<PAGE>
HARTFORD
LIFE INSURANCE COMPANY
GROUP VARIABLE ANNUITY CONTRACTS
ISSUED BY HARTFORD LIFE INSURANCE COMPANY
WITH RESPECT TO DC-I AND DC-II
[LOGO]
The variable annuity contracts (hereinafter the "contract" or "contracts" or
"Master Contracts") described in this Prospectus are issued by Hartford Life
Insurance Company ("HL"). The contracts provide for both an Accumulation
Period and an Annuity Period.
On contracts issued in conjunction with a Deferred Compensation Plan of an
Employer, variable account Contributions are held in Hartford Life Insurance
Company DC Variable Account-I ("DC-I") during the Accumulation Period and in a
series of Hartford Life Insurance Company Separate Account Two ("DC-II")
during the Annuity Period.
On contracts issued in conjunction with a Qualified Plan of an employer, all
variable account Contributions during both the Accumulation Period and Annuity
Period are held in DC-II.
The contracts to which contributions may be made may contain a General
Account option or a separate General Account contract may be issued in
conjunction with the contracts described herein. The General Account option or
contract may contain restrictions on a Contract Owner's ability to transfer
Participant Account Values to or from such contract or option. The General
Account option or contract and these restrictions, if any, are not described
in this Prospectus.
The contracts are used in conjunction with Deferred Compensation Plans of
tax-exempt and governmental employers as well as with Qualified Plans
established by Employers generally (tax-exempt and non-tax-exempt).
The following Sub-Accounts are available under the contracts. Opposite each
Sub-Account is the name of the underlying investment for that Account.
Advisers Fund -- shares of Hartford Advisers Fund, Inc.
Sub-Account ("Advisers Fund")
Bond Fund Sub-Account -- shares of Hartford Bond Fund, Inc. ("Bond Fund")
Capital Appreciation -- shares of Hartford Capital Appreciation Fund,
Fund Sub-Account Inc. (formerly Hartford Aggressive Growth Fund,
Inc.) ("Capital Appreciation Fund")
Index Fund Sub-Account -- shares of Hartford Index Fund, Inc. ("Index
Fund")
International -- shares of Hartford International Opportunities
Opportunities Fund Fund, Inc. ("International Opportunities Fund")
Sub-Account
Money Market Fund Sub- -- shares of HVA Money Market Fund, Inc. ("Money
Account Market Fund")
Mortgage Securities Fund -- shares of Hartford Mortgage Securities Fund,
Sub-Account Inc. ("Mortgage Securities Fund")
Responsibly Invested -- shares of Calvert Responsibly Invested Balanced
Fund Sub-Account Portfolio of Acacia Capital Corporation.
(formerly Calvert Socially Responsive Fund)
("Responsibly Invested Fund")
Stock Fund Sub-Account -- shares of Hartford Stock Fund, Inc. ("Stock
Fund")
U.S. Government Money -- shares of Hartford U.S. Government Money Market
Market Fund Fund, Inc. ("U.S. Government Money Market Fund")
Sub-Account
(continued on next page)
This Prospectus sets forth the information concerning the Separate Account
that investors ought to know before investing. This Prospectus should be kept
for future reference. Additional information about the Separate Account has
been filed with the Securities and Exchange Commission and is available
without charge upon request. To obtain the Statement of Additional Information
send a written request to Hartford Life Insurance Company, Attn: RPVA
Administration, P.O. Box 2999, Hartford, CT 06104-2999. The Table of Contents
for the Statement of Additional Information may be found on page 41 of this
Prospectus. The Statement of Additional Information is incorporated by
reference to this Prospectus.
------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
------------------------------------------------------------------------------
------------------------------------------------------------------------------
THIS PROSPECTUS IS NOT VALID UNLESS ATTACHED TO THE CURRENT PROSPECTUS OF THE
APPLICABLE ELIGIBLE FUNDS LISTED ABOVE WHICH CONTAINS A FULL DESCRIPTION OF
THOSE FUNDS. INVESTORS ARE ADVISED TO RETAIN THESE PROSPECTUSES FOR FUTURE
REFERENCE.
------------------------------------------------------------------------------
Prospectus Dated: May 1, 1995
Prospectus Revised: July 1, 1995
Statement of Additional Information Dated: May 1, 1995
<PAGE>
THE FOLLOWING FUNDS ARE AVAILABLE BEGINNING JULY 1, 1995:
Dividend and Growth Fund -- shares of Hartford Dividend and Growth Fund,
Sub-Account Inc. ("Dividend and Growth Fund")
AMS/TCI Advantage Fund -- shares of TCI Portfolios, Inc. TCI Advantage
Sub-Account ("AMS/TCI Advantage Fund")
AMS/TCI Growth Fund Sub- -- shares of TCI Portfolios, Inc. TCI Growth
Account ("AMS/TCI Growth Fund")
AMS/Fidelity VIP II -- shares of Fidelity Investments Variable
Asset Manager Fund Insurance Products II Asset Manager
Sub-Account ("AMS/Fidelity VIP II Asset Manager Fund")
AMS/Fidelity VIP II -- shares of Fidelity Investments Variable
Contrafund Fund Insurance Products II Contrafund Fund
Sub-Account ("AMS/Fidelity VIP II Contrafund Fund")
AMS/Fidelity VIP Growth -- shares of Fidelity Investments Variable
Fund Sub-Account Insurance Products Growth Fund ("AMS/Fidelity
VIP Growth Fund")
AMS/Fidelity VIP -- shares of Fidelity Investments Variable
Overseas Fund Insurance Products Overseas Fund ("AMS/Fidelity
Sub-Account VIP Overseas Fund")
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
------------------------------------------------------------------------ ----
<S> <C>
GLOSSARY OF SPECIAL TERMS............................................... 5
FEE TABLE............................................................... 7
SUMMARY................................................................. 8
ACCUMULATION UNIT VALUES................................................ 11
PERFORMANCE RELATED INFORMATION......................................... 15
INTRODUCTION............................................................ 16
THE DC-I AND DC-II CONTRACT AND SEPARATE ACCOUNT DC-I AND
SEPARATE ACCOUNT TWO (DC-II)......................................... 16
What are the DC-I and DC-II contracts?................................ 16
Who can buy these contracts?.......................................... 16
What are the Separate Accounts and how do they operate?............... 17
OPERATION OF THE CONTRACT............................................... 18
How are Contributions credited?....................................... 18
May I make changes in the amounts of my Contribution?................. 18
May I transfer assets between Sub-Accounts?........................... 18
What happens if the Contract Owner fails to make Contributions?....... 19
May I assign or transfer the contract?................................ 19
How do I know what my account is worth?............................... 19
How is the Accumulation Unit value determined?........................ 20
How are the underlying Fund shares valued?............................ 20
PAYMENT OF BENEFITS..................................................... 20
What would my Beneficiary receive as death proceeds?.................. 20
How can a contract be redeemed or surrendered?........................ 20
Can payment of the redemption or surrender value ever be postponed
beyond the seven day period?......................................... 21
May I surrender once Annuity payments have started?................... 22
Are there differences in the contract related to the type of plan in
which the Participant is enrolled?................................... 22
Can a contract be suspended by a Contract Owner?...................... 22
How do I elect an Annuity Commencement Date and Form of Annuity?...... 22
What is the minimum amount that I may select for an Annuity
payment?............................................................. 23
How are Contributions made to establish my Annuity account?........... 23
What are the available Annuity options under the contracts?........... 23
How are Variable Annuity payments determined?......................... 24
Can a contract be modified?........................................... 25
CHARGES UNDER THE CONTRACT.............................................. 26
How are the charges under these contracts made?....................... 26
Is there ever a time when the sales charges do not apply?............. 26
What do the sales charges cover?...................................... 27
What is the mortality, expense risk and administrative charge?........ 27
Are there any other administrative charges?........................... 28
Experience Rating of Contracts........................................ 28
How much are the deductions for Premium Taxes on these contracts?..... 28
Are there any other deductions?....................................... 28
HARTFORD LIFE INSURANCE COMPANY AND THE FUNDS........................... 28
What is HL?........................................................... 28
What are the Funds?................................................... 29
Does HL have any interest in the Funds?............................... 32
FEDERAL TAX CONSIDERATIONS.............................................. 33
What are some of the federal tax consequences which affect these
contracts?........................................................... 33
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
MISCELLANEOUS........................................................... 37
What are my voting rights?............................................ 37
Will other contracts be participating in the Separate Accounts?....... 38
How are the contracts sold?........................................... 38
Who is the custodian of the Separate Accounts' assets?................ 38
Are there any material legal proceedings affecting the Separate
Accounts?............................................................ 38
Are you relying on any experts as to any portion of this
Prospectus?.......................................................... 38
How may I get additional information?................................. 38
APPENDIX................................................................ 39
TABLE OF CONTENTS FOR STATEMENT OF ADDITIONAL INFORMATION............... 41
</TABLE>
4
<PAGE>
GLOSSARY OF SPECIAL TERMS
ACCUMULATION PERIOD: The period before the commencement of Annuity payments.
ACCUMULATION UNIT: An accounting unit of measure used to calculate values before
Annuity payments begin.
ACTIVE LIFE FUND: A term used to describe the sum of all Participants'
Individual Account value(s) in the Separate Account under a contract during the
Accumulation Period.
ANNUAL CONTRACT FEE: A fee charged for establishing and maintaining a
Participant's Individual Account under a contract.
ANNUITANT: A Participant on whose behalf Annuity payments are to be made under a
contract.
ANNUITANT'S ACCOUNT: An account established at the commencement of the Annuity
Period under which Annuity payments are made under the contracts.
ANNUITY: A series of payments for life, or for life with a minimum number of
payments or a determinable sum guaranteed, or for a joint lifetime and
thereafter during the lifetime of the survivor, or for payments for a designated
period.
ANNUITY COMMENCEMENT DATE: The date on which Annuity payments are to commence.
ANNUITY PERIOD: The period following the commencement of Annuity payments.
ANNUITY RIGHTS: The Contract Owner's right in situations where the contract is
issued in conjunction with a Deferred Compensation Plan to apply up to five
times the gross contributions made to the contract during the Accumulation
Period (in DC-I only), at the Annuity rates set forth in the contract at the
time of issue, at the commencement of the Annuity Period to effect Annuity
payments.
ANNUITY UNIT: An accounting unit of measure in the Separate Account used to
calculate the amount of Variable Annuity payments.
BENEFICIARY: The person(s) designated to receive contract values in the event of
the Participant's or Annuitant's death.
CODE: The Internal Revenue Code of 1986, as amended.
COMMISSION: Securities and Exchange Commission.
CONTRACT OWNER: The Employer or entity owning the contract.
CONTRACT YEAR: A period of 12 months commencing with the effective date of the
contract or with any anniversary thereof.
CONTRIBUTION(S): The amount(s) paid or transferred to HL on behalf of
Participants pursuant to the terms of the contracts.
DATE OF COVERAGE: The date on which the application on behalf of a Participant
is received by HL.
DC VARIABLE ACCOUNT II: A series of Hartford Life Insurance Company Separate
Account Two.
DEFERRED COMPENSATION PLAN: A plan established and maintained in accordance with
the provisions of Section 457 of the Internal Revenue Code and the regulations
issued thereunder.
EMPLOYER: A governmental or tax-exempt Employer maintaining a Deferred
Compensation Plan for its Employees or an Employer establishing a Qualified Plan
for its Employees.
FIXED ANNUITY: An Annuity providing for guaranteed payments which remain fixed
in amount throughout the payment period and which do not vary with the
investment experience of a separate account.
FUNDS: Currently, the Funds described commencing on page 29 of this Prospectus.
GENERAL ACCOUNT: The General Account of HL in which reserves are maintained for
Fixed Annuities during the Annuity Period.
HL: Hartford Life Insurance Company.
MINIMUM DEATH BENEFIT: The minimum amount payable upon the death of Participant
prior to age 65 and before Annuity payments have commenced.
PARTICIPANT: A term used to describe, for recordkeeping purposes only, any
Employee electing to participate in the Deferred Compensation or Qualified Plan
of the Employer/Contract Owner.
5
<PAGE>
PARTICIPANT'S CONTRACT YEAR: A period of twelve (12) months commencing with the
Date of Coverage of a Participant and each successive 12 month period
thereafter.
PARTICIPANT'S INDIVIDUAL ACCOUNT: An account to which the Separate Account
Accumulation Units held by the Contract Owner on behalf of Participant under the
contract are allocated.
PLAN: The unfunded Deferred Compensation Plan or Qualified Plan of an Employer.
PREMIUM TAX: A tax charged by a state or municipality on premiums, purchase
payments or contract values.
QUALIFIED PLAN: A voluntary plan of an Employer which qualifies for special tax
treatment under a section of the Internal Revenue Code.
SEPARATE ACCOUNT: The Account entitled Hartford Life Insurance Company DC
Variable Account-I ("DC-I") and a series of Hartford Life Insurance Company
Separate Account Two ("DC-II").
SUB-ACCOUNT: Accounts established within the Separate Account with respect to a
Fund.
VALUATION DAY: Every day the New York Stock Exchange is open for business
exclusive of the following national and local business holidays: Martin Luther
King Day, Lincoln's Birthday, Columbus Day, Veteran's Day, the day before
Independence Day and the day after Thanksgiving. The value of the Separate
Account is determined at the close of the New York Stock Exchange (currently
4:00 p.m. Eastern Time) on such days.
VALUATION PERIOD: The period between successive Valuation Days.
VARIABLE ANNUITY: An Annuity providing for payments varying in amount in
accordance with the investment experience of the assets held in the underlying
securities of the Separate Account.
6
<PAGE>
FEE TABLE
Contract Owner Transaction Expense
(All Sub Accounts)
<TABLE>
<S> <C>
Sales Load Imposed on Purchases (as a percentage of premium
payments)....................................................... None
Transfer Fee...................................................... $ 5
Contingent Deferred Sales Charge (as a percentage of amounts
withdrawn)......................................................
First through Sixth Year...................................... 7%
Seventh through Twelfth Year.................................. 5%
Thirteenth Year............................................... 0%
Annual Contract Fee............................................... $ 18(1)
Annual Expenses--Separate Account (as a percentage of average
account value)
Mortality and Expense Risk (DC I)............................. 1.100%
Mortality and Expense Risk (DC II)............................ 1.250%
</TABLE>
The Transfer Fee, Contingent Deferred Sales Charge, Annual Contract Fee and
Mortality and Expense Risk charge may be reduced or eliminated. See "Experience
of Contracts" on page .
Annual Fund Operating Expense
(as a percentage of net assets for the year ended 1994)
<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT OTHER OPERATING
FEES EXPENSES EXPENSES
---------- -------- ----------
<S> <C> <C> <C>
Hartford Bond Fund.............................. 0.500% 0.047% 0.547%
Hartford Stock Fund............................. 0.462% 0.039% 0.501%
HVA Money Market Fund........................... 0.425% 0.049% 0.474%
Hartford Advisers Fund.......................... 0.615% 0.040% 0.655%
Hartford U.S. Government Money Market Fund...... 0.425% 0.157% 0.582%
Hartford Capital Appreciation Fund.............. 0.675% 0.045% 0.720%
Hartford Mortgage Securities Fund............... 0.425% 0.052% 0.477%
Hartford Index Fund............................. 0.375% 0.079% 0.454%
Hartford International Opportunities Fund....... 0.725% 0.126% 0.851%
Responsibly Invested Fund....................... 0.700% 0.100% 0.800%
Hartford Dividend and Growth Fund (2)........... 0.688% 0.166% 0.834%
TCI Growth...................................... 1.000% 0.000% 1.000%
TCI Advantage................................... 1.000% 0.000% 1.000%
Fidelity VIP Growth............................. 0.620% 0.070% 0.690%
Fidelity VIP Overseas........................... 0.770% 0.150% 0.920%
Fidelity VIP II Asset Manager................... 0.720% 0.080% 0.800%
Fidelity VIP II Contrafund...................... 0.620% 0.270% 0.890%
<FN>
(1) The annual contract fee is a single $18 charge on a Contract. It is
deducted proportionally from the investment options in use at the time of
the charge. In the Example, the annual contract fee is approximated as a
0.07% annual asset charge based on the experience of the Contracts.
(2) A portion of the management fees were waived in 1994. Without this waiver,
the management fee would have been 0.750% and the total operating expense
would have been 0.916%.
