<PAGE>
HARTFORD
LIFE INSURANCE COMPANY
MASTER GROUP VARIABLE ANNUITY CONTRACTS
[LOGO]
WITH RESPECT TO DC-I AND DC-II
The variable annuity contracts (hereinafter the "contract" or "contracts" or
"Master Contracts") described in this Prospectus are issued by Hartford Life
Insurance Company ("Hartford"). 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.,
Calvert Responsibly -- shares of the Calvert Responsibly Invested
Invested Balanced Balanced Portfolio of Acacia Capital Corporation
Portfolio Sub-Account ("Calvert Responsibly Invested Balanced
Portfolio")
Capital Appreciation -- shares of Hartford Capital Appreciation Fund,
Fund Sub-Account Inc., ("Capital Appreciation Fund")
Dividend and Growth Fund -- shares of Hartford Dividend and Growth Fund,
Sub-Account Inc. ("Dividend and Growth 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")
Stock Fund Sub-Account -- shares of Hartford Stock Fund, Inc. ("Stock
Fund")
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 ("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 40
of this Prospectus. The Statement of Additional Information is incorporated by
reference to this Prospectus.
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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.
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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.
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Prospectus Dated: May 1, 1997
Statement of Additional Information Dated: May 1, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
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<S> <C>
GLOSSARY OF SPECIAL TERMS............................................... 4
FEE TABLE............................................................... 6
SUMMARY................................................................. 8
ACCUMULATION UNIT VALUES................................................ 11
PERFORMANCE RELATED INFORMATION......................................... 17
INTRODUCTION............................................................ 18
THE CONTRACTS AND THE SEPARATE ACCOUNT.................................. 18
What are the contracts?............................................... 18
Who can buy these contracts?.......................................... 18
What are the Separate Accounts and how do they operate?............... 19
OPERATION OF THE CONTRACT............................................... 20
How are Contributions credited?....................................... 20
May I make changes in the amounts of my Contributions?................ 20
May I transfer assets between Sub-Accounts?........................... 20
May I systematically transfer assets to the Sub-Accounts?............. 21
What happens if the Contract Owner fails to make Contributions?....... 21
May I assign or transfer the contract?................................ 21
How do I know what my account is worth?............................... 22
How is the Accumulation Unit value determined?........................ 22
How are the underlying Fund shares valued?............................ 22
PAYMENT OF BENEFITS..................................................... 22
What would my Beneficiary receive as death proceeds?.................. 22
How can a contract be redeemed or surrendered?........................ 23
Can payment of the redemption or surrender value ever be postponed
beyond the seven day period?......................................... 23
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?............................................................. 22
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.............................................. 25
How are the charges under these contracts made?....................... 25
Is there ever a time when the sales charges do not apply?............. 26
What do the sales charges cover?...................................... 26
What is the mortality, expense risk and administrative charge?........ 26
Are there any other administrative charges?........................... 27
Experience Rating of Contracts........................................ 27
How much are the deductions for Premium Taxes on these contracts?..... 28
What charges are made by the Funds?................................... 28
Are there any other deductions?....................................... 28
HARTFORD LIFE INSURANCE COMPANY AND THE FUNDS........................... 28
What is Hartford?..................................................... 28
What are the Funds?................................................... 28
Does Hartford have any interest in the Funds?......................... 31
FEDERAL TAX CONSIDERATIONS.............................................. 31
What are some of the federal tax consequences which affect these
contracts?........................................................... 31
MISCELLANEOUS........................................................... 35
What are my voting rights?............................................ 35
Will other contracts be participating in the Separate Accounts?....... 36
</TABLE>
2
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SECTION PAGE
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How are the contracts sold?........................................... 36
Who is the custodian of the Separate Accounts' assets?................ 36
Are there any material legal proceedings affecting the Separate
Accounts?............................................................ 36
Are you relying on any experts as to any portion of this
Prospectus?.......................................................... 36
How may I get additional information?................................. 37
APPENDIX -- ACCUMULATION PERIOD UNDER PRIOR GROUP CONTRACTS............. 38
TABLE OF CONTENTS FOR STATEMENT OF ADDITIONAL INFORMATION............... 40
</TABLE>
3
<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.
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 Hartford, by the Contract
Owner 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 Hartford.
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.
DC VARIABLE ACCOUNT I: Hartford Life Insurance Company DC Variable Account I.
DC VARIABLE ACCOUNT II: A series of Hartford Life Insurance Company Separate
Account Two.
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 28 of this Prospectus.
GENERAL ACCOUNT: The General Account of Hartford which consists of all assets of
Hartford other than those allocated to the separate accounts of Hartford.
HARTFORD: Hartford Life Insurance Company.
MINIMUM DEATH BENEFIT: The minimum amount payable upon the death of a
Participant prior to age 65 and before Annuity payments have commenced.
4
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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.
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 General Account values
and the Separate Account Accumulation Units held by the Contract Owner on behalf
of Participant under the contract are allocated.
PLAN: The 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 particular section of the Internal Revenue Code.
SEPARATE ACCOUNT: The separate 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 trading. 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.
5
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FEE TABLE
SUMMARY
Contract Owner Transaction Expenses
(All Sub-Accounts)
<TABLE>
<S> <C>
Sales Load Imposed on Purchases (as a percentage of premium
payments)....................................................... None
Transfer Fee...................................................... $ 0
Contingent Deferred Sales Charge (as a percentage of amounts
withdrawn)
First through Sixth Year...................................... 5%
Seventh and Eighth Year....................................... 4%
Ninth and Tenth Year.......................................... 3%
Eleventh and Twelfth Year..................................... 2%
Thirteenth Year............................................... 0%
Annual Contract Fee............................................... None
Annual Expenses-Separate Account (as percentage of average account
value)
Mortality and Expense Risk (DC I)(1).......................... 0.900%
Mortality and Expense Risk (DC II)............................ 1.250%
</TABLE>
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(1) The Mortality and Expense Risk charge under Separate Account DC-I is 0 .750%
of the average daily net assets of DC-I for contract values which exceed $50
million.
The Transfer Fee, Contingent Deferred Sales Charge, Annual Contract Fee and
Mortality and Expense Risk charge may be reduced or eliminated. See "Experience
Rating of Contracts," page 27.
Annual Fund Operating Expenses
(as percentage of net assets)
<TABLE>
<CAPTION>
TOTAL FUND
MANAGEMENT OTHER OPERATING
FEES EXPENSES EXPENSES
---------- -------- ----------
<S> <C> <C> <C>
Hartford Bond Fund.............................. 0.490% 0.030% 0.520%
Hartford Stock Fund............................. 0.441% 0.016% 0.457%
HVA Money Market Fund........................... 0.423% 0.021% 0.444%
Hartford Advisers Fund.......................... 0.615% 0.017% 0.632%
Hartford Capital Appreciation Fund.............. 0.629% 0.017% 0.646%
Hartford Mortgage Securities Fund............... 0.424% 0.029% 0.453%
Hartford Index Fund............................. 0.374% 0.019% 0.393%
Hartford International Opportunities Fund....... 0.691% 0.095% 0.786%
Calvert Responsibly Invested Balanced
Portfolio(1).................................. 0.710% 0.130% 0.840%
Hartford Dividend & Growth Fund................. 0.709% 0.017% 0.726%
</TABLE>
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(1) The figures shown above for the Calvert Responsibly Invested Balanced
Portfolio reflect anticipated expenses for fiscal year 1997 and reflect a
proposed increase in transfer agency fees. Actual total operating expenses
in 1996 were 0.81%.
EXAMPLE-DCI (0.900% MORTALITY AND EXPENSE RISK)
<TABLE>
<CAPTION>
If you surrender your Contract If you annuitize your Contract If you do not surrender your
at the end of the applicable at the end of the applicable Contract, you would pay the
time period, you would pay the time period, you would pay the following expenses on a $1,000
following expenses on a $1,000 following 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................ $ 66 $ 101 $ 138 $ 214 $ 15 $ 45 $ 78 $ 171 $ 15 $ 45 $ 78 $ 171
Stock Fund............... 66 99 134 207 14 43 75 164 14 43 75 164
HVA Money Market Fund.... 66 98 134 205 14 23 74 163 14 33 74 163
Advisers Fund............ 67 104 143 226 16 49 84 184 16 49 84 184
Capital Appreciation
Fund................... 68 104 144 227 16 49 85 185 16 49 85 185
Mortgage Securities
Fund................... 66 99 134 206 14 43 75 164 14 43 75 164
Index Fund............... 65 97 131 200 13 41 71 157 13 41 71 157
International
Opportunities Fund..... 69 109 151 242 17 54 92 201 17 54 92 201
Calvert Responsibly
Invested Balanced
Portfolio.............. 69 110 154 248 18 55 95 207 18 55 95 207
Dividend & Growth Fund... 68 107 148 236 17 52 89 194 17 52 69 194
</TABLE>
The purpose of this Example is to assist the Contract Owner in understanding
various costs and expenses that a Contract Owner will bear directly or
indirectly. This Example reflects expenses of the Separate Account and the
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.
