THE TRAVELERS VARIABLE
PRODUCTS FUNDS
SEMI-ANNUAL REPORTS
JUNE 30, 1997


                MANAGED ASSETS TRUST HIGH
                YIELD BOND TRUST
CAPITAL APPRECIATION FUND CASH INCOME
TRUST

                THE TRAVELERS SERIES
TRUST:
                U.S. Government Securities
                Portfolio Social Awareness Stock
                Portfolio Utilities Portfolio
                
                
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The Travelers Insurance Company
The Travelers Life and Annuity Company
One Tower Square
Hartford, CT  06183














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SEMI-ANNUAL REPORT FOR THE TRAVELERS VARIABLE PRODUCTS
FUNDS ----------------------------------------------------
---------------------------



Dear Shareholder:



We are pleased to provide the semi-annual report for
Managed Assets Trust, High
Yield Bond Trust, Capital Appreciation Fund, Cash Income
Trust and The Travelers
Series Trust (U.S. Government Securities, Social Awareness
Stock and Utilities
Portfolios) for the period ended June 30, 1997. Please
note that the
commentaries for The Travelers Series Trust begin on page
35 of this report. In
this letter, we briefly discuss general economic and
market conditions. In
addition, more detailed comparisons showing the growth of
a hypothetical $10,000
invested in each Trust or Portfolio since its inception
date can be found in
this report. A more detailed summary of performance and
current holdings for
each Trust or Portfolio can be found in the appropriate
sections that follow.

ECONOMIC REVIEW AND OUTLOOK

Economic activity in the first quarter of 1997 showed
surprising strength as
real Gross Domestic Product ("GDP") growth rose well above
5%. Despite the
unexpected strength in the economy and a decline in
unemployment to about 5%,
reported inflation remained low. However, the stronger
U.S. economy, reflected
in both a tight labor market and a high capacity
utilization rate, sparked
concerns about rising future inflation and prompted an
increasingly vigilant
Federal Reserve Board ("Fed") to raise the federal-funds
rate by 25 basis points
(0.25%) on March 25, 1997. (The federal-funds rate is the
interest rate banks
charge each other for overnight loans and is a closely
watched indicator of the
direction of interest rates.) Concerns of higher interest
rates triggered a
correction in both the stock and bond markets at the end
of the first quarter of
1997.

The key economic news in the second quarter of 1997 was a
distinct slowdown in
economic growth and surprisingly low inflation. Both stock
and bond market
investors drew relief from these developments as the
prospects of further Fed
tightening receded. Interest rates fell from above 7% to
6.8% by the end of the
second quarter of 1997 and the stock market began a
furious rally that saw stock
prices rise by almost 20%.

The second quarter of 1997 began with a singular focus on
the future direction
of Fed action. After an increase of 25 basis points in the
federal-funds rate in
late March on the heels of strong economic growth in the
first quarter, it was
considered quite likely that rates would rise during the
second quarter. The
prospect of higher rates created turmoil within the U.S.
capital markets and
stocks, in particular, were hit hard in early April.
Economic data released in
early May provided mounting evidence of a slower economy
and low inflation.
Retail sales for April were soft and producer prices
showed a dramatic decline
of 0.4%. The consensus forecast for second quarter real
economic growth has now
dropped below 2%.

The inflation trend in recent months has been nothing
short of remarkable,
especially in light of the low unemployment rate and high
capacity utilization
rates in the U.S. economy. The consumer price deflator,
which is considered to
be a better inflation measure than the consumer price
index ("CPI"), fell to a
30-year low in May at an annual rate of 1.6%. Gains in
average hourly wages, a
closely monitored signal of wage inflation, have slowed
from 4.1% to 3.5%.
Commodity price indexes are declining, oil prices are
falling and the price of
gold is now below $320, its lowest level in five years. In
other words,
inflation just does not appear to be an issue at this
point.

The biggest contributing factor in the demise of inflation
appears to be the
significant gains in productivity achieved over the last
few years. It is widely
acknowledged that conventional measures of productivity
gains are being
understated and, under that scenario, lower-than-expected
inflation may be
explained by higher-than-expected productivity gains.
Several other factors also
suggest that the current disinflationary trend is likely
to be both secular and
global in nature. These include a high level of
disinflation in the growing
technology sector, significant government downsizing and
severe global
competition.

The second quarter rally in the stock and bond markets
suggests that investors
have reduced their inflation expectations and,
consequently, the likelihood of
further Fed tightening. In our view, the biggest risk to
the presently benign
investment climate looms on the economic landscape. A
resurgence of economic
growth in the second half of the year may prompt the Fed
to act yet again on a
preemptive basis to choke off inflationary pressures.
Strong retail sales may
well hold the key to a reacceleration in third quarter
economic growth. The
boost in consumer spending could come from any one of
several sources: increased
refinancing activity, the wealth effect of a stronger
stock market, record
levels of consumer confidence and the recent strong growth
in real disposable
personal income.

While the relatively high real yield levels in the bond
market suggests that
bond investors still remain wary of an increase in
inflation, we think the stock
market is clearly vulnerable to such a development.

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FIXED INCOME COMMENTARY

Bond prices also rose higher in the second quarter. The
Lehman Long
Government/Corporate Index performed the best with a gain
of 5.5% as interest
rates fell below 7%. The yield curve became flatter as the
spread between long-
and short-term bonds narrowed by 0.20% in the quarter.

Stronger growth with low inflation has been good for bonds
as it has reduced
government financing needs. Low inflation coupled with a
declining budget
deficit provides positive support for the bond market.
Going forward, the
bullish case for bonds can be attributed to a reduced
budget deficit and the
absence of inflation in final goods pricing. While wages
may be drifting higher,
so are productivity gains due to technological
improvements. At the same time,
global competition and an 8.5% year-to-date increase in
the trade weighted
dollar should prevent higher product inflation. Year-over
year Producer Price
Index ("PPI") statistics show no signs of price pressures,
and CPI has been at a
2.0% to 2.5% rate for the past few years. Additionally,
the CPI is generally
agreed to be overstated and the government may be in the
process of gradually
reducing this upward basis.

The key question for the markets will be the pace of
growth in the second half
of the year and how the bond market and Fed react to it.
We do not believe that
growth necessarily leads to further inflation on the
finished goods side. As
long as wage growth is offset by productivity increases,
higher growth with low
unemployment does not have to lead to a rise in inflation.
However there is
still much debate on what the market and the Fed think
about the relationship
between economic growth and inflation. If growth is above
3%, the market may
still expect higher inflation or the Fed may raise rates
on a preemptive basis.

Within the fixed income markets, spreads remain tight and
there is a high level
of complacency. Within the corporate market, spreads
remain compressed between
different quality levels and "riskier" borrowers have
access to an abundance of
capital. This condition is unlikely to change in the near
term as good economic
growth has reduced the stress on weaker credits. High
issues of Collateralized
Bond Obligations ("CBO") have created a new class of buyer
for lower quality
issues, one that is more concerned with default likelihood
rather than relative
pricing. Mortgage-backed spreads have tightened as market
volatility has been
low and prepayments have been within their predicted
range. Mortgage spreads are
unlikely to widen much as long as government agencies such
as Federal National
Mortgage Association ("FNMA") and Federal Home Loan
Mortgage Corporation
("FHLMC") are quick to arbitrage any spread widening.
Corporate spreads are
likely to take their cues from the high yield and equity
markets. As long as
these remain well bid for, high quality spreads should
remain firm.
Historically, October has been a month when spreads have
become wider and we
would therefore, not be surprised to see some modest
pressure on spreads as the
fourth quarter begins.

EQUITY COMMENTARY

The U.S. stock market continues to be in one of the
strongest bull market runs
ever. Stock prices have now doubled over the last two and
a half years and
almost tripled in the last five years in an ideal
investment climate of solid
economic growth, low inflation and strong corporate
profits growth.

The year 1997 began on a positive note for the stock
market. Fueled by strong
fourth quarter earnings and robust money flows into mutual
funds, the Standard &
Poor's 500 Composite Stock Index ("S&P 500") gained over
7% in January and
February, and continued to move to new highs in early
March. However, as
evidence of unexpectedly robust economic growth came to
hand, investors became
increasingly concerned about the risk of higher inflation
and interest rates.
The Fed raised short-term rates in March, and long-term
Treasury bond yields
moved back over the psychologically important 7% level.

The upward spike in interest rates triggered a sharp sell
off in the stock
market during the last week of March, erasing most of the
market's year-to-date
gains. For the entire first quarter, the S&P 500 edged out
a 2.7% gain with
dividends. Small capitalization issues generally fared
worse. During the first
three months of 1997, the Russell 2000 Stock Index
declined 5.5% in value.

The second quarter of 1997 was the best quarter for the
U.S. stock market in
over ten years. The stock market rally was broad in nature
lifting most stocks
and indexes to record high levels. The S&P 500 soared by
17.44% in the second
quarter, the Russell 2000 Index rose 16.2% and the Nasdaq
Composite Index
performed even better with a gain of 18.0%. (The S&P 500
is an unmanaged
capitalization-weighted index of 500 widely held common
stocks. The Russell 2000
Index is made up of 2,000 smaller-capitalized U.S.-based
companies whose common
stocks trade on either the New York, American or Nasdaq
stock exchanges. The
Nasdaq Composite Index is a capitalization-weighted index
of all stocks which
trade on Nasdaq.)

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As noted, the stock market got off to a rocky start in
April as the effects of
the Fed rate hike from late March rippled through the
capital markets. The S&P
500 sold off a low of 733 and the Dow Jones Industrial
Average retreated to
almost 6300 on April 14, 1997, as investors focused on the
likelihood of higher
rates. The investor mood swing to optimism was triggered
by the release of solid
first quarter earnings in April and the market rally began
in real earnest when
inflation reports in early May showed a significant
decline in producer and
consumer prices.

First quarter 1997 corporate earnings were again ahead of
expectations. The
final tally on the earnings scorecard showed that 54% of
all companies reported
earnings in excess of expectations while 31% of companies
disappointed relative
to the consensus. The preponderance of positive earnings
surprises continues a
trend which now extends to 17 consecutive quarters and is
unprecedented in terms
of duration or magnitude. Moreover, the agreement on a
balanced budget in
Washington and the prospects of a lower capital gains tax
added further fuel to
the stock market rally in the middle of the quarter. The
flood of liquidity into
the market continued unabated in the second quarter and
put more buying pressure
on stocks.

There are no indications right now to suggest that
earnings are at any great
risk in the near term. The earnings preannouncement season
at the end of the
quarter, when companies typically confess to upcoming
earnings shortfalls, was
uneventful and early second quarter earnings seem to be
quite strong.

There are no visible signs on the horizon that inflation
is
likely to flare up
in the near future. The employment cost index and hourly
wage gains are likely
to be the most closely monitored gauges of expected
inflation. We believe the
biggest risk on the interest rate front lies in a stronger
than-expected economy
in the second half. In fact, the Fed may be inclined to
respond to strong
economic data even before it begins to affect inflation
measures.

We remain cautious on the U.S. stock market. With all the
good news already
reflected in stock prices, the stock market has virtually
no margin for error.
We suspect that any unpleasant surprise will be enough
provocation to trigger a
correction. The market will focus on earnings or interest
rates for any negative
developments but any wild card surprise such as an oil
price shock could mean
trouble. The positive long-term trends toward low
inflation and lower interest
rates should, however, contain the downside in the stock
market and limit any
correction to the traditional 10% to 15% range from prior
highs.

Foreign stock markets also enjoyed a strong second quarter
with the Morgan
Stanley Capital International Europe Australia Far East
index ("MSCI EAFE")
rising by 13.0% in U.S. dollar terms. (The MSCI EAFE Index
consists of the
equity total returns for Europe, Australia, New Zealand
and the Far East.) The
bull market in global stocks also saw the Latin America
index advance by 22.5%
in the second quarter while the emerging markets index
gained 8.6% in U.S.
dollar terms.

MANAGED ASSETS TRUST

Managed Assets Trust gained 10.9% in the second quarter of
1997 while the 60/40%
S&P 500/Lehman Government/Corporate Index advanced by
11.8%. For the first half
of 1997, Managed Assets Trust enjoyed a total return of
11.82%.

The first half of 1997 provided stock market investors
with a glimpse of the
"best of all worlds" scenario, combining solid economic
growth, the lowest level
of inflation seen in a decade, a balanced budget agreement
out of Washington,
the promise of lower capital gains taxes, strong corporate
earnings growth,
merger activity rivaling the late 1980s and an abundance
of liquidity.

As a result, the U.S. stock market remains in one of the
strongest bull market
runs ever. The second quarter, in particular, was the best
quarter for the U.S.
stock market in over ten years. Virtually all sectors of
the stock market
reached new highs in the first half of 1997.

The U.S. bond market also rose higher in the second
quarter. The Lehman
Long-Term Bond Index performed the best with a gain of
5.5% as interest rates
fell below 7% in the second quarter. The yield curve
became flatter as the
spread between long-and short-term bonds narrowed by 20
basis points in the
quarter.

The dominant theme in the U.S. capital markets in the
second quarter was the
disappearing act staged by inflation. The remarkable good
news on the inflation
front finally seemed to get bond investors' attention as
the yield on long-term
bonds began to move lower. Stock market investors, on the
other hand, simply
accelerated their frenzied rush into stocks which
continues to drive valuations
higher.

The stock and bond markets have offered an interesting
contrast in terms of
their somewhat asymmetrical views on future inflation.
Even with a drop in
interest rates to 6.8% at the end of June, the bond market
is still fairly
cautious in terms of inflation expectations and future Fed
actions. It can well
be argued that inflation has been running close to 2% over
the last

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several months and yet the bond market has consistently
priced real rates at
fairly high levels. Real federal funds rates have been
around 3.3% and real long
term rates have been at about 4.7%, levels considerably
higher than the
historical average. To put these interest rates in
perspective, real Fed funds
rates peaked at 3.3% during the tightening monetary period
in 1987 whereas they
have traded at those levels for several months now.

The bond market, therefore, has been unwilling to give
ground to inflation and
has remained skeptical about the sustainability of this
low inflation. The
conservative reaction in the bond market leaves it better
prepared to deal with
an inflation shock or further Fed tightening.

The stock market has been far more enthusiastic in its
reaction to low
inflation. For that matter, stocks have been quick to
impound into prices all
the good news on the economic and earnings front as well.
Unlike the bond
market, stock prices have quickly adjusted to good news as
soon as it has become
available. The resulting high valuation levels in the
stock market now leave it
vulnerable to any disappointment on either the inflation
or earnings front.

As a result of this disparate investor behavior, the stock
market has been able
to far outperform the bond market over the last 18 months.
The return to risk
reward for stock investors has been even more favorable as
stock market
volatility has remained unusually low over the same
period.

Valuations in the stock market continue to be stretched.
The 12-month forward
P/E multiple on the S&P 500 now stands at 18.4 times which
is a record high over
the last 25 years. By most valuation measures, we believe
the market is between
10% and 15% overvalued.

We remain cautious on the U.S. stock market. With all good
news already
reflected in stock prices, the stock market has virtually
no margin for error.
We suspect that any unpleasant surprise will be enough
provocation to trigger a
correction. As we discussed earlier, the bond market has
refrained from building
up a similar level of excess and, therefore, offers better
value than stocks at
this point. We recommend a small underweight position in
U.S. stocks at this
point.

HIGH YIELD BOND TRUST

For the six months ended June 30, 1997, the High Yield
Bond Trust had a total
return of 8.13%. The Portfolio began the second quarter of
1997 with a high cash
balance comprising roughly 24% of the Portfolio. While the
Portfolio performed
well in the second quarter of 1997, its high cash position
penalized its
performance as the high yield bond market rallied. The
following issues had a
positive impact on the Portfolio's performance: Diamond
Cable, Florist
Transworld, Food 4 Less, ICF Kaiser, Syratech, SFX
Broadcasting and United
International Holdings.

The high yield bond market recovered from its modest
return of 1.47% in the
first quarter of 1997 to post a solid 4.32% for the second
quarter of 1997.
Lower-quality high yield bonds outperformed the BB-sector
as
the sound economic
outlook lifted the riskier credit issues over the near
term.

The high yield bond market has continued to rally on
strong demand from both new
investors and mutual funds. Given the market's strong
condition, we have seen a
record amount of new high yield bond issuance (more than
$60 billion) during the
first six months of this year. Moreover, during the past
twelve months there has
been a meaningful increase in the number of structured
transactions
incorporating high yield securities that has caused the
demand for high yield
bonds to rise even more. In the past two years, a number
of institutions,
particularly insurance companies, have begun to create
collateralized bond
obligations (CBOs) that use high yield securities as
collateral. Given the
intense demand on the part of many investors for current
yield the past year has
resulted in a significant increase in the creation of
CBOs. The amount of total
capital invested in the high yield bond market has risen
to record levels.

CAPITAL APPRECIATION FUND

In the second quarter, stocks registered their best
performance since the first
quarter of 1987. Large stocks remained the clear market
leaders, but smaller
companies also performed well, which made for a much
healthier overall market.
The S&P 500 gained 17.44% for the quarter. For the six
months ended June 30,
1997, the Fund generated a total return of 16.88% versus
the 20.6% for the S&P
500 over the same period.

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We continue to enjoy excellent economic conditions, with
little inflation, low
interest rates and increasing productivity. In sum, it is
still a very good
environment for financial assets. Raw materials as well as
labor are plentiful
internationally, which brought about deflation in many
core commodity prices as
the quarter ended -- copper, aluminum, grains and gold all
declined
significantly -- and continues to restrain inflationary
wage pressures. The
Fed's decision not to raise interest rates at both its May
and July meetings was
a further endorsement of the economy's basic health and
stability. Finally, the
budget process in Washington, D.C. is providing an
encouraging backdrop for
financial markets.

This quarter we experienced substantial gains in many of
our holdings, despite
some lingering cross-currents in technology as the quarter
began, when it proved
difficult to sort out the prospects for a few large
technology positions. In
spite of this ebb and flow, we posted good returns with
Microsoft Corp. and
Lucent Technologies. Microsoft, the dominant presence in
PC and network
operating systems, is beginning another upgrade cycle for
its NT, Office and
Windows products. Earnings are very consistent, not only
due to product demand
but also because Microsoft employs conservative accounting
methods. Lucent has
made a number of changes aimed at producing more
consistent revenues and
earnings, including restructuring the pay of its sales
force, cutting sales and
administrative expenses, and joint venturing with Philips
Electronics to sell
Lucent's electronic consumer goods (primarily cellular
telephones) under the
Philips name.

Dell Computer also appreciated nicely. Dell is clearly the
best operator in the
PC business. Inventory turnover averages only 12 days, and
the company has
remained focused on the commercial PC market, where demand
for new processors
and other upgrades is still strong. Dell is also just
getting started in the
high-margin server market. Dell's operating model is so
effective that Compaq
Computer, the largest PC retailer in the industry,
recently announced that it
wants to copy the Dell model, and tried to purchase
Gateway 2000 in order to
enter the direct order PC business, where Dell has been
very successful.

Our drug stocks also produced good returns this quarter.
Warner-Lambert's two
new drugs, Lipitor, which reduces cholesterol, and
Rezulin, for diabetes, have
been well received. Lipitor, which was introduced
approximately six months ago,
has already captured 21% of a highly competitive market.
Eli Lilly's Zyprexa,
for the treatment of schizophrenia, and Reopro, which
treats cardiovascular
disease, are selling well.

Two core growth companies, FNMA and First Data, also
appreciated. FNMA is
repurchasing stock and continues to post improved earnings
despite mediocre loan
growth. Credit card transaction processor First Data came
under pressure earlier
in the year on concerns over a potential slowdown in
credit
card use. However,
these fears were overblown, and the stock gained almost
30%.

Finally, two new holdings, Diamond Offshore Drilling and
Delta and Pine Land,
were up nicely. Delta and Pine has developed a new insect
resistant cotton seed
that is just beginning to penetrate the market. Diamond
Offshore is the leading
provider of deep-water drilling equipment. Exploration
budgets at the major oil
companies are at an all-time high, demand for Diamond
Offshore's products is
excellent and day rates are up. The company's fixed costs
are stable, which
gives it huge pricing leverage as more equipment goes into
the field.

Nike and Texas Instruments were sold at a profit during
the quarter. The revenue
growth rate slowed at Nike, and DRAM demand declined at
Texas Instruments.
Halliburton (energy company) was let go at a loss, due to
concerns about the
strength of its engineering and construction business.

Going forward, we are still very optimistic about the
equity markets. Although
valuations are rich in some stocks, healthy earnings
prospects and low interest
rates should support higher prices. In addition, our
Treasury yields also remain
high compared to international rates, making them
attractive to foreign
investors. As long as economic growth is moderate and
inflation is low, there
should be room for interest rates to come down. If this
proves to be the case,
financial assets will continue to benefit.

CASH INCOME TRUST

Cash Income Trust seeks to provide shareholders with high
current income from
short-term money market instruments while emphasizing
preservation of capital
and maintaining a high degree of liquidity. Cash Income
Trust pursues this
objective by investing in securities maturing in one year
or less.

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For the six months ended June 30, 1997, Cash Income Trust
generated an effective
yield of 4.84% and as of June 30, 1997 had an average
maturity of 16 days. Cash
Income Trust continues to invest primarily in U.S.
Treasuries and government
agency securities. This investment strategy has provided
Cash Income Trust with
safety, liquidity and stability.

You should be aware that your investment in the Cash
Income Trust is neither
insured nor guaranteed by the U.S. Government. Moreover,
no assurance can be
given that the Fund will be able to maintain a stable net
asset value of $1.00
per share.

In closing, we would like to thank you for your investment
in Managed Asset
Trust, High Yield Bond Trust, Capital Appreciation Fund
and Cash Income Trust.
We look forward to continuing to help you achieve your
financial goals.

Sincerely,

McLendon sig

Heath B. McLendon
Chairman

July 28, 1997

                                        6

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------------------------------
 PERFORMANCE COMPARISON -- MANAGED ASSETS TRUST AS OF
6/30/97 (UNAUDITED)

<TABLE>
<CAPTION>
       AVERAGE ANNUAL TOTAL RETURN -----------------------
   -------------
   <S>                                 <C>
   Six Months Ended 6/30/97+            11.82%
   Year Ended 6/30/97
21.44%
   Five Years Ended 6/30/97
12.82%
   Ten Years Ended 6/30/97
12.85%
   +Total return is not annualized, as it
    may not be representative of the total
    return for the year.
</TABLE>

This chart assumes an initial investment of $10,000 made on
June
30, 1987 assuming reinvestment of dividends through June
30, 1997.
The Lehman Government/Corporate Bond Index is a weighted
composite
of the Lehman Government Bond Index, which is a broad-based
index
of all public debt obligations of the U.S. Government and
its
agencies and has an average maturity of nine years and the
Lehman
Corporate Bond Index, which is comprised of all public
fixedrate
non-convertible investment-grade domestic corporate debt,
excluding
collateralized mortgage obligations. The Consumer Price
Index is a
measure of the average change in prices over time in a
fixed market
basket of goods and services. The Standard & Poor's 500
Index is an
unmanaged index composed of 500 widely held common stocks
listed on
the New York Stock Exchange, American Stock Exchange and
over-the-
counter market.

<TABLE>
<CAPTION>
   Measurement                   Lehman
      Period          Managed    Government  Consumer
Standard
 (Fiscal Year       Assets       Bond        Price      &
Poors
  Covered)          Trust       Index       Index     500
Index
<S>                 <C>         <C>         <C>
<C>
Jun-87                 10000       10000       10000
10000
Dec-87                 10620       10274       10165
8259
Dec-88                 10824       11053       10614
9627
Dec-89                 11816       12626       11107
12672
Dec-90                 15021       13673       11785
12279
Dec-91                 15392       15877       12146
16012
Dec-92                 18732       17081       12498
17232
Dec-93                 19695       18966       12842
18964
Dec-94                 21533       18299       13185
19213
Dec-95                 21050       21821       13520
23425
Dec-96                 23938       22453       13968
28801
Jun-97                 26768       23068       14065
34734
</TABLE>

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

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.

Average annual total returns are historical in nature and
measure net investment
income and capital gain or loss from portfolio investments
assuming reinvestment
of dividends. The returns do not reflect expenses
associated with the subaccount
such as administrative fees, account charges and surrender
charges which, if
reflected, would reduce the performance shown.
----------------------------------------------------------
---------------------
 PERFORMANCE COMPARISON -- HIGH YIELD BOND TRUST AS OF
6/30/97 (UNAUDITED)

<TABLE>
<CAPTION>
            AVERAGE ANNUAL TOTAL RETURN ------------------
   ---------------------------
   <S>                                 <C>
   Six Months Ended 6/30/97+               8.13%
   Year Ended 6/30/97
16.25%
   Five Years Ended 6/30/97
11.43%
   Ten Years Ended 6/30/97
9.93%
   +Total return is not annualized, as it may
    not be representative of the total return
    for the year.
</TABLE>

This chart assumes an initial investment of $10,000 made
on June
30, 1987 assuming reinvestment of dividends through June
30, 1997.
The Lehman Aggregate Bond Index, an unmanaged index, is
composed of
the Lehman Intermediate Government/Corporate Bond Index
and the
Mortgage Backed Securities Index and includes treasury
issues,
agency issues, corporate bond issues and mortgage-backed
securities. The Consumer Price Index is a measure of the
average
change in prices over time in a fixed market basket of
goods and
services. The First Boston High Yield Index Top Tier is a
broad-based market measure of high yield bonds, commonly
known as
"junk bonds."

<TABLE>
<CAPTION>
                                        Lehman
 Measurement Period     High Yield     Aggregate
Consumer
(Fiscal Year Covered)   Bond Trust    Bond Index    Price
Index
<S>                     <C>           <C>           <C>
Jun-87                      10000         10000
10000
Dec-87                      10381         10293
10165
Dec-88                      10346         11105
10614
Dec-89                      11853         12720
11107
Dec-90                      12019         13859
11785
Dec-91                      10922         16077
12146
Dec-92                      13774         17266
12498
Dec-93                      15587         18950
12842
Dec-94                      17771         18397
13185
Dec-95                      17547         21795
13520
Dec-96                      20363         22586
13968
Jun-97                      22019         23205
14065
</TABLE>

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

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.

Average annual total returns are historical in nature and
measure net investment
income and capital gain or loss from portfolio investments
assuming reinvestment
of dividends. The returns do not reflect expenses
associated with the subaccount
such as administrative fees, account charges and surrender
charges which, if
reflected, would reduce the performance shown.

                                        7
<pg$pcn>
----------------------------------------------------------
---------------------
 PERFORMANCE COMPARISON -- CAPITAL APPRECIATION FUND AS OF
6/30/97 (UNAUDITED)

<TABLE>
<CAPTION>
            AVERAGE ANNUAL TOTAL RETURN ------------------
   ---------------------------
   <S>                                 <C>
   Six Months Ended 6/30/97+              16.88%
   Year Ended 6/30/97
28.25%
   Five Years Ended 6/30/97
21.61%
   Ten Years Ended 6/30/97
16.45%
   + Total return is not annualized, as it may
     not be representative of the total return
     for the year.
</TABLE>

This chart assumes an initial investment of $10,000 made
on June
30, 1987 assuming reinvestment of dividends through June
30,
  1997. The Standard & Poor's 500 Index is an unmanaged
index
 composed of 500 widely held common stocks listed on the
New York
  Stock Exchange, American Stock Exchange and over-the-
counter
   market. The Russell 2000 Index is a capitalization
weighted total
  return index which is comprised of 2,000 of the
  smallest capitaled U.S. domiciled companies with less
  than average
growth
  orientation whose common stock is traded in the United
States of
 the New York Stock Exchange, American Stock Exchange and
NASDAQ.
   The Consumer Price Index is a measure of the average
change in
  prices over time in a fixed market basket of goods and
services.

<TABLE>
<CAPTION>
   Measurement
      Period          Capital     Russell    Consumer
Standard
  (Fiscal Year      Appreciation   2000       Price      &
Poors
  Covered)          Fund        Index       Index     500
Index
<S>                 <C>         <C>         <C>
<C>
Jun-87                 10000       10000       10000
10000
Dec-87                  9720        7395       10165
8259
Dec-88                  8931        9245       10614
9627
Dec-89                  9830       10749       11107
12672
Dec-90                 11374        8655       11785
12279
Dec-91                 10665       12640       12146
16012
Dec-92                 14414       14967       12498
17232
Dec-93                 16951       17792       12842
18964
Dec-94                 19509        7383       13185
19213
Dec-95                 18580        9484       13520
23425
Dec-96                 23828       11048       13968
28801
Jun-97                 27850       12175       14065
34734
</TABLE>

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

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.

Average annual total returns are historical in nature and
measure net investment
income and capital gains or losses from portfolio
investments assuming
reinvestments of dividends. The returns do not reflect
expenses associated with
the subaccount such as administrative fees, account
charges and surrender
charges which, if reflected, would reduce the performance
shown.

                                        8
<pg$pcn>
----------------------------------------------------------
---------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED)
JUNE 30, 1997

                              MANAGED ASSETS TRUST

<TABLE>
<CAPTION>
 SHARES                                       SECURITY
VALUE ----------------------------------------------------
----------------------------------------------------
<C>        <S>
<C>
COMMON STOCK -- 59.5% ------------------------------------
----------------------------------------------------------
----------
CONSUMER CYCLICALS -- 8.0%
  16,300   Accustaff
Inc.++....................................................
 .. .........   $    386,106
  10,200   American Stores Co.
 ..........................................................
 . 503,625
  16,400   Borders Group,
Inc.++....................................................
 .. ....     395,650
   5,400   Colgate-Palmolive Co.
 .........................................................
352,350
  17,300   Costco Cos., Inc.
 ..........................................................
 .. .              569,278
  10,400   CVS Corp.
 ..........................................................
 .. .........        533,000
   6,100   Eastman Kodak Co.
 ..........................................................
 .. .              468,175
  13,300   Federated Department Stores
Inc.++.............................................
462,175
   7,600   Gannett Co.
 ..........................................................
 .. .......     750,500
   5,200   Gap Inc.
 ..........................................................
 .. ..........        202,150
  14,100   Gillette Co.
 ..........................................................
 .. ......   1,335,975
  10,100   HFS
Inc.++....................................................
 .. ...............        585,800
   4,900   Hilton Hotels Corp.
 ..........................................................
 . 130,156
   9,400   Home Depot Inc.
 ..........................................................
 .. ...     648,013
  16,948   Kimberly-Clark Corp.
 ..........................................................
843,163
  13,200   Lowe's Cos., Inc.
 ..........................................................
 .. .              490,050
   5,400   McDonalds Corp.
 ..........................................................
 .. ...     260,888
  10,400   New York Times Co., Class A
shares.............................................
514,800
   4,600   Nike Inc., Class B
shares....................................................
 .. 268,525
  15,200   Proctor & Gamble Co.
 ..........................................................
2,147,000
   7,400   Sears Roebuck & Co.
 ..........................................................
 . 397,750
  27,500   Stride Rite Corp.
 ..........................................................
 .. .              354,062
  12,500   Tele-Communications
Inc.++....................................................
 . 185,547
  10,000   Time Warner Inc.
 ..........................................................
 .. ..        482,500
  17,800   TJX Cos., Inc.
 ..........................................................
 .. ....     469,475
   2,600   Unilever
NV........................................................
 .. ..........        566,800
  43,000   Wal-Mart Stores, Inc.
 .........................................................
1,453,938
  12,477   Walt Disney Co.
 ..........................................................
 .. ...      1,001,279 ------------------------------------
----------------------------------------------------------
----------

16,758,730 -----------------------------------------------
---------------------------------------------------------
CONSUMER STAPLES -- 4.7%
   9,200   Anheuser-Busch Co.
 ..........................................................
 .. 385,825
   3,800   Campbell Soup Co.
 ..........................................................
 .. .              190,000
  44,800   Coca-Cola Co.
 ..........................................................
 .. .....   3,024,000
  10,900   Conagra Inc.
 ..........................................................
 .. ......     698,963
   7,000   CPC International Inc.
 ........................................................
646,187
  11,700   Dean
Foods.....................................................
 ..
 ..............        472,388
   3,100   Gallaher Group
PLC.......................................................
 .. ....      57,156
   1,300   Kellogg Co.
 ..........................................................
 .. .......     111,313
  29,000   PepsiCo, Inc.
 ..........................................................
 .. .....   1,089,313
  45,800   Philip Morris, Inc.
 ..........................................................
 . 2,032,375
   6,800   Pioneer Hi-Bred
International.............................................
 .. ...     544,000
   9,000   Sara Lee Corp.
 ..........................................................
 .. ....     374,625
   9,200   Whitman Corp.
 ..........................................................
 .. .....     232,875
----------------------------------------------------------
----------------------------------------------

9,859,020 ------------------------------------------------
--------------------------------------------------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                        9

<pg$pcn> -------------------------------------------------
------------------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                              MANAGED ASSETS TRUST
<TABLE>
<CAPTION>
 SHARES                                       SECURITY
VALUE ----------------------------------------------------
----------------------------------------------------
<C>        <S>
<C>
ENERGY -- 0.4%
   6,400   Louisiana Land & Exploration Co.
 ..............................................   $
365,600
   4,500   Schlumberger Ltd.
 ..........................................................
 .. .              562,500
----------------------------------------------------------
----------------------------------------------

928,100 --------------------------------------------------
------------------------------------------------------
FINANCE -- 8.1%
   8,265   Allstate Corp.
 ..........................................................
 .. ....     603,345
   4,900   Ambac Inc.
 ..........................................................
 .. ........                 374,238
   9,200   American Express Co.
 ..........................................................
685,400
   8,750   American International Group Inc.
 .............................................
  1,307,031 10,389     Banc One Corp.
 ..........................................................
 .. ....     503,217
  10,400   Bank of Boston
Corp.++...................................................
 .. ....     749,450
   7,100   Bank of New
York......................................................
 .. .......     308,850
  19,000   BankAmerica Corp.
 ..........................................................
 .. .            1,226,688
   3,600   Barnett Banks Inc.
 ..........................................................
 .. 189,000
   8,036   Chase Manhattan Corp.
 .........................................................
779,994
   3,100   Chubb Corp.
 ..........................................................
 .. .......     207,313
   8,400
Citicorp..................................................
 .. ...................      1,012,725
  14,000   Federal Home Loan Mortgage Corp.
 ..............................................
481,250
  20,600   Federal National Mortgage
Association..........................................
898,675
   2,600   First Bank System Inc.
 ........................................................
221,975
   6,000   First Chicago NBD Corp.
 .......................................................
363,000
   2,800   First Union Corp.
 ..........................................................
 .. .              259,000
   5,700   Golden West Financial Corp.
 ...................................................
399,000
   7,200   Hartford Financial Services Group Inc.
 ........................................        595,800
   6,700   Household International Inc.
 ..................................................
786,831
   3,400   J.P. Morgan & Co.
 ..........................................................
 .. .              354,875
  16,800   Mellon Bank Corp.
 ..........................................................
 .. .              758,100
   6,200   Merrill Lynch & Co., Inc.
 .....................................................
369,675
  10,950   Morgan Stanley Dean Witter
Discover............................................
471,534
  12,000   NationsBank Corp.
 ..........................................................
 .. .              774,000
   8,400   Northern Trust Corp.
 ..........................................................
406,613
   6,700   Norwest Corp.
 ..........................................................
 .. .....     376,875
   5,900   PNC Bank Corp.
 ..........................................................
 .. ....     245,587
   7,600   SunAmerica, Inc.
 ..........................................................
 .. ..        370,500
   4,100   SunTrust Banks, Inc.
 ..........................................................
225,756
   1,800   Wells Fargo & Co.
 ..........................................................
 .. .              485,100
----------------------------------------------------------
----------------------------------------------

16,791,397 -----------------------------------------------
---------------------------------------------------------
HEALTHCARE -- 7.2%
   9,100   Abbott
Laboratories..............................................
 .. ............        607,425
   7,000   American Home Products Corp.
 ..................................................
535,500
   4,800   Amgen
Inc.++....................................................
 .. .............        278,850
  25,500   Beverly Enterprises, Inc.
 .....................................................
414,375
   3,300   Boston Scientific Corp.
 .......................................................
202,744
  23,300   Bristol-Myers Squibb Co.
 ......................................................
1,887,300
  12,300   Columbia/HCA Healthcare Corp.
 .................................................
483,544
   6,400   Eli Lilly & Co.
 ..........................................................
 .. ...     699,600
   6,800   Guidant Corp.
 ..........................................................
 .. .....     578,000
   6,500   HBO & Co.
 ..........................................................
 .. .........        447,687
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.
                                       10

<pg$pcn>

----------------------------------------------------------
---------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                              MANAGED ASSETS TRUST
<TABLE>
<CAPTION>
 SHARES                                       SECURITY
VALUE ----------------------------------------------------
----------------------------------------------------
<C>        <S>
<C>
HEALTHCARE -- 7.2% (CONTINUED)
  29,600   Johnson &
Johnson...................................................
 .. .........   $  1,905,500
   4,500   Medtronic Inc.
 ..........................................................
 .. ....     364,500
  27,200   Merck & Co.
 ..........................................................
 .. .......   2,815,200
  11,700   Pfizer Inc.
 ..........................................................
 .. .......   1,398,150
  12,400   PhyCor, Inc.
 ..........................................................
 .. ......     426,638
  13,800   Schering-Plough Corp.
 .........................................................
660,675
   3,500   United Healthcare Corp.
 .......................................................
182,000
  12,000   U.S. Surgical Corp.
 ..........................................................
 . 447,000
   5,000   Warner-Lambert Co.
 ..........................................................
 .. 621,250 -----------------------------------------------
---------------------------------------------------------

14,955,938 -----------------------------------------------
---------------------------------------------------------
INSURANCE -- 1.1%
   2,700   Aetna Inc.
 ..........................................................
 .. ........                        276,413
   1,400   Cigna
Corp......................................................
 .. .............        248,500
  15,000   Conseco Inc.
 ..........................................................
 .. ......     555,000
   1,800   Lincoln National Corp.
 ........................................................
115,875
   8,600   Marsh & McLennan Cos.,
Inc.....................................................
613,825
   4,000   Transatlantic Holdings, Inc.
 ..................................................
397,000 --------------------------------------------------
------------------------------------------------------

2,206,613 ------------------------------------------------
--------------------------------------------------------
MATERIALS & PROCESSING -- 4.5%
   5,000   Aluminum Co. of
America...................................................
 .. ...     376,875
   6,900   Avery Dennison Corp.
 ..........................................................
276,862
   4,100   Corning Inc.
 ..........................................................
 .. ......     228,062
   7,000   Cummins Engine Co., Inc.
 ......................................................
493,938
   8,800   Cytec Industries Inc.
 .........................................................
328,900
  20,400   E.I. du Pont de Nemours & Co.
 .................................................
1,282,650
   9,600   Ecolab, Inc.
 ..........................................................
 .. ......     458,400
   3,100   Fortune Brands, Inc.
 ..........................................................
115,669
  13,900   Freeport-McMoRan
Copper....................................................
 .. ..        432,638
   4,900   Georgia-Pacific Corp.
 .........................................................
418,338
  18,100   Homestake Mining Co.
 ..........................................................
236,431
  12,100   Masco Corp.
 ..........................................................
 .. .......     505,175
   9,900   McDonnell Douglas Corp.
 .......................................................
678,150
   6,800   Mead Corp.
 ..........................................................
 .. ........                        423,300
  19,700   Monsanto Co.
 ..........................................................
 .. ......     848,331
   4,400   Raytheon Co.
 ..........................................................
 .. ......     224,400
   8,600   United Technologies Corp.
 .....................................................
713,800
  14,700   U.S. Industries, Inc.
 .........................................................
523,688
  11,700   USX-US Steel
Group.....................................................
 .. ......     410,231
   8,800   Waste Management Inc.
 .........................................................
282,700
   3,700   Weyerhauser Co.
 ..........................................................
 .. ...     192,400
----------------------------------------------------------
----------------------------------------------

9,450,938 ------------------------------------------------
--------------------------------------------------------
OIL -- 5.0%
   7,100   Amerada Hess Corp.
 ..........................................................
 .. 394,494
   9,000   Amoco Corp.
 ..........................................................
 .. .......     782,437
   8,100   Ashland Inc.
 ..........................................................
 .. ......     375,638
   4,200   Atlantic Richfield Co.
 ........................................................
296,100
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       11

<pg$pcn> -------------------------------------------------
------------------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                              MANAGED ASSETS TRUST
<TABLE>
<CAPTION>
 SHARES                                       SECURITY
VALUE ----------------------------------------------------
----------------------------------------------------
<C>        <S>
<C>
OIL -- 5.0% (CONTINUED)
  12,000   Baker Hughes Inc.
 ..........................................................
 .. .         $    464,250
  12,000   Chevron Corp.
 ..........................................................
 .. .....     887,250
  38,800   Exxon Corp.
 ..........................................................
 .. .......   2,386,200
  19,600   Mobil Corp.
 ..........................................................
 .. .......   1,369,550
  31,600   Royal Dutch Petroleum Co.
 .....................................................
1,718,250
  10,200   Texaco Inc.
 ..........................................................
 .. .......   1,109,250
  14,200   Unocal Corp.
 ..........................................................
 .. ......     551,138
----------------------------------------------------------
----------------------------------------------

10,334,557 -----------------------------------------------
---------------------------------------------------------
PRODUCER DURABLES -- 5.0%
   5,200   Allied Signal Inc.
 ..........................................................
 .. 436,800
   5,600   Betzdearborn, Inc.
 ..........................................................
 .. 369,600
   6,400   Boeing Co.
 ..........................................................
 .. ........                 339,600
   3,700   Caterpillar Inc.
 ..........................................................
 .. ..        397,288
  10,650   Crane Co.
 ..........................................................
 .. .........        445,303
  11,400   Deere & Co.
 ..........................................................
 .. .......     625,575
   4,500   Dow Chemical Co.
 ..........................................................
 .. ..        392,063
   8,200   Emerson Electric Co.
 ..........................................................
451,512
  62,400   General Electric Co.
 ..........................................................
4,079,400
   6,700   Honeywell Inc.
 ..........................................................
 .. ....     508,362
  12,800   Illinois Tool
Works.....................................................
 .. .....     639,200
   3,680   Lockheed Martin Corp.
 .........................................................
381,110
   7,800   Minnesota Mining & Manufacturing Co.
 ..........................................        795,600
   4,700   Raychem Corp.
 ..........................................................
 .. .....     349,562
  11,900   Westinghouse Electric Corp.
 ...................................................
275,188 --------------------------------------------------
------------------------------------------------------

10,486,163 -----------------------------------------------
---------------------------------------------------------
TECHNOLOGY -- 8.1%
  10,000   Advanced Micro Devices, Inc.
 ..................................................
360,000
   4,625   Andrew Corp.
 ..........................................................
 .. ......     129,789
   3,300   Applied Materials, Inc.
 .......................................................
233,578
   5,700   Automatic Data Processing, Inc.
 ...............................................
267,900
  11,900   Cisco Systems, Inc.
 ..........................................................
 . 799,159
   5,400   Compaq Computer Corp.
 .........................................................
535,950
   6,575   Computer Associates International, Inc.
 .......................................        366,145
   3,300   Dell Computer Corp.
 ..........................................................
 . 387,440
  23,000   Edison
International.............................................
 .. ............        572,125
  11,200   Gateway 2000
Inc.++....................................................
 .. ......     363,300
  18,600   Hewlett Packard Co.
 ..........................................................
 . 1,041,600
  12,600   Intel Corp.
 ..........................................................
 .. .......   1,784,081
  19,000   International Business Machines Corp.
 .........................................      1,713,563
  15,200   Liberty Media, Class A
shares..................................................
361,475
  15,200   LSI Logic Corp.
 ..........................................................
 .. ...     486,400
  11,569   Lucent Technologies Inc.
 ......................................................
833,691
   6,100   McAfee Associates, Inc.
 .......................................................
384,681
  22,200   Microsoft Corp.
 ..........................................................
 .. ...      2,807,606
  13,800   Motorola Inc.
 ..........................................................
 .. .....   1,048,800
  12,000   Oracle Corp.
 ..........................................................
 .. ......     604,125
   5,200
PacifiCorp................................................
 .. ...................     114,400
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       12
<pg$pcn>
----------------------------------------------------------
---------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                              MANAGED ASSETS TRUST
<TABLE>
<CAPTION>
 SHARES                                       SECURITY
VALUE ----------------------------------------------------
----------------------------------------------------
<C>        <S>
<C>
TECHNOLOGY -- 8.1% (CONTINUED)
  16,400   Read-Rite Corp.
 ..........................................................
 .. ...   $ 341,838
   4,400   Seagate Technology, Inc.
 ......................................................
154,825
   6,500   Sun Microsystems Inc.
 .........................................................
241,922
   3,200   Texas Instruments Inc.
 ........................................................
269,000
   5,900   3Com Corp.
 ..........................................................
 .. ........                        265,316
   6,200   Xerox Corp.
 ..........................................................
 .. .......     489,025
----------------------------------------------------------
----------------------------------------------

16,957,734 -----------------------------------------------
--------------------------------------------------------
TRANSPORTATION -- 1.7%
   6,300   Burlington Northern Sante
Fe...................................................
566,213
  12,800   Chrysler Corp.
 ..........................................................
 .. ....     420,000
  11,200   Continental Airlines, Inc., Class B
shares.....................................        391,300
  21,100   Ford Motor Co.
 ..........................................................
 .. ....     796,525
  12,900   General Motors Corp.
 ..........................................................
718,369
   7,800   Lear Corp.
 ..........................................................
 .. ........                        346,125
   4,000   Union Pacific Corp.
 ..........................................................
 . 282,000 ------------------------------------------------
--------------------------------------------------------

3,520,532 ------------------------------------------------
--------------------------------------------------------
UTILITIES -- 5.7%
   5,100   AES
Corp.++...................................................
 .. ...............        360,825
  25,900   American Telephone & Telegraph Corp.
 ..........................................        908,119
  10,500   Ameritech Corp.
 ..........................................................
 .. ...     713,344
   9,900   Baltimore Gas & Electric Co.
 ..................................................
264,206
   8,200   Bell Atlantic Corp.
 ..........................................................
 . 622,175
  19,000   Bellsouth Corp.
 ..........................................................
 .. ...     881,120
   9,700   CalEnergy Co.,
Inc.++....................................................
 .. ....     368,600
   7,600   Columbia Gas
System....................................................
 .. ......     495,900
   3,800   Duke Energy Corp.
 ..........................................................
 .. .              182,163
  12,800   Enron Corp.
 ..........................................................
 .. .......     522,400
  10,700   FPL Group Inc.
 ..........................................................
 .. ....     492,869
  15,600   GTE Corp.
 ..........................................................
 .. .........        684,450
   4,900   Houston Industries, Inc.
 ......................................................
105,044
  12,700   MCI Communications Corp.
 ......................................................
486,172
   4,700   Northern Telecom
Ltd.......................................................
 .. ..        427,700
   8,300   Nynex Corp.
 ..........................................................
 .. .......     478,287
   4,100   Pacific
Enterprises...............................................
 .. ...........        137,862
  20,227   SBC Communications, Inc.
 ......................................................
1,251,546
   8,700   Sonat Inc.
 ..........................................................
 .. ........                        445,875
  12,700   Southern Co.
 ..........................................................
 .. ......     277,812
   6,300   Sprint Corp.
 ..........................................................
 .. ......     331,538
  10,000   Texas Utilities Co.
 ..........................................................
 . 344,375
   3,400   US West Communications
Group...................................................
128,138
  29,100   Worldcom Inc.
 ..........................................................
 .. .....                 931,200
----------------------------------------------------------
----------------------------------------------

11,841,720 -----------------------------------------------
---------------------------------------------------------
           TOTAL COMMON STOCK (Cost -
$85,322,071).......................................
124,091,442 ----------------------------------------------
----------------------------------------------------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       13

<pg$pcn> -------------------------------------------------
------------------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                              MANAGED ASSETS TRUST
<TABLE>
<CAPTION>
 SHARES                                       SECURITY
VALUE ----------------------------------------------------
----------------------------------------------------
<C>        <S>
<C>
PREFERRED STOCK -- 2.1% ----------------------------------
----------------------------------------------------------
------------
FINANCIAL -- 0.6%
   4,000   Excel Reality Trust Inc., Convertible
2.125%...................................   $    109,000
   2,000   Finova Finance, Convertible
5.500%.............................................
115,000
       4   Fuji Finance, Convertible
0.250%...............................................
109,444
   8,000   Merry Land & Investment, Convertible
2.150%....................................        217,000
   8,000   National Australia Bank, Convertible
7.875%....................................        223,500
   4,000   St. Paul Capital, Convertible
6.000%...........................................
277,000
   5,000   Tosco Financial Trust, Convertible
5.750%......................................
278,750 --------------------------------------------------
------------------------------------------------------

1,329,694 ------------------------------------------------
--------------------------------------------------------
INDUSTRIAL -- 1.5%
   4,000   Amcor Ltd., Convertible
7.250%.................................................
211,750
  10,000   Calenergy Capital II, Convertible
6.250%+......................................
  567,500 12,000 International
Paper.....................................................
 .. .....     639,000
  10,990   News Corp., Ltd., Convertible
5.000%...........................................
945,140
   9,000   Occidental Petroleum
Corp.+....................................................
525,375
   4,000   Rouse Co.
 ..........................................................
 .. .........          193,000
----------------------------------------------------------
----------------------------------------------

3,081,765 ------------------------------------------------
--------------------------------------------------------
           TOTAL PREFERRED STOCK (Cost -
$4,057,871).....................................
4,411,459 ------------------------------------------------
--------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
    FACE
   AMOUNT                                       SECURITY
VALUE ----------------------------------------------------
----------------------------------------------------
<C>            <S>
<C>
CORPORATE BONDS -- 23.2% ---------------------------------
----------------------------------------------------------
-------------
FINANCIAL -- 2.6%
$    500,000   Great Western Financial, 6.375% due
7/1/00.................................        495,625
   5,000,000   New Plan Reality, 5.950% due
11/2/26.......................................
5,004,500 ------------------------------------------------
--------------------------------------------------------

5,500,125 ------------------------------------------------
--------------------------------------------------------
GOVERNMENT, NATIONAL -- 2.9%
   2,000,000   Canada - Global Bond, 6.375% due
7/21/05...................................      1,971,250
   3,000,000   Panama-IRB, 3.500% due
7/17/14.............................................
2,321,250
   2,000,000   Poland, 6.438% due
10/27/24................................................
1,718,750 ------------------------------------------------
--------------------------------------------------------
6,011,250 ------------------------------------------------
--------------------------------------------------------
INDUSTRIAL -- 10.3%
   2,000,000   Becton Dickinson, 8.800% due
3/1/01........................................
2,130,000
   2,000,000   Cox Communication Inc., 6.875% due
6/15/05.................................      1,970,000
   2,000,000   McDonnell Douglas, 9.750% due
4/1/12.......................................
   2,400,000 3,000,000 McKesson Corp., 6.875% due
3/1/02+.........................................
3,003,750
   4,000,000   Philip Morris, 7.750% due
1/15/27..........................................
3,920,000
   1,000,000   SIGMT, 1993-4b, 5.800% due
3/15/98.........................................
990,560
   2,020,000   Tele-Comm Inc., 9.650% due
10/1/03.........................................
2,184,125
   5,000,000   Xerox Corp., 6.250% due
11/15/26...........................................
4,850,000 ------------------------------------------------
--------------------------------------------------------

21,448,435 -----------------------------------------------
---------------------------------------------------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       14

<pg$pcn> -------------------------------------------------
------------------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                              MANAGED ASSETS TRUST
<TABLE>
<CAPTION>
    FACE
   AMOUNT                                       SECURITY
VALUE ----------------------------------------------------
----------------------------------------------------
<C>            <S>
<C>
OIL -- 0.3%
$    500,000   Apache Corp, 6.000% due
1/15/02............................................   $
592,500 --------------------------------------------------
----------
---------------------------------------------
TELEPHONE -- 3.7%
   5,000,000   Bellsouth Cap Funding, 6.040% due
11/15/26.................................      4,918,750
   3,000,000   Bellsouth Telecom, 7.000% due
12/1/2095....................................
2,850,000 ------------------------------------------------
--------------------------------------------------------

7,768,750 ------------------------------------------------
-------------------------------------------------------
TRANSPORTATION -- 1.9%
   3,000,000   CSX, 6.950% due
5/1/27+...................................................
 . 3,015,000
     880,199   Wilmington Trust, 9.250% due
1/2/07+.......................................
907,582 --------------------------------------------------
------------------------------------------------------

3,922,582 ------------------------------------------------
--------------------------------------------------------
UTILITY - ELECTRIC -- 1.5%
   3,000,000   Tenaga Nasional, 7.200% due
4/29/07........................................
3,071,250 ------------------------------------------------
--------------------------------------------------------
               TOTAL CORPORATE BONDS (Cost -
$47,689,603)................................
48,314,892 -----------------------------------------------
---------------------------------------------------------
CONVERTIBLE CORPORATE BONDS -- 3.9% ----------------------
----------------------------------------------------------
------------------------
FINANCIAL -- 0.5%
     500,000   Equitable Cos., 6.125% due
12/15/24........................................
686,250
     500,000   USF&G Corp., zero coupon due
3/3/09........................................
358,750 --------------------------------------------------
------------------------------------------------------

1,045,000 ------------------------------------------------
--------------------------------------------------------
GOVERNMENT, NATIONAL -- 0.2%
     500,000   Republic of Italy, 5.000% due
6/28/01......................................
507,500 --------------------------------------------------
------------------------------------------------------
INDUSTRIAL -- 2.9%
   1,400,000   Alza Corp., zero coupon due
7/14/14........................................
624,750
     300,000   Berkshire Hathaway, 1.000% due
12/03/01....................................
     312,750 500,000     CUC International Inc., 3.000%
     due
2/15/02.................................        531,875
     300,000   GVC Corp. Ltd., zero coupon due
5/21/02+...................................        311,625
     580,000   Hilton Hotels Corp. 5.000% due
5/15/06.....................................
     620,600 500,000   Home Depot Inc., 3.250% due
10/1/01........................................
573,750
     300,000   Inco Ltd., 7.750% due
3/15/16..............................................
314,625
     300,000   Indian Petrochemicals, 8.800% due
3/11/02+.................................        317,625
   1,000,000   Marriot International, zero coupon due
3/25/11.............................        616,250
     100,000   Omnicom, zero coupon due
1/3/07............................................
121,625
     400,000   Rouse Co., 5.750% due
7/23/02..............................................
417,000
     300,000   RPM Inc., zero coupon due
9/30/12..........................................
144,750
     500,000   Scholastic Corp., 5.000% due
8/15/05.......................................
406,875
     200,000   Taiwan Semiconductor, zero coupon due
7/3/02+..............................        200,000
     500,000   Trinova Corp., 6.000% due
10/15/02.........................................
521,875 --------------------------------------------------
------------------------------------------------------

6,035,975 ------------------------------------------------
--------------------------------------------------------
UTILITY - ELECTRIC -- 0.3%
     600,000   Potomac Electric Power, 5.000% due
9/1/02..................................        554,250 --
----------------------------------------------------------
--------------------------------------------
               TOTAL CONVERTIBLE CORPORATE BONDS (Cost -
$7,490,037).....................      8,142,725 ----------
----------------------------------------------------------
------------------------------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       15

<pg$pcn> -------------------------------------------------
------------------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                              MANAGED ASSETS TRUST
<TABLE>
<CAPTION>
    FACE
   AMOUNT                                       SECURITY
VALUE ----------------------------------------------------
----------------------------------------------------
<C>            <S>
<C>
U.S. GOVERNMENT AGENCIES AND OBLIGATIONS -- 3.6% ---------
----------------------------------------------------------
-------------------------------------
$  3,000,000   U.S. Treasury Strip, zero coupon due
5/15/07...............................   $  1,566,660
     387,863   FHLMC, 8.500% due
9/1/02...................................................
397,680
   3,237,993   FNMA, 7.500% due
10/1/25...................................................
3,247,092
     171,320   FNMA, 8.500% due
3/1/05....................................................
177,423
     727,603   GNMA, 7.500% due
12/15/25..................................................
730,332
     193,425   GNMA, 7.500% due
5/15/23...................................................
194,151
     207,731   GNMA, 9.000% due
12/15/16..................................................
219,676
     210,679   GNMA, 9.000% due
11/15/19..................................................
222,794
     207,929   GNMA, 9.500% due
3/15/20...................................................
224,369
     376,019   GNMA, 9.500% due
1/15/20...................................................
405,748 --------------------------------------------------
------------------------------------------------------
               TOTAL U.S. GOVERNMENT AGENCIES AND
OBLIGATIONS
               (Cost -
$7,322,719)...............................................
 .. ......      7,385,925 ---------------------------------
----------------------------------------------------------
-------------
SHORT-TERM U.S. GOVERNMENT INSTRUMENTS -- 0.2%
     350,000   U.S. Treasury Bill, 5.060% due
7/10/97#....................................
      349,556 70,000 U.S. Treasury Bill, 5.070% due
7/10/97#....................................
      69,911 75,000  U.S. Treasury Notes, 5.480% due
8/21/97....................................         74,420
----------------------------------------------------------
----------------------------------------------
               TOTAL SHORT-TERM U.S. GOVERNMENT
               INSTRUMENTS (Cost --
$493,887).................................................
 .. ......        493,887 ---------------------------------
----------------------------------------------------------
-------------

COMMERCIAL PAPER -- 3.8%
   8,000,000   Merrill Lynch & Co., Inc., 5.550% due
7/8/97
(Cost -- $7,991,360)..........      7,991,360 ------------
----------------------------------------------------------
----------------------------------

REPURCHASE AGREEMENT -- 3.7%
   7,611,000   Citibank, 6.000% due 7/1/97; Proceeds at
maturity -- $7,612,266; (Fully
               collateralized by U.S. Treasury Notes;
5.500% due 12/31/00; Market
               value -- $7,766,069) (Cost -
$7,611,000)..................................
7,611,000 ------------------------------------------------
--------------------------------------------------------
               TOTAL INVESTMENTS -- 100% (Cost -
$167,978,548*)..........................   $208,442,690 --
----------------------------------------------------------
--------------------------------------------
</TABLE>

++ Non-income producing security.
+ Security is exempt from registration under rule 144A of
the Securities Act of
 1933. This security may be sold in transactions that are
exempt from
  registration, normally to qualified institutional
buyers. #      Security segregated by Custodian for open
futures contract
commitments.
* Aggregate cost for Federal income tax purposes is
substantially the same.

