.                                                               

(B) At December 31, 1994, net unrealized appreciation for all securities                         
       was $4,796,334.  This consisted of aggregate gross unrealized                             
       appreciation for all securities in which there was an excess of market                    
       value over cost of $6,318,002 and aggregate gross unrealized                              
       depreciation for all securities in which there was an excess of cost                      
       over market value of $1,521,668.                                                          

(C) Management Priced Security.                                                                  

(D) The cost of investments for federal income tax purposes amounted                             
       to $73,266,792.  Gross unrealized appreciation and depreciation of                        
       investments, based on identified tax cost, at December 31, 1994,                          
       were as follows:                                                                          
                Gross unrealized appreciation ......................                $  6,197,434 
                Gross unrealized depreciation ......................                  (1,521,668)
                                                                                     ------------
                Net unrealized appreciation ........................                 $ 4,675,766 
                                                                                     ------------
                                                                                     ------------

                                See Notes to Financial Statements                                


485BPOS
42nd Page of 51
TOC
1st
Previous
Next
Bottom
Just 42nd

REPORT OF INDEPENDENT ACCOUNTANTS               

To the Board of Trustees and Shareholders of Capital Appreciation               
Fund:                                                                           

We have audited the accompanying statement of assets and                        
liabilities of                                                                  

CAPITAL APPRECIATION FUND                         

including the statement of investments, as of December 31, 1994,                
and the related statement of operations for the year then ended,                
the statement of changes in net assets for each of the two years in             
the period then ended, and the financial highlights  for each of                
the five years in the period then ended.  These financial                       
statements and financial highlights are the responsibility of                   
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 generally accepted                   
auditing standards.  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, 1994, by correspondence with the custodian             
and brokers.  An audit also includes assessing the accounting                   
principles used and significant estimates made by management, as                
well as evaluating the overall financial statement presentation.                
We believe that our audits provide a reasonable basis for our                   
opinion.                                                                        

In our opinion, the financial statements and financial highlights               
referred to above present fairly, in all material respects, the                 
financial position of Capital Appreciation Fund as of December 31,              
1994, 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 five years             
in the period then ended, in conformity with generally accepted                 
accounting principles.                                                          

COOPERS & LYBRAND L.L.P.                                                        

Hartford, Connecticut                                                           
February 15, 1995                                                               

485BPOS
43rd Page of 51
TOC
1st
Previous
Next
Bottom
Just 43rd

This page intentionally left blank.               

485BPOS
44th Page of 51
TOC
1st
Previous
Next
Bottom
Just 44th


Investment Advisers               
------------------------              

(CAPITAL APPRECIATION FUND AND                    
SOCIAL AWARENESS STOCK PORTFOLIO)                 

THE TRAVELERS INVESTMENT MANAGEMENT COMPANY                 

Hartford, Connecticut                   

(MANAGED ASSETS TRUST, HIGH YIELD                 
BOND TRUST, CASH INCOME                 
TRUST AND U.S. GOVERNMENT SECURITIES PORTFOLIO)             
TRAVELERS ASSET MANAGEMENT INTERNATIONAL CORPORATION                  

Hartford, Connecticut                   

(UTILITIES  PORTFOLIO)                  
GREENWICH STREET ADVISORS                   

New York, New York                      

Independent Accountants               
------------------------                

COOPERS & LYBRAND L.L.P.                
Hartford, Connecticut                   

Custodian                   
------------------------                
SHAWMUT BANK CONNECTICUT, N.A.                    

Hartford, Connecticut                   

This report is prepared for the general information                             
of contract owners and is not an offer of shares of Managed Assets              
Trust, High Yield Bond Trust, Capital Appreciation Fund, Cash                   
Income Trust, U.S. Government Securities Portfolio, Social                      
Awareness Stock Portfolio or Utilities Portfolio. It should not be              
used in connection with any offer except in conjunction with the                
Prospectuses for the Variable Annuity and Variable Universal Life               
Insurance products offered by The Travelers Insurance Company and               
the Prospectuses of the underlying mutual funds, which collectively             
contain all pertinent information, including the applicable selling             
commissions.                                                                    

VG-181 (Annual)      (12-94)      Printed in U.S.A.                             