6
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EXAMPLE-DC-I (0.750% MORTALITY AND EXPENSE RISK)
<TABLE>
<CAPTION>
If you surrender your Contract If you annuitize your Contract If you do not surrender your
at the end of the applicable at the end of the applicable Contract, you would pay the
time period, you would pay the time period, you would pay the following expenses on a $1,000
following expenses on a $1,000 following 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................ $ 65 $ 96 $ 130 $ 197 $ 13 $ 41 $ 70 $ 154 $ 13 $ 41 $ 70 $ 154
Stock Fund............... 64 94 127 190 12 39 67 147 12 39 67 147
HVA Money Market Fund.... 64 94 126 189 12 38 66 145 12 38 66 145
Advisers Fund............ 66 100 136 209 14 44 76 167 14 44 76 167
Capital Appreciation
Fund................... 66 100 136 211 14 44 77 168 14 44 77 168
Mortgage Securities
Fund................... 64 94 127 190 12 38 66 146 12 38 66 146
Index Fund............... 64 92 124 183 12 37 63 140 12 37 63 140
International
Opportunities Fund..... 67 104 143 226 16 49 84 184 16 49 84 184
Calvert Responsibly
Invested Balanced
Portfolio.............. 68 106 146 232 16 51 87 190 16 51 87 190
Dividend & Growth Fund... 67 102 140 220 15 47 81 177 15 47 81 177
</TABLE>
The purpose of this Example is to assist the Contract Owner in understanding
various costs and expenses that a Contract Owner will bear directly or
indirectly. This Example reflects expenses of the Separate Account and the
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.
EXAMPLE-DC-II
<TABLE>
<CAPTION>
If you surrender your Contract If you annuitize your Contract If you do not surrender your
at the end of the applicable at the end of the applicable Contract, you would pay the
time period, you would pay the time period, you would pay the following expenses on a $1,000
following expenses on a $1,000 following 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................ $ 70 $ 111 $ 156 $ 252 $ 18 $ 56 $ 97 $ 211 $ 18 $ 56 $ 97 $ 211
Stock Fund............... 69 110 153 245 17 54 94 204 18 55 94 204
HVA Money Market Fund.... 69 109 152 244 17 54 93 202 17 54 93 203
Advisers Fund............ 71 115 161 263 19 60 103 223 19 60 103 223
Capital Appreciation
Fund................... 71 115 162 265 19 60 104 224 20 60 104 224
Mortgage Securities
Fund................... 69 109 152 245 17 54 94 203 18 54 94 204
Index Fund(1)............ 65 96 129 195 13 40 69 152 13 40 69 152
International
Opportunities Fund..... 72 119 169 279 21 65 111 239 21 65 111 239
Calvert Responsibly
Invested Balanced
Portfolio.............. 73 121 171 285 21 66 114 245 22 66 114 245
Dividend & Growth Fund... 72 117 166 273 20 63 808 233 20 65 108 233
</TABLE>
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(1) For this Example, the Index Fund combined expenses are limited to 1.25%.
The purpose of this Example is to assist the Contract Owner in understanding
various costs and expenses that a Contract Owner will bear directly or
indirectly. This Example reflects expenses of the Separate Account and the
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
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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 38) 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 the Separate
Account, 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's Contract Years. During the first 6 years thereof, a maximum
deduction of 5% will be made against the full amount of any such surrender.
During the next 2 years thereof, a maximum deduction of 4% will be made against
the full amount of any such surrender. During the next 2 years thereof, a
maximum deduction of 3% will be made against the full amount of any such
surrender. During the next 2 years thereof, a maximum deduction of 2% will be
made against the full amount of any such surrender. Such charges will never
exceed 8.5% of aggregate Contributions to a Participant's Individual Account.
The amount or term of the contingent deferred sales charge may be reduced (see
"Charges Under the Contract -- Experience Rating of Contracts," page 27).
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.)
Hartford 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 Hartford 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.
There may be restrictions under certain circumstances (see "May I transfer
assets between Sub-Accounts?" commencing on 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 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.
8
<PAGE>
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, Hartford 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, Hartford 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 by a state or other governmental entity. The range is generally
between 0% and 3.50%. (See "Charges Under The Contract," page 25.)
I. ASSET CHARGE IN THE SEPARATE ACCOUNT
During both the Accumulation Period and the Annuity Period a charge is made
by Hartford for providing the mortality, expense, and administrative
undertakings under the contracts. With respect to contract values held in DC-I,
such charge is an annual rate of .90% (.50% for mortality, .15% for expense and
.25% for administrative undertakings) of the average daily net assets of DC-I;
however, where contract values exceed fifty million dollars ($50,000,000.00),
such charge is an annual rate of .75% (.50% for mortality, .10% for expense and
.15% 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
mortality, expense and administrative undertakings under the contracts maybe
reduced (see "Charges Under the Contract -- Experience Rating of Contracts,"
page 27). The rate charged for the expense, mortality and administrative
undertakings may be periodically increased by Hartford 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 25.)
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. Currently there is no Annual Contract Fee. (See "Charges Under
The Contract," page 25.) The Annual Contract Fee may be reduced or waived (see
"Charges Under the Contract -- Experience Rating of Contracts," page 27).
K. FUND FEES AND CHARGES
The funds are subject to certain fees, charges and expenses. See the
accompanying prospectuses for the Funds.
L. 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.
9
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M. PAYMENT ALLOCATION TO DC-I AND
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.
N. 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, Hartford shall vote such
interest in the same proportion as shares of the Fund for which instructions
have been received by Hartford. (See "What are my voting rights?" commencing on
page 35.)
10
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ACCUMULATION UNIT VALUES
(FOR AN ACCUMULATION UNIT OUTSTANDING THROUGHOUT THE PERIOD)
The following information, insofar as it relates to the period ended
December 31, 1996, 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,
-----------------------------------------------------
1996 1995 1994 1993 1992
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
DC-I
HARTFORD BOND FUND SUB-ACCOUNT
Accumulation unit value at beginning of period.......................... $ 4.099 $ 3.499 $ 3.689 $ 3.388 $ 3.251
Accumulation unit value at end of period................................ $ 4.201 $ 4.099 $ 3.499 $ 3.689 $ 3.388
Number accumulation units outstanding at end of period (in thousands)... 8,711 8,630 9,090 10,092 10,253
DC-I
HARTFORD STOCK FUND SUB-ACCOUNT
Accumulation unit value at beginning of period.......................... $ 8.979 $ 6.773 $ 6.990 $ 6.190 $ 5.695
Accumulation unit value at end of period................................ $ 11.059 $ 8.979 $ 6.773 $ 6.990 $ 6.190
Number accumulation units outstanding at end of period (in thousands)... 42,224 39,271 39,551 37,542 34,861
DC-I
HARTFORD MONEY MARKET FUND SUB-ACCOUNT
Accumulation unit value at beginning of period.......................... $ 2.629 $ 2.515 $ 2.450 $ 2.410 $ 2.354
Accumulation unit value at end of period................................ $ 2.738 $ 2.629 $ 2.515 $ 2.450 $ 2.410
Number accumulation units outstanding at end of period (in thousands)... 9,609 7,884 9,548 9,298 9,999
DC-I
HARTFORD ADVISERS FUND SUB-ACCOUNT
Accumulation unit value at beginning of period.......................... $ 3.649 $ 2.876 $ 2.993 $ 2.700 $ 2.524
Accumulation unit value at end of period................................ $ 4.213 $ 3.649 $ 2.876 $ 2.993 $ 2.700
Number accumulation units outstanding at end of period (in thousands)... 136,232 128,415 126,437 119,064 105,648
DC-I
HARTFORD CAPITAL APPRECIATION FUND SUB-ACCOUNT
Accumulation unit value at beginning of period.......................... $ 5.482 $ 4.257 $ 4.204 $ 3.524 $ 3.050
Accumulation unit value at end of period................................ $ 6.552 $ 5.482 $ 4.257 $ 4.204 $ 3.524
Number accumulation units outstanding at end of period (in thousands)... 59,279 52,278 46,086 36,598 25,900
DC-I
HARTFORD MORTGAGE SECURITIES FUND SUB-ACCOUNT
Accumulation unit value at beginning of period.......................... $ 2.335 $ 2.034 $ 2.093 $ 1.993 $ 1.929
Accumulation unit value at end of period................................ $ 2.430 $ 2.335 $ 2.034 $ 2.093 $ 1.993
Number accumulation units outstanding at end of period (in thousands)... 10,597 11,067 10,782 11,722 12,046
DC-I
HARTFORD INDEX FUND SUB-ACCOUNT
Accumulation unit value at beginning of period.......................... $ 2.353 $ 1.738 $ 1.735 $ 1.605 $ 1.522