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       16

<pg$pcn> -------------------------------------------------
------------------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                             HIGH YIELD BOND TRUST
<TABLE>
<CAPTION>
  FACE
 AMOUNT    RATINGS
SECURITY                                     VALUE
----------------------------------------------------------
-----------------------------------------------
<C>        <S>        <C>
<C>
CORPORATE BONDS AND NOTES -- 90.7% -----------------------
----------------------------------------------------------
-----------------------BROADCASTING -- 2.6%
$500,000    BBB-      TKR Cable One Inc., Debentures,
10.500% due 10/30/07..................   $   549,375 -----
----------------------------------------------------------
------------------------------------------
CONSUMER NON-DURABLES -- 2.5%
  340,000    NR        French Fragrances Inc., Sr. Notes,
10.375% due 5/15/07+...............       351,050
  180,000    B         Syratech Corp., Sr. Notes, 11.000%
                            due
4/15/07........................       193,050 ------------
----------------------------------------------------------
-----------------------------------

544,100 --------------------------------------------------
-------------------------------------------------------
ENERGY -- 8.0%
   150,000    NR        Belden Blake Corp., Sr. Sub.
                        Notes,
9.875% due 6/15/07+...............       150,000
 310,000    B         Energy Corp. of America, Sr. Sub.
Notes, 9.500% due 5/15/07...........       310,000
 100,000    B-        Pacalta Resources Ltd., Sr.
Notes,
10.750% due 6/15/04+...............       101,750
 400,000    B+        Parker Drilling Corp., Sr. Notes,
Series B, 9.750% due 11/15/06+......       418,000
                      Transamerican Energy Corp.:
 200,000    NR        Sr. Secured Notes, 11.500% due
6/15/02+...............................       195,000
400,000    B+        Sr. Secured Discount Notes, step bond
to yield 13.000% due 6/15/02+...       290,000
100,000    BB        Triton Energy Ltd., Sr. Notes, 8.750%
due 4/15/02.....................       101,125
100,000    B+        Wiser Oil Co., Sr. Sub. Notes, 9.500%
due 5/15/07+....................       100,500 -----------
----------------------------------------------------------
------------------------------------

1,666,375 ------------------------------------------------
---------------------------------------------------------
FINANCE -- 2.1%
  400,000    B-        B. F. Saul Real Estate Investment
Trust, Sr. Secured Notes, Series B,
                      11.625% due
4/1/02+...................................................
431,000 --------------------------------------------------
-------------------------------------------------------
FOOD AND DRUG -- 9.9%
  150,000    NR        Archibald Candy Corp., Sr. Secured
Notes, 10.250% due 7/1/04+.........       152,250
  100,000    NR        Arisco Productos Alimenticios SA,
Notes, 10.750% due 5/22/05+.........       102,375
60,000      B         Dominicks Finer Foods, Sr. Sub.
Notes,
Series B, 10.875% due 5/1/05...        66,600
 500,000    B-        Duane Reade Corp., Sr. Notes, Series
B, 12.000% due 9/15/02...........       527,500
 267,032    NR        Food 4 Less Holdings Inc., Sr. Sub.
Debentures, Payment-in-kind,
                      13.625% due
6/15/07...................................................
317,768
100,000    NR        Leiner Health Products Inc., Sr. Sub.
Notes, 9.625% due 7/10/07+......       102,000
 200,000    B         Penn Traffic Co., Sr. Notes, 8.625%
due 12/15/03......................       162,750
 250,000    B-        Pueblo Extra International Inc., Sr.
Notes, 9.500% due 8/1/03.........       242,500
 250,000    NR        Randalls Food Markets Inc., Sr. Sub.
Notes, 9.375% due 7/1/07+........       249,375
  140,000    B+        Shoppers Food Warehouse Corp., Sr.
Notes, 9.750% due 6/15/04+.........       140,350 --------
----------------------------------------------------------
---------------------------------------

2,063,468 ------------------------------------------------
--------------------------------------------------------
FOOD/TOBACCO -- 7.6%
500,000    B+        Americold Corp., 1st Mortgage, Series
B, 11.500% due 3/1/05...........       540,000
250,000    NR        AFC Enterprises Inc., Sr. Sub. Notes,
10.250% due 5/15/07+............       254,375
 240,000    B+        Fresh Delmonte Produce N.V.,
Sr.
Notes, 10.000% due 5/1/03............       246,600
   236,896    NR        FRD Acquisition Co., Sr. Notes,
                          Series
B, 12.500% due 7/15/04.........       252,885
 100,000    NR        North Atlantic Trading Inc., Sr.
Notes, 11.000% due 6/15/04+..........       101,750
 200,000    NR        Windy Hill Pet Food Inc., Sr. Sub.
Notes, 9.750% due 5/15/07+.........       203,500
----------------------------------------------------------
-----------------------------------------------

1,599,110 ------------------------------------------------
---------------------------------------------------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       17

<pg$pcn> -------------------------------------------------
------------------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                             HIGH YIELD BOND TRUST
<TABLE>
<CAPTION>
  FACE
 AMOUNT    RATINGS
SECURITY                                     VALUE
----------------------------------------------------------
-----------------------------------------------
<C>        <S>        <C>
<C>
FOREST PRODUCTS -- 3.5%
$ 50,000    B         Broadway Corp., Sr. Sub. Notes,
10.250% due 4/15/07+..................   $    53,625
 250,000    NR        Indah Kiat Finance Mauritius Ltd.,
Guaranteed Sr. Notes, 10.000% due

7/1/07+...................................................
 .. ..........       249,688
  300,000    B         Silgan Corp., Sr. Sub. Debentures,
9.000% due 6/1/09+.................       303,000
 130,000    B-        Stone Container Corp., Sr. Sub.
Debentures, 12.250% due 4/1/02........       133,575 -----
----------------------------------------------------------
------------------------------------------

739,888 --------------------------------------------------
------------------------------------------------------
GAMING/LEISURE -- 4.1%
  100,000    NR        Colorado Gaming Entertainment Co.,
                            Sr.
Secured Notes, Payment-in-kind,
                      12.000% due
6/1/03....................................................
99,875
  350,000    B+        Hollywood Casino Corp., Guaranteed
                            Sr.
Secured Notes, 12.750% due

11/1/03...................................................
 .. ..........       373,625
 200,000    B         Riddell Sports Inc., Sr. Notes,
10.500% due 7/15/07+..................       205,000
    190,000    BB-       Trump Atlantic City Associates
                          Funding
Inc., 1st Mortgage Notes,
                      11.250% due
5/1/06....................................................
186,200 --------------------------------------------------
-------------------------------------------------------

864,700 --------------------------------------------------
-------------------------------------------------------
HEALTHCARE PRODUCTS -- 0.9%
  180,000    B-        Regency Health Services Inc., Sr.
                           Sub.
Notes, 9.875% due 10/15/02.....       186,300 ------------
----------------------------------------------------------
-----------------------------------
HOUSING -- 5.4%
 130,000    B-        Associated Materials Inc., Sr. Sub.
Notes, 11.500% due 8/15/03........       137,800
   350,000    B+        Greystone Homes Inc., Sr. Notes,
10.750% due 3/1/04...................       379,313
 250,000    B         NVR Inc., Sr. Notes, 11.000% due
4/15/03..............................       268,438
 340,000    NR        Reliant Building Products Inc., Sr.
Sub. Notes, 10.875% due 5/1/04+...       350,200
----------------------------------------------------------
-----------------------------------------------

1,135,751 ------------------------------------------------
--------------------------------------------------------
INFORMATION/TECHNOLOGY -- 0.8%
  160,000    B+        Unisys Corp., Sr. Notes, Series B,
12.000% due 4/15/03................       175,200 --------
----------------------------------------------------------
--------------------------------------MANUFACTURING --
5.1%
 200,000    B         CMI Industries Inc., Sr. Sub. Notes,
9.500% due 10/1/03...............       200,750
  150,000    B-        Roller Bearing Co., Guaranteed Sr.
Sub. Notes, 9.625% due 6/15/07+....       152,250
  50,000    B         Selmer Co. Inc., Sr. Sub. Notes,
11.000% due 5/15/05..................        54,750
 400,000    B-        Terex Corp., Sr. Secured Notes,
13.250% due 5/15/02+..................       449,000
 200,000    B-        Viasystems Inc., Sr. Sub. Notes,
9.750% due 6/1/07+...................       205,000 ------
----------------------------------------------------------
-----------------------------------------

1,061,750 ------------------------------------------------
--------------------------------------------------------
MEDIA/ENTERTAINMENT -- 18.2%
 180,000    B         Affinity Group Inc., Sr. Sub. Notes,
11.500% due 10/15/03.............       193,500
 150,000    BB-       Cobb Theatres Corp., Sr. Secured
Notes, 10.625% due 3/1/03............       164,813
  55,000    B-        Commemorative Brands Inc., Sr. Sub.
Notes, 11.000% due 1/15/07........        57,750
   500,000    B3*       Commodore Media Inc., Sr. Sub.
                         Notes,
7.500% due 5/1/03...............       545,000
350,000    B-        Diamond Cable Communication PLC., Sr.
Discount Notes, step bond to
                    yield   10.500% due
2/15/07+..........................................
208,250
100,000    B         Globolstar LP, Sr. Notes, 11.250% due
6/15/04+........................        94,000
    350,000    B-        Kabelmedia Holdings GMBH, Sr.
                         Discount
Notes, step bond to yield
                      12.840% due
8/1/06....................................................
215,250
 500,000    NR        Live Entertainment Inc., Sr. Sub.
Notes, 12.000% due 3/23/99..........       501,250
400,000    B-        Paxson Communications Corp., Sr. Sub.
Notes, 11.625% due 10/1/02+.....       433,500
  400,000    B-        Pegasus Media Communications Inc.,
Notes, Series B, 12.500% due

7/1/05+...................................................
 .. ..........       441,000
 300,000    B-        Plitt Theaters Inc., Sr. Sub. Notes,
10.875% due 6/15/04..............       313,500
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       18

<pg$pcn> -------------------------------------------------
------------------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                             HIGH YIELD BOND TRUST
<TABLE>
<CAPTION>
  FACE
 AMOUNT    RATINGS
SECURITY                                     VALUE
----------------------------------------------------------
-----------------------------------------------
<C>        <S>        <C>
<C>
MEDIA/ENTERTAINMENT -- 18.2% (CONTINUED)
$170,000    NR        PTC International Finance BV, Co.
Guaranteed, step bond to yield
                      10.652% due
7/1/07+...................................................
$   103,275
 200,000    B+        Telewest Communications PLC, Sr.
Discount Debentures, step bond to
                      yield
                      10.751% due
10/1/07...................................................
145,000
 190,000    NR        Sun Media Corp., Sr. Sub. Notes,
9.500% due 5/15/07+..................       192,375
 250,000    B-        United International Holdings Inc.,
Ltd., Sr. Secured Discount Notes,
                      zero coupon
                      to yield 11.320% due
11/15/99.........................................
195,000 --------------------------------------------------
-------------------------------------------------------

3,803,463 ------------------------------------------------
--------------------------------------------------------
METALS/MINERALS -- 1.9%
 100,000    B         Continental Global Group Corp., Sr.
Notes, 11.000% due 4/1/07.........       105,125
  90,000    B-        MMI Products Inc., Sr. Sub. Notes,
11.250% due 4/15/07+...............        96,075
 180,000    B+        Wells Aluminum Corp., Sr. Notes,
10.125% due 6/1/05+..................       186,975 ------
----------------------------------------------------------
-----------------------------------------

388,175 --------------------------------------------------
-------------------------------------------------------
RETAIL -- 3.7%
 500,000    B+        K Mart Corp., Medium Term Notes,
7.900% due 12/14/00..................       487,500
 150,000    B+        Leslies Poolmart Inc., Sr. Notes,
10.375% due 7/15/04+................       154,689
  40,000    CCC       Specialty Foods Inc., Sr. Sub.
Notes,
11.250% due 8/15/03.............        35,200
 100,000    BB-       Specialty Retailers Inc., Sr. Notes,
8.500% due 7/15/05+..............       100,750 ----------
----------------------------------------------------------
-------------------------------------

778,139 --------------------------------------------------
-------------------------------------------------------
SERVICES -- 13.9%
 500,000    NR        Emcor Group Inc., Sub. Notes, Series
C, 11.000% due 12/15/01..........       522,500
  400,000    CCC+      Florists Transworld Delivery Inc.,
                            Sr.
Sub. Notes, Series B,
                      14.000% due
12/15/01..................................................
427,000
 150,000    NR        Hedstrom Corp., Sr. Sub. Notes,
10.000% due 6/1/07+...................       153,000
 150,000    B-        ICF Kaiser International Inc., Sr.
Sub. Notes, 13.000% due 12/31/03...       153,562
   400,000    B         Mail-Well Corp., Sr. Sub.
                       Notes,
10.500% due 2/15/04+.................       424,000
 500,000    Caa*      Sullivan Graphics Inc., Sr.
Sub.
Notes, 12.750% due 8/1/05+...........       519,375
   500,000    B-        U.S. Banknote Corp., Sr. Notes,
                          Series
B, 11.625% due 8/1/02+.........       507,500
  200,000    B-        Williams Scotsman Inc., Sr. Notes,
9.875% due 6/1/07+.................       200,500 --------
----------------------------------------------------------
---------------------------------------

2,907,437 ------------------------------------------------
--------------------------------------------------------
TRANSPORTATION -- 0.5%
   100,000    B         Atlantic Express Transportation
                          Corp.,
Sr. Secured Notes, 10.750% due

2/1/04....................................................
 ..
 ..........       104,375 ---------------------------------
----------------------------------------------------------
--------------
                      TOTAL CORPORATE BONDS AND NOTES
(Cost -- $18,091,154).................    18,998,606 -----
----------------------------------------------------------
------------------------------------------
FOREIGN GOVERNMENT BONDS -- 4.2%
 200,000    BB-       Brazil- NMB L-Bearer, Government
Guaranteed, 6.938% due 4/15/09.......       174,625
 354,921    BB+       Panama-PDI, Debentures, 6.563% due
7/17/16............................       312,774
                      Republic of Venezuela:
 250,000    B+        Government Guaranteed, 6.750% due
3/31/20.............................       196,875
 200,000    B+        Sr. Unsub. Notes, 9.125% due
6/18/07..................................       200,400 --
----------------------------------------------------------
---------------------------------------------
                      TOTAL FOREIGN GOVERNMENT BONDS (Cost
- $859,340).....................       884,674
----------------------------------------------------------
-----------------------------------------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       19

<pg$pcn> -------------------------------------------------
------------------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                             HIGH YIELD BOND TRUST
<TABLE>
<CAPTION>
 SHARES
SECURITY                                     VALUE
----------------------------------------------------------
-----------------------------------------------
<C>        <S>        <C>
<C>
COMMON STOCK -- 0.0%
ENERGY -- 0.0%
     264              Baycorp Holdings Ltd. (Cost --
$0)....................................   $     2,013 ----
----------------------------------------------------------
-------------------------------------------
PREFERRED STOCK -- 0.7%
BROADCASTING -- 0.7%
   1,300              SFX Broadcasting Inc., 12.625% (Cost
-
- $132,537).....................       147,874
----------------------------------------------------------
-----------------------------------------------
WARRANTS -- 0.1% -----------------------------------------
----------------------------------------------------------
-----MANUFACTURING -- 0.1%
   1,600              Terex Corp., Expire
5/15/02++.........................................
19,200 ---------------------------------------------------
---------
----------------------------------------------
METAL PRODUCTS -- 0.0%
     500              Gulf State Steel Alabama Inc.,
Expire
4/15/03+++......................         2,500
----------------------------------------------------------
-----------------------------------------------
                      TOTAL WARRANTS (Cost -
$0)...........................................
21,700 ---------------------------------------------------
------------------------------------------------------
  FACE
 AMOUNT
SECURITY                                     VALUE
----------------------------------------------------------
-----------------------------------------------
REPURCHASE AGREEMENT -- 4.3%
$890,000             Citibank, 6.000% due 7/1/97; Proceeds
at maturity -- $890,148; (Fully
                      collateralized by U.S. Treasury
Notes, 5.875% due 3/31/99; (Market
                      value -- $901,125) (Cost -
$890,000).................................       890,000 -
----------------------------------------------------------
----------------------------------------------
                      TOTAL INVESTMENTS -- 100% (Cost -
$19,973,031**).....................   $20,944,867 --------
----------------------------------------------------------
---------------------------------------
</TABLE>

 + Security is exempt from registration under Rule 144A of
the Securities Act of
   1933. These securities may be resold in transactions
exempt from
 registration, normally to qualified institutional buyers.
 ++ Non-income producing security.
** Aggregate cost for Federal income tax purposes is
substantially the same.

   See page 21 for definition of bond ratings.

                      SUMMARY OF BONDS BY COMBINED RATINGS

<TABLE>
<CAPTION>
                      STANDARD &     % OF TOTAL CORPORATE
MOODY'S     AND/OR      POOR'S          BONDS & NOTES
--------------------------------------------------------
<S>         <C>       <C>            <C>
 Ba                     BB                     8.0%
  B                      B
60.0
 Caa                    CCC
5.0
 NR                     NR
27.0
---------------------------------------------------------
                                             100.0% ------

--------------------------------------------------</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       20

<pg$pcn>

----------------------------------------------------------
---------------------
 BOND RATINGS
All ratings are by Standard & Poor's Rating Service
("Standard & Poor's"),
except that those identified by an asterisk (*) are rated
by Moody's Investors
Service, Inc. ("Moodys"). The definitions of the
applicable rating symbols are
set forth below:

Standard & Poor's -- Rating from "AA" to "C" may be
modified by the addition of
a plus (+) or a minus (-) sign to show relative standings
within the major
rating categories.

<TABLE>
<S>             <C>  <C>
AAA             --   Debt rated "AAA" has the highest
rating
assigned by Standard & Poor's. Capacity to
                     pay interest and repay principal is
extremely strong.
AA              --   Debt rated "AA" has a very strong
capacity to pay interest and repay principal and
                     differs from the highest rated issue
only in a small degree.
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.
BBB             --   Debt rated "BBB" are regarded as
having
an adequate capacity to pay interest and
                     repay principal. Whereas they
normally exhibit 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 bonds in this category
                     than for bonds in higher rated
categories.
BB, B and CCC   --   Debt rated "BB" and "B" are 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"
represents a lower degree of speculation than "B",
                     and "CCC" the highest degree of
speculation. While such bonds will likely have some
                     quality and protective
                     characteristics,
these are outweighed by large uncertainties
                     or major risk exposures to adverse
conditions.
C               --   The rating "C" is reserved for income
bonds on which no interest is being paid.
D               --   Debt rated "D" are in default, and
payment of interest and/or repayment of
                     principal is in arrears.
</TABLE>

Moody's -- Numerical modifiers 1, 2, and 3 may be applied
to each generic rating
from "Aa" to "C", where 1 is the highest and 3 the lowest
rating within its
generic category.

<TABLE>
<S>             <C>  <C>
Aaa             --   Bonds that are rated "Aaa" are judged
to be of the best quality. They carry the
                     smallest degree of investment fisk
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 as can be visualized are
most unlikely to impair the fundamentally
                     strong position of such issues.
Aa              --   Bonds that 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 fluctuation of protective elements may be
                     of greater amplitude or there may be
other elements present which make the
                     long-term risks appear somewhat
larger than in "Aaa" securities.
A               --   Bonds that 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 some
time in the future.
Baa             --   Bonds that are rated "Baa" are
considered to be medium grade obligations; that is,
                     they are neither highly protected nor
poorly secured. Interest payment 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. These bonds lack outstanding
investment characteristics and may have
                     speculative characteristics as well.
Ba              --   Bonds that 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.
B               --   Bonds that are rated "B" generally
lack
characteristics of desirable investments.
                     Assurance of interest and principal
payments or of maintenance of other terms of
                     the contract over any long period of
time may be small.
Caa             --   Bonds that are rated "Caa" are of
poor
standing. These issues may be in default, or
                     present elements of danger may exist
with respect to principal or interest.
Ca              --   Bonds that are rated "Ca" represent
obligations which are speculative in a high
                     degree. Such issues are often in
default or have other marked shortcomings.
C               --   Bonds that are rated "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.
NR              --   Indicates that the bond is not rated
by
Standard & Poor's or Moody's.
</TABLE>

                                       21
<pg$pcn>
----------------------------------------------------------
---------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                           CAPITAL APPRECIATION FUND

<TABLE>
<CAPTION>
  SHARES                                        SECURITY
VALUE ----------------------------------------------------
----------------------------------------------------
<C>            <S>
<C>
COMMON STOCK -- 90.8% ------------------------------------
----------------------------------------------------------
----------
AIRCRAFT & AEROSPACE -- 2.0%
     99,700    Textron
Inc.......................................................
 .. .......   $  6,617,588 --------------------------------
----------------------------------------------------------
--------------
AIRLINES -- 3.4%
     50,750    Alaska Air Group,
Inc......................................................
1,300,469
    138,650    UAL
Corp.++...................................................
 .. ...........   9,922,141
----------------------------------------------------------
----------------------------------------------

11,222,610 -----------------------------------------------
---------------------------------------------------------
BANKING -- 7.8%
    102,050    Bank of New
York......................................................
 .. ...      4,439,175
     10,000    Catskill Financial
Corp.++.................................................
155,000
     63,190
Citicorp..................................................
 .. ...............   7,618,344
     10,000    Community Federal
Bancorp..................................................
180,000
     10,000    First Bergen
Bancorp...................................................
 .. ..                    152,500
     10,000    GA Financial
Inc.......................................................
 .. ..                    188,750
     28,550    Mercantile Bancorp,
Inc....................................................
1,734,413
     10,000    PFF Bancorp,
Inc.++....................................................
 .. ..                    187,500
     47,000    R & G Financial
Corp......................................................
 . 1,222,000
     35,791    Wells Fargo &
Co........................................................
 .. .             9,645,674
----------------------------------------------------------
----------------------------------------------

25,523,356 -----------------------------------------------
---------------------------------------------------------
BEVERAGE -- 4.9%
     93,250    Coca-Cola
Co........................................................
 .. .....      6,294,375
    429,275    Coca-Cola
Enterprises...............................................
 .. .....      9,873,325 ----------------------------------
----------------------------------------------------------
------------

16,167,700 -----------------------------------------------
---------------------------------------------------------
BUSINESS SERVICES -- 4.7%
     46,075    Danka Business Systems
ADR.................................................
1,883,316
     31,087    Diebold
Inc.......................................................
 .. .......      1,212,393
    276,225    First Data
Corp......................................................
 .. ....     12,136,636 -----------------------------------
----------------------------------------------------------
-----------

15,232,345 -----------------------------------------------
---------------------------------------------------------
CHEMICAL -- 7.0%
    175,575    Cytec Industries
Inc.++....................................................
6,562,116
    375,350    Monsanto
Co........................................................
 .. ......     16,163,509 ---------------------------------
----------------------------------------------------------
-------------

22,725,625 -----------------------------------------------
--------------------------------------------------------
COMMUNICATIONS -- 0.5%
     65,000    Qwest Communications International,
Inc.++.................................      1,771,250 ---
----------------------------------------------------------
-------------------------------------------
COMPUTERS -- 8.8%
     17,500    Compaq Computer
Corp.++...................................................
 . 1,736,875
    108,075    Dell Computer
Corp.++...................................................
 .. .                   12,692,058
     59,625    Intel
Corp......................................................
 .. .........   8,455,570
    168,425    Seagate Technology,
Inc.++.................................................
5,926,455 ------------------------------------------------
--------------------------------------------------------

28,810,958 -----------------------------------------------
---------------------------------------------------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       22

<pg$pcn> -------------------------------------------------
------------------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                           CAPITAL APPRECIATION FUND
<TABLE>
<CAPTION>
  SHARES                                        SECURITY
VALUE ----------------------------------------------------
----------------------------------------------------
<C>            <S>
<C>
CONSUMER STAPLES -- 2.3%
    250,000    US Office Products Co.
 ....................................................   $
7,640,625 ------------------------------------------------
--------------------------------------------------------
DIVERSIFIED OPERATIONS -- 4.0%
    202,450    General Electric Co.
 ......................................................
13,235,168 -----------------------------------------------
---------------------------------------------------------
DRUGS AND HEALTHCARE -- 10.5%
     35,850    American Home
Products..................................................
 .. .                    2,742,525
      8,400    Bristol-Myers Squibb Co.
 ..................................................
680,400
    123,475    Eli Lilly & Co.
 ..........................................................
 . 13,497,360
     63,475    Pfizer, Inc.
 ..........................................................
 .. ..                  7,585,263
     78,125    Warner-Lambert Co.
 ........................................................
9,707,031 ------------------------------------------------
--------------------------------------------------------

34,212,579 -----------------------------------------------
---------------------------------------------------------
FINANCIAL SERVICES -- 10.8%
     32,950    Charles Schwab Corp.
 ......................................................
1,340,653
     10,000    Chester Bancorp Inc.
 ......................................................
148,750
    179,325    Federal Home Loan Mortgage Corp.
 ..........................................      6,164,297
    196,655    Federal National Mortgage
Association......................................
8,579,074
     10,000    First Defiance Financial
Corp..............................................
146,250
    132,355    Merrill Lynch & Co., Inc.
 .................................................
7,891,667
     10,000    South Street Financial
Co.++...............................................
165,000
     98,075    State Street Boston Corp.
 .................................................
4,535,969
     50,725    Student Loan Marketing
Association.........................................
6,442,075 ------------------------------------------------
--------------------------------------------------------

35,413,735 -----------------------------------------------
---------------------------------------------------------
FOOD -- 0.4%
     25,365    Safeway
Inc.++....................................................
 .. .......      1,169,961 --------------------------------
----------------------------------------------------------
-------------MANUFACTURING -- 4.6%
     84,625    Applied Materials,
Inc.++..................................................
5,992,508
    142,800    E. I. du Pont de Nemours & Co.
 ............................................
8,978,550 ------------------------------------------------
--------------------------------------------------------

14,971,058 -----------------------------------------------
---------------------------------------------------------
MATERIALS & PROCESSING -- 2.3%
    208,050    Delta & Pine Land Co.
 .....................................................
7,411,781 ------------------------------------------------
--------------------------------------------------------
NATURAL GAS -- 1.3%
     75,500    Praxair Inc.
 ..........................................................
 .. ..                     4,228,000
----------------------------------------------------------
----------------------------------------------
OIL & GAS -- 5.5%
    106,425    Diamond Offshore Drilling,
Inc.++..........................................
8,314,453
     52,550    Schlumberger Ltd.
 .........................................................
6,568,750
     41,625    Transocean Offshore Inc.
 ..................................................
3,023,016 ------------------------------------------------
--------------------------------------------------------

17,906,219 -----------------------------------------------
--------------------------------------------------------
TELECOMMUNICATIONS -- 5.2%
     28,450    Cincinnati Bell, Inc.
 .....................................................
896,175
    224,450    Lucent Technologies
Inc....................................................
16,174,428 -----------------------------------------------
---------------------------------------------------------

17,070,603 -----------------------------------------------
---------------------------------------------------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       23

<pg$pcn> -------------------------------------------------
------------------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                           CAPITAL APPRECIATION FUND
<TABLE>
<CAPTION>
  SHARES                                        SECURITY
VALUE ----------------------------------------------------
----------------------------------------------------
<C>            <S>
<C>
RETAIL -- 2.0%
     34,875    Fred Meyer,
Inc.++....................................................
 ..
 ...   $  1,802,602
     44,875    Gucci
Group.....................................................
 .. .........   2,888,828
     46,650    Starbucks
Corp.++...................................................
 .. .....          1,816,434
----------------------------------------------------------
----------------------------------------------

6,507,864 ------------------------------------------------
--------------------------------------------------------
SOFTWARE -- 2.8%
     73,425    Microsoft
Corp.++...................................................
 .. .....          9,279,084
----------------------------------------------------------
----------------------------------------------
                TOTAL COMMON STOCK (Cost --
$225,628,571)..................................
297,118,109 ----------------------------------------------
----------------------------------------------------------
FOREIGN STOCK -- 5.8%
        801    Bayerische Motoren Werke
AG................................................
660,988
     17,506    Volkswagen
AG........................................................
 .. ....         13,280,690
     56,000    Sony Corp.
 ..........................................................
 .. ....          4,888,928
----------------------------------------------------------
----------------------------------------------
               TOTAL FOREIGN STOCK (Cost --
$14,586,624)..................................
18,830,606 -----------------------------------------------
---------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
   FACE
  AMOUNT                                        SECURITY
VALUE ----------------------------------------------------
----------------------------------------------------
<C>            <S>
<C>
REPURCHASE AGREEMENT -- 3.4%
$11,027,000    Citibank, 5.988% due 7/1/97; Proceeds at
maturity -- $11,028,834; (Fully
               collateralized by U.S. Treasury Notes,
6.500% due 8/31/01; Market
               value -- $11,249,381) (Cost -
$11,027,000)................................
11,027,000 -----------------------------------------------
---------------------------------------------------------
               TOTAL INVESTMENTS -- 100% (Cost -
$251,242,195*)..........................   $326,975,715 --
----------------------------------------------------------
--------------------------------------------
</TABLE>

 ++ Non-income producing security.
    * Aggregate cost for Federal income tax purposes is
substantially the same.

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       24

<pg$pcn>

----------------------------------------------------------
---------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                               CASH INCOME TRUST
<TABLE>
<CAPTION>
   FACE
ANNUALIZED
  AMOUNT                                  SECURITY
YIELD         VALUE
----------------------------------------------------------
-----------------------------------------------
<C>           <S>
<C>           <C>

COMMERCIAL PAPER -- 95.5%
$   180,000   Allied Signal Inc. matures
7/7/97................................      5.58%      $
179,834
    180,000   American Express Co. matures
7/2/97..............................      5.56
179,972
    180,000   Becton Dickinson & Co. matures
7/8/97............................     5.55
179,806
    149,900   Chase Manhattan Bank matures
7/8/97..............................     5.57
149,739
    175,000   Dillard Investment Co., Inc. matures
7/22/97.....................      5.58          174,432
    180,000   Ford Motor Credit Corp. matures
7/29/97..........................      5.56
179,226
    180,000   General Electric Capital Corp. matures
7/23/97...................      5.60          179,390
    180,000   General Mills Inc. matures
7/8/97................................      5.55
179,807
    180,000   Goldman, Sachs matures
7/10/97...................................      5.58
179,749
    180,000   Household Finance Corp. matures
7/22/97..........................      5.60
179,416
    175,000   May Department Stores matures
7/29/97............................      5.62
174,242
    180,000   Merrill Lynch Co. matures
7/14/97................................      5.61
179,637
    180,000   National Rural Utilities matures
7/17/97.........................      5.57
179,558
    175,000   Northern Indiana Public Service Corp.
matures
7/21/97............      5.57          174,461
    180,000   Paccar Financial Corp. matures
7/7/97............................      5.52
179,835
    180,000   PacifiCorp matures
7/17/97.......................................      5.60
179,555
    180,000   Pearson Inc. matures
7/15/97.....................................      5.58
179,611
    175,000   Progress Capital Holdings matures
7/11/97........................      5.57          174,730
    176,000   Prudential Funding Co. matures
7/21/97...........................      5.58
175,459
    175,000   Southern California Edison Co. matures
7/23/97...................      5.57          174,406
    180,000   Southern New England Telecom matures
7/22/97.....................      5.56          179,419
    180,000   Tampa Electric Co. matures
7/28/97...............................      5.57
179,251
    180,000   Transamerica Finance Corp. matures
7/11/97.......................      5.63          179,719
    180,000   TRW Inc. matures
7/7/97..........................................      5.59
179,834 --------------------------------------------------
-------------------------------------------------------
              TOTAL COMMERCIAL PAPER (Cost -
$4,251,088)......................
4,251,088
----------------------------------------------------------
-----------------------------------------------

REPURCHASE AGREEMENT -- 4.5%
    198,000   Citibank, 5.59% due 7/1/97, Proceeds at
maturity -- $198,031;
              (Fully collateralized by U.S. Treasury
Notes, 8.75% due 8/15/00;
              Market value -- $218,295) (Cost -
$198,000).....................                    198,000
----------------------------------------------------------
-----------------------------------------------
              TOTAL INVESTMENTS -- 100% (Cost -
$4,449,088*)..................                 $4,449,088
----------------------------------------------------------
-----------------------------------------------
</TABLE>

* Aggregate cost for Federal income tax purposes is

substantially the same.

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       25

<pg$pcn> -------------------------------------------------
------------------------------
 STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 1997

<TABLE>
<CAPTION>

MANAGED      HIGH YIELD      CAPITAL         CASH

ASSETS         BOND       APPRECIATION     INCOME
TRUST          TRUST          FUND         TRUST
----------------------------------------------------------
-------------------------------------------------
<S>                                                   <C>
<C>           <C>            <C>
ASSETS:
  Investments -- Cost...............................
$167,978,548   $19,973,031   $251,242,195   $4,449,088
----------------------------------------------------------
------------------------------------------------
  Investments, at value.............................
$208,442,690   $20,944,867   $326,975,715   $4,449,088
  Cash..............................................
229       205,826            155          768
Dividends and interest receivable.................
1,099,628       375,048         86,591
114
  Receivable from securities
sold................... 893,678       422,579
128,290           --
  Receivable from broker -- variation
margin........ 83,125           --     --
--
  Receivable from
affiliate......................... --            -
- --       14,855
----------------------------------------------------------
-------------------------------------------------
  TOTAL ASSETS......................................
210,519,350    21,948,320    327,190,751    4,464,825
----------------------------------------------------------
------------------------------------------------
LIABILITIES:
  Investment advisory fees payable..................
84,967         8,519        166,085           --
  Administration fees payable.......................
10,235         1,022         12,502           --
  Payable for securities purchased..................
1,408,138       648,106         86,583           --
  Dividends payable.................................
--            --             --        6,714
  Accrued expenses..................................
19,687        16,258          4,048        1,776
----------------------------------------------------------
-------------------------------------------------
  TOTAL LIABILITIES.................................
1,523,027       673,905        269,218        8,490
----------------------------------------------------------
-------------------------------------------------
TOTAL NET ASSETS....................................
$208,996,323   $21,274,415   $326,921,533   $4,456,335
----------------------------------------------------------
-------------------------------------------------
NET ASSETS:
  Paid-in capital...................................
$156,846,314   $24,249,684   $239,162,568   $4,456,335
  Undistributed net investment income...............
3,725,600       656,407      1,274,156           --
  Accumulated net realized gain (loss) from security
     transactions...................................
7,886,167    (4,603,512)    10,751,141           --
  Net unrealized appreciation of investments,
     futures contracts and foreign currencies.......
40,538,242       971,836     75,733,668           --
----------------------------------------------------------
-------------------------------------------------
TOTAL NET ASSETS....................................
$208,996,323   $21,274,415   $326,921,533   $4,456,335 ---
----------------------------------------------------------
----------------------------------------------
SHARES OUTSTANDING..................................
12,474,281     2,318,711      7,617,350    4,456,335
----------------------------------------------------------
-------------------------------------------------
NET ASSET VALUE, PER SHARE..........................
$16.75         $9.18         $42.92        $1.00
----------------------------------------------------------
-------------------------------------------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       26

<pg$pcn> -------------------------------------------------
------------------------------
   STATEMENTS OF OPERATIONS (UNAUDITED)     FOR THE SIX
                          MONTHS
ENDED JUNE 30, 1997

<TABLE>
<CAPTION>

MANAGED     HIGH YIELD     CAPITAL        CASH

ASSETS         BOND      APPRECIATION    INCOME

TRUST        TRUST          FUND        TRUST
----------------------------------------------------------
--------------------------------------------------
<S>
<C>           <C>          <C>            <C>
INVESTMENT INCOME:
  Interest...............................................
  $
2,608,814   $  912,810   $    942,881   $108,363
  Dividends..............................................
1,053,145           --      1,274,157         --
  Less: Foreign withholding tax..........................
--           --        (42,871)        --
----------------------------------------------------------
--------------------------------------------------
  TOTAL INVESTMENT INCOME................................
3,661,959      912,810      2,174,167    108,363
----------------------------------------------------------
-------------------------------------------------EXPENSES:
  Investment advisory fees (Note 3)......................
486,500       47,082      1,002,275      9,526
  Administration fees (Note 3)...........................
55,213        4,756         69,061      1,469
Shareholder communications.............................
29,115        8,300         23,000        450
Audit and legal........................................
23,140       10,000          7,000      8,315
Custody................................................
16,860        3,000          9,000      3,487
Shareholder and system servicing fees..................
5,000        4,300          3,920      2,860
Trustees' fees.........................................
5,000        4,400          5,000      3,272
Pricing service fees...................................
3,000           --             --         --
  Registration fees......................................
--           --             --        400
  Other..................................................
1,780        1,610            360         --
----------------------------------------------------------
--------------------------------------------------
  TOTAL EXPENSES.........................................
625,608       83,448      1,119,616     29,779
  Less: Expense reimbursement............................
--           --             --    (16,196)
----------------------------------------------------------
--------------------------------------------------
  NET EXPENSES...........................................
625,608       83,448      1,119,616     13,583
----------------------------------------------------------
--------------------------------------------------
NET INVESTMENT INCOME....................................
3,036,351      829,362      1,054,551     94,780
----------------------------------------------------------
--------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS,
FUTURES CONTRACTS AND FOREIGN CURRENCIES (NOTES 4 AND 6):
  Realized Gain (Loss) From:
     Security transactions (excluding short-term
       securities)*......................................
5,413,500      336,616     11,972,060        (25)
   Futures contracts...................................
(1,098,325)          --             --         --
----------------------------------------------------------
--------------------------------------------------
  NET REALIZED GAIN (LOSS)...............................
4,315,175      336,616     11,972,060        (25) --------
----------------------------------------------------------
------------------------------------------
   Change in Net Unrealized Appreciation of Investments,
  Futures Contracts and Foreign Currencies:
   Beginning of period.................................
25,676,994      658,102     45,698,691         --
   End of period.......................................
40,538,242      971,836     75,733,668         --
----------------------------------------------------------
--------------------------------------------------
  INCREASE IN NET UNREALIZED APPRECIATION................
14,861,248      313,734     30,034,977         --
----------------------------------------------------------
--------------------------------------------------
NET GAIN (LOSS) ON INVESTMENTS, FUTURES CONTRACTS AND
  FOREIGN CURRENCIES.....................................
19,176,423      650,350     42,007,037        (25)
----------------------------------------------------------
--------------------------------------------------
INCREASE IN NET ASSETS FROM OPERATIONS...................
$22,212,774   $1,479,712   $ 43,061,588   $ 94,755 -------
----------------------------------------------------------
-------------------------------------------
</TABLE>

* Represents only gains from the sale of short-term
securities for the Cash
Income Trust.

                       SEE NOTES TO FINANCIAL
STATEMENTS.

                                       27

<pg$pcn>

----------------------------------------------------------
---------------------
 STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)   FOR THE
SIX MONTHS ENDED JUNE
30, 1997

<TABLE>
<CAPTION>

MANAGED      HIGH YIELD      CAPITAL         CASH
ASSETS         BOND       APPRECIATION     INCOME
TRUST          TRUST          FUND         TRUST
----------------------------------------------------------
-------------------------------------------------
<S>                                                   <C>
<C>           <C>            <C>
OPERATIONS:
   Net investment income.............................  $
3,036,351   $   829,362   $  1,054,551   $   94,780
  Net realized gain (loss)..........................
4,315,175       336,616     11,972,060          (25)
  Increase in net unrealized appreciation...........
14,861,248       313,734     30,034,977           --
----------------------------------------------------------
-------------------------------------------------
  INCREASE IN NET ASSETS FROM OPERATIONS............
22,212,774     1,479,712     43,061,588       94,755
----------------------------------------------------------
------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM (NOTE 2):
  Net investment income.............................
--            --             --      (94,737)
----------------------------------------------------------
-------------------------------------------------
  DECREASE IN NET ASSETS FROM
     DISTRIBUTIONS TO SHAREHOLDERS..................
--            --             --      (94,737)
----------------------------------------------------------
-------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 9):
  Net proceeds from sale of shares..................
3,264,591     3,595,019     69,418,802    7,780,666
  Net asset value of shares issued for
      reinvestment of dividends......................
--            --             --       94,737
  Cost of shares reacquired.........................
(5,091,523)   (1,091,359)    (9,690,608)  (6,961,741)
----------------------------------------------------------
-------------------------------------------------
  INCREASE (DECREASE) IN NET ASSETS FROM FUND SHARE
     TRANSACTIONS...................................
(1,826,932)    2,503,660     59,728,194      913,662
----------------------------------------------------------
-------------------------------------------------
INCREASE IN NET ASSETS..............................
20,385,842     3,983,372    102,789,782      913,680
NET ASSETS:
  Beginning of period...............................
188,610,481    17,291,043    224,131,751    3,542,655
----------------------------------------------------------
-------------------------------------------------
  END OF PERIOD*....................................
$208,996,323   $21,274,415   $326,921,533   $4,456,335
----------------------------------------------------------
-------------------------------------------------
* Includes undistributed net investment income
  of: ..............................................
$3,725,600      $656,407     $1,274,156           --
----------------------------------------------------------
-------------------------------------------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       28

<pg$pcn> -------------------------------------------------
------------------------------
  STATEMENTS OF CHANGES IN NET ASSETS        FOR THE YEAR
ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>

MANAGED      HIGH YIELD      CAPITAL         CASH
ASSETS         BOND       APPRECIATION     INCOME
TRUST          TRUST          FUND          TRUST
----------------------------------------------------------
--------------------------------------------------
<S>                                                   <C>
<C>           <C>            <C>
OPERATIONS:
   Net investment income.............................  $
6,221,446   $ 1,631,694   $  1,149,455   $    94,484
  Net realized gain (loss)..........................
13,430,793      (304,388)    13,938,060            --
  Increase in net unrealized appreciation...........
3,373,072       857,828     24,478,515            --
----------------------------------------------------------
--------------------------------------------------
  INCREASE IN NET ASSETS FROM OPERATIONS............
23,025,311     2,185,134     39,566,030        94,484
----------------------------------------------------------
-------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM (NOTE 2):
  Net investment income.............................
(10,914,123)   (2,978,125)    (1,741,271)      (94,502)
  Net realized gains................................
(17,258,729)           --    (23,015,510)           --
----------------------------------------------------------
--------------------------------------------------
  DECREASE IN NET ASSETS FROM
     DISTRIBUTIONS TO SHAREHOLDERS..................
(28,172,852)   (2,978,125)   (24,756,781)      (94,502)
----------------------------------------------------------
--------------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 9):
  Net proceeds from sale of shares..................
7,067,309     5,233,862     72,301,317     9,941,686
  Net asset value of shares issued for
     reinvestment of
dividends...................... 28,172,852
2,978,125      24,756,781        94,502
Cost of shares reacquired.........................
(12,757,653)   (3,030,251)    (9,891,028)   (7,910,199) --
----------------------------------------------------------
------------------------------------------------
  INCREASE IN NET ASSETS FROM
     FUND SHARE TRANSACTIONS........................
22,482,508     5,181,736     87,167,070     2,125,989 ----
----------------------------------------------------------
----------------------------------------------
INCREASE IN NET ASSETS..............................
17,334,967     4,388,745    101,976,319     2,125,971
NET ASSETS:
  Beginning of year.................................
171,275,514    12,902,298    122,155,432     1,416,684 ---
----------------------------------------------------------
-----------------------------------------------
  END OF YEAR*......................................
$188,610,481   $17,291,043   $224,131,751   $ 3,542,655 --
----------------------------------------------------------
------------------------------------------------
* Includes undistributed net investment income
  of:...............................................
$689,249     $(172,955)      $219,605            ---------
----------------------------------------------------------
------------------------------------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       29

<pg$pcn> -------------------------------------------------
------------------------------
 NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

     1.  SIGNIFICANT ACCOUNTING POLICIES

     The Managed Assets Trust, High Yield Bond Trust,
Capital Appreciation Fund
and Cash Income Trust (collectively, "Fund(s)") are each a
Massachusetts
business trust registered under the Investment Company Act
of 1940, as amended,
as diversified, open-end management investment companies.
Shares of the Funds
are offered only to insurance company separate accounts
that fund certain
variable annuity and variable life insurance contracts.