485BPOS
45th Page of 51
TOC
1st
Previous
Next
Bottom
Just 45th

      PART C

   OTHER INFORMATION

Item 24.  Financial Statements and Exhibits                                     

(a) The financial statements of the Registrant and the Report of Independent    
Accountants are contained in the December 31, 1994 Annual Report to             
Shareholders and are incorporated by reference in the Statement of Additional   
Information. The Registrant's financial statements include:                     

Statement of Assets and Liabilities as of December 31, 1994         
Statement of Operations for the year ended December 31, 1994        
Statement of Changes in Net Assets for the years ended December 31, 
1994 and 1993                                               
Statement of Investments as of December 31, 1994                    
Notes to Financial Statements                                       

(b) Exhibits                                                                    

*1.  Declaration of Trust.  (Incorporated herein by reference to Exhibit  
    1(b)(1) to the Registration Statement on Form N-1 filed on March 22,
1982.)                                                          

*2.  By-Laws of Capital Appreciation Fund.  (Incorporated herein by       
      reference to Exhibit 1(b)(2) to the Registration Statement on Form N-1
     filed on March 22, 1982.)  Amendments to the Registrant's By-Laws are
   also incorporated herein by reference to Exhibits 24(b)(2) to Post-
    Effective Amendments Nos. 8, 15 and 18 to the Registration Statement
on Form N-1A.                                                   

*5(A).  Investment Advisory Agreement between the Registrant and The Travelers  
    Investment Management Company.  (Incorporated herein by reference to
 Exhibit 5A to Post-Effective Amendment No. 21 to the Registration
Statement on Form N-1A filed on April 15, 1993.)                

*5(B).  Sub-Advisory Agreement between The Travelers Investment Management      
Company and Janus Capital Corporation.  (Incorporated herein by 
 reference to Exhibit 5A to Post-Effective Amendment No. 21 to the
Registration Statement on Form N-1A filed on April 15, 1993.)   

8.  Custody Agreement dated February 1, 1995 between the Registrant and 
Chase Manhattan Bank, N.A., of Brooklyn, New York.              

*9.  Transfer and Recordkeeping Agreement between the Registrant and The  
  Travelers Insurance Company.  (Incorporated herein by reference to
Exhibit 24(b)(9) to Post-Effective Amendment No. 19 to the      
Registration Statement on Form N-1A filed on April 14, 1992.)   

*10.  An opinion and consent of counsel as to the legality of the securities
   registered by the Registrant.  (Incorporated herein by reference to
      the Registrant's most recent 24f-2 Notice filed on February 27, 1995.)

485BPOS
46th Page of 51
TOC
1st
Previous
Next
Bottom
Just 46th

11(A).  Consent of Coopers & Lybrand L.L.P., Independent Accountants, to the    
    use of their name and opinion in Part A and Part B of this Form N-1A
and to the incorporation by reference of their report.          

11(B).  Powers of Attorney authorizing Ernest J. Wright as signatory for Heath  
  B. McLendon, Knight Edwards, Robert E. McGill, III, Lewis Mandell,
Frances M. Hawk and Ian R. Stuart.                              

27      Financial Data Schedule                                                 

* Previously filed and incorporated herein by reference.                        

Item 25.  Persons Controlled By or Under Common Control With the Registrant     

Not Applicable.                                                                 

Item 26.  Number of Holders of Securities                                       

                                      Number of Record Holders
Title of Class                       as of February 17, 1995
 ---------------                      ------------------------

Shares of beneficial interest,                 Two (2)      
without par value                                           

Item 27.  Indemnification                                                       

Provisions for the indemnification of the Fund's Trustees and officers are      
contained in the Fund's Declaration of Trust which was filed with the Fund's    
Registration Statement as Exhibit 1(b)(1) and is incorporated by reference      
herein.                                                                         

485BPOS
47th Page of 51
TOC
1st
Previous
Next
Bottom
Just 47th


Item 28.  Business and Other Connections of Investment Adviser                  

Officers and Directors of The Travelers Investment Management Company (TIMCO),  
the Registrant's Investment Adviser, are set forth in the following table:      

Name                  Position with TIMCO                Other Business         
-----                 -------------------                ---------------        

Jeffrey B. Lane       Director and Chairman              Vice Chairman          
                                                     Smith Barney Inc.**