Accumulation unit value at end of period................................ $ 1.520 $ 2.353 $ 1.738 $ 1.735 $ 1.605
Number accumulation units outstanding at end of period (in thousands)... 49,989 19,816 15,356 13,489 11,720
DC-I
CALVERT RESPONSIBLY INVESTED BALANCED PORTFOLIO SUB-ACCOUNT
Accumulation unit value at beginning of period.......................... $ 1.929 $ 1.504 $ 1.573 $ 1.475 $ 1.388
Accumulation unit value at end of period................................ $ 2.152 $ 1.929 $ 1.504 $ 1.573 $ 1.475
Number accumulation units outstanding at end of period (in thousands)... 10,160 9,009 7,899 7,199 5,215
<CAPTION>
1991 1990 1989 1988 1987
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
DC-I
HARTFORD BOND FUND SUB-ACCOUNT
Accumulation unit value at beginning of period.......................... $ 2.827 $ 2.640 $ 2.384 $ 2.244 $ 2.273(a)
Accumulation unit value at end of period................................ $ 3.251 $ 2.827 $ 2.640 $ 2.384 $ 2.244
Number accumulation units outstanding at end of period (in thousands)... 10,201 9,871 9,462 9,015 8,461
DC-I
HARTFORD STOCK FUND SUB-ACCOUNT
Accumulation unit value at beginning of period.......................... $ 4.628 $ 4.875 $ 3.916 $ 3.332 $ 3.201(a)
Accumulation unit value at end of period................................ $ 5.695 $ 4.628 $ 4.875 $ 3.916 $ 3.332
Number accumulation units outstanding at end of period (in thousands)... 32,700 29,962 28,198 25,658 25,694
DC-I
HARTFORD MONEY MARKET FUND SUB-ACCOUNT
Accumulation unit value at beginning of period.......................... $ 2.248 $ 2.106 $ 1.954 $ 1.842 $ 1.752(b)
Accumulation unit value at end of period................................ $ 2.354 $ 2.248 $ 2.106 $ 1.954 $ 1.842
Number accumulation units outstanding at end of period (in thousands)... 10,936 11,181 8,871 8,703 7,521
DC-I
HARTFORD ADVISERS FUND SUB-ACCOUNT
Accumulation unit value at beginning of period.......................... $ 2.123 $ 2.123 $ 1.766 $ 1.566 $ 1.497(c)
Accumulation unit value at end of period................................ $ 2.524 $ 2.123 $ 2.123 $ 1.766 $ 1.566
Number accumulation units outstanding at end of period (in thousands)... 93,981 84,223 74,660 62,335 56,502
DC-I
HARTFORD CAPITAL APPRECIATION FUND SUB-ACCOUNT
Accumulation unit value at beginning of period.......................... $ 2.004 $ 2.278 $ 1.858 $ 1.490 $ 1.579(d)
Accumulation unit value at end of period................................ $ 3.050 $ 2.004 $ 2.278 $ 1.858 $ 1.490
Number accumulation units outstanding at end of period (in thousands)... 19,437 15,293 13,508 9,970 8,485
DC-I
HARTFORD MORTGAGE SECURITIES FUND SUB-ACCOUNT
Accumulation unit value at beginning of period.......................... $ 1.702 $ 1.571 $ 1.406 $ 1.313 $ 1.296(e)
Accumulation unit value at end of period................................ $ 1.929 $ 1.702 $ 1.571 $ 1.406 $ 1.313
Number accumulation units outstanding at end of period (in thousands)... 11,855 10,291 8,919 9,005 8,139
DC-I
HARTFORD INDEX FUND SUB-ACCOUNT
Accumulation unit value at beginning of period.......................... $ 1.190 $ 1.255 $ 0.975 $ 0.850 $ 1.000(f)
Accumulation unit value at end of period................................ $ 1.522 $ 1.190 $ 1.255 $ 0.975 $ 0.850
Number accumulation units outstanding at end of period (in thousands)... 8,519 6,350 3,639 1,946 1,323
DC-I
CALVERT RESPONSIBLY INVESTED BALANCED PORTFOLIO SUB-ACCOUNT
Accumulation unit value at beginning of period.......................... $ 1.207 $ 1.173 $ 1.000 -- --(g)
Accumulation unit value at end of period................................ $ 1.388 $ 1.207 $ 1.173 -- --
Number accumulation units outstanding at end of period (in thousands)... 3,508 2,036 629 -- --
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1996 1995 1994 1993 1992
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
DC-I
HARTFORD INTERNATIONAL OPPORTUNITIES FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 1.330 $ 1.181 $ 1.220 $ 0.924 $ 0.979
Accumulation unit value at end of period..................................... $ 1.488 $ 1.330 $ 1.181 $ 1.220 $ 0.924
Number accumulation units outstanding at end of period (in thousands)........ 43,558 35,671 38,270 19,894 8,061
DC-I
HARTFORD DIVIDEND & GROWTH FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 1.224 -- -- -- --
Accumulation unit value at end of period..................................... $ 1.490 $ 1.224 -- -- --
Number accumulation units outstanding at end of period (in thousands)........ 20,897 6,317 -- -- --
DC-II (1.25%)
HARTFORD BOND FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 4.095 $ 3.500 $ 3.689 $ 3.389 $ 3.251
Accumulation unit value at end of period..................................... $ 4.187 $ 4.095 $ 3.500 $ 3.689 $ 3.389
Number accumulation units outstanding at end of period (in thousands)........ 1,655 1,368 1,123 992 816
DC-II (1.25%)
HARTFORD STOCK FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 8.968 $ 6.771 $ 6.988 $ 6.188 $ 5.694
Accumulation unit value at end of period..................................... $ 11.017 $ 8.968 $ 6.771 $ 6.988 $ 6.188
Number accumulation units outstanding at end of period (in thousands)........ 4,885 4,413 3,885 3,181 2,517
DC-II (1.25%)
HARTFORD MONEY MARKET FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 2.624 $ 2.512 $ 2.447 $ 2.407 $ 2.351
Accumulation unit value at end of period..................................... $ 2.725 $ 2.624 $ 2.512 $ 2.447 $ 2.407
Number accumulation units outstanding at end of period (in thousands)........ 1,333 989 905 886 884
DC-II (1.25%)
HARTFORD ADVISERS FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 3.647 $ 2.876 $ 2.993 $ 2.700 $ 2.524
Accumulation unit value at end of period..................................... $ 4.201 $ 3.647 $ 2.876 $ 2.993 $ 2.700
Number accumulation units outstanding at end of period (in thousands)........ 10,505 9,212 8,279 7,023 7,323
DC-II (1.25%)
HARTFORD CAPITAL APPRECIATION FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 5.478 $ 4.257 $ 4.204 $ 3.524 $ 3.050
Accumulation unit value at end of period..................................... $ 6.533 $ 5.478 $ 4.257 $ 4.204 $ 3.524
Number accumulation units outstanding at end of period (in thousands)........ 10,979 9,081 6,923 4,940 3,276
DC-II (1.25%)
HARTFORD MORTGAGE SECURITIES FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 2.333 $ 2.034 $ 2.093 $ 1.993 $ 1.929
Accumulation unit value at end of period..................................... $ 2.421 $ 2.333 $ 2.034 $ 2.093 $ 1.993
Number accumulation units outstanding at end of period (in thousands)........ 1,141 1,149 994 942 802
<CAPTION>
1991 1990 1989 1988 1987
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
DC-I
HARTFORD INTERNATIONAL OPPORTUNITIES FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 0.877 $ 1.000 -- -- --
(h)
Accumulation unit value at end of period..................................... $ 0.979 $ 0.877 -- -- --
Number accumulation units outstanding at end of period (in thousands)........ 4,663 2,564 -- -- --
DC-I
HARTFORD DIVIDEND & GROWTH FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... -- -- -- -- --
(i)
Accumulation unit value at end of period..................................... -- -- -- --
Number accumulation units outstanding at end of period (in thousands)........ -- -- -- --
DC-II (1.25%)
HARTFORD BOND FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 2.827 $ 2.641 $ 2.385 $ 2.244 $ 2.273
(j)
Accumulation unit value at end of period..................................... $ 3.251 $ 2.827 $ 2.641 $ 2.385 $ 2.244
Number accumulation units outstanding at end of period (in thousands)........ 732 724 594 433 320
DC-II (1.25%)
HARTFORD STOCK FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 4.627 $ 4.874 $ 3.915 $ 3.331 $ 3.200
(k)
Accumulation unit value at end of period..................................... $ 5.694 $ 4.627 $ 4.874 $ 3.915 $ 3.331
Number accumulation units outstanding at end of period (in thousands)........ 1,885 1,467 1,156 1,011 951
DC-II (1.25%)
HARTFORD MONEY MARKET FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 2.245 $ 2.103 $ 1.951 $ 1.840 $ 1.749
(k)
Accumulation unit value at end of period..................................... $ 2.351 $ 2.245 $ 2.103 $ 1.951 $ 1.840
Number accumulation units outstanding at end of period (in thousands)........ 929 881 718 628 389
DC-II (1.25%)
HARTFORD ADVISERS FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 2.123 $ 2.123 $ 1.766 $ 1.566 $ 1.497
(c)
Accumulation unit value at end of period..................................... $ 2.524 $ 2.123 $ 2.123 $ 1.766 $ 1.566
Number accumulation units outstanding at end of period (in thousands)........ 6,220 5,565 5,227 4,631 4,283
DC-II (1.25%)
HARTFORD CAPITAL APPRECIATION FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 2.004 $ 2.278 $ 1.858 $ 1.490 $ 1.579
(d)
Accumulation unit value at end of period..................................... $ 3.050 $ 2.004 $ 2.278 $ 1.858 $ 1.490
Number accumulation units outstanding at end of period (in thousands)........ 2,113 1,455 1,037 787 664
DC-II (1.25%)
HARTFORD MORTGAGE SECURITIES FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 1.702 $ 1.571 $ 1.406 $ 1.313 $ 1.296
(e)
Accumulation unit value at end of period..................................... $ 1.929 $ 1.702 $ 1.571 $ 1.406 $ 1.313
Number accumulation units outstanding at end of period (in thousands)........ 736 582 845 764 598