</TABLE>
<TABLE>
<CAPTION>
EXAMPLE-DCI If you surrender your contract If you annuitize at the end of If you do not surrender your
at the end of the applicable the applicable time period: You contract: You would pay the
time period: You would pay the would pay the following following expenses on a $1,000
following expenses on a $1,000 expenses on a $1,000 investment, assuming a 5%
investment, assuming a 5% investment, assuming a 5% annual return on assets:
annual return on assets: annual return on assets:
SUB-ACCOUNT 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- -------- ------ ------- ------- -------- ------ ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bond Fund................ $ 90 $ 132 $ 176 $ 273 $ 17 $ 54 $ 93 $ 203 $ 18 $ 55 $ 94 $ 204
Stock Fund............... 89 130 174 268 16 52 91 198 17 53 91 199
Money Market Fund........ 89 129 172 265 16 51 89 195 17 52 90 196
Advisers Fund............ 91 135 181 284 18 57 99 215 19 58 100 216
U.S. Government Money
Market Fund............ 90 133 178 276 17 55 95 207 18 56 96 208
Capital Appreciation
Fund................... 92 137 184 290 19 59 102 222 19 60 103 223
Mortgage Securities
Fund................... 89 130 173 266 16 52 89 195 17 52 90 196
Index Fund............... 86 120 156 231 13 41 72 159 14 42 73 160
International
Opportunities Fund..... 93 140 191 303 20 63 109 236 21 64 110 237
Responsibly Invested
Fund................... 92 139 188 296 19 62 106 230 20 62 107 231
Dividend & Growth........ 93 140 190 302 20 53 108 234 21 63 109 235
AMS/TCI Growth........... 94 145 198 318 22 68 117 251 22 69 118 252
AMS/TCI Advantage........ 94 145 198 318 22 68 117 251 22 69 118 252
AMS/Fidelity VIP
Growth................. 91 136 183 287 18 68 117 251 19 69 101 220
AMS/Fidelity VIP
Overseas............... 93 142 194 310 21 65 113 243 21 66 113 244
AMS/Fidelity VIP II Asset
Manager................ 92 139 139 298 19 62 106 230 20 62 107 231
AMS/Fidelity VIP II
Contrafund............. 93 141 193 307 20 64 111 240 21 65 112 241
</TABLE>
The purpose of this table is to assist the contract owner in understanding
various costs and expenses that a contract owner will bear directly or
indirectly. The table reflects expenses of the Separate Account and underlying
Funds. Premium taxes may also be applicable.
This EXAMPLE should not be considered a representation of past or future
expenses and actual expenses may be greater or less than those shown.
7
<PAGE>
SUMMARY
A. CONTRACTS OFFERED
Group contracts issued in conjunction with a Deferred Compensation Plan or a
Qualified Plan of an employer are offered.
The Qualified Plan contracts available with respect to DC-II are limited to
plans established and sponsored by Employers for their Employees. Qualified
Plans provide a way for an Employer to establish a funded retirement plan for
its Employees. The contract is normally issued to the Employer or to the trustee
or custodian of the Employer's Plan.
Contract Owners who have purchased a prior series of contracts may continue
to make Contributions to such contracts subject to the terms and provisions of
their contracts. New Participants may be added to existing contracts of the
prior series but no new contracts of that series will be issued. Prior Contract
Owners are referred to the Appendix (commencing on page 39) for a description of
the sales charges and other expenses applicable to earlier series of contracts.
B. ACCUMULATION PERIOD UNDER THE CONTRACTS
During the Accumulation Period under the contracts, Contributions made by
the Employer to the contracts are used to purchase variable account interests.
Contributions allocated to purchase variable interests may, after the deductions
described hereafter, be invested in selected Sub-Accounts of DC-I or DC-II, as
appropriate.
C. CONTINGENT DEFERRED SALES CHARGES
No deduction for sales expense is made at the time of allocation of
Contributions to the contracts. A deduction for contingent deferred sales
charges is made if there is any surrender of contract values during the first 12
Participant Contract Years. During the first 6 years thereof, a maximum
deduction of 7% will be made against the full amount of any such surrender.
During the next 6 years thereof, a maximum deduction of 5% will be made against
the full amount of any such surrender. Such charges will in no event exceed
8.50% when applied as a percentage against the sum of all Contributions to a
Participant's Individual Account. The amount or term of the contingent deferred
sales charge may be reduced (see "Experience Rating of Contracts", page 28).
No deduction for contingent deferred sales charges will be made in certain
cases. (See "Is there ever a time when the sales charges do not apply?"
commencing on page 26.)
HL reserves the right to limit any increase in the Contributions made to a
Participant's Individual Account under any contract to no more than three times
the total Contributions made on behalf of such Participant during the initial 12
consecutive months following the Date of Coverage. Increases in excess of those
described will be accepted only with the consent of HL and subject to the then
current deductions being made under the contracts.
D. TRANSFER BETWEEN ACCOUNTS
During the Accumulation Period a Contract Owner may allocate monies held in
the Separate Account among the available Sub-Accounts of the Separate Account.
Each transfer under the contract may be subject to a $5.00 Transfer Fee (see
"Experience Rating of Contracts", page 28). However, there may be additional
restrictions under certain circumstances (see "May I transfer assets between
Sub-Accounts?" page 18.)
E. ANNUITY PERIOD UNDER THE CONTRACTS
Contract values held with respect to Participants' Individual Accounts with
respect to DC-I or DC-II, as appropriate, at the end of the Accumulation Period
(and any additional Contributions that a Deferred
8
<PAGE>
Compensation Plan Contract Owner (DC-I, only) elects to make at the commencement
of the Annuity Period) will, at the direction of the Contract Owner, be
allocated to establish Annuitants' Accounts to provide Fixed and/or Variable
Annuities under the contracts.
Additional Contributions made under the contracts (on Deferred Compensation
Plans written with respect to DC-I only) at the beginning of the Annuity Period,
to effect increased Fixed and/or Variable Annuity payments, will be subject to a
sales charge deduction in the maximum amount of 3.50% of such Contribution. (See
"How are Contributions made to establish my Annuity account?" commencing on page
23.)
F. MINIMUM DEATH BENEFITS
A Minimum Death Benefit is provided in the event of death of the Participant
under a Participant's Individual Account prior to the earlier of the
Participant's 65th birthday or the Annuity Commencement Date. (see "What would
my Beneficiary receive as death proceeds?" commencing on page 20.)
G. ANNUITY OPTIONS
The Annuity Commencement Date will not be deferred beyond the Participant's
75th birthday or such earlier date as may be required by applicable law and/or
regulation. If a Contract Owner does not elect otherwise, HL reserves the right
to begin Annuity payments automatically at age 65 under an option providing for
a life Annuity with 120 monthly payments certain. (see "What are the available
Annuity options under the contracts?" commencing on page 23.) However, HL will
not assume responsibility in determining or monitoring minimum distributions
beginning at age 70 1/2. When an Annuity is purchased by a Contract Owner for an
Annuitant, unless otherwise specified, DC-I or DC-II Accumulation Unit Values
will be applied to provide a Variable Annuity under DC-II.
H. DEDUCTIONS FOR PREMIUM TAXES
Deductions will be made during the Accumulation Period and Annuity Period,
as appropriate, for the payment of any Premium Taxes that may be levied against
the contract. The range is generally between 0% and 4.00%. (see "Charges Under
The Contract" on page 26.)
I. ASSET CHARGE IN THE SEPARATE ACCOUNT
During both the Accumulation Period and the Annuity Period a charge is made
by HL for providing the expense, mortality and administrative undertakings under
the contracts. With respect to contract values held in DC-I, such charge is an
annual rate of 1.10% (.70% for mortality, .15% for expense and .25% for
administrative undertakings) of the average daily net assets of DC-I. With
respect to contract values held in DC-II such charge is an annual rate of 1.25%
(.85% for mortality, .15% for expense and .25% for administrative undertakings)
of the average daily net assets of DC-II. The rate charged for the expense,
mortality and administrative undertakings under the contracts may be reduced
(see "Experience Rating of Contracts", page 28). The rate charged for the
expense, mortality and administrative undertakings may be periodically increased
by HL subject to a maximum annual rate of 2.00%, provided, however, that no such
increase will occur unless the Commission shall have first approved any such
increase. (See "Charges Under The Contract," page 26.)
J. ANNUAL CONTRACT FEE
An Annual Contract Fee may be charged against the value of each
Participant's Individual Account under a contract at the end of a Participant's
Contract Year. The maximum Annual Contract Fee is $18.00 per year on all
contracts. (See "Charges Under the Contract" page 26). The Annual Contract Fee
may be reduced or waived (see "Experience Rating of Contracts", page 28).
9
<PAGE>
K. MINIMUM PAYMENT
The minimum Contribution that may be made each month on behalf of a
Participant's Individual Account under a contract is $30.00 unless the
Employer's Plan provides otherwise.
L. PAYMENT ALLOCATION TO DC-I AND DC-II
The contracts permit the allocation of Contributions, in multiples of ten
percent of each Contribution among the several Sub-Accounts of DC-I and DC-II.
The minimum amount that may be allocated to or invested in Accumulation Units of
any Sub-Account in a Separate Account shall not be less than $10.00.
M. VOTING RIGHTS OF CONTRACT OWNERS
Contract Owners and/or vested Participants will have the right to vote on
matters affecting the underlying Fund to the extent that proxies are solicited
by such Fund. If a Contract Owner does not vote, HL shall vote such interest in
the same proportion as shares of the Fund for which instructions have been
received by HL. (see "What are my voting rights?" commencing on page 37.)
10
<PAGE>
ACCUMULATION UNIT VALUES
(FOR AN ACCUMULATION UNIT OUTSTANDING THROUGHOUT THE PERIOD)
The following information has been examined by Arthur Andersen LLP,
independent public accountants, whose report thereon is included in the
Statement of Additional Information, which is incorporated by reference to this
Prospectus.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
-------- -------- -------- ---------- ------- ---------- ------- ---------- ------- ----------
DC-I (1.25%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BOND FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period.......... $ 3.689 $ 3.388 $ 3.251 $ 2.827 $ 2.640 $ 2.384 $ 2.244 $ 2.273 $ 2.052 $ 1.722
Accumulation unit
value at end of
period............. $ 3.499 $ 3.689 $ 3.388 $ 3.251 $ 2.827 $ 2.640 $ 2.384 $ 2.244 $ 2.273 $ 2.052
Number of
accumulation units
outstanding at
end of period (in
thousands)......... 9,090 10,092 10,253 10,201 9,871 9,462 9,015 8,461 9,640 8,335
DC-II (1.25%)
BOND FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period.......... $ 3.689 $ 3.389 $ 3.251 $ 2.827 $ 2.641 $ 2.385 $ 2.244 $ 2.273 $ 2.052 $ 1.723
Accumulation unit
value at end of
period............. $ 3.500 $ 3.689 $ 3.389 $ 3.251 $ 2.827 $ 2.641 $ 2.385 $ 2.244 $ 2.273 $ 2.052
Number of
accumulation units
outstanding at
end of period (in
thousands)......... 1,123 992 816 732 724 594 433 320 224 145
DC-I (1.25%)
STOCK FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period.......... $ 6.990 $ 6.190 $ 5.695 $ 4.628 $ 4.875 $ 3.916 $ 3.332 $ 3.201 $ 2.886 $ 2.222
Accumulation unit
value at end of
period............. $ 6.773 $ 6.990 $ 6.190 $ 5.695 $ 4.628 $ 4.875 $ 3.916 $ 3.332 $ 3.201 $ 2.886
Number of
accumulation units
outstanding at
end of period (in
thousands)......... 39,551 37,542 34,861 32,700 29,962 28,198 26,658 25,694 21,622 19,566
DC-II (1.25%)
STOCK FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period.......... $ 6.988 $ 6.188 $ 5.694 $ 4.627 $ 4.874 $ 3.915 $ 3.331 $ 3.200 $ 2.885 $ 2.222
Accumulation unit
value at end of
period............. $ 6.771 $ 6.988 $ 6.188 $ 5.694 $ 4.627 $ 4.874 $ 3.915 $ 3.331 $ 3.200 $ 2.885
Number of
accumulation units
outstanding at
end of period (in
thousands)......... 3,885 3,181 2,517 1,885 1,467 1,156 1,011 951 772 437
DC-I (1.25%)
MONEY MARKET FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period.......... $ 2.450 $ 2.410 $ 2.354 $ 2.248 $ 2.106 $ 1.954 $ 1.842 $ 1.752 $ 1.661 $ 1.550
Accumulation unit
value at end of
period............. $ 2.515 $ 2.450 $ 2.410 $ 2.354 $ 2.248 $ 2.106 $ 1.954 $ 1.842 $ 1.752 $ 1.661
Number of
accumulation units
outstanding at
end of period (in
thousands)......... 9,548 9,298 9,999 10,936 11,181 8,871 8,703 7,521 6,321 7,068
DC-II (1.25%)
MONEY MARKET FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period.......... $ 2.447 $ 2.407 $ 2.351 $ 2.245 $ 2.103 $ 1.951 $ 1.840 $ 1.749 $ 1.659 $ 1.548
Accumulation unit
value at end of
period............. $ 2.512 $ 2.447 $ 2.407 $ 2.351 $ 2.245 $ 2.103 $ 1.951 $ 1.840 $ 1.749 $ 1.659
Number of
accumulation units
outstanding at
end of period (in
thousands)......... 905 886 884 929 881 718 628 389 351 235
<CAPTION>
1984 1983 1982
---------- ---------- ---------
DC-I (1.25%)
<S> <C> <C> <C>
BOND FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period.......... $ 1.541 $ 1.519 $1.318(a)
Accumulation unit
value at end of
period............. $ 1.722 $ 1.541 $1.519
Number of
accumulation units
outstanding at
end of period (in
thousands)......... 8,464 4,693 187
DC-II (1.25%)
BOND FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period.......... $ 1.541 $ 1.519 $1.366(b)
Accumulation unit
value at end of
period............. $ 1.723 $ 1.541 $1.519
Number of
accumulation units
outstanding at
end of period (in
thousands)......... 113 88 28
DC-I (1.25%)
STOCK FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period.......... $ 2.238 $ 1.989 $1.548(a)
Accumulation unit
value at end of
period............. $ 2.222 $ 2.238 $1.989
Number of
accumulation units
outstanding at
end of period (in
thousands)......... 17,831 10,598 332
DC-II (1.25%)
STOCK FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period.......... $ 2.238 $ 1.989 $1.551(c)
Accumulation unit
value at end of
period............. $ 2.222 $ 2.238 $1.989
Number of
accumulation units
outstanding at
end of period (in
thousands)......... 253 141 26
DC-I (1.25%)
MONEY MARKET FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period.......... $ 1.417 $ 1.312 $1.258(d)
Accumulation unit
value at end of
period............. $ 1.550 $ 1.417 $1.312
Number of
accumulation units
outstanding at
end of period (in
thousands)......... 8,416 2,654 2,007
DC-II (1.25%)
MONEY MARKET FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period.......... $ 1.415 $ 1.310 $1.235(c)
Accumulation unit
value at end of
period............. $ 1.548 $ 1.415 $1.310
Number of
accumulation units
outstanding at
end of period (in
thousands)......... 349 67 66
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
-------- -------- -------- ---------- ------- ---------- ------- ---------- ------- ----------
DC-I (1.25%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ADVISERS FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period......... $ 2.993 $ 2.700 $ 2.524 $ 2.123 $ 2.123 $ 1.766 $ 1.566 $ 1.497 $ 1.345 $ 1.074
Accumulation unit
value at end of
period............ $ 2.876 $ 2.993 $ 2.700 $ 2.524 $ 2.123 $ 2.123 $ 1.766 $ 1.566 $ 1.497 $ 1.345
Number of
accumulation units
outstanding at
end of period (in
thousands)........ 126,437 119,064 105,648 93,981 84,223 74,660 62,335 56,502 36,266 22,051
DC-II (1.25%)