     The significant accounting policies consistently
followed by the Funds are:
(a) security transactions are accounted for on trade date;
(b) securities traded
on national securities markets are valued at the closing
prices on such markets;
securities for which no sales price were reported and U.S.
government and agency
obligations are valued at the mean between the last
reported bid and asked
prices or on the basis of quotations received from
reputable brokers or other
recognized sources; (c) securities maturing within 60 days
are valued at cost
plus accreted discount and, or minus amortized premium,
which approximates
market value; (d) securities that have a maturity of 60
days or more are valued
at prices based on market quotations for securities of
similar type, yield and
maturity; (e) interest income, adjusted for amortization
of premium and
accretion of discount, is recorded on the accrual basis
and dividend income is
recorded on the ex-dividend date; foreign dividends are
recorded on the
ex-dividend date or as soon as practical after the Fund
determines the existence
of a dividend declaration after exercising reasonable due
diligence; (f) gains
or losses on the sale of securities are calculated by
using the specific
identification method; (g) dividends and distributions to
shareholders are
recorded on the ex-dividend date; (h) the accounting
records of the Fund are
maintained in U.S. dollars. All assets and liabilities
denominated in foreign
currencies are translated into U.S. dollars on the date of
valuation. Purchases
and sales of securities and income and expenses are
translated at the rate of
exchange quoted on the respective date that such
transactions are recorded.
Differences between income and expense amounts recorded
and collected or paid
are adjusted when reported by the custodian; (i) the
character of income and
gains to be distributed are determined in accordance with
income tax regulations
which may differ from generally accepted accounting
principles. At December 31,
1996, reclassifications were made to the capital accounts
of the High Yield Bond
Trust, Capital Appreciation Fund and Cash Income Trust to
reflect permanent
book/tax differences and income and gains available for
distributions under
income tax regulations. Accordingly, for the High Yield
Bond Trust a portion of
accumulated net realized loss amounting to $1,893,310 was
reclassified to
paid-in capital. Net investment income, net realized gains
and net assets were
not affected by this change; (j) the Funds intend to
comply with the
requirements of the Internal Revenue Code of 1986, as
amended, pertaining to
regulated investment companies and to make distributions
of taxable income
sufficient to relieve it from substantially all Federal
income and excise taxes;
and (k) estimates and assumptions are required to be made
regarding assets,
liabilities and changes in net assets resulting from
operations when financial
statements are prepared. Changes in the economic
environment, financial markets
and any other parameters used in determining these
estimates could cause actual
results to differ.

     2.  DIVIDENDS
     Cash Income Trust declares and records a dividend
of substantially all of
its net investment income on each business day. Such
dividends are paid or
reinvested on the payable date.

     3.  INVESTMENT ADVISORY AGREEMENT AND OTHER
TRANSACTIONS

   Travelers Asset Management International Corporation
("TAMIC"), an indirect
wholly owned subsidiary of Travelers Group Inc., acts as
investment manager and
advisor to the Managed Assets Trust ("MAT"), High Yield
Bond Trust ("HYBT"),
Capital Appreciation Fund ("CAF") and Cash Income Trust
("CIT"). MAT, CAF and
CIT pay TAMIC an investment management and advisory fee
calculated at the annual
rate of 0.50%, 0.75% and 0.3233%, respectively of its
average daily net assets.
HYBT pays TAMIC an investment management and advisory fee
calculated at an
annual rate of: 0.50% on the first $50,000,000, 0.40% on
the next $100,000,000,
0.30% on the next $100,000,000 and 0.25% on the amount
over $250,000,000 of its
average daily net assets. This fee is calculated daily and
paid monthly.

   TAMIC has a sub-advisory agreement with The Travelers
Investment Management
Company, Inc. ("TIMCO"), an indirect wholly owned
subsidiary of Travelers Group
Inc. Pursuant to the sub-advisory agreement, TIMCO is
responsible for the
day-to-day portfolio operations and investment decisions
for MAT. As a result,
TAMIC pays TIMCO, as sub-advisor, 0.25% of the average
daily net assets of MAT.

    TIMCO also has a sub-advisory agreement with Janus
Capital Corporation
("Janus"). Pursuant to the sub-advisory agreement, Janus
is responsible for the
day-to-day portfolio operations and investment decisions
for CAF. As a result,
TIMCO pays Janus, as sub-advisor, 0.55% of the average
daily net assets of CAF.

                                       30
<pg$pcn>
----------------------------------------------------------
---------------------
 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

    Travelers Insurance Company ("Travelers Insurance")
acts as administrator
to the Funds. The Funds pay Travelers Insurance an
administration fee calculated
at an annual rate of 0.06% of its average daily net
assets. Travelers Insurance
has entered into a sub-administrative services agreement
with Smith Barney
Mutual Funds Management Inc. ("SBMFM"), a subsidiary of
Smith Barney Holdings
Inc. ("SBH"). Travelers Insurance pays SBMFM, as sub
administrator, a fee
calculated at an annual rate of 0.06% for the average
daily net assets of each
Fund. This fee is calculated daily and paid monthly.

     SB received brokerage commissions of $3,530 from
affiliated brokers.

     One Trustee and all officers of the Funds are
employees of Travelers Group
Inc., or its subsidiaries.

     4.  INVESTMENTS

      During the six months ended June 30, 1997, the
aggregate cost of purchases
and proceeds from sales of investments (including
maturities, but excluding
short-term securities) were as follows:

<TABLE>
<CAPTION>

MANAGED          HIGH           CAPITAL

ASSETS        YIELD BOND      APPRECIATION

TRUST           TRUST            FUND --------------------
----------------------------------------------------------
----------------------------
<S>
<C>             <C>             <C>
Purchases.................................................
 .. .. $78,952,894     $17,477,715     $198,723,695 -------
----------------------------------------------------------
----------------------------------------
Sales.....................................................
 .. ..  81,429,405      10,944,026     125,088,536
</TABLE>

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

     At June 30, 1997, the aggregate gross unrealized
appreciation and
depreciation of investments for Federal income tax
purposes were substantially
as follows:

<TABLE>
<CAPTION>

MANAGED           HIGH           CAPITAL

ASSETS        YIELD BOND      APPRECIATION

TRUST            TRUST            FUND -------------------
----------------------------------------------------------
-----------------------------
<S>
<C>              <C>             <C>
Gross unrealized
appreciation................................  $41,421,245
$1,037,816     $79,745,703
Gross unrealized
depreciation................................     (957,103)
(65,980)     (4,012,183) ---------------------------------
----------------------------------------------------------
---------------
Net unrealized
appreciation..................................
$40,464,142 $971,836     $75,733,520 ---------------------
----------------------------------------------------------
---------------------------
</TABLE>

     5.  REPURCHASE AGREEMENTS

     The Funds purchase (and its custodian takes
possession of) U.S. Government
securities from banks and securities dealers subject to
agreements to resell the
securities to the sellers at a future date (generally, the
next business day) at
an agreed-upon higher repurchase price. The Funds require
continual maintenance
of the market value of the collateral in amounts at least
equal to 102% of the
repurchase price.

     6.  FUTURES CONTRACTS

     Initial margin deposits made upon entering into
futures contracts are
recognized as assets. The initial margin is segregated by
the custodian and is
noted in the schedule of investments. During the period
the futures contract is
open, changes in the value of the contract are recognized
as unrealized gains or
losses by "marking-to-market" on a daily basis to reflect
the market value of
the contract at the end of each day's trading. Variation
margin payments are
made or received and recognized as assets due from or
liabilities due to broker,
depending upon whether unrealized gains or losses are
incurred. When the
contract is closed, the Funds record a realized gain or
loss equal to the
difference between the proceeds from (or cost of) the
closing transactions and
the Funds' basis in the contract. The Funds bear the
market risk that arises
from changes in the value of the financial instruments and
securities indices
(futures contracts) and the credit risk should a
counterparty fail to perform
under such contracts.

   At June 30, 1997, MAT had sold 25 financial futures
contracts on the
Standard & Poor's 500 Index expiring in September 1997.
The basis value of such
contracts was $11,202,225. The market value of such
contracts on June 30, 1997
was $11,128,125, thereby resulting in an unrealized gain
of
$74,100.
                                       31
<pg$pcn>
----------------------------------------------------------
---------------------
 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

     7.  OPTIONS CONTRACTS

     Premiums paid when put or call options are purchased
by the Funds,
represent investments, which are "marked-to-market" daily.
When a purchased
option expires, the Funds realize a loss in the amount of
the premium paid. When
the Funds enter into closing sales transactions, the Funds
realize a gain or
loss depending on whether the proceeds from the closing
sales transaction are
greater or less than the premium paid for the option. When
the Funds exercise a
put option, it will realize a gain or loss from the sale
of the underlying
security and the proceeds from such sale will be decreased
by the premium
originally paid. When the Funds exercise a call option,
the cost of the security
which the Funds purchase upon exercise will be increased
by the premium
originally paid.

   As of June 30, 1997, the Funds had no open purchased
call or put options
contracts.

     8.  CAPITAL LOSS CARRYFORWARD

     At December 31, 1996, HYBT had, for Federal income
tax purposes,
approximately $4,751,000 of capital loss carryforwards
available to offset
future capital gains. To the extent that these
carryforward losses can be used
to offset realized capital gains, it is probable that such
gains will not be
distributed. The amount and expiration of the
carryforwards are indicated below.
Expiration occurs on December 31 of the year indicated:

<TABLE>
<CAPTION>
                          1996         1997          1998
1999       2000        2001       2002        2004
<S>                     <C>         <C>           <C>
<C>         <C>        <C>         <C>        <C> --------
----------------------------------------------------------
--------------------------------------------------
Carryforward
  Amounts............   $530,000    $1,094,000
$1,970,000 $748,000    $48,000    $135,000    $38,000
$188,000 -------------------------------------------------
----------------------------------------------------------
---------</TABLE>

     9.  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 each
Fund were as follows:

<TABLE>
<CAPTION>

SIX MONTHS ENDED       YEAR ENDED
JUNE 30, 1997      DECEMBER 31, 1996
<S>
<C>                 <C> ----------------------------------
----------------------------------------------------------
-----------
MANAGED ASSETS TRUST
Shares
sold.....................................................
206,135              469,580
Shares issued on
reinvestment...................................
--            1,926,518
Shares
redeemed.................................................
(326,069)            (847,611)
----------------------------------------------------------
---------------------------------------------
Net Increase
(Decrease).........................................
(119,934)           1,548,487 ----------------------------
----------------------------------------------------------
-----------------
HIGH YIELD BOND TRUST
Shares
sold.....................................................
405,971              591,013
Shares issued on
reinvestment...................................
--              356,007
Shares
redeemed.................................................
(123,742)            (343,196)
----------------------------------------------------------
---------------------------------------------
Net
Increase..................................................
 .. 282,229           603,824
----------------------------------------------------------
---------------------------------------------
CAPITAL APPRECIATION FUND
Shares
sold.....................................................
1,772,207            1,994,300
Shares issued on
reinvestment...................................
--              716,103
Shares
redeemed.................................................
(258,840)            (287,644)
----------------------------------------------------------
---------------------------------------------
Net
Increase..................................................
 .. 1,513,367            2,422,759 ------------------------
----------------------------------------------------------
---------------------
CASH INCOME TRUST
Shares
sold.....................................................
7,780,666            9,941,686
Shares issued on
reinvestment...................................
94,737               94,502
Shares
redeemed.................................................
(6,961,741)          (7,910,199) -------------------------
----------------------------------------------------------
--------------------
Net
Increase..................................................
 .. 913,662                                      2,125,989
----------------------------------------------------------
---------------------------------------------
</TABLE>

                                       32
<pg$pcn>
----------------------------------------------------------
---------------------
 FINANCIAL HIGHLIGHTS
For a share of beneficial interest outstanding throughout
each period:

<TABLE>
<CAPTION>
          MANAGED ASSETS TRUST             1997(1)
1996        1995        1994        1993        1992
----------------------------------------------------------
-----------------------------------------------------
<S>                                        <C>
<C>
<C>         <C>         <C>         <C>
NET ASSET VALUE, BEGINNING OF PERIOD....     $14.98
$15.50      $12.85      $14.21      $14.02      $14.78
----------------------------------------------------------
----------------------------------------------------INCOME
(LOSS) FROM OPERATIONS:
  Net investment income.................       0.24
0.46        0.49        0.46        0.51        0.64
  Net realized and unrealized gain
     (loss).............................       1.53
1.50        2.83       (0.73)       0.72        0.01
----------------------------------------------------------
-----------------------------------------------------
Total Income (Loss) From Operations.....       1.77
1.96        3.32       (0.27)       1.23        0.65
----------------------------------------------------------
-----------------------------------------------------
LESS DISTRIBUTIONS FROM (2):
  Net investment income.................         --
(0.89)      (0.50)      (0.67)      (0.85)
(1.04)
  Net realized gains....................         --
(1.59)      (0.17)      (0.42)      (0.19)
(0.37)
----------------------------------------------------------
-----------------------------------------------------
Total Distributions.....................         --
(2.48)      (0.67)      (1.09)      (1.04)      (1.41)
----------------------------------------------------------
-----------------------------------------------------
NET ASSET VALUE, END OF PERIOD..........     $16.75
$14.98      $15.50      $12.85      $14.21      $14.02
----------------------------------------------------------
-----------------------------------------------------
TOTAL RETURN............................      11.82%++
13.78%      27.12%      (2.24)%      9.33%       5.14%
----------------------------------------------------------
-----------------------------------------------------
NET ASSETS, END OF PERIOD (000'S).......   $208,996
$188,610    $171,276    $140,887    $156,767    $148,971
----------------------------------------------------------
----------------------------------------------------RATIOS
TO AVERAGE NET ASSETS:
  Expenses (3)..........................       0.64%+
0.58%       0.58%       0.61%       0.56%       0.56%
  Net investment income.................       3.12+
3.51        3.49        3.59        3.65        4.97
----------------------------------------------------------
----------------------------------------------------
PORTFOLIO TURNOVER RATE.................         42%
108%        110%         97%         86%        112%
----------------------------------------------------------
----------------------------------------------------
AVERAGE COMMISSIONS PER SHARES PAID ON
  EQUITY TRANSACTIONS (4)...............   $   0.06     $
0.06          --          --          --          --
----------------------------------------------------------
----------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
         HIGH YIELD BOND TRUST             1997(1)
1996        1995        1994        1993        1992
----------------------------------------------------------
-----------------------------------------------------
<S>                                        <C>
<C>
<C>         <C>         <C>         <C>
NET ASSET VALUE, BEGINNING OF PERIOD....      $8.49
$9.00       $8.49       $9.25       $8.91       $8.75
----------------------------------------------------------
----------------------------------------------------INCOME
(LOSS) FROM OPERATIONS:
  Net investment income.................       0.37
0.91        0.80        0.66        0.68        0.88
  Net realized and unrealized gain
     (loss).............................       0.32
0.41        0.41       (0.76)       0.47        0.18
----------------------------------------------------------
-----------------------------------------------------
Total Income (Loss) From Operations.....       0.69
1.32        1.21       (0.10)       1.15        1.06
----------------------------------------------------------
-----------------------------------------------------
LESS DISTRIBUTION FROM (2):
  Net investment income.................         --
(1.83)      (0.70)      (0.66)      (0.81)      (0.90)
----------------------------------------------------------
-----------------------------------------------------
NET ASSET VALUE, END OF PERIOD..........      $9.18
$8.49       $9.00       $8.49       $9.25       $8.91
----------------------------------------------------------
-----------------------------------------------------
TOTAL RETURN............................       8.13%++
16.05%      15.47%      (1.26)%     14.01%      13.16% ---
----------------------------------------------------------
--------------------------------------------------
NET ASSETS, END OF PERIOD (000'S).......    $21,274
$17,291     $12,902     $11,716     $12,765     $10,289 --
----------------------------------------------------------
--------------------------------------------------RATIOS
TO AVERAGE NET ASSETS:
  Expenses (5)..........................       0.81%+
0.97%       1.25%       1.25%       0.99%       0.56%
  Net investment income.................       6.40+
11.01        9.37        7.71        7.69       10.24 ----
----------------------------------------------------------
------------------------------------------------PORTFOLIO
TURNOVER RATE.................         73%
84%        222%       146.%         19%         52% ------
----------------------------------------------------------
----------------------------------------------</TABLE>

(1) For the six months ended June 30, 1997 (unaudited).

(2) Distributions from realized gains include both net
realized short-term and
    long-term capital gains. Prior to 1996 net realized
short-term capital gains
    were included in distributions from net investment
income.

(3) The ratios of expenses to average net assets for the
years 1993 and 1992
   reflects an expense reimbursement by The Travelers in
connection with
    voluntary expense limitations. Without the expense
reimbursement, the ratios
  of expenses to average net assets would have been 0.60%
and 0.63%, for the
   years ended December 31, 1993 and 1992, respectively.
                             
(4) For the fiscal years beginning after 1995, the SEC
instituted new guidelines
    requiring the disclosure of average commissions per
share on Funds which
   held more than 10% of their assets in commissionable
equity securities.

(5) The ratio of expenses to average net assets reflects
an expense
     reimbursement by The Travelers in connection with
voluntary expense
    limitations. Without the expense reimbursement, the
ratios of expenses to
  average net assets would have been 1.28%, 1.33%, 1.31%
and 1.28%, for the
    years ended December 31, 1995, 1994, 1993 and 1992,
respectively.
++  Total return is not annualized, as it may not be
representative of the total
return for the year.
+  Annualized.

                                       33
<pg$pcn>
----------------------------------------------------------
--
--------------------
 FINANCIAL HIGHLIGHTS (CONTINUED)
For a share of beneficial interest outstanding throughout
each period:

<TABLE>
<CAPTION>
     CAPITAL APPRECIATION FUND         1997(1)       1996
1995         1994       1993(2)        1992
----------------------------------------------------------
----------------------------------------------------
<S>                                   <C>          <C>
<C>          <C>          <C>          <C>
NET ASSET VALUE, BEGINNING OF
  PERIOD...........................     $36.72
  $33.18
$24.50       $25.87       $22.72       $19.63
----------------------------------------------------------
----------------------------------------------------
INCOME (LOSS) FROM OPERATIONS:
  Net investment income............       0.13
0.23
0.24         0.19         0.19         0.28
  Net realized and unrealized gain
     (loss)........................       6.07
     8.49
8.61        (1.41)        3.21         3.13
----------------------------------------------------------
----------------------------------------------------
Total Income (Loss) From
  Operations.......................       6.20
8.72
8.85        (1.22)        3.40         3.41
----------------------------------------------------------
----------------------------------------------------
LESS DISTRIBUTION FROM (3):
  Net investment income............         --
(0.41)
(0.17)       (0.15)       (0.25)       (0.32)
  Net realized gains...............         --
(4.77)
--           --           --           --
----------------------------------------------------------
----------------------------------------------------
Total Distributions................         --
(5.18)
(0.17)       (0.15)       (0.25)       (0.32)
----------------------------------------------------------
----------------------------------------------------
NET ASSET VALUE, END OF PERIOD.....     $42.92
$36.72
$33.18       $24.50       $25.87       $22.72
----------------------------------------------------------
----------------------------------------------------
TOTAL RETURN.......................      16.88%++
28.21%
36.37%       (4.76)%      15.09%       17.60%
----------------------------------------------------------
----------------------------------------------------
NET ASSETS, END OF PERIOD
  (000'S)..........................   $326,922
  $224,132
$122,155      $78,494      $62,414      $29,506
----------------------------------------------------------
----------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
  Expenses (4).....................       0.84%+
0.83%
0.85%       0.89%         0.87%        0.56%
  Net investment income............       0.79+
0.69
0.84         0.79         0.81         1.39
----------------------------------------------------------
---------------------------------------------------
PORTFOLIO TURNOVER RATE............         52%
84%
124%        106%          155%         126%
----------------------------------------------------------
----------------------------------------------------
AVERAGE COMMISSIONS PER SHARE PAID
 ON EQUITY TRANSACTIONS (5).......   $   0.06     $   0.06
--           --           --           --
----------------------------------------------------------
---------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
         CASH INCOME TRUST             1997(1)       1996
1995         1994         1993         1992
----------------------------------------------------------
----------------------------------------------------
<S>                                   <C>          <C>
<C>          <C>          <C>          <C>
NET ASSET VALUE, BEGINNING OF
  PERIOD...........................      $1.00
  $1.00
$1.00        $1.00        $1.00        $1.00
----------------------------------------------------------
----------------------------------------------------
  Net investment income (6)........     0.0238
0.0412
0.0417       0.0278       0.0214       0.0322
  Distributions from net investment
     income........................    (0.0238)
     (0.0412)
(0.0417)     (0.0278)     (0.0214)     (0.0322)
----------------------------------------------------------
----------------------------------------------------
NET ASSET VALUE, END OF PERIOD.....      $1.00
$1.00
$1.00        $1.00        $1.00        $1.00
----------------------------------------------------------
----------------------------------------------------
TOTAL RETURN.......................       2.29%++
4.20%
4.17%        2.78%        2.14%        3.22%
----------------------------------------------------------
----------------------------------------------------
NET ASSETS, END OF PERIOD
  (000'S)..........................     $4,456
  $3,543
$1,417       $1,203         $647         $697
----------------------------------------------------------
----------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
  Expenses (6)(7)..................       0.68%+
0.78%
1.25%        1.25%        0.94%        0.38%
  Net investment income............       4.75+
3.72
--           --           --           --
----------------------------------------------------------
---------------------------------------------------
</TABLE>

(1) For the six months ended June 30, 1997 (unaudited).

(2) Effective May 1, 1993, Janus Capital Corporation
became sub-adviser for
    Capital Appreciation Fund.

(3) Distributions from realized gains include both net
realized short-term and
    long-term capital gains. Prior to 1996 net realized
short-term capital gains
    were included in distributions from net investment
income.

(4) The ratio of expenses to average net assets for 1993
and 1992 reflects an
   expense reimbursement by The Travelers in connection
with voluntary expense
    limitations. Without the expense reimbursement, the
ratios of expenses to
  average net assets would have been 0.96% and 0.91%, for
the years ended
    December 31, 1993 and 1992, respectively.
(5) For the fiscal years beginning after 1995, the SEC
instituted new guidelines
    requiring the disclosure of average commissions per
share on Funds which
   held more than 10% of their assets in commissionable
equity securities.

(6) The Travelers reimbursed CIT for $16,196 and $43,376
in expenses for the six
  months ended June 30, 1997 and the year ended December
31, 1996,
  respectively. If such fees were not waived and expenses
not reimbursed, the
  per share decreases of net investment income would have
been $0.004 and
  $0.02, respectively, and the expense ratios would have
been 1.49%
    (annualized) and 1.71%, respectively.

(7) The ratio of expenses to average net assets for 1995
1992 reflects an
   expense reimbursement by The Travelers in connection
with voluntary expense
    limitations. Without the expense reimbursement, the
ratios of expenses to
  average net assets would have been 7.37%, 6.40%, 8.47%
and 7.70% for the
    years ended December 31, 1995, 1994, 1993 and 1992,
respectively.
 ++  Total return is not annualized, as it may not be
representative of the
     total return for the year.

 +  Annualized.

                                       34

<pg$pcn>

SEMI-ANNUAL REPORT FOR THE TRAVELERS SERIES TRUST --------
----------------------------------------------------------
-------------


U.S. GOVERNMENT SECURITIES PORTFOLIO


For the six months ended June 30, 1997, the U.S.
Government Securities Portfolio
had a total return of 3.13%. As of June 30, 1997 the
composition of assets was
46% in mortgage-backed securities, 40% in U.S. Treasuries,
11.5% in U.S. agency
securities and 2.5% in cash.

The second quarter came on the heels of a Federal Reserve
Board ("Fed")
tightening on March 25, 1997. By the end of the first
quarter of 1997, the yield
on the 30-year U.S. Treasury bond rose to 7.10%. Market
expectations of another
Fed move at the May meeting kept interest rates high for
the
first half of the
quarter, diminishing only after negative retail sales in
April were reported in
the middle of May. By the time the quarter had ended,
rates were essentially at
the levels very close to where the year began.

Corporate bonds and mortgage-backed securities did better
than U.S. Treasuries
by a small margin. In the U.S. government securities
market, agency debentures
(i.e., general debt obligations backed only by the
integrity of the borrower and
documented by an agreement called an indenture) fared
marginally better than
other U.S. Treasuries because of their slight yield
advantage.

The Portfolio's exposure to GNMA adjustable rate mortgage
securities helped its
performance during the reporting period. Going forward, we
expect to maintain a
fairly neutral duration in the Portfolio but we intend to
maintain its
overweighting in mortgage-backed securities.

Solid gains in jobs and income, advancing financial
markets and high levels of
consumer confidence have created ideal conditions for
possibly greater consumer
spending. These ideal conditions may in turn cause labor
markets to tighten and
trigger a shift in the Fed's monetary policy. In our view,
the timing and
direction of the next Fed move is uncertain and will only
take place when there
are clearer indications about the strength of the U.S.
economy.

SOCIAL AWARENESS STOCK PORTFOLIO

The Social Awareness Stock Portfolio seeks high total
return by investing in the
equity securities of issuers who demonstrate a positive
awareness of their
impact on the society in which they operate. For the six
months ended June 30,
1997, the Portfolio generated a total return of 16.62%. As
of June 30, 1997, the
Portfolio owned 70 stocks, with an overweighting in
financial, technology and
transportation issues. The stock focus in the Portfolio is
on middle- to
large-sized companies with an average market
capitalization of $29.5 billion.

Although a preference for strong, large-capitalization
stocks still persists,
the stock market continues to run on all cylinders with
better breadth across
the population of stocks. We have resisted the temptation
to simply equate
higher stock prices with excessive speculation. With an
economy characterized by
low inflation, positive interest rates and strong profits
and cash flows, we
believe that the long-term values behind this market
remain solid.
On a short-term momentum basis, however, conditions are
almost too good and
prices are reaching extreme levels. In other words, there
aren't many real
market laggards and most stocks are participating in
varying degrees in the
market's historic advance. The first half market gains
were even more
significant when you consider that interest rates remained
approximately flat,
and earnings grew on the order of about 10%. This has made
it a bit more
difficult to find inexpensive values with our disciplined
investment strategy.

During the six months under review, health care,
financial, high technology and
capital goods were the market sectors that performed best.
At the other extreme
were the infrastructure sectors like utilities,
communications services, basic
materials and energy that were sector laggards. The
Portfolio's sector
weightings at the end of June generally contributed to its
solid performance.

During the reporting period, we sold nine existing stock
positions, reduced one
position, added to 13 existing holdings and bought eight
new issues. The new
names represent a diverse list such American Stores,
Dollar General, Rite-Aid
and Wendy's (consumer retail sector), Beckman Instruments
(medical area), Chase
Manhattan (finance) and Cisco Systems and Motorola
(technology).

UTILITIES PORTFOLIO

The Utilities Portfolio seeks to provide current income
and as a secondary goal,
capital appreciation, by investing at least 25% of its
assets in the utilities
industry. For the six months ended June 30, 1997, the
Utilities Portfolio
generated a total return of 4.17%.

                                       35
<pg$pcn>
SEMI-ANNUAL REPORT FOR THE TRAVELERS SERIES TRUST --------
----------------------------------------------------------
-------------
So far in 1997, favorable economic news, better-than
expected gross domestic
product (GDP), continued low inflation and strong
corporate earnings growth
fueled the U.S. economy and financial markets. (GDP is the
total output of goods
and services.) However, this positive economic
environment, continued to
challenge utility stocks as a whole because of the
uncertainty surrounding
industry restructuring.

The strong equity market, as measured by the Standard and
Poor's 500 Index and
the Dow Jones Industrial Average led by technology and
cyclical issues, provided
investors with investment returns substantially above
historical averages.
Despite this strong performance, the volatility of the
markets increased during
the past six months. In our opinion, this increase in
market volatility has not
deterred investors who continue to avoid more defensive
stocks such as
utilities. As a group, the utilities industry continued to
underperform relative
to the broad-based equity market.

Despite the market's underweighting in the utility
industry and the cloud of
uncertainty caused by deregulation, we remain very
positive on the utility
industry as a whole and anticipate several positive
regulatory decisions both at
the state and federal level in the months ahead. Although
the level of long-term
interest rates continues to be an important influence on a
utility company's
relative performance, we think that improving a company's
competitive position
is a more significant factor in achieving attractive
investment returns. Given
the wide disparity in the performance of different utility
stocks, we believe
that careful stock selection remains key to achieving
superior total return
performance.

With respect to the long-term outlook for utilities, many
states have recently
enacted competitive restructuring proposals. Under these
proposals, power
providers would compete for customers in an open market.
In our view, these
proposals are not only positive compared to many of the
early more punitive
proposals, but essentially provide the local utility the
opportunity to recover
its "stranded costs." (Stranded costs are expenses that
utilities are at risk of
not recovering in a competitive environment.) Stranded
costs, often associated
with expensive nuclear plants, includes any assets or
expenses that, when
recovered through traditional power rates, can cause
utility rates to exceed the
market price of power. Certain states have passed
legislation to permit the
recovery of stranded costs through the issuance of asset
backed bonds.

As full retail competition is established, clearly not all
utilities, whether in
the electric, gas or telecommunications industries, will
be
impacted by
competition to the same extent. Deregulation, while
increasing the business risk
for companies with higher expenses, should provide
opportunities for lower-cost,
well-managed companies. We expect volatility in the
utility industry to persist
as the reduction in regulatory protection proceeds and the
financial markets
differentiate between those companies that are
"competitively blessed," (with
lower cost structures, strong service territory growth and
competitive
management skills), and those companies that are perceived
to be "fundamentally
challenged," (due to the burden of high cost structures,
limited customer growth
and lack of a clear corporate strategy). As noted, the
increasing disparity of
performance within the utility industry has resulted from
a combination of
fundamental factors and competitive uncertainty.

In our opinion, merger and acquisition activity within the
electric utility,
natural gas and telecommunication industry have generally
generated superior
total returns. We anticipate the pace of merger activity
within the utility
industry to increase as state and federal regulatory
proposals are finalized.
Consolidation such as mergers that integrate two
industries, (e.g.,
electric/natural gas) are primarily driven by competitive
concerns. A successful
merger often allows two companies to leverage their
production costs over a
larger customer base.

In an effort to take advantage of better relative market
performance and total
return, we have strategically increased the Portfolio's
emphasis in natural gas
stocks. The natural gas holdings in the Portfolio are
companies that we believe
should deliver solid core earnings growth while at the
same time rapidly growing
their non-regulated businesses. Supporting our confidence
in the natural gas
sector through the end of the 1997 is a positive commodity
price forecast and
solid earning performance for many natural gas companies.

In addition, we continue to increase the Portfolio's
emphasis in the
telecommunications industry. Although not immune to
regulatory concerns, select
companies within the telecommunications industry offer the
Portfolio
diversification and compelling investment opportunities.
Many telecommunications
companies stand to benefit from the integration of long
distance, local, cable
and internet services, as well as the rapid expansion of
global
telecommunications networks.

Our portfolio strategy continues to focus on long-term
growth and current
income. Looking ahead to 1998, deregulation and
competition will continue to
evolve implying both increased volatility and greater
opportunity. We anticipate
that as the competitive regulatory framework takes shape,
issues of market share
and customer satisfaction will replace concerns regarding
transition plans and
rate decreases. The Portfolio maintains its emphasis in
quality, low-cost
companies with a predictable earnings base.

                                       36
<pg$pcn>
SEMI-ANNUAL REPORT FOR THE TRAVELERS SERIES TRUST --------
----------------------------------------------------------
-------------
For the remaining six months of 1997, we expect to
continue the moderate,
sustainable growth in the U.S. economy. We believe
inflation should remain under
control as the Federal Reserve Board appears resolved to
take the necessary
preemptive steps if any signs of inflationary pressures
emerge.

In closing, we thank you for your investment in The
Travelers Series Trust. We
look forward to continuing to help you achieve your
financial goals.

Sincerely,

McLendon sig
Heath B. McLendon
Chairman

August 1, 1997

                                       37

<pg$pcn> -------------------------------------------------
------------------------------
 PERFORMANCE COMPARISON -- U.S. GOVERNMENT SECURITIES
PORTFOLIO AS OF 6/30/97
(UNAUDITED)
<TABLE>
<CAPTION>
            AVERAGE ANNUAL TOTAL RETURN ------------------
   ---------------------------
   <S>                                 <C>
   Six Months Ended 6/30/97+             3.13%
   Year Ended 6/30/97                    9.59%
   1/24/92* through 6/30/97              7.01%

<CAPTION>
              CUMULATIVE TOTAL RETURN --------
   -------------------------------------
   <S>                                 <C>
   1/24/92* through 6/30/97
7.09%
   + Total return is not annualized, as it
     may not be representative of the total
     return for the year.
   * Commencement of operations
</TABLE>

This chart assumes an initial investment of $10,000 made
on January
24, 1992 and assuming reinvestment of dividends through
June 30,
1997. The Lehman Government Bond Index is a broad-based
Index of
all public debt obligations of the U.S. Government and its
agencies
and has an average maturity of nine years. The Consumer
Price Index
is a measure of the average change in prices over time in
a fixed
market basket of goods and services.

<TABLE>
<CAPTION>
                           U.S.
                        Government      Lehman
 Measurement Period     Securities    Government
Consumer
(Fiscal Year Covered)    Portfolio    Bond Index    Price
Index
<S>                     <C>           <C>           <C>
1/24/92                     10000         10000
10000
Dec-92                      10790         10920
10275
Dec-93                      11813         12125
10557
Dec-94                      11147         11699
10840
Dec-95                      13869         13950
11115
Dec-96                      14077         14354
11484
6/30/97                     14511         14732
11607
</TABLE>

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

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.

Average annual total returns are historical in nature and
measure net investment
income and capital gain or loss from portfolio investments
assuming
reinvestments of dividends. The returns do not reflect
expenses associated with
the subaccount such as administrative fees, account
charges and surrender
charges which, if reflected, would reduce the performance
shown.
----------------------------------------------------------
---------------------
PERFORMANCE COMPARISON -- SOCIAL AWARENESS STOCK PORTFOLIO
AS OF 6/30/97
(UNAUDITED)
<TABLE>
<CAPTION>
            AVERAGE ANNUAL TOTAL RETURN ------
   --------------------------------------<S>
   <C>
   Six Months Ended 6/30/97+
16.62%
   Year Ended 6/30/97
28.38%
   5/1/92* through 6/30/97
16.61%

<CAPTION>
              CUMULATIVE TOTAL RETURN --------
   ------------------------------------<S>
   <C>
   5/1/92* through 6/30/97
   113.88% + Total return is not annualized,
   as it may
     not be representative of the total return
     for the year.
   * Commencement of operations
</TABLE>

This chart assumes an initial investment of $10,000 made
on May 1,
1992 assuming reinvestment of dividends through June 30,
1997. The
Standard & Poor's 500 Index is an unmanaged index composed
of 500
widely held common stocks listed on the New York Stock
Exchange,
American Stock Exchange and the over-the-counter market.
The Consumer Price Index is a measure of the average
change in prices
over time in a fixed market basket of goods and services.

<TABLE>
<CAPTION>
                          Social
                         Awareness    Standard &
 Measurement Period        Stock       Poors 500
Consumer
(Fiscal Year Covered)    Portfolio       Index      Price
Index
<S>                     <C>           <C>           <C>
5/1/92                      10000         10000
10000
Dec-92                      10950         10673
10157
Dec-93                      11777         11745
10436
Dec-94                      11461         11900
10716
Dec-95                      15285         14509
10988
Dec-96                      18340         17838
11353
6/30/97                     21388         21513
11474
</TABLE>

----------------------------------------------------------
--
--------------------
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.

Average annual total returns are historical in nature and
measure net investment
income and capital gain or loss from portfolio investments
assuming
reinvestments of dividends. The returns do not reflect
expenses associated with
the subaccount such as administrative fees, account
charges and surrender
charges which, if reflected, would reduce the performance
shown.

                                       38
<pg$pcn>
----------------------------------------------------------
---------------------
    PERFORMANCE COMPARISON -- UTILITIES PORTFOLIO AS OF
                          6/30/97
(UNAUDITED)
<TABLE>
<CAPTION>
            AVERAGE ANNUAL TOTAL RETURN ------------------
   ---------------------------
   <S>                                 <C>
   Six Months Ended 6/30/97+               4.17%
   Year Ended 6/30/97
7.01%
   2/4/94* through 6/30/97
12.04%

<CAPTION>
              CUMULATIVE TOTAL RETURN --------
   ------------------------------------<S>
   <C>
   2/4/94* through 6/30/97
47.21%
   + Total return is not annualized, as it may
     not be representative of the total return
     for this year.
   * Commencement of operations
</TABLE>

This chart assumes an initial investment of $10,000 made
on February 4, 1994 assuming reinvestment of dividends
through June
30, 1997. Standard & Poor's 500 Index is an unmanaged
index composed of 500 widely held common stocks listed on
the New York
Stock Exchange, American Stock Exchange and over-the-
counter market. The Consumer Price Index is a measure of
the average change
in prices over time in a fixed market basket of goods and
services.

<TABLE>
<CAPTION>
                                      Standard &
 Measurement Period      Utilities     Poors 500
Consumer
(Fiscal Year Covered)    Portfolio       Index      Price
Index
<S>                     <C>           <C>           <C>
2/4/94                      10000         10000
10000
Dec-94                      10170         10072
10205
Dec-95                      13149         13852
10464
Dec-96                      14139         17031
10811
6/30/97                     14721         20539
10927
</TABLE>

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

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.

Average annual total returns are historical in nature and
measure net investment
income and capital gain or loss from portfolio investments
assuming
reinvestments of dividends. The returns do not reflect
expenses associated with
the subaccount such as administrative fees, account
charges and surrender
charges which, if reflected, would reduce the performance
shown.

                                       39
<pg$pcn>
----------------------------------------------------------
---------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED)
JUNE 30, 1997
                      U.S. GOVERNMENT SECURITIES PORTFOLIO

<TABLE>
<CAPTION>
    FACE
   AMOUNT                                        SECURITY
VALUE ----------------------------------------------------
----------------------------------------------------
<C>            <S>
<C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS -- 97.5%
$  1,750,000   U.S. Treasury Bond, 12.000% due
8/15/13.....................................   $
   2,461,760 2,500,000                 U.S. Treasury
   Bond, 8.125% due
8/15/19......................................
   2,853,825 3,200,000                 U.S. Treasury
   Bond, 8.000% due
11/15/21.....................................
   3,620,256 6,000,000                 U.S. Treasury FICO
   Strip, zero coupon due
9/26/19...........................     1,220,820
     939,124   FHLMC Certificates, 8.000% due
5/1/26.......................................
   962,011 2,521,812  FHLMC Certificates, 8.000% due
4/1/27.......................................
   2,582,487 1,958,551 FNMA Certificates,  7.000% due
5/1/24........................................
   1,927,939 1,929,836 FNMA Certificates,  7.000% due
6/1/24........................................
   1,899,669 1,935,368 FNMA Certificates,  7.500% due
8/1/26........................................
     1,941,406 370,403 GNMA Certificates,    8.500% due
3/15/18.......................................
     391,005 589,091   GNMA Certificates,    8.500% due
5/15/18.......................................
     621,857 213,761   GNMA Certificates,    8.500% due
6/15/18.......................................
     225,651 141,904   GNMA Certificates,    8.500% due
7/15/18.......................................
     149,797 975,530   FNMA Certificates,    7.500% due
11/1/26@......................................
   978,575 3,000,000   Tennessee Valley Authority
   Debenture, 6.375%
due 6/15/05....................     2,935,080
----------------------------------------------------------
----------------------------------------------
               TOTAL U.S. GOVERNMENT AND AGENCY
OBLIGATIONS (Cost -- $24,616,862)..........  24,772,138
----------------------------------------------------------
----------------------------------------------
REPURCHASE AGREEMENT -- 2.5%
     625,000   Citibank, 6.000% due 7/1/97; Proceeds at
maturity -- $625,104;
               (Fully collateralized by U.S. Treasury
Notes, 5.875% due 2/28/99;
             Market value -- $641,025)(Cost --
$625,000).................................       625,000 -
----------------------------------------------------------
---------------------------------------------
               TOTAL INVESTMENTS -- 100% (Cost -
$25,241,862*)............................   $25,397,138 --
----------------------------------------------------------
--------------------------------------------
</TABLE>

@ Date shown represents the last in range of maturity
dates
of mortgage
  certificates owned.
*  Aggregate cost for Federal income tax purposes is
substantially the same.

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       40

<pg$pcn> -------------------------------------------------
------------------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                        SOCIAL AWARENESS STOCK PORTFOLIO
<TABLE>
<CAPTION>
SHARES                                         SECURITY
VALUE ----------------------------------------------------
----------------------------------------------------
<C>       <S>
<C>
COMMON STOCK -- 70.8% ------------------------------------
----------------------------------------------------------
----------
BASIC MATERIALS -- 3.3%
  2,000   Air Products & Chemicals,
Inc.....................................................
$ 162,500
  5,000   Engelhard Corp.
 ..........................................................
 .. ......   104,687
  4,800   Praxair,
Inc.......................................................
 .. .............      268,800 ----------------------------
----------------------------------------------------------
------------------

535,987 --------------------------------------------------
------------------------------------------------------
CAPITAL GOODS -- 1.2%
  1,500   AMP,
Inc.......................................................
 .. .................       62,625
  2,000   Pitney Bowes, Inc.
 ..........................................................
 .. ...      139,000 --------------------------------------
----------------------------------------------------------
--------

201,625 --------------------------------------------------
-----------------------------------------------------
COMMUNICATIONS -- 3.2%
    800   Bell Atlantic
Corp......................................................
 .. ........       60,700
  3,000   Cisco Systems
Inc.++....................................................
 .. ........      201,375
  2,300   MCI Communications Corp.
 .........................................................
88,047
  2,200   Motorola, Inc.
167,200 --------------------------------------------------
------------------------------------------------------

517,322 --------------------------------------------------
------------------------------------------------------
CONSUMER CYCLICALS -- 10.0%
  3,000   Dollar General Corp.
 ..........................................................
 .. .           112,500
  2,900   Home Depot, Inc.
 ..........................................................
 .. .....   199,919
  3,500   Kaufman & Broad Home Corp.
 .......................................................
61,469
  3,000   May Department
Stores....................................................
 .. .......        141,750
  2,000   Nine West Group,
Inc.++....................................................
 ..
 .....       76,375
  4,000   Pep Boys -- Manny, Moe &
Jack.....................................................
136,250
  3,000   Rite Aid Corp.
 ..........................................................
 .. .......        149,625
  4,000   Toys "R" Us,
Inc.++....................................................
 .. .........      140,000
  3,800   Tribune Co.
 ..........................................................
 .. ..........      182,637
  5,800   Wal-Mart Stores, Inc.
 ..........................................................
 .. 196,113
  3,000   Xerox Corp.
 ..........................................................
 .. ..........      236,625 -------------------------------
----------------------------------------------------------
---------------

1,633,263 ------------------------------------------------
--------------------------------------------------------
CONSUMER STAPLES -- 10.5%
  2,700   American Stores Co.
 ..........................................................
 .. ..      133,313
  2,000   Coca-Cola Co.
 ..........................................................
 .. ........      135,000
  2,000   Gillette Co.
 ..........................................................
 .. .........      189,500
  6,000   Kroger
Co.++.....................................................
 .. ...............      174,000
  2,000   McDonald's Corp.
 ..........................................................
 .. .....    96,625
  5,000   Newell Co.
 ..........................................................
 .. ...........      198,125
  4,800   PepsiCo, Inc.
 ..........................................................
 .. ........      180,300
  2,800   Sysco Corp.
 ..........................................................
 .. ..........      102,200
  1,000   Unilever N.V.
 ..........................................................
 .. ........      218,000
  1,600   Walt Disney Co.
 ..........................................................
 .. ......   128,400
  6,000   Wendy's International, Inc.
 ......................................................
155,625 --------------------------------------------------
------------------------------------------------------

1,711,088 ------------------------------------------------
--------------------------------------------------------
ENERGY -- 1.0%
  2,800   Anadarko Petroleum Corp.
 .........................................................
168,000 --------------------------------------------------
------------------------------------------------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       41

<pg$pcn> -------------------------------------------------
------------------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                        SOCIAL AWARENESS STOCK PORTFOLIO
<TABLE>
<CAPTION>
SHARES                                         SECURITY
VALUE ----------------------------------------------------
----------------------------------------------------
<C>       <S>
<C>
FINANCE -- 16.8%
  1,600   Aetna Inc.
 ..........................................................
 .. ...........   $  163,800
  3,500   American Express Co.
 ..........................................................
 .. .           260,750
  1,250   American International Group Inc.
 ................................................
186,719
  4,000   Associates 1st Capital Corp.
 .....................................................
222,000
  2,700   Bank of Boston Corp.
 ..........................................................
 .. .           194,569
  3,000   Barnett Banks, Inc.
 ..........................................................
 .. ..      157,500
  1,500   Chase Manhattan Corp.
 ..........................................................
 .. 145,594
  1,800
Citicorp..................................................
 .. ......................      217,012
  4,800   Federal Home Loan Mortgage Corp.
 .................................................
165,000
  3,000   H. F. Ahmanson & Co.
 ..........................................................
 .. .           129,000
  2,500   Lincoln National Corp.
 ..........................................................
 . 160,937
  4,400   NationsBank Corp.
 ..........................................................
 .. ....   283,800
  6,800   State Street Corp.
 ..........................................................
 .. ...      314,500
  1,500   Transamerica Corp.
 ..........................................................
 .. ...      140,344 --------------------------------------
----------------------------------------------------------
--------

2,741,525 ------------------------------------------------
--------------------------------------------------------
HEALTHCARE -- 8.2%
  3,200   Amgen
Inc.......................................................
 .. ................      186,000
  4,300   DENTSPLY International, Inc.
 .....................................................
210,700
  3,600   Johnson &
Johnson...................................................
 .. ............      231,750
  2,300   Merck & Co., Inc.
 ..........................................................
 .. ....   238,050
  1,200   Pfizer, Inc.
 ..........................................................
 .. .........      143,400
  2,400   Schering-Plough Corp.
 ..........................................................
 .. 114,900
  6,200   Stryker Corp.
 ..........................................................
 .. ........      216,225 ---------------------------------
----------------------------------------------------------
-------------

1,341,025 ------------------------------------------------
-------------------------------------------------------
MANUFACTURING -- 0.6%
  2,000   Beckman Instruments, Inc.
 ........................................................
96,500 ---------------------------------------------------
-----------------------------------------------------
TECHNOLOGY -- 13.5%
  4,500   Belden, Inc.
 ..........................................................
 .. .........      153,281
  2,500   Compaq Computer
Corp.++...................................................
 .. ......   248,125
  5,000   Computer Associates
International.............................................
 .. ..      278,438
  7,000   EMC
Corp.++...................................................
 .. ..................      273,000
  1,000   Intel Corp.
 ..........................................................
 .. ..........      141,812
  1,400   International Business Machines Corp.
 ............................................      126,262
  4,600   Lucent Technologies Corp.
 ........................................................
331,488
  2,000   Madge Networks
N.V.++....................................................
 .. .......                 12,750
  3,300   Marshall
Industries++..............................................
 .. .............      122,925
  3,500   Oracle
Corp.++...................................................
 .. ...............      176,312
  2,500   Perkin-Elmer Corp.
 ..........................................................
 .. ...      198,906
  4,000   Sun Microsystems
Inc.++....................................................
 .. .....   148,875
----------------------------------------------------------
----------------------------------------------

2,212,174 ------------------------------------------------
-------------------------------------------------------
TRANSPORTATION -- 1.5%
  4,500   Mesaba Holdings,
Inc.++....................................................
 .. .....    66,375
  1,400   Norfolk Southern Corp.
 ..........................................................
 . 141,050
  1,300   Southwest
Airlines..................................................
 .. ............       33,638 -----------------------------
----------------------------------------------------------
-----------------

241,063 --------------------------------------------------
------------------------------------------------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       42

<pg$pcn> -------------------------------------------------
------------------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                        SOCIAL AWARENESS STOCK PORTFOLIO
<TABLE>
<CAPTION>
SHARES                                         SECURITY
VALUE ----------------------------------------------------
----------------------------------------------------
<C>       <S>
<C>
UTILITIES -- 1.0%
  4,000   Enron Corp.
 ..........................................................
 .. ..........   $  163,250 -------------------------------
----------------------------------------------------------
---------------
          TOTAL COMMON STOCK (Cost -
$7,407,734)...........................................
11,562,822 -----------------------------------------------
---------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
   FACE
  AMOUNT                                        SECURITY
VALUE ----------------------------------------------------
----------------------------------------------------
<C>           <S>
<C>
REPURCHASE AGREEMENTS -- 29.2%
$2,767,000    Chase Manhattan Bank, 5.72% due 7/1/97;
Proceeds at maturity -- $2,767,440;       2,767,000
              (Fully collateralized by U.S. Treasury
Notes, 6.750% due 4/30/00; Market
              value -
$2,825,400)...............................................
 .. .......
 2,000,000    Citibank, 5.96% due 7/1/97; Proceeds at
maturity -- $2,000,331; (Fully            2,000,000
              collateralized by U.S. Treasury Notes,
6.875% due 3/31/00; Market
              value -
$2,044,125)...............................................
 .. ....... -----------------------------------------------
---------------------------------------------------------

4,767,000
              TOTAL REPURCHASE AGREEMENTS (Cost -
$4,767,000)............................ ------------------
----------------------------------------------------------
----------------------------

$16,329,822
            TOTAL INVESTMENTS -- 100% (Cost --
$12,174,734*)............................ ----------------
----------------------------------------------------------
------------------------------
</TABLE>

++ Non-income producing security.
* Aggregate cost for Federal income tax purposes is
substantially the same.