</TABLE>
12
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1996 1995 1994 1993 1992
--------- --------- --------- --------- ---------
DC-II (1.25%)
HARTFORD INDEX FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 2.353 $ 1.738 $ 1.735 $ 1.605 $ 1.522
Accumulation unit value at end of period..................................... $ 2.848 $ 2.353 $ 1.738 $ 1.735 $ 1.605
Number accumulation units outstanding at end of period (in thousands)........ 4,378 3,153 2,376 1,862 1,437
DC-II (1.25%)
CALVERT RESPONSIBLY INVESTED BALANCED PORTFOLIO SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 1.817 $ 1.417 $ 1.483 $ 1.391 $ 1.308
Accumulation unit value at end of period..................................... $ 2.021 $ 1.817 $ 1.417 $ 1.483 $ 1.391
Number accumulation units outstanding at end of period (in thousands)........ 1,193 923 693 498 317
DC-II (1.25%)
HARTFORD INTERNATIONAL OPPORTUNITIES FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 1.329 $ 1.181 $ 1.220 $ 0.924 $ 0.979
Accumulation unit value at end of period..................................... $ 1.483 $ 1.329 $ 1.181 $ 1.220 $ 0.924
Number accumulation units outstanding at end of period (in thousands)........ 5,996 4,520 3,640 1,495 553
DC-II (1.25%)
HARTFORD DIVIDEND & GROWTH FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 1.223 -- -- -- --
Accumulation unit value at end of period..................................... $ 1.490 $ 1.223 -- -- --
Number accumulation units outstanding at end of period (in thousands)........ 3,874 558 -- -- --
DC-II (0.150%)
HARTFORD BOND FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 3.858 $ 3.261 $ 3.400 $ 3.089 $ 2.932
Accumulation unit value at end of period..................................... $ 3.988 $ 3.858 $ 3.261 $ 3.400 $ 3.089
Number accumulation units outstanding at end of period (in thousands)........ 306 282 306 313 329
DC-II (0.150%)
HARTFORD STOCK FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 6.964 $ 5.200 $ 5.309 $ 4.651 $ 4.232
Accumulation unit value at end of period..................................... $ 8.648 $ 6.964 $ 5.200 $ 5.309 $ 4.651
Number accumulation units outstanding at end of period (in thousands)........ 874 825 858 859 865
DC-II (0.150%)
HARTFORD MONEY MARKET FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 2.551 $ 2.416 $ 2.328 $ 2.265 $ 2.188
Accumulation unit value at end of period..................................... $ 2.679 $ 2.551 $ 2.416 $ 2.328 $ 2.265
Number accumulation units outstanding at end of period (in thousands)........ 321 267 266 278 300
DC-II (0.150%)
HARTFORD ADVISERS FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 4.188 $ 3.268 $ 3.365 $ 3.002 $ 2.776
Accumulation unit value at end of period..................................... $ 4.875 $ 4.188 $ 3.268 $ 3.365 $ 3.002
Number accumulation units outstanding at end of period (in thousands)........ 603 646 529 547 517
<CAPTION>
1991 1990 1989 1988 1987
--------- --------- --------- --------- ---------
DC-II (1.25%)
HARTFORD INDEX FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 1.190 $ 1.255 $ 0.975 $ 0.850 $ 1.000
(f)
Accumulation unit value at end of period..................................... $ 1.522 $ 1.190 $ 1.255 $ 0.975 $ 0.850
Number accumulation units outstanding at end of period (in thousands)........ 871 595 275 116 49
DC-II (1.25%)
CALVERT RESPONSIBLY INVESTED BALANCED PORTFOLIO SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 1.138 $ 1.106 $ 1.000 -- --
(g)
Accumulation unit value at end of period..................................... $ 1.308 $ 1.138 $ 1.106 $ 1.000 --
Number accumulation units outstanding at end of period (in thousands)........ 187 94 18 -- --
DC-II (1.25%)
HARTFORD INTERNATIONAL OPPORTUNITIES FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 0.877 $ 1.000 -- -- --
(h)
Accumulation unit value at end of period..................................... $ 0.979 $ 0.877 -- -- --
Number accumulation units outstanding at end of period (in thousands)........ 220 52 -- -- --
DC-II (1.25%)
HARTFORD DIVIDEND & GROWTH FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... -- -- -- -- --
(i)
Accumulation unit value at end of period..................................... -- -- -- -- --
Number accumulation units outstanding at end of period (in thousands)........ -- -- -- -- --
DC-II (0.150%)
HARTFORD BOND FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 2.521 $ 2.329 $ 2.080 $ 1.937 $ 1.273
(l)
Accumulation unit value at end of period..................................... $ 2.932 $ 2.521 $ 2.329 $ 2.080 $ 1.937
Number accumulation units outstanding at end of period (in thousands)........ 324 328 359 381 385
DC-II (0.150%)
HARTFORD STOCK FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 3.401 $ 3.544 $ 2.815 $ 2.370 $ 2.252
(l)
Accumulation unit value at end of period..................................... $ 4.232 $ 3.401 $ 3.544 $ 2.815 $ 2.370
Number accumulation units outstanding at end of period (in thousands)........ 877 870 892 943 994
DC-II (0.150%)
HARTFORD MONEY MARKET FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 2.067 $ 1.915 $ 1.757 $ 1.639 $ 1.541
(l)
Accumulation unit value at end of period..................................... $ 2.188 $ 2.067 $ 1.915 $ 1.757 $ 1.639
Number accumulation units outstanding at end of period (in thousands)........ 304 324 332 342 356
DC-II (0.150%)
HARTFORD ADVISERS FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 2.310 $ 2.284 $ 1.879 $ 1.646 $ 1.558
(c)
Accumulation unit value at end of period..................................... $ 2.776 $ 2.310 $ 2.284 $ 1.879 $ 1.646
Number accumulation units outstanding at end of period (in thousands)........ 477 462 453 498 522
<CAPTION>
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1996 1995 1994 1993 1992
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
DC-II (0.150%)
HARTFORD CAPITAL APPRECIATION FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 6.224 $ 4.785 $ 4.676 $ 3.876 $ 3.318
Accumulation unit value at end of period..................................... $ 7.501 $ 6.224 $ 4.785 $ 4.676 $ 3.876
Number accumulation units outstanding at end of period (in thousands)........ 783 737 600 502 335
DC-II (0.150%)
HARTFORD MORTGAGE SECURITIES FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 2.632 $ 2.269 $ 2.310 $ 2.176 $ 2.082
Accumulation unit value at end of period..................................... $ 2.761 $ 2.632 $ 2.269 $ 2.310 $ 2.176
Number accumulation units outstanding at end of period (in thousands)........ 143 76 78 111 132
DC-II (0.150%)
HARTFORD INDEX FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 2.558 $ 1.876 $ 1.861 $ 1.708 $ 1.602
Accumulation unit value at end of period..................................... $ 3.118 $ 2.558 $ 1.876 $ 1.861 $ 1.708
Number accumulation units outstanding at end of period (in thousands)........ 354 282 217 183 144
DC-II (0.150%)
HARTFORD INTERNATIONAL OPPORTUNITIES FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 1.412 $ 1.241 $ 1.268 $ 0.949 $ 0.995
Accumulation unit value at end of period..................................... $ 1.592 $ 1.412 $ 1.241 $ 1.268 $ 0.949
Number accumulation units outstanding at end of period (in thousands)........ 438 329 334 154 131
DC-II (0.150%)
HARTFORD DIVIDEND & GROWTH FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 1.223 -- -- -- --
Accumulation unit value at end of period..................................... $ 1.484 $ 1.223 -- -- --
Number accumulation units outstanding at end of period (in thousands)........ 3,874 558 -- -- --
<CAPTION>
1991 1990 1989 1988 1987
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
DC-II (0.150%)
HARTFORD CAPITAL APPRECIATION FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 2.157 $ 2.425 $ 1.956 $ 1.552 $ 1.626
(d)
Accumulation unit value at end of period..................................... $ 3.318 $ 2.157 $ 2.425 $ 1.956 $ 1.552
Number accumulation units outstanding at end of period (in thousands)........ 255 246 242 234 270
DC-II (0.150%)
HARTFORD MORTGAGE SECURITIES FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 1.817 $ 1.659 $ 1.468 $ 1.357 $ 1.324
(e)
Accumulation unit value at end of period..................................... $ 2.082 $ 1.817 $ 1.659 $ 1.468 $ 1.357
Number accumulation units outstanding at end of period (in thousands)........ 108 85 91 95 114
DC-II (0.150%)
HARTFORD INDEX FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 1.238 $ 1.292 $ 0.993 $ 0.856 $ 1.000
(m)
Accumulation unit value at end of period..................................... $ 1.602 $ 1.238 $ 1.292 $ 0.993 $ 0.856
Number accumulation units outstanding at end of period (in thousands)........ 90 72 49 40 94
DC-II (0.150%)
HARTFORD INTERNATIONAL OPPORTUNITIES FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... $ 0.882 $ 1.000 -- -- --
(h)
Accumulation unit value at end of period..................................... $ 0.995 $ 0.882 $ 1.000 -- --
Number accumulation units outstanding at end of period (in thousands)........ 96 96 -- -- --
DC-II (0.150%)
HARTFORD DIVIDEND & GROWTH FUND SUB-ACCOUNT
Accumulation unit value at beginning of period............................... -- -- -- -- --
(i)
Accumulation unit value at end of period..................................... -- -- -- -- --
Number accumulation units outstanding at end of period (in thousands)........ -- -- -- -- --
</TABLE>
- ------------
(a) Inception date August 3, 1982.