Kent A. Kelley *      Director and Chief                 Not Applicable         
Executive Officer                   

Sandip A. Bhagat*     Director and President             Not Applicable         

Heath B. McLendon     Director                           Managing Director      
                                                     Smith Barney Inc.**

Jacob E. Hurwitz*     Vice President                     Not Applicable         

Emil Molinaro         Vice President                     Not Applicable         

Daniel Willey*        Vice President                     Not Applicable         

Gloria G. Williams*   Assistant Vice President           Not Applicable         

James W. Churm        Corporate Secretary                Senior Vice President  
                                                     Smith Barney Inc.**

Michael Day           Treasurer                          Managing Director      
                                                     Smith Barney Inc.**

*  Address:  One Tower Square, Hartford, Connecticut 06183                  
**  Address:  388 Greenwich Street, New York, New York 10013                  

485BPOS
48th Page of 51
TOC
1st
Previous
Next
Bottom
Just 48th

Executive Officers and Directors of Janus Capital Corporation, the              
Registrant's Sub-Adviser, are set forth in the following table:                 

Position with Janus                 
Name                  Capital Corporation                Other Business         
-----                 -------------------                ---------------        

Thomas H. Bailey      President, Director                Chairman and President 
                 and Chairman                       Janus Aspen Series
                                                  Denver, Colorado
                                                       Chairman and Director
                                                       IDEX Management, Inc.
                                                Largo, Florida

Jack R. Thompson      Executive Vice President           Trustee and Senior     
             and Director                       Vice President
                                                    Janus Aspen Series
                                               Janus Service
                                                    Janus Distributors
                                                  Denver, Colorado

Michael E. Herman     Independent Director               Chairman               
                                                   Finance Committee
                                                       Ewing Marion Kauffman
                                            Foundation
                                                       Kansas City, Missouri

Thomas A. McDonnell   Independent Director               President, CEO and     
                                           Director,
                                                  DST Systems Inc.
                                                       Kansas City, Missouri

                                                Executive Vice
                                           President
                                              and Director
                                                      Kansas City Southern
                                                  Industries, Inc.
                                                       Kansas City, Missouri

Michael Stolper       Independent Director               President,             
                                                     Stolper & Co., Inc.
                                                       San Diego, California

David C. Tucker       Vice President, General            Vice President and     
              Counsel and Secretary              General Counsel
                                                    Janus Aspen Series
                                               Janus Service
                                                    Janus Distributors
                                                  Denver, Colorado

Steven R. Goodbarn    Treasurer and Chief                Treasurer and Chief    
                Financial Officer                  Financial Officer
                                                    Janus Aspen Series
                                               Janus Service
                                                    Janus Distributors
                                                  Denver, Colorado

485BPOS
49th Page of 51
TOC
1st
Previous
Next
Bottom
Just 49th


Item 29.  Principal Underwriter                                                 

Not Applicable.                                                                 

Item 30.  Location of Accounts and Records                                      

(1) The Travelers Insurance Company                         
One Tower Square                                    
Hartford, Connecticut  06183                        

(2) Chase Manhattan Bank, N.A.                              
Chase MetroTech Center                              
Brooklyn, New York                                  

Item 31.  Management Services                                                   

Not Applicable.                                                                 

Item 32.  Undertakings                                                          

The undersigned Registrant hereby undertakes to provide to each person to whom  
a prospectus is delivered a copy of the Registrant's latest annual report to    
shareholders, upon request and without charge.                                  

485BPOS
50th Page of 51
TOC
1st
Previous
Next
Bottom
Just 50th

    SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment   
Company Act of 1940, the Registrant, Capital Appreciation Fund, certifies that  
it meets all of the requirements for effectiveness of this post-effective       
amendment to this Registration Statement pursuant to Rule 485(b) under the      
Securities Act of 1933 and has duly caused this amendment to this Registration  
Statement to be signed on its behalf by the undersigned, thereunto duly         
authorized, in the City of Hartford, State of Connecticut, on April 25, 1995.   