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       43

<pg$pcn> -------------------------------------------------
------------------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                              UTILITIES PORTFOLIO

<TABLE>
<CAPTION>
SHARES                                        SECURITY
VALUE ----------------------------------------------------
----------------------------------------------------
<C>        <S>
<C>
COMMON STOCK -- 81.1% ------------------------------------
----------------------------------------------------------
----------
ELECTRIC - UTILITY -- 55.5%
 10,000    Allegheny Power System,
Inc....................................................
$ 266,875
 11,000    American Electric Power Co.,
Inc...............................................
462,000
  7,500    Baltimore Gas & Electric
Co....................................................
200,156
 15,000    CINergy
Corp......................................................
 .. ...........        522,188
  7,500    CIPSCO,
Inc.......................................................
 .. ...........        274,219
 15,000    CMS Energy
Corp......................................................
 .. ........         528,750
 10,000    DPL
Inc.......................................................
 .. ...............        246,250
 12,750    DQE
Inc.......................................................
 .. ...............        360,187
 20,000    Edison
International.............................................
 .. ............        497,500
  7,000    Energen
Corp......................................................
 .. ...........        235,812
 15,000    Entergy Corp.
 ..........................................................
 .. .....     410,625
 15,000    Florida Progress
Corp......................................................
 .. ..        469,687
 10,000    FPL Group
Inc.......................................................
 .. .........        460,625
 10,000    GPU
Inc.......................................................
 .. ...............        358,750
 15,000    Illinova
Corp......................................................
 .. ..........        330,000
 10,000    KN Energy
Inc.......................................................
 .. .........        421,250
 15,000    Long Island Lighting
Co........................................................
345,000
 10,000    New York State Electric & Gas
Corp.............................................
208,750
 10,000    NIPSCO Industries,
Inc.......................................................
 ..
413,125
  3,000    Oneok
Inc.......................................................
 .. .............         96,563
 10,000
PacifiCorp................................................
 .. ...................        220,000
  5,000    Pinnacle West Capital
Corp.....................................................
150,313
  5,000    Potomac Electric Power
Co......................................................
115,625
  7,500    Public Service Co. of
Colorado.................................................
311,250
  8,000    Public Service Co. of New
Mexico...............................................
143,000
 15,000    SCANA
Corp......................................................
 .. .............        372,188
 15,000    Sierra Pacific
Resources.................................................
 .. ....     480,000
 12,500    Southern
Co........................................................
 .. ..........        273,437
 10,000    Texas Utilities
Co........................................................
 .. ...     344,375
 12,000    UtiliCorp United,
Inc.......................................................
 .. .              349,500
----------------------------------------------------------
----------------------------------------------

9,868,000 ------------------------------------------------
--------------------------------------------------------
NATURAL GAS -- 13.8%
  8,000    Coastal
Corp......................................................
 .. ...........        425,500
  5,000    Columbia Gas Systems,
Inc......................................................
326,250
  7,000    Enron
Corp......................................................
 .. .............        285,687
  5,000    Equitable Resources Inc.
 ......................................................
141,875
  7,000    MCN
Corp......................................................
 .. ...............        214,375
 10,000    Pacific
Enterprises...............................................
 .. ...........        336,250
 15,000    Southwest Gas Corp.
 ..........................................................
 . 298,125
 10,000    Williams Cos.,
Inc.......................................................
 .. ....     437,500
----------------------------------------------------------
--
---------------------------------------------
2,465,562 ------------------------------------------------
--------------------------------------------------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       44

<pg$pcn> -------------------------------------------------
------------------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                              UTILITIES PORTFOLIO
<TABLE>
<CAPTION>
SHARES                                        SECURITY
VALUE ----------------------------------------------------
----------------------------------------------------
<C>        <S>
<C>
TELEPHONE -- 11.8%
  2,000    Bell Atlantic Corp.
 ..........................................................
 . $           151,750
 10,000    GTE Corp.
 ..........................................................
 .. .........        438,750
  7,000    MCI Communications Corp.
 ......................................................
267,969
  5,000    Qwest Communications International Inc.
 .......................................        136,250
  3,000    SBC Communications
Inc.......................................................
 .. 185,625
 10,000    Teleport Communications Group,
Inc.++..........................................
341,250
  5,000    US West Media
Group++...................................................
 .. .....     101,250
 15,000    WorldCom, Inc.
 ..........................................................
 .. ....     480,000
----------------------------------------------------------
----------------------------------------------

2,102,844 ------------------------------------------------
--------------------------------------------------------

14,436,406
           TOTAL COMMON STOCK (Cost -
$12,296,057)....................................... ------
----------------------------------------------------------
----------------------------------------
</TABLE>

<TABLE>
<CAPTION>
   FACE
  AMOUNT                                        SECURITY
VALUE
<C>           <S>
<C> ------------------------------------------------------
--------------------------------------------------
CORPORATE BONDS -- 3.6% ----------------------------------
----------------------------------------------------------
------------
ELECTRIC - UTILITY -- 2.3%
$  200,000    Arizona Public Service Co., 7.25% due
8/1/23.................................       188,642
   200,000    Philadelphia Electric, 8.75% due
4/1/22......................................       212,250
----------------------------------------------------------
----------------------------------------------

400,892 --------------------------------------------------
------------------------------------------------------
TELEPHONE -- 1.3%
   230,000    MCI Communication Corp., 7.75% due
3/23/25...................................       229,425 -
----------------------------------------------------------
---------------------------------------------

630,317
              TOTAL CORPORATE BONDS (Cost --
$605,989)..................................... -----------
----------------------------------------------------------
-----------------------------------
U.S. TREASURY OBLIGATIONS -- 2.9%
   500,000    U.S. Treasury Notes, 7.75% due 11/30/99
(Cost
-- $499,832)...................       517,265 ------------
----------------------------------------------------------
----------------------------------

15,583,988
              SUB-TOTAL INVESTMENTS (Cost --
$13,401,878).................................. -----------
----------------------------------------------------------
-----------------------------------
REPURCHASE AGREEMENT -- 12.4%
 2,208,000    Chase Manhattan Bank, 5.75% due by 7/1/97;
Proceeds at                            2,208,000
              maturity -- $2,208,353; (Fully
collateralized by U.S. Treasury Notes, 6.75%
              due 4/30/00; Market value -- $2,254,000)
(Cost -- $2,208,000)................ ---------------------
----------------------------------------------------------
-------------------------

$17,791,988
            TOTAL INVESTMENTS -- 100% (Cost --
$15,609,878*)............................. ---------------
----------------------------------------------------------
-------------------------------
</TABLE>

++ Non-income producing security.
* Aggregate cost for Federal income tax purposes is
substantially the same.

                       SEE NOTES TO FINANCIAL STATEMENTS.
                                       45
<pg$pcn>
----------------------------------------------------------
---------------------
 STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30,1997

<TABLE>
<CAPTION>

U.S. GOVERNMENT     SOCIAL AWARENESS

SECURITIES             STOCK            UTILITIES

PORTFOLIO           PORTFOLIO          PORTFOLIO
----------------------------------------------------------
----------------------------------------------------
<S>
<C>                 <C>                  <C>
ASSETS:
  Investments -- Cost..................................
$24,616,862         $  7,407,734       $13,401,878
  Repurchase agreements -- Cost........................
625,000            4,767,000         2,208,000 -----------
----------------------------------------------------------
----------------------------------------
  Investments, at value................................
$24,772,138         $ 11,562,822       $15,583,988
  Repurchase agreements, at value......................
625,000            4,767,000         2,208,000
  Cash.................................................
437                  935               303
   Receivable from affiliate............................
--               25,093                --
   Dividends and interest receivable....................
269,759                7,484            44,083
----------------------------------------------------------
----------------------------------------------------
   TOTAL ASSETS.........................................
25,667,334           16,363,334        17,836,374
----------------------------------------------------------
---------------------------------------------------
LIABILITIES:
   Investment advisory fees payable.....................
6,805                8,125             9,081
  Administration fees payable..........................
1,263                  800               570
   Accrued expenses.....................................
38,997               44,746            29,959
----------------------------------------------------------
----------------------------------------------------
   TOTAL LIABILITIES....................................
47,065               53,671            39,610
----------------------------------------------------------
----------------------------------------------------
TOTAL NET ASSETS.......................................
$25,620,269         $ 16,309,663       $17,796,764
----------------------------------------------------------
----------------------------------------------------
NET ASSETS:
   Paid-in capital......................................
$25,366,667         $ 11,851,444       $15,207,835
  Undistributed net investment income..................
790,396               51,756           331,494
  Accumulated net realized gain (loss) from security
     transactions......................................
(692,070)             251,375            75,325
   Net unrealized appreciation of investments...........
155,276            4,155,088         2,182,110
----------------------------------------------------------
----------------------------------------------------
TOTAL NET ASSETS.......................................
$25,620,269         $ 16,309,663       $17,796,764
----------------------------------------------------------
----------------------------------------------------
SHARES OUTSTANDING.....................................
2,286,540              887,129         1,397,603
----------------------------------------------------------
----------------------------------------------------
NET ASSET VALUE, PER SHARE.............................
$11.20               $18.38            $12.73
----------------------------------------------------------

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

</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       46

<pg$pcn> -------------------------------------------------
------------------------------
   STATEMENTS OF OPERATIONS (UNAUDITED)     FOR THE SIX
                          MONTHS
ENDED JUNE 30, 1997

<TABLE>
<CAPTION>

U.S.           SOCIAL

GOVERNMENT      AWARENESS

SECURITIES        STOCK        UTILITIES

PORTFOLIO      PORTFOLIO      PORTFOLIO ------------------
----------------------------------------------------------
------------------------------
<S>
<C>             <C>            <C>
INVESTMENT INCOME:

Interest..................................................
 .. .   $   870,923     $   77,647     $  111,504

Dividends.................................................
 .. .                           --       55,338
316,410
----------------------------------------------------------
------------------------------------------------
  TOTAL INVESTMENT
INCOME......................................       870,923
132,985        427,914 -----------------------------------
----------------------------------------------------------
-------------
EXPENSES:
  Investment advisory fees (Note
2)............................        40,802
42,049 60,769
  Audit and
legal............................................
 .. 10,496      10,025         11,000
  Administration fees (Note
2).................................         7,572
3,881          5,240
  Shareholder
communications...................................
5,850          6,938          8,500
  Shareholder and system servicing
fees........................         5,788          6,346
4,000
  Trustees'
fees...............................................
3,200          3,500          3,500

Custody...................................................
 .. .                3,065          3,183          2,250
Other.....................................................
 .. .                1,028          5,307          6,125
----------------------------------------------------------
------------------------------------------------
  TOTAL
EXPENSES...............................................
77,801         81,229        101,384
----------------------------------------------------------
------------------------------------------------
NET INVESTMENT
INCOME..........................................
793,122         51,756        326,530
----------------------------------------------------------
------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE
  3): Realized Gain From Security Transactions (excluding
  short-term securities):
     Proceeds from
sales.......................................    39,847,698
1,314,750      6,315,309
     Cost of securities
sold...................................    39,838,979
1,060,462      6,239,984
----------------------------------------------------------
------------------------------------------------
  NET REALIZED
GAIN............................................
8,719        254,288         75,325 ----------------------
----------------------------------------------------------
--------------------------
   Change in Net Unrealized Appreciation of Investments:
     Beginning of
period.......................................
184,657 2,448,669   1,870,929
     End of
period.............................................
155,276      4,155,088      2,182,110 --------------------
----------------------------------------------------------
----------------------------
  INCREASE (DECREASE) IN NET UNREALIZED
APPRECIATION...........       (29,381)     1,706,419
311,181 --------------------------------------------------
--------------------------------------------------------
NET GAIN (LOSS) ON
INVESTMENTS.................................
(20,662) 1,960,707    386,506
----------------------------------------------------------
------------------------------------------------
INCREASE IN NET ASSETS FROM
OPERATIONS.........................   $   772,460
$2,012,463     $  713,036 --------------------------------
----------------------------------------------------------
----------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       47

<pg$pcn> -------------------------------------------------
------------------------------
 STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)   FOR THE
SIX MONTHS ENDED JUNE

30, 1997

<TABLE>
<CAPTION>
                                                      U.S.
GOVERNMENT     SOCIAL AWARENESS
SECURITIES             STOCK            UTILITIES
PORTFOLIO           PORTFOLIO          PORTFOLIO
----------------------------------------------------------
-----------------------------------------------
<S>                                                   <C>
<C>                  <C>
OPERATIONS:
  Net investment income.............................    $
793,122         $     51,756       $   326,530
  Net realized gain.................................
8,719              254,288            75,325
  Increase (decrease) in net unrealized
     appreciation...................................
(29,381)           1,706,419           311,181
----------------------------------------------------------
-----------------------------------------------
  INCREASE IN NET ASSETS FROM OPERATIONS............
772,460            2,012,463           713,036
----------------------------------------------------------
----------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
  Net investment income.............................
--                   --                --
----------------------------------------------------------
-----------------------------------------------
  DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO
     SHAREHOLDERS...................................
--                   --                --
----------------------------------------------------------
-----------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 8):
  Net proceeds from sale of shares..................
1,370,841            4,626,716         1,268,577
  Net asset value of shares issued for reinvestment
      of dividends...................................
--                   --                --
  Cost of shares reacquired.........................
(2,531,566)          (1,369,511)       (2,399,075)
----------------------------------------------------------
-----------------------------------------------
  INCREASE (DECREASE) IN NET ASSETS FROM FUND SHARE
     TRANSACTIONS...................................
(1,160,725)           3,257,205        (1,130,498)
----------------------------------------------------------
-----------------------------------------------
INCREASE (DECREASE) IN NET ASSETS...................
(388,265)           5,269,668          (417,462)
NET ASSETS:
  Beginning of period...............................
26,008,534           11,039,995        18,214,226
----------------------------------------------------------
-----------------------------------------------
  END OF PERIOD*....................................
$25,620,269         $ 16,309,663       $17,796,764
----------------------------------------------------------
-----------------------------------------------
* Includes undistributed net investment income
  of:...............................................
$790,396              $51,756          $331,494
----------------------------------------------------------
-----------------------------------------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       48

<pg$pcn> -------------------------------------------------
------------------------------
  STATEMENTS OF CHANGES IN NET ASSETS        FOR THE YEAR
ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>

U.S.           SOCIAL

GOVERNMENT       AWARENESS

SECURITIES         STOCK         UTILITIES

PORTFOLIO       PORTFOLIO       PORTFOLIO
<S>
<C>             <C>             <C>
----------------------------------------------------------
-----------------------------------------------OPERATIONS:
  Net investment
income......................................   $ 1,540,387
$    37,123     $   670,946
  Net realized gain
(loss)...................................      (704,606)
400,819         829,616
  Increase (decrease) in net unrealized
appreciation.........      (612,404)      1,159,056
(222,208) ------------------------------------------------
----------------------------------------------------------
  INCREASE IN NET ASSETS FROM
OPERATIONS.....................       223,377
1,596,998       1,278,354 --------------------------------
----------------------------
----------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
  Net investment
income......................................
(3,539,054) (233,199)     (1,107,160)
  Net realized
gains.........................................
(423,418)       (525,148)       (974,548) ----------------
----------------------------------------------------------
--------------------------------
  DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO

SHAREHOLDERS............................................
(3,962,472)       (758,347)     (2,081,708) --------------
----------------------------------------------------------
----------------------------------
FUND SHARE TRANSACTIONS (NOTE 8):
  Net proceeds from sale of
shares...........................     6,750,676
4,848,116       7,458,285
   Net asset value of shares issued for reinvestment of
                             
dividends...............................................
3,962,472         758,347       2,081,708
  Cost of shares
reacquired..................................
(9,157,807) (2,459,930)     (5,862,088) ------------------
----------------------------------------------------------
------------------------------
  INCREASE IN NET ASSETS FROM FUND SHARE
TRANSACTIONS........     1,555,341       3,146,533
3,677,905 ------------------------------------------------
----------------------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS............................    (2,183,754)
3,985,184       2,874,551
NET ASSETS:
  Beginning of
year..........................................
28,192,288 7,054,811      15,339,675 ---------------------
----------------------------------------------------------
---------------------------
  END OF
YEAR*...............................................
$26,008,534     $11,039,995     $18,214,226 --------------
----------------------------------------------------------
----------------------------------
* Includes undistributed net investment income
of:...........       $(2,726)             --
$4,964
----------------------------------------------------------
------------------------------------------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       49

<pg$pcn> -------------------------------------------------
------------------------------
 NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

     1.  SIGNIFICANT ACCOUNTING POLICIES

     The U.S. Government Securities, Social Awareness Stock
and Utilities
Portfolios (collectively, "Portfolio(s)") are separate
investment portfolios of
The Travelers Series Trust ("Trust"). The Trust is a
Massachusetts business
trust registered under the Investment Company Act of 1940, as
amended, as a
diversified, open-end management investment company and
consists of these
portfolios and eleven other separate investment portfolios:
Travelers Quality
Bond, Lazard International Stock, MFS Emerging Growth,
Federated High Yield,
Federated Stock, Large Cap, Equity Income, Mid-Cap
Disciplined Equity Fund, Zero
Coupon Bond Fund Portfolio Series 1998, Zero Coupon Bond
Fund Portfolio Series
2000 and Zero Coupon Bond Fund Portfolio Series 2005
Portfolios. Shares of the
Trust are offered only to insurance company separate
accounts that fund certain
variable annuity and variable life insurance contracts. The
financial statements
and financial highlights for the other portfolios are
presented in separate
semi-annual reports.

     The significant accounting policies consistently
followed by the Portfolios
are: (a) security transactions are accounted for on trade
date; (b) securities
traded on national securities markets are valued at the
closing prices on such
markets; securities for which no sales prices were
reported and U.S. Government
and Agency obligations are valued at the mean between the
last reported bid and
asked prices or on the basis of quotations received from
reputable brokers or
other recognized sources; (c) securities maturing within
60 days are valued at
cost plus accreted discount and, or minus amortized
premium, which approximates
market value; (d) securities that have a maturity of 60
days or more are valued
at prices based on market quotations for securities of
similar type, yield and
maturity; (e) interest income, adjusted for amortization
of premium and
accretion of discount, is recorded on the accrual basis
and dividend income is
recorded on the ex-dividend date; (f) gains or losses on
the sale of securities
are calculated by using the specific identification
method; (g) dividends and
distributions to shareholders are recorded on the ex
dividend date; (h) the
Portfolios intend to comply with the requirements of the
Internal Revenue Code
of 1986, as amended, pertaining to regulated investment
companies and to make
distributions of taxable income sufficient to relieve it
from substantially all
Federal income and excise taxes; (i) the character of
income and gains to be
distributed are determined in accordance with income tax
regulations which may
differ from generally accepted accounting principles. At
December 31, 1996,
reclassifications were made to the Portfolio capital
accounts to reflect
permanent book/tax differences and income and gains
available for distribution
under income tax regulations. Accordingly, a portion of
overdistributed net
investment income and accumulated net realized loss
amounting to $6,915 and
$9,045, respectively, were reclassified to paid-in capital
for Social Awareness
Stock Portfolio. Net investment income, net realized gains
and net assets for
each Portfolio were not affected by these changes; and (j)
estimates and
assumptions are required to be made regarding assets,
liabilities and changes in
net assets resulting from operations when financial
statements are prepared.
Changes in the economic environment, financial markets and
any other parameters
used in determining these estimates could cause actual
results to differ.

     2.  INVESTMENT ADVISORY AGREEMENT AND OTHER
TRANSACTIONS
   Travelers Asset Management International Corporation
("TAMIC"), an indirect
wholly owned subsidiary of Travelers Group Inc., acts as
investment manager and
advisor to the U.S. Government Securities Portfolio
("USGS"). USGS pays TAMIC an
investment management and advisory fee calculated at the
annual rate of 0.3233%
of its average daily net assets. This fee is calculated
daily and paid monthly.

     Greenwich Street Advisors ("GSA"), a division of
Smith Barney Mutual Funds
Management Inc. ("SBMFM") which is a subsidiary of Smith
Barney Holdings Inc.
("SBH") and an indirect wholly owned subsidiary of
Travelers Group Inc., acts as
investment manager and advisor to the Social Awareness
Stock ("SAS") and
Utilities ("Utilities") Portfolios. SAS pays GSA an
investment management and
advisory fee calculated at an annual rate of : 0.65% on
the first $50 million,
0.55% on the next $50 million, 0.45% on the next $100
million and 0.40% on
amounts over $200 million of the average daily net assets.
Utilities pays GSA an
investment management and advisory fees calculated at an
annual rate of 0.65% of
the average daily net assets. These fees are calculated
daily and paid monthly.

                                       50
<pg$pcn>
----------------------------------------------------------
---------------------
 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

    Travelers Insurance Company ("Travelers Insurance")
acts as administrator
to the Portfolios. The Portfolios pay Travelers Insurance
an administration fee
calculated at an annual rate of 0.06% of the average daily
net assets. Travelers
Insurance has entered into a sub-administrative services
agreement with SBMFM.
Travelers Insurance pays SBMFM, as sub-administrator, a
fee calculated at an
annual rate of 0.06% of the average daily net assets of
each Portfolio. This fee
is calculated daily and paid monthly.

     One Trustee and all officers of the Trust are
employees of Travelers Group
Inc., or its subsidiaries.

     3.  INVESTMENTS

      During the six months ended June 30, 1997, the
aggregate cost of purchases
and proceeds from sales of investments (including
maturities, but excluding
short-term securities) were as follows:

<TABLE>
<CAPTION>

USGS            SAS         UTILITIES --------------------
----------------------------------------------------------
----------------------------
<S>
<C>              <C>            <C>
Purchases.................................................
 .. .... $ 41,695,116     $1,584,840     $5,196,884 -------
----------------------------------------------------------
----------------------------------------
Sales.....................................................
 .. ....   39,847,698      1,314,750      6,315,309
</TABLE>

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

     At June 30, 1997, aggregate gross unrealized
appreciation and depreciation
of investments for Federal income tax purposes were
substantially as follows:

<TABLE>
<CAPTION>

USGS          SAS         UTILITIES ----------------------
----------------------------------------------------------
--------------------------
<S>
<C>          <C>            <C>
Gross unrealized
appreciation.......................................
$203,706 $4,206,799      2,306,548
Gross unrealized
depreciation.......................................
(48,430)       (51,711)      (124,438) -------------------
----------------------------------------------------------
-----------------------------
Net unrealized
appreciation.........................................
$155,276     $4,155,088     $2,182,110 -------------------
----------------------------------------------------------
-----------------------------
</TABLE>

     4.  REPURCHASE AGREEMENTS
    The Portfolios purchase (and their custodian takes
possession of) U.S.
Government securities from banks and securities dealers
subject to agreements to
resell the securities to the sellers at a future date
(generally, the next
business day) at an agreed-upon higher repurchase price.
The Portfolios require
continual maintenance of the market value of the
collateral in amounts at least
equal to 102% of the repurchase price.

     5.  FUTURES CONTRACTS

     Initial margin deposits made upon entering into
futures contracts are
recognized as assets. The initial margin is segregated by
the custodian and is
noted in the schedule of investments. During the period
the futures contract is
open, changes in the value of the contract are recognized
as unrealized gains or
losses by "marking-to-market" on a daily basis to reflect
the market value of
the contract at the end of each day's trading. Variation
margin payments are
made or received and recognized as assets due from or
liabilities due to broker,
depending upon whether unrealized gains or losses are
incurred. When the
contract is closed, the Portfolios record a realized gain
or loss equal to the
difference between the proceeds from (or cost of) the
closing transactions and
the Portfolio's basis in the contract. The Portfolios bear
the market risk that
arises from changes in the value of the financial
instruments and securities
indices (futures contracts) and the credit risk should a
counterparty fail to
perform under such contracts.

   At June 30, 1997, the Portfolios had no open futures
contracts.

                                       51
<pg$pcn>
----------------------------------------------------------
---------------------
 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

     6.  OPTIONS CONTRACTS

     Premiums paid when put or call options are purchased
by the Portfolios,
represent investments, which are "marked-to-market" daily.
When a purchased
option expires, the Portfolios will realize a loss in the
amount of the premium
paid. When the Portfolios enter into closing sales
transactions, the Portfolios
will realize a gain or loss depending on whether the
proceeds from the closing
sales transactions are greater or less than the premium
paid for the option.
When the Portfolios exercise a put option, they will
realize a gain or loss from
the sale of the underlying security and the proceeds from
such sale will be
decreased by the premium originally paid. When the
Portfolios exercise a call
option, the cost of the security which the Portfolios
purchase upon exercise
will be increased by the premium originally paid.

      As of June 30, 1997, the Portfolios had no open
purchased call or put
options contracts.

     7.  CAPITAL LOSS CARRYFORWARD

    At December 31, 1996, U.S. Government Securities
Portfolio had, for Federal
income tax purposes, approximately $715,000 of capital
loss carryforwards
available to offset future capital gains through 2004. To
the extent that these
carryforward losses are used to offset capital gains, it
is probable that the
gains so offset will not be distributed.

     8.  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 each
Portfolio were as follows:

<TABLE>
<CAPTION>

SIX MONTHS ENDED       YEAR ENDED

JUNE 30, 1997      DECEMBER 31, 1996 ---------------------
----------------------------------------------------------
------------------------
<S>
<C>                 <C>
U.S. GOVERNMENT SECURITIES PORTFOLIO
Shares
sold.....................................................
125,466              606,114
Shares issued on
reinvestment...................................
--              355,511
Shares
redeemed.................................................
(232,804)            (834,803) ---------------------------
-------------------------------------------------------
Net Increase
(Decrease).........................................
(107,338)             126,822 ----------------------------
------------------------------------------------------
SOCIAL AWARENESS STOCK PORTFOLIO
Shares
sold.....................................................
269,793              323,694
Shares issued on
reinvestment...................................
--               51,251
Shares
redeemed.................................................
(83,021)            (167,210) ----------------------------
------------------------------------------------------
Net
Increase..................................................
 .. 186,772              207,735 --------------------------
--------------------------------------------------------
UTILITIES PORTFOLIO
Shares
sold.....................................................
103,856              590,496
Shares issued on
reinvestment...................................
--              169,391
Shares
redeemed.................................................
(196,396)            (463,451) ---------------------------
-------------------------------------------------------
Net Increase
(Decrease).........................................
(92,540)             296,436 -----------------------------
-----------------------------------------------------
</TABLE>

                                       52
<pg$pcn>
----------------------------------------------------------
---------------------
 FINANCIAL HIGHLIGHTS
For a share of beneficial interest outstanding throughout
each period:

<TABLE>
<CAPTION>
    U.S. GOVERNMENT SECURITIES PORTFOLIO       1997(1)
1996       1995       1994       1993      1992(2) -------
----------------------------------------------------------
-------------------------------------------
<S>                                             <C>
<C>        <C>        <C>        <C>        <C>
NET ASSET VALUE, BEGINNING OF PERIOD..........   $10.86
$12.43     $10.58     $11.63     $10.79    $10.00 --------
----------------------------------------------------
-------------------------------------------------
INCOME (LOSS) FROM OPERATIONS:
  Net investment income.......................     0.35
0.68       0.65       0.60       0.57      0.53
  Net realized and unrealized gain (loss).....    (0.01)
(0.52)      1.80      (1.23)      0.44      0.26
----------------------------------------------------------
--------------------------------------------------
Total Income (Loss) From Operations...........     0.34
0.16       2.45      (0.63)      1.01      0.79
----------------------------------------------------------
--------------------------------------------------
LESS DISTRIBUTIONS FROM (3):
  Net investment income.......................       --
(1.55)     (0.60)     (0.39)     (0.17)       --
  Net realized gains..........................       --
(0.18)        --      (0.03)        --        --
----------------------------------------------------------
--------------------------------------------------
Total Distributions...........................       --
(1.73)     (0.60)     (0.42)     (0.17)       --
----------------------------------------------------------
--------------------------------------------------
NET ASSET VALUE, END OF PERIOD................   $11.20
$10.86     $12.43     $10.58     $11.63    $10.79
----------------------------------------------------------
--------------------------------------------------
TOTAL RETURN..................................     3.13%++
1.46%     24.42%     (5.64)%     9.48%     7.90%++
----------------------------------------------------------
--------------------------------------------------
NET ASSETS, END OF PERIOD (000'S).............  $25,620
$26,009    $28,192    $24,522    $25,520    $9,017
----------------------------------------------------------
--------------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
  Expenses (4)................................     0.62%+
0.62%      0.56%      0.71%      0.58%     0.38%+
  Net investment income.......................     6.35+
5.68       5.80       5.56       5.04      4.72+
----------------------------------------------------------
-------------------------------------------------PORTFOLIO
TURNOVER RATE.......................    170%
501%       214%        16%        51%       25%
----------------------------------------------------------
--------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
       SOCIAL AWARENESS STOCK PORTFOLIO         1997(1)
1996       1995       1994       1993      1992(5)
----------------------------------------------------------
--------------------------------------------------
<S>                                             <C>
<C>        <C>        <C>        <C>        <C>
NET ASSET VALUE, BEGINNING OF PERIOD..........   $15.76
$14.32     $11.05     $11.64     $10.95    $10.00
----------------------------------------------------------
--------------------------------------------------
INCOME (LOSS) FROM OPERATIONS:
  Net investment income (6)...................     0.06
0.31       0.12       0.16       0.17      0.16
  Net realized and unrealized gain (loss).....     2.56
2.42       3.47      (0.45)      0.65      0.79
----------------------------------------------------------
--
-------------------------------------------------
Total Income (Loss) From Operations...........     2.62
2.73       3.59      (0.29)      0.82      0.95 ----------
----------------------------------------------------------
----------------------------------------
LESS DISTRIBUTIONS FROM (3):
   Net investment income.......................       --
(0.43)     (0.14)     (0.24)     (0.13)       --
   Net realized gains..........................       --
(0.86)     (0.18)     (0.06)        --        ------------
----------------------------------------------------------
---------------------------------------
Total Distributions...........................       -
(1.29)     (0.32)     (0.30)     (0.13)       ------------
----------------------------------------------------------
---------------------------------------
NET ASSET VALUE, END OF PERIOD................   $18.38
$15.76     $14.32     $11.05     $11.64    $10.95 --------
----------------------------------------------------------
------------------------------------------
TOTAL RETURN..................................    16.62%++
19.98%     33.37%     (2.69)%     7.55%     9.50%++ ------
----------------------------------------------------------
--------------------------------------------
NET ASSETS, END OF PERIOD (000'S).............  $16,310
$11,040     $7,055     $3,879     $3,361    $1,394 -------
----------------------------------------------------------
-------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
  Expenses (6)(7).............................     1.25%+
1.25%      1.25%      1.25%      1.05%     0.71%+
  Net investment income.......................     0.80+
0.43       0.99       1.43       1.50      2.22+ ---------
----------------------------------------------------------
----------------------------------------PORTFOLIO TURNOVER
RATE.......................       13% 26%        73%
137%        60%       56% --------------------------------
----------------------------------------------------------
------------------
AVERAGE COMMISSIONS PER SHARE PAID
   ON EQUITY TRANSACTIONS(8)...................    $0.06
$0.06         --         --         --        ------------
----------------------------------------------------------
---------------------------------------
</TABLE>

(1) For the six months ended June 30, 1997 (unaudited).

(2) For the period from January 24, 1992 (commencement of
operations) to
    December 31, 1992.
(3) Distributions from realized gains include both net
realized short-term and
    long-term capital gains. Prior to 1996 net realized
short-term capital gains
    were included in distributions from net investment
income.

(4) The expense ratios for the year ended December 31,
1993 and the period ended
  December 31, 1992 reflect expense reimbursement by The
Travelers in
  connection with voluntary expense limitations. Without
the expense
  reimbursement, the expense ratios would have been 0.77%
and 0.72%
    (annualized), respectively.
(5) For the period from May 1, 1992 (inception date) to
December 31, 1992.
(6) For the year ended December 31, 1996, The Travelers
reimbursed the Portfolio
    for $25,093 in expenses. If such fees were not
waived and expenses not
    reimbursed, the per share decrease of net
investment income would have been
  $0.06 and the expense ratio would have been 1.69%.
                           
(7) The expense ratios for the years ended December 31,
1995, 1994, 1993 and the
    period ended December 31, 1992 reflect expense
reimbursement by The
    Travelers in connection with voluntary expense
limitations. Without the
    expense reimbursement, the expense ratios would
have been 1.75%, 3.34%,
    3.73% and 2.19% (annualized), respectively.

(8) For the fiscal years beginning after 1995, the SEC
instituted new guidelines
  requiring the disclosure of average commissions per
share on Funds which
    held more than 10% of their assets in
commissionable equity securities.

  ++ Total return is not annualized, as it may not be
representative of the total
    return for the year.

 + Annualized.

                                       53

<pg$pcn> -------------------------------------------------
------------------------------
 FINANCIAL HIGHLIGHTS (CONTINUED)
For a share of beneficial interest outstanding throughout
each period:

<TABLE>
<CAPTION>
                       UTILITIES PORTFOLIO
1997(1)     1996       1995      1994(2)
----------------------------------------------------------
-----------------------------------------------
<S>
<C>        <C>        <C>        <C>
NET ASSET VALUE, BEGINNING OF
PERIOD.............................   $12.22     $12.85
$10.17    $10.00 -----------------------------------------
----------------------------------------------------------
------
INCOME FROM OPERATIONS:
  Net investment
income..........................................
0.23 0.47       0.48      0.35
  Net realized and unrealized gain
(loss)........................     0.28       0.47
2.44     (0.18) ------------------------------------------
----------------------------------------------------------
-----
Total Income From
Operations.....................................     0.51
0.94       2.92      0.17 --------------------------------
----------------------------------------------------------
---------------
LESS DISTRIBUTIONS FROM (3):
  Net investment
income..........................................       -
(0.84)     (0.24)       --
  Net realized
gains.............................................       -
(0.73)        --        ----------------------------------
----------------------------------------------------------
--------------
Total
Distributions.............................................
 . --      (1.57)     (0.24)       ------------------------
----------------------------------------------------------
------------------------
NET ASSET VALUE, END OF
PERIOD...................................   $12.73
$12.22     $12.85    $10.17 ------------------------------
----------------------------------------------------------
-----------------
TOTAL
RETURN....................................................
 . 4.17%++    7.47%     29.29%     1.70%++ ----------------
----------------------------------------------------------
-------------------------------
NET ASSETS, END OF PERIOD
(000'S)................................  $17,797
$18,214 $15,340    $5,757 --------------------------------
----------------------------------------------------------
---------------
RATIOS TO AVERAGE NET ASSETS:
  Expenses
(4)...................................................
1.16%+     1.07%      1.25%     1.25%+
  Net investment
income..........................................     3.74+
3.88       4.29      3.86+ -------------------------------
----------------------------------------------------------
----------------
PORTFOLIO TURNOVER
RATE..........................................       35%
39%        25%       32% ---------------------------------
----------------------------------------------------------
--------------
AVERAGE COMMISSIONS PER SHARE PAID ON EQUITY TRANSACTIONS
(5)....    $0.06      $0.06         --        ------------
----------------------------------------------------------
------------------------------------
</TABLE>

(1) For the six months ended June 30, 1997 (unaudited).
(2) For the period from February 4, 1994 (commencement of
operations) to
    December 31, 1994.

(3) Distributions from realized gains include both net
realized short-term and
    long-term capital gains. Prior to 1996 net realized
short-term capital gains
  were included in distributions from net investment
income.

(4) The ratios of expenses to average net assets for
the year ended December 31,
  1995 and the period ended December 31, 1994 reflect
expense reimbursements
    by The Travelers in connection with voluntary
expense limitations. Without
    the expense reimbursements, the ratios of expenses
to average net assets
     would have been 1.27% and 3.49% (annualized),
respectively.

(5) For the fiscal years beginning after 1995, the SEC
instituted new guidelines
  requiring the disclosure of average commissions per
share on Funds which
    held more than 10% of their assets in
commissionable equity securities.

  ++ Total return is not annualized, as it may not be
representative of the total
    return for the year.

 + Annualized

                                       54

<pg$pcn>

                              Investment Advisers --------
                              ------------
                              
                              
   MANAGED ASSETS TRUST, HIGH YIELD BOND TRUST, CAPITAL
APPLICATION FUND, CASH
                                INCOME TRUST AND
        THE TRAVELERS SERIES TRUST: U.S. GOVERNMENT
SECURITIES PORTFOLIO

              TRAVELERS ASSET MANAGEMENT INTERNATIONAL
CORPORATION

                             Hartford, Connecticut

    THE TRAVELERS SERIES TRUST: SOCIAL AWARENESS STOCK
PORTFOLIO AND UTILITIES
                                   PORTFOLIO

                   SMITH BARNEY MUTUAL FUNDS MANAGEMENT
INC.

                               New York, New York

                            Independent Accountants ------
                           -------------------
                           
                               KPMG PEAT MARWICK

                               New York, New York

                                   Custodian
                                   ----------

                                 PNC BANK, N.A.

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, The Travelers
Series 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 for the underlying funds, which
collectively contain all
pertinent information, including the applicable sales
commissions.

Printed in U.S.A. VG-181 (Semi)(8-97)




THE TRAVELERS VARIABLE
PRODUCTS FUNDS

SEMI-ANNUAL REPORTS
JUNE 30, 1997

[PHOTO]

                     THE TRAVELERS SERIES TRUST:
                     TRAVELERS QUALITY BOND PORTFOLIO
                     LAZARD INTERNATIONAL STOCK
                     PORTFOLIO MFS EMERGING GROWTH
                     PORTFOLIO FEDERATED HIGH YIELD
                     PORTFOLIO FEDERATED STOCK PORTFOLIO
                     MID CAP DISCIPLINED EQUITY
FUND


[TRAVELERS LIFE & ANNUITY LOGO]

The Travelers Insurance Company
The Travelers Life and Annuity Company
One Tower Square
Hartford, CT 06183

<PAGE>

                         THE TRAVELERS SERIES TRUST:
                         TRAVELERS QUALITY BOND
                         PORTFOLIO LAZARD INTERNATIONAL
                         STOCK
PORTFOLIO
                         MFS EMERGING GROWTH PORTFOLIO
                         FEDERATED HIGH YIELD PORTFOLIO
                         FEDERATED STOCK PORTFOLIO
                         MID CAP DISCIPLINED EQUITY FUND

<PAGE>

SEMI-ANNUAL REPORT FOR THE TRAVELERS SERIES TRUST --------
----------------------------------------------------------
-------------

DEAR SHAREHOLDER:

We are pleased to provide the semi-annual report for six
of the fourteen
portfolios of The Travelers Series Trust -- Travelers
Quality Bond, Lazard
International Stock, MFS Emerging Growth, Federated High
Yield, Federated Stock
Portfolios and Mid Cap Disciplined Equity Fund
("Portfolios") for the period
ended June 30, 1997. In this letter, we briefly discuss
general economic and
market conditions and outline each Portfolio's investment
strategy. A detailed
summary of performance and current holdings for each
Portfolio can be found in
the appropriate sections that follow in the report.

ECONOMIC REVIEW AND OUTLOOK

Economic activity in the first quarter of 1997 showed
surprising strength as
real Gross Domestic Product ("GDP") growth rose by 4.9%.
Despite the unexpected
strength in the economy and a decline in unemployment to
about 5.0%, reported
inflation remained low. However, the stronger U.S.
economy, reflected in both a
tight labor market and a high capacity utilization rate,
sparked concerns about
rising future inflation and prompted an increasingly
vigilant Federal Reserve
Board ("Fed") to raise the federal-funds rate by 25 basis
points (0.25%) on
March 25, 1997. (The federal-funds rate is the interest
rate banks charge each
other for overnight loans and is a closely watched
indicator of the direction of
interest rates.) Concerns of higher interest rates
triggered a correction in
both the stock and bond markets at the end of the first
quarter of 1997.

The key economic news in the second quarter of 1997 was a
distinct slowdown in
economic growth and surprisingly low inflation. Both stock
and bond market
investors drew relief from these developments as the
prospects of further Fed
tightening receded. Interest rates fell from above 7.0% to
6.8% by the end of
the second quarter of 1997 and the stock market began on a
furious rally that
saw stock prices rise by almost 20%.

The second quarter of 1997 began with a singular focus on
the future direction
of Fed action. After an increase of 25 basis points in the
federal-funds rate in
late March on the heels of strong economic growth in the
first quarter, it was
considered quite likely that rates would rise during the
second quarter. The
prospects of higher rates created turmoil within the U.S.
capital markets and
stocks, in particular, were hit hard in early April.
Economic data released in
early May provided mounting evidence of a slower economy
and low inflation.
Retail sales for April were soft and producer prices
showed a dramatic decline
of 0.4%. The consensus forecast for second quarter real
economic growth has now
dropped below 2.0%.

The inflation trend in recent months has been nothing
short of remarkable,
especially in light of the low unemployment rate and high
capacity utilization
rates in the U.S. economy. The consumer price deflator,
which is considered to
be a better inflation measure than the Consumer Price
Index ("CPI"), fell to a
30-year low in May at an annual rate of 1.6%. Gains in
average hourly wages, a
closely monitored signal of wage inflation, have slowed
from 4.1% to 3.5%.
Commodity price indexes are declining, oil prices are
falling and the price of
gold is now below $320, its lowest level in five years. In
other words,
inflation just does not appear to be an issue at this
point.

The biggest contributing factor in the demise of inflation
appears to be the
significant gains in productivity achieved over the last
few years. It is widely
acknowledged that conventional measures of productivity
gains are being
understated and, under that scenario, lower-than-expected
inflation may be
explained by higher-than-expected productivity gains.
Several other factors also
suggest that the current disinflationary trend is likely
to be both secular and
global in nature. These include a high level of
disinflation in the growing
technology sector, significant government downsizing and
severe global
competition.

The second quarter rally in the stock and bond markets
suggests that investors
have reduced their inflation expectations and,
consequently, the likelihood of
further Fed tightening. In our view, the biggest risk to
the presently benign
investment climate looms on the economic landscape. A
resurgence of economic
growth in the second half of the year may prompt the Fed
to act yet again on a
preemptive basis to choke off inflationary pressures.
Strong retail sales may
well hold the key to a reacceleration in third quarter
economic growth. The
boost in consumer spending could come from any one of
several sources: increased
refinancing activity, the wealth effect of a stronger
stock market, record
levels of consumer confidence and the recent strong growth
in real disposable
personal income.

While the relatively high real yield levels in the bond
market suggest that bond
investors still remain wary of an increase in inflation,
we think the stock
market is clearly vulnerable to such a development.

                                        1
<PAGE>
SEMI-ANNUAL REPORT FOR THE TRAVELERS SERIES TRUST --------
----------------------------------------------------------
-------------
FIXED INCOME COMMENTARY
Bond prices rose higher in the second quarter. The Lehman
Long
Government/Corporate Index performed the best with a gain
of 5.5% as interest
rates fell below 7%. The yield curve became flatter as the
spread between long-
and short-term bonds narrowed by 0.20% in the quarter.

Stronger growth with low inflation has been good for bonds
as it has reduced
government financing needs. The low inflation environment
coupled with a
declining budget deficit provides positive support for the
bond market. Going
forward, the bullish case for bonds can be attributed to a
reduced budget
deficit and absence of inflation in final goods pricing.
While wages may be
drifting higher, so are productivity gains due to
technological improvements. At
the same time, global competition and an 8.5% year-to-date
increase in the trade
weighted dollar should prevent higher product inflation.
Year-over-year Producer
Price Index ("PPI") statistics show no signs of price
pressures, and CPI has
been at a 2.0% to 2.5% rate for the past few years.
Additionally, the CPI is
generally agreed to be overstated and the government may
be in the process of
gradually reducing this upward bias.

The key question for the markets will be the pace of
growth in the second half
of the year and how the bond market and Fed react to it.
We do not believe that
growth necessarily leads to further inflation on the
finished goods side. As
long as wage growth is offset by productivity increases,
higher growth with low
unemployment does not have to lead to a rise in inflation.
However there is
still much debate on what the market and the Fed think
about the relationship
between economic growth and inflation. If growth is above
3%, the market may
still expect higher inflation or the Fed may raise rates
on a preemptive basis.

Within the fixed income markets, spreads remain tight and
there is a high level
of complacency. Within the corporate market, spreads
remain compressed between
different quality levels and "riskier" borrowers have
access to an abundance of
capital. This condition is unlikely to change in the near
term as good economic
growth has reduced the stress on weaker credits. High
issues of Collateralized
Bond Obligations ("CBOs") has created a new class of buyer
for lower quality
issues, on that is more concerned with default likelihood
than relative pricing.
Mortgage-backed spreads have tightened as market
volatility has been low and
prepayments have been within their predicted range.
Mortgage spreads are
unlikely to widen much as long as government agencies such
as Federal National
Mortgage Association ("FNMA") and Federal Home Loan
Mortgage Corporation
("FHLMC") are quick to arbitrage any spread widening.
Corporate spreads are
likely to take their cues from the high yield and equity
markets. As long as
these remain well bid for, high quality spreads should
remain firm.
Historically, October has been a month when spreads have
become wider and we
would therefore not be surprised to see some modest
pressure on spreads as the
fourth quarter begins.

EQUITY COMMENTARY

The U.S. stock market continues to be in one the strongest
bull market runs
ever. Stock prices have now doubled over the last two and
a half years and
almost tripled in the last five years in an ideal
investment climate of solid
economic growth, low inflation and strong corporate
profits growth.

The year 1997 began on a positive note for the stock
market. Fueled by strong
fourth quarter earnings and robust money flows into mutual
funds, the Standard &
Poor's 500 Stock Index ("S&P 500") gained over 7% in
January and February, and
continued to move to new highs in early March. However, as
evidence of
unexpectedly robust economic growth came to hand,
investors became increasingly
concerned about the risk of higher inflation and interest
rates. The Fed raised
short-term rates in March, and long-term Treasury bond
yields moved back over
the psychologically important 7% level.

The upward spike in interest rates triggered a sharp sell
off in the stock
market during the last week of March, erasing most of the
market's year-to-date
gains. For the entire first quarter, the S&P 500 edged out
a
2.7% gain with
dividends. Small capitalization issues generally fared
worse. During the first
three months of 1997, the Russell 2000 Stock Index
declined 5.5% in value.

The second quarter of 1997 was the best quarter for the
U.S. stock market in
over ten years. The stock market rally was broad in nature
lifting most stocks
and indexes to record high levels. The S&P 500 soared by
17.5% in the second
quarter, the Russell 2000 Index rose 16.2% and the Nasdaq
Composite Index
performed even better with a gain of 18.0%. (The S&P 500
is an unmanaged
capitalization-weighted index of 500 widely held common
stocks. The Russell 2000
Index is made up of 2,000 smaller-capitalized U.S.-based
companies whose common
stocks trade on either the New York, American or Nasdaq
stock exchanges. The
Nasdaq Composite Index is a capitalization-weighted index
of all stocks which
trade on Nasdaq.)

                                        2
<PAGE>
SEMI-ANNUAL REPORT FOR THE TRAVELERS SERIES TRUST --------
----------------------------------------------------------
-------------
As noted, the stock market got off to a rocky start in
April as the effects of
the Fed rate hike from late March rippled through the
capital markets. The S&P
500 sold off a low of 733 and the Dow Jones Industrial
Average ("DJIA")
retreated to almost 6300 on April 14, 1997, as investors
focused on the
likelihood of higher rates. The investor mood swing to
optimism was triggered by
the release of solid first quarter earnings in April and
the market rally began
in earnest when inflation reports in early May showed a
significant decline in
producer and consumer prices.

First quarter 1997 corporate earnings were again ahead of
expectations. The
final tally on the earnings scorecard showed that 54% of
all companies reported
earnings in excess of expectations while 31% of companies
disappointed relative
to the consensus. The preponderance of positive earnings
surprises continues a
trend which now extends to 17 consecutive quarters and is
unprecedented in terms
of duration or magnitude. Moreover, the agreement on a
balanced budget in
Washington and the prospects of a lower capital gains tax
added further fuel to
the stock market rally in the middle of the quarter. The
flood of liquidity into
the market continued unabated in the second quarter and
put more buying pressure
on stocks.

There are no indications right now to suggest that
earnings are at any great
risk in the near term. The earnings pre-announcement
season at the end of the
quarter, when companies typically confess to upcoming
earnings shortfalls, was
uneventful and early second quarter earnings seem to be
quite strong.

There are no visible signs on the horizon that inflation
is likely to flare up
in the near future. The employment cost index and hourly
wage gains are likely
to be the most closely monitored gauges of expected
inflation. We believe the
biggest risk on the interest rate front lies in a stronger
than-expected economy
in the second half. In fact, the Fed may be inclined to
respond to strong
economic data even before it begins to affect inflation
measures.

We remain cautious on the U.S. stock market. With all the
good news already
reflected in stock prices, the stock market has virtually
no margin for error.
We suspect that any unpleasant surprise will be enough
provocation to trigger a
correction. The market will focus on earnings or interest
rates for any negative
developments but any wild card surprise such as an oil
price shock could mean
trouble. The positive long-term trend towards low
inflation and lower interest
rates should, however, contain the downside in the stock
market and limit any
correction to the tradition 10% to 15% range from prior
highs.

Foreign stock markets also enjoyed a strong second quarter
with the Morgan
Stanley Capital International Europe Australia Far East
index ("MSCI EAFE")
rising by 13.0% in U.S. dollar terms. (The MSCI EAFE Index
consists of the
equity total returns for Europe, Australia, New Zealand
and the Far East.) The
bull market in global stocks also saw the Latin America
index advance by 22.5%
in the second quarter while the Emerging Markets index
gained 8.6% in U.S.
dollar terms.

TRAVELERS QUALITY BOND PORTFOLIO

The second quarter of 1997 began with weak financial
markets following a March
Fed rate increase. Financial markets bottomed in April and
roared in May and
June as investor fears of further Fed tightening subsided
with a much lower than
expected employment cost index increase, three consecutive
months of negative
retail sales growth and five consecutive months of
negative producer price
inflation reports. Investors seem to have a growing
conviction that we are in a
new era where inflation can stay low despite low levels of
unemployment last
seen in 1973. In addition to inflation, the drop in the
size of the Federal
government's budget deficit has been a major surprise.
This has led to a sharp
drop in Federal financing needs which has initially
manifested itself in a sharp
drop in Treasury bill rates. The surprise was generated by
higher than expected
tax receipts due to stock market capital gains, option
exercises and strong
corporate profits.

Second quarter GDP growth has slowed to 2%-3% from a 5.9%
pace in the first
quarter. Factors such as warm weather and the timing of
refunds vs. tax payments
were responsible for the fast pace of first quarter
growth, stealing from growth
in the second quarter. Going forward, the bullish case for
bonds has been made
because technological improvements, global competition and
low levels of
unemployment should not lead to higher product inflation.
The bear case for
bonds is that economic growth above 3% is likely to lead
to expectations of
further Fed tightening. The bear argument expresses our
bias.

For the quarter, the Lehman Intermediate
Government/Corporate Index returned
2.95%. Travelers Quality Bond Portfolio had a 2.38% return
which was 57 basis
points (0.57%) behind our index. The slightly shorter
duration strategy which
helped our total return in the first quarter created the
drag in the second. For
the year, the Lehman Intermediate Government/Corporate
Index has returned 2.83%
while the Portfolio has gained 3.23%, 40 basis points
ahead of the index.

                                        3
<PAGE>
SEMI-ANNUAL REPORT FOR THE TRAVELERS SERIES TRUST --------
----------------------------------------------------------
-------------
LAZARD INTERNATIONAL STOCK PORTFOLIO
International equity markets moved ahead strongly in the
second quarter of 1997.
After a modest gain in the first quarter, the MSCI EAFE
Index rose 13%, led by a
24% gain in Japan. Improving sentiment helped domestic
Japanese companies drive
the rebounding stock market, while the yen bounced off its
lows to further
propel performance. In the Pacific Rim Region, the quarter
closed with China
peacefully regaining control of Hong Kong after 156 years
of British rule. In
Europe, the Labour party claimed victory in the U.K.
elections, followed by a
Socialist-led coalition victory in France, while European
currency political
rhetoric continued to accelerate throughout the quarter.
Although this political
news dominated the headlines, fundamental corporate change
was at the heart of
the impressive rise in select European equity markets. The
Portfolio
participated in most of this bull rise in the second
quarter and still leads the
MSCI EAFE Index by a healthy margin year to date. The
Lazard International Stock
Portfolio had a total return of 9.74% for the six months
ended June 30, 1997
versus the total return of the MSCI EAFE Index of 11.36%.

Japan was the strongest performing equity market in dollar
terms. Over the last
two years, the Japanese equity market has become polarized
as companies forced
to change to compete with global peers have driven
performance, while domestic
companies in regulated industries have languished.
Deregulation, pension reform
and improving corporate governance are beginning to compel
change in Japanese
domestic companies. In the face of first-time competition,
NTT has begun to
restructure and has plans to spin-off its cellular phone
business. Strong
performance of our domestic Japanese holdings, which began
to close some of the
gap relative to the global exporters, offset low exposure
to Japan. Ito-Yokado
(retailing), Mitsui Marine & Fire (insurance), Orix
(leasing), Promise (consumer
loans), and Sumitomo Trust (financial services) all
significantly outperformed
the Nikkei Index. New legislation to allow easier share
buybacks and
incentive-based stock options provided a further glimmer
of change. In response,
several companies announced buyback plans while Sony, Orix
and Omron tentatively
planned for management stock options.

With the exception of a slight dip ahead of the French
elections, European
equity markets steadily advanced to new heights during the
quarter. Despite a
changing political climate, many European companies
continue to forge a path of
value creation for their shareholders. Corporate action
benefited the Portfolio
in almost every country. In the Netherlands, the stock of
Philips Electronics,
rose 61% in local terms as the restructuring program
implemented by CEO Cor
Boonstra last year is now bearing fruit in the form of its
first quarterly
upturn since first quarter 1995.