(b) Inception date June 14, 1982.
(c) Inception date May 2, 1983.
(d) Inception date April 2, 1984.
(e) Inception date January 15, 1985.
(f) Inception date June 3, 1987
(g) Inception date January 25, 1989.
(h) Inception date July 2, 1990.
(i) Inception date May 1, 1995.
(j) Inception date August 25, 1982
(k) Inception date June 29, 1982.
(l) Inception date March 15, 1982.
(m) Inception date May 12, 1987.
14
<PAGE>
PERFORMANCE RELATED INFORMATION
Each 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, Calvert Responsibly Invested Balanced
Portfolio, Capital Appreciation Fund, Dividend and Growth Fund, Index Fund,
International Opportunities Fund, Money Market Fund, Mortgage Securities Fund,
and Stock Fund Sub-Accounts may include total return in advertisements or other
sales material.
When a Sub-Account advertises its standardized 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). Total return figures are not of all Fund level
management fees and changes, the mortality and expense risk charge and the
Annual Contract Fee.
The Bond Fund and Mortgage Securities 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 30 day 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 and the mortality and expense risk change.
The Money Market Fund Sub-Account 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 and the mortality and expense risk
charge.
Total return at the Separate Account level includes all contract charges:
contingent deferred 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
Hartford 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 4 and 5
prior to reading this Prospectus to familiarize yourself with the terms being
used.
THE CONTRACTS AND THE SEPARATE ACCOUNTS
WHAT ARE THE 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. The Small Business Job Protection Act of 1996,
effective August 20, 1996, requires that all assets and income of an eligible
Deferred Compensation Plan which is established by a governmental employer
which is a State, a political subdivision of a State, or any agency or
instrumentality of a State or political subdivision of a State, must be held
in trust (or under certain specified custodial accounts or annuity contracts)
for the exclusive benefit of Participants and their beneficiaries. Special
transition rules apply to such governmental Deferred Compensation Plans
already in existence on August 20, 1996, and provide that such Plans need not
establish a trust before January 1, 1999.
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 38) 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 state, a political
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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
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," page
31.) 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 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 Hartford by the Commission. However, Hartford 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 Hartford may
conduct. So, you will not be affected by the rate of return of Hartford's
general account, nor by the investment performance of any of Hartford's other
separate accounts.
Your contributions are allocated to one or more Sub-Accounts of the Separate
Account. Each Sub-Account is invested exclusively in the assets of one
underlying Fund. Contributions 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.
HARTFORD 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 SUM OF ALL CONTRIBUTIONS 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 FUNDS' PROSPECTUSES.
Hartford 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.
Hartford also reserves the right, subject to compliance with the law to offer
additional Sub-Accounts with differing investment objectives, and to make
existing Sub-Account options unavailable under the contracts in the future.
The Separate Accounts 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.
Hartford 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.
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<PAGE>
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 and
separately applicable 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 38, for a
description of the sales charges and other expenses applicable to such
contracts.
The number of Accumulation Units purchased is determined by dividing the
Contribution amount by the appropriate Accumulation Unit Value on the date the
Contribution is credited to the Participant's Individual Account. Initial
Contributions are credited to a Participants Individual Account within two
days of receipt of a properly completed application and the initial
contribution. Subsequent Contributions are credited to a Participant's
Individual Account on the date following receipt of the Contribution by
Hartford at its home office, P. O. Box 2999, Hartford, CT 06104-2999 (or other
address as directed). If an application or any other information is incomplete
when received, Contributions 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.
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
the form and manner prescribed by Hartford.
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.
Transfers of assets presently held in the General Account, or which were
held in the General Account at any time during the preceding three months, to
the Money Market Fund Sub-Account are prohibited.
Similarly, transfers of assets presently held in the Money Market Fund
Sub-Account, or which were held in the Money Market Fund Sub-Account or the
General Account during the preceding three months, to the General Account are
prohibited.
Transfers between Sub-Accounts and changes in Sub-Account allocations may be
made by written request or by calling 1-800-771-3051. Any transfers or changes
made in writing will be effected as of the date the request is received by
Hartford at its home office, P. O. Box 2999, Hartford, CT 06104-2999.
Telephone transfer changes may not be permitted in some states. The policy of
Hartford and its agents and affiliates is that they will not be responsible
for losses resulting from acting upon telephone requests reasonably believed
to be genuine. Hartford will employ reasonable procedures to confirm that
instructions communicated by telephone are genuine; otherwise Hartford may be
liable for any losses due to unauthorized or fraudulent instructions. The
procedures Hartford follows for transactions initiated by telephone include
requirements that Participants provide certain identifying information. All
transfer instructions by telephone are recorded.
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<PAGE>
In addition, the right, with respect to a Participant's Individual Account,
to transfer monies between Sub-Accounts is subject to modification if Hartford
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 Hartford to be the disadvantage of other Contract
Owners/Participants.
MAY I SYSTEMATICALLY TRANSFER ASSETS TO THE SUB-ACCOUNTS?
If, during the Accumulation Period, the portion of your contract values held
under the General Account option is at least $5,000, or the value of your
Accumulation Units held under the Money Market Fund Sub-Account is at least
$5,000, you may choose to have a specified dollar amount transferred from
either the General Account option or the Money Market Fund Sub-Account,
whichever meets the applicable minimum value, to other Sub-Accounts of the
Separate Account at monthly, quarterly, semi-annual or annual intervals. This
is known as Dollar Cost Averaging. The main objective of a Dollar Cost
Averaging program is to minimize the impact of short term price fluctuations.
Since the same dollar amount is transferred to other Sub-Accounts at set
intervals, more units are purchased in a Sub-Account if the value per unit is
low and less units are purchased if the value per unit is high. Therefore, a
lower average cost per unit may be achieved over the long term. A Dollar Cost
Averaging program allows investors to take advantage of market fluctuations.
However, it is important to understand that Dollar Cost Averaging does not
assure a profit or protect against a loss in declining markets.
The minimum amount that may be transferred to any one Sub-Account at a
transfer interval is $100. The transfer date will be the monthly, quarterly,
semi-annual or annual anniversary, as applicable, of your first transfer under
your initial Dollar Cost Averaging election. The first transfer will commence
within five (5) business days after Hartford receives your initial election
either on an appropriate election form in good order or by telephone subject
to the telephone transfer procedures detailed above. The dollar amount will be
allocated to the Sub-Accounts that you specify, in the proportions that you
specify on the appropriate election form provided by Hartford. You may specify
a maximum of five (5) Sub-Accounts. If, on any transfer date, your General
Account value or the value of your Accumulation Units under the Money Market
Fund Sub-Account, as applicable, is less than the amount you have elected to
have transferred, your Dollar Cost Averaging program will end. You may cancel
your Dollar Cost Averaging election by notice to Hartford in writing or by
calling 1-800-528-9009 and giving notice to a Hartford representative on our
recorded telephone line.
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
Hartford during the preceding 12 month period. Effective with a change of the
contract to paid-up status, no further Contributions will be accepted by
Hartford 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?" commencing on page 21). 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 Hartford at Hartford,
Connecticut, prior to settlement for Hartford's liability under the contract.
Hartford assumes no responsibility for the validity of any such assignments.
Participants may not assign their individual account interests.
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<PAGE>
HOW DO I KNOW WHAT MY ACCOUNT IS WORTH?
The value of the Accumulation Units in a Separate Account 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?" below.)
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.
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 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 Hartford, 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
Hartford, 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 Hartford and within one year after the
death by written notice to Hartford 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
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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?" commencing on 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
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%.
HARTFORD 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 25.) The amount
received will be the net termination value next computed after receipt by
Hartford 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 Hartford.
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?" commencing on page 25.) If the contingent
deferred sales charges have been experience rated (see "How are the charges
under these contracts made?" commencing on page 25), 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.
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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 Hartford at Annuity rates then being offered by
Hartford.
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 Hartford 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 Hartford 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, Hartford reserves the right to begin
Annuity payments at age 65 under Option 2 with 120 monthly payments certain.
However, Hartford 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.
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, Hartford has the right to change the frequency of
payment to intervals that will result in payments of at least $20.00.
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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.................................... 3.50%
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. This option offers the maximum level of monthly payments of any of
the other life annuity options (Options 2-4) 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 payments will be made for a minimum of 120,
180 or 240 months, as elected. If, at the death of the Annuitant, payments
have been made for less than the minimum elected number of months, then 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 Hartford.
*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 by number of monthly
(b) = 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 Hartford.
23
<PAGE>
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.
At the Annuitant's death, payments will continue to be made to the
contingent annuitant, if living for the remainder of the contingent
annuitant's life. When the Annuity is purchased, the Annuitant elects what
percentage (50%, 66 2/3% or 100%) of the monthly Annuity payment will continue
to be paid to the contingent annuitant.
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 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 Hartford. 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 the charges under
these contracts made?" commencing on page 25).
* 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 HARTFORD.
- --------------------------------------------------------------------------------
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 no earlier than 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.
The first monthly payment varies according to the form of Annuity selected.
The contract cites 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 contract.
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 A.I.R. 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
24
<PAGE>
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.
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 month 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
Hartford. No modification will affect the amount or 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 Hartford 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.