ADVISERS FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period......... $ 2.993 $ 2.700 $ 2.524 $ 2.123 $ 2.123 $ 1.766 $ 1.566 $ 1.497 $ 1.345 $ 1.074
Accumulation unit
value at end of
period............ $ 2.876 $ 2.993 $ 2.700 $ 2.524 $ 2.123 $ 2.123 $ 1.766 $ 1.566 $ 1.497 $ 1.345
Number of
accumulation units
outstanding at
end of period (in
thousands)........ 8,279 7,023 7,323 6,220 5,565 5,227 4,631 4,283 3,357 2,429
DC-I (1.25%)
U.S. GOVERNMENT
MONEY MARKET FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period......... $ 1.718 $ 1.694 $ 1.661 $ 1.593 $ 1.500 $ 1.400 $ 1.326 $ 1.269 $ 1.209 $ 1.133
Accumulation unit
value at end of
period............ $ 1.758 $ 1.718 $ 1.694 $ 1.661 $ 1.593 $ 1.500 $ 1.400 $ 1.326 $ 1.269 $ 1.209
Number of
accumulation units
outstanding at
end of period (in
thousands)........ 4,783 4,791 5,498 5,979 5,848 4,576 4,576 3,796 3,172 3,014
DC-II (1.25%)
U.S. GOVERNMENT
MONEY MARKET FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period......... $ 1.718 $ 1.694 $ 1.661 $ 1.593 $ 1.500 $ 1.400 $ 1.326 $ 1.269 $ 1.209 $ 1.133
Accumulation unit
value at end of
period............ $ 1.758 $ 1.718 $ 1.694 $ 1.661 $ 1.593 $ 1.500 $ 1.400 $ 1.326 $ 1.269 $ 1.209
Number of
accumulation units
outstanding at
end of period (in
thousands)........ 483 467 382 381 293 212 163 107 102 77
DC-I (1.25%)
CAPITAL APPRECIATION
FUND SUB-ACCOUNT
Accumulation unit
value at beginning
of period......... $ 4.204 $ 3.524 $ 3.050 $ 2.004 $ 2.278 $ 1.858 $ 1.490 $ 1.579 $ 1.467 $ 1.092
Accumulation unit
value at end of
period............ $ 4.257 $ 4.204 $ 3.524 $ 3.050 $ 2.004 $ 2.278 $ 1.858 $ 1.490 $ 1.579 $ 1.467
Number of
accumulation units
outstanding at
end of period (in
thousands)........ 46,086 36,598 25,900 19,437 15,293 13,508 9,970 8,485 6,552 2,485
DC-II (1.25%)
CAPITAL APPRECIATION
FUND SUB-ACCOUNT
Accumulation unit
value at beginning
of period......... $ 4.204 $ 3.524 $ 3.050 $ 2.004 $ 2.278 $ 1.858 $ 1.490 $ 1.579 $ 1.467 $ 1.092
Accumulation unit
value at end of
period............ $ 4.257 $ 4.204 $ 3.524 $ 3.050 $ 2.004 $ 2.278 $ 1.858 $ 1.490 $ 1.579 $ 1.467
Number of
accumulation units
outstanding at
end of period (in
thousands)........ 6,923 4,940 3,276 2,113 1,455 1,037 787 664 462 117
<CAPTION>
1984 1983 1982
---------- ---------- ---------
DC-I (1.25%)
<S> <C> <C> <C>
ADVISERS FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period......... $ 1.013 $ 1.000(e) --
Accumulation unit
value at end of
period............ $ 1.074 $ 1.013 --
Number of
accumulation units
outstanding at
end of period (in
thousands)........ 14,035 7,971 --
DC-II (1.25%)
ADVISERS FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period......... $ 1.013 $ 1.000(e) --
Accumulation unit
value at end of
period............ $ 1.074 $ 1.013 --
Number of
accumulation units
outstanding at
end of period (in
thousands)........ 2,266 837 --
DC-I (1.25%)
U.S. GOVERNMENT
MONEY MARKET FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period......... $ 1.045 $ 1.000(e) --
Accumulation unit
value at end of
period............ $ 1.133 $ 1.045 --
Number of
accumulation units
outstanding at
end of period (in
thousands)........ 2,068 944 --
DC-II (1.25%)
U.S. GOVERNMENT
MONEY MARKET FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period......... $ 1.045 $ 1.000(e) --
Accumulation unit
value at end of
period............ $ 1.133 $ 1.045 --
Number of
accumulation units
outstanding at
end of period (in
thousands)........ 22 2 --
DC-I (1.25%)
CAPITAL APPRECIATION
FUND SUB-ACCOUNT
Accumulation unit
value at beginning
of period......... $ 1.000(f) -- --
Accumulation unit
value at end of
period............ $ 1.092 -- --
Number of
accumulation units
outstanding at
end of period (in
thousands)........ 113 -- --
DC-II (1.25%)
CAPITAL APPRECIATION
FUND SUB-ACCOUNT
Accumulation unit
value at beginning
of period......... $ 1.000(f) -- --
Accumulation unit
value at end of
period............ $ 1.092 -- --
Number of
accumulation units
outstanding at
end of period (in
thousands)........ 5 -- --
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
-------- -------- -------- ---------- ------- ---------- ------- ---------- ------- ----------
DC-I (1.25%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MORTGAGE SECURITIES
FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period......... $ 2.093 $ 1.993 $ 1.929 $ 1.702 $ 1.571 $ 1.406 $ 1.313 $ 1.296 $ 1.181 $ 1.000(g)
Accumulation unit
value at end of
period............ $ 2.034 $ 2.093 $ 1.993 $ 1.929 $ 1.702 $ 1.571 $ 1.406 $ 1.313 $ 1.296 $ 1.181
Number of
accumulation units
outstanding at
end of period (in
thousands)........ 10,782 11,722 12,046 11,855 10,291 8,919 9,005 8,139 7,902 5,130
DC-II (1.25%)
MORTGAGE SECURITIES
FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period......... $ 2.093 $ 1.993 $ 1.929 $ 1.702 $ 1.571 $ 1.406 $ 1.313 $ 1.296 $ 1.181 $ 1.000(g)
Accumulation unit
value at end of
period............ $ 2.034 $ 2.093 $ 1.993 $ 1.929 $ 1.702 $ 1.571 $ 1.406 $ 1.313 $ 1.296 $ 1.181
Number of
accumulation units
outstanding at
end of period (in
thousands)........ 994 942 802 736 582 845 764 598 431 247
DC-I (1.25%)
INDEX FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period......... $ 1.735 $ 1.605 $ 1.522 $ 1.190 $ 1.255 $ 0.975 $ 0.850 $ 1.000(h) -- --
Accumulation unit
value at end of
period............ $ 1.738 $ 1.735 $ 1.605 $ 1.522 $ 1.190 $ 1.255 $ 0.975 $ 0.850 -- --
Number of
accumulation units
outstanding at
end of period (in
thousands)........ 15,356 13,489 11,720 8,519 6,350 3,639 1,946 1,323 -- --
DC-II (1.25%)
INDEX FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period......... $ 1.735 $ 1.605 $ 1.522 $ 1.190 $ 1.255 $ 0.975 $ 0.850 $ 1.000(h) -- --
Accumulation unit
value at end of
period............ $ 1.738 $ 1.735 $ 1.605 $ 1.522 $ 1.190 $ 1.255 $ 0.975 $ 0.850 -- --
Number of
accumulation units
outstanding at
end of period (in
thousands)........ 2,376 1,862 1,437 871 595 275 116 49 -- --
DC-I (1.25%)
RESPONSIBLY INVESTED
FUND SUB-ACCOUNT
Accumulation unit
value at beginning
of period......... $ 1.573 $ 1.475 $ 1.388 $ 1.207 $ 1.173 $ 1.000(i) -- -- -- --
Accumulation unit
value at end of
period............ $ 1.504 $ 1.573 $ 1.475 $ 1.388 $ 1.207 $ 1.173 -- -- -- --
Number of
accumulation units
outstanding at
end of period (in
thousands)........ 7,899 7,199 5,215 3,508 2,036 629 -- -- -- --
DC-II (1.25%)
RESPONSIBLY INVESTED
FUND SUB-ACCOUNT
Accumulation unit
value at beginning
of period......... $ 1.483 $ 1.391 $ 1.308 $ 1.138 $ 1.106 $ 1.000(i) -- -- -- --
Accumulation unit
value at end of
period............ $ 1.417 $ 1.483 $ 1.391 $ 1.308 $ 1.138 $ 1.106 -- -- -- --
Number of
accumulation units
outstanding at
end of period (in
thousands)........ 693 498 317 187 94 18 -- -- -- --
<CAPTION>
1984 1983 1982
---------- ---------- ---------
DC-I (1.25%)
<S> <C> <C> <C>
MORTGAGE SECURITIES
FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period......... -- -- --
Accumulation unit
value at end of
period............ -- -- --
Number of
accumulation units
outstanding at
end of period (in
thousands)........ -- -- --
DC-II (1.25%)
MORTGAGE SECURITIES
FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period......... -- -- --
Accumulation unit
value at end of
period............ -- -- --
Number of
accumulation units
outstanding at
end of period (in
thousands)........ -- -- --
DC-I (1.25%)
INDEX FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period......... -- -- --
Accumulation unit
value at end of
period............ -- -- --
Number of
accumulation units
outstanding at
end of period (in
thousands)........ -- -- --
DC-II (1.25%)
INDEX FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period......... -- -- --
Accumulation unit
value at end of
period............ -- -- --
Number of
accumulation units
outstanding at
end of period (in
thousands)........ -- -- --
DC-I (1.25%)
RESPONSIBLY INVESTED
FUND SUB-ACCOUNT
Accumulation unit
value at beginning
of period......... -- -- --
Accumulation unit
value at end of
period............ -- -- --
Number of
accumulation units
outstanding at
end of period (in
thousands)........ -- -- --
DC-II (1.25%)
RESPONSIBLY INVESTED
FUND SUB-ACCOUNT
Accumulation unit
value at beginning
of period......... -- -- --
Accumulation unit
value at end of
period............ -- -- --
Number of
accumulation units
outstanding at
end of period (in
thousands)........ -- -- --
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
-------- -------- -------- ---------- ------- ---------- ------- ---------- ------- ----------
DC-I (1.25%)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INTERNATIONAL
OPPORTUNITIES FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period......... $ 1.220 $ 0.924 $ 0.979 $ 0.877 $ 1.000(j) -- -- -- -- --
Accumulation unit
value at end of
period............ $ 1.181 $ 1.220 $ 0.924 $ 0.979 $ 0.877 -- -- -- -- --
Number of
accumulation units
outstanding at
end of period (in
thousands)........ 38,270 19,894 8,061 4,663 2,564 -- -- -- -- --
DC-II (1.25%)
INTERNATIONAL
OPPORTUNITIES FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period......... $ 1.220 $ 0.924 $ 0.979 $ 0.877 $ 1.000(j) -- -- -- -- --
Accumulation unit
value at end of
period............ $ 1.181 $ 1.220 $ 0.924 $ 0.979 $ 0.877 -- -- -- -- --
Number of
accumulation units
outstanding at
end of period (in
thousands)........ 3,640 1,495 553 220 52 -- -- -- -- --
<CAPTION>
1984 1983 1982
---------- ---------- ---------
DC-I (1.25%)
<S> <C> <C> <C>
INTERNATIONAL
OPPORTUNITIES FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period......... -- -- --
Accumulation unit
value at end of
period............ -- -- --
Number of
accumulation units
outstanding at
end of period (in
thousands)........ -- -- --
DC-II (1.25%)
INTERNATIONAL
OPPORTUNITIES FUND
SUB-ACCOUNT
Accumulation unit
value at beginning
of period......... -- -- --
Accumulation unit
value at end of
period............ -- -- --
Number of
accumulation units
outstanding at
end of period (in
thousands)........ -- -- --
</TABLE>
14
<PAGE>
PERFORMANCE RELATED INFORMATION
The Separate Account may advertise certain performance related information
concerning its Sub-Accounts. Performance information about the Sub-Account is
based on the Sub-Account's past performance only and is no indication of future
performance.
The Advisers Fund, Bond Fund, Capital Appreciation Fund, Dividend and Growth
Fund, Index Fund, International Opportunities Fund, Money Market Fund, Mortgage
Securities Fund, Responsibly Invested Fund, Stock Fund, U.S. Government Money
Market Fund, AMS/TCI Advantage Fund, AMS/TCI Growth Fund, AMS/Fidelity VIP II
Asset Manager Fund, AMS/Fidelity VIP II Contrafund Fund, AMS/Fidelity VIP Growth
Fund, and AMS/Fidelity VIP Overseas Fund Sub-Accounts may include total return
in advertisements or other sales material.
When the Sub-Account advertises its total return, it will usually be
calculated for one year, five years, and ten years or some other relevant
periods if the Sub-Account has not been in existence for at least ten years.
Total return is measured by comparing the value of an investment in the
Sub-Account at the beginning of the relevant period to the value of the
investment at the end of the period (assuming the deduction of any contingent
deferred sales charge which would be payable if the investment were redeemed at
the end of the period).
The Bond Fund, Mortgage Securities Fund and TCI Advantage Fund Sub-Accounts
may advertise yield in addition to total return. The yield will be computed in
the following manner: The net investment income per unit earned during a recent
one month period is divided by the unit value on the last day of the period.
This figure reflects the recurring charges on the Separate Account level
including the Annual Contract Fee.
The Money Market Fund and U.S. Government Money Market Fund Sub-Accounts may
advertise yield and effective yield. The yield of the Sub-Account is based upon
the income earned by the Sub-Account over a seven-day period and then
annualized, i.e. the income earned in the period is assumed to be earned every
seven days over a 52-week period and stated as a percentage of the investment.
Effective yield is calculated similarly but when annualized, the income earned
by the investment is assumed to be reinvested in Sub-Account units and thus
compounded in the course of a 52-week period. Yield and effective yield reflect
the recurring charges on the Separate Account level including the Annual
Contract Fee.
Total return at the Separate Account level includes all contract charges:
sales charges, mortality and expense risk charges, and the Annual Contract Fee
and is therefore lower than total return at the Fund level, with no comparable
charges. Likewise, yield at the Separate Account level includes all recurring
charges (except sales charges), and is therefore lower than yield at the Fund
level, with no comparable charges.
15
<PAGE>
INTRODUCTION
This Prospectus has been designed to provide you with the necessary
information to make a decision on purchasing contracts issued in conjunction
with a Deferred Compensation Plan or Qualified Plan of an Employer offered by HL
in Separate Account DC-I or DC-II. This Prospectus describes only the elements
of the contracts pertaining to the variable portion of the contract. The
contracts may contain a General Account option which is not described in this
Prospectus. Please read the Glossary of Special Terms on pages 5 and 6 prior to
reading this Prospectus to familiarize yourself with the terms being used.
THE DC-I AND DC-II CONTRACT AND
SEPARATE ACCOUNT DC-I AND
SEPARATE ACCOUNT TWO (DC-II)
WHAT ARE THE DC-I AND DC-II CONTRACTS?
On contracts issued in conjunction with a Deferred Compensation Plan of an
Employer, variable account Contributions are held in Hartford Life Insurance
Company DC Variable Account-I ("DC-I") during the Accumulation Period and in a
series of Hartford Life Insurance Company Separate Account Two ("DC-II")
during the Annuity Period.
On contracts issued in conjunction with a Qualified Plan of an Employer,
Contributions are held in DC-II during both the Accumulation Period and
Annuity Period.
The Qualified Plan contracts available with respect to DC-II are limited to
voluntary plans established and sponsored by Employers for their Employees.
Qualified Plans provide a way for an Employer to establish a funded retirement
plan for its Employees. The contract is normally issued to the Employer or to
the trustee or custodian of the Employer's Plan.
Deferred Compensation Plans provide a way for an Employer and its Employees
to arrange for eligible employees to defer a certain portion of their income
("Deferred Compensation") to a determinable future date and thereby defer
current federal income taxes on such deferred compensation until actually
received by the Employee according to the terms of the Employer's Plan. An
Employer contemplating the offering of such a Plan should consult with its
legal counsel with respect to any securities aspects of interest in such
Plans. At all times, the Employer is the sole and exclusive owner of the
contract issued with respect to the Plan. An Employee electing to participate
in the Employer's Plan is, at all times, a general creditor of the Employer
establishing the Plan.
Contract Owners who have purchased a prior series of contracts may continue
to make Contributions to such contracts subject to the terms and provisions of
their contracts. New Participants may be added to existing contracts of the
prior series but no new contracts of that series will be issued. Prior
Contract Owners are referred to the Appendix (commencing on page 39) for a
description of the sales charges and other expenses applicable to earlier
series of contracts.
During the Accumulation Period under the contracts, Contributions made by
the Employer to the contracts are used to purchase variable account interests.
Contributions allocated to purchase variable interests may, after the
deductions described hereafter, be invested in selected Sub-Accounts of DC-I
or DC-II, as appropriate.
WHO CAN BUY THESE CONTRACTS?