In Finland, UPM-Kymmene first reduced its stake in Rauma,
its non-core
engineering subsidiary, through an innovative scrip
dividend and share
repurchase, then reduced its stake in Nokia through a
large block trade. In
Germany, Daimler-Benz continued to sharpen its focus by
selling its Cap Gemini
stake, a French software consultancy, while strengthening
its core activities
with the purchase of Ford's U.S. truck business. In the
U.K., it did not take
Unilever long to find a buyer for its non-core specialty
chemicals arm. ICI
bought it for $8 billion. Grand Metropolitan announced a
merger with Guinness to
create a powerful combination of brands and distribution
in the fragmented
global spirits industry.

France continues to drag its feet regarding European
defense industry
consolidation, but British Aerospace is not waiting
around. In a bold
cross-Atlantic move, it aligned itself with Lockheed-
Martin in a bid for the
Joint Strike Fighter contract in the U.S. Even in France,
where concern that a
Socialist victory would stall economic progress, companies
instituted change.
Elf Aquitane and Total proposed share repurchase plans
while Generale des Eaux
sold Ffr 4.2 billion of property assets. Rhone-Poulenc
announced plans to
reshape itself into a pharmaceutical company by buying the
Ffr 25 billion
minority interest in Rhone-Poulenc Rorer, its U.S. quoted
drugs arm.

In our view, the litany of change attests to corporate
progress that is likely
to drive European equity market performance for some time
to come. However,
restructuring is not a panacea. Despite being engaged in
50 cost-reduction
projects and completing nearly 80% of its L2.3 billion
disposal program, BTR
(U.K.) slipped as weak economic conditions in key markets
dimmed its profit
outlook. Rank (U.K.) stumbled on a profits warning after
finally selling its
non-core stake in Rank Xerox. However, both companies
trade at attractive
valuations. Restructuring is not a path without bumps and
we closely monitor the
will and ability of companies to create shareholder value.
However, during the
reporting period, positive changes have far outweighed
negative ones in the
international equity market.

                                        4
<PAGE>
SEMI-ANNUAL REPORT FOR THE TRAVELERS SERIES TRUST --------
----------------------------------------------------------
-------------
MFS EMERGING GROWTH PORTFOLIO
For the six months ended June 30, 1997, the MFS Emerging
Growth Portfolio
provided a total return of 10.62%. This compares to a
10.20% return for the
Russell 2000 Index.

Although the Portfolio's performance benefited from the
strong appreciation of
many of its holdings in the technology, health care and
retailing sectors, the
overall market in 1997 continues to be dominated by large
capitalization stocks
as represented by DJIA and the S&P 500. However, the
Portfolio's performance
compared favorably to the Russell 2000 Index, as investors
rewarded the earnings
growth of the many companies owned in the Portfolio.

The past six months was a paradoxical time for investors.
On the one hand, the
economy was stronger than expected, but there were a
notable number of
company-specific earnings disappointments that had not
been anticipated. Another
paradox in this strong economy has been the extremely low
rate of inflation.
Despite these tranquil economic times, there has been
considerable interest rate
volatility and, accompanying it, higher than average
market volatility. In our
opinion, this situation has provided opportunities for
identifying rapidly
growing companies at attractive valuations.

The Portfolio's performance benefited from strong
performance in its technology
holdings, primarily software. Companies such as SAP,
Compuware and Microsoft
reported much better than expected earnings, and their
stocks' prices responded
positively. Our holdings in business and computer services
also helped the
Portfolio's performance. Learning Tree International,
Accustaff, Corestaff and
Technology Solutions, which serve the burgeoning demands
of corporations in
information technology, aided performance. The health care
sector continued to
yield mixed results. Medical device companies such as
Guidant and Medtronic,
which have innovative products serving global markets, did
well. However, HMOs
such as Pacificare and United Healthcare were hurt by
higher than expected costs
and limited pricing power.

One important holding that did not perform as well as
expected was HFS, a
service provider in the hotel, real estate and car rental
industries, which
merged with CUC International, a provider of membership
services to consumers.
Investors are still assimilating the many synergies of
these two complex
businesses. We are optimistic that the market will
ultimately reward the
underlying value of this powerful combination.

Looking forward, we see a continuation of the steady
economic growth and
favorable interest rates that the U.S. has been
experiencing for the past
several years. We believe that our investment strategy of
finding rapidly
growing companies early in their development and growth
stocks at reasonable
prices should reward investors for the rest of 1997.

FEDERATED HIGH YIELD PORTFOLIO

High yield bonds delivered outstanding returns in the
first half of 1997, on
both a relative and absolute basis. These returns were
driven by an almost ideal
economic performance by the domestic economy. First-
quarter growth was very
strong, while the second quarter slowed to a respectable
but perhaps more
sustainable pace. From a high yield bond investor
perspective, the continued
strong performance of the economy resulted in low default
rates and modestly
tighter yield spreads between high yield bonds and
Treasury securities. Perhaps
more remarkable, this strong economic growth occurred
without rekindling
inflationary pressures. Despite a 25 basis point increase
(0.25%) in the fed
funds rate by the Fed interest rates on 10-year Treasury
securities rose only 7
basis points. Strong economic growth, good corporate
earnings growth, and low
inflation drove stock prices to record levels. The strong
equity market provided
high yield issuers with increased financial flexibility
and provided increased
equity value "protection" to high yield securities.

Finally, high yield bonds benefited from extremely strong
demand during the
period, which offset a record amount of new-issue
activity. Mutual funds
continued to have inflows, while insurance companies and
pension funds continued
to allocate money to the high yield market. Also,
structured products such as
collateralized bond obligations allocated substantial
dollars to the high yield
sector. These factors contributed to the outstanding
returns for the high yield
sector. For example, the Lehman Brothers High Yield Bond
Index returned 5.82%
over the period, outperforming the Lehman Brothers
Aggregate Bond Index, a
measure of high-quality bond performance, which returned
3.09% over the period.
(The Aggregate Bond Index is composed of the Lehman
Government/Corporate Index
and the Mortgage-Backed Securities Index and includes
Treasury issues, agency
issues, corporate bond issues and mortgage-backed
securities.)

The Federated High Yield Portfolio, which returned 6.72%,
performed very well
over the period, outperforming both the Lehman Brothers
High Yield Bond Index
and the Lipper High Current Yield Fund Average, which
returned 5.99%. The

                                        5
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SEMI-ANNUAL REPORT FOR THE TRAVELERS SERIES TRUST --------
----------------------------------------------------------
-------------
Portfolio benefited from good security selection during
the period, avoiding
most of the deteriorating credit situations in the quarter
such as Penn Traffic,
Harvard Industries and Grand Union. Several sector and
specific holdings
performed well above the overall market. The Portfolio's
holdings in the
Australian cable TV market rebounded strongly from
depressed year-end levels.
The Portfolio's radio holdings, especially preferred
stocks of American Radio
and Chancellor Broadcasting, performed very well as
investors' comfort level
with the consolidation occurring in the radio industry
increased. In the
domestic cable area, the Portfolio's holdings such as
Cablevision Systems
performed very well as investors focused on the value in
well-run highly
clustered cable operators. This performance was
highlighted by Microsoft's $1
billion equity investment in Comcast. Finally, specific
holdings such as
Millicom International and Nextel turned in good
performances during the period,
based on company-specific events.

Our outlook for the high yield bond market continues to be
optimistic,
especially as we look ahead at the rest of 1997. We see
nothing to alter our
expectations of steady economic growth and modest
inflation. The Portfolio's
largest sector exposures continue to be
telecommunications, cable TV and
broadcasting. Many of the Portfolio's telecommunications
positions, such as
Teleport and Qwest Communications, are benefiting from
technology advances and
deregulation. The domestic cable TV market is rapidly
changing as new delivery
devices such as satellite broadcasters attempt to gain
subscribers. We believe
that the new delivery entrants will expand the overall
market but large,
well-managed, well-clustered traditional operators should
continue to thrive.
The Portfolio also has exposure to the United Kingdom's
cable TV and
telecommunications market, which is still in its early
stages of development. We
think these issuers will gain market share and eventually
consolidate,
benefiting high yield issuers. Recently the Portfolio has
increased its exposure
in the oil and gas industry, focusing on the drilling
sector and producers, who
we believe will benefit from expanding production.
Finally, the Portfolio has
modestly increased the overall credit quality in response
to the spread
tightening that has occurred over the past six months.

FEDERATED STOCK PORTFOLIO

The U.S. stock market continues to show surprising
strength in 1997. However,
volatility on a daily basis has increased as investors
remain uncertain with
regard to the direction of the economy and interest rates.
We think our focus on
quality and strict valuation parameters continues to
benefit our shareholders.
The Federated Stock Portfolio had a total return of 19.73%
versus the S&P 500
Index of 20.6% for the six months ended June 30, 1997.

The danger of "market timing" was apparent during the
second quarter. In early
April, the conventional wisdom was that the economy was
too strong, which would
have forced the Fed to increase interest rates in an
effort to thwart inflation.
Accordingly, many investors began reducing their exposure
to U.S. equities. What
followed was an apparent slowdown in the economy, which
convinced investors that
there would be no need to change current interest rates.
This renewed optimism
then led to a market increase from the low single digits
to a 20% total return
by June 30, 1997.

While we do believe that there are some industries and
numerous stocks that are
overvalued, we are not convinced that market timing is a
logical way to protect
our shareholders. We believe that our valuation
disciplines, which force us to
sell overpriced securities and focus on undervalued
situations, are in our
shareholders' best long-term interests. Given current
valuations, our recent
emphasis has been on high-quality well-run, companies that
for various reasons
have not fully participated in the unprecedented bull
market of the past 2 1/2
years.
Our largest industry underweight continues to be
technology as the valuations
continue at all time highs and the fundamental picture is
not as robust as it
was two years ago. Conversely, we remain overweight in
energy as we believe
global industrialization should continue to expand demand
while historic
underinvestment has kept supply contained. What follows
are our thoughts
regarding certain key Portfolio holdings.

Sun Company, Inc. -- The largest refiner in the United
States that is in the
midst of a company restructuring as well as sharing an
improving fundamental
outlook for its industry. Additionally, Sun's yield is
50% greater than the
overall market.

Lexmark International Group "A" -- An IBM spinoff that
manufactures printers for
personal computers. Lexmark, along with Hewlett-Packard,
has been gaining market
share in the laser printer area at the expense of their
Japanese competitors.

Viacom, Inc. -- Dominant franchises such as MTV and
Blockbuster video in the
entertainment industry allow us to diversify and do so at
unprecedented low
valuations.

                                        6
<PAGE>
SEMI-ANNUAL REPORT FOR THE TRAVELERS SERIES TRUST --------
----------------------------------------------------------
-------------
Reader's Digest Association -- This brand-name company has
high-quality globally
recognized products that have been under pressure, as its
management has had a
flawed strategy of trying to sell more products to
existing clients versus
increasing its client base. The stock currently trades at
valuations that we
believe reflect investors' emotions, not the value of the
company. While we
admit this is a turnaround situation, the current yield of
6.3% gives us
incentive to be patient.

Dow Chemical Co. -- This firm has been shunned by
investors concerned about the
"polyethylene cycle." Current valuations are extremely low
for this dominant
company. Dow has been behind its competitors in its
restructuring efforts,
allowing for more future potential.

MID CAP DISCIPLINED EQUITY FUND

The Mid Cap Disciplined Equity Fund seeks to provide
diversified exposure to the
mid- and small-capitalization sector of the U.S. equity
market. Stock selection
is based on a disciplined quantitative screening process
that favors companies
that are able to grow earnings above consensus
expectations and offer attractive
relative value. In order to achieve consistent relative
performance, we manage
the Portfolio to mirror the overall risk, sector
weightings and growth/value
style characteristics of the Standard & Poor's 400 stock
index, a value-weighted
index comprised of mid- and small-company stocks.

The Mid Cap Disciplined Equity Fund was launched on April
1, 1997. The initial
cash flow into the Portfolio was invested in a diversified
portfolio of stocks
during the first week of April. Net of fees and expenses,
the Mid Cap
Disciplined Equity Fund's total return of 13.60% for the
second quarter of 1997
was in line with the 14.49% average return achieved by
variable annuity stock
funds in the Lipper Analytical Services Inc. mid cap
category.

During the first half, stock selection in the financial
services sector made the
strongest positive contribution to the Fund's overall
relative performance. In
financial services, our biggest relative performance gain
came from our
overweighted position in a number of specialty property
casualty insurers whose
shares were up strongly during the quarter, including
Progressive Corp., Everest
Reinsurance and Transatlantic Holdings. The Portfolio also
benefited from
overweighted positions in a number of better performing
banks including Northern
Trust and State Street, both of which are leveraging their
dominant position in
global custody services to achieve above-average revenue
and earnings growth.

We lost ground to the benchmark primarily in the energy
and technology sectors.
In the energy sector, we were hurt by the weakness of
Chesapeake Energy
Corporation in the oil exploration and production group.
The shares of
Chesapeake declined sharply on news of disappointing
drilling results on the
company's newest properties in Louisiana. In technology,
our relative
performance suffered as a result of the portfolio being
underweighted in a
number of stocks that ran up strongly on either takeover
activity or positive
earnings surprises. These included Verifone (on a take-
over by Hewlett-Packard),
Stratus Computer and Solectron.

The effort by U.S. corporations to capture leading global
market positions
through productivity-enhancing measures has been critical
to the U.S. equity
market's spectacular rise, and we expect more and more
U.S. firms to seek growth
through a global strategy. We believe that the current
economic expansion has
further to go, that inflation will remain low and that
corporate earnings will
continue to grow, although perhaps more slowly than seen
in the past year.
Therefore, the bull market should remain intact. Despite
all these positives, we
expect market volatility to increase through the remainder
of this market cycle.
With valuation at current levels, investors are nervous
and likely to
demonstrate little tolerance for any cyclical rise in
inflation and interest
rates, or even hints of bad news at the individual company
level.

In this environment, we believe that it is particularly
important to identify
companies with sustainable earnings growth at attractive
valuations across a
wide variety of industries. Our disciplined approach to
stock selection
emphasizes equities that exhibit improving fundamentals,
measured by changes in
analysts' earnings estimates and the trend of recent
earnings surprises, and
which also trade at a reasonable price-to-earnings (P/E)
ratio relative to
expected earnings growth rates. (The price/earnings ratio
is the price of a
stock divided by its earnings per share.)

                                        7
<PAGE>
SEMI-ANNUAL REPORT FOR THE TRAVELERS SERIES TRUST --------
----------------------------------------------------------
-------------
In closing, we would like to thank you for your investment
in The Travelers
Series Trust Portfolios. We look forward to continuing to
help you achieve your
financial goals.

Sincerely,

/s/ HEATH B. MCLENDON
Heath B. McLendon
Chairman

July 28, 1997

                                        8

<PAGE>

----------------------------------------------------------
---------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED)
JUNE 30, 1997

                        TRAVELERS QUALITY BOND PORTFOLIO
<TABLE>
<CAPTION>
   FACE
  AMOUNT      RATING
SECURITY                                    VALUE
----------------------------------------------------------
------------------------------------------------
<C>           <S>       <C>
<C>
U.S. GOVERNMENT AGENCIES AND OBLIGATIONS -- 24.8%
   $500,000   AAA       U.S. Treasury Notes, 6.375% due
5/15/99...............................   $  502,605
    250,000   AAA       U.S. Treasury Notes, 6.625% due
4/30/02...............................      252,375
    250,000   AAA       Federal Farm Credit Bank, Medium
Term Notes, 7.340% due 9/19/01.......      250,095
    250,000   AAA       Federal Home Loan Bank, Notes,
7.300% due 10/18/01....................      250,150
    250,000   AAA       Federal National Mortgage
Association, 8.550% due 12/10/04............      252,150
----------------------------------------------------------
------------------------------------------------
                        TOTAL U.S. GOVERNMENT AGENCIES AND
OBLIGATIONS
                        (Cost -- $1,503,953)
1,507,375 ------------------------------------------------
----------------------------------------------------------
CORPORATE BONDS AND NOTES -- 61.1% -----------------------
----------------------------------------------------------
------------------------BROADCASTING -- 3.7%
    200,000   BBB       Continental Cablevision, Inc., Sr.
Sub. Debentures, 11.000% due

6/1/07....................................................
 .. ..........   224,000
----------------------------------------------------------
------------------------------------------------
FINANCIAL SERVICES -- 16.2%
    250,000   BBB+      Banponce Financial Corp., Medium
Term Notes, 6.750% due 8/9/01........      248,438
    400,000   A+        Grand Metro Investment PLC, zero
coupon notes to yield 6.998% due

1/6/04....................................................
 .. ..........   256,500
    225,000   AA+       Hewlett-Packard Finance, 6.500%
due
12/30/99..........................      225,984
    250,000   A+        New Plan Realty Trust, Medium Term
Notes, 5.950% due 11/2/26..........      250,225 ---------
----------------------------------------------------------
---------------------------------------

981,147 --------------------------------------------------
-------------------------------------------------------
INDUSTRIALS -- 16.8%
    250,000   BBB-      James River Corp., Notes, 6.750%
due
10/1/99..........................      249,688
    250,000   A         McKesson Corp., Notes, 6.875% due
3/1/02+.............................      250,312
    250,000   A-        Sears Roebuck Acceptance Corp.,
Medium Term Notes, 6.400% due

9/25/00...................................................
 .. ..........   248,437
    250,000   A+        Texaco Capital Inc., Guaranteed
Notes, 8.500% due 2/15/03.............      270,625 ------
----------------------------------------------------------
------------------------------------------

1,019,062 ------------------------------------------------
---------------------------------------------------------
TELECOMMUNICATIONS -- 7.9%
    250,000   AAA       BellSouth Capital Funding Corp.,
Debentures, 6.040% due 11/15/26......      245,938
    225,000   A         MCI Communications Corp., Sr.
Notes,
7.125% due 6/15/27...............      231,750 -----------
----------------------------------------------------------
-------------------------------------

477,688 --------------------------------------------------
--------------------------------------------------------
TOBACCO -- 4.1%
    250,000   A         Philip Morris Cos. Inc., Notes,
6.950% due 6/1/06.....................      251,250 ------
----------------------------------------------------------
-----------------------------------------TRANSPORTATION --
4.1%
    250,000   BBB-      CSX Transportation Inc.,
Debentures,
6.950% due 5/1/27+...............      251,250 -----------
----------------------------------------------------------
-------------------------------------
UTILITIES - ELECTRIC -- 8.3%
    250,000   BBB       Illinois Power, 1st Mortgage Bond,
6.500% due 9/1/99..................      250,312
    250,000   A+        Tenaga Nasional Berhad, Notes,
7.200% due 4/29/07+....................      255,938 -----
----------------------------------------------------------
-------------------------------------------

506,250 --------------------------------------------------
--------------------------------------------------------
                        TOTAL CORPORATE BONDS AND NOTES
(Cost -- $3,711,981)..................    3,710,647 ------
----------------------------------------------------------
------------------------------------------
                        SUB-TOTAL INVESTMENTS (Cost -
$5,215,934)                                5,218,022
----------------------------------------------------------
------------------------------------------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                        9

<PAGE> ---------------------------------------------------
----------------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                        TRAVELERS QUALITY BOND PORTFOLIO
<TABLE>
<CAPTION>
   FACE
  AMOUNT
SECURITY                                    VALUE
----------------------------------------------------------
------------------------------------------------
<C>           <S>       <C>
<C>
REPURCHASE AGREEMENT -- 14.1%
   $852,000             Citibank, 5.905% due 7/1/97;
Proceeds at maturity -- $852,140;
                        (Fully collateralized by U.S.
Treasury Notes, 5.875% due 2/28/99;
                        Market value -- $875,050) (Cost -
$852,000)..........................   $  852,000 ---------
----------------------------------------------------------
---------------------------------------
                        TOTAL INVESTMENTS -- 100% (Cost -
$6,067,934**)......................   $6,070,022 ---------
----------------------------------------------------------
---------------------------------------
</TABLE>

 + Security is exempt from registration under Rule 144A of
the Securities Act of
  1933. This security may be resold in transactions that
are exempt from
   registration, normally to qualified institutional

buyers. ** Aggregate cost for Federal income tax purposes

is substantially the same.

   See page 34 for definition of ratings.

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       10

<PAGE> ---------------------------------------------------
----------------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                      LAZARD INTERNATIONAL STOCK PORTFOLIO

<TABLE>
<CAPTION>
  SHARES                                         SECURITY
VALUE ----------------------------------------------------
----------------------------------------------------
<C>          <S>
<C>
STOCKS -- 82.7% ------------------------------------------
----------------------------------------------------------
----
AUSTRALIA -- 1.7%
   19,900    Westpac Banking Corp.
Ltd......................................................
$  118,825
----------------------------------------------------------
----------------------------------------------
DENMARK -- 0.9%
    1,100    Unidanmark A/S, Class A
Shares.................................................
61,879 ---------------------------------------------------
-----------------------------------------------------
FINLAND -- 0.5%
    1,500    UPM-Kymmene
Corp......................................................
 .. .......    34,654
----------------------------------------------------------
----------------------------------------------
FRANCE -- 10.7%
      800    Alcatel
Alsthom...................................................
 .. ...........      100,290
    2,300    Banque Nationale de
Paris.....................................................
 . 94,883
      670    Compagnie de Saint
Gobain....................................................
 .. 97,801
      920    Compagnie Generale des
Eaux....................................................
117,997
      740    Compagnie Generale des Eaux Warrants, Expire
5/2/01+...........................          443
    1,200    Elf Aquitaine
S.A.......................................................
 .. .....      129,586
      300    Havas
S.A.......................................................
 .. .............       21,640
    4,000    Rhone-Poulenc, Class A
Shares..................................................
163,516
      350    Total S.A., Class B
Shares....................................................
 . 35,411 -------------------------------------------------
-------------------------------------------------------

761,567 --------------------------------------------------
------------------------------------------------------
GERMANY -- 11.3%
    1,500    Daimler-Benz
AG........................................................
 .. ......      122,145
    2,080    Deutsche Bank
AG........................................................
 .. .....      122,227
    3,000    Hoeschst
AG........................................................
 .. ..........     127,224
      220    Mannesmann
AG........................................................
 .. ........    98,347
    2,800    Metallgesellschaft
AG+.......................................................
 .. 57,925
      570    Metro
AG........................................................
 .. .............       62,149
      320    Thyssen
AG........................................................
 .. ...........       77,034
      300    Viag
AG........................................................
 .. ..............      137,123 ---------------------------
----------------------------------------------------------
-------------------

804,174 --------------------------------------------------
------------------------------------------------------
HONG KONG -- 2.3%
    2,673    HSBC Holdings
PLC.......................................................
 .. .....       80,390
    9,500    Swire Pacific Ltd.
 ..........................................................
 .. 85,530 ------------------------------------------------
--------------------------------------------------------

165,920 --------------------------------------------------
------------------------------------------------------
ITALY -- 4.5%
   16,600    Ente Nazionale Idrocarburi S.p.A.
 .............................................       93,746
   15,700    Fiat S.p.A.
 ..........................................................
 .. .......    56,378
   29,000    Fiat S.p.A. Privilizio
 ........................................................
53,517
   13,300    Instituto Nationale delle Assicurazioni
 .......................................       20,121
   27,100    Stet Societa' Finanziaria Telefonica
S.p.A.....................................       93,747 --
----------------------------------------------------------
--------------------------------------------

317,509 --------------------------------------------------
------------------------------------------------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       11

<PAGE> ---------------------------------------------------
----------------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                      LAZARD INTERNATIONAL STOCK PORTFOLIO
<TABLE>
<CAPTION>
  SHARES                                         SECURITY
VALUE ----------------------------------------------------
----------------------------------------------------
<C>          <S>
<C>
JAPAN -- 18.0%
    2,000    Honda Motor Co.
Ltd.......................................................
 .. ...       $   60,299
    1,000    Ito-Yokado Co.
Ltd.......................................................
 .. ....            58,114
    8,000    Matsushita Electric Industrial Co.
Ltd.........................................      161,496
   12,000    Mitsubishi Heavy Industrial
Ltd................................................
92,179
    3,000    Mitsui Marine and Fire Insurance Co.
Ltd.......................................       21,708
    1,100    Nintendo Corp.
Ltd.......................................................
 .. ....            92,283
       13    Nippon Telegraph &
Telephone.................................................
 .. 124,967
    4,000    NKK
Corp......................................................
 .. ...............        8,599
    2,000    Omron
Corp......................................................
 .. .............       42,471
    1,000    Orix
Corp......................................................
 .. ..............       74,194
      900    Promise Co.
Ltd.......................................................
 .. .......    51,595
   11,000    Ricoh Co.
Ltd.......................................................
 .. .........   144,193
    8,000    Sekisui Chemical
Co........................................................
 .. ..            81,098
    1,400    Sony
Corp......................................................
 .. ..............      122,223
   13,000    Sumitomo Trust &
Banking...................................................
 .. ..           139,736
----------------------------------------------------------
----------------------------------------------

1,275,155 ------------------------------------------------
--------------------------------------------------------
MALAYSIA -- 0.3%
    5,000    Genting
Berhad....................................................
 .. ...........       23,970 ------------------------------
----------------------------------------------------------
----------------
NETHERLANDS -- 3.7%
      410    Heineken
N.V.......................................................
 .. ..........      70,102
    1,300    Philips Electronics N.V.
 ......................................................
93,288
    1,880    Royal Dutch Petroleum Co., New York
Registered
Shares..........................      102,234
----------------------------------------------------------
----------------------------------------------
265,624 --------------------------------------------------
------------------------------------------------------
NEW ZEALAND -- 0.5%
   14,600    Lion Nathan
Ltd.......................................................
 .. .......    36,912
----------------------------------------------------------
----------------------------------------------
SPAIN -- 0.7%
    1,800    Telefonica de
Espana....................................................
 .. .....       52,138 ------------------------------------
----------------------------------------------------------
----------
SWEDEN -- 3.2%
    3,733    Astra AB, Class B
Shares....................................................
 .. .                    65,904
      980    Electrolux AB, Class B
Shares..................................................
70,721
    2,700    Svenska Handelsbanken, Class A
Shares..........................................
86,422 ---------------------------------------------------
-----------------------------------------------------

223,047 --------------------------------------------------
------------------------------------------------------
SWITZERLAND -- 7.3%
       60    Elektrowatt AG, Class B
Shares.................................................
22,264
       70    Holderbank Financier Glarus
AG.................................................
66,212
       84    Nestle
SA........................................................
 .. ............      110,971
       82    Novartis
AG........................................................
 .. ..........             132,344
       25    SGS Societe Generale de Surveillance Holding
SA, Class B Shares................       53,502
       51    Societe Suisse pour la Microelectronique et
l'Horlogerie.......................       29,175
      250    Zuerich
Versicherungsgesellschaft.................................
 .. ...........       99,630 ------------------------------
----------------------------------------------------------
----------------

514,098 --------------------------------------------------
------------------------------------------------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.
                                       12
<PAGE>
----------------------------------------------------------
---------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                      LAZARD INTERNATIONAL STOCK PORTFOLIO
<TABLE>
<CAPTION>
  SHARES                                         SECURITY
VALUE ----------------------------------------------------
----------------------------------------------------
<C>          <S>
<C>
UNITED KINGDOM -- 17.1%
    9,900    B.A.T. Industries
PLC.......................................................
 .. .                  $   88,562
    7,300    British Aerospace
PLC.......................................................
 .. .                     162,377
   18,800    BTR
PLC.......................................................
 .. ...............    64,299
   13,498    Cadbury Schweppes
PLC.......................................................
 .. .                     120,299
    3,200    EMI Group
PLC.......................................................
 .. .........    57,385
    9,600    General Electric Co.
PLC.......................................................
57,359
   13,143    Grand Metropolitan
PLC.......................................................
 .. 127,197
   25,900    LucasVarity
PLC.......................................................
 .. .......    89,660
   13,200    Mirror Group
PLC.......................................................
 .. ......    41,302
   12,100    National Power
PLC.......................................................
 .. ....      105,121
    4,800    Prudential Corp.
PLC.......................................................
 .. ..       46,454
    7,600    Rank Group
PLC.......................................................
 .. ........    48,128
    9,300    Redland
PLC.......................................................
 .. ...........       52,703
   51,000    Sears
PLC.......................................................
 .. .............       56,869
    3,200    Unilever
PLC.......................................................
 .. ..........             91,685
----------------------------------------------------------
----------------------------------------------

1,209,400 ------------------------------------------------
--------------------------------------------------------
             TOTAL STOCKS(Cost -
$5,108,200)...............................................
5,864,872 ------------------------------------------------
--------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
   FACE
  AMOUNT                                         SECURITY
VALUE ----------------------------------------------------
----------------------------------------------------
<C>           <S>
<C>
REPURCHASE AGREEMENT -- 17.3%
$1,227,000    Citibank, 6.000% due 7/1/97; Proceeds at
maturity -- $1,227,205;
              (Fully collateralized by U.S. Treasury
Notes, 5.125% due 3/31/98;
              Market value -- $1,259,375)
              (Cost -
$1,227,000)...............................................
 .. ......... 1,227,000
----------------------------------------------------------
----------------------------------------------
            TOTAL INVESTMENTS -- 100% (Cost --
$6,335,200*)...............................   $7,091,872 -
----------------------------------------------------------
---------------------------------------------
</TABLE>

+ Non-income producing security.
* Aggregate cost for Federal income tax purposes is
substantially the same.

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       13

<PAGE> ---------------------------------------------------
----------------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                         MFS EMERGING GROWTH PORTFOLIO
<TABLE>
<CAPTION>
  SHARES                                        SECURITY
VALUE ----------------------------------------------------
----------------------------------------------------
<C>           <S>
<C>
COMMON STOCKS -- 89.9% -----------------------------------
----------------------------------------------------------
----------BIOTECHNOLOGY -- 1.4%
     9,400    Biochem Pharmaceuticals,
Inc.+...............................................   $
209,150
     3,150    Guidant
Corp......................................................
 .. .........    267,750
----------------------------------------------------------
----------------------------------------------

476,900 --------------------------------------------------
------------------------------------------------------
BUSINESS MACHINES -- 0.7%
     4,100    Affiliated Computer Services
Inc.+...........................................
114,800
     3,650    Sun Microsystems,
Inc.+.....................................................
 . 135,848 ------------------------------------------------
--------------------------------------------------------

250,648 --------------------------------------------------
------------------------------------------------------
BUSINESS SERVICES -- 11.4%
     9,600    Accustaff
Inc.+.....................................................
 .. .......    227,400
    42,100    ADT
Ltd.+.....................................................
 .. .............     1,389,300
     2,500    Ceridian
Corp.+....................................................
 .. ........    105,625
     1,000    Corestaff
Inc.+.....................................................
 .. .......     27,000
    14,600    CUC International
Inc.+.....................................................
 . 376,863
    10,600    Danka Business Systems,
Inc..................................................
433,275
     6,000    DST Systems
Inc.+.....................................................
 .. .....       199,875
     4,900    Employee Solutions
Inc.+.....................................................
27,256
       300    IKON Office Solutions,
Inc...................................................
7,481
    16,650    Learning Tree International,
Inc.+...........................................
738,844
       300    The SABRE Group Holdings,
Inc.+..............................................
8,138
       300    Staff Leasing,
Inc.+.....................................................
 .. ..              5,625
    11,300    Technology Solutions
Co.+....................................................
446,350
     1,500    Transaction Systems Architects,
Inc.+........................................
51,750
----------------------------------------------------------
----------------------------------------------
4,044,782 ------------------------------------------------
--------------------------------------------------------
COMPUTER SOFTWARE - PC -- 3.3%
       125    Autodesk,
Inc.......................................................
 .. .......      4,789
     3,660    First Data
Corp......................................................
 .. ......       160,811
     7,850    Microsoft
Corp.+....................................................
 .. .......    992,044
----------------------------------------------------------
----------------------------------------------

1,157,644 ------------------------------------------------
--------------------------------------------------------
COMPUTER SOFTWARE - SYSTEMS -- 18.3%
       200    Adobe Systems,
Inc.......................................................
 .. ..                      7,013
    20,300    BMC Software,
Inc.+.....................................................
 .. ...                  1,124,113
    24,605    Cadence Design Systems,
Inc.+................................................
824,268
    30,135    Computer Associates International,
Inc.......................................     1,678,143
    19,250    Compuware
Corp.+....................................................
 .. .......    919,188
       100    Genesys Telecommunications Laboratories,
Inc.+...............................         2,775
       100    Great Plains Software,
Inc.+.................................................
2,700
       100    Infinity Financial Technology,
Inc.+.........................................
       1,631 100       Intelligroup,
Inc.+.....................................................
 .. ...                   963
     1,600    Lear
Corp.+....................................................
 .. ............        71,000
    34,200    Oracle Systems
Corp.+....................................................
 .. ..                  1,722,825
       100    RWD Technologies,
Inc.+.....................................................
 . 1,725
       300    SAP Aktiengesellschaft,
ADR..................................................
20,738
       200    Sybase,
Inc.+.....................................................
 .. .........      2,975
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.
                                       14
<PAGE>
----------------------------------------------------------
---------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                         MFS EMERGING GROWTH PORTFOLIO

<TABLE>
<CAPTION>
  SHARES                                        SECURITY
VALUE ----------------------------------------------------
----------------------------------------------------
<C>           <S>
<C>
COMPUTER SOFTWARE - SYSTEMS -- 18.3% (CONTINUED)
     2,300    Synopsys,
Inc.+.....................................................
 .. .......   $            84,525
     1,400    Xionics Document Technology,
Inc.+...........................................
20,650 ---------------------------------------------------
-----------------------------------------------------

6,485,232 ------------------------------------------------
--------------------------------------------------------
CONSUMER GOODS & SERVICES -- 5.4%
     8,400    Carson,
Inc.+.....................................................
 .. .........     90,300
     6,200    Coleman Co.,
Inc.+.....................................................
 .. ....                      106,950
       100    800-JR CIGAR,
Inc.+.....................................................
 .. ...                        2,075
     1,900    Jostens,
Inc.......................................................
 .. ........     50,825
     9,500    Service Corp.
International.............................................
 .. ...                      312,313
       400    Silgan Holdings,
Inc.+.....................................................
 .. 15,500
    19,200    Tyco International
Ltd.......................................................
1,335,600 ------------------------------------------------
--------------------------------------------------------

1,913,563 ------------------------------------------------
--------------------------------------------------------
ELECTRONICS -- 1.8%
     6,900    Altera
Corp.+....................................................
 .. ..........    348,450
     2,600    Kulicke & Soffa Industries,
Inc.+............................................
84,419
     1,500    Sony Corp.
ADR.......................................................
 .. ......       132,000
     1,700    Xilinx,
Inc.+.....................................................
 .. .........     83,406
----------------------------------------------------------
----------------------------------------------

648,275 --------------------------------------------------
------------------------------------------------------
ENERGY -- 0.3%
     3,000    Keystone International
Inc...................................................
104,063 --------------------------------------------------
-----------------------------------------------------
ENTERTAINMENT -- 3.6%
     2,600    American Radio Systems
Corp..................................................
103,675
     3,400    Clear Channel Communications,
Inc.+..........................................
209,100
     6,300    Cox Radio
Inc.+.....................................................
 .. .......    161,438
     2,600    Emmis Broadcasting
Corp.+....................................................
113,425
     2,000    Gemstar International Group
Ltd..............................................
36,750
     4,600    Harrah's Entertainment,
Inc.+................................................
83,950
     5,800    Heritage Media
Corp.+....................................................
 .. ..           109,475
     4,200    Jacor Communications,
Inc.+..................................................
160,650
     4,050    Lin Television
Corp.+....................................................
 .. ..           178,706
       100    Metro Networks,
Inc.+.....................................................
 .. .      2,425
     2,800    Univision Communications
Inc.+...............................................
109,550 --------------------------------------------------
------------------------------------------------------

1,269,144 ------------------------------------------------
--------------------------------------------------------
FINANCIAL INSTITUTIONS -- 1.8%
       700    AmeriTrade Holding
Corp.+....................................................
11,025
     6,587    Franklin Resources,
Inc......................................................
477,969
     4,700    Nationwide Financial Services,
Inc...........................................
       124,844 200     New Century Financial
Corp.+.................................................
2,900 ----------------------------------------------------
----------------------------------------------------

616,738 --------------------------------------------------
------------------------------------------------------
FOOD & BEVERAGE -- 1.3%
     8,600    Smith's Food & Drug Centers,
Inc.+...........................................
461,175 --------------------------------------------------
------------------------------------------------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       15

<PAGE> ---------------------------------------------------
----------------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                         MFS EMERGING GROWTH PORTFOLIO
<TABLE>
<CAPTION>
  SHARES                                        SECURITY
VALUE ----------------------------------------------------
----------------------------------------------------
<C>           <S>
<C>
MACHINERY -- 0.5%
       100    JLK Direct Distribution
Inc.+................................................   $
2,563
     2,100    SI Handling Systems,
Inc.....................................................
38,850
     2,250    SPX
Corp.+....................................................
 .. .............       145,828 ---------------------------
----------------------------------------------------------
-------------------

187,241 --------------------------------------------------
------------------------------------------------------
MEDICAL & HEALTH SERVICES -- 11.8%
     1,500    AmeriSource Health
Corp.+....................................................
74,813
     2,200    Boston Scientific
Corp.+....................................................
 . 135,163
     1,900    Cardinal Health,
Inc.+.....................................................
 .. 108,775
     2,200    Columbia/HCA Healthcare
Corp.................................................
86,488
        82    Foundation Health Systems,
Inc.+.............................................
2,486
     3,300    Genesis Health Ventures,
Inc.+...............................................
111,375
     2,400    Health Management Associates,
Inc.+..........................................
68,400
    33,200    HEALTHSOUTH
Corp.+....................................................
 .. .....           827,925
       800    Healthsource,
Inc.+.....................................................
 .. ...            17,350
     2,900    IDX Systems
Corp.+....................................................
 .. .....           100,050
     1,800    Mariner Health Group,
Inc.+..................................................
27,788
     7,300    MedPartners,
Inc.+.....................................................
 .. ....           157,863
     4,300    Medtronic,
Inc.......................................................
 .. ......       348,300
     3,000    Mentor
Corp......................................................
 .. ..........     88,875
    15,100    Tenet Healthcare
Corp.+....................................................
 .. 446,394
    24,500    United Healthcare
Corp......................................................
 . 1,274,000
     7,400    Vencor,
Inc.+.....................................................
 .. .........    312,650
----------------------------------------------------------
----------------------------------------------

4,188,695 ------------------------------------------------
-------------------------------------------------------
MISCELLANEOUS -- 0.6%
     1,100    Gibson Greetings,
Inc.+.....................................................
 . 24,750
        50    Gucci Group
NV........................................................
 .. .....            3,219
     1,000    Newport News Shipbuilding
Inc................................................
19,438
       500    Santa Fe International
Corp.+................................................
17,000
       100    The Shaw Group,
Inc.+.....................................................
 .. .            1,625
     2,200    Stone Container
Corp.+....................................................
 ..
 .        31,488
       800    Tower Automotive,
Inc.+.....................................................
 . 34,400
     1,900    Wisconsin Central Transportation
Corp.+......................................        70,775
----------------------------------------------------------
----------------------------------------------

202,695 --------------------------------------------------
------------------------------------------------------
POLLUTION CONTROL -- 0.5%
     4,520    USA Waste Services,
Inc.+....................................................
174,585 --------------------------------------------------
------------------------------------------------------
RESTAURANTS & LODGING -- 5.6%
     5,400    Applebees International,
Inc.................................................
144,450
    28,512    HFS,
Inc.+.....................................................
 .. ............     1,653,696
     4,200    Hilton Hotels
Corp......................................................
 .. ...                    111,563
       300    Promus Hotel
Corp.+....................................................
 .. ....                     11,625
     2,200    Wyndham Hotel
Corp.+....................................................
 .. ...                     71,775
----------------------------------------------------------
----------------------------------------------

1,993,109 ------------------------------------------------
--------------------------------------------------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       16

<PAGE> ---------------------------------------------------
----------------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                         MFS EMERGING GROWTH PORTFOLIO
<TABLE>
<CAPTION>
  SHARES                                        SECURITY
VALUE ----------------------------------------------------
----------------------------------------------------
<C>           <S>
<C>
STORES -- 9.4%
     4,000    American Stores
Co........................................................
 ..
 .   $   197,500
     5,750    Consolidated Stores
Corp.+...................................................
199,810
    25,800    Corporate Express,
Inc.+.....................................................
372,488
     4,600    Costco Cos.,
Inc.+.....................................................
 .. ....            151,225
     6,600    CVS
Corp......................................................
 .. .............       338,250
     3,000    Dillard's
Inc.......................................................
 .. .......    103,875
     1,500    Hollywood Entertainment
Corp.+...............................................
34,313
     4,300    Home Depot,
Inc.......................................................
 .. .....       296,431
     7,800    Micro Warehouse,
Inc.+.....................................................
 .. 133,575
     3,700    Office Depot,
Inc.+.....................................................
 .. ...             71,919
    16,200    Rite Aid
Corp......................................................
 .. ........    807,975
    26,150    Staples,
Inc.+.....................................................
 .. ........    607,988
----------------------------------------------------------
----------------------------------------------

3,315,349 ------------------------------------------------
-------------------------------------------------------
TELECOMMUNICATIONS -- 10.2%
       300    Aspect Telecommunication
Corp.+..............................................
6,675
    19,700    Cisco Systems,
Inc.+.....................................................
 .. ..          1,322,360
     1,500    Intermedia Communications
Inc.+..............................................
48,560
     6,075    Lucent Technologies,
Inc.....................................................
437,780
       200    Qwest Communications International
Inc.+.....................................         5,450
     1,300    Tel-Save Holdings,
Inc.+.....................................................
19,820
     2,800    Telecommunicacoas Brasileiras S/A
ADR........................................       424,900
    42,200    Worldcom
Inc.+.....................................................
 .. ........     1,350,400 --------------------------------
----------------------------------------------------------
--------------

3,615,945 ------------------------------------------------
--------------------------------------------------------
UTILITIES - TELEPHONE -- 2.0%
    12,100    MCI Communications
Corp......................................................
463,204
     4,700    Sprint
Corp......................................................
 .. ..........    247,338
----------------------------------------------------------
----------------------------------------------

710,542 --------------------------------------------------
------------------------------------------------------
               TOTAL COMMON STOCKS (Cost --
$28,464,557)....................................
31,816,325 -----------------------------------------------
---------------------------------------------------------
FOREIGN STOCKS -- 4.2% -----------------------------------
----------------------------------------------------------
-----------
GERMANY -- 1.5%
     2,500    SAP AG,
Preferred.................................................
 .. .........    515,752
----------------------------------------------------------
----------------------------------------------
JAPAN -- 2.5%
     8,000    Canon Inc.
 ..........................................................
 .. ......       218,125
     1,000    Nidec Corp.
 ..........................................................
 .. .....        48,938
     1,000    Rohm Co.
 ..........................................................
 .. ........    103,120
     5,000    Secom Co.
 ..........................................................
 .. .......    367,474
     1,000    Sony Corp.
 ..........................................................
 .. ......              87,302
     2,000    Takeda Chemical
Industries................................................
 .. .            56,279
----------------------------------------------------------
----------------------------------------------

881,238 --------------------------------------------------
------------------------------------------------------
POLAND -- 0.1%
       400    Telecel-Comunicaaoes Pessoais,
SA............................................
33,221 ---------------------------------------------------
-----------------------------------------------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.
                                       17
<PAGE>
----------------------------------------------------------
---------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                         MFS EMERGING GROWTH PORTFOLIO
<TABLE>
<CAPTION>
  SHARES                                        SECURITY
VALUE ----------------------------------------------------
----------------------------------------------------
<C>           <S>
<C>
SWITZERLAND -- 0.1%
        15    Kuoni Reisen
AG........................................................
 .. ....   $    51,444 ------------------------------------
----------------------------------------------------------
----------
               TOTAL FOREIGN STOCKS (Cost --
$1,266,341)....................................
1,481,655 ------------------------------------------------
--------------------------------------------------------
              SUB-TOTAL INVESTMENTS (Cost -
$29,730,898)..................................
33,297,980 -----------------------------------------------
---------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
   FACE
  AMOUNT                                        SECURITY
VALUE ----------------------------------------------------
----------------------------------------------------
<C>           <S>
<C>
SHORT-TERM INVESTMENT -- 5.9%
$2,100,000    Federal Home Loan Discount Note, 5.500% due
7/1/97
              (Cost -
$2,100,000)...............................................
 .. ........     2,100,000 --------------------------------
----------------------------------------------------------
--------------
            TOTAL INVESTMENTS -- 100% (Cost --
$31,830,898*).............................   $35,397,980 -
----------------------------------------------------------
---------------------------------------------
</TABLE>

+ Non-income producing security.
* Aggregate cost for Federal income tax purposes is
substantially the same.