At any time Hartford reserves the right to modify the contract, 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
Hartford 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 Hartford will provide
notice to the Contract Owner or to the payee(s) during the Annuity period.
Hartford 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's Contract Years. During the first 6 years thereof, a maximum
deduction of 5% will be made against the full amount of any such surrender.
During the next 2 years thereof, a maximum deduction of 4% will be made
against the full amount of any such surrender. During the next 2 years
thereof, a maximum deduction of 3% will be made against the full amount of any
such surrender. During the next 2 years thereof, a maximum deduction of 2%
will be made against the full amount of any such surrender. Such
25
<PAGE>
charges will never exceed 8.5% of aggregate Contributions to a Participant's
Individual Account. The amount or term of the contingent deferred sales charge
may be reduced (see "Charges Under the Contract -- Experience Rating of
Contracts," page 27).
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 by $1,000 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).
Hartford 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 Hartford
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 apply to a
surrender, including amounts applied to effect an annuity payout under one of
the available Annuity Options, payable directly to the Participant or the
Participant's beneficiary on account of: (1) the death of the Participant, (2)
a financial hardship withdrawal as defined in the Plan, (3) the Participant's
separation from service, or (4) the Participant's retirement.
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 Hartford
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) Hartford's
actual mortality experience among Annuitants before or after retirement or (b)
Hartford's actual expenses, including certain administrative expenses, if
greater than the deductions provided for in the contracts because of the
mortality and expense undertakings by Hartford.
In providing an expense undertaking with respect to both DC-I and DC-II,
Hartford 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 Hartford 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 Hartford's present
actuarial determination of expected mortality rates among all Annuitants.
If actual experience among Annuitants deviates from Hartford's actuarial
determination of expected mortality rates among Annuitants because, as a
group, their longevity is longer than anticipated, Hartford
26
<PAGE>
must provide amounts from its general funds to fulfill its contract
obligations. In that event, a loss will fall on Hartford. Conversely, if
longevity among Annuitants is lower than anticipated, a gain will result to
Hartford. Hartford also assumes the liability for payment of the Minimum Death
Benefit provided under the contract.
The administrative undertaking provided by Hartford assures the Contract
Owner that administration will be provided throughout the entire life of the
contract.
For assuming these risks Hartford presently charges .90% (.50% for
mortality, .15% for expense and .25% for administrative undertakings) of the
average daily net assets of DC-I; however, where contract values exceed fifty
million dollars ($50,000,000.00), such charge is an annual rate of .75% (.50%
for mortality, .10% for expense and .15% for administrative undertakings) of
the average daily net assets of DC-I. With respect to the contract values 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, as appropriate. The rate charged for the expense, mortality
and administrative undertakings under the contracts may be reduced (see
"Charges Under the Contract -- Experience Rating of Contracts," page 27). The
rate charged for the expense, mortality and administrative undertakings may be
periodically increased by Hartford 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.
Under a Contract issued to Hartford Fire Insurance Company (a parent company
of Hartford) as custodian for the Hartford Insurance Group ("HIG") Employer
Sponsored Individual Retirement Account, no deduction for mortality and
expense charges are made against the assets of the Separate Account. A
deduction of 0.15% is made under this Contract for administrative
undertakings. All costs of the mortality and expense undertakings and the
reduction in charges for the administrative undertakings are being assumed by
HIG since the plan is limited to employees of HIG and is in the nature of an
additional employee benefit for its Employees. In calculating the Accumulation
and Annuity Unit prices with respect to DC-II, no deduction will be made for
such mortality and expense undertakings on this Contract but the deduction of
0.15% for administrative undertakings will be made. Separate Accumulation and
Annuity Unit prices are maintained with respect to HIG and non-HIG contracts.
The expense of maintaining separate unit prices is borne solely by HIG.
Provision of this benefit for HIG employees in no way affects present or
future charges, rights, benefits or contract values of other Contract Owners.
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. Currently there is no
Annual Contract Fee. (See "Charges Under the Contract -- Experience Rating of
Contracts," page 27).
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 Hartford 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 some or all of the following
factors: the total number of Participants, the sum of all Participants'
Individual Account values, the sum of all Participants' Individual Account
values which are allocated to funds managed by affiliates of Hartford,
anticipated present or future expense levels, anticipated present or future
commission levels, and whether or not Hartford is an exclusive annuity
Contract provider. Experience rating of a contract may be discontinued in the
event of a change in the applicable factors. Hartford, 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 amount of, or waiving, the Transfer Fee, (4) reducing the
mortality, expense and administrative risk charge, or (5) by any combination
of the above.
27
<PAGE>
Reductions in these charges will not be unfairly discriminatory against any
person, including the affected Contractholders/Participants funded by the
Separate Account. Experience rating credits have been given on certain cases.
Participants in Contracts receiving experience rating credits will receive
notification regarding any reduction in charges of fees.
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 3.50%. On any contract subject to Premium Taxes, Hartford will
pay the taxes when imposed by the applicable taxing authorities. Hartford, as
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.
WHAT CHARGES ARE MADE BY THE FUNDS?
Deductions are made from assets of the Funds to pay for management fees and
the operating expenses of the Funds. A full description of the Funds, their
investment policies and restrictions, risks, charges and expenses and all
other aspects of their operation is contained in the accompanying prospectuses
for the Funds.
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 "Charges Under the
Contract -- Experience Rating of Contracts," page 27). Currently there is no
transfer charge.
HARTFORD LIFE INSURANCE COMPANY
AND THE FUNDS
WHAT IS HARTFORD?
Hartford Life Insurance Company ("Hartford") is a stock life insurance
company engaged in the business of writing health and life insurance, both
individual and group, in all states of the United States and the District of
Columbia. Hartford was originally incorporated under the laws of Massachusetts
on June 5, 1902, and was subsequently redomiciled to Connecticut. Its offices
are located in Simsbury, Connecticut; however, its mailing address is P. O.
Box 2999, Hartford, CT 06104-2999. Hartford is a subsidiary of Hartford Fire
Insurance Company, one of the largest multiple lines insurance carriers in the
United States. Hartford is ultimately owned by ITT Hartford Group, Inc., a
Delaware corporation. Subject to shareholder approval on May 2, 1997, the name
of ITT Hartford Group, Inc. will change to The Hartford Financial Services
Group, Inc.
Hartford is rated A+ (superior) by A.M. Best and Company, Inc., on the basis
of its financial soundness and operating performance. Hartford is rated AA by
Standard & Poor's and AA+ by Duff and Phelps , on the basis of its claims
paying ability. These ratings do not apply to the investment performance of
the Sub-Accounts of the Separate Account. The ratings apply to Hartford's
ability to meet its insurance obligations, including those described in this
Prospectus.
WHAT ARE THE FUNDS?
Hartford Stock Fund, Inc. was organized on March 11, 1976. Calvert
Responsibly Invested Balanced Portfolio 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.
28
<PAGE>
The investment objectives of each of the Funds are as follows:
HARTFORD ADVISERS FUND, INC.
Seeks 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.
HARTFORD BOND FUND, INC.
Seeks maximum current income consistent with preservation of capital by
investing primarily in fixed-income securities. Up to 20% of the total assets
of this Fund may be invested in debt securities rated in the highest category
below investment grade ("Ba" by Moody's Investor Services, Inc. or "BB" by
Standard & Poor's) or, if unrated, are determined to be of comparable quality
by the Fund's investment adviser. Securities rated below investment grade are
commonly referred to as "high yield-high risk securities" or "junk bonds." For
more information concerning the risks associated with investing in such
securities, please refer to the section in the accompanying prospectus for the
Hartford Funds entitled "Hartford Bond Fund, Inc. -- Investment Policies."
HARTFORD CAPITAL APPRECIATION FUND, INC.
Seeks 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.
Seeks a high level of current income consistent with growth of capital and
reasonable investment risk.
HARTFORD INDEX FUND, INC.
Seeks 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.*
HARTFORD INTERNATIONAL OPPORTUNITIES FUND, INC.
Seeks long-term total return consistent with prudent investment risk through
investment primarily in equity securities issued by non-U.S. companies.
HARTFORD MORTGAGE SECURITIES FUND, INC.
Seeks 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.
HARTFORD STOCK FUND, INC.
Seeks long-term capital growth primarily through capital appreciation, with
income a secondary consideration, by investing primarily in equity securities.
HVA MONEY MARKET FUND, INC.
Seeks maximum current income consistent with liquidity and preservation of
capital.
CALVERT RESPONSIBLY INVESTED BALANCED PORTFOLIO
Seeks a total return above the rate of inflation through an actively
managed, nondiversified portfolio of common and preferred stocks, bonds, and
money market instruments which offer income and capital growth opportunities
and which satisfy the social criteria established for the Portfolio.
* "STANDARD & POOR'S", "S&P", "S&P 500", "STANDARD & POOR'S 500", AND "500"
ARE TRADEMARKS OF THE MCGRAW-HILL COMPANIES, INC. AND HAVE BEEN LICENSED FOR
USE BY HARTFORD LIFE INSURANCE COMPANY AND AFFILIATES. THE HARTFORD INDEX
FUND, INC. ("INDEX FUND") IS NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY
STANDARD & POOR'S AND STANDARD & POOR'S MAKES NO REPRESENTATION REGARDING
THE ADVISABILITY OF INVESTING IN THE INDEX FUND.