The group variable annuity contracts offered under this Prospectus are
offered for use in connection with plans qualified under Sections 401(a) or
403(a) of the Internal Revenue Code, including annuity purchase plans adopted
by public school systems and certain tax-exempt organizations according to
Section 403(b) of the Internal Revenue Code; annuity purchase plans adopted
according to Section 408 of the Internal Revenue Code, including employee
pension plans established for employees by a
16
<PAGE>
state, a political subdivision of a state, or an agency or instrumentality of
either a state or a political subdivision of a state, and certain eligible
deferred compensation plans as defined in Section 457 of the Internal Revenue
Code; and pension or profit-sharing plans described in Section 401(a) and
401(k) ("Qualified Contracts").
WHAT ARE THE SEPARATE ACCOUNTS AND HOW DO THEY OPERATE?
Provision has been made for two different Separate Accounts (DC-I and a
series of Separate Account Two ("DC-II")), to be operative during the life of
the contracts which are issued in conjunction with Deferred Compensation
Plans. This arrangement provides for tax treatment of DC-I which may provide
tax advantages to Deferred Compensation Plan Contract Owners. (see "Federal
Tax Considerations," commencing on page 33.) Provision has been made for DC-II
only, to be operative during the life of a contract issued in conjunction with
a Qualified Plan. DC-I and a series of Separate Account Two (DC-II) have been
organized as unit investment trust types of investment companies and have been
registered as such with the Commission under the Investment Company Act of
1940, as amended. The Separate Accounts meet the definition of "separate
account" under federal securities law.
Registration of the Separate Accounts with the Commission does not involve
supervision of the management or investment practices or policies of the
Separate Account or of HL by the Commission. However, HL and the Separate
Accounts are subject to supervision and regulation by the Department of
Insurance of the State of Connecticut.
Under Connecticut law, the assets of the Separate Accounts attributable to
the contracts offered under this Prospectus are held for the benefit of the
owners of, and the persons entitled to payments under, those contracts. Also,
in accordance with the contracts, the assets in the Separate Accounts
attributable to contracts participating in the Separate Accounts are not
chargeable with liabilities arising out of any other business HL may conduct.
So, you will not be affected by the rate of return of HL's general account,
nor by the investment performance of any of HL's other separate accounts.
Your investment is allocated to one or more Sub-Accounts of the Separate
Account. Each Sub-Account is invested exclusively in the assets of one
underlying Fund. Net Purchase Payments and proceeds of transfers between
Sub-Accounts are applied to purchase shares in the appropriate Fund at net
asset value determined as of the end of the Valuation Period during which the
payments were received or the transfer made. All distributions from the Fund
are reinvested at net asset value. The value of your investment during the
Accumulation Period will therefore vary in accordance with the net income and
fluctuation in the individual investments within the underlying Fund portfolio
or portfolios. During the Variable Annuity payout period, both your annuity
payments and reserve values will vary in accordance with these factors.
HL DOES NOT GUARANTEE THE INVESTMENT RESULTS OF THE SUB-ACCOUNTS OR ANY OF
THE UNDERLYING INVESTMENTS. THERE IS NO ASSURANCE THAT THE VALUE OF A CONTRACT
DURING THE YEARS PRIOR TO RETIREMENT OR THE AGGREGATE AMOUNT OF THE VARIABLE
ANNUITY PAYMENTS WILL EQUAL THE TOTAL OF PURCHASE PAYMENTS MADE UNDER THE
CONTRACT. SINCE EACH UNDERLYING FUND HAS DIFFERENT INVESTMENT OBJECTIVES, EACH
IS SUBJECT TO DIFFERENT RISKS. THESE RISKS ARE MORE FULLY DESCRIBED IN THE
ACCOMPANYING FUND PROSPECTUS.
HL reserves the right, subject to compliance with the law, to substitute the
shares of any other registered investment company for the shares of any Fund
held by the Separate Account. Substitution may occur if shares of the Fund(s)
become unavailable or due to changes in applicable law or interpretations of
law. Current law requires notification to you of any such substitution and
approval of the Securities and Exchange Commission.
HL also reserves the right, subject to compliance with the law to offer
additional Sub-Accounts with differing investment objectives.
17
<PAGE>
The Separate Account may be subject to liabilities arising from series whose
assets are attributable to other variable annuity contracts or variable life
insurance policies offered by the Separate Account which are not described in
this Prospectus.
HL may offer additional Separate Account options from time to time under
these contracts. Such new options will be subject to the then in effect
charges, fees, and or transfer restrictions for the contracts for such
additional separate accounts.
OPERATION OF THE CONTRACT
HOW ARE CONTRIBUTIONS CREDITED?
A Master Contract is issued to an association, Employer or Employer group
designated entity. Employers participating in the Master Contract will do so
by executing a Joinder Agreement through which they agree to participate in
the Master Contract. The provisions in the Master Contract are fully
applicable severally to each joining Employer and to Participant's Individual
Accounts thereunder. The variable contracts of prior series are no longer
issued, however, Contract Owners may continue to make Contributions to those
contracts. Such Contract Owners should refer to the Appendix, page 39 for a
description of the sales charges and other expenses applicable to such
contracts.
The net Contributions to a Participant's Individual Account under a contract
are applied to purchase Accumulation Units in the selected Sub-Accounts. In
order to reflect such Contributions on behalf of a Participant, except with
respect to an initial Contribution, there is credited to each Participant's
Individual Account under a contract such Sub-Account Accumulation Units with
respect to DC-I or DC-II, as appropriate, determined by dividing the net
Contribution by the appropriate Accumulation Unit value next computed
following receipt of the payment by HL at its home office, P.O. Box 2999,
Hartford, Connecticut 06104-2999. With respect to an initial Contribution, the
net Contribution is credited to the Participant's Individual Account within
two business days of receipt of a properly completed application and the
initial Contribution. If an application or any other information is incomplete
when received, the net Contribution will be credited to the Participant's
Individual Account within five business days. If an initial Contribution is
not credited within five business days, it will be immediately returned unless
you have been informed of the delay and request that the Contribution not be
returned. Subsequent payments cannot be credited on the same day of receipt
unless they are accompanied by adequate instructions.
The number of Sub-Account Accumulation Units will not change because of a
subsequent change in an Accumulation Unit's value, but the dollar value of an
Accumulation Unit will vary to reflect the investment experience of the
appropriate Fund shares that serve as the underlying investment for the
Sub-Account.
MAY I MAKE CHANGES IN THE AMOUNTS OF MY CONTRIBUTION?
Yes, however the minimum Contribution that may be made at any one time on
behalf of a Participant during the Accumulation Period under a contract is $30
unless the Employer's Plan provides otherwise. If the Plan adopted by the
Contract Owner so provides, the contract permits the allocation of
Contributions, in multiples of 10% among the several Sub-Accounts of DC-I and
DC-II. The minimum amount that may be allocated to any Sub-Account in a
Separate Account shall not be less than $10. Such changes must be requested in
writing and will be effected as of the date the request is received by HL at
its home office, P.O. Box 2999, Hartford, Connecticut 06104-2999.
MAY I TRANSFER ASSETS BETWEEN SUB-ACCOUNTS?
Yes, during the Accumulation Period you may transfer the values of your
Sub-Account allocations from one or more Sub-Accounts to another.
The following transfer restrictions apply to contracts issued or amended on
or after May 1, 1992.
18
<PAGE>
Transfers of assets presently held in the General Account, or which were
held in the General Account at any time during the preceding 3 months, to the
Money Market Fund Sub-Account or to the U.S. Government Money Market
Sub-Account are prohibited.
Similarly, transfers of assets presently held in the Money Market Fund
Sub-Account or U.S. Government Money Market Sub-Account, or which were held in
either of these two Sub-Accounts or the General Account during the preceding 3
months, to the General Account are prohibited.
Such transfers must be requested in writing and will be effected as of the
date the request is received by HL at its home office, P.O. Box 2999,
Hartford, Connecticut 06104-2999. Each transfer may be subject to a $5.00
transfer fee (see "Experience Rating of Contracts", page 28).
In addition, the right, with respect to a Participant's Individual Account,
to transfer monies between Sub-Accounts is subject to modification if HL
determines, in its sole opinion, that the exercise of that right by the
Contract Owner/Participant is, or would be, to the disadvantage of other
Contract Owners/ Participants. Any modification could be applied to transfers
to or from the same or all of the Accounts and could include, but not be
limited to, the requirement of a minimum time period between each transfer,
not accepting transfer requests of an agent acting under a power of attorney
on behalf of more than one Participant or Contract Owner, or limiting the
dollar amount that may be transferred between Sub-Accounts by a Contract
Owner/Participant at any one time. Such restrictions may be applied in any
manner reasonably designed to prevent any use of the transfer right which is
considered by HL to be to the disadvantage of other Contract
Owners/Participants.
WHAT HAPPENS IF THE CONTRACT OWNER FAILS TO MAKE CONTRIBUTIONS?
A contract will be deemed paid-up within 30 days after any anniversary date
of the contract if the Contract Owner has not remitted a Contribution to HL
during the preceding 12 month period. Effective with a change of the contract
to paid-up status, no further Contributions will be accepted by HL and each
Participant's Individual Account will be considered an inactive account until
the commencement of Annuity payments or until the value of the Participant's
Individual Account is disbursed or applied in accordance with the termination
provisions (see "How can a contract be redeemed or surrendered?" page 20.)
Once a contract has been placed on a paid-up status it may not be reinstated.
Persons receiving Annuity payments at the time of any change to paid-up status
will continue to receive their payments.
MAY I ASSIGN OR TRANSFER THE CONTRACT?
The group contracts issued with respect to Deferred Compensation Plans may
be assigned by the Contract Owner. Some forms of Qualified Plans prohibit the
assignment of a contract or any interest therein. No assignment will be
effective until a copy has been filed at the offices of HL at Hartford,
Connecticut, prior to settlement for HL's liability under the contract. HL
assumes no responsibility for the validity of any such assignments.
Participants may not assign their individual account interests.
HOW DO I KNOW WHAT MY ACCOUNT IS WORTH?
The value of the Accumulation Units in DC-I or DC-II representing an
interest in the appropriate Fund shares that are held under the contract were
initially established on the date that Contributions were first contributed to
the appropriate Sub-Account of the Separate Account. The value of the
respective Accumulation Units for any subsequent day is determined by
multiplying the Accumulation Unit value for the preceding day by the net
investment factor of the appropriate Sub-Accounts, as appropriate. (see "How
is the Accumulation Unit value determined?" page 20.)
The value of a Participant's Individual Account under a contract at any time
prior to the commencement of Annuity payments can be determined by multiplying
the total number of Sub-Account Accumulation Units credited to a Participant's
Individual Account by the current Accumulation Unit value for the respective
Sub-Account. There is no assurance that the value in the Sub-Accounts will
equal or exceed the Contributions made by the Contract Owner to such
Sub-Accounts.
19
<PAGE>
HOW IS THE ACCUMULATION UNIT VALUE DETERMINED?
The Accumulation Unit value for each Sub-Account will vary to reflect the
investment experience of the applicable Fund and will be determined on each
"Valuation Day" by multiplying the Accumulation Unit value of the particular
Sub-Account on the preceding Valuation Day by a "Net Investment Factor" for
that Sub-Account for the Valuation Period then ended. The Net Investment
Factor for each of the Sub-Accounts is equal to the net asset value per share
of the corresponding Fund at the end of the Valuation Period (plus the per
share amount of any dividends or capital gains by that Fund if the ex-dividend
date occurs in the Valuation Period then ended) divided by the net asset value
per share of the corresponding Fund at the beginning of the Valuation Period
and subtracting from that amount the amount of any charges assessed during the
Valuation Period then ending. You should refer to the Prospectuses for each of
the Funds which accompany this Prospectus for a description of how the assets
of each Fund are valued since each determination has a direct bearing on the
Accumulation Unit value of the Sub-Account and therefore the value of a
contract.
HOW ARE THE UNDERLYING FUND SHARES VALUED?
The shares of the Fund are valued at net asset value on a daily basis. A
complete description of the valuation method used in valuing Fund shares may
be found in the accompanying Prospectus of each Fund.
PAYMENT OF BENEFITS
WHAT WOULD MY BENEFICIARY RECEIVE AS DEATH PROCEEDS?
The contracts provide that in the event the Participant dies before the
selected Annuity Commencement Date or the Participant's age 65 (whichever
occurs first) the Minimum Death Benefit payable on such contract will be the
greater of (a) the value of the Participant's Individual Account determined as
of the day written proof of death of such person is received by HL, or (b)
100% of the total Contributions made to such Account, reduced by any prior
partial surrenders.
The benefit may be taken by the Contract Owner in a single sum, in which
case payment will be made within seven days of receipt of proof of death by
HL, unless subject to postponement as explained below. In lieu of payment in
one sum, a Contract Owner may elect that the amount be applied, subject to the
suspension provisions described below, under any one of the optional Annuity
forms provided under DC-II (see "What are the available Annuity options under
the contracts?" commencing on page 23) to provide Annuity payments to the
Beneficiary.
An election to receive death benefits under a form of Annuity must be made
prior to a lump sum settlement with HL and within one year after the death by
written notice to HL at its offices in Hartford, Connecticut. Benefit proceeds
due on death may be applied to provide variable payments, fixed payments, or a
combination of variable and fixed payments. No election to provide Annuity
payments will become operative unless the initial Annuity payment is at least
$20.00 on either a variable or fixed basis, or $20.00 on each basis when a
combination benefit is elected. The manner in which the Annuity payments are
determined and in which they may vary from month to month are the same as
applicable to a Participant's Individual Account after retirement. (see "How
are contributions made to establish my Annuity account?" page 23.)
HOW CAN A CONTRACT BE REDEEMED OR SURRENDERED?
THERE ARE CERTAIN RESTRICTIONS ON SECTION 403(B) TAX-SHELTERED ANNUITIES. AS
OF DECEMBER 31, 1988, ALL SECTION 403(B) ANNUITIES HAVE LIMITS ON FULL AND
PARTIAL SURRENDERS. CONTRIBUTIONS TO THE CONTRACT MADE AFTER DECEMBER 31, 1988
20
<PAGE>
AND ANY INCREASES IN CASH VALUE AFTER DECEMBER 31, 1988 MAY NOT BE DISTRIBUTED
UNLESS THE CONTRACT OWNER/EMPLOYEE HAS (A) ATTAINED AGE 59 1/2, (B) TERMINATED
EMPLOYMENT, (C) DIED, (D) BECOME DISABLED OR (E) EXPERIENCED FINANCIAL
HARDSHIP.
DISTRIBUTIONS DUE TO FINANCIAL HARDSHIP OR SEPARATION FROM SERVICE MAY STILL
BE SUBJECT TO A PENALTY TAX OF 10%.
HL WILL NOT ASSUME ANY RESPONSIBILITY IN DETERMINING WHETHER A WITHDRAWAL IS
PERMISSIBLE, WITH OR WITHOUT TAX PENALTY, IN ANY PARTICULAR SITUATION; OR IN
MONITORING WITHDRAWAL REQUESTS REGARDING PRE OR POST JANUARY 1, 1989 ACCOUNT
VALUES.
On termination of Contributions to a contract by the Contract Owner on
behalf of a Participant prior to the selected Annuity Commencement Date for
such Participant, the Contract Owner will have the following options:
1.To continue a Participant's Individual Account in force under the
contract. Under this option, when the selected Annuity Commencement Date
arrives, the Contract Owner will begin to receive Annuity payments under the
selected Annuity option under the contract. (See "What are the available
Annuity options under the contracts?" commencing on page 23.) At any time in
the interim, a Contract Owner may surrender a Participant's Individual
Account for a lump sum cash settlement in accordance with 3. below.
2.To provide Annuity payments immediately. The values in a Participant's
Individual Account may be applied, subject to contractual provisions, to
provide for Fixed or Variable Annuity payments, or a combination thereof,
commencing immediately, under the selected Annuity option under the
contract. (See "What are the available Annuity options under the contracts?"
commencing on page 23.)
3.To surrender a Participant's Individual Account under the contract for a
lump sum cash settlement, in which event the Annual Contract Fee and any
applicable contingent deferred sales charges will be deducted. (See "How are
the charges under these contracts made?" commencing on page 26.) The amount
received will be the net termination value next computed after receipt by HL
at its home office, P. O. Box 2999, Hartford, CT 06104-2999, of a written
surrender request for complete surrender. Payment will normally be made as
soon as possible but not later than seven days after the written request is
received by HL.