   CAPITAL APPRECIATION FUND
    (Registrant)

                                  By: *HEATH B. McLENDON
                                      ------------------
                                       Heath B. McLendon
                                                 Chairman, Board of Trustees

Pursuant to the requirements of the Securities Act of 1933, this Registration   
Statement has been signed below by the following persons in the capacities      
indicated on April 25, 1995.                                                    

*HEATH B. McLENDON                   Chairman of the Board                      
------------------                                                              
(Heath B. McLendon)                                                             

*KNIGHT EDWARDS                      Trustee                                    
---------------                                                                 
(Knight Edwards)                                                                

*ROBERT E. McGILL, III               Trustee                                    
----------------------                                                          
(Robert E. McGill, III)                                                         

*LEWIS MANDELL                       Trustee                                    
--------------                                                                  
(Lewis Mandell)                                                                 

*FRANCES M. HAWK                     Trustee                                    
----------------                                                                
(Frances M. Hawk)                                                               

*IAN R. STUART                       Treasurer and Chief Accounting Officer     
--------------                                                                  
(Ian R. Stuart)                                                                 

*By:    /s/ Ernest J. Wright                                                    
__________________________________                                    

Ernest J. Wright, Attorney-in-Fact                                              
Secretary, Board of Trustees                                                    

485BPOS
Last Page of 51
TOC
1st
Previous
Next
Bottom
Just 51st

EXHIBIT INDEX   

Exhibit                                                                         
No.    Description                                         Method of Filing 
-------  -----------                                         ----------------   

1.     Declaration of Trust.  (Incorporated herein by                       
reference to Exhibit 1(b)(1) to the Registration              
Statement on Form N-1 filed on March 22, 1982.)               

2.     By-Laws of Capital Appreciation Fund.  (Incorporated                 
herein by reference to Exhibit 1(b)(2) to the Registration    
Statement on Form N-1 filed on March 22, 1982.)               
Amendments to the Registrant's By-Laws are also               
incorporated herein by reference to Exhibits 24(b)(2)         
to Post-Effective Amendments Nos. 8, 15 and 18 to             
the Registration Statement on Form N-1A.                      

5(A).   Investment Advisory Agreement between the Registrant                  
and The Travelers Investment Management Company.              
(Incorporated herein by reference to Exhibit 5A to            
Post-Effective Amendment No. 21 to the Registration           
Statement on Form N-1A filed on April 15, 1993.)              

5(B).   Sub-Advisory Agreement between The Travelers Investment               
Management Company and Janus Capital Corporation.             
(Incorporated herein by reference to Exhibit 5A to Post-      
Effective Amendment No. 21 to the Registration Statement      
on Form N-1A filed on April 15, 1993.)                        

 8.     Custody Agreement dated February 1, 1995 between the    Electronically
Registrant and Chase Manhattan Bank, N.A., of                 
Brooklyn, New York.                                           

9.     Transfer and Recordkeeping Agreement between the                     
Registrant and The Travelers Insurance Company.               
(Incorporated herein by reference to Exhibit 24(b)(9) to      
Post-Effective Amendment No. 19 to the Registration           
Statement on Form N-1A filed on April 14, 1992.)              

10.    An opinion and consent of counsel as to the legality of                
the securities registered by the Registrant.  (Incorporated     
herein by reference to the Registrant's most recent             
24f-2 Notice filed on February 27, 1995.)                       

11(A).  Consent of Coopers & Lybrand L.L.P., Independent         Electronically 
Accountants, to the use of their name and opinion in            
Part A and Part B of this Form N-1A.                            

11(B).  Powers of Attorney authorizing Ernest J. Wright          Electronically 
as signatory for Heath B. McLendon, Knight Edwards,             
Robert E. McGill, III, Lewis Mandell, Frances M. Hawk           
and Ian R. Stuart.                                              

27.     Financial Data Schedule                                  Electronically 

Dates Referenced Herein   and   Documents Incorporated By Reference

				Referenced-On Page
This 485BPOS Filing		Date		First		Last			Other Filings
		4/14/92		45		51
		12/31/92		5		39
		4/15/93		45		51
		4/23/93		23
		5/1/93		5		39
		12/31/93		5		45			NSAR-B
		12/31/94		1		45			NSAR-B
		1/27/95		38
		1/30/95		38
		2/1/95		45		51
		2/9/95		41
		2/15/95		42
		2/17/95		46
		2/27/95		1		51			NSAR-B
		4/1/95		25
Filed On / Filed As Of / Effective As Of		4/25/95		50
		5/1/95		1		19
Top									List All Filings