29
<PAGE>
ALL FUNDS
The Hartford Funds are available only to serve as the underlying investment
for the variable annuity and variable life insurance contracts issued by
Hartford.
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 Hartford 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 Calvert Responsibly Invested Balanced Portfolio, a series of
Acacia Capital Corporation which is unaffiliated with Hartford, are offered to
other unaffiliated separate accounts. Hartford 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.
Hartford 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.
Hartford also reserves the right, subject to compliance with the law to offer
additional Funds with differing investment objectives.
The Advisers Fund Sub-Account was 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. The Dividend and Growth Fund Sub-Account was not
available under contracts issued prior to May 1, 1995. Funds not available
prior to the issue date of a contract may be requested in writing by the
Contract Owner.
All of the Funds are sponsored by Hartford and are incorporated under the
laws of the State of Maryland. HL Investment Advisors, Inc. ("HL Advisors")
serves as the investment adviser to each of the Hartford Funds.
Wellington Management Company, L.L.P. serves as sub-investment adviser for
Hartford Advisers Fund, Hartford Capital Appreciation Fund, Hartford Dividend
and Growth Fund, Hartford International Opportunities Fund and Hartford Stock
Fund.
Calvert Asset Management Company serves as investment adviser and manages
the fixed-income portion of the Calvert Responsibly Invested Balanced
Portfolio. The sub-advisor to the Portfolio is NCM Capital Management Group,
Inc. ("NCM"). NCM manages the equity portion of the Portfolio.
In addition, HL Advisors has entered an investment services agreement with
Hartford Investment Management Company, Inc., ("HIMCO"), pursuant to which
HIMCO will provide certain investment services to Hartford Bond Fund, Hartford
Index Fund, Hartford Mortgage Securities Fund, and HVA Money Market Fund.
A full description of the Funds, their investment policies and restrictions,
risks, charges and expenses and all other aspects of their operation 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 Hartford. The Funds may
not be available in all states.
30
<PAGE>
DOES HARTFORD HAVE ANY INTEREST IN THE FUNDS?
As of December 31, 1996, certain Hartford group pension contracts held
direct interest in shares as follows:
<TABLE>
<CAPTION>
PERCENT OF
SHARES TOTAL SHARES
------------- -------------
<S> <C> <C>
Hartford Advisers Fund, Inc............................................................... 18,752,510 0.69%
Hartford Bond Fund, Inc................................................................... 47,060 0.01%
Hartford Capital Appreciation Fund, Inc................................................... 15,519,596 1.79%
Hartford Dividend and Growth Fund, Inc.................................................... 443,556 0.08%
Hartford Index Fund, Inc.................................................................. 16,432,999 6.30%
Hartford International Opportunities Fund, Inc............................................ 7,835,802 1.11%
Hartford Mortgage Securities Fund, Inc.................................................... 17,408,850 5.65%
Hartford Stock Fund, Inc.................................................................. 92,167 0.01%
HVA Money Market Fund, Inc................................................................ 31,633 0.01%
</TABLE>
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
Hartford's understanding of existing federal income tax laws as they are
currently interpreted.
B. HARTFORD AND DC-I AND DC-II
DC-I is not taxed as a part of Hartford. The taxation of DC-I is governed by
Subchapter M of Chapter 1 of the Internal Revenue Code of 1986, as amended
(the "Code") pursuant to an Internal Revenue Service ("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 Hartford 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 Hartford which is taxed as a life insurance
company in accordance with the 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 rules applicable to tax qualified contract owners, including
restrictions on contributions and distributions, taxation of distributions and
tax penalties, vary according to the type of plan as well as the terms and
conditions of the plan itself. Various tax penalties may apply to
contributions in excess of specified limits, to distributions in excess of
specified limits, distributions which do not satisfy certain
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requirements and certain other transactions with respect to qualified plans.
Accordingly, this summary provides only general information about the tax
rules associated with use of the Contract by a qualified plan. Contract
owners, plan participants and beneficiaries are cautioned that the rights and
benefits of any person to benefits are controlled by the terms and conditions
of the plan regardless of the terms and conditions of the Contract. Some
qualified plans are subject to distribution and other requirements which are
not incorporated into Hartford's administrative procedures. Owners,
participants and beneficiaries are responsible for determining that
contributions, distributions and other transactions comply with applicable
law. Because of the complexity of these rules, owners, participants and
beneficiaries are encouraged to consult their own tax advisors as to specific
tax consequences.
1. QUALIFIED PENSION PLANS.
Provisions of the Code permit eligible employers to establish 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)). Such plans are subject
to limitations on the amount that may be contributed, the persons who may be
eligible and the time when distributions must commence. Corporate employers
intending to use these contracts in connection with such plans should seek
competent advice.
2. TAX SHELTERED ANNUITIES UNDER SECTION 403(B).
Section 403(b) of the Code permits public school employees and employees of
certain types of charitable, educational and scientific organizations
specified in Section 501(c)(3) of the Code to purchase annuity contracts, and,
subject to certain limitations, exclude such contributions from gross income.
Generally, such contributions may not exceed the lesser of $9,500 or 20% of
the employees "includable compensation" for his most recent full year of
employment, subject to other adjustments. Special provisions may allow some
employees to elect a different overall limitation.
Tax-sheltered annuity programs under Section 403(b) are subject to a
PROHIBITION AGAINST DISTRIBUTIONS FROM THE CONTRACT ATTRIBUTABLE TO
CONTRIBUTIONS MADE PURSUANT TO A SALARY REDUCTION AGREEMENT unless such
distribution is made:
(a) after the participating employee attains age 59 1/2;
(b) upon separation from service;
(c) upon death or disability, or
(d) in the case of hardship.
The above restrictions apply to distributions of employee contributions made
after December 31, 1988, earnings on those contributions, and earnings on
amounts attributable to employee contributions held as of December 31, 1988.
They do not apply to distributions of any employer or other after-tax
contributions, employee contributions made on or before December 31, 1988, and
earnings credited to employee contributions before December 31, 1988.
3. DEFERRED COMPENSATION PLANS UNDER SECTION 457.
Employees and independent contractors performing services for such employers
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 or other tax-exempt organization. ("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.) Generally, the limitation is
33 1/3% of includable compensation (typically 25% of gross compensation) or
$7,500 (indexed), whichever is less. The plan may also provide for additional
"catch-up" deferrals during the three taxable years ending before a
Participant attains normal retirement age.
An employee electing to participate in a Deferred Compensation Plan should
understand that his or her rights and benefits are governed strictly by the
terms of the plan and that the employer is the legal owner of any contract
issued with respect to the plan. 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 or her plan for any charges in regard to participating therein
other than those disclosed in this Prospectus. Participants should also be
aware that effective August 20, 1996,
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the Small Business Job Protection Act of 1996 requires that all assets and
income of an eligible Deferred Compensation Plan established by a governmental
employer which is a State, a political subdivision of a State, or any agency
or instrumentality of a State or political subdivision of a State, must be
held in trust (or under certain specified annuity contracts or custodial
accounts) for the exclusive benefit of Participants and their Beneficiaries.
Special transition rules apply to such governmental Deferred Compensation
Plans already in existence on August 20, 1996, and provide that such plans
need not establish a trust before January 1, 1999. However, this requirement
does not apply to amounts under a Deferred Compensation Plan of a tax-exempt
(non-governmental) organization and such amounts will be subject to the claims
of such tax-exempt employer's general creditors.
In general, distributions from a Section 457 Deferred Compensation Plan are
prohibited unless made after the participating employee attains the age
specified in the plan, separates from service, dies, or suffers an
unforeseeable financial emergency. Present federal tax law does not allow
tax-free transfers or rollovers for amounts accumulated in a Section 457 plan
except for transfers to other Section 457 plans in limited cases.
4. INDIVIDUAL RETIREMENT ANNUITIES UNDER SECTION 408.
Section 408 of the Code permits eligible individuals to establish individual
retirement programs through the purchase of Individual Retirement Annuities
("IRAs"). IRAs are subject to limitations on the amount that may be
contributed, the contributions that may be deducted from taxable income, the
persons who may be eligible and the time when distributions may commence.
Also, distributions from certain qualified plans may be "rolled-over" on a
tax-deferred basis into an IRA.
5. TAX PENALTIES.
Distributions from retirement plans are generally taxed under Section 72 of
the Code. Under these rules, a portion of each distribution may be excludable
from income. The excludable amount is the portion of the distribution which
bears the same ratio as the after-tax contributions bear to the expected
return.
A. PREMATURE DISTRIBUTION.
Distributions from a qualified plan before the Participant attains age
59 1/2 are generally subject to an additional tax equal to 10% of the taxable
portion of the distribution. The 10% penalty does not apply to distributions
made after the employee's death, on account of disability, for eligible
medical expenses 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. 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).
B. MINIMUM DISTRIBUTION TAX.
If the amount distributed is less than the minimum required distribution for
the year, the Participant is subject to a 50% tax on the amount that was not
properly distributed.
An individual's interest in a retirement plan must generally be distributed,
or begin to be distributed, not later than April 1 of the calendar year
following the later of (i) the calendar year in which the individual attains
age 70 1/2 or (ii) the calendar year in which the individual retires from
service with the employer sponsoring the plan ("required beginning date").
However, the required beginning date for an individual who is a five (5)
percent owner (as defined in the Code), or who is the owner of an IRA, is
April 1 of the calendar year following the calendar year in which the
individual 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 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.