4.In the case of a partial surrender the amount requested is either taken
out of the specified Sub-Account(s) or if no Sub-Account(s) are
specified, the requested amount is taken out of all applicable
Sub-Account(s) on a pro rata basis. Within this context, the contingent
deferred sales charges are taken as a percentage of the amount withdrawn.
(see "How are the charges under these contracts made?" page 26.) If the
contingent deferred sales charges have been experience rated (see "How are
the charges under these contracts made?", page 26), any amounts not subject
to the contingent deferred sales charge will be deemed to be surrendered
last.
CAN PAYMENT OF THE REDEMPTION OR SURRENDER VALUE EVER BE POSTPONED BEYOND THE
SEVEN DAY PERIOD?
Yes. It may be postponed whenever (a) the New York Stock Exchange is closed,
except for holidays or weekends, or trading on the New York Stock Exchange is
restricted as determined by the Securities and Exchange Commission; (b) the
Securities and Exchange Commission permits postponement and so orders; or (c)
the Securities and Exchange Commission determines that an emergency exists
making valuation of the amounts or disposal of securities not reasonably
practicable.
21
<PAGE>
MAY I SURRENDER ONCE ANNUITY PAYMENTS HAVE STARTED?
Except with respect to Option 5 (on a variable payout), once Annuity
payments have commenced for an Annuitant, no surrender of a life Annuity
benefit can be made for the purpose of receiving a partial withdrawal or a
lump sum settlement in lieu thereof. Any surrender out of Option 5 will be
subject to contingent deferred sales charges, if applicable.
ARE THERE DIFFERENCES IN THE CONTRACT RELATED TO THE TYPE OF PLAN IN WHICH THE
PARTICIPANT IS ENROLLED?
Annuity Rights are provided under contracts issued only in conjunction with
Deferred Compensation Plans, with respect to DC-I only, entitling the Contract
Owner to have Annuity payments at the rates set forth in the contract at the
time of issue. Such rates will be made applicable to all amounts held in a
Participant's Individual Account during the Annuity Period under such contract
which do not exceed five times the gross Contributions made during the
Accumulation Period with respect to such Participant's Individual Account
thereunder. To the extent that the value of a Participant's Individual Account
at the end of the Accumulation Period is insufficient to fund the Annuity
Rights provided, the Contract Owner shall have the right to apply additional
Contributions to the values held in a Participant's Individual Account in
order to exercise all of the Annuity Rights provided. Any amounts in excess
thereto may be applied by HL at Annuity rates then being offered by HL.
CAN A CONTRACT BE SUSPENDED BY A CONTRACT OWNER?
A contract may be suspended by the Contract Owner by giving written notice
at least 90 days prior to the effective date of such suspension to HL at its
home office, P. O. Box 2999, Hartford, Connecticut 06104-2999. A contract will
be suspended automatically on its anniversary if the Contract Owner fails to
assent to any modification of a contract, as described under the caption "Can
a contract be modified?" which modifications would have become effective on or
before that anniversary. Upon suspension, Contributions will continue to be
accepted by HL under the contract, and subject to the terms thereof, as they
are applicable to Participant's Individual Accounts under the contracts prior
to such suspension, but no Contributions will be accepted on behalf of any new
Participant's Individual Accounts. Annuitants at the time of any suspension
will continue to receive their Annuity payments. The suspension of a contract
will not preclude the Contract Owner's applying existing Participant's
Individual Accounts under DC-I or DC-II, as appropriate, to the purchase of
Fixed or Variable Annuity benefits.
HOW DO I ELECT AN ANNUITY COMMENCEMENT DATE AND FORM OF ANNUITY?
The Contract Owner selects an Annuity Commencement Date, usually between a
Participant's 50th and 75th birthdays, and an Annuity Option. The Annuity
Commencement Date may not be deferred beyond a Participant's 75th birthday or
such earlier date as may be required by applicable law and/or regulation. The
Annuity Commencement Date and/or the Annuity option may be changed from time
to time, but any such change must be made at least 30 days prior to the date
on which Annuity payments are scheduled to begin. Annuity payments will
normally be made on the first business day of each month.
The contract contains five optional annuity forms which may be selected on
either a Fixed or Variable Annuity basis, or a combination thereof. If a
Contract Owner does not elect otherwise, HL reserves the right to begin
Annuity payments at age 65 under Option 2 with 120 monthly payments certain.
However, HL will not assume responsibility in determining or monitoring
minimum distributions beginning at age 70 1/2.
When an Annuity is purchased by a Contract Owner for an Annuitant, unless
otherwise specified, DC-I or DC-II Accumulation Unit values will be applied to
provide a Variable Annuity under DC-II.
22
<PAGE>
WHAT IS THE MINIMUM AMOUNT THAT I MAY SELECT FOR AN ANNUITY PAYMENT?
The minimum Annuity payment is $20.00. No election may be made which results
in a first payment of less than $20.00. If at any time Annuity payments are or
become less than $20.00, HL has the right to change the frequency of payment
to intervals that will result in payments of at least $20.00.
HOW ARE CONTRIBUTIONS MADE TO ESTABLISH MY ANNUITY ACCOUNT?
During the Annuity Period, contract values and any allowable additional
Contributions made by the Contract Owner for the purpose of effecting Annuity
payments under the contract (Deferred Compensation Plans Only) are, based upon
the information received from the Contract Owner, applied to establish
Annuitant's Accounts under the contracts to provide Fixed or Variable Annuity
payments.
At the end of the Accumulation Period with respect to a Participant's
Individual Account there is an automatic transfer of all DC-I values to DC-II
which are used to establish Annuitant's Accounts with respect to DC-II. Such
transfer will be effected by a transfer of ownership of DC-I interests in the
underlying securities to DC-II. The value of a Participant's Individual
Account that is transferred to DC-II hereunder will be without application of
any sales charges or other expenses, with the exception of any applicable
Premium Taxes. DC-II values held during the Accumulation Period under a
contract are retained in DC-II.
In addition to having the right to allocate the value of a Participant's
Individual Account held in the Separate Account during the Accumulation Period
to establish an Annuitant's Account during the Annuity Period, a Deferred
Compensation Plan Contract Owner (with respect to DC-I, only) may make
additional Contributions at the beginning of the Annuity Period for the
purpose of effecting increased Annuity payments for Participants. All such
additional Contributions shall be subject to a deduction for sales expenses,
as well as any applicable Premium Taxes as follows:
<TABLE>
<CAPTION>
TOTAL
ADDITIONAL CONTRIBUTION TO AN ANNUITANT'S ACCOUNT DEDUCTION
------------------------------------------------------------ ----------
<S> <C>
On the first $50,000.................................... .50 %
On the next $50,000..................................... 2.00 %
On the excess over $100,000............................. 1.00 %
</TABLE>
WHAT ARE THE AVAILABLE ANNUITY OPTIONS UNDER THE CONTRACTS?
OPTION 1: LIFE ANNUITY
A Life Annuity is an Annuity payable during the lifetime of the Annuitant
and terminating with the last monthly payment preceding the death of the
Annuitant. Life Annuity Options (Options 1-4) offer the maximum level of
monthly payments of any of the options since there is no guarantee of a
minimum number of payments nor a provision for a death benefit payable to a
Beneficiary.
It would be possible under this option for an Annuitant to receive only one
Annuity payment if he died prior to the due date of the second Annuity
payment, two if he died before the due date of the third Annuity payment, etc.
*OPTION 2: LIFE ANNUITY WITH 120, 180 OR 240 MONTHLY PAYMENTS CERTAIN
This Annuity option is an Annuity payable monthly during the lifetime of an
Annuitant with the provision that if, at the death of the Annuitant, payments
have been made for less than 120, 180 or 240 months, as elected, then the
present value as of the date of the Participant's death at the current dollar
amount at the date of death of any remaining guaranteed monthly payments will
be paid in one sum to the Beneficiary or Beneficiaries designated unless other
provisions will have been made and approved by HL.
23
<PAGE>
*OPTION 3: UNIT REFUND LIFE ANNUITY
This Annuity option is an Annuity payable monthly during the lifetime of the
Annuitant terminating with the last payment due prior to the death of the
Annuitant except that an additional payment will be made to the Beneficiary or
Beneficiaries if (a) below exceeds (b) below:
total amount applied under the option
(a) = at the Annuity Commencement Date
--------------------------------------------------------------------
Annuity Unit value at the Annuity Commencement Date
number of Annuity Units represented number of monthly
(b) = by each monthly Annuity payment made X Annuity payments made
The amount of the additional payments will be determined by multiplying such
excess by the Annuity Unit value as of the date that proof of death is
received by HL.
OPTION 4: JOINT AND LAST SURVIVOR ANNUITY
An Annuity payable monthly during the joint lifetime of the Annuitant and a
designated second person, and thereafter during the remaining lifetime of the
survivor, ceasing with the last payment prior to the death of the survivor.
It would be possible under this Option for an Annuitant and designated
second person in the event of the common or simultaneous death of the parties
to receive only one payment in the event of death prior to the due date for
the second payment and so on.
*OPTION 5: PAYMENTS FOR A DESIGNATED PERIOD
An amount payable monthly for the number of years selected. Under the
contracts the minimum number of years is five.
In the event of the Annuitant's death prior to the end of the designated
period, any then remaining balance of proceeds will be paid in one sum to the
Beneficiary or Beneficiaries designated unless other provisions will have been
made and approved by HL. Option 5 is an option that does not involve life
contingencies and thus no mortality guarantee.
Surrenders are subject to the limitations set forth in the contract and any
applicable contingent deferred sales charges. (see "How are charges under
these contracts made?" page 26.)
* ON QUALIFIED PLANS, OPTIONS 2, 3 AND 5 ARE AVAILABLE ONLY IF THE GUARANTEED
PAYMENT PERIOD IS LESS THAN THE LIFE EXPECTANCY OF THE ANNUITANT AT THE TIME
THE OPTION BECOMES EFFECTIVE. SUCH LIFE EXPECTANCY SHALL BE COMPUTED ON THE
BASIS OF THE MORTALITY TABLE PRESCRIBED BY THE IRS, OR IF NONE IS PRESCRIBED,
THE MORTALITY TABLE THEN IN USE BY HL.
- --------------------------------------------------------------------------------
UNDER ANY OF THE ANNUITY OPTIONS ABOVE, EXCEPT OPTION 5 (ON A VARIABLE BASIS),
NO SURRENDERS ARE PERMITTED AFTER ANNUITY PAYMENTS COMMENCE.
- --------------------------------------------------------------------------------
HOW ARE VARIABLE ANNUITY PAYMENTS DETERMINED?
The value of the Annuity Unit for each Sub-Account in the Separate Account
for any day is determined by multiplying the value for the preceding day by
the product of (1) the net investment factor (see "How is the Accumulation
Unit value determined?" commencing on page 20) for the day for which the
Annuity Unit value is being calculated, and (2) a factor to neutralize the
assumed net investment rate discussed below.
When Annuity payments are to commence, the value of the contract is
determined as the product of the value of the Accumulation Unit credited to
each Sub-Account as of the close of business on the fifth business day
preceding the date the first Annuity payment is due and the number of
Accumulation Units credited to each Sub-Account as of the date the Annuity is
to commence.
24
<PAGE>
The contract contains tables indicating the dollar amount of the first
monthly payment under the optional forms of Annuity for each $1,000 of value
of a Sub-Account under a contract. The first monthly payment varies according
to the form of Annuity selected. The contract contains Annuity tables derived
from the 1983a Individual Annuity Mortality Table with an assumed interest
rate ("A.I.R.") of 4.00% or 5.00% per annum. The total first monthly Annuity
payment is determined by multiplying the value (expressed in thousands of
dollars) of a Sub-Account (less any applicable Premium Taxes) by the amount of
the first monthly payment per $1,000 of value obtained from the tables in the
contracts. With respect to fixed annuities only, the current rate will be
applied if it is higher than the rate under the tables in the contracts.
Level Annuity payments would be provided if the net investment rate remained
constant and equal to the A.I.R. In fact, payments will vary up or down in the
proportion that the net investment rate varies up or down from the A.I.R. A
higher assumed interest rate may produce a higher initial payment but more
slowly rising and more rapidly falling subsequent payments than would a lower
interest rate assumption.
The amount of the first monthly Annuity payment, determined as described
above, is divided by the value of an Annuity Unit for the appropriate
Sub-Account as of the close of business on the fifth business day preceding
the day on which the payment is due in order to determine the number of
Annuity Units represented by the first payment. This number of Annuity Units
remains fixed during the Annuity Period, and in each subsequent month the
dollar amount of the Annuity payment is determined by multiplying this fixed
number of Annuity Units by the then current Annuity Unit value.
The Annuity payments will be made on the date selected. The Annuity Unit
value used in calculating the amount of the Annuity payments will be based on
an Annuity Unit value determined as of the close of business on a day not more
than the fifth business day preceding the date of the Annuity payment.
In order to comply with the requirements of the Supreme Court decision dated
July 6, 1983, in the case of Norris vs. Arizona Governing Committee, HL will,
with respect to all contracts which have been issued with sex distinct rates,
increase the guaranteed Annuity rates provided for females under the contracts
to the guaranteed Annuity rate provided for males. Thus, there will no longer
be any sex distinct Annuity rates with respect to those contracts. With
respect to new contracts, Annuity rates will be based on a guaranteed Annuity
rate table which is identical for both males and females.
Here is an example of how a variable annuity is determined:
ILLUSTRATION OF ANNUITY PAYMENTS:
(UNISEX) AGE 65, LIFE ANNUITY WITH 120 PAYMENTS CERTAIN
<TABLE>
<C> <S> <C>
1. Net amount applied........................................ $ 139,782.50
2. Initial monthly income per $1,000 of payment applied...... 6.13
3. Initial monthly payment (1 X 2 DIVIDED BY 1,000)......... 856.87
4. Annuity Unit Value........................................ 3.125
5. Number of monthly annuity units (3 DIVIDED BY 4)......... 274.198
6. Assume annuity unit value of second month equal to........ 2.897
7. Second monthly payment (6 X 5)............................ 794.35
8. Assume annuity unit value for third month equal to........ 3.415
9. Third month payment (8 X 5)............................... 936.39
</TABLE>
The above figures are simply to illustrate the calculation of a variable
annuity and have no bearing on the actual historical record of any Separate
Account.
CAN A CONTRACT BE MODIFIED?
The contracts may, subject to any federal and state regulatory restrictions,
be modified at any time by written agreement between the Contract Owner and
HL. No modification will affect the amount or
25
<PAGE>
term of any Annuities begun prior to the effective date of the modification,
unless it is required to conform the contract to, or give the Contract Owner
the benefit of, any federal or state statutes or any rule or regulation of the
U.S. Treasury Department or Internal Revenue Service.
On or after the fifth anniversary of any contract HL may change, from time
to time, any or all of the terms of the contracts by giving 90 days advance
written notice to the Contract Owner, except that the Annuity tables,
guaranteed interest rates and the contingent deferred sales charges which are
applicable at the time a Participant's Individual Account is established under
a contract, will continue to be applicable. In addition, the limitations on
the deductions for the Mortality, Expense Risks and Administrative
Undertakings and the Annual Contract Fee will continue to apply in all
Contract Years.
HL reserves the right to modify the contract, but only if such modification:
(i) is necessary to make the contract or the Separate Account comply with any
law or regulation issued by a governmental agency to which HL is subject; or
(ii) is necessary to assure continued qualification of the contract under the
Code or other federal or state laws relating to retirement annuities or
annuity contracts; or (iii) is necessary to reflect a change in the operation
of the Separate Account or the Sub-Account(s); or (iv) provides additional
Separate Account options; or (v) withdraws Separate Account options. In the
event of any such modification HL will provide notice to the Contract Owner or
to the payee(s) during the Annuity period. HL may also make appropriate
endorsement in the contract to reflect such modification.
CHARGES UNDER THE CONTRACT
HOW ARE THE CHARGES UNDER THESE CONTRACTS MADE?
No deduction for sales expense is made at the time of allocation of
Contributions to the contracts. A deduction for contingent deferred sales
charges is made if there is any surrender of contract values during the first
12 Participant Contract Years. During the first 6 years thereof, a maximum
deduction of 7% will be made against the full amount of any such surrender.
During the next 6 years thereof, a maximum deduction of 5% will be made
against the full amount of any such surrender. Such charges will in no event
ever exceed 8.50% when applied as a percentage against the sum of all
Contributions to a Participant's Individual Account. The amount or term of the
contingent deferred sales charge may be reduced (see "Experience Rating of
Contracts", page 28).