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       18

<PAGE>

----------------------------------------------------------
---------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                         FEDERATED HIGH YIELD PORTFOLIO
<TABLE>
<CAPTION>
  FACE
 AMOUNT     RATING
SECURITY                                     VALUE
----------------------------------------------------------
-----------------------------------------------
<C>         <S>       <C>
<C>
CORPORATE BONDS AND NOTES -- 88.2% -----------------------
----------------------------------------------------------
------------------------
AUTOMOTIVE -- 1.6%
$100,000    B         Collins & Aikman Products Co., Sr.
Sub. Note, 11.500% due 4/15/06......     $113,250 --------
----------------------------------------------------------
---------------------------------------
BANKING -- 1.6%
  100,000    Ba3*      First Nationwide Escrow Corp., Sr.
Sub. Note, 10.625% due 10/1/03......      110,500 --------
----------------------------------------------------------
---------------------------------------
BROADCAST RADIO & TV -- 5.1%
  50,000    B-        Chancellor Broadcasting Co., Sr.
Sub.
Note, 9.375% due 10/1/04.........       52,000
  50,000    B         Heritage Media Corp., Sr. Sub. Note,
8.750% due 2/15/06................       52,000
  50,000    B         Outdoor Systems Inc., Sr. Sub. Note,
8.875% due 6/15/07................       48,750
  100,000    B         Sinclair Broadcast Group, Sr. Sub.
Note, 10.000% due 9/30/05...........      103,750
  100,000    B-        Sullivan Broadcast Holdings, Inc.,
                            Sr.
Sub. Note, 10.250% due

12/15/05..................................................
 .. .........             103,500
----------------------------------------------------------
-----------------------------------------------

360,000 --------------------------------------------------
------------------------------------------------------
BUILDING/CONSTRUCTION -- 0.7%
  50,000    B3*       American Builders & Contractors
Supply
Co., Inc., Sr. Sub. Note,
                        10.625% due
5/15/07@.................................................
51,500 ---------------------------------------------------
------------------------------------------------------
BUSINESS EQUIPMENT & SERVICES -- 1.8%
  65,000    B+        Knoll, Inc., Sr. Sub. Note, 10.875%
due 3/15/06........................       72,150
  50,000    B-        United Stationers Supply Co., Sr.
Sub.
Note, 12.750% due 5/1/05........       56,000 ------------
----------------------------------------------------------
-----------------------------------

128,150 --------------------------------------------------
-------------------------------------------------------
CABLE TELEVISION -- 10.0%
  50,000    NR        Australis Holdings Ltd., step bond
to
yield 15.000% due 11/1/02........       36,000
 100,000    B         Cablevision Systems Co., Sr. Sub.
Debenture, 9.875% due 2/15/13........      105,500
  100,000    B         Charter Communications Southeast,
L.P., Sr. Note, 11.250% due

3/15/06...................................................
 .. .........             108,250
150,000    B-        Diamond Cable Communications PLC, Sr.
Disc. Note, step bond to yield
                        11.109% due
2/15/07@.................................................
89,250
   100,000    CCC+      Echostar Satellite Broadcasting
                          Corp.,
Sr. Disc. Note, step bond to
                        yield   13.017% due
3/15/04..........................................
71,500
  100,000    B         International Cabletel, Inc., Sr.
Note, step bond to yield 11.941% due

2/1/06....................................................
 .. .........              69,250
100,000    BB+       Rogers Cablesystems Ltd., Sr. Secured
2nd Priority Note, 10.000% due

3/15/05...................................................
 .. .........             108,750
  150,000    BB        Telewest PLC, Sr. Disc. Debenture,
step bond to yield 11.396% due

10/1/07...................................................
 .. .........             108,750
----------------------------------------------------------
-----------------------------------------------

697,250 --------------------------------------------------
-------------------------------------------------------
CHEMICALS & PLASTICS -- 2.5%
 100,000    B-        Astor Corp., Sr. Sub. Note, 10.500%
due 10/15/06.......................      106,750
100,000    B+        Sterling Chemicals Holdings Inc., Sr.
Disc. Note, step bond to yield
                        12.485% due
8/15/08..................................................
66,250 ---------------------------------------------------
------------------------------------------------------

173,000 --------------------------------------------------
-------------------------------------------------------
CLOTHING & TEXTILES -- 3.0%
  50,000    B-        Collins & Aikman Floorcoverings,
Inc.,
Sr. Sub. Note, 10.000% due

1/15/07@..................................................
 .. .........              50,625
  50,000    B-        Glenoit Corp., Sr. Sub. Note,
11.000%
due 4/15/07......................       52,688
 100,000    B+        Westpoint Stevens, Inc., Sr. Sub.
Debenture, 9.375% due 12/15/05.......      105,125
----------------------------------------------------------
-----------------------------------------------

208,438 --------------------------------------------------
-------------------------------------------------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       19

<PAGE> ---------------------------------------------------
----------------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                         FEDERATED HIGH YIELD PORTFOLIO
<TABLE>
<CAPTION>
  FACE
 AMOUNT     RATING
SECURITY                                     VALUE
----------------------------------------------------------
-----------------------------------------------
<C>         <S>       <C>
<C>
CONSUMER PRODUCTS -- 4.9%
$100,000    BB-       American Safety Razor Co., Sr. Note,
9.875% due 8/1/05.................   $  104,750
  50,000    NR        ICON Fitness Corp., Sr. Disc. Note,
step bond to yield 14.000% due

11/15/06..................................................
 .. .........              27,187
  50,000    NR        Renaissance Cosmetics, Inc., Sr.
Note,
11.750% due 2/15/04.............       52,375
 100,000    B         Simmons Co., Sr. Sub. Note, 10.750%
due 4/15/06........................      105,625
  50,000    B         Syratech Corp., Sr. Note, 11.000%
due
4/15/07..........................       53,625
----------------------------------------------------------
-----------------------------------------------

343,562 --------------------------------------------------
-------------------------------------------------------
ECOLOGICAL SERVICES & EQUIPMENT -- 1.4%
  75,000    B+        Allied Waste Industries, Sr. Disc.
Note, step bond to yield 11.300% due

6/1/07@...................................................
 .. .........              46,500
  50,000    B+        Allied Waste North America, Inc.,
Sr.
Sub. Note, 10.250% due

12/1/06@..................................................
 .. .........              54,000
----------------------------------------------------------
-----------------------------------------------

100,500 --------------------------------------------------
-------------------------------------------------------
ELECTRONICS -- 1.5%
  50,000    B         Fairchild Semiconductor Corp., Sr.
Sub. Note, 10.125% due 3/15/07@.....       53,000
  50,000    B-        Viasystems Inc., Sr. Sub. Note,
9.750%
due 6/1/07@.....................       51,250 ------------
----------------------------------------------------------
-----------------------------------

104,250 --------------------------------------------------
-------------------------------------------------------
FINANCIAL -- 0.7%
  50,000    BB-       Olympic Financial, Ltd., Unit,
11.500%
due 3/15/07.....................       51,125 ------------
----------------------------------------------------------
-----------------------------------
FOOD & DRUG RETAILERS -- 1.6%
    100,000    B         Ralph's Grocery Co., Sr. Note,
                          10.450%
due 6/15/04.....................      109,250 ------------
----------------------------------------------------------
-----------------------------------
FOOD PRODUCTS -- 2.3%
  50,000    B-        International Home Foods Inc., Sr.
Sub. Note, 10.375% due 11/1/06......       51,875
 100,000    B-        Van de Kamp's, Inc., Sr. Sub. Note,
12.000% due 9/15/05................      111,375 ---------
----------------------------------------------------------
--------------------------------------

163,250 --------------------------------------------------
-------------------------------------------------------
FOREST PRODUCTS -- 2.2%
 100,000    B         Four M Corp., Sr. Secured Note,
12.000% due 6/1/06.....................      104,000
  50,000    NR        Uniforet Inc., Sr. Note, 11.125% due
10/15/06..........................       46,750 ----------
----------------------------------------------------------
-------------------------------------

150,750 --------------------------------------------------
-------------------------------------------------------
HEALTHCARE -- 3.2%
  100,000    B         Dade International, Inc., Sr. Sub.
Note, 11.125% due 5/1/06............      111,500
   100,000    B+        Tenet Healthcare Corp., Sr. Sub.
                           Note,
10.125% due 3/1/05..............      109,500 ------------
----------------------------------------------------------
-----------------------------------

221,000 --------------------------------------------------
-------------------------------------------------------
HOTELS, MOTELS, INNS & CASINOS -- 1.6%
  100,000    B-        Courtyard By Marriott II L.P., Sr.
Note, 10.750% due 2/1/08............      109,000 --------
----------------------------------------------------------
---------------------------------------
INDUSTRIAL -- 3.0%
  50,000    B2*       Amphenol Corp., Sr. Sub. Note,
9.875%
due 5/15/07......................       52,000
  50,000    B         Continental Global Group, Sr. Note,
11.000% due 4/1/07@................       52,562
  50,000    NR        International Knife & Saw, Inc., Sr.
Sub. Note, 11.375% due 11/15/06...       53,750
  50,000    B2*       MMI Products, Inc., Sr. Sub. Note,
11.250% due 4/15/07@................       53,375
----------------------------------------------------------
-----------------------------------------------

211,687 --------------------------------------------------
-------------------------------------------------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       20

<PAGE> ---------------------------------------------------
----------------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                         FEDERATED HIGH YIELD PORTFOLIO
<TABLE>
<CAPTION>
  FACE
 AMOUNT     RATING
SECURITY                                     VALUE
----------------------------------------------------------
-----------------------------------------------
<C>         <S>       <C>
<C>
LEISURE & ENTERTAINMENT -- 5.4%
$100,000    B2*       AMF Group, Inc., Sr. Disc. Note,
step
bond to yield 11.960% due

3/15/06...................................................
 .. .........          $   72,000
   100,000    B         Cobblestone Golf Group Inc., Sr.
                           Note,
11.500% due 6/1/03..............      105,750
100,000    B         Six Flags Theme Parks, Sr. Sub. Disc.
Note, step bond to yield 12.250%
                        due
6/15/05...................................................
 .. .....      102,000
 100,000    BB-       Viacom Inc., Sub. Debenture, 8.000%
due 7/7/06.........................       97,750
----------------------------------------------------------
-----------------------------------------------

377,500 --------------------------------------------------
-------------------------------------------------------
MACHINERY & EQUIPMENT -- 2.3%
  50,000    B-        Alvey Systems Inc., Sr. Sub. Note,
11.375% due 1/31/03.................       51,750
100,000    B3*       Tokheim Corp., Sr. Sub. Note, 11.500%
due 8/1/06.......................      107,374
----------------------------------------------------------
-----------------------------------------------

159,124 --------------------------------------------------
----------
---------------------------------------------MANUFACTURING
-- 0.7%
  50,000    B-        Roller Bearing Co. of America, Inc.,
Sr. Sub. Note, 9.625% due

6/15/07@..................................................
 .. .........              50,750
----------------------------------------------------------
-----------------------------------------------
OIL & GAS -- 5.2%
  50,000    B         Abraxas Petroleum, Sr. Note, 11.500%
due 11/1/04.......................       54,875
                      Forcenergy Gas Exploration, Inc.,
Sr. Sub. Notes:
  50,000    B         9.500% due
11/1/06...................................................
 .. 51,750
  50,000    NR        8.500% due
2/15/07...................................................
 .. 49,000
  50,000    BB-       Pride Petroleum Services, Inc., Sr.
Note, 9.375% due 5/1/07............       52,000
  50,000    B         United Meridan Corp., Sr. Sub. Note,
10.375% due 10/15/05..............       54,250
  50,000    B2*       United Refining Co., Sr. Note,
10.750%
due 6/15/07@....................       49,875
  50,000    NR        XCL, Ltd., Unit, 13.500% due
5/1/04@...................................       50,250 --
----------------------------------------------------------
---------------------------------------------

362,000 --------------------------------------------------
-------------------------------------------------------
PRINTING & PUBLISHING -- 4.1%
  150,000    B         Affiliated Newspaper Investments,
Inc., Sr. Disc. Note, step bond to
                    yield   12.262% due
7/1/06.............................................
127,500
  50,000    BB-       Hollinger International Publishing,
Inc., Sr. Sub. Note, 9.250% due
3/15/07...................................................
 .. .........    51,125
  50,000    B-        Peterson Publishing Co., L.L.C., Sr.
Sub. Note, 11.125% due 11/15/06...       55,750
  50,000    B-        Von Hoffmann Press, Inc., Sr. Sub.
Note, 10.375% due 5/15/07@..........       52,000 --------
----------------------------------------------------------
---------------------------------------

286,375 --------------------------------------------------
-------------------------------------------------------
SERVICES -- 0.7%
  50,000    NR        Intertek Finance PLC, Sr. Sub. Note,
10.250% due 11/1/06...............       51,875 ----------
----------------------------------------------------------
-------------------------------------
STEEL -- 1.6%
 100,000    B         GS Technologies Operating Co., Inc.,
Sr. Note, 12.250% due 10/1/05.....      110,375
----------------------------------------------------------
-----------------------------------------------
SURFACE TRANSPORTATION -- 5.3%
 100,000    BB        Gearbulk Holding Ltd, Sr. Note,
11.250% due 12/1/04....................      111,000
  50,000    B1*       Statia Terminals International
  N.V.,
1st Mortgage Note, 11.750% due

11/15/03..................................................
 .. .........              53,000
 100,000    BB-       Stena AB, Sr. Note, 10.500% due
12/15/05...............................      109,500
 100,000    B         Trism, Inc., Sr. Sub. Note, 10.750%
due 12/15/00.......................       95,000
----------------------------------------------------------
-----------------------------------------------

368,500 --------------------------------------------------
-------------------------------------------------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       21

<PAGE> ---------------------------------------------------
----------------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                         FEDERATED HIGH YIELD PORTFOLIO
<TABLE>
<CAPTION>
  FACE
 AMOUNT     RATING
SECURITY                                     VALUE
----------------------------------------------------------
-----------------------------------------------
<C>         <S>       <C>
<C>
TELECOMMUNICATIONS & CELLULAR -- 11.2%
$100,000    NR        Brooks Fiber Properties, Inc. Sr.
Disc. Note, step bond to yield
                        11.524% due
3/1/06...................................................
$   68,250
100,000    B         Intermedia Communications of Florida,
Inc., Sr. Disc. Note, step bond
                      to yield   10.755% due
5/15/06.........................................
70,000
  50,000    B         McLeod Inc., Sr. Disc. Note, step
bond
to yield 10.500% due 3/1/07@....       31,875
   100,000    NR        Millicom International Cellular,
                           S.A.,
Sr. Sub. Disc. Note, step bond
                      to yield   13.270% due
6/1/06..........................................
36,875
   100,000    B3*       Nextel Communications, Inc., Sr.
                           Disc.
Note, step bond to yield
                        13.986% due
8/15/04..................................................
77,250
 100,000    B         Paging Network, Inc., Sr. Sub. Note,
10.000% due 10/15/08..............       96,500
  50,000    B2*       PhoneTel Technologies, Inc. Sr.
Note,
12.000% due 12/15/06.............       51,500
  50,000    B+        Qwest Communications International,
Inc., Sr. Note, 10.875% due

4/1/07@...................................................
 .. ...........       54,625
 100,000    CCC+      Sygnet Wireless, Inc. Sr. Note,
11.500% due 10/1/06....................      100,375
 100,000    B         Teleport Communications Group, Inc.
Sr. Disc. Note, step bond to yield
                        10.828% due
7/1/07...................................................
72,375
  50,000    Ba3*      Telesystems International Wireless
Inc., Sr. Disc. Note, step bond to
                    yield   13.250% due
6/30/07@...........................................
27,000
 100,000    B+        Vanguard Cellular Systems Inc.,
Debenture, 9.375% due 4/15/06..........      100,875
----------------------------------------------------------
-----------------------------------------------

787,500 --------------------------------------------------
-------------------------------------------------------
TOBACCO -- 0.7%
  50,000    BB+       Dimon Inc., Sr. Note, 8.875% due
6/1/06................................       52,250 ------
----------------------------------------------------------
-----------------------------------------
UTILITIES -- 2.3%
   100,000    BB        California Energy Co., Inc., Sr.
                           Note,
10.250% due 1/15/04.............      108,500
  50,000    BB-       El Paso Electric Co., 1st Mortgage
Note, 9.400% due 5/1/11.............       53,688 --------
----------------------------------------------------------
---------------------------------------

162,188 --------------------------------------------------
-------------------------------------------------------
                      TOTAL CORPORATE BONDS AND NOTES
(Cost -- $5,898,030)...................    6,174,899 -----
----------------------------------------------------------
------------------------------------------
 SHARES
SECURITY                                     VALUE
----------------------------------------------------------
----------------------------------------------NON-
CONVERTIBLE PREFERRED STOCK -- 1.6%
   1,058              K-III Communications Corp., Series
B,
Payment-in-kind
                      (Cost -
$107,088).................................................
 .. ..                    114,369
----------------------------------------------------------
-----------------------------------------------
CONVERTIBLE PREFERRED STOCKS -- 3.9%
   1,052              American Radio Systems Corp., Sub.
Debenture, $11.375..................      112,570
     500              Capstar Broadcasting Partners,
Senior
Preferred, $12.000@..............       50,250
     500              Chancellor Radio Broadcasting Co.,
Exchangeable Preferred, 12.000%@....       56,875
      53              Pegasus Communications Corp., Unit,
Series A, 12.750%..................       51,326
----------------------------------------------------------
-----------------------------------------------
                      TOTAL CONVERTIBLE PREFERRED STOCKS
(Cost -- $258,984)..................      271,021
----------------------------------------------------------
-----------------------------------------------
WARRANTS -- 0.1%
      50              Australis Holdings Pty. Ltd. Expires
10/30/01..........................            2
     100              Sterling Chemicals Holdings, Inc.,
Expires 8/15/08.....................        3,500
----------------------------------------------------------
-----------------------------------------------
                      TOTAL WARRANTS (Cost -
$0)............................................
3,502 ----------------------------------------------------
-----------------------------------------------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       22

<PAGE> ---------------------------------------------------
----------------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                         FEDERATED HIGH YIELD PORTFOLIO
<TABLE>
<CAPTION>
   FACE
  AMOUNT
SECURITY                                    VALUE
----------------------------------------------------------
------------------------------------------------
<C>           <S>       <C>
<C>
REPURCHASE AGREEMENT -- 6.2%
$  434,000              Citibank, 6.000% due 7/1/97;
Proceeds at maturity -- $434,072; (Fully
                        collateralized by U.S. Treasury
Notes, 4.750% due 8/31/98; Market
                        value $446,669) (Cost -
$434,000)....................................   $  434,000
----------------------------------------------------------
------------------------------------------------
                        TOTAL INVESTMENTS -- 100% (Cost -
$6,698,102**)......................   $6,997,791 ---------
----------------------------------------------------------
---------------------------------------
</TABLE>

@  Security is exempt from registration under Rule 144A of
the Securities Act of
  1933. This security may be resold in transactions that
are exempt from
   registration, normally to qualified institutional
buyers. ** Aggregate cost for Federal income tax purposes
is substantially the same.

   See page 34 for definition of ratings.

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       23

<PAGE>

----------------------------------------------------------
---------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                           FEDERATED STOCK PORTFOLIO
<TABLE>
<CAPTION>
  SHARES                                         SECURITY
VALUE ----------------------------------------------------
----------------------------------------------------
<C>           <S>
<C>
COMMON STOCKS -- 91.6% -----------------------------------
----------------------------------------------------------
-----------
AIRLINES -- 1.0%
     2,200    KLM Royal Dutch
Airlines..................................................
 .. ..         $   67,925
----------------------------------------------------------
----------------------------------------------
APPAREL -- 2.4%
     3,100    Russell Corp.
 ..........................................................
 .. ....       91,838
       800    V.F. Corp.
 ..........................................................
 .. .......    68,100
----------------------------------------------------------
----------------------------------------------

159,938 --------------------------------------------------
------------------------------------------------------
AUTOMOTIVE -- 1.5%
       800    General Motors
Corp......................................................
 .. ...           44,550
     1,200    PACCAR Inc.
 ..........................................................
 .. ......       55,725 -----------------------------------
----------------------------------------------------------
-----------

100,275 --------------------------------------------------
------------------------------------------------------
BANKING -- 1.0%
     1,200    National City Corp.
 ..........................................................
63,000 ---------------------------------------------------
-----------------------------------------------------
BEVERAGES -- 2.3%
     4.100    PepsiCo Inc.
 ..........................................................
 .. .....      154,006 ------------------------------------
----------------------------------------------------------
----------
BUILDING MATERIALS -- 1.1%
     2,139    Martin Marietta
Materials.................................................
 .. ..           69,250
----------------------------------------------------------
----------------------------------------------
CABLE TELEVISION -- 2.0%
     8,600    Tele-communications,
Inc.+....................................................
127,925 --------------------------------------------------
------------------------------------------------------
CHEMICALS -- 2.9%
     1,100    BetzDearborn Inc.
 ..........................................................
 .. 72,600
       700    Dow Chemical Corp.
 ..........................................................
 . 60,988
     1,800    Morton International Inc.
 ....................................................
54,338 ---------------------------------------------------
-----------------------------------------------------

187,926 --------------------------------------------------
-----------------------------------------------------
COMMUNICATIONS -- 2.5%
     1,100    GTE Corp.
 ..........................................................
 .. ........    48,262
     3,100    MCI
Communications............................................
 .. ..............      118,672 ---------------------------
----------------------------------------------------------
-------------------

166,934 --------------------------------------------------
------------------------------------------------------
CONSUMER PRODUCTS -- 1.1%
     1,400    Kimberly-
Clark.....................................................
 .. .........    69,650
----------------------------------------------------------
----------------------------------------------
DIVERSIFIED HEALTHCARE -- 1.1%
     4,400    Beverly
Enterprises+..............................................
 .. ..........    71,500
----------------------------------------------------------
----------------------------------------------
DIVERSIFIED OPERATIONS -- 1.7%
     4,400    ITT Industries Inc.
 ..........................................................
113,300 --------------------------------------------------
------------------------------------------------------
DRUGS -- 4.1%
       800    American Home
Products..................................................
 ..
 ....       61,200
     1,700    Bristol Myers
Squibb....................................................
 .. ....      137,700
       700    Merck & Co. Inc.
 ..........................................................
 .. .           72,450
----------------------------------------------------------
----------------------------------------------

271,350 --------------------------------------------------
------------------------------------------------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       24

<PAGE> ---------------------------------------------------
----------------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                           FEDERATED STOCK PORTFOLIO
<TABLE>
<CAPTION>
  SHARES                                         SECURITY
VALUE ----------------------------------------------------
----------------------------------------------------
<C>           <S>
<C>
ENERGY -- 1.8%
       800    Atlantic
Richfield.................................................
 .. .........   $   56,400
     2,500    Occidental Petroleum Corp.
 ...................................................
62,656 ---------------------------------------------------
-----------------------------------------------------

119,056 --------------------------------------------------
------------------------------------------------------
FINANCIAL SERVICES -- 3.9%
     2,025    Bear, Stearns & Co., Inc.
 ....................................................
69,230
     1,300    Fannie
Mae.......................................................
 .. ...........    56,712
     2,100    H&R Block Inc.
 ..........................................................
 .. ...           67,725
     1,500    Morgan Stanley Dean Witter Discover &
Co......................................       64,594 ----
----------------------------------------------------------
------------------------------------------

258,261 --------------------------------------------------
----------
--------------------------------------------FOOD
PROCESSING -- 0.8%
       600    CPC
International.............................................
 .. ..............       55,387 ---------------------------
----------------------------------------------------------
-------------------
HOSPITAL SUPPLIES & SERVICES -- 2.5%
     1,400    Abbott
Laboratories..............................................
 .. ...........     93,450
     1,400    United
Healthcare................................................
 .. ...........     72,800
----------------------------------------------------------
----------------------------------------------

166,250 --------------------------------------------------
------------------------------------------------------
HOUSEHOLD PRODUCTS -- 2.0%
     4,400    Rubbermaid Inc.
 ..........................................................
 .. ..          130,900
----------------------------------------------------------
----------------------------------------------
INDUSTRIAL CONTROLS -- 1.7%
       500    Unilever N.V., New York
Shares................................................
109,000 --------------------------------------------------
------------------------------------------------------
INSURANCE -- 7.7%
     1,700    Alimerica Financial Corp.
 ....................................................
67,787
     1,400    Allstate Corp.
 ..........................................................
 .. ...          102,200
       900    Cigna Corp.
 ..........................................................
 .. ......      159,750
     2,000    Marsh & McLennan Inc.
 ........................................................
142,750
     1,100    Providian Financial
Corp.+....................................................
35,338 ---------------------------------------------------
-----------------------------------------------------

507,825 --------------------------------------------------
------------------------------------------------------
MACHINERY - GENERAL INDUSTRY -- 2.3%
     2,400    Ingersoll-
Rand......................................................
 .. ........   148,200
----------------------------------------------------------
----------------------------------------------
MEDICAL -- 2.9%
     2,800    Biomet Inc.
 ..........................................................
 .. ......       52,150
     1,800    Columbia/HCA Healthcare Corp.
 ................................................
70,763
     3,200    Healthsource, Inc.
 ..........................................................
 . 69,400 -------------------------------------------------
-------------------------------------------------------

192,313 --------------------------------------------------
------------------------------------------------------
MULTIMEDIA -- 0.8%
     1,800    Viacom,
Inc.+.....................................................
 .. ..........    53,438
----------------------------------------------------------
----------------------------------------------
OIL & GAS -- 10.2%
     1,300    Chevron Corp.
 ..........................................................
 .. ....       96,119
     1,100    Coastal Corp.
 ..........................................................
 .. ....       58,506
     1,600    Exxon Corp.
 ..........................................................
 .. ......       98,400
     1,200    Royal Dutch Petroleum Co.
ADR.................................................
65,250
     3,300    Sun Corp.
 ..........................................................
 .. ........   102,300
       900
Texaco....................................................
 .. ..................    97,875
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       25

<PAGE> ---------------------------------------------------
----------------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                           FEDERATED STOCK PORTFOLIO
<TABLE>
<CAPTION>
  SHARES                                         SECURITY
VALUE ----------------------------------------------------
----------------------------------------------------
<C>           <S>
<C>
OIL & GAS -- 10.2% (CONTINUED)
     3,200    USX Marathon Group Inc.
 ......................................................   $
92,400
       800    Western Atlas
Inc.+.....................................................
 .. ....       58,600 -------------------------------------
-----------------------
---------------------------------------------
669,450 --------------------------------------------------
-----------------------------------------------------
PHARMACEUTICAL -- 1.0%
       700    SmithKline Beecham Inc.
 ......................................................
64,138 ---------------------------------------------------
-----------------------------------------------------
PUBLISHING -- 1.3%
     3,000    Readers
Digest....................................................
 .. ..........    86,063
----------------------------------------------------------
----------------------------------------------
REAL ESTATE -- 0.4%
     1,000    Boston
Properties+...............................................
 .. ...........     27,500
----------------------------------------------------------
----------------------------------------------
RETAIL -- 7.8%
     2,700    Dayton-Hudson Corp.
 ..........................................................
143,606
     1,500    Fred Meyer,
Inc.+.....................................................
 .. ......       77,531
     7,800    K-Mart
Corp.+....................................................
 .. ...........     95,550
     1,200    Tambrands, Inc.
 ..........................................................
 .. ..           59,850
     4,100    Walmart Corp.
 ..........................................................
 .. ....      138,631 -------------------------------------
----------------------------------------------------------
---------

515,168 --------------------------------------------------
------------------------------------------------------
STEEL & IRON -- 1.1%
     4,900    LTV Corp.
 ..........................................................
 .. ........    69,825
----------------------------------------------------------
----------------------------------------------
TECHNOLOGY -- 9.8%
     1,800    AMP,
Inc.......................................................
 .. .............       75,150
     1,900    Cabletron
Systems+..................................................
 .. ........    53,794
     2,000    C.R. Bard Inc.
 ..........................................................
 .. ...           72,625
     1,100    General Motors, Class H
Shares................................................
63,525
       800    International Business
Machines...............................................
72,150
     2,500    Lexmark Holding Inc., Class A
Shares+.........................................
75,937
     1,000    Lucent Technologies Inc.
 .....................................................
72,062
       900
Raytheon..................................................
 .. ..................    45,900
     2,500    Storage Technologies,
Inc.+...................................................
111,250 --------------------------------------------------
------------------------------------------------------

642,393 --------------------------------------------------
------------------------------------------------------
TOBACCO -- 2.3%
       500    Loews Corp.
 ..........................................................
 .. ......       50,062
     1,200    Philip Morris Co.
 ..........................................................
 .. 53,250
     1,500    RJR Nabisco
Holdings..................................................
 .. ......       49,500 -----------------------------------
----------------------------------------------------------
-----------

152,812 --------------------------------------------------
-----------------------------------------------------
TRANSPORTATION -- 1.1%
     2,300    CNF Transportation Inc.
 ......................................................
74,175 ---------------------------------------------------
-----------------------------------------------------
UTILITIES -- 4.0%
     1,600    CMS Energy Corp.
 ..........................................................
 .. .    56,400
     1,000    Columbia Gas Systems Inc.
 ....................................................
65,250
     2,900    Houston
Industries................................................
 .. ..........    62,169
     3,300    Pacific Gas & Electric Co.
 ...................................................
80,025 ---------------------------------------------------
-----------------------------------------------------

263,844 --------------------------------------------------
------------------------------------------------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       26
<PAGE>
----------------------------------------------------------
---------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                           FEDERATED STOCK PORTFOLIO
<TABLE>
<CAPTION>
  SHARES                                         SECURITY
VALUE ----------------------------------------------------
----------------------------------------------------
<C>           <S>
<C>
WASTE MANAGEMENT -- 1.5%
     2,900    Browning-Ferris
Industries................................................
 .. ..                  $   96,425
----------------------------------------------------------
----------------------------------------------
               TOTAL COMMON STOCKS (Cost --
$5,093,673)......................................
6,025,402 ------------------------------------------------
--------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
   FACE
  AMOUNT                                         SECURITY
VALUE ----------------------------------------------------
----------------------------------------------------
<C>           <S>
<C>
REPURCHASE AGREEMENT -- 8.4%
$  552,000    Citibank, 5.853% due 7/1/97; Proceeds at
maturity -- $552,090;
              (Fully collateralized by U.S. Treasury
Notes, 5.125% due 3/31/98;
              Market value $564,900) (Cost -
$552,000).....................................
552,000 --------------------------------------------------
------------------------------------------------------
            TOTAL INVESTMENTS -- 100% (Cost --
$5,645,673*)...............................   $6,577,402 -
----------------------------------------------------------
---------------------------------------------
</TABLE>

+ Non-income producing security.
* Aggregate cost for Federal income tax purposes is
substantially the same.

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       27

<PAGE> ---------------------------------------------------
----------------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                        MID CAP DISCIPLINED EQUITY FUND
<TABLE>
<CAPTION>
SHARES                                        SECURITY
VALUE
----------------------------------------------------------
                             -
--------------------------------------------
<C>       <S>
<C>
COMMON STOCKS -- 86.0% -----------------------------------
----------------------------------------------------------
----------
AUTOMOTIVE & TRANSPORTATION -- 2.2%
  540     Alexander & Baldwin Inc.
 ........................................................
$ 14,109
  310     Continental Airlines Inc., Class B
Shares+.......................................
  10,832 200            GATX Corp.
 ..........................................................
 .. ..........       11,551
  260     Illinois Central Corp.
 ..........................................................
9,085
  150     Kansas City Southern Industries, Inc.
 ...........................................        9,675
  240     Lear
Corp.+....................................................
 .. ................       10,650
  270     OEA Inc.
 ..........................................................
 .. ............       10,665 -----------------------------
----------------------------------------------------------
----------------

76,567 ---------------------------------------------------
----------------------------------------------------
CONSTRUCTION SERVICES -- 0.2%
  480     Clayton Homes Inc.
 ..........................................................
 .. ..     6,841
----------------------------------------------------------
---------------------------------------------
CONSUMER DISCRETIONARY -- 17.0%
  430     Accustaff
Inc.+.....................................................
 .. ...........       10,186
  200     AH Belo Corp., Class A
Shares....................................................
8,325
  380     Alberto Culver Co., Class A
Shares...............................................
8,859
  610     Bed Bath & Beyond
Inc.+.....................................................
 .. ...    18,529
  900     Best Buy Co.,
Inc.+.....................................................
 .. .......                  13,387
  360     Borders Group
Inc.+.....................................................
 ..
 .......        8,685
  200     Cintas Corp.
 ..........................................................
 .. ........       13,750
  420     Circus Circus Enterprise
Inc.+...................................................
10,343
  690     Claires Stores Inc.
 ..........................................................
 .. .            12,075
  337     Consolidated Stores
Corp.+....................................................
 .. .            11,711
  200     Cracker Barrel Old Country Store Inc.
 ...........................................        5,300
  256     CVS Corp.
 ..........................................................
 .. ...........       13,120
  800     Dial Corp.
 ..........................................................
 .. ..........       12,500
  390     Dollar General Corp.
 ..........................................................
 .. 14,625
  180     Evergreen Media Corp., Class A
Shares+...........................................
8,032
  600     Family Dollar Stores Inc.
 .......................................................
16,350
  300     Fred Meyer
Inc.+.....................................................
 .. ..........       15,506
  240     Gartner Group Inc., Class A
Shares+..............................................
8,625
  360     General Nutrition Co.,
Inc.+.....................................................
10,080
  320     Harley Davidson Inc.
 ..........................................................
 .. 15,340
  400     Herman Miller Inc.
 ..........................................................
 .. ..       14,400
  203     HFS
Inc.+.....................................................
 .. .................       11,774
  300     Hillenbrand Industries, Inc.
 ....................................................
14,250
  540     International Game
Technology................................................
 .. ..     9,585
  370     Jones Apparel Group
Inc.+.....................................................
 .. .            17,668
  310     Kohl's
Corp.+....................................................
 .. ..............       16,410
  450     Lands' End
Inc.+.....................................................
 .. ..........       13,331
  390     Leggett & Platt Inc.
 ..........................................................
 .. 16,770
  350     Manpower Inc.
 ..........................................................
 .. .......                 15,575
  730     Mirage Resorts
Inc.+*....................................................
 .. ......    18,432
  200     New York Times Co., Class A
Shares...............................................
9,900
  680     Office Depot
Inc.+.....................................................
 .. ........       13,217
  340     Omnicom
Group.....................................................
 .. .............       20,952
  450     Paychex Inc.
 ..........................................................
 .. ........       17,100
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       28

<PAGE> ---------------------------------------------------
----------------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                        MID CAP DISCIPLINED EQUITY FUND
<TABLE>
<CAPTION>
SHARES                                        SECURITY
VALUE ----------------------------------------------------
---------------------------------------------------
<C>       <S>
<C>
CONSUMER DISCRETIONARY -- 17.0% (CONTINUED)
  300     Payless Shoesource
Inc.+.....................................................
 .. ..   $   16,406
  200     Promus Hotel
Corp.+....................................................
 .. ........        7,750
  300     Reynolds & Reynolds Co., Class A
Shares..........................................
4,725
1,090     Staples
Inc.+.....................................................
 .. .............       25,342
  400     Tele-Comm Liberty Media, Class A
Shares+.........................................
9,500
  170     Tiffany & Co.
 ..........................................................
 .. .......                  7,853
  400     TJX Cos., Inc.
 ..........................................................
 .. ......    10,550
  240     Tribune Co.
 ..........................................................
 .. .........       11,535
  350     US Industries
Inc.+.....................................................
 .. .......         12,469
  560     Unifi Inc.
 ..........................................................
 .. ..........       20,930
  350     Viking Office Products
Inc.+.....................................................
6,650
   40     Washington Post Co., Class B
Shares*.............................................
15,920 ---------------------------------------------------
----------------------------------------------------

594,322 --------------------------------------------------
-----------------------------------------------------
CONSUMER STAPLES -- 4.2%
1,390     Coca-Cola
Enterprises*..............................................
 .. ...........       31,970
  300     Costco Cos.,
Inc.+.....................................................
 .. ........        9,863
  440     Dean Foods Co.
 ..........................................................
 .. ......    17,765
  480     Dole Foods Co.
Inc.*.....................................................
 .. ......    20,520
  200     Interstate Bakeries Corp.
 .......................................................
11,863
  340     McCormick & Co.
 ..........................................................
 .. .....     8,585
  130     Pioneer Hibred International, Inc.
 ..............................................
  10,400 900     Tyson Foods Inc., Class A
Shares*................................................
17,212
  430     Universal Corp.
 ..........................................................
 .. .....    13,625
  200     Whitman Corp.
 ..........................................................
 .. .......          5,063
----------------------------------------------------------
---------------------------------------------

146,866 --------------------------------------------------
-----------------------------------------------------
ENERGY -- 4.4%
  250     Anadarko Petroleum Corp.
 ........................................................
15,000
  370     Apache Corp.
 ..........................................................
 .. ........       12,025
  340     BJ Services
Co.+......................................................
 .. .........       18,232
  300     Ensco International
Inc.+.....................................................
 ..
 .       15,825
  990     Global Marine
Inc.+.....................................................
 .. .......                 23,017
  160     Louisiana Land & Exploration Co.
 ................................................
9,140
  440     Noble Affiliates Inc.
 ..........................................................
 . 17,022
  420     Noble Drilling
Corp.+....................................................
 .. ......     9,476
  260     Tidewater Inc.
 ..........................................................
 .. ......    11,440
  210     Transocean Offshore Inc.
 ........................................................
15,251
  220     Weatherford Enterra
Inc.+.....................................................
 .. .             8,470
----------------------------------------------------------
---------------------------------------------

154,898 --------------------------------------------------
-----------------------------------------------------
FINANCIALS -- 14.8%
  300     Aflac Inc.
 ..........................................................
 .. ..........       14,175
  275     AMBAC Inc.
 ..........................................................
 .. ..........       21,003
  160     American Bankers Insurance
Group+................................................
10,120
  200     Amsouth
Bancorporation............................................
 .. .............        7,563
  270     Bear, Stearns & Co. Inc.
 ........................................................
9,232
  530     Capital One Financial Corp.
 .....................................................
20,007
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       29

<PAGE> ---------------------------------------------------
----------------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                        MID CAP DISCIPLINED EQUITY FUND
<TABLE>
<CAPTION>
SHARES                                        SECURITY
VALUE
----------------------------------------------------------
---------------------------------------------
<C>       <S>
<C>
FINANCIALS -- 14.8% (CONTINUED)
  570     City National Corp.
 ..........................................................
 .. .        $   13,716
  310     Conseco Inc.
 ..........................................................
 .. ........       11,470
  250     Crestar Financial Corp.
 .........................................................
9,718
   30     First Empire State Corp.
 ........................................................
10,110
  195     First of America Bank Corp.
 .....................................................
8,921
  510     First Tennessee National Corp.
 ..................................................
24,480
  330     Firstar Corp.
 ..........................................................
 .. .......         10,065
  540     Franklin Resources Inc.
 .........................................................
39,184
  550     Hibernia Corp., Class A
Shares...................................................
7,665
  250     Lehman Brothers Holdings Inc.
 ...................................................
10,125
  380     Marshall & Ilsley
Corp.*....................................................
 .. ...    15,438
  170     Mercantile Bancorp., Inc.
 .......................................................
10,327
  460     Mercantile Bankshares Corp.
 .....................................................
18,400
  660     Northern Trust Corp.
 ..........................................................
 .. 31,928
  390     PaineWebber Group, Inc.
 .........................................................
13,650
  150     PMI Group Inc.
 ..........................................................
 .. ......     9,356
  410     Progressive Corp.
 ..........................................................
 .. ...    35,670
  100     Provident Co., Inc.
 ..........................................................
 .. .             5,350
  520     Regions Financial Corp.
 .........................................................
16,445
  640     South Trust Corp.
 ..........................................................
 .. ...    26,480
  680     State Street Corp.
 ..........................................................
 .. ..       31,450
  190     Summit
Bancorp...................................................
 .. ..............        9,524
  690     SunAmerica Inc.
 ..........................................................
 .. .....    33,638
  210     TransAtlantic Holdings Inc.
 .....................................................
20,843
  210     Union Planters Corp.
 ..........................................................
 .. 10,894 ------------------------------------------------
-------------------------------------------------------

516,947 --------------------------------------------------
-----------------------------------------------------
HEALTHCARE -- 6.7%
  500     Acuson
Corp.+....................................................
 .. ..............       11,500
  200     Apria Healthcare Group,
Inc.+....................................................
3,550
  250     Bergen Brunswig Corp., Class A
Shares............................................
6,969
  310     Biogen
Inc.+.....................................................
 .. ..............       10,501
  520     Centocor
Inc.+.....................................................
 .. ............       16,153
  260     Chiron
Corp.+....................................................
 .. ..............        5,428
  486     Foundation Health Systems Inc., Class A
Shares+..................................       14,732
  310     Genzyme
Corp.+....................................................
 .. .............        8,603
  200     HBO & Co.
 ..........................................................
 .. ...........       13,775
  100     McKesson Corp.
 ..........................................................
 .. ......     7,750
  510     Mylan
Laboratories..............................................
 .. ...............        7,522
  480     Oxford Health Plans
Inc.+.....................................................
 .. .            34,440
  230     Pacificare Health Systems Inc., Class B
Shares+..................................       14,691
  390     Phycor
Inc.+.....................................................
 .. ..............       13,431
  410     Stryker Corp.
 ..........................................................
 .. .......         14,299
  340     Tenet Healthcare
Corp.+....................................................
 ..
 ....       10,051
  275     US Surgical
Corp......................................................
 .. .........       10,244
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       30

<PAGE> ---------------------------------------------------
----------------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                        MID CAP DISCIPLINED EQUITY FUND
<TABLE>
<CAPTION>
SHARES                                        SECURITY
VALUE ----------------------------------------------------
---------------------------------------------------
<C>       <S>
<C>
HEALTHCARE -- 6.7% (CONTINUED)
  280     Vencor
Inc.+.....................................................
 .. ..............   $   11,830
  490     Watson Pharmaceuticals
Inc.+.....................................................
20,703 ---------------------------------------------------
----------------------------------------------------

236,172 --------------------------------------------------
-----------------------------------------------------
INTERGRATED OILS -- 1.5%
  200     Amerada Hess Corp.
 ..........................................................
 .. ..       11,113
  190     Murphy Oil Corp.
 ..........................................................
 .. ....     9,264
  560     Tosco Corp.
 ..........................................................
 .. .........       16,765
  400     Valero Energy Corp.
 ..........................................................
 .. .            14,500
----------------------------------------------------------
---------------------------------------------

51,642 ---------------------------------------------------
----------------------------------------------------
MATERIALS & PROCESSING -- 5.8%
  230     Alumax
Inc.+.....................................................
 .. ..............        8,726
  100     Avery Dennison Corp.
 ..........................................................
 .. 4,014
  220     Bemis Co.
 ..........................................................
 .. ...........        9,516
  220     BetzDearborn Inc.
 ..........................................................
 .. ...    14,520
  250     Bosie Cascade Corp.
 ..........................................................
 .. .             8,829
  300     Bowater Inc.
 ..........................................................
 .. ........       13,875
  670     Crompton & Knowles Corp.
 ........................................................
14,907
  420     Cytec Industries
Inc.+.....................................................
 .. ....    15,697
  200     Ecolab Inc.
 ..........................................................
 .. .........        9,550
  400     IMC Global Inc.
 ..........................................................
 .. .....    14,000
  690     International Specialty Products
Inc.+...........................................
9,703
  270     James River Corp.
 ..........................................................
 .. ...     9,990
  680     LTV Corp.
 ..........................................................
 .. ...........        9,690
  150     Lubrizol Corp.
 ..........................................................
 .. ......     6,292
  150     Mead Corp.
 ..........................................................
 .. ..........        9,338
  210     Olin Corp.
 ..........................................................
 .. ..........        8,204
  150     Praxair Inc.
 ..........................................................
 .. ........        8,400
  390     Sealed Air
Corp.+....................................................
 .. ..........       18,525
  270     USX-US Steel Group, Inc.
 ........................................................
9,468 ----------------------------------------------------
---------------------------------------------------

203,244 --------------------------------------------------
-----------------------------------------------------
PRODUCER DURABLES -- 6.0%
  500     AGCO Corp.
 ..........................................................
 .. ..........       17,969
  400     American Power Conversion
Corp.+.................................................
7,600
  280     Crane Co.
 ..........................................................
 ..
 ...........       11,709
  440     Danaher Corp.
 ..........................................................
 .. .......                 22,359
  480     Hubbell Inc., Class B
Shares+...................................................
 . 21,121
  430     Jacobs Engineering Group
Inc.+...................................................
11,556
  190     Litton Industries
Inc.+.....................................................
 .. ...     9,179
  250     Molex Inc.
 ..........................................................
 .. ..........        9,125
  200     Precision Castparts Corp.
 .......................................................
11,925
  110     Raychem Corp.
 ..........................................................
 .. .......                  8,182
  360     Sunstrand Corp.
 ..........................................................
 .. .....    20,092
  230     Thiokol Corp.
 ..........................................................
 .. .......                 16,100
  300     US Filter
Corp.+....................................................
 .. ...........        8,175
  100     United Waste Systems Inc.
 .......................................................
4,100
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       31

<PAGE> ---------------------------------------------------
----------------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                        MID CAP DISCIPLINED EQUITY FUND
<TABLE>
<CAPTION>
SHARES                                        SECURITY
VALUE ----------------------------------------------------
---------------------------------------------------
<C>       <S>
<C>
PRODUCER DURABLES -- 6.0% (CONTINUED)
  310     USA Waste Services
Inc.+.....................................................
 .. ..   $   11,974
  490     Watts Industries, Inc., Class A
Shares...........................................
11,760
  190     York International Corp.
 ........................................................
8,740 ----------------------------------------------------
---------------------------------------------------

211,666 --------------------------------------------------
-----------------------------------------------------
TECHNOLOGY -- 11.9%
  200     Adaptec
Inc.+.....................................................
 .. .............        6,950
  460     ADC Telecommunications
Inc.+.....................................................
15,353
  370     Altera
Corp.+....................................................
 .. ..............       18,685
  390     America Online
Inc.+.....................................................
 .. ......    21,695
  650     Analog Devices
Inc.+.....................................................
 .. ......    17,265
  210     Arrow Electronics
Inc.+.....................................................
 .. ...    11,156
  410     Atmel
Corp.+....................................................
 .. ...............       11,480
  190     Avnet Inc.
 ..........................................................
 .. ..........       10,925
  630     BMC Software
Inc.+*....................................................
 .. ........       34,886
  680     Cadence Design Systems
Inc.+.....................................................
22,780
  300     Cambridge Technology Partners
Inc.+..............................................
9,600
  300     Comdisco Inc.
 ..........................................................
 .. .......                  7,800
  360     Compuware
Corp.+....................................................
 .. ...........       17,190
  280     Diebold Inc.
 ..........................................................
 .. ........       10,920
  210     Encad
Inc.+.....................................................
 .. ...............        8,715
  230     LAM Research
Corp.+....................................................
 .. ........        8,524
  510     Linear Technology Corp.
 .........................................................
26,392
  360     LSI Logic
Corp.+....................................................
 .. ...........       11,520
  260     Maxim Integrated Products
Inc.+..................................................
14,787
  150     McAfee Associates
Inc.+.....................................................
 .. ...     9,469
  420     NCR
Corp.+....................................................
 .. .................       12,495
  280     Policy Management Systems
Corp.+.................................................
13,160
  480     Quantum
Corp.+....................................................
 .. .............        9,751
  390     Read-Rite
Corp.+....................................................
 .. ...........        8,141
  170     Solectron
Corp.+....................................................
 .. ...........       11,900
  260     Storage Technology
Corp.+....................................................
 .. ..       11,570
  180     Sunguard Data Systems
Inc.+.....................................................
 . 8,370
  420     Symbol Technologies Inc.
 ........................................................
14,123
  360     Teradyne
Inc.+.....................................................
 .. ............       14,130
  390     Xilinx
Inc.+.....................................................
 .. ..............       19,134 ---------------------------
----------------------------------------------------------
------------------

418,866 --------------------------------------------------
-----------------------------------------------------
UTILITIES -- 11.3%
  410     AES
Corp.+*...................................................
 .. .................       29,008
  800     Allegheny Power System,
Inc.*....................................................
21,351
  340     Boston Edison Co.
 ..........................................................
 .. ...     8,968
  510     Brooklyn Union Gas
Co.*......................................................
 .. ..       14,599
  520     Calenergy
Inc.+*....................................................
 .. ...........       19,760
  260     Century Telephone
Enterprise................................................
 .. ...     8,758
  740     CMS Energy Corp.
 ..........................................................
 .. ....    26,085
  180     Columbia Gas System, Inc.
 .......................................................
11,746
  160     Consolidated Natural Gas Co.
 ....................................................
8,610
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       32

<PAGE>

----------------------------------------------------------
---------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                        MID CAP DISCIPLINED EQUITY FUND
<TABLE>
<CAPTION>
SHARES                                        SECURITY
VALUE
----------------------------------------------------------
                             -
--------------------------------------------
<C>       <S>
<C>
UTILITIES -- 11.3% (CONTINUED)
  110     El Paso Natural Gas Co.
 .........................................................
$    6,050
  420     Florida Progress Corp.
*.........................................................
13,152
  310     Illinova Corp.
 ..........................................................
 .. ......     6,820
  240     IPALCO Enterprises,
Inc.*.....................................................
 .. .             7,500
  640     LG&E Energy
Corp.*....................................................
 .. .........       14,120
  200     Mapco Inc.
 ..........................................................
 .. ..........        6,300
  300     MCN Energy Group Inc.
 ..........................................................
 . 9,188
  440     National Fuel Gas
Co.*......................................................
 .. ...    18,454
  960     Nextel Communications
Inc.+.....................................................
 . 18,180
  480     Nipsco Industries,
Inc.*.....................................................
 .. ..       19,830
  530     Northeast
Utilities.................................................
 .. ...........        5,068
  650     Pinnacle West Capital
Corp.*....................................................
 . 19,541
  570     Public Service Co. of
Colorado*.................................................
 . 23,655
  780     SCANA
Corp.*....................................................
 .. ...............       19,354
  270     Southern New England Telecommunications Corp.
 ...................................       10,496
  860     Teco Energy
Inc.*.....................................................
 .. .........       21,984
  260     Telephone & Data Systems, Inc.
 ..................................................
9,880
  290     360 Communications
Co.+......................................................
 .. ..     4,966
  470     Wisconsin Energy
Corp.*....................................................
 .. ....    11,692
----------------------------------------------------------
---------------------------------------------

395,115 --------------------------------------------------
-----------------------------------------------------
          TOTAL COMMON STOCKS (Cost -
$2,685,492).........................................
3,013,146 ------------------------------------------------
------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
  FACE
  AMOUNT                                         SECURITY
VALUE ----------------------------------------------------
----------------------------------------------------
<C>         <S>
<C>
SHORT-TERM INVESTMENTS -- 14.0% --------------------------
----------------------------------------------------------
--------------------
U.S. TREASURY OBLIGATION -- 0.4%
$ 15,000    U.S. Treasury Bill, 5.120% due 9/18/97 (Cost -
-
$14,840)@.......................       14,840 ------------
----------------------------------------------------------
----------------------------------
REPURCHASE AGREEMENT -- 13.6%
 485,000    Citibank, 6.000% due 7/1/97; Proceeds at
maturity -- $475,079;
            (Fully collateralized by U.S. Treasury Notes,
5.000% due 2/15/99;
            Market value -- $486,819)(Cost -
$475,000).....................................
475,000 --------------------------------------------------
------------------------------------------------------
           TOTAL SHORT-TERM INVESTMENTS (Cost --
$489,840).................................      489,840 --
----------------------------------------------------------
--------------------------------------------
            TOTAL INVESTMENTS -- 100% (Cost -
$3,175,332**)................................   $3,502,986
----------------------------------------------------------
----------------------------------------------
</TABLE>

+   Non-income producing security.
*   Security has been partially segregated by custodian to
cover open
    commitments.
@   Security serves as collateral for futures contracts.
**  Aggregate cost for Federal income tax purposes is

substantially the same.

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       33

<PAGE>

----------------------------------------------------------
---------------------
 BOND RATINGS

All ratings are by Standard & Poor's Ratings Service
("Standard & Poor's"),
except those identified by an asterisk (*) are rated by
Moody's Investors
Service, Inc. ("Moody's"). The definitions of the
applicable rating symbols are
set forth below:

Standard & Poor's -- Ratings from "AA" to "CCC" may be
modified by the addition
of a plus (+) or minus (-) sign to show relative
standings within the major
rating categories.

<TABLE>
<S>             <C>   <C>
AAA              --   Bonds rated "AAA" have the highest
rating assigned by Standard & Poor's. Capacity
                      to pay interest and repay principal
is extremely strong.
AA               --   Bonds rated "AA" have a very strong
capacity to pay interest and repay principal
                      and differ from the highest rated
issue only in a small degree.
A                --   Bonds rated "A" have a strong
capacity
to pay interest and repay principal although
                      they are somewhat more susceptible
to the adverse effects of changes in
                      circumstances and economic
conditions than bonds in higher rated categories.
BBB              --   Bonds rated "BBB" are regarded as
having an adequate capacity to pay interest and
                      repay principal. Whereas they
normally exhibit 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 bonds in this category
                      than in higher rated categories.
BB, B and CCC    --   Bonds rated "BB" and "B" are
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
represents a lower degree of speculation than B, and
                      CCC the highest degree of
speculation. While such bonds will likely have some
                      quality and protective
characteristics, these are outweighed by large
uncertainties
                      or major risk exposures to adverse
conditions.
</TABLE>
Moody's -- Numerical modifiers 1, 2, and 3 may be applied
to each generic rating
from "Aa" to "B", where 1 is the highest and 3 the lowest
rating within its
generic category.