In the case of a redemption in which you request a certain dollar amount be
withdrawn, the sales charge is deducted from the amount withdrawn and the
balance is paid to you. Example: You request a total withdrawal, your account
value is $1,000 and the applicable sales load is 5%. Your Sub-Account(s) will
be surrendered and you will receive $950 (i.e., the $1,000 total withdrawal
less the 5% sales charge). This is the method applicable on a full surrender
of your contract. In the case of a partial redemption in which you request to
receive a specified amount, the sales charge will be calculated on the total
amount that must be withdrawn from your Sub-Account(s) in order to provide you
with the amount requested. Example: You request to receive $1,000 and the
applicable sales load is 5%. Your Sub-Account(s) will be reduced by $1,052.63
(i.e., a total withdrawal of $1,052.63 which results in a $52.63 sales charge
($1,052.63 X 5%) and a net amount paid to you of $1,000 as requested).
HL reserves the right to limit any increase in the Contributions made to a
Participant's Individual Account under any contract to not more than three
times the total Contributions made on behalf of such Participant during the
initial 12 consecutive months following the Date of Coverage. Increases in
excess of those described will be accepted only with the consent of HL and
subject to the then current deductions being made under the contracts.
IS THERE EVER A TIME WHEN THE SALES CHARGES DO NOT APPLY?
No deduction for contingent deferred sales charges will be made on
contracts: (1) in the event of death of a Participant, (2) if the value of a
Participant's Individual Account is paid out under one of the available
Annuity options under the contracts (except that a surrender out of Annuity
Option 5 is
26
<PAGE>
subject to sales charges, if applicable) or (3) if on Public Employee Deferred
Compensation Plans only, a Participant in a Plan makes a financial hardship
withdrawal as defined in the Regulations issued by the IRS with respect to the
IRC Section 457 governmental deferred compensation plans. The Plan of the
Employer must also provide for such hardship withdrawals. Participants with a
Date of Coverage prior to October 15, 1986 may withdraw up to 10% of the value
of their Individual Account on a non-cumulative basis each Participant's
Contract Year, after the first, without application of contingent deferred
sales charges. Participant's with a Date of Coverage on or after October 15,
1986 do not have this 10% withdrawal privilege.
WHAT DO THE SALES CHARGES COVER?
The contingent deferred sales charges, when applicable, will be used to
cover expenses relating to the sale and distribution of the contracts,
including commissions paid to any distribution organization and its sales
personnel, the cost of preparing sales literature and other promotional
activities. It is anticipated that gross commissions paid on the sale of the
contracts will not exceed 5% of a Contribution. To the extent that these
charges do not cover such distribution expenses they will be borne by HL from
its general assets, including surplus or possible profit from mortality and
expense risk charges.
WHAT IS THE MORTALITY, EXPENSE RISK AND ADMINISTRATIVE CHARGE?
Although Variable Annuity payments made under the contracts will vary in
accordance with the investment performance of the underlying Fund shares held
in the Sub-Account(s), the payments will not be affected by (a) HL's actual
mortality experience among Annuitants before or after retirement or (b) HL's
actual expenses, including certain administrative expenses, if greater than
the deductions provided for in the contracts because of the expense and
mortality undertakings by HL.
In providing an expense undertaking with respect to both DC-I and DC-II, HL
assumes the risk that the deductions for contingent deferred sales charges,
and the Annual Contract Fee under the contracts may be insufficient to cover
the actual future costs.
The mortality undertaking provided by HL under the contracts, assuming the
selection of one of the forms of life annuities, is to make monthly Annuity
payments (determined in accordance with the annuity tables and other
provisions contained in the contract) to Contract Owners on Annuitants'
Accounts regardless of how long all Annuitants may live and regardless of how
long all Annuitants as a group may live. This undertaking assures a Contract
Owner that neither the longevity of an Annuitant nor an improvement in life
expectancy will have any adverse effect on the monthly Annuity payments the
Employee will receive under the contract. It thus relieves the Contract Owner
from the risk that Participants in the Plan will outlive the funds
accumulated. The mortality undertaking is based on HL's present actuarial
determination of expected mortality rates among all Annuitants.
If actual experience among Annuitants deviates from HL's actuarial
determination of expected mortality rates among Annuitants because, as a
group, their longevity is longer than anticipated, HL must provide amounts
from its general funds to fulfill its contract obligations. In that event, a
loss will fall on HL. Conversely, if longevity among Annuitants is lower than
anticipated, a gain will result to HL. HL also assumes the liability for
payment of the Minimum Death Benefit provided under the contract.
The administrative undertaking provided by HL assures the Contract Owner
that administration will be provided throughout the entire life of the
contract.
For assuming these risks HL presently charges 1.10% (.70% for mortality,
.15% for expense and .25% for administrative undertakings) of the average
daily net assets of DC-I and 1.25% (.85% for mortality, .15% for expense and
.25% for administrative undertakings) of the average daily net assets of
DC-II, as appropriate. The rate charged for the expense, mortality and
administrative undertakings under the contracts may be reduced (see
"Experience Rating of Contracts", page 28). The rate charged for the expense,
mortality and administrative undertakings may be periodically increased by HL
subject to a maximum annual rate of 2.00%, provided, however, that no such
increase will occur unless the Commission shall have first approved such
increase.
27
<PAGE>
ARE THERE ANY OTHER ADMINISTRATIVE CHARGES?
There may be an Annual Contract Fee deduction from the value of each
Participant's Individual Account under the contracts. The maximum Annual
Contract Fee is $18 per year but may be reduced or waived (see "Experience
Rating of Contracts", page 28).
The Annual Contract Fee will be deducted from the value of each such Account
on the last business day of each Participant's Contract Year provided,
however, that if the value of a Participant's Individual Account is redeemed
in full at any time before the last business day of the Participant's Contract
Year, then the Annual Contract Fee charge will be deducted from the proceeds
of such redemption. No deduction for the Annual Contract Fee will be made
during the Annuity Period under the contracts.
In the event that the contract contains a General Account option or the
contract is issued in conjunction with a separate HL General Account contract,
the Annual Contract Fee as described above will be charged against DC-I or
DC-II (as applicable) and the General Account contract or option on a pro rata
basis.
EXPERIENCE RATING OF CONTRACTS
Certain of the charges and fees described in this Prospectus may be reduced
("experience rated") for contracts depending on the total number of
Participants, the total of all Participants' Individual Accounts and/or
anticipated present or future expense levels. HL, in its discretion, may
experience rate a contract (either prospectively or retrospectively) by: (1)
reducing the amount or term of any applicable contingent deferred sales
charge, (2) reducing the amount of, or waiving the Annual Contract Fee, (3)
reducing the Transfer Fee, (4) reducing the mortality and expense risk charge,
or (5) by any combination of the above. Reductions in these charges will not
be unfairly discriminatory against any person, including the affected Contract
Owners/Participants funded by the Separate Account. Experience rating credits
have been given on certain cases.
HOW MUCH ARE THE DEDUCTIONS FOR PREMIUM TAXES ON THESE CONTRACTS?
A deduction is also made for Premium Taxes, if applicable, imposed by a
state or other governmental entity. Certain states impose a Premium Tax,
ranging up to 4.00%. On any contract subject to a Premium Taxes, HL will pay
the taxes imposed by the applicable taxing authorities. HL, at its sole
discretion, will deduct the taxes from Contributions when received, from the
proceeds at surrender, or from the amount applied to effect an Annuity at the
time Annuity payments commence.
ARE THERE ANY OTHER DEDUCTIONS?
Reallocation of monies between or among Sub-Accounts under the contracts may
be subject to a $5.00 charge for each such transfer (see "Experience Rating of
Contracts", page 28).
HARTFORD LIFE INSURANCE COMPANY AND THE FUNDS
WHAT IS HL?
HL was originally incorporated under the laws of Massachusetts on June 5,
1902. It was subsequently redomiciled to Connecticut. It is a stock life
insurance company engaged in the business of writing health and life
insurance, both ordinary and group, in all states of the United States and the
District of Columbia. The offices of HL are located in Simsbury, Connecticut;
however, its mailing address is P.O. Box 2999, Hartford, CT 06104-2999. HL is
ultimately 100% owned by Hartford Fire Insurance Company, one of the largest
multiple lines insurance carriers in the United States. Hartford Fire
Insurance Company is a subsidiary of ITT Corporation. HL is rated A++
(superior) by A.M. Best and Company, Inc. on the basis of its financial
soundness and operating performance, the highest ratings provided by this
service. HL has an AA+ rating from Standard and Poor's and Duff and Phelps'
highest rating (AAA) on the basis of its claims-paying ability.
28
<PAGE>
These ratings do not apply to the performance of the Separate Account.
However, the contractual obligations under this variable annuity are the
general corporate obligations of HL. These ratings do apply to HL's ability to
meet its insurance obligations under the contracts.
WHAT ARE THE FUNDS?
Hartford Stock Fund, Inc. was organized on March 11, 1976. The Responsibly
Invested Balanced Portfolio (formerly Socially Responsive Fund) is a series of
the Acacia Capital Corporation, which was incorporated on September 27, 1982.
Hartford Advisers Fund, Inc., Hartford Bond Fund, Inc., Hartford U.S.
Government Money Market Fund, Inc., and HVA Money Market Fund, Inc. were all
organized on December 1, 1982. Hartford Index Fund, Inc. was organized on May
16, 1983. Hartford Capital Appreciation Fund, Inc. was organized on September
20, 1983. Hartford Mortgage Securities Fund, Inc. was organized on October 5,
1984. Hartford International Opportunities Fund, Inc. was organized on January
25, 1990. Hartford Dividend and Growth Fund, Inc. was organized on March 16,
1994. All of the Funds were incorporated under the laws of the State of
Maryland and are collectively referred to as the "Hartford Funds."
The TCI Advantage and TCI Growth Funds ("TCI Funds") are separate series of
shares issued by TCI Portfolios, Inc. ("TCIP"), a corporation organized under
the laws of the state of Maryland. TCIP is a registered, diversified,
open-ended investment management company under the Investment Company Act of
1940.
The Fidelity Funds involve two diversified open-ended management investment
companies, each with multiple portfolios and organized as a Massachusetts
business trust. The Growth Portfolio and Overseas Portfolio are portfolios of
the Variable Insurance Products Fund. The Asset Manager Portfolio and
Contrafund Portfolio is a portfolio of the Variable Insurance Products Fund
II. Each Fund continually issues an unlimited number of full and fractional
shares of beneficial interest in the Fund.
The investment objectives of each of the Funds are as follows:
HARTFORD FUNDS
HARTFORD ADVISERS FUND, INC.
To achieve maximum long term total rate of return consistent with prudent
investment risk by investing in common stock and other equity securities,
bonds and other debt securities, and money market instruments. The investment
adviser will vary the investments of the Fund among equity and debt securities
and money market instruments depending upon its analysis of market trends.
Total rate of return consists of current income, including dividends, interest
and discount accruals and capital appreciation.
HARTFORD BOND FUND, INC.
To achieve maximum current income consistent with preservation of capital by
investing primarily in fixed-income securities.
HARTFORD CAPITAL APPRECIATION FUND, INC.
To achieve growth of capital by investing in securities selected solely on
the basis of potential for capital appreciation; income, if any, is an
incidental consideration.
*HARTFORD DIVIDEND AND GROWTH FUND, INC.
To seek a high level of current income consistent with growth of capital and
reasonable investment risk.
29
<PAGE>
HARTFORD INDEX FUND, INC.
To provide investment results that correspond to the price and yield
performance of publicly-traded common stocks in the aggregate, as represented
by the Standard & Poor's 500 Composite Stock Price Index (the "Index"). The
Fund is neither sponsored by, nor affiliated with, Standard & Poor's
Corporation.
HARTFORD INTERNATIONAL OPPORTUNITIES FUND, INC.
To achieve long-term total return consistent with prudent investment risk
through investment primarily in equity securities issued by foreign companies.
HARTFORD MORTGAGE SECURITIES FUND, INC.
To achieve maximum current income consistent with safety of principal and
maintenance of liquidity by investing primarily in mortgage-related
securities, including securities issued by the Government National Mortgage
Association ("GNMA").
RESPONSIBLY INVESTED BALANCED PORTFOLIO (CALVERT RESPONSIBLY INVESTED
BALANCED PORTFOLIO SERIES, ACACIA CAPITAL CORPORATION)(FORMERLY "SOCIALLY
RESPONSIVE FUND")
To seek growth of capital through investments in enterprises which make a
significant contribution to society through products and services and through
the way they do business.
HARTFORD STOCK FUND, INC.
To achieve long-term capital growth primarily through capital appreciation,
with income a secondary consideration, by investing in equity-type securities.
HARTFORD U.S. GOVERNMENT MONEY MARKET FUND, INC.
To achieve maximum current income consistent with preservation of capital by
investing in short-term, marketable obligations issued or guaranteed by the
United States Government or by agencies or instrumentalities of the United
States Government whether or not they are guaranteed by the full faith and
credit of the federal government.
HVA MONEY MARKET FUND, INC.
To achieve maximum current income consistent with liquidity and preservation
of capital by investing in money market securities.
*TCI FUNDS
TCI PORTFOLIOS, INC. TCI ADVANTAGE
To seek capital growth over time by investing primarily in common stocks
that are considered by the investment manager to have better-than-average
prospects for appreciation.
TCI PORTFOLIOS, INC. TCI GROWTH
To provide reasonable share price stability through its holdings of money
market securities and bonds, provide competitive rates of current income with
government-backed securities, and offer the potential for long-term returns
higher than those of fixed income investments through its use of common
stocks.
*FIDELITY FUNDS
FIDELITY INVESTMENTS VIP II ASSET MANAGER
To seek high total return with reduced risk over the long term by allocating
its assets among stocks, bonds, and short-term fixed-income instruments.
30
<PAGE>
FIDELITY INVESTMENTS VIP GROWTH
To seek capital appreciation primarily through purchase of common stocks,
although its investments are not restricted to any one type of security.
FIDELITY INVESTMENTS VIP II CONTRAFUND
To seek long term capital appreciation through purchase of equity securities
of domestic or foreign companies that are undervalued or due to an overly
pessimistic appraisal by the public.
FIDELITY INVESTMENTS VIP OVERSEAS
To seek long term capital appreciation by investing primarily in foreign
securities whose principal business activities are outside of the United
States.
*These funds are available beginning July 1, 1995.
ALL FUNDS
The Funds are available only to serve as the underlying investment for the
variable annuity and variable life insurance contracts issued by HL.
It is conceivable that in the future it may be disadvantageous for variable
annuity separate accounts and variable life insurance separate accounts to
invest in the Funds simultaneously. Although HL and the Funds do not currently
foresee any such disadvantages either to variable annuity Contract Owners or to
variable life insurance Policy Owners, the Funds' Board of Directors intends to
monitor events in order to identify any material conflicts between such Contract
Owners and Policy Owners and to determine what action, if any, should be taken
in response thereto. If the Board of Directors of the Funds were to conclude
that separate funds should be established for variable life and variable annuity
separate accounts, the variable annuity Contract Owners would not bear any
expenses attendant to the establishment of such separate funds, but variable
annuity Contract Owners and variable life insurance Policy Owners would no
longer have the economics of scale resulting from a larger combined fund.
Shares of Responsibly Invested Balanced Portfolio, a series of Acacia
Capital Corporation which is unaffiliated with HL, are offered to other
unaffiliated separate accounts. HL and the Board of Trustees of Acacia Capital
Corporation intend to monitor events to identify any material irreconcilable
conflicts which may arise and to determine what action, if any, should be taken
in response thereto.
Shares of the TCI Funds and the Fidelity Funds are offered to other
unaffiliated separate accounts.
HL reserves the right, subject to compliance with the law, to substitute the
shares of any other registered investment company for the shares of any Fund
held by the Separate Account. Substitution may occur if shares of the Fund(s)
become unavailable or due to changes in applicable law or interpretations of
law. Current law requires notification to you of any such substitution and
approval of the Securities and Exchange Commission. HL also reserves the right,
subject to compliance with the law to offer additional Funds with differing
investment objectives.
HARTFORD FUNDS
The U.S. Government Money Market Fund and Advisers Fund Sub-Accounts were
not available under contracts issued prior to May 2, 1983. The Capital
Appreciation Fund Sub-Account was not available under contracts issued prior to
May 1, 1984. The Mortgage Securities Fund Sub-Account was not available under
contracts issued prior to January 15, 1985. The Index Fund Sub-Account was not
available under contracts issued prior to May 1, 1987. Funds not available prior
to the issue date of a contract may be requested in writing by the Contract
Owner.
The Hartford Investment Management Company ("HIMCO") has been serving as
investment manager or adviser to each of the Funds. In addition, Wellington
Management Company ("Wellington Management") has served as sub-investment
adviser to certain of the Funds since August 1984.
31
<PAGE>
HIMCO serves as investment manager for Hartford Advisers, Hartford Capital
Appreciation Fund, Hartford Dividend and Growth Fund, Hartford International
Opportunities and Hartford Stock Funds pursuant to an Investment Management
Agreement between each. Wellington Management serves as sub-investment adviser
to each of these funds pursuant to a Sub-Investment Advisory Agreement between
Wellington Management and HIMCO on behalf of each fund.
HIMCO serves as the investment adviser to Hartford Bond, Hartford Index,
Hartford Mortgage Securities, Hartford U.S. Government Money Market and HVA
Money Market Funds pursuant to an Investment Advisory Agreement between these
funds and HIMCO.
The Calvert Asset Management Company serves as investment adviser and United
States Trust Company of Boston serves as sub-investment adviser to Responsibly
Invested Balanced Fund.
A full description of the Funds, their investment policies and restrictions,
risks, charges and expenses and all other aspects of their operations is
contained in the accompanying Funds' Prospectus which should be read in
conjunction with this Prospectus before investing, and in the Funds' Statement
of Additional Information which may be ordered from HL.
TCI FUNDS
The TCI Funds are managed by Investors Research Corporation ("Investors
Research"), whose principal business address is 4500 Main Street, Kansas City,
Missouri 64111.
Investors Research has been providing investment advisory and management
services to investment companies within the Twentieth Century family of mutual
funds and to institutional clients since 1958.
FIDELITY FUNDS
The Fidelity Funds are managed by Fidelity Management & Research Company
("Fidelity Management"), whose principal business address is 82 Devonshire
Street, Boston, Massachusetts. Fidelity Management is one of America's largest
investment management organizations. It is composed of a number of different
companies, which provide a variety of financial services and products. Fidelity
Management is the original Fidelity company, founded in 1946. It provides a
number of mutual funds and other clients with investment research and portfolio
management services. Various Fidelity companies perform certain activities
required to operate Variable Insurance Products Fund and Variable Insurance
Products Fund II.
DOES HL HAVE ANY INTEREST IN THE FUNDS?
At December 31, 1994, certain HL group pension contracts held direct
interest in shares as follows:
<TABLE>
<CAPTION>
PERCENT OF
SHARES TOTAL SHARES
---------- ------------
<S> <C> <C>
Hartford Advisers Fund, Inc....................... 10,709,364 0.56%
Hartford Capital Appreciation Fund, Inc........... 5,313,800 1.31%
Hartford Index Fund, Inc.......................... 9,462,900 9.14%
Hartford International Opportunities Fund, Inc.... 5,547,408 1.16%
Hartford Mortgage Securities Fund, Inc............ 16,249,689 5.26%
Hartford Stock Fund, Inc.......................... 65,899 0.02%
</TABLE>
32
<PAGE>
FEDERAL TAX CONSIDERATIONS
WHAT ARE SOME OF THE FEDERAL TAX CONSEQUENCES WHICH AFFECT THESE CONTRACTS?
A. GENERAL
SINCE THE TAX LAW IS COMPLEX AND SINCE TAX CONSEQUENCES WILL VARY ACCORDING
TO THE ACTUAL STATUS OF THE CONTRACT OWNER INVOLVED AND THE TYPE OF PLAN UNDER
WHICH THE CONTRACT IS PURCHASED, LEGAL AND TAX ADVICE MAY BE NEEDED BY A
PERSON, EMPLOYER OR OTHER ENTITY CONTEMPLATING THE PURCHASE OF A CONTRACT
DESCRIBED HEREIN.
It should be understood that any detailed description of the federal income
tax consequences regarding the purchase of these contracts cannot be made in
this Prospectus and that special tax rules may be applicable with respect to
certain purchase situations not discussed herein. For detailed information, a
qualified tax adviser should always be consulted. This discussion is based on
HL's understanding of current federal income tax laws as they are currently
interpreted.
B. HL AND DC-I AND DC-II
DC-I is not taxed as a part of HL. The taxation of DC-I is governed by
Subchapter M of Chapter 1 of the Internal Revenue Code pursuant to an IRS
Private Letter Ruling issued with respect to DC-I. By distributing
substantially all of the net income and realized capital gains of DC-I to
Contract Owners no federal income tax liability will be incurred by DC-I on
the income and gain so distributed. While HL has no reason to believe that the
above referenced Private Letter Ruling will ever be withdrawn by the IRS, in
the event that it is the taxation of DC-I and DC-II would be identical from
the effective date of any such withdrawal.
DC-II is taxed as part of HL which is taxed as a life insurance company in
accordance with the Internal Revenue Code. Accordingly, DC-II will not be
taxed as a "regulated investment company" under Subchapter M of the Code.
Investment income and any realized capital gains on the assets of DC-II are
reinvested and are taken into account in determining the value of the
Accumulation and Annuity Units. (See "How is the Accumulation Unit value
determined?" commencing on page 20.) As a result, such investment income and
realized capital gains are automatically applied to increase reserves under
the contract.
No taxes are due on interest, dividends and short-term or long-term capital
gains earned by DC-II with respect to qualified or non-qualified contracts.
C. INFORMATION REGARDING TAX QUALIFIED PLANS
THE TAX REFORM ACT OF 1986 AND THE TECHNICAL AND MISCELLANEOUS REVENUE ACT
OF 1988 HAVE MADE SUBSTANTIAL CHANGES TO QUALIFIED PLANS. YOU SHOULD CONSULT
YOUR TAX ADVISER TO FULLY ADDRESS ALL CHANGES OCCURRING AS A RESULT OF THE TAX
REFORM ACT AND THEIR EFFECT ON QUALIFIED PLANS.
1. CONTRIBUTIONS
A. PENSION, PROFIT-SHARING AND SIMPLIFIED EMPLOYEE PENSION PLANS
Contributions to pension or profit-sharing plans (described in Section
401(a) and 401(k), if applicable, and exempt from taxation under Section
501(a) of the Code), and Simplified Employee Pension Plans (described in
Section 408(k)), which do not exceed certain limitations prescribed in the
Code are fully tax-deductible to the employer. Such contributions are not
currently taxable to the covered employees, and increases in the value of
contracts purchased with such contributions are not subject to taxation until
received by the covered employees or their Beneficiaries in the form of
Annuity payments or other distributions.
33
<PAGE>
B. TAX-DEFERRED ANNUITY PLANS FOR PUBLIC SCHOOL TEACHERS AND EMPLOYERS AND
EMPLOYEES OF CERTAIN TAX-EXEMPT ORGANIZATIONS
Contributions to tax-deferred annuity plans (described in Section 403(a) and
403(b) of the Code) by employers are not includable within the employee's
income to the extent those contributions do not exceed the lesser of $9,500 or
the exclusion allowance. Generally, the exclusion allowance is equal to 20% of
the employee's includable compensation for his most recent full year of
employment multiplied by the number of years of his service, less the
aggregate amount contributed by the employer for Annuity contracts which were
not included within the gross income of the employee for any prior taxable
year. There are special provisions which may allow an employee of an
educational institution, a hospital or a home health service agency to elect
an overall limitation different from the limitation described above.
C. DEFERRED COMPENSATION PLANS FOR TAX-EXEMPT ORGANIZATIONS AND STATE AND
LOCAL GOVERNMENTS
Employees may contribute on a before tax basis to the Deferred Compensation
Plan of their employer in accordance with the employer's Plan and Section 457
of the Code. Section 457 places limitations on contributions to Deferred
Compensation Plans maintained by a State ("State" means a State, a political
sub-division of a State, and an agency or instrumentality of a State or
political sub-division of a State) or other tax-exempt organization.
Generally, the limitation is 33 1/3% of includable compensation (25% of gross
compensation) or $7,500, whichever is less. The plan may also provide for
additional contributions during the three taxable years ending before normal
retirement age of a Participant for a total of up to $15,000 per year for such
three years.
An employee electing to participate in a plan should understand that his
rights and benefits are governed strictly by the terms of the plan, that he is
in fact a general creditor of the employer under the terms of the plan, that
the employer is legal owner of any contract issued with respect to the plan
and that the employer as owner of the contract(s) retains all voting and
redemption rights which may accrue to the contract(s) issued with respect to
the plan. The participating employee should look to the terms of his plan for
any charges in regard to participating therein other than those disclosed in
this Prospectus.
D. INDIVIDUAL RETIREMENT ANNUITIES ("IRA'S")
Individuals may contribute and deduct the lesser of $2,000 or 100 percent of
their compensation to an IRA. In the case of a spousal IRA, the maximum
deduction is the lesser of $2,250 or 100 percent of compensation. The
deduction for contributions is phased out between $40,000 and $50,000 of
adjusted gross income (AGI) for a married individual (and between $25,000 and
$35,000 for single individuals) if either the individual or his or her spouse
is an active Participant in any Section 401(a), 403(a), 403(b) or 408(k) plan
regardless of whether the individual's interest is vested.
To the extent deductible contributions are not allowed, individuals may make
designated non-deductible contributions to an IRA, subject to the above
limits.
2. DISTRIBUTIONS
A. PENSION AND PROFIT-SHARING PLANS, TAX-SHELTERED ANNUITIES, INDIVIDUAL
RETIREMENT ANNUITIES.
Annuity payments made under the contracts are taxable under Section 72 of
the Code as ordinary income, in the year of receipt, to the extent that they
exceed the "excludable amount." The investment in the contract is normally the
aggregate amount of the contributions made by or on behalf of an employee
which were included as a part of his taxable income and not deducted. Thus,
annual contributions for an IRA are not included in the investment in the
contract. The employee's investment in the contract is divided by the expected
number of payments to be made under the contract. The amount so computed
constitutes the "excludable amount," which is the amount of each annuity
payment considered a return of investment in each year and, therefore, not
taxable. Once the employee's investment in the contract is recouped, the full
amount of each payment will be fully
34
<PAGE>
taxable. If the employee dies prior to recouping his or her investment in the
contract, a deduction is allowed for the last taxable year. The rules for
determining the excludable amount are contained in Section 72 of the Code.
Generally, distributions or withdrawals prior to age 59 1/2 may be subject
to an additional income tax of 10% of the amount includable in income. This
additional tax does not apply to distributions made after the employee's
death, on account of disability and distributions in the form of a life
annuity and, except in the case of an IRA, certain distributions after
separation from service at or after age 55 and certain distributions for
eligible medical expenses. A life annuity is defined as a scheduled series of
substantially equal periodic payments for the life or life expectancy of the
Participant (or the joint lives or life expectancies of the Participant and
Beneficiary).
The taxation of withdrawals and other distributions varies depending on the
type of distribution and the type of plan from which the distribution is made.
With respect to tax-deferred annuity contracts under Section 403(b),
contributions to the contract made after December 31, 1988 and any increases
in cash value after that date may not be distributed prior to attaining age 59
1/2, separation from service, death or disability. Contributions (but not
earnings) made after December 31, 1988 may also be distributed by reason of
financial hardship.
Generally, in order to avoid a penalty tax, annuity payments, periodic
payments or annual distributions must commence by April 1 of the calendar year
following the year in which the Participant attains age 70 1/2. The entire
interest of the Participant must be distributed beginning no later than this
required beginning date over a period which may not extend beyond a maximum of
the lives or life expectancies of the Participant and a designated
Beneficiary. Each annual distribution must equal or exceed a "minimum
distribution amount" which is determined by dividing the account balance by
the applicable life expectancy. With respect to a Section 403(b) plan, this
account balance is based on earnings and contributions after December 31,
1986. In addition, minimum distribution incidental benefit rules may require a
larger annual distribution based upon dividing the entire account balance as
of the close of business on the last day of the previous calendar year by a
factor promulgated by the Internal Revenue Service which ranges from 26.2 (at
age 70) to 1.8 (at age 115). Special rules apply to require that distributions
be made to Beneficiaries after the death of the Participant. A penalty tax of
up to 50% of the amount which should be distributed may be imposed by the
Internal Revenue Service for failure to make such distribution.
B. DEFERRED COMPENSATION PLANS FOR TAX-EXEMPT ORGANIZATIONS AND STATE AND
LOCAL GOVERNMENTS
Generally, in order to avoid a penalty tax, annuity payments, periodic
payments or annual distributions must commence by April 1 of the calendar year
following the year in which the Participant attains age 70 1/2. Minimum
distributions under Section 457 Deferred Compensation Plan may be further
deferred if the Participant remains employed. The entire interest of the
Participant must be distributed beginning no later than this required
beginning date over a period which may not extend beyond a maximum of the life
expectancy of the Participant and a designated Beneficiary. Each annual
distribution must equal or exceed a "minimum distribution amount" which is
determined by dividing the account balance by the applicable life expectancy.
This account balance is generally based upon the account value as of the close
of business on the last day of the previous calendar year. In addition,
minimum distribution incidental benefit rules may require a larger annual
distribution based upon dividing the account balance by a factor promulgated
by the Internal Revenue Service which ranges from 26.2 (at age 70) to 1.8 (at
age 115). Special rules apply to require that distributions be made to
Beneficiaries after the death of the Participant. A penalty tax of up to 50%
of the amount which should be distributed may be imposed by the Internal
Revenue Service for failure to make a distribution.
If the Contract Owner is a Section 457 plan, certain distributions are
required to be made upon the death of a Participant. In the event of the death
of a Participant prior to the Annuity Commencement Date, the entire interest
in the Participant's contract must be distributed within 5 years after the
Participant's death and in the event of the Participant's death which occurs
on or after the Annuity Commencement Date, any remaining interest in the
Contract must be paid at least as rapidly as under
35
<PAGE>
the method of distribution in effect at the time of death; except that if the
benefit is payable over a period not extending beyond the life expectancy of
the beneficiary or over the life of the beneficiary, such distribution must
commence within one year of the date of death.
Upon receipt of any monies pursuant to the terms of a Deferred Compensation
Plan for a tax-exempt organization, state or local government under Section
457 of the Code, such monies are taxable to such employee as ordinary income
in the year in which it is received.
D. FEDERAL INCOME TAX WITHHOLDING
The portion of a distribution which is taxable income to the recipient will
be subject to federal income tax withholding, pursuant to Section 3405 of the
Internal Revenue Code. The application of this provision is summarized below:
1. ELIGIBLE ROLLOVER DISTRIBUTIONS
a. The Unemployment Compensation Amendments Act of 1992 requires that
federal income taxes be withheld from certain distributions from
tax-qualified retirement plans and from tax-sheltered annuities under
Section 403(b). These provisions DO NOT APPLY to distributions from
individual retirement annuities under section 408(b) or from deferred
compensation programs under section 457.
b. If any portion of a distribution is an "eligible rollover distribution",
the law requires that 20% of that amount be withheld. This amount is sent
to the IRS as withheld income taxes. The following types of payments DO
NOT constitute an eligible rollover distribution (and, therefore, the
mandatory withholding rules will not apply):
-- the non-taxable portion of the distribution;
-- distributions which are part of a series of equal (or substantially
equal) payments made at least annually for your lifetime (or your life
expectancy), or your lifetime and your Beneficiary's lifetime (or life
expectancies), or for a period of ten years or more.
-- required minimum distributions made pursuant to section 401(a)(9) of
the IRC.
c. However, these mandatory withholding requirements do not apply in the
event of all or a portion of any eligible rollover distribution is paid
in a "direct rollover". A direct rollover is the direct payment of an
eligible rollover distribution or portion thereof to an individual
retirement arrangement or annuity (IRA) or to another qualified employer
plan. IF A DIRECT ROLLOVER IS ELECTED, NO INCOME TAX WILL BE WITHHELD.
d. If any portion of a distribution is not an eligible rollover distribution
but is taxable, the mandatory withholding rules described above do not
apply. In this case, the voluntary withholding rules described below
apply.
2. NON-ELIGIBLE ROLLOVER DISTRIBUTIONS
A. NON-PERIODIC DISTRIBUTIONS
The portion of a non-periodic distribution which constitutes taxable income
will be subject to federal income tax withholding unless the recipient elects
not to have taxes withheld. If an election not to have taxes withheld is not
provided, 10% of the taxable distribution will be withheld as federal income
tax. Election forms will be provided at the time distributions are requested.