<TABLE>
<S>             <C>   <C>
Aaa              --   Bonds that 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 as can be visualized
are most unlikely to impair the fundamentally
                      strong position of such issues.
Aa               --   Bonds that 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 fluctuation of protective elements may be
                      of greater amplitude or there may be
other elements present which make the
                      long-term risks appear somewhat
larger than in Aaa securities.
A                --   Bonds that 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 some
time in the future.
Baa              --   Bonds that 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.
Ba               --   Bonds that 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 therefore not well safeguarded during
                      both good and bad times over the
future. Uncertainty of position characterizes
                      bonds in this class.
B                --   Bonds that are rated "B" generally
lack characteristics of desirable investments.
                      Assurance of interest and principal
payment or of maintenance of other terms of the
                      contract over any long period of
time
may be small.
NR               --   Indicates that the bond is not rated
by Standard & Poor's or Moody's.
</TABLE>

                                       34
<PAGE>
----------------------------------------------------------
---------------------
 STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 1997

<TABLE>
<CAPTION>

LAZARD           MFS                                   MID
CAP
                                                TRAVELERS
INTERNATIONAL    EMERGING     FEDERATED    FEDERATED
DISCIPLINED
                                               QUALITY
BOND STOCK         GROWTH      HIGH YIELD        STOCK
EQUITY
                                                PORTFOLIO
PORTFOLIO      PORTFOLIO    PORTFOLIO    PORTFOLIO
FUND -----------------------------------------------------
----------------------------------------------------------
----------------
<S>                                            <C>
<C>             <C>           <C>          <C>
<C>
ASSETS:
  Investments -- Cost........................   $5,215,934
$ 5,108,200    $29,730,898   $6,264,102   $5,093,673   $
2,685,492
  Short-term investments -- Cost.............      852,000
1,227,000      2,100,000      434,000      552,000
489,840
  Foreign currency -- Cost...................           --
89,640             --           --           --
-

----------------------------------------------------------
----------------------------------------------------------
-----------
  Investments, at value......................   $5,218,022
$ 5,864,872    $33,297,980   $6,563,791   $6,025,402   $
3,013,146
  Short-term investments, at value...........      852,000
1,227,000      2,100,000      434,000      552,000
489,840
  Foreign currency, at value.................           --
89,105             --           --           --
-
-
  Cash.......................................          884
56,599         36,922          377          229
416
  Dividends and interest receivables.........       64,570
32,799         17,053      113,073        8,374
2,518
  Receivables from securities sold...........           --
27,416        235,579           --       33,150
21,280
  Receivables from affiliate.................        9,583
18,261          5,454        4,463       11,064
8,597
----------------------------------------------------------
----------------------------------------------------------
-----------
 TOTAL ASSETS...............................    6,145,059
7,316,052     35,692,988    7,115,704    6,630,219
3,535,797 ------------------------------------------------
----------------------------------------------------------
---------------------
LIABILITIES:
 Payables for securities purchased..........           --
15,952        384,638      128,251       26,468
23,660
  Investment advisory fees payable...........           --
-           --        3,543              --            --
  Administration fees payable................           --
-        1,622          326              --            --
  Payable to broker -- variation margin......           --
-           --           --              --         1,875
  Accrued expenses...........................       15,787
26,235         24,400       13,552       20,781
10,950 ---------------------------------------------------
----------------------------------------------------------
------------------
 TOTAL LIABILITIES..........................       15,787
42,187        410,660      141,803       47,249
36,485 ---------------------------------------------------
----------------------------------------------------------
------------------
TOTAL NET ASSETS.............................   $6,129,272
$ 7,273,865    $35,282,328   $6,973,901   $6,582,970   $
3,499,312 ------------------------------------------------
----------------------------------------------------------
---------------------
NET ASSETS:
  Paid-in capital............................   $5,951,689
$ 6,399,288    $32,313,827   $6,369,051   $5,221,714   $
3,093,345
 Accumulated net investment income (loss)...      157,901
27,085        (32,492)     273,526       35,828
6,657
  Accumulated net realized gain (loss) on
     security transactions and
   futures contracts.......................       17,594
90,774       (566,089)      31,635      393,699
72,959
  Net unrealized appreciation of investments,
     futures contracts and
   foreign currencies......................        2,088
756,718      3,567,082      299,689      931,729
326,351 --------------------------------------------------
----------------------------------------------------------
-------------------
TOTAL NET ASSETS.............................   $6,129,272
$ 7,273,865    $35,282,328   $6,973,901   $6,582,970   $
3,499,312 ------------------------------------------------
----------------------------------------------------------
---------------------
SHARES OUTSTANDING...........................      592,999
614,625      3,024,196      626,947      495,391
308,155
----------------------------------------------------------
----------------------------------------------------------
-----------
NET ASSET VALUE, PER SHARE...................
$10.34
$11.83        $11.67       $11.12       $13.29
$11.36
----------------------------------------------------------
----------------------------------------------------------
-----------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       35

<PAGE> ---------------------------------------------------
----------------------------
   STATEMENTS OF OPERATIONS (UNAUDITED)     FOR THE SIX
                          MONTHS
ENDED JUNE 30, 1997

<TABLE>
<CAPTION>
                                                 TRAVELERS
LAZARD            MFS
MID
CAP
                                                 QUALITY
INTERNATIONAL     EMERGING      FEDERATED    FEDERATED
DISCIPLINED
                                                   BOND
STOCK          GROWTH       HIGH YIELD     STOCK
EQUITY
                                                 PORTFOLIO
PORTFOLIO       PORTFOLIO     PORTFOLIO    PORTFOLIO
FUND -----------------------------------------------------
----------------------------------------------------------
----------------
<S>                                              <C>
<C>             <C>             <C>          <C>
<C>
INVESTMENT INCOME:
  Interest....................................   $178,162
$  10,454      $     52,269    $285,407    $    5,988    $
5,945
  Dividends...................................         --
74,275            23,003      14,590        58,917
8,355
  Less: Foreign withholding tax...............         --
(8,202)               --          --            --
----------------------------------------------------------
----------------------------------------------------------
------------
  TOTAL INVESTMENT INCOME.....................    178,162
76,527            75,272     299,997        64,905
14,300 ---------------------------------------------------
----------------------------------------------------------
------------------
EXPENSES:
  Investment advisory fees (Note 2)...........      8,734
20,780            85,077      18,924        19,130
5,637
  Audit and legal.............................
7,380
7,000             7,800       5,000         8,750
4,667
  Shareholder and system servicing fees.......
5,680 3,181                   3,500         2,000 3,010
1,503
Pricing service fees........................      3,390
3,788                --         900            --
--
Trustees' fees..............................      2,500
2,000             3,000       1,000         3,500
1,200
Custody.....................................      1,900
8,459            18,900       1,450         2,525
300
  Administration fees (Note 2)................
1,621 1,501                   6,806         1,747 1,836
483
  Shareholder communications..................
-1,800                        7,605         1,000 3,900
2,000
  Registration fees...........................         --
-     --          --          --          333
 Other.......................................        650
188               800         100         1,000
117
----------------------------------------------------------
----------------------------------------------------------
-----------
  TOTAL EXPENSES..............................     31,855
48,697           133,488      32,121        43,651
16,240
  Less: Investment advisory fee and expense
     reimbursements (Note 2)..................    (11,594)
(17,212)          (25,724)     (4,463)      (14,574)
(8,597) --------------------------------------------------
----------------------------------------------------------
-------------------
  NET EXPENSES................................     20,261
31,485           107,764      27,658        29,077
7,643 ----------------------------------------------------
----------------------------------------------------------
-----------------
NET INVESTMENT INCOME (LOSS)..................    157,901
45,042           (32,492)    272,339        35,828
6,657 ----------------------------------------------------
----------------------------------------------------------
-----------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
        INVESTMENTS, FUTURES CONTRACTS AND FOREIGN
  CURRENCIES (NOTES 3 AND 5):
  Net Realized Gain (Loss) From:
     Security transactions (excluding
short-term securities)..................     17,594
98,474          (546,854)     31,635       393,699
43,803
     Futures contracts........................         ---
--   --           --       29,156
     Foreign currency transactions............         -
(17,087)           (8,924)         --            --
-
----------------------------------------------------------
----------------------------------------------------------
-----------
  NET REALIZED GAIN (LOSS)....................     17,594
81,387          (555,778)     31,635       393,699
72,959 ---------------------------------------------------
----------------------------------------------------------
------------------
  Change in Net Unrealized Appreciation
     (Depreciation) of Investments
  and Foreign Currencies:
   Beginning of period......................     48,017
311,067           (19,224)    209,283       333,273
--
   End of period............................      2,088
756,718         3,567,082     299,689       931,729
326,351 --------------------------------------------------
----------------------------------------------------------
-------------------
  INCREASE (DECREASE) IN NET UNREALIZED
     APPRECIATION.............................    (45,929)
445,651         3,586,306      90,406       598,456
326,351 --------------------------------------------------
----------------------------------------------------------
-------------------
NET GAIN (LOSS) ON INVESTMENTS, FUTURES
  CONTRACTS AND FOREIGN CURRENCIES............    (28,335)
527,038         3,030,528     122,041       992,155
399,310 --------------------------------------------------
----------------------------------------------------------
-------------------
INCREASE IN NET ASSETS FROM OPERATIONS........   $129,566
$ 572,080      $  2,998,036    $394,380    $1,027,983    $
405,967 --------------------------------------------------
----------------------------------------------------------
-------------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       36

<PAGE> ---------------------------------------------------
----------------------------
 STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)   FOR THE
SIX MONTHS ENDED JUNE
30, 1997
<TABLE>
<CAPTION>

LAZARD             MFS
MID CAP
                                     TRAVELERS
INTERNATIONAL      EMERGING       FEDERATED
FEDERATED DISCIPLINED
                                    QUALITY BOND
STOCK           GROWTH        HIGH YIELD        STOCK
EQUITY
                                     PORTFOLIO
PORTFOLIO        PORTFOLIO      PORTFOLIO       PORTFOLIO
FUND(1) --------------------------------------------------
----------------------------------------------------------
--------------------
<S>                                 <C>              <C>
<C>             <C>            <C>             <C>
OPERATIONS:
  Net investment income (loss)...    $  157,901       $
45,042      $   (32,492)    $  272,339     $    35,828
$ 6,657
  Net realized gain (loss).......        17,594
81,387         (555,778)        31,635         393,699
72,959
  Increase (decrease) in net
     unrealized appreciation.....       (45,929)
445,651        3,586,306         90,406         598,456
326,351
----------------------------------------------------------
----------------------------------------------------------
------------
  INCREASE IN NET ASSETS FROM
     OPERATIONS..................       129,566
572,080        2,998,036        394,380       1,027,983
405,967 --------------------------------------------------
----------------------------------------------------------
--------------------
DISTRIBUTIONS TO SHAREHOLDERS
  FROM:
  Net investment income..........            --
(10,591)              --             --              --
----------------------------------------------------------
----------------------------------------------------------
-------------
  DECREASE IN NET ASSETS FROM
     DISTRIBUTIONS TO
     SHAREHOLDERS................            --
(10,591)              --             --              --
----------------------------------------------------------
----------------------------------------------------------
-------------
FUND SHARE TRANSACTIONS (NOTE 9):
  Net proceeds from sale of shares......................
     774,143
2,457,573       19,820,374      1,221,082       5,861,834
3,093,345
  Net asset value of shares
     issued for reinvestment of
     dividends...................            --
10,591               --             --              ---
  Cost of shares reacquired......       (46,956)
(78,117)        (459,928)       (22,664)     (3,686,374) -
----------------------------------------------------------
----------------------------------------------------------
------------
  INCREASE IN NET ASSETS FROM
     FUND SHARE TRANSACTIONS.....       727,187
2,390,047       19,360,446      1,198,418       2,175,460
3,093,345 ------------------------------------------------
----------------------------------------------------------
----------------------
INCREASE IN NET ASSETS...........       856,753
2,951,536       22,358,482      1,592,798       3,203,443
3,499,312
NET ASSETS:
  Beginning of period............     5,272,519
4,322,329       12,923,846      5,381,103       3,379,527
-
----------------------------------------------------------
----------------------------------------------------------
------------
  END OF PERIOD*.................    $6,129,272       $
7,273,865      $35,282,328     $6,973,901     $ 6,582,970
$3,499,312 -----------------------------------------------
----------------------------------------------------------
-----------------------
* Includes accumulated net
  investment income (loss) of: ..      $157,901
$27,085         $(32,492)      $273,526         $35,828
$6,657 ---------------------------------------------------
----------------------------------------------------------
-------------------
</TABLE>

(1) For the period from April 1, 1997 (commencement of
operations) to June 30,
    1997.

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       37

<PAGE>

----------------------------------------------------------
---------------------
  STATEMENTS OF CHANGES IN NET ASSETS      FOR THE PERIOD
ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>

LAZARD             MFS
                                                 TRAVELERS
INTERNATIONAL       EMERGING        FEDERATED
FEDERATED
                                                QUALITY
BOND STOCK            GROWTH         HIGH YIELD    STOCK

PORTFOLIO(1) PORTFOLIO(2)      PORTFOLIO(1)
PORTFOLIO(1) PORTFOLIO(1) --------------------------------
----------------------------------------------------------
-------------------------------------
<S>                                             <C>
<C>               <C>              <C>              <C>
OPERATIONS:
  Net investment income......................    $
97,521
$     7,084      $     33,395      $  154,634       $
17,122
  Net realized gain (loss)...................
31,374
(5,063)            2,110          16,573           29,045
  Increase in net unrealized appreciation
     (depreciation)..........................
     48,017
311,067           (19,224)        209,283          333,273
----------------------------------------------------------
----------------------------------------------------------
-----------
  INCREASE IN NET ASSETS FROM OPERATIONS.....
176,912
313,088            16,281         380,490          379,440
----------------------------------------------------------
----------------------------------------------------------
-----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income......................       (97,521)
--           (33,395)       (153,447)         (17,122)
Net realized gain..........................       (31,374)
--           (12,421)        (16,573)         (29,045)
 Capital....................................            --
--           (13,669)             --           (1,834)
----------------------------------------------------------
----------------------------------------------------------
-----------
  DECREASE IN NET ASSETS FROM DISTRIBUTIONS
     TO SHAREHOLDERS.........................
(128,895) --                              (59,485)
(170,020)         (48,001)
----------------------------------------------------------
----------------------------------------------------------
-----------
FUND SHARE TRANSACTIONS (NOTE 9):
  Net proceeds from sale of shares...........
5,094,655 4,009,241        12,907,565   5,000,613
3,000,087
  Net asset value of shares issued for
     reinvestment of dividends...............
129,847 --                                 59,485
170,020           48,001
 Cost of shares reacquired..................            --
--                --              --               --
----------------------------------------------------------
----------------------------------------------------------
-----------
  INCREASE IN NET ASSETS FROM FUND SHARE
     TRANSACTIONS............................
     5,224,502
4,009,241        12,967,050       5,170,633
3,048,088
----------------------------------------------------------
----------------------------------------------------------
-----------
INCREASE IN NET ASSETS.......................
5,272,519 4,322,329        12,923,846   5,381,103
3,379,527
NET ASSETS:
  Beginning of period........................            -
--                --              --               --
----------------------------------------------------------
----------------------------------------------------------
-----------
 END OF PERIOD*.............................    $5,272,519
$ 4,322,329      $ 12,923,846      $5,381,103
$3,379,527 -----------------------------------------------
----------------------------------------------------------
----------------------
* Includes undistributed net investment
  income of: ................................            -
$9,721                --          $1,187               --
----------------------------------------------------------
----------------------------------------------------------
-----------
</TABLE>

(1) For the period from August 30, 1996 (commencement of
operations) to December
    31, 1996.
(2) For the period from August 1, 1996 (commencement
of operations) to December
    31, 1996.

                       SEE NOTES TO FINANCIAL
STATEMENTS.

                                       38
<PAGE>
----------------------------------------------------------
---------------------
 NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

     1.  SIGNIFICANT ACCOUNTING POLICIES

     The Travelers Quality Bond, Lazard International
Stock, MFS Emerging
Growth, Federated High Yield, Federated Stock Portfolios
and Mid Cap Disciplined
Equity Fund ("Portfolio(s)") are separate investment
portfolios of The Travelers
Series Trust ("Trust"). The Trust is a Massachusetts
business trust registered
under the Investment Company Act of 1940, as amended, as a
diversified, open-end
management investment company and consists of these
portfolios and eight other
separate investment portfolios: U.S. Government
Securities, Social Awareness
Stock, Utilities, Large Cap, Equity Income, Zero Coupon
Bond Fund Portfolio
Series 1998, Zero Coupon Bond Fund Portfolio Series 2000
and Zero Coupon Bond
Fund Portfolio Series 2005 Portfolios. Shares of the Trust
are offered only to
insurance company separate accounts that fund certain
variable annuity and
variable life insurance contracts. The financial
statements and financial
highlights for the other portfolios are presented in
separate semi-annual
reports.

     The significant accounting policies consistently
followed by the Portfolios
are: (a) security transactions are accounted for on trade
date; (b) securities
traded on national securities markets are valued at the
closing price on such
markets or, if there were no sales during the day, at
current quoted bid price;
securities primarily traded on foreign exchanges are
generally valued at the
closing values of such securities on their respective
exchanges, except that
when a significant occurrence exists subsequent to the
time a value was so
established and it is likely to have significantly changed
the value, then the
fair value of those securities will be determined by
consideration of other
factors by or under the direction of the Board of
Trustees; securities traded in
the over-the-counter market are valued on the basis of the
bid price at the
close of business on each day; U.S. government agencies
and obligations are
valued at the mean between the last reported bid and ask
prices; (c) securities
maturing within 60 days are valued at cost plus accreted
discount and, or minus
amortized premium, which approximates value; (d)
securities that have a maturity
of 60 days or more are valued at prices based on market
quotations for
securities of similar type, yield and maturity; (e)
interest income, adjusted
for amortization of premium and accretion of discount, is
recorded on an accrual
basis and dividend income is recorded on the ex-dividend
date; foreign dividends
are recorded on the ex-dividend date or as soon as
practical after the Portfolio
determines the existence of a dividend declaration after
exercising reasonable
due diligence; (f) gains or losses on the sale of
securities are calculated by
using the specific identification method; (g) dividends
and distributions to
shareholders are recorded on the ex-dividend date; (h) the
accounting records of
the Portfolios are maintained in U.S. dollars. All assets
and liabilities
denominated in foreign currencies are translated into U.S.
dollars based on the
rate of exchange of such currencies against U.S. dollars
on the date of
valuation. Purchases and sales of securities, income and
expenses are translated
at the rate of exchange quoted on the respective date that
such transactions are
recorded. Differences between income or expense amounts
recorded and collected
or paid are adjusted when reported by the custodian bank;
(i) the Portfolios
intend to comply with the requirements of the Internal
Revenue Code of 1986, as
amended, pertaining to regulated investment companies and
to make distributions
of taxable income sufficient to relieve it from
substantially all Federal income
and excise taxes; and (j) estimates and assumptions are
required to be made
regarding assets, liabilities and changes in net assets
resulting from
operations when financial statements are prepared. Changes
in the economic
environment, financial markets and any other parameters
used in determining
these estimates could cause actual results to differ.

   In addition, the Lazard International Stock Portfolio
may enter into
forward exchange contracts in order to hedge against
foreign currency risk.
These contracts are marked to market daily, by recognizing
the difference
between the contract exchange rate and the current market
rate as an unrealized
gain or loss. Realized gains or losses are recognized when
the contracts are
settled.

     As of June 30, 1997, there were no open forward
foreign currency contracts.

     2.  INVESTMENT ADVISORY AGREEMENT AND OTHER
TRANSACTIONS
   Travelers Asset Management International Corporation
("TAMIC"), an indirect
wholly owned subsidiary of Travelers Group Inc., acts as
investment manager and
advisor to the Travelers Quality Bond ("TQB"), Lazard
International Stock
("LIS"), MFS Emerging Growth ("MEG"), Federated High Yield
("FHY"), Federated
Stock ("FSP") Portfolios and Mid Cap Disciplined Equity
Fund ("MCDE"). TQB, LIS,
MEG, FHY, FSP and MCDE each pays TAMIC an investment
management and advisory fee
calculated at the annual rate of 0.3233%, 0.35%, 0.375%,
0.25%, 0.25% and 0.70%,
respectively, of the average daily net assets. This fee is
calculated daily and
paid monthly.

    TAMIC has entered into sub-advisory agreements with
Lazard Freres Asset
Management ("Lazard"), Massachusetts Financial Services
("MFS"), Federated
Investment Counseling ("Federated") and the Travelers
Investment Management

                                       39
<PAGE>
----------------------------------------------------------
---------------------
 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

Co., Inc. ("TIMCO"). Pursuant to each sub-advisory
agreement, Lazard, MFS and
TIMCO are responsible for the day-to-day portfolio
operations and investment
decisions for LIS, MEG and MCDE, respectively. Federated
is responsible for the
day-to-day portfolio operations and investment decisions
for FHY and FSP. As a
result the Portfolios pay the following fees calculated at
an annual rate:

          - LIS pays Lazard 0.475% of the average daily
net assets

          - MEG pays MFS 0.375% of the average daily net
assets

          - FHY and FSP pay Federated 0.40% and 0.375%,
respectively, of their
            average daily net assets.

          - TAMIC pays TIMCO 0.35% of MCDE's average daily
net assets.
          These fees are calculated daily and paid
monthly.

    Travelers Insurance Company ("Travelers Insurance")
acts as administrator
to the Portfolios. The Portfolios pay Travelers Insurance
an administration fee
calculated at an annual rate of 0.06% of its average daily
net assets. Travelers
Insurance has entered into a sub-administrative services
agreement with Smith
Barney Mutual Funds Management Inc. ("SBMFM"), a
subsidiary of Smith Barney
Holdings Inc. ("SBH"). Travelers Insurance pays SBMFM, as
sub-administrator, a
fee calculated at an annual rate of 0.06% of the average
daily net assets of the
Portfolios. This fee is calculated daily and paid monthly.

     For the six months ended June 30, 1997, Travelers
Insurance waived all or
part of its fees for the Portfolios, and agreed to
reimburse TQB and MCDE for
expenses in the amounts of $1,239, and $2,960,
respectively.

     One Trustee and all officers of the Trust are
employees of Travelers Group
Inc., or its subsidiaries.

     3.  INVESTMENTS

    The aggregate costs of purchases and proceeds from
sales of investments
(including maturities, but excluding short-term
securities), during the six
months ended June 30, 1997 were as follows:

<TABLE>
<CAPTION>
                                 PORTFOLIO
PURCHASES        SALES -----------------------------------
----------------------------------------------------------
-----------
<S>
<C>            <C>
Travelers Quality Bond
Portfolio............................................   $
4,267,959    $ 3,753,531
Lazard International Stock
Portfolio........................................
2,082,348        960,627
MFS Emerging Growth
Portfolio...............................................
33,286,718     12,671,642
Federated High Yield
Portfolio..............................................
2,759,134      1,662,068
Federated Stock
Portfolio.................................................
 .. 5,065,565      3,351,924
Mid Cap Disciplined Equity
Fund.............................................
3,201,310        559,621 ---------------------------------
----------------------------------------------------------
-------------
</TABLE>

     At June 30, 1997, aggregate gross unrealized
appreciation and depreciation
of investments for Federal income tax purposes were
substantially as follows:

<TABLE>
<CAPTION>

GROSS          GROSS
UNREALIZED     UNREALIZED    NET UNREALIZED
                         PORTFOLIO
APPRECIATION   DEPRECIATION    APPRECIATION
----------------------------------------------------------
------------------------------------------------
<S>
<C>            <C>            <C>
Travelers Quality Bond
Portfolio............................ $   20,449  $
(18,361)       $    2,088
Lazard International Stock
Portfolio........................ 868,288       (111,616)
756,672
MFS Emerging Growth
Portfolio............................... 3,976,734
(409,652)      3,567,082
Federated High Yield
Portfolio.............................. 384,250   (84,561)
299,689
Federated Stock
Portfolio................................... 956,826
(25,097)                 931,729
Mid Cap Disciplined Equity
Fund............................. 357,411    (29,757)
327,654
----------------------------------------------------------
------------------------------------------------
</TABLE>

     4.  REPURCHASE AGREEMENTS

    The Portfolios purchase (and their custodians take
possession of) U.S.
government securities from banks and securities dealers
subject to agreements to
resell the securities to the sellers at a future date
(generally, the next
business day) at an agreed-upon higher repurchase price.
The Portfolios require
continual maintenance of the market value of the
collateral in amounts at least
equal to 102% of the repurchase price.

                                       40
<PAGE>
----------------------------------------------------------
---------------------
 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

     5.  FUTURES CONTRACTS

     The LIS, MEG and MCDE Portfolios may from time to
time enter into futures
contracts.

     Initial margin deposits made upon entering into
futures contracts are
recognized as assets. Securities equal to the initial
margin amount are
segregated by the custodian in the name of the broker.
Additional securities are
also segregated up to the current market value of the
futures contracts. During
the period the futures contract is open, changes in the
value of the contract
are recognized as unrealized gains or losses by "marking-
tomarket" on a daily
basis to reflect the market value of the contract at the
end of each day's
trading. Variation margin payments are received or made
and recognized as assets
due from or liabilities due to broker, depending upon
whether unrealized gains
or losses are incurred. When the contract is closed, the
Portfolio records a
realized gain or loss equal to the difference between the
proceeds from (or cost
of) the closing transactions and the Portfolio's basis in
the contract. The
Portfolios bear the market risk that arises from changes
in the value of the
financial instruments and securities indices (futures
contracts) and the credit
risk should a counterparty fail to perform under such
contracts.

     As of June 30, 1997, MCDE had the following open
futures contracts:

<TABLE>
<CAPTION>
                                          EXPIRATION
# OF         BASIS        MARKET      UNREALIZED
                                          MONTH/YEAR
CONTRACTS      VALUE        VALUE          LOSS
----------------------------------------------------------
--------------------------------------------------
<S>                                       <C>
<C>           <C>          <C>          <C>
FUTURES CONTRACTS TO BUY:
Mid Cap 400 Index.......................     9/97
3         $435,703     $434,400      $ (1,303)
----------------------------------------------------------
--------------------------------------------------
</TABLE>

     6.  OPTIONS CONTRACTS

     The LIS, MEG, FHY and MCDE Portfolios may from time
to time enter into
options contracts.

     Premiums paid when put or call options are purchased
by the Portfolios,
represent investments, which are "marked-to-market" daily.
When a purchased
option expires, the Portfolios will realize a loss in the
amount of the premium
paid. When the Portfolios enter into a closing sales
transaction, the Portfolios
will realize a gain or loss depending on whether the
proceeds from the closing
sales transactions are greater or less than the premium
paid for the option.
When the Portfolio exercises a put option, it will realize
a gain or loss from
the sale of the underlying security and the proceeds from
such sale will be
decreased by the premium originally paid. When the
Portfolios exercise a call
option, the cost of the security which the Portfolios
purchase upon exercise
will be increased by the premium originally paid.

     As of June 30, 1997, the Portfolios had no
open purchased call or put
option contracts.

     When Portfolios write a covered call or put option,
an amount equals to the
premium received by the Portfolios is recorded as a
liability, the value of
which is marked-to-market daily. When a written option
expires, the Portfolios
realize a gain equal to the amount of the premium
received. When the Portfolios
enter into a closing purchase transaction, the Portfolios
realize a gain (or
loss if the cost of the closing purchase transaction
exceeds the premium
received when the option was sold) without regard to any
unrealized gain or loss
on the underlying security, and the liability related to
such option is
eliminated. When a written call option is exercised, the
cost of the security
sold will be decreased by the premium originally received.
When a put option is
exercised, the amount of the premium originally received
will reduce the cost of
the security which the Portfolios purchased upon exercise.
When written index
options are exercised, settlement is made in cash. The
risk associated with
purchasing options is limited to the premium originally
paid. The Portfolios
enter into options for hedging purposes. The risk in
writing a covered call
option is that the Portfolios give up the opportunity to
participate in any
increase in the price of the underlying security beyond
the exercise price. The
risk in writing a put option is that the Portfolios are
exposed to the risk of a
loss if the market price of the underlying security
declines.

      During the six months ended June 30, 1997, the
Portfolios did not write any
options.

     7.  CAPITAL LOSS CARRYFORWARD

   At December 31, 1996, LIS had, for Federal income tax
purposes,
approximately $7,000 of capital loss carryforwards
available to offset future
realized capital gains through 2004. To the extent that
these carryforward
losses are used to offset capital gains, it is probable
that the gains so offset
will not be distributed.

                                       41
<PAGE>
----------------------------------------------------------
---------------------
 NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)

     8.  FOREIGN SECURITIES

     Investing in securities of foreign companies and
foreign governments
involves special risks and considerations not typically
associated with
investing in U.S. companies and the U.S. government. These
risks include
revaluation of currencies and future adverse political and
economic
developments. Moreover, securities of many foreign
companies and foreign
governments and their markets may be less liquid and their
prices more volatile
than those of securities of comparable U.S. companies and
the U.S. government.

     9.  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 each
Portfolio were as follows:

<TABLE>
<CAPTION>

SIX MONTHS ENDED        PERIOD ENDED

JUNE 30, 1997       DECEMBER 31, 1996 --------------------
----------------------------------------------------------
------------------------
<S>
<C>                  <C>
TRAVELERS QUALITY BOND PORTFOLIO(1):
Shares
sold.................................................
75,533               509,203
Shares issued on
reinvestment............................... --
12,856
Shares
redeemed.............................................
(4,593)                   --------------------------------
----------------------------------------------------------
-------------
Net
Increase................................................
70,940               522,059 -----------------------------
----------------------------------------------------------
---------------
LAZARD INTERNATIONAL STOCK PORTFOLIO(2):
Shares
sold.................................................
219,753               400,880
Shares issued on
reinvestment............................... 995
--
Shares
redeemed.............................................
(7,003)                   --------------------------------
----------------------------------------------------------
-------------
Net
Increase................................................
213,745               400,880 ----------------------------
----------------------------------------------------------
----------------
MFS EMERGING GROWTH PORTFOLIO(1):
Shares
sold.................................................
1,839,938             1,219,526
Shares issued on
reinvestment............................... --
5,638
Shares
redeemed.............................................
(40,906)                   --
----------------------------------------------------------
--------------------------------------------
Net
Increase................................................
1,799,032             1,225,164
----------------------------------------------------------
--------------------------------------------
FEDERATED HIGH YIELD PORTFOLIO(1):
Shares
sold.................................................
112,625               500,058
Shares issued on
reinvestment............................... --
16,317
Shares
redeemed.............................................
(2,053)                   --
----------------------------------------------------------
--------------------------------------------
Net
Increase................................................
110,572               516,375
----------------------------------------------------------
--------------------------------------------
FEDERATED STOCK PORTFOLIO(1):
Shares
sold.................................................
489,863               300,008
Shares issued on
reinvestment............................... --
4,324
Shares
redeemed.............................................
(298,804)                   --
----------------------------------------------------------
--------------------------------------------
Net
Increase................................................
191,059               304,332
----------------------------------------------------------
--------------------------------------------
MID CAP DISCIPLINED EQUITY FUND(3):
Shares
sold.................................................
308,155                    --
Shares issued on
reinvestment............................... --         --
Shares
redeemed............................................. --
--
----------------------------------------------------------
--------------------------------------------
Net
Increase................................................
308,155                    --
----------------------------------------------------------
--------------------------------------------
</TABLE>

(1) For the period from August 30, 1996 (commencement of
operations) to December
    31, 1996.

(2) For the period from August 1, 1996 (commencement
of operations) to December
    31, 1996.

(3) For the period from April 1, 1997 (commencement
of operations) to June 30,
    1997.


42
<PAGE>

----------------------------------------------------------
---------------------
 FINANCIAL HIGHLIGHTS

For a share of beneficial interest outstanding throughout
each period:

<TABLE>
<CAPTION>
TRAVELERS QUALITY BOND PORTFOLIO
1997(1)       1996(2) ------------------------------------
----------------------------------------------------------
---------
<S>
<C>           <C>
NET ASSET VALUE, BEGINNING OF
PERIOD.............................................  $
10.10 $   10.00
----------------------------------------------------------
---------------------------------------------
INCOME FROM OPERATIONS:
  Net investment
income(3).................................................
 .. ....     0.27          0.19
  Net realized and unrealized gain
(loss)........................................    (0.03)
0.16 -----------------------------------------------------
--------------------------------------------------
Total Income From
Operations................................................
 .. ...     0.24          0.35 ----------------------------
----------------------------------------------------------
-----------------
LESS DISTRIBUTIONS FROM:
  Net investment
income....................................................
 .. ....       --         (0.19)
  Net realized
gain......................................................
 .. ......       --         (0.06) ------------------------
----------------------------------------------------------
---------------------
Total
Distributions.............................................
 .. ...............       --         (0.25) ---------------
----------------------------------------------------------
------------------------------
NET ASSET VALUE, END OF
PERIOD...................................................
$ 10.34       $ 10.10 ------------------------------------
----------------------------------------------------------
---------
TOTAL
RETURN++..................................................
 .. ...............     2.38%         3.56% ---------------
----------------------------------------------------------
------------------------------
NET ASSETS, END OF PERIOD
(000'S)................................................  $
6,129       $ 5,273 --------------------------------------
----------------------------------------------------------
-------
RATIOS TO AVERAGE NET ASSETS+:

Expenses(3)...............................................
 .. ...................     0.75%      0.75%
  Net investment
income....................................................
 .. ....     5.84       5.62
----------------------------------------------------------
---------------------------------------------
PORTFOLIO TURNOVER
RATE......................................................
 .. ..                    76%              35%
----------------------------------------------------------
---------------------------------------------
</TABLE>

(1) For the six months ended June 30, 1997 (unaudited).

(2) For the period from August 30, 1996 (commencement of
operations) to December
    31, 1996.

(3) The Travelers has waived all of its fees for the
periods June 30, 1997 and
    December 31, 1996. In addition, The Travelers has
agreed to reimburse the
    Portfolio for $1,239 of the Portfolio's expenses for
the periods ended June
   30, 1997 and December 31, 1996. If such fees were not
waived or reimbursed,
  the per share decrease in net investment income and the
expense ratios would
    have been as follows:

<TABLE>
<CAPTION>
                    PER SHARE DECREASES
EXPENSE RATIOS WITHOUT
                   IN NET INVESTMENT INCOME         FEE
WAIVERS AND REIMBURSEMENT+
                   ------------------------         ------
-----------------------
<S>                <C>                              <C>
1997                        $ 0.02
1.18%
1996                          0.03
1.76
</TABLE>

 ++  Total return is not annualized, as it may not be
representative of the
     total return for the year.

 +   Annualized.

                                       43

<PAGE> ---------------------------------------------------
----------------------------
 FINANCIAL HIGHLIGHTS (CONTINUED)

For a share of beneficial interest outstanding throughout
each period:

<TABLE>
<CAPTION>
LAZARD INTERNATIONAL STOCK PORTFOLIO
1997(1)       1996(2) ------------------------------------
----------------------------------------------------------
---------
<S>
<C>           <C>
NET ASSET VALUE, BEGINNING OF
PERIOD.............................................  $
10.78 $            10.00
----------------------------------------------------------
---------------------------------------------
INCOME FROM OPERATIONS:
  Net investment
income(3).................................................
 .. ....     0.08          0.02
  Net realized and unrealized
gain...............................................
1.00 0.76 ------------------------------------------------
-------------------------------------------------------
Total Income From
Operations................................................
 .. ...     1.08          0.78 ----------------------------
----------------------------------------------------------
-----------------
LESS DISTRIBUTIONS FROM:
  Net investment
income....................................................
 .. ....    (0.03)           ------------------------------
----------------------------------------------------------
----------------
Total
Distributions.............................................
 .. ...............    (0.03)           -------------------
----------------------------------------------------------
---------------------------
NET ASSET VALUE, END OF
PERIOD...................................................
$ 11.83       $ 10.78 ------------------------------------
----------------------------------------------------------
---------
TOTAL
RETURN++..................................................
 .. ...............     9.74%         7.80% ---------------
----------------------------------------------------------
------------------------------
NET ASSETS, END OF PERIOD
(000'S)................................................  $
7,274       $ 4,322 --------------------------------------
----------------------------------------------------------
-------
RATIOS TO AVERAGE NET ASSETS+:

Expenses(3)...............................................
 .. ...................     1.23%         1.25%
  Net investment
income....................................................
 .. ....     1.77          0.42 ---------------------------
----------------------------------------------------------
------------------
PORTFOLIO TURNOVER
RATE......................................................
 .. ..       20%            9% ----------------------------
----------------------------------------------------------
-----------------
AVERAGE COMMISSIONS PER SHARE ON EQUITY
TRANSACTIONS.............................    $0.03
$0.01 ----------------------------------------------------
---------------------------------------------------
</TABLE>

(1) For the six months ended June 30, 1997 (unaudited).

(2) For the period from August 1, 1996 (commencement of
operations) to December
    31, 1996.
(3) The Travelers has waived part or all of its fees for
the periods ended June
     30, 1997 and December 31, 1996. In addition, The
Travelers has agreed to
  reimburse the Portfolio for $12,454 of the Portfolio's
expenses for the
   period ended December 31, 1996. If such fees were not
waived or reimbursed,
  the per share decrease in net investment income and the
expense ratios would
    have been as follows:

<TABLE>
<CAPTION>
                    PER SHARE DECREASES
EXPENSE RATIOS WITHOUT
                   IN NET INVESTMENT INCOME         FEE
WAIVERS AND REIMBURSEMENT+
                   ------------------------         ------
-----------------------
<S>                <C>                              <C>
1997                        $ 0.03
1.91%
1996                          0.07
2.87
</TABLE>

 ++  Total return is not annualized, as it may not be
representative of the
     total return for the year.

 +   Annualized.

                                       44

<PAGE> ---------------------------------------------------
----------------------------
 FINANCIAL HIGHLIGHTS (CONTINUED)

For a share of beneficial interest outstanding throughout
each period:

<TABLE>
<CAPTION>
                         MFS EMERGING GROWTH PORTFOLIO
1997(1)       1996(2) ------------------------------------
----------------------------------------------------------
-------
<S>
<C>           <C>
NET ASSET VALUE, BEGINNING OF
PERIOD...........................................   $10.55
$10.00 ---------------------------------------------------
--------------------------------------------------
INCOME FROM OPERATIONS:
  Net investment income
(loss)(3)..............................................
(0.01)         0.03
  Net realized and unrealized
gain.............................................     1.13
0.57 -----------------------------------------------------
------------------------------------------------
Total Income From
Operations................................................
 .. .     1.12          0.60
----------------------------------------------------------
-------------------------------------------
LESS DISTRIBUTIONS FROM:
  Net investment
income....................................................
 .. ..       --         (0.03)
  Net realized
gain......................................................
 .. ....       --         (0.01)

Capital...................................................
 .. .................       --         (0.01) -------------
----------------------------------------------------------
------------------------------
Total
Distributions.............................................
 .. .............       --         (0.05) -----------------
----------------------------------------------------------
--------------------------
NET ASSET VALUE, END OF
PERIOD.................................................
$11.67        $10.55 -------------------------------------
----------------------------------------------------------
------
TOTAL
RETURN++..................................................
 .. .............    10.62%         6.00% -----------------
----------------------------------------------------------
--------------------------
NET ASSETS, END OF PERIOD
(000'S)..............................................
$35,282       $12,924 ------------------------------------
----------------------------------------------------------
-------
RATIOS TO AVERAGE NET ASSETS+:

Expenses(3)...............................................
 .. .................     0.95%         0.95%
  Net investment
income....................................................
 .. ..    (0.28)         0.55 -----------------------------
----------------------------------------------------------
--------------
PORTFOLIO TURNOVER
RATE......................................................
 .. 60%           49% -------------------------------------
----------------------------------------------------------
------
AVERAGE COMMISSIONS PER SHARE ON EQUITY
TRANSACTIONS...........................    $0.03
$0.03
----------------------------------------------------------
-------------------------------------------
</TABLE>

(1) For the six months ended June 30, 1997 (unaudited).

(2) For the period from August 30, 1996 (commencement of
operations) to December
    31, 1996.
(3) The Travelers has waived part or all of its fees for
the periods ended June
     30, 1997 and December 31, 1996. In addition, The
Travelers has agreed to
  reimburse the Portfolio for $16,407 of the Portfolio's
expenses for the
   period ended December 31, 1996. If such fees were not
waived or reimbursed,
  the per share decrease in net investment income and the
expense ratios would
    have been as follows:

<TABLE>
<CAPTION>
                    PER SHARE DECREASES
EXPENSE RATIOS WITHOUT
                   IN NET INVESTMENT INCOME         FEE
WAIVERS AND REIMBURSEMENT+
                   ------------------------         ------
-----------------------
<S>                <C>                              <C>
1997                        $ 0.01
1.17%
1996                          0.06
2.09
</TABLE>

 ++  Total return is not annualized, as it may not be
representative of the
     total return for the year.

 +   Annualized.

                                       45

<PAGE> ---------------------------------------------------
----------------------------
 FINANCIAL HIGHLIGHTS (CONTINUED)

For a share of beneficial interest outstanding throughout
each period:

<TABLE>
<CAPTION>
                         FEDERATED HIGH YIELD PORTFOLIO
1997(1)       1996(2) ------------------------------------
----------------------------------------------------------
---------
<S>
<C>           <C>
NET ASSET VALUE, BEGINNING OF
PERIOD.............................................  $
10.42 $            10.00
----------------------------------------------------------
--
-------------------------------------------INCOME FROM
OPERATIONS:
  Net investment
income(3).................................................
 .. ....     0.43          0.31
  Net realized and unrealized
gain...............................................
0.27 0.46 ------------------------------------------------
-------------------------------------------------------
Total Income From
Operations................................................
 .. ...     0.70          0.77 ----------------------------
----------------------------------------------------------
-----------------
LESS DISTRIBUTIONS FROM:
  Net investment
income....................................................
 .. ....       --         (0.31)
  Net realized
gain......................................................
 .. ......       --         (0.04) ------------------------
----------------------------------------------------------
---------------------
Total
Distributions.............................................
 .. ...............       --         (0.35) ---------------
----------------------------------------------------------
------------------------------
NET ASSET VALUE, END OF
PERIOD...................................................
$ 11.12       $ 10.42 ------------------------------------
----------------------------------------------------------
---------
TOTAL
RETURN++..................................................
 .. ...............     6.72%         7.61% ---------------
----------------------------------------------------------
------------------------------
NET ASSETS, END OF PERIOD
(000'S)................................................  $
6,974       $ 5,381 --------------------------------------
----------------------------------------------------------
-------
RATIOS TO AVERAGE NET ASSETS+:

Expenses(3)...............................................
 .. ...................     0.95%         0.95%
  Net investment
income....................................................
 .. ....     9.33          8.78 ---------------------------
----------------------------------------------------------
------------------
PORTFOLIO TURNOVER
RATE......................................................
 .. ..       28%           23% ----------------------------
----------------------------------------------------------
-----------------
</TABLE>

(1) For the six months ended June 30, 1997 (unaudited).

(2) For the period from August 30, 1996 (commencement of
operations) to December
    31, 1996.
(3) The Travelers has waived part or all of its fees for
the periods ended June
     30, 1997 and December 31, 1996. In addition, The
Travelers has agreed to
   reimburse the Portfolio for $9,268 of the Portfolio's
expenses for the
   period ended December 31, 1996. If such fees were not
waived or reimbursed,
  the per share decrease in net investment income and the
expense ratios would
    have been as follows:
<TABLE>
<CAPTION>
                    PER SHARE DECREASES
EXPENSE RATIOS WITHOUT
                   IN NET INVESTMENT INCOME         FEE
WAIVERS AND REIMBURSEMENT+
                   ------------------------         ------
-----------------------
<S>                <C>                              <C>
1997                        $ 0.01
1.11%
1996                          0.04
2.19
</TABLE>

 ++  Total return is not annualized, as it may not be
representative of the
     total return for the year.

 +   Annualized.

                                       46

<PAGE> ---------------------------------------------------
----------------------------
 FINANCIAL HIGHLIGHTS (CONTINUED)

For a share of beneficial interest outstanding throughout
each period:

<TABLE>
<CAPTION>
                            FEDERATED STOCK PORTFOLIO
1997(1)       1996(2) ------------------------------------
----------------------------------------------------------
---------
<S>
<C>           <C>
NET ASSET VALUE, BEGINNING OF
PERIOD.............................................  $
11.10 $            10.00
----------------------------------------------------------
---------------------------------------------
INCOME FROM OPERATIONS:
  Net investment
income(3).................................................
 .. ....     0.07       0.06
  Net realized and unrealized
gain...............................................
2.12 1.20 ------------------------------------------------
-------------------------------------------------------
Total Income From
Operations................................................
 .. ...     2.19          1.26 ----------------------------
----------------------------------------------------------
-----------------
LESS DISTRIBUTIONS FROM:
  Net investment
income....................................................
 .. ....       --        (0.06)
  Net realized
gain......................................................
 .. ......       --        (0.09)

Capital...................................................
 .. ...................       --        (0.01) ------------
----------------------------------------------------------
---------------------------------
Total
Distributions.............................................
 .. ...............       --        (0.16) ----------------
----------------------------------------------------------
-----------------------------
NET ASSET VALUE, END OF
PERIOD...................................................
$ 13.29       $ 11.10 ------------------------------------
----------------------------------------------------------
---------
TOTAL
RETURN++..................................................
 .. ...............    19.73%        12.61% ---------------
----------------------------------------------------------
------------------------------
NET ASSETS, END OF PERIOD
(000'S)................................................  $
6,583       $ 3,380 --------------------------------------
----------------------------------------------------------
-------
RATIOS TO AVERAGE NET ASSETS+:

Expenses(3)...............................................
 .. ...................     0.96%         0.95%
  Net investment
income....................................................
 .. ....     1.17          1.55 ---------------------------
----------------------------------------------------------
------------------
PORTFOLIO TURNOVER
RATE......................................................
 .. ..       61%           11% ----------------------------
----------------------------------------------------------
-----------------
AVERAGE COMMISSIONS PER SHARE ON EQUITY
TRANSACTIONS.............................    $0.05
$0.05 ----------------------------------------------------
---------------------------------------------------
</TABLE>

(1) For the six months ended June 30, 1997 (unaudited).

(2) For the period from August 30, 1996 (commencement of
operations) to December
    31, 1996.

(3) The Travelers has waived part or all of its fees for
the periods ended June
     30, 1997 and December 31, 1996. In addition, The
Travelers has agreed to
  reimburse the Portfolio for $15,460 of the Portfolio's
expenses for the
   period ended December 31, 1996. If such fees were not
waived or reimbursed,
  the per share decrease in net investment income and the
expense ratios would
    have been as follows:
<TABLE>
<CAPTION>
                    PER SHARE DECREASES
EXPENSE RATIOS WITHOUT
                   IN NET INVESTMENT INCOME         FEE
WAIVERS AND REIMBURSEMENT+
                   ------------------------         ------
-----------------------
<S>                <C>                              <C>
1997                        $ 0.03
1.43%
1996                          0.08
3.03
</TABLE>

 ++  Total return is not annualized, as it may not be
representative of the
     total return for the year.

 +   Annualized.

                                       47

<PAGE> ---------------------------------------------------
----------------------------
 FINANCIAL HIGHLIGHTS (CONTINUED)

For a share of beneficial interest outstanding throughout
each period:

<TABLE>
<CAPTION>
                             MID CAP DISCIPLINED EQUITY
FUND 1997(1) ---------------------------------------------
----------------------------------------------------------
<S>
<C>
NET ASSET VALUE, BEGINNING OF
PERIOD.............................................
$ 10.00
----------------------------------------------------------
---------------------------------------------
INCOME FROM OPERATIONS:
  Net investment
income(2).................................................
 .. ....                        0.02
  Net realized and unrealized
gain...............................................
1.34 -----------------------------------------------------
--------------------------------------------------
Total Income From
Operations................................................
 ..
 ...                   1.36 -------------------------------
----------------------------------------------------------
--------------
LESS DISTRIBUTIONS FROM:
  Net investment
income....................................................
 .. ....                     ------------------------------
----------------------------------------------------------
----------------
Total
Distributions.............................................
 .. ...............                     -------------------
----------------------------------------------------------
---------------------------
NET ASSET VALUE, END OF
PERIOD...................................................
$ 11.36
----------------------------------------------------------
---------------------------------------------
TOTAL
RETURN++..................................................
 .. ...............                  13.60% ---------------
----------------------------------------------------------
------------------------------
NET ASSETS, END OF PERIOD
(000'S)................................................
$ 3,499
----------------------------------------------------------
---------------------------------------------
RATIOS TO AVERAGE NET ASSETS+:

Expenses(2)...............................................
 .. ...................                   0.95%
  Net investment
income....................................................
 .. ....                   0.83 ---------------------------
----------------------------------------------------------
------------------
PORTFOLIO TURNOVER
RATE......................................................
 .. ..                     19% ----------------------------
----------------------------------------------------------
-----------------
AVERAGE COMMISSIONS PER SHARE ON EQUITY
TRANSACTIONS.............................
$0.05 ----------------------------------------------------
---------------------------------------------------
</TABLE>

(1) For the period from April 1, 1997 (commencement of
operations) to June 30,
    1997 (unaudited).

(2) The Travelers has waived all of its fees for the
period ended June 30, 1997.
  In addition, The Travelers has agreed to reimburse the
Portfolio for $2,960
   of the Portfolio's expenses for the period ended June
30, 1997. If such fees
    were not waived or reimbursed, the per share decrease
in net investment
    income would have been $0.03 and the expense ratio
would have been 2.01%
    (annualized).

++  Total return is not annualized, as it may not be
representative of the total
    return for the year.

+   Annualized.

                                       48

<PAGE>

                              Investment Advisors
              TRAVELERS ASSET MANAGEMENT
              INTERNATIONAL
CORPORATION

                             Hartford, Connecticut

                            Independent Accountants

                               KPMG PEAT MARWICK LLP

                               New York, New York

                                   Custodians

                                 PNC BANK, N.A.
                         THE CHASE MANHATTAN BANK, N.A.

This report is prepared for the general information of
contract owners and is
not an offer of shares of The Travelers Series Trust:
Travelers Quality Bond,
Lazard International Stock, MFS Emerging Growth,
Federated High Yield, Federated
Stock Portfolios and Mid Cap Disciplined Equity Fund. 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 for the
underlying funds, which
collectively contain all pertinent information, including
the applicable sales
commissions.

Series Trust (Semi-Annual) (6-97) Printed in U.S.A.









THE TRAVELERS VARIABLE

PRODUCTS FUNDS

SEMI-ANNUAL REPORTS
June 30, 1997


               THE TRAVELERS SERIES TRUST:
                            
                ZERO COUPON BOND FUND PORTFOLIO SERIES
                1998 ZERO COUPON BOND FUND PORTFOLIO
                SERIES 2000 ZERO COUPON BOND FUND
                PORTFOLIO SERIES 2005
                

[TRAVELERSLIFE LOGO]

The Travelers Insurance Company
The Travelers Life and Annuity Company
One Tower Square
Hartford, CT  06183





















<PAGE>

TRAVELERS SERIES TRUST: ZERO COUPON BOND FUND PORTFOLIOS:
SERIES 1998, 2000,
2005 -----------------------------------------------------
--------------------------

DEAR SHAREHOLDER:

We are pleased to provide the semi-annual report for The
Travelers Series Trust:
Zero Coupon Bond Fund Portfolios: Series 1998, 2000 and
2005 ("Portfolio(s)")
for the period ended June 30, 1997. In this letter, we
briefly discuss general
economic and market conditions. In addition, more detailed
comparisons showing
the growth of a hypothetical $10,000 invested in each
Portfolio since inception
date can also be found in this report. A more detailed
summary of performance
and current holdings for each Portfolio can be found in
the appropriate sections
that follow.

ECONOMIC REVIEW AND OUTLOOK

The key economic news in the second quarter of 1997 was a
distinct slowdown in
economic growth and surprisingly low inflation. Both stock
and bond market
investors drew relief from these developments as the
prospects of further
Federal Reserve Board ("Fed") tightening receded. Interest
rates fell from above
7.0% to 6.8% by the end of the second quarter and the
stock market embarked on a
furious rally that saw prices rise by almost 20%.

The second quarter of 1997 began with a singular focus on
the future direction
of Fed action. After an increase of 25 basis points in the
federal-funds rate in
late March on the heels of strong economic growth in the
first quarter, it was
considered quite likely that rates would rise during the
second quarter. (The
federal-funds rate is the interest rate banks charge each
other for overnight
loans and an indicator of the direction of interest
rates.) The prospects of
higher rates created turmoil within the U.S. capital
markets and stocks, in
particular, were hit hard in early April. Economic data
released in early May
provided mounting evidence of a slower economy and low
inflation. Retail sales
for April were soft and producer prices showed a dramatic
decline of 0.4%.

The inflation trend in recent months has been nothing
short of remarkable,
especially in light of the low unemployment rate and high
capacity utilization
rates in the U.S. economy. The consumer price deflator,
which is considered to
be a better inflation measure than the consumer price
index, fell to a 30-year
low in May at an annual rate of 1.6%. Gains in average
hourly wages, a closely
monitored signal for wage inflation, have slowed from 4.1%
to 3.5%. Commodity
price indexes are declining, oil prices are falling and
the price of gold is now
below $320, its lowest level in five years. In other
words, inflation just does
not appear to be an issue at this point.

The biggest contributing factor in the demise of inflation
appears to be the
significant gains in productivity achieved over the last
few years. It is widely
acknowledged that conventional measures of productivity
gains are being
understated and, under that scenario, lower-than-expected
inflation may be
explained by higher-than-expected productivity gains.
Several other factors also
suggest that the current disinflationary trend is likely
to be both secular and
global in nature. These include a high level of
disinflation in the growing
technology sector, significant government downsizing and
severe global
competition.

The second quarter rally in the bond market suggests that
investors have reduced
their inflation expectations and, consequently, the
likelihood of further Fed
tightening. In our view, the biggest risk to the presently
benign investment
climate looms on the economic landscape. A resurgence of
economic growth in the
second half of the year may prompt the Fed to act yet
again on a preemptive
basis to choke off inflationary pressures. Strong retail
sales may well hold the
key to a reacceleration in third quarter economic growth.
The boost in consumer
spending could come from any one of several sources:
increased refinancing
activity, the wealth effect of a stronger stock market,
record levels of
consumer confidence and the recent strong growth in real
disposable personal
income.

FIXED INCOME COMMENTARY

The Lehman Intermediate Government/Corporate Index
returned 2.79% for the second
quarter of 1997 and 6.95% for the one year ended June 30,
1997. Over the past
twelve months, the Lehman Long Government/Corporate Index
generated a total
return of 8.80%.

There are no visible signs on the horizon that inflation
is likely to flare up
in the near future. The employment cost index and hourly
wage gains are likely
to be the most closely monitored gauges of expected
inflation. We believe the
biggest risk on the interest rate front lies in stronger
than-expected economy
in the second half. In fact, the Fed may be inclined to
respond to strong
economic data even before it begins to affect inflation
measures.

Within the fixed income markets, spreads remain tight and
there has been a high
level of complacency. Within the corporate market, spreads
remain compressed
between different quality levels and "riskier" borrowers
have access to an
abundance of

                                        1
<PAGE>
capital. This condition is unlikely to change in the near
term as good economic
growth has reduced the stress on weaker credits.

Mortgage-backed security spreads have tightened as market
volatility has been
low and prepayments have been within their predicted
range. Mortgage-backed
securities outperformed investment grade corporates as
spreads narrowed and
volatility remained low. Callable securities performed
better than noncallable
securities due to their higher yields and the tight range
of interest rates.
Within the corporate market, the lowest quality areas
continued to do best.
Corporate spreads continued to tighten despite several
large issuances including
a record $4.3 billion raised by Norfolk Southern to
finance their acquisition of
part of Conrail. Municipal bonds underperformed vs.
Treasuries as ratios widened
due to increased issuance.

Corporate spreads are likely to take their cues from the
high yield bond market
and equity market. As long as these remain well bid for,
high-quality spreads
should remain firm. Historically, October has been a month
when some spread
widening has occurred, so we would not be surprised to see
some modest pressure
as the fourth quarter 1997 begins.

Emerging markets continue to attract new buyers from both
the high yield bond
and the high grade bond spectrum of buyers. Political
turmoil or a run on some
of the local currencies may rattle the global fixed-income
markets, but as
worldwide economic growth and access to capital remains
strong, the likelihood
of a "tequila effect" repeat is low.