B. PERIODIC DISTRIBUTIONS (DISTRIBUTIONS PAYABLE OVER A PERIOD GREATER THAN
ONE YEAR)
The portion of a periodic distribution which constitutes taxable income will
be subject to federal income tax withholding as if the recipient were married
claiming three exemptions. A recipient may elect not to have income taxes
withheld or have income taxes withheld at a different rate by providing a
completed election form. Election forms will be provided at the time
distributions are requested.
36
<PAGE>
E. ANY DISTRIBUTION FROM PLANS DESCRIBED IN SECTION 457 OF THE INTERNAL REVENUE
CODE IS SUBJECT TO THE REGULAR WAGE WITHHOLDING RULES.
F. DIVERSIFICATION REQUIREMENTS
Section 817 of the Code provides that a variable annuity contract (other
than a pension plan contract) will not be treated as an annuity for any period
during which the investments made by the separate account or underlying fund
are not adequately diversified in accordance with regulations prescribed by
the Treasury. If a contract is not treated as an annuity, the Contract Owner
will be subject to income tax on the annual increases in cash value. The
Treasury has issued diversification regulations which, among other things,
require that no more than 55% of the assets of mutual funds (such as the HL
mutual funds) underlying a variable annuity contract, be invested in any one
investment. In determining whether the diversification standards are met, each
United States Government Agency or instrumentality shall be treated as a
separate issuer. If the diversification standards are not met, non-pension
Contract Owners will be subject to current tax on the increase in cash value
in the contract.
G. NON-NATURAL PERSONS, CORPORATIONS
The annual increase in the value of the contract is currently includable in
gross income of a non-natural person. There is an exception for annuities held
by structured settlement companies and annuities held by an employer with
respect to a terminated pension plan. A non-natural person which is a tax-exempt
entity for federal tax purposes will not be subject to income tax as a result of
this provision.
MISCELLANEOUS
WHAT ARE MY VOTING RIGHTS?
HL shall notify the Contract Owner of any Fund shareholders' meeting if the
shares held for the Contract Owner's accounts may be voted at such meetings.
HL shall also send proxy materials and a form of instruction by means of which
the Contract Owner can instruct HL with respect to the voting of the Fund
shares held for the Contract Owner's account. In connection with the voting of
Fund shares held by it, HL shall arrange for the handling and tallying of
proxies received from Contract Owners. HL as such, shall have no right, except
as hereinafter provided, to vote any Fund shares held by it hereunder which
may be registered in its name or the names of its nominees. HL will, however,
vote the Fund shares held by it in accordance with the instructions received
from the Contract Owners for whose accounts the Fund shares are held. If a
Contract Owner desires to attend any meeting at which shares held for the
Contract Owner's benefit may be voted, the Contract Owner may request HL to
furnish a proxy or otherwise arrange for the exercise of voting rights with
respect to the Fund shares held for such Contract Owner's account. In the
event that the Contract Owner gives no instructions or leaves the manner of
voting discretionary, HL will vote such shares of the appropriate Fund,
including any of its own shares in the same proportion as shares of that Fund
for which instructions have been received.
Every Participant under a contract issued with respect to DC-II who has a
full (100%) vested interest under a group contract, shall receive proxy
material and a form of instruction by means of which Participants may instruct
the Contract Owner with respect to the number of votes attributable to his
individual participation under a group contract.
A Contract Owner or Participant, as appropriate, is entitled to one full or
fractional vote for each full or fractional Accumulation or Annuity Unit
owned. The Contract Owner has voting rights throughout the life of the
contract. The vested Participant has voting rights for as long as
participation in the contract continues. Voting rights attach only to Separate
Account interests.
During the Annuity period under a contract the number of votes will decrease
as the assets held to fund Annuity benefits decrease.
37
<PAGE>
WILL OTHER CONTRACTS BE PARTICIPATING IN THE SEPARATE ACCOUNTS?
In addition to the contracts described in this Prospectus, it is
contemplated that other forms of group or individual annuities may be sold
providing benefits which vary in accordance with the investment experience of
the Separate Accounts.
HOW ARE THE CONTRACTS SOLD?
Hartford Equity Sales Company, Inc. ("HESCO") currently serves as Principal
Underwriter for the securities issued with respect to the Separate Account.
Hartford Securities Distribution Company, Inc. ("HSD") will replace HESCO as
principal underwriter upon approval by the Commission, the National
Association of Securities Dealers, Inc. ("NASD") and applicable state
regulatory authorities.
Both HESCO and HSD are wholly-owned subsidiaries of Hartford Life Insurance
Company. The principal business address of HESCO and HSD is the same as
Hartford Life Insurance Company.
The securities will be sold by salespersons of HESCO, and subsequently HSD,
who represent HL as insurance and Variable Annuity agents and who are
registered representatives or Broker-Dealers who have entered into
distribution agreements with HESCO, and subsequently HSD.
HESCO is registered with the Commission under the Securities Exchange Act of
1934 as a Broker-Dealer and is a member of the NASD. HSD will be registered
with the Commission under the Securities Exchange Act of 1934 as a
Broker-Dealer and will become a member of the NASD.
Compensation will be paid by HL to registered representatives for the sale
of contracts up to a maximum of 5% of initial Contributions and .50% of all
subsequent Contributions. Sales compensation may be reduced.
WHO IS THE CUSTODIAN OF THE SEPARATE ACCOUNTS' ASSETS?
HL is the custodian of the Separate Accounts' assets.
ARE THERE ANY MATERIAL LEGAL PROCEEDINGS AFFECTING THE SEPARATE ACCOUNTS?
No.
ARE YOU RELYING ON ANY EXPERTS AS TO ANY PORTION OF THIS PROSPECTUS?
The audited financial statements and schedules for HL included in this
Prospectus and Registration Statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with
respect thereto, and are included herein in reliance on the authority of said
firm as experts in giving said reports.
HOW MAY I GET ADDITIONAL INFORMATION?
Inquiries will be answered by calling your representative or by writing:
Hartford Life Insurance Company
Attn: RPVA Administration
P.O. Box 2999
Hartford, CT 06104-2999
38
<PAGE>
APPENDIX
ACCUMULATION PERIOD UNDER PRIOR GROUP CONTRACTS
Such contracts are no longer being issued. Contract Owners may continue to
make Contributions to the contracts subject to the following charges.
A. DEDUCTIONS UNDER THE PRIOR GROUP CONTRACTS FOR SALES EXPENSES, THE MINIMUM
DEATH BENEFIT GUARANTEE AND ANY APPLICABLE PREMIUM TAXES.
Contributions made to a Participant's Individual Account pursuant to the
terms of contracts issued after December 7, 1981 and prior to May 2, 1983 are
subject to the following:
No deductions for sales expenses is made at the time of allocation of
Contributions to the contracts. A deduction of six percent (6%) is made from
the amount surrendered from any Participant's Individual Account under a
Master Contract during the first (10) Participant's Contract Years and five
percent (5%) thereafter prior to the Annuity Commencement Date.
The full value of a surrender is subject to such changes with the provision
that such charges will in no event ever exceed 8.50% when applied as a
percentage against the sum of all Contributions to a Participant's Individual
Account.
No deduction for contingent deferred sales charges will be made: (1) in the
event of death of a Participant; or (2) if the value of a Participant's
Individual Account is paid out under one of the available annuity options
under the contracts; or, (3) if, on Public Employee Deferred Compensation
Plans only, a Participant in a Plan makes a financial hardship withdrawal as
defined in the Regulations issued by the IRS with respect to the IRC Section
457 governmental deferred compensation plans. The Plan of the Employer must
also provide for such hardship withdrawals.
HL reserves the right to limit any increase in the Contributions made to a
Participant's Individual Account to not more than three times the total
Contributions made on behalf of such Participant during the initial 12
consecutive months of the Account's existence under the contract of the
present guaranteed deduction rates. Increases in excess of those described
will be accepted only with the consent of HL and subject to the then current
deductions being made for sales charges, the Minimum Death Benefit guarantee
and mortality and expense undertaking.
Each contract provides for experience rating of the deduction for sales
expenses and/or the Annual Contract Fee. In order to experience rate a
contract, actual sales costs applicable to a particular contract are
determined. If the costs exceed the amounts deducted for such expenses, no
additional deduction will be made. If however, the amounts deducted for such
expenses exceed actual costs, HL, in its discretion, may allocate all, a
portion, or none of such excess as an experience rating credit. If such an
allocation is made, the experience credit will be made as considered
appropriate: (1) by a reduction in the amount deducted from subsequent
contributions for sales expenses; (2) by the crediting of a number of
additional Accumulation Units or by Annuity Units, as applicable, without
deduction of any sales or other expenses therefrom; (3) or by waiver of the
Annual Contract Fees or by a combination of the above. To date experience
rating credits have been provided on certain cases.
B. DEDUCTIONS FOR MORTALITY AND EXPENSE ADMINISTRATIVE UNDERTAKINGS, ANNUAL
CONTRACT FEE AND PREMIUM TAXES.
1. MORTALITY AND EXPENSE UNDERTAKINGS
Although variable annuity payments made under the contracts will vary in
accordance with the investment performance of the Fund shares, the payments
will not be affected by (a) HL's actual expenses, if greater than the
deductions provided for in the contracts, or (b) HL's actual mortality
experience among Annuitants after retirement because of the expense and
mortality undertakings by HL.
39
<PAGE>
In providing an expense undertaking, HL assumes the risk that the deductions
for sales expenses, the Annual Contract Fee and the Minimum Death Benefit
during the Accumulation Period may be insufficient to cover the actual costs
of providing such items.
The mortality undertaking provided by HL under the contracts, assuming the
selection of one of the forms of life annuities, is to make monthly annuity
payments (determined in accordance with the annuity tables and other
provisions contained in the contract) to Contract Owners or Annuitant's
Accounts regardless of how long an Annuitant may live and regardless of how
long all Annuitants as a group may live. This undertaking assures a Contract
Owner that neither the longevity of an Annuitant nor an improvement in life
expectancy will have any adverse effect on the monthly annuity payments the
Employees will receive under the contract. It thus relieves the Contract Owner
from the risk that Participants in the Plan will outlive the funds
accumulated.
The mortality undertaking is based on HL's actuarial determination of
expected mortality rates among all Annuitants. If actual experience among
Annuitants deviates from HL's actuarial determination of expected mortality
rates among Annuitants because, as a group, their longevity is longer than
anticipated, HL must provide amounts from its general funds to fulfill its
contract obligations. In that event, a loss will fall on HL. Conversely, if
longevity among Annuitants is lower than anticipated, a gain will result to
HL.
For assuming these risks HL makes a minimum daily charge against the value
of the average daily assets held under DC-I and DC-II, as appropriate, of
1.25% with respect to the Bond Fund and Money Market Fund Sub-Accounts where
available, on an annual basis. This rate may be periodically increased by HL
subject to a maximum annual rate of 2.00%. However, no increase will occur
unless the Securities and Exchange Commission first approves the increase.
2. ANNUAL CONTRACT FEE
There will be an Annual Contract Fee deduction in the amount of $10.00 from
the value of each such Participant's Individual Account under the contracts,
except as set forth below.
This fee will be deducted from the value of each such account on the last
business day of each calendar year; provided, however, that if the value of a
Participant's Individual Account is redeemed in full at any time before the
last business day of the year, then the Annual Contract Fee charge will be
deducted from the proceeds of such redemption. No contract fee deduction will
be made during the Annuity Payment period under the contracts.
In the event that the Contributions made on behalf of a Participant are
allocated partially to the fixed annuity portion of the Participant's
Individual Account and partially to the variable annuity portion of the
Participant's Individual Account, then the Annual Contract Fee will be
deducted first from the value of the fixed annuity portion of the
Participant's Individual Account. If the value of the fixed annuity portion of
the Participant's Individual Account is insufficient to pay the fee, then any
deficit will be deducted from the value of the variable annuity portion of the
Participant's Individual Account in the following manner: if there are no
accumulation units in the General Account or if their value is less than
$10.00, the General Account portion of an account will be made against values
held in the Stock Fund Sub-Account of DC-I. If the Stock Fund Sub-Account
values are insufficient to cover the fee, the fee shall be deducted from the
account values held in the Bond Fund Sub-Account of DC-I. In the event that
the Contributions made on behalf of a Participant are allocated partially to
the General Account and partially to the Separate Account, the Annual Contract
Fee will be charged against the Separate Account and General Account on a pro
rata basis.
3. PREMIUM TAXES
A deduction is also made for Premium Taxes, if applicable. On any contract
subject to Premium Taxes, the tax will be deducted from the Contributions when
received, from the proceeds at surrender, or from the amount applied to effect
an annuity at the time annuity payments commence.
40
<PAGE>
TABLE OF CONTENTS
FOR
STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
SECTION PAGE
- ----------------------------------------------------------------------------------------------------------- -----
<S> <C>
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY............................................................. 1
SAFEKEEPING OF ASSETS...................................................................................... 1
INDEPENDENT PUBLIC ACCOUNTANTS............................................................................. 1
DISTRIBUTION OF CONTRACTS.................................................................................. 1
ANNUITY PERIOD............................................................................................. 3
A. Annuity Payments..................................................................................... 3
B. Electing the Annuity Commencement Date and Form of Annuity........................................... 3
C. Optional Annuity Forms............................................................................... 3
OPTION 1: Life Annuity............................................................................. 3
OPTION 2: Life Annuity With 120, 180 or 240 Monthly Payments Certain............................... 3
OPTION 3: Unit Refund Life Annuity................................................................. 4
OPTION 4: Joint and Last Survivor Annuity.......................................................... 4
OPTION 5: Payments for a Designated Period......................................................... 4
CALCULATION OF YIELD AND RETURN............................................................................ 5
PERFORMANCE COMPARISONS.................................................................................... 7
FINANCIAL STATEMENTS....................................................................................... 8
</TABLE>
41
<PAGE>
This form must be completed for all tax-sheltered annuities.
SECTION 403(B)(11) ACKNOWLEDGMENT FORM
The Hartford variable annuity contract which you have recently purchased is
subject to certain restrictions imposed by the Tax Reform Act of 1986.
Contributions to the contract after December 31, 1988 and any increases in cash
value after December 31, 1988 may not be distributed to you unless you have:
a. attained age 59 1/2
b. terminated employment
c. died, or
d. become disabled.
Distributions of post December 31, 1988 contributions may also be made if you
have experienced a financial hardship. Also there may be a 10% penalty tax for
distributions made because of financial hardship or separation from service.
Also, please be aware that your 403(b) Plan may also offer other financial
alternatives other than the Hartford variable annuity. Please refer to your
Plan.
Please complete the following and return to:
Hartford Life Insurance Company
Attn: RPVA Administration
P.O. Box 2999
Hartford, CT 06104-2999
Name of Contract Owner/Participant: ____________________________________________
Address: _______________________________________________________________________
City or Plan/School District: __________________________________________________
Date: __________________________________________________________________________
Participant No: ________________________________________________________________
Signature: _____________________________________________________________________
<PAGE>
To obtain a Statement of Additional
Information, complete the form below and mail to:
Hartford Life Companies
Attn: RPVA Administration
P.O. Box 2999
Hartford, CT 06104-2999
Please send a Statement of Additional
Information for Separate Account DC-I and
Separate Account Two (DC-II)(Form HV-1879-10) to
me at the following address.
________________________________________
(name)
_______________________________________
(street)
_______________________________________
(city/state) (zip code)
<PAGE>
PRINCIPAL UNDERWRITER
Hartford Equity Sales Company, Inc. (HESCO)
Hartford Securities Distribution Company, Inc. (HSD)
Hartford Plaza, Hartford, CT 06115
HARTFORD
INDEPENDENT AUDITORS FOR HARTFORD
LIFE INSURANCE COMPANY AND
LIFE INSURANCE
THE GENERAL ACCOUNT OPTION
Arthur Andersen LLP
Hartford, Connecticut 06103
COMPANY
INSURER
Hartford Life Insurance Company
Executive Offices: P.O. Box 2999
DC VARIABLE ACCOUNT-I AND
Hartford, CT 06104-2999
DC VARIABLE ACCOUNT-II PROSPECTUS
INCLUDING THE PROSPECTUS OF
THE FUNDS
MAY 1, 1995
Group Variable Annuity Contracts
The Master Contracts described in
this prospectus are
sold only by Gardner & White. General
Agents of Hartford
Life Insurance Company.
HV-1524-17
[LOGO]
HARTFORD LIFE INSURANCE COMPANY
BULK RATE
P.O. BOX 2999, HARTFORD, CT 06104-2999
U.S. POSTAGE
PAID
PERMIT NO. 1
HARTFORD, CONN.