ZERO COUPON BOND FUND PORTFOLIO PERFORMANCE

The three Zero Coupon Bond Fund Portfolios commenced
operations on October 11,
1995. These Portfolios were set up as an option for the
Travelers Single Premium
Variable Universal Life Product offered by The Travelers
Insurance Company and
The Travelers Life and Annuity Company. The three
Portfolios have target
maturity dates of December 1998, December 2000 and
December 2005, respectively.
The Portfolios invest primarily in U.S. Treasury zero
coupon bonds which provide
a "locked-in" rate of return. Zero coupons, sometimes
referred to as "strips,"
are long-term U.S. Treasury bonds that have been
"stripped" of their interest
coupons. Instead of regular interest payments, these
securities offer return
based on the difference between the purchase price and the
value at maturity, or
par value. The yield for a zero coupon is the difference
in price over the time
until the bond matures.

To enhance performance, we have added corporate zero
coupons and other spread
assets such as senior notes. Because spread assets are
difficult to find, we
vary the maturities within a year or two range to increase
the universe of
spread assets. We balance the Portfolio's maturities to
match the interest rate
risk of a zero coupon with the Portfolios' target maturity
date.

ZERO COUPON BOND FUND PORTFOLIO SERIES 1998

The Zero Coupon Bond Fund Portfolio Series 1998 had a
total return of 2.50% for
the six months ended June 30, 1997 versus the Merrill
Lynch Zero Coupon - 2 year
total return of 2.81% for the same period.

ZERO COUPON BOND FUND PORTFOLIO SERIES 2000

The Zero Coupon Bond Fund Portfolio Series 2000 had a
total return of 2.31% for
the six months ended June 30, 1997 versus the Merrill
Lynch Zero Coupon - 5 year
total return of 2.59% for the same period.

ZERO COUPON BOND FUND PORTFOLIO SERIES 2005

The Zero Coupon Bond Fund Portfolio Series 2005 had a
total return of 2.11% for
the six months ended June 30, 1997 versus the Merrill
Lynch Zero Coupon - 10
year total return of 2.31% for the same period.

In closing, thank you for investing in The Travelers
Series Trust: Zero Coupon
Bond Fund Portfolios. We look forward to serving your
investment needs.

Sincerely,

/S/ HEATH B. MCLENDON
Heath B. McLendon
Chairman

July 22, 1997

                                        2

<PAGE> ---------------------------------------------------
----------------------------
 PERFORMANCE COMPARISON -- ZERO COUPON BOND FUND PORTFOLIO
SERIES 1998
(UNAUDITED)

<TABLE>
<CAPTION>
              AVERAGE ANNUAL RETURNS ---------------------
   ------------------------
   <S>                                 <C>
   Six Months Ended 6/30/97+             2.50%
   Year Ended 6/30/97
6.35
   10/11/95* through 6/30/97
5.26
   *Commencement of operations
   +Total Return is not annualized, as it
    may not be representative of the total
    return for the year.
</TABLE>

This chart assumes an initial investment of $10,000 made
on October
11, 1995, assuming reinvestment of dividends, through June
30,
1997. The Merrill Lynch Zero Coupon - 2 year is comprised
of U.S.
government stripped securities which have a maturity not
greater
than two years.

<TABLE>
<CAPTION>
                               Zero Coupon
                                Bond Fund      Merrill
    Lynch Measurement Period    Portfolio      Zero Coupon
    -
   (Fiscal Year Covered)       Series 1998         2 year
<S>                               <C>              <C>
10/11/95                               10,000
10,000
12/31/95                               10,211
10,299
12/31/96                               10,655
10,738
6/30/97                                10,922
11,039
</TABLE>

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

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.  Average
annual total returns are historical in nature and measure
net investment income
and capital gain or loss from portfolio investments
assuming reinvestment of
dividends. The returns do not reflect expenses associated
with the subaccount
such as administrative fees, account charges and surrender
charges which, if
reflected, would reduce the performance shown.

----------------------------------------------------------
---------------------
 PERFORMANCE COMPARISON -- ZERO COUPON BOND FUND PORTFOLIO
SERIES 2000
(UNAUDITED)

<TABLE>
<CAPTION>
              AVERAGE ANNUAL RETURNS ---------------------
   ------------------------
   <S>                                 <C>
   Six Months Ended 6/30/97+                2.31%
   Year Ended 6/30/97
6.91
   10/11/95* through 6/30/97
4.81
   *Commencement of operations
   +Total Return is not annualized, as it may
    not be representative of the total return
    for the year.
</TABLE>

This chart assumes an initial investment of $10,000 made
on October
11, 1995, assuming reinvestment of dividends, through June
30,
1997. The Merrill Lynch Zero Coupon - 5 year is comprised
of U.S.
government stripped securities which have a maturity not
greater
than five years.

<TABLE>
<CAPTION>
                               Zero Coupon
                                Bond Fund      Merrill
    Lynch Measurement Period    Portfolio      Zero Coupon
    -
   (Fiscal Year Covered)       Series 2000         5 year
<S>                           <C>              <C>
10/11/95                               10,000
10,000
12/31/95                               10,252
10,405
12/31/96                               10,596
10,648
6/30/97                                10,841
10,924
</TABLE>

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

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.

Average annual total returns are historical in nature and
measure net investment
income and capital gain or loss from portfolio investments
assuming reinvestment
of dividends. The returns do not reflect expenses
associated with the subaccount
such as administrative fees, account charges and surrender
charges which, if
reflected, would reduce the performance shown.

                                        3

<PAGE>

----------------------------------------------------------
---------------------
 PERFORMANCE COMPARISON -- ZERO COUPON BOND FUND PORTFOLIO
SERIES 2005
(UNAUDITED)

<TABLE>
<CAPTION>
              AVERAGE ANNUAL RETURNS ---------------------
   ------------------------
   <S>                                 <C>
   Six Months Ended 6/30/97+                2.11%
   Year Ended 6/30/97
9.21
   10/11/95* through 6/30/97
4.59
   *Commencement of operations
   +Total Return is not annualized, as it may
    not be representative of the total return
    for the year.
</TABLE>

This chart assumes an initial investment of $10,000 made
on
October
11, 1995, assuming reinvestment of dividends, through June
30,
1997. The Merrill Lynch Zero Coupon - 10 year is comprised
of U.S.
government stripped securities which have a maturity not
greater
than ten years.

<TABLE>
<CAPTION>
                               Zero Coupon
                                Bond Fund      Merrill
    Lynch Measurement Period    Portfolio      Zero Coupon
    -
   (Fiscal Year Covered)       Series 2005        10 year
<S>                           <C>              <C>
10/11/95                               10,000
10,000
12/31/95                               10,480
10,587
12/31/96                               10,580
10,584
6/30/97                                10,802
10,829
</TABLE>

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

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.

Average annual total returns are historical in nature and
measure net investment
income and capital gains or losses from portfolio
investments assuming
reinvestment of dividends. The returns do not reflect
expenses associated with
the subaccount such as administrative fees, account
charges and surrender
charges which, if reflected, would reduce the performance
shown.

                                        4

<PAGE>

----------------------------------------------------------
---------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED)
JUNE 30, 1997

                  ZERO COUPON BOND FUND PORTFOLIO SERIES
1998

<TABLE>
<CAPTION>
  FACE
 AMOUNT     RATING
SECURITY                                     VALUE
----------------------------------------------------------
-----------------------------------------------
<C>         <S>       <C>
<C>
U.S. TREASURY OBLIGATION -- 56.8%
$810,000     AAA      U.S. Treasury Notes, Stripped
Principal Payment Only due 11/15/98
                      (Cost -
$748,788).................................................
 .. ..   $  747,573 ---------------------------------------
----------------------------------------------------------
-------COLLATERALIZED MORTGAGE OBLIGATION -- 3.4%
  48,964     AAA      Federal Home Loan Mortgage Corp.,
zero
coupon bond to yield 6.727% due
                        12/15/99 (Cost -
$44,968)...........................................
44,650 ---------------------------------------------------
------------------------------------------------------
CORPORATE BONDS AND NOTES -- 15.3% -----------------------
----------------------------------------------------------
------------------------
AUTOMOBILE -- 3.7%
  48,000     A        General Motors Acceptance Corp.,
Notes, 7.500% due 5/26/00.............       49,140 ------
----------------------------------------------------------
-----------------------------------------
BANKING -- 3.9%
  60,000     AAA      Deutsche Bank Financial, zero coupon
medium term note to yield 6.401%
                        due
2/1/00....................................................
 .. .....       50,925 ------------------------------------
----------------------------------------------------------
-----------
FINANCE -- 7.7%
  60,000     A*       Avco Financial Services, Inc., zero
coupon structure note to yield
                        6.571% due
12/16/98..................................................
54,675
  50,000     A        Sears Overseas Financial NV, zero
coupon bond to yield 5.945% due
7/12/98...................................................
 .. .........    46,971
----------------------------------------------------------
-----------------------------------------------

101,646 --------------------------------------------------
-------------------------------------------------------
                      TOTAL CORPORATE BONDS AND NOTES
(Cost -- $202,738).....................      201,711 -----
----------------------------------------------------------
------------------------------------------
FOREIGN CORPORATE BONDS AND NOTES -- 16.1% ---------------
----------------------------------------------------------
--------------------------------
BANKING -- 7.8%
  60,000     A2*      Chemical New York NV Corp., zero
coupon bond to yield 7.085% due
2/16/99...................................................
 .. .........    50,287
  60,000     NR       International Bank of Reconstruction
&
Development, zero coupon bond to
                        yield 7.042% due
4/16/99.............................................
52,331 ---------------------------------------------------
------------------------------------------------------
102,618 --------------------------------------------------
-------------------------------------------------------
FOOD -- 4.2%
  62,000     A1*      PepsiCo, Inc., zero coupon note to
yield 6.720% due 5/25/99............       55,025
----------------------------------------------------------
-----------------------------------------------
INSURANCE -- 4.1%
  60,000     AA       New England Life, zero coupon bond
to
yield 7.001% due 2/1/99..........       54,413
----------------------------------------------------------
-----------------------------------------------
                      TOTAL FOREIGN CORPORATE BONDS AND
NOTES (Cost -- $216,890).............      212,056
----------------------------------------------------------
-----------------------------------------------
REPURCHASE AGREEMENT -- 8.4%
111,000              Citibank, 5.270% due 7/1/97; Proceeds
at maturity -- $111,016;
                      (Fully collateralized by U.S.
Treasury Note, 5.375% due 5/31/98;
                      Market value -- $115,144) (Cost -
$111,000)...........................      111,000
----------------------------------------------------------
-----------------------------------------------
                      TOTAL INVESTMENTS -- 100% (Cost -
$1,324,384**).......................   $1,316,990 --------
----------------------------------------------------------
---------------------------------------
</TABLE>

** Aggregate cost for Federal income tax purposes is

substantially the same.

   See page 8 for definition of ratings.

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                        5

<PAGE> ---------------------------------------------------
----------------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                  ZERO COUPON BOND FUND PORTFOLIO SERIES
2000

<TABLE>
<CAPTION>
  FACE
 AMOUNT     RATING
SECURITY                                     VALUE
----------------------------------------------------------
-----------------------------------------------
<C>         <S>       <C>
<C>
U.S. TREASURY OBLIGATIONS -- 58.1%
$558,000     AAA      U.S. Treasury Notes, Stripped
Principal Payment Only due 11/15/00......   $  453,118
 167,000     AAA      U.S. Treasury Notes, Stripped
Principal Payment Only due 5/15/01.......      131,292
 300,000     AAA      U.S. Treasury Notes, Stripped
Principal Payment Only due 8/15/01.......      232,032
  74,000     AAA      U.S. Treasury Notes, Stripped
Principal Payment Only due 11/15/02......       52,891
  47,000     AAA      U.S. Treasury Notes, Stripped
Principal Payment Only due 2/15/03.......       32,945 ---
----------------------------------------------------------
--------------------------------------------
                      TOTAL U.S. TREASURY OBLIGATIONS
(Cost -- $907,596).....................      902,278 -----
----------------------------------------------------------
-----------------------------------------COLLATERALIZED
MORTGAGE OBLIGATION -- 3.3%
  62,000     AAA      Federal Home Loan Mortgage Corp.,
zero
coupon bond to yield 7.433% due
                        9/15/18 (Cost -
$51,818)............................................
51,305 ---------------------------------------------------
------------------------------------------------------
CORPORATE BONDS AND NOTES -- 18.2% -----------------------
----------------------------------------------------------
------------------------
FINANCIAL SERVICES -- 6.6%
  65,000     AAA      Exxon Capital Ventures, Inc., zero
coupon guaranteed note to yield
                        6.538% due
2/15/01...................................................
51,431
  60,000     AAA      Deutsche Bank Financial, Inc., zero
coupon medium term note to yield
                        6.546% due
2/1/00....................................................
50,925 ---------------------------------------------------
------------------------------------------------------

102,356 --------------------------------------------------
-------------------------------------------------------
FOODS -- 3.3%
  70,000     AA-      Archer-Daniels Midland Co., zero
coupon bond to yield 6.505% due
5/1/02....................................................
 .. .........    50,662
----------------------------------------------------------
-----------------------------------------------
HOSPITAL SUPPLIES & SERVICES -- 3.4%
  65,000     A-       Hospital Corp. of America, zero
coupon
bond to yield 7.306% due

6/1/00....................................................
 .. .........    52,325
----------------------------------------------------------
----------------------------------------------
TELECOMMUNICATIONS -- 4.9%
  70,000     BBB-     Tele-Communications Inc., amortizing
note, 9.650% due 10/1/03..........       75,687 ----------
----------------------------------------------------------
-------------------------------------
                      TOTAL CORPORATE BONDS AND NOTES
(Cost -- $283,242).....................      281,030 -----
----------------------------------------------------------
------------------------------------------
FOREIGN BONDS AND NOTES -- 20.4% -------------------------
----------------------------------------------------------
----------------------
BANKING -- 6.6%
  60,000     A1*      Chemical New York NV Corp., zero
coupon bond to yield 7.085% due
2/16/99...................................................
 .. .........       50,288
  60,000     NR       International Bank of Reconstruction
&
Development, zero coupon bond to
                        yield 7.042% due
4/16/99.............................................
52,331 ---------------------------------------------------
------------------------------------------------------
102,619 --------------------------------------------------
-------------------------------------------------------
FINANCIAL SERVICES -- 3.4%
  65,000     A+       American Express Co., zero coupon
bond
to yield 6.736% due 12/12/00....       52,244 ------------
----------------------------------------------------------
-----------------------------------
FOODS -- 3.5%
  62,000     A1*      PepsiCo, Inc., zero coupon note to
yield 6.720% due 5/25/99............       55,025
----------------------------------------------------------
-----------------------------------------------
FOREIGN GOVERNMENT -- 3.4%
  64,000     AA+      Kingdom of Sweden, zero coupon note
to
yield 6.210% due 7/31/00........       52,760 ------------
----------------------------------------------------------
-----------------------------------
INSURANCE -- 3.5%
  60,000     AA       New England Life, zero coupon bond
to
yield 7.001% due 2/1/99..........       54,413
----------------------------------------------------------
-----------------------------------------------
                      TOTAL FOREIGN BONDS AND NOTES (Cost
-$323,186).......................      317,061 -----------
----------------------------------------------------------
------------------------------------
                      TOTAL INVESTMENTS -- 100% (Cost -
$1,565,842**).......................   $1,551,674 --------
----------------------------------------------------------
---------------------------------------
</TABLE>

** Aggregate cost for Federal income tax purposes is

substantially the same.

   See page 8 for definition of ratings.

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                        6

<PAGE> ---------------------------------------------------
---------
--------------------
 SCHEDULES OF INVESTMENTS (UNAUDITED) (CONTINUED)
JUNE 30, 1997

                  ZERO COUPON BOND FUND PORTFOLIO SERIES
2005
<TABLE>
<CAPTION>
   FACE
  AMOUNT      RATING
SECURITY                                    VALUE
----------------------------------------------------------
------------------------------------------------
<C>           <S>       <C>
<C>
U.S. TREASURY OBLIGATIONS -- 84.1%
$1,090,000     AAA      U.S. Treasury Note, Stripped
Principal Payment Only due 11/15/05......   $  632,876
 1,435,000     AAA      U.S. Treasury Note, Stripped
Principal Payment Only due 2/15/06.......      817,706
   379,000     AAA      U.S. Treasury Note, Stripped
Principal Payment Only due 2/15/09.......      174,420 ---
----------------------------------------------------------
---------------------------------------------
                        TOTAL U.S. TREASURY OBLIGATIONS
(Cost -- $1,620,404)..................    1,625,002 ------
----------------------------------------------------------
------------------------------------------
CORPORATE BONDS AND NOTES -- 5.3% ------------------------
----------------------------------------------------------
------------------------
FINANCE -- 2.7%
    80,000     A+       Grand Metro Investment, zero
coupon
note to yield 6.967% due 1/6/04...       51,300
----------------------------------------------------------
------------------------------------------------
FOODS -- 2.6%
    70,000     AA-      Archer-Daniels Midland Co., zero
coupon bond to yield 6.505% due

5/1/02....................................................
 .. ........    50,662
----------------------------------------------------------
------------------------------------------------
                        TOTAL CORPORATE BONDS AND NOTES
(Cost -- $103,555)....................      101,962 ------
----------------------------------------------------------
------------------------------------------
FOREIGN BONDS AND NOTES -- 10.6% -------------------------
----------------------------------------------------------
-----------------------
BANKING -- 2.8%
    75,000     A1*      Chemical New York NV Corp., zero
coupon bond to yield 7.390% due

2/16/02...................................................
 .. ........    55,031
----------------------------------------------------------
------------------------------------------------
FINANCE -- 2.6%
    80,000     AAA      Exxon Capital Corp., zero coupon
note to yield 7.057% due 11/15/04....       50,200
----------------------------------------------------------
------------------------------------------------
FOODS -- 2.6%
    80,000     A+       General Mills Inc., zero coupon
bond
to yield 7.322% due 8/15/04......       49,300
----------------------------------------------------------
------------------------------------------------
INSURANCE -- 2.6%
    80,000     AAA      American International Group, zero
coupon bond to yield 7.103% due

8/15/04...................................................
 .. ........                49,700
----------------------------------------------------------
------------------------------------------------
                        TOTAL FOREIGN BONDS AND NOTES
(Cost -- $206,182)......................     204,231
----------------------------------------------------------
------------------------------------------------
                        TOTAL INVESTMENTS -- 100% (Cost -
$1,930,141**)......................   $1,931,195 ---------
----------------------------------------------------------
---------------------------------------
</TABLE>

** Aggregate cost for Federal income tax purposes is

substantially the same.

   See page 8 for definition of ratings.

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                        7

<PAGE> ---------------------------------------------------
----------------------------
 BOND RATINGS

All ratings are by Standard & Poor's Ratings Service
("Standard & Poor's),
except those identified by an asterisk (*) are rated by
Moody's Investors
Service, Inc. ("Moody's"). The definitions of the
applicable rating symbols are
set forth below:

Standard & Poor's -- Ratings from "AA" to "BBB" may be
modified by the addition
of a plus (+) or minus (-) sign to show relative
standings within the major
rating categories.

<TABLE>
<S>   <C>  <C>
AAA   --   Bonds rated "AAA" have the highest rating
assigned by Standard & Poor's. Capacity to pay
           interest and repay principal are extremely
strong.
AA    --   Bonds rated "AA" have a very strong capacity to
pay interest and repay principal and differ
           from the highest rated issue only in a small
degree.
A     --   Bonds rated "A" have a strong capacity to pay
interest and repay principal although they are
           somewhat more susceptible to the adverse
effects of changes in circumstances and economic
           conditions than bonds in higher rated
categories.
BBB   --   Bonds rated "BBB" are regarded as having an
adequate capacity to pay interest and repay
           principal. Whereas they normally exhibit
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 bonds in this
category than in higher rated categories.

Moody's -- Numerical modifiers 1, 2, and 3 may be applied
to each generic rating from "Aa" to "Baa",
where 1 is the highest and 3 the lowest rating within its
generic category.

Aaa   --   Bonds that 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 as can be visualized are most
           unlikely to impair the fundamentally strong
position of such issues.
Aa    --   Bonds that 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 fluctuation of protective
elements may be of greater amplitude or there may be
           other elements present which make the long-term
risks appear somewhat larger than in Aaa
           securities.
A     --   Bonds that 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 some time in the future.
Baa   --   Bonds that 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.

NR    --   Indicates that the bond is not rated by
Standard
& Poor's or Moody's.
</TABLE>

                                        8
<PAGE>
----------------------------------------------------------
---------------------
 STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 1997

<TABLE>
<CAPTION>

ZERO COUPON    ZERO COUPON    ZERO

COUPON

BOND FUND      BOND FUND      BOND FUND

PORTFOLIO      PORTFOLIO      PORTFOLIO

SERIES 1998    SERIES 2000    SERIES
2005
----------------------------------------------------------
--------------------------------------------------
<S>
<C>            <C>            <C>
ASSETS:
 Investments, at value (Cost -- $1,324,384, $1,565,842 and
     $1,930,141,
respectively)....................................
$1,316,990     $1,551,674     $1,931,195
Cash......................................................
 .. ....         827         69,211         16,864
  Interest
receivable.............................................
911          1,680             --
  Receivable from
affiliate.......................................
46,767 46,660  45,808
----------------------------------------------------------
--------------------------------------------------
  TOTAL
ASSETS....................................................
1,365,495      1,669,225      1,993,867
----------------------------------------------------------
-------------------------------------------------
LIABILITIES:
  Accrued
expenses................................................
19,401         18,857         16,802
----------------------------------------------------------
--------------------------------------------------
  TOTAL
LIABILITIES...............................................
19,401         18,857         16,802
----------------------------------------------------------
--------------------------------------------------
TOTAL NET
ASSETS..................................................
$1,346,094     $1,650,368     $1,977,065
----------------------------------------------------------
--------------------------------------------------
NET ASSETS:
  Paid-in
capital.................................................
$1,317,951     $1,622,259     $1,922,712
  Undistributed net investment
income.............................      36,483 47,987
63,806
  Accumulated net realized loss on security
transactions..........        (946)        (5,710)
(10,507)
  Net unrealized appreciation (depreciation) of
investments.......      (7,394)       (14,168)
1,054 ----------------------------------------------------
--------------------------------------------------------
TOTAL NET
ASSETS..................................................
$1,346,094     $1,650,368     $1,977,065 -----------------
----------------------------------------------------------
---------------------------------
SHARES
OUTSTANDING...............................................
 . 131,441        161,880        194,208 ------------------
----------------------------------------------------------
--------------------------------
NET ASSET VALUE, PER
SHARE........................................      $10.24
$10.19         $10.18 ------------------------------------
----------------------------------------------------------
--------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                        9

<PAGE> ---------------------------------------------------
----------------------------
   STATEMENTS OF OPERATIONS (UNAUDITED)     FOR THE SIX
                          MONTHS
ENDED JUNE 30, 1997

<TABLE>
<CAPTION>

ZERO COUPON     ZERO COUPON     ZERO COUPON

BOND FUND       BOND FUND       BOND FUND

PORTFOLIO       PORTFOLIO       PORTFOLIO

SERIES 1998     SERIES 2000     SERIES
2005
----------------------------------------------------------
--------------------------------------------------
<S>
<C>             <C>             <C>
INVESTMENT INCOME:

Interest..................................................
 .. ..   $  37,473       $  49,174       $  63,954 --------
----------------------------------------------------------
-----------------------------------------EXPENSES:
  Audit and
legal...............................................
10,000          10,000          10,000
  Shareholder and system servicing
fees.........................       3,750
3,750
3,750
  Trustees'
fees................................................
1,000           1,000           1,000
  Investment advisory fees (Note
2).............................         660
791
983

Custody...................................................
 .. ..         100                   100         100

Other.....................................................
 .. ..       1,000                 1,000       1,000
----------------------------------------------------------
--------------------------------------------------
  TOTAL
EXPENSES................................................
16,510          16,641          16,833
 Less: Investment advisory fee and expense reimbursements
(Note

2)........................................................
 . (15,520)      (15,454)        (15,359)
----------------------------------------------------------
--------------------------------------------------
  NET
EXPENSES..................................................
990           1,187           1,474 ----------------------
----------------------------------------------------------
----------------------------
NET INVESTMENT
INCOME...........................................
36,483          47,987          62,480
----------------------------------------------------------
--------------------------------------------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS (NOTE 3):
  Net Realized Loss From Security Transactions (excluding
  short-term securities):
     Proceeds from
sales........................................     305,684
463,791         178,552
     Cost of securities
sold....................................     306,630
466,463         181,585
----------------------------------------------------------
--------------------------------------------------
  NET REALIZED
LOSS.............................................
(946)         (2,672)         (3,033) --------------------
----------------------------------------------------------
------------------------------
  Change in Net Unrealized Appreciation (Depreciation) of
     Investments:
     Beginning of
period........................................
(4,686) (6,197) 19,427
     End of
period..............................................
(7,394)        (14,168)          1,054 -------------------
----------------------------------------------------------
-------------------------------
  INCREASE (DECREASE) IN NET UNREALIZED APPRECIATION

(DEPRECIATION)............................................
 . (2,708)       (7,971)        (18,373)
----------------------------------------------------------
--------------------------------------------------
NET LOSS ON
INVESTMENTS.........................................
(3,654)        (10,643)        (21,406) ------------------
----------------------------------------------------------
--------------------------------
INCREASE IN NET ASSETS FROM
OPERATIONS..........................   $  32,829       $
37,344       $  41,074 -----------------------------------
----------------------------------------------------------
---------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.
                                       10
<PAGE>
----------------------------------------------------------
---------------------
 STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED) AND
THE YEAR ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>
ZERO COUPON BOND FUND PORTFOLIO SERIES 1998
1997          1996 ---------------------------------------
----------------------------------------------------------
-------
<S>
<C>           <C>
OPERATIONS:
  Net investment
income....................................................
 .. .                     $   36,483    $   65,673
  Net realized gain
(loss)....................................................
(946)        1,301
  Increase in net unrealized
depreciation.....................................
(2,708)      (17,675) ------------------------------------
----------------------------------------------------------
----------
  INCREASE IN NET ASSETS FROM
OPERATIONS......................................
32,829        49,299 -------------------------------------
----------------------------------------------------------
--------DISTRIBUTIONS TO SHAREHOLDERS FROM:
  Net investment
income....................................................
 .. .                             --       (78,270)
  Net realized
gain......................................................
 .. ...           --       (943)
----------------------------------------------------------
----------------------------------------------
 DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS
--       (79,213) ----------------------------------------
----------------------------------------------------------
------
FUND SHARE TRANSACTIONS (NOTE 8):
  Net proceeds from sale of
shares............................................
35,964       239,165
   Net asset value of shares issued for reinvestment of
dividends                         --        79,213
  Cost of shares
reacquired................................................
 .. .                        (25,269)       (9,692)
----------------------------------------------------------
----------------------------------------------
  INCREASE IN NET ASSETS FROM FUND SHARE
TRANSACTIONS.........................       10,695
308,686 --------------------------------------------------
------------------------------------------------------
INCREASE IN NET
ASSETS....................................................
 .. ..       43,524       278,772
NET ASSETS:
  Beginning of
period....................................................
 .. ...    1,302,570     1,023,798 ------------------------
----------------------------------------------------------
----------------------
  END OF
PERIOD*...................................................
 .. .........   $1,346,094    $1,302,570 ------------------
----------------------------------------------------------
----------------------------
* Includes undistributed net investment income
of:............................      $36,483            --
----------------------------------------------------------
---------------------------------------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       11

<PAGE> ---------------------------------------------------
----------------------------
 STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED) AND
THE YEAR ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>
ZERO COUPON BOND FUND PORTFOLIO SERIES 2000
1997          1996 ---------------------------------------
----------------------------------------------------------
-------
<S>
<C>           <C>
OPERATIONS:
  Net investment
income....................................................
 .. .                     $   47,987    $   76,115
  Net realized
loss......................................................
 .. ...       (2,672)    (1,828)
  Increase in net unrealized
depreciation.....................................
(7,971)      (25,539) ------------------------------------
----------------------------------------------------------
----------
  INCREASE IN NET ASSETS FROM
OPERATIONS......................................
37,344        48,748 -------------------------------------
----------------------------------------------------------
--------DISTRIBUTIONS TO SHAREHOLDERS FROM:
  Net investment
income....................................................
 .. .                             --       (88,804)
----------------------------------------------------------
----------------------------------------------
  DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO
SHAREHOLDERS...................           --
(88,804)
----------------------------------------------------------
--
--------------------------------------------FUND SHARE
TRANSACTIONS (NOTE 8):
  Net proceeds from sale of
shares............................................
61,582       504,039
   Net asset value of shares issued for reinvestment of
dividends..............           --        88,804
  Cost of shares
reacquired................................................
 .. .                        (13,302)      (17,510)
----------------------------------------------------------
----------------------------------------------
  INCREASE IN NET ASSETS FROM FUND SHARE
TRANSACTIONS.........................       48,280
575,333 --------------------------------------------------
------------------------------------------------------
INCREASE IN NET
ASSETS....................................................
 .. ..       85,624       535,277
NET ASSETS:
  Beginning of
period....................................................
 .. ...    1,564,744     1,029,467 ------------------------
----------------------------------------------------------
----------------------
  END OF
PERIOD*...................................................
 .. .........   $1,650,368    $1,564,744 ------------------
----------------------------------------------------------
----------------------------
* Includes undistributed net investment income
of:............................      $47,987            --
----------------------------------------------------------
---------------------------------------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       12

<PAGE> ---------------------------------------------------
----------------------------
 STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED) AND
THE YEAR ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>
ZERO COUPON BOND FUND PORTFOLIO SERIES 2005
1997          1996 ---------------------------------------
----------------------------------------------------------
-------
<S>
<C>           <C>
OPERATIONS:
  Net investment
income....................................................
 .. .                     $   62,480    $   94,226
  Net realized
loss......................................................
 .. ...       (3,033)    (5,606)
  Decrease in net unrealized
appreciation.....................................
(18,373)      (17,386) -----------------------------------
----------------------------------------------------------
-----------
  INCREASE IN NET ASSETS FROM
OPERATIONS......................................
41,074        71,234 -------------------------------------
----------------------------------------------------------
--------DISTRIBUTIONS TO SHAREHOLDERS FROM:
  Net investment
income....................................................
 .. .                          --      (106,679)
----------------------------------------------------------
----------------------------------------------
  DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO
SHAREHOLDERS...................           --
(106,679)
----------------------------------------------------------
----------------------------------------------
FUND SHARE TRANSACTIONS (NOTE 8):
  Net proceeds from sale of
shares............................................
71,593     1,100,998
   Net asset value of shares issued for reinvestment of
dividends..............           --       106,679
  Cost of shares
reacquired................................................
 .. .                    (189,844)     (167,911)
----------------------------------------------------------
----------------------------------------------
  INCREASE (DECREASE) IN NET ASSETS FROM FUND SHARE
TRANSACTIONS..............     (118,251)    1,039,766 ----
----------------------------------------------------------
------------------------------------------
INCREASE (DECREASE) IN NET
ASSETS.............................................
(77,177)    1,004,321
NET ASSETS:
  Beginning of
period....................................................
 .. ...    2,054,242     1,049,921 ------------------------
----------------------------------------------------------
----------------------
  END OF
PERIOD*...................................................
 .. .........   $1,977,065    $2,054,242 ------------------
----------------------------------------------------------
----------------------------
* Includes undistributed net investment income
of:............................      $63,806        $1,326
----------------------------------------------------------
----------------------------------------------
</TABLE>

                       SEE NOTES TO FINANCIAL STATEMENTS.

                                       13

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

     1.  SIGNIFICANT ACCOUNTING POLICIES

      The Zero Coupon Bond Fund Portfolio Series 1998
("Series 1998"), Zero
Coupon Bond Fund Portfolio Series 2000 ("Series 2000") and
Zero Coupon Bond Fund
Portfolio Series 2005 ("Series 2005"), (collectively the
"Portfolios"), are
separate investment portfolios of The Travelers Series
Trust ("Trust"). The
Trust is a Massachusetts business trust registered under
the Investment Company
Act of 1940, as amended, as a diversified, open-end
management investment
company and consists of these portfolios and eleven other
separate investment
portfolios: U.S. Government Securities, Social Awareness
Stock, Utilities,
Travelers Quality Bond, Lazard International Stock, MFS
Emerging Growth,
Federated High Yield, Federated Stock, Large Cap, Equity
Income Portfolios and
Mid Cap Disciplined Equity Fund. Shares of the Trust are
offered only to
insurance company separate accounts that fund certain
variable annuity and
variable life insurance contracts. The financial
statements and financial
highlights for the other portfolios are presented in
separate semi-annual
reports.

     The significant accounting policies consistently
followed by the Portfolios
are: (a) security transactions are accounted for on trade
date; (b) securities
traded on national securities markets are valued at the
closing prices on such
markets; securities for which no sales prices were
reported and U.S. government
agencies and obligations are valued at the mean between
the last reported bid
and ask prices or on the basis of quotations received from
reputable brokers or
other recognized sources; (c) securities maturing within
60 days are valued at
cost plus accreted discount and, or minus amortized
premium, which approximates
value; (d) securities that have a maturity of 60 days or
more are valued at
prices based on market quotations for securities of
similar type, yield and
maturity; (e) interest income, adjusted for amortization
of premium and
accretion of discount, is recorded on an accrual basis;
(f) gains or losses on
the sale of securities are calculated by using the
specific identification
method; (g) dividends and distributions to shareholders
are recorded on the
ex-dividend date; (h) the Portfolios intend to comply with
the requirements of
the Internal Revenue Code of 1986, as amended, pertaining
to regulated
investment companies and to make distributions of taxable
income sufficient to
relieve it from substantially all Federal income and
excise taxes; (i) the
character of income and gains to be distributed are
determined in accordance
with income tax regulations which may differ from
generally accepted accounting
principles. At December 31, 1996, reclassifications were
made to the Portfolios'
capital accounts to reflect permanent book/tax differences
and income and gains
available for distributions under income tax regulations.
Accordingly, a portion
of overdistributed net investment income amounting to
$169, $97, and $520, were
reclassified to paid-in capital for Series 1998, Series
2000, and Series 2005,
respectively. Net investment income, net realized gains
and net assets for each
Portfolio were not affected by these changes; and (j)
estimates and assumptions
are required to be made regarding assets, liabilities and
changes in net assets
resulting from operations when financial statements are
prepared. Changes in the
economic environment, financial markets and any other
parameters used in
determining these estimates could cause actual results to
differ.

     2.  INVESTMENT ADVISORY AGREEMENT AND OTHER
TRANSACTIONS
   Travelers Asset Management International Corporation
("TAMIC"), an indirect
wholly owned subsidiary of Travelers Group Inc., acts as
investment manager and
advisor to the Portfolios. The Portfolios pay TAMIC an
investment management and
advisory fee calculated at an annual rate of 0.10% of the
average daily net
assets. This fee is calculated daily and paid monthly.

    Travelers Insurance Company ("Travelers Insurance")
acts as administrator
to the Portfolios. The Portfolios pay Travelers Insurance
an administration fee
calculated at an annual rate of 0.06% of the average daily
net assets. Travelers
Insurance has entered into a sub-administrative services
agreement with Smith
Barney Mutual Funds Management, Inc. ("SBMFM"). Travelers
Insurance pays SBMFM,
as sub-administrator, a fee calculated at an annual rate
of 0.06% of the average
daily net assets of each Portfolio. This fee is calculated
daily and paid
monthly.

     For the six months ended June 30, 1997, Travelers
Insurance has agreed to
reimburse Series 1998, Series 2000, and Series 2005 for
expenses in the amount
of $15,520, $15,454, and $15,359, respectively.

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

     3.  INVESTMENTS

      During the six months ended June 30, 1997, the
aggregate cost of purchases
and proceeds from sales of investments (including
maturities, but excluding
short-term securities) were as follows:

<TABLE>
<CAPTION>

SERIES 1998     SERIES 2000     SERIES 2005 --------------
----------------------------------------------------------
----------------------------------------
<S>
<C>             <C>             <C>
Purchases.................................................
 .. ........   $ 208,035       $ 427,702       $  25,773
Sales.....................................................
 .. ........     305,684         463,791         178,552 --
----------------------------------------------------------
---------------------------------------------------
</TABLE>

     At June 30, 1997, the aggregate unrealized
appreciation and depreciation of
investments for Federal income tax purposes were
substantially as follows:

<TABLE>
<CAPTION>

SERIES 1998     SERIES 2000     SERIES 2005 --------------
----------------------------------------------------------
----------------------------------------
<S>
<C>             <C>             <C>
Gross unrealized
appreciation.......................................    $
138        $   4,200       $  24,236
Gross unrealized
depreciation.......................................
(7,532)         (18,368)        (23,182) -----------------
----------------------------------------------------------
-------------------------------------
Net unrealized appreciation
(depreciation)..........................    $(7,394)
$ (14,168)      $   1,054 --------------------------------
----------------------------------------------------------
---------------------</TABLE>

     4.  REPURCHASE AGREEMENTS

    The Portfolios purchase (and their custodian takes
possession of) U.S.
government securities from banks and securities dealers
subject to agreements to
resell the securities to the sellers at a future date
(generally, the next
business day) at an agreed-upon higher repurchase price.
The Portfolios require
continual maintenance of the market value of the
collateral
in amounts at least
equal to 102% of the repurchase price.

     5.  FUTURES CONTRACTS

     Initial margin deposits made upon entering into
futures contracts are
recognized as assets. Securities equal to the initial
margin amount are
segregated by the custodian in the name of the broker.
Additional securities are
also segregated up to the current market value of the
futures contracts. During
the period the futures contract is open, changes in the
value of the contract
are recognized as unrealized gains or losses by "marking-
tomarket" on a daily
basis to reflect the market value of the contract at the
end of each day's
trading. Variation margin payments are received or made
and recognized as assets
due from or liabilities due to broker, depending upon
whether unrealized gains
or losses are incurred. When the contract is closed, the
Portfolios record a
realized gain or loss equal to the difference between the
proceeds from (or cost
of) the closing transactions and the Portfolios' basis in
the contract. The
Portfolios bear the market risk that arises from changes
in the value of the
financial instruments and securities indices (futures
contracts) and the credit
risk should a counterparty fail to perform under such
contracts.

   At June 30, 1997, the Portfolios had no open futures
contracts.

     6.  STRIPPED SECURITIES

     Each Portfolio will invest primarily in "Stripped
Securities," a term used
collectively for Stripped Treasury Securities, Stripped
Government Securities,
Stripped Corporate Securities, and Stripped Eurodollar
Obligations; as well as
other stripped securities. Stripped securities can be
securities consisting of
debt obligations that have been stripped of unmatured
interest coupons,
securities consisting of unmatured interest coupons that
have been stripped from
debt obligations, or debt obligations that are issued
without interest coupons
and are sold at substantial discounts from their face
amounts.

   Stripped securities do not make periodic payments of
interest prior to
maturity. The market value of stripped securities will
fluctuate in response to
changes in economic conditions, interest rates and the
market's perception of
the securities. Fluctuations in response to interest rates
may be greater than
those for debt obligations of comparable maturities that
pay interest currently.
The amount of fluctuation increases with a longer period
of maturity.

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

     7.  CAPITAL LOSS CARRYFORWARD

     At December 31, 1996, Series 2000 and Series 2005
had, for Federal income
tax purposes, approximately $700 and $7,500, respectively,
of capital loss
carryforwards available to offset future capital gains. To
the extent that these
carryforward losses are used to offset capital gains, it
is probable that the
gains so offset will not be distributed. The amount and
expiration of the
carryforwards are indicated below. Expiration occurs on
December 31 of the year
indicated:

<TABLE>
<CAPTION>

2003       2004 ------------------------------------------
----------------------------------------------------------
--
<S>
<C>        <C>
Series
2000......................................................
 .. .................  $  700         --
Series
2005......................................................
 .. .................   1,900     $5,600 ------------------
----------------------------------------------------------
--------------------------
</TABLE>

     8.  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 each
Portfolio were as follows:

<TABLE>
<CAPTION>

SIX MONTHS ENDED        YEAR ENDED

JUNE 30, 1997       DECEMBER 31, 1996 --------------------
----------------------------------------------------------
------------------------
<S>
<C>                  <C>
SERIES 1998
Shares
sold....................................................
3,568               23,525
Shares issued on
reinvestment..................................
-7,906
Shares
redeemed................................................
(2,489)                (944) -----------------------------
----------------------------------------------------------
---------------
Net
Increase..................................................
 . 1,079               30,487 -----------------------------
----------------------------------------------------------
---------------
SERIES 2000
Shares
sold....................................................
6,123               50,040
Shares issued on
reinvestment..................................
-8,881
Shares
redeemed................................................
(1,330)              (1,710) -----------------------------
----------------------------------------------------------
---------------
Net
Increase..................................................
 . 4,793               57,211 -----------------------------
----------------------------------------------------------
---------------
SERIES 2005
Shares
sold....................................................
7,217              111,855
Shares issued on
reinvestment..................................
-10,654
Shares
redeemed................................................
(19,055)             (16,627) ----------------------------
----------------------------------------------------------
----------------
Net Increase
(Decrease)........................................
(11,838)             105,882 -----------------------------
----------------------------------------------------------
---------------
</TABLE>

                                       16
<PAGE>
----------------------------------------------------------
---------------------
 FINANCIAL HIGHLIGHTS
For a share of beneficial interest outstanding throughout
each period:

<TABLE>
<CAPTION>
ZERO COUPON BOND FUND PORTFOLIO SERIES 1998
1997(a)       1996        1995(b)
----------------------------------------------------------
----------------------------------------------
<S>
<C>          <C>          <C>
NET ASSET VALUE, BEGINNING OF
PERIOD.................................   $ 9.99 $10.25
$10.00
----------------------------------------------------------
----------------------------------------------
INCOME FROM OPERATIONS:
  Net investment income
(c)..........................................     0.28
0.53         0.12
  Net realized and unrealized gain
(loss)............................    (0.03)       (0.13)
0.13 -----------------------------------------------------
---------------------------------------------------
Total Income From
Operations.........................................
0.25 0.40         0.25 -----------------------------------
----------------------------------------------------------
-----------
LESS DISTRIBUTIONS FROM:
  Net investment
income..............................................
-        (0.65)          --
  Net realized
gains.................................................
--        (0.01)          --------------------------------
----------------------------------------------------------
---------------
Total
Distributions.............................................
 .. ...       --        (0.66)          -------------------
----------------------------------------------------------
----------------------------
NET ASSET VALUE, END OF
PERIOD.......................................   $10.24
$ 9.99       $10.25
----------------------------------------------------------
----------------------------------------------
TOTAL
RETURN....................................................
 .. ...     2.50%++      3.94%        2.50%++ -------------
----------------------------------------------------------
---------------------------------
NET ASSETS, END OF PERIOD
(000'S)....................................   $1,346
$1,303       $1,024 --------------------------------------
----------------------------------------------------------
--------
RATIOS TO AVERAGE NET ASSETS:
  Expenses
(c)(d)....................................................
0.15%+       0.15%        0.15%+
  Net investment
income..............................................
5.51+        5.64         5.55+ --------------------------
----------------------------------------------------------
--------------------
PORTFOLIO TURNOVER
RATE..............................................
16% 19%          20% -------------------------------------
----------------------------------------------------------
---------
</TABLE>
(a) For the six months ended June 30, 1997 (unaudited).
(b) For the period from October 11, 1995 (commencement
of operations) to
    December 31, 1995.
(c) For the six months ended June 30, 1997 and the year
ended December 31, 1996,
    The Travelers reimbursed the Portfolio for $15,520
and $31,112 in expenses,
    respectively. If expenses were not reimbursed, the
per share decrease of net
  investment income and expense ratios would have been as
follows:

<TABLE>
<CAPTION>
                PER SHARE DECREASES                EXPENSE
RATIOS
              TO NET INVESTMENT INCOME          WITHOUT
REIMBURSEMENT
              ------------------------          ----------
----------
<S>           <C>                               <C>
1997                   $ 0.12
2.51%+
1996                     0.24
2.82
</TABLE>

(d) The expense ratio for the period ended December 31,
1995 reflects an expense
     reimbursement by The Travelers in connection with
voluntary expense
    limitations. Without the expense reimbursement, the
expense ratio would have
    been 6.51% (annualized).
 ++ Total return is not annualized, as it may not be
representative of the total
    return for the year.
 +  Annualized.

                                       17

<PAGE>

----------------------------------------------------------
---------------------
 FINANCIAL HIGHLIGHTS (CONTINUED)
For a share of beneficial interest outstanding throughout
each period:

<TABLE>
<CAPTION>
ZERO COUPON BOND FUND PORTFOLIO SERIES 2000
1997(a)       1996        1995(b)
----------------------------------------------------------
---------------------------------------------
<S>
<C>          <C>          <C>
NET ASSET VALUE, BEGINNING OF
PERIOD.................................   $ 9.96 $10.31
$10.00
----------------------------------------------------------
---------------------------------------------
INCOME FROM OPERATIONS:
  Net investment income
(c)..........................................     0.30
0.50         0.13
  Net realized and unrealized gain
(loss)............................    (0.07)       (0.22)
0.18 -----------------------------------------------------
--------------------------------------------------
Total Income From
Operations.........................................
0.23 0.28         0.31 -----------------------------------
----------------------------------------------------------
----------
LESS DISTRIBUTIONS FROM:
  Net investment
income..............................................
-        (0.63)          --
----------------------------------------------------------
---------------------------------------------
Total
Distributions.............................................
 .. ...       --        (0.63)          -------------------
----------------------------------------------------------
---------------------------
NET ASSET VALUE, END OF
PERIOD.......................................   $10.19
$ 9.96       $10.31
----------------------------------------------------------
---------------------------------------------
TOTAL
RETURN....................................................
 .. ...     2.31%++      2.76%        3.10%++ -------------
----------------------------------------------------------
--------------------------------
NET ASSETS, END OF PERIOD
(000'S)....................................   $1,650
$1,565       $1,029 --------------------------------------
----------------------------------------------------------
-------
RATIOS TO AVERAGE NET ASSETS:
  Expenses
(c)(d)....................................................
0.15%+       0.15%        0.15%+
  Net investment
income..............................................
6.05+        5.74         5.61+ --------------------------
----------------------------------------------------------
-------------------
PORTFOLIO TURNOVER
RATE..............................................
27% 33%          34% -------------------------------------
----------------------------------------------------------
--------
</TABLE>

(a) For the six months ended June 30, 1997 (unaudited).
(b) For the period from October 11, 1995 (commencement of
operations) to
    December 31, 1995.
(c) For the six months ended June 30, 1997 and the year
ended December 31, 1996,
  The Travelers reimbursed the Portfolio for $15,454 and
$31,032 in expenses,
  respectively. If expenses were not reimbursed, the per
share decrease of net
    investment income and expense ratios would have been
as
follows:
<TABLE>
<CAPTION>
                PER SHARE DECREASES                EXPENSE
RATIOS
              TO NET INVESTMENT INCOME          WITHOUT
REIMBURSEMENT
              ------------------------          ----------
----------
<S>           <C>                               <C>
1997                   $ 0.10
2.10%+
1996                     0.20
2.49
</TABLE>

(d) The expense ratio for the period ended December 31,
1995 reflects an expense
     reimbursement by The Travelers in connection with
voluntary expense
    limitations. Without the expense reimbursement, the
expense ratio would have
    been 6.51% (annualized).
 ++ Total return is not annualized, as it may not be
representative of the total
    return for the year.
 +  Annualized.

                                       18

<PAGE>

----------------------------------------------------------
---------------------
 FINANCIAL HIGHLIGHTS (CONTINUED)
For a share of beneficial interest outstanding throughout
each period:

<TABLE>
<CAPTION>
ZERO COUPON BOND FUND PORTFOLIO SERIES 2005
1997(a)       1996         1995(b)
----------------------------------------------------------
-------------------------------------------
<S>
<C>          <C>           <C>
NET ASSET VALUE, BEGINNING OF
PERIOD..............................   $ 9.97       $10.48
$10.00 ---------------------------------------------------
--------------------------------------------------
INCOME FROM OPERATIONS:
  Net investment income
(c).......................................     0.32 0.48
0.13
  Net realized and unrealized gain
(loss).........................    (0.11)       (0.38)
0.35
----------------------------------------------------------
-------------------------------------------
Total Income From
Operations......................................     0.21
0.10          0.48
----------------------------------------------------------
-------------------------------------------
LESS DISTRIBUTIONS FROM:
  Net investment
income...........................................       -
(0.61)           --
----------------------------------------------------------
-------------------------------------------
Total
Distributions.............................................
 .. --        (0.61)           ----------------------------
----------------------------------------------------------
----------------
NET ASSET VALUE, END OF
PERIOD....................................   $10.18
$ 9.97        $10.48 -------------------------------------
----------------------------------------------------------
------
TOTAL
RETURN....................................................
 .. 2.11%++   0.90%         4.80%++
----------------------------------------------------------
-------------------------------------------
NET ASSETS, END OF PERIOD
(000'S).................................   $1,977
$2,054        $1,050
----------------------------------------------------------
-------------------------------------------
RATIOS TO AVERAGE NET ASSETS:
  Expenses
(c)(d).................................................
0.15%+       0.15%         0.15%+
  Net investment
income...........................................
6.34+ 6.14    5.89+
----------------------------------------------------------
-------------------------------------------
PORTFOLIO TURNOVER
RATE...........................................        1%
17%           23%
----------------------------------------------------------
-------------------------------------------
</TABLE>

(a) For the six months ended June 30, 1997 (unaudited).
(b) For the period from October 11, 1995 (commencement of
operations) to
    December 31, 1995.
(c) For the six months ended June 30, 1997 and the year
ended December 31, 1996,
  The Travelers reimbursed the Portfolio for $15,359 and
$30,922 in expenses,
  respectively. If expenses were not reimbursed, the per
share decrease of net
  investment income and expense ratios would have been as
follows:

<TABLE>
<CAPTION>
                PER SHARE DECREASES                EXPENSE
RATIOS
              TO NET INVESTMENT INCOME          WITHOUT
REIMBURSEMENT
              ------------------------          ----------
----------
<S>           <C>                               <C>
1997                   $ 0.08
1.72%+
1996                     0.15
2.17
</TABLE>

(d) The expense ratio for the period ended December 31,
1995 reflects an expense
     reimbursement by The Travelers in connection with
voluntary expense
    limitations. Without the expense reimbursement, the
expense ratio would have
    been 6.48% (annualized).
 ++ Total return is not annualized, as it may not be
representative of the total
    return for the year.
 +  Annualized.

                                       19

<PAGE>

                               Investment Advisor
              TRAVELERS ASSET MANAGEMENT
              INTERNATIONAL
CORPORATION

                             Hartford, Connecticut

                              Independent Auditors

                             KPMG PEAT MARWICK LLP

                               New York, New York

                                   Custodian

                                 PNC BANK, N.A.

This report is prepared for the general information of
contract owners and is
not an offer of shares of Zero Coupon Bond Fund Portfolio
Series 1998, Zero
Coupon Bond Fund Portfolio Series 2000 and Zero Coupon
Bond Fund Portfolio
Series 2005. It should not be used in connection with any
offer except in
conjunction with the Prospectuses for the Variable
Universal Life Insurance
products offered by The Travelers Insurance Company and
The Travelers Life and
Annuity Company and the Prospectuses for the underlying
funds, which
collectively contain all pertinent information, including
the applicable sales
commissions.

VG-ZERO (Semi-Annual) (6-97) Printed in U.S.A.