If an individual dies before reaching his or her required beginning date,
the individual's entire interest must generally be distributed within five
years of the individual's death. However, this rule will be deemed satisfied,
if distributions begin before the close of the calendar year following the
individual's death to a
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<PAGE>
designated Beneficiary (or over a period not extending beyond the life
expectancy of the beneficiary). If the Beneficiary is the individual's
surviving spouse, distributions may be delayed until the individual would have
attained age 70 1/2.
If an individual dies after reaching his or her required beginning date or
after distributions have commenced, the individual's interest must generally
be distributed at least as rapidly as under the method of distribution in
effect at the time of the individual's death.
C. EXCESS DISTRIBUTION TAX.
If the aggregate distributions from all IRAs and certain other qualified
plans in a calendar year exceed the greater of (i) $150,000, or (ii) $112,500
as indexed for inflation, a penalty tax of 15% is generally imposed on the
excess portion of the distribution.
D. WITHHOLDING.
Periodic distributions from a qualified plan lasting for a period of 10 or
more years are generally subject to voluntary income tax withholding. The
recipient of periodic distributions may generally elect not to have
withholding apply or to have income taxes withheld at a different rate by
providing a completed election form. Otherwise, the amount withheld on such
distributions is determined at the rate applicable to wages as if the
recipient were married claiming three exemptions.
Nonperiodic distributions from an IRA are subject to income tax withholding
at a flat 10% rate. The recipient may elect not to have withholding apply.
Nonperiodic distributions from other qualified plans are generally subject
to mandatory income tax withholding at the flat rate of 20% unless such
distributions are:
1) the non-taxable portion of the distribution;
2) required minimum distributions;
3) eligible rollover distributions.
Eligible rollover distributions are direct payments to an IRA or to another
qualified employer plan.
In general, distributions from plans described in Section 457 of the Code
are subject to regular wage withholding rules.
D. DIVERSIFICATION REQUIREMENTS
Section 817 of the Code provides that a variable annuity contract will not
be treated as an annuity contract 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 Department. If a
Contract is not treated as an annuity contract, the Contract Owner will be
subject to income tax on the annual increases in cash value.
The Treasury Department has issued diversification regulations which
generally require, among other things, that no more than 55% of the value of
the total assets of the segregated assets account underlying a variable
contract is represented by any one investment, no more than 70% is represented
by any two investment, no more than 80% is represented by any three
investments, and no more than 90% is represented by any four investments. In
determining whether the diversification standards are met, all securities of
the same issuer, all interests in the same real property project, and all
interests in the same commodity are each treated as a single investment. In
addition, in the case of government securities, each government agency or
instrumentality shall be treated as a separate issuer.
A separate account must be in compliance with the diversification standards
on the last day of each calendar quarter or within 30 days after the quarter
ends. If an insurance company inadvertently fails to meet the diversification
requirements, the company may comply within a reasonable period and avoid the
taxation of contract income on an ongoing basis. However, either the company
or the Contract Owner must agree to pay the tax due for the period during
which the diversification requirements were not met.
Hartford monitors the diversification of investments in the separate
accounts and tests for diversification as required by the Code. Hartford
intends to administer all contracts subject to the diversification
requirements in a manner that will maintain adequate diversification.
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<PAGE>
E. OWNERSHIP OF THE ASSETS IN THE SEPARATE ACCOUNT
In order for a variable annuity contract to qualify for tax deferral, assets
in the segregated asset accounts supporting the variable contract must be
considered to be owned by the insurance company and not by the variable
contract owner. The IRS has issued several rulings which discuss investor
control. The IRS has ruled that incidents of ownership by the contract owner,
such as the ability to select and control investments in a separate account,
will cause the contract owner to be treated as the owner of the assets for tax
purposes.
Further, in the explanation to the temporary Section 817 diversification
regulations, the Treasury Department noted that the temporary regulations "do
not provide guidance concerning the circumstances in which investor control of
the investments of a segregated asset account may cause the investor, rather
than the insurance company, to be treated as the owner of the assets in the
account." The explanation further indicates that "the temporary regulations
provide that in appropriate cases a segregated asset account may include
multiple sub-accounts, but do not specify the extent to which policyholders
may direct their investments to particular sub-accounts without being treated
as the owners of the underlying assets. Guidance on this and other issues will
be provided in regulations or revenue rulings under Section 817(d), relating
to the definition of "variable contract." The final regulations issued under
Section 817 did not provide guidance regarding investor control, and as of the
date of this Prospectus, no other such guidance has been issued. Further,
Hartford does not know if or in what form such guidance will be issued. In
addition, although regulations are generally issued with prospective effect,
it is possible that regulations may be issued with retroactive effect. Due to
the lack of specific guidance regarding the issue of investor control, there
is necessarily some uncertainty regarding whether a Contract Owner could be
considered the owner of the assets for tax purposes. Hartford reserves the
right to modify the contracts, as necessary, to prevent Contract Owners from
being considered the owners of the assets in the separate accounts.
F. 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.
G. ANNUITY PURCHASES BY NONRESIDENT ALIENS AND FOREIGN CORPORATIONS
The discussion above provides general information regarding U.S. federal
income tax consequences to annuity purchasers that are U.S. citizens or
residents. Purchasers that are not U.S. citizens or residents will generally
be subject to U.S. federal income tax and withholding on annuity distributions
at a 30% rate, unless a lower treaty rate applies. In addition, purchasers may
be subject to state premium tax, other state and/or municipal taxes, and taxes
that may be imposed by the purchaser's country of citizenship or residence.
Prospective purchasers are advised to consult with a qualified tax adviser
regarding U.S., state, and foreign taxation with respect to an annuity
purchase.
MISCELLANEOUS
WHAT ARE MY VOTING RIGHTS?
Hartford 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. Hartford shall also send proxy materials and a form of instruction
by means of which the Contract Owner can instruct Hartford 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, Hartford shall arrange for the
handling and tallying of proxies received from Contract Owners. Hartford 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. Hartford 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 Hartford to furnish a proxy or otherwise
arrange for the exercise of voting rights with respect to the Fund shares held
for such Contract
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Owner's account. In the event that the Contract Owner gives no instructions or
leaves the manner of voting discretionary, Hartford will vote such shares,
including any of its own shares, of the appropriate Fund 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.
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 Securities Distribution Company, Inc. ("HSD") serves as Principal
Underwriter for the securities issued with respect to the Separate Account.
HSD is a wholly-owned subsidiary of Hartford. The principal business address
of HSD is 200 Hopmeadow Street, Simsbury, CT 06089.
The securities will be sold by salespersons of HSD who represent Hartford as
insurance and Variable Annuity agents and who are registered representatives
or Broker-Dealers who have entered into distribution agreements with HSD.
HSD is registered with the Commission under the Securities Exchange Act of
1934 as a Broker-Dealer and is a member of the National Association of
Securities Dealers, Inc.
Compensation will be paid by Hartford to registered representatives for the
sale of contracts up to a maximum of 5.0% of Contributions and .25% annually
on Participants' Individual Account Values. Sales compensation may be reduced.
WHO IS THE CUSTODIAN OF THE SEPARATE ACCOUNTS' ASSETS?
Hartford is the custodian of the Separate Accounts' assets.
ARE THERE ANY MATERIAL LEGAL PROCEEDINGS AFFECTING THE SEPARATE ACCOUNTS?
There are no material legal proceedings pending to which the Separate
Account is a party. Counsel with respect to federal laws and regulations
applicable to the issue and sale of the contracts and with respect to
Connecticut law is Lynda Godkin, General Counsel, Hartford Life Insurance
Companies, P. O. Box 2999, Hartford, CT 06104-2999.
ARE YOU RELYING ON ANY EXPERTS AS TO ANY PORTION OF THIS PROSPECTUS?
The audited consolidated financial statements and financial statement
schedules included in this Prospectus and elsewhere in the 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 upon the authority of said firm as experts in
giving said reports. Reference is made to said report on the consolidated
financial statements of Hartford Life Insurance Company (the Depositor), which
includes an explanatory paragraph with respect to the change in method of
accounting for debt and equity securities as of January 1, 1994, as discussed
in Note 2 of Notes to Consolidated Financial Statements. The principal
business address of Arthur Andersen LLP is One Financial Plaza, Hartford,
Connecticut 06103.
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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
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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 the prior contracts are subject to the following deductions:
<TABLE>
<CAPTION>
DEDUCTIONS PORTION REPRESENTING
AGGREGATE CONTRIBUTION MINIMUM
AMOUNTS TO THE TOTAL SALES DEATH TOTAL AS % OF
SUB ACCOUNTS* INVESTED DEDUCTION EXPENSES BENEFIT NET AMOUNT
- -------------------------------------------------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
On the first $2,500............................... 7.00% 6.25% .75% 7.53%
On the next $47,500............................... 3.50% 2.75% .75% 3.63%
On the next $50,000............................... 2.00% 1.25% .75% 2.04%
On the excess over $100,000....................... 1.00% .25% .75% 1.01%
</TABLE>
* This illustration does not assume the payment of any Premium Taxes.
Under the schedule of deductions shown above, all amounts contributed on
behalf of a Participants Individual Account to the Bond Fund and Stock Fund
Sub-Accounts are aggregated to determine if a particular level of deductions
has been reached. Thus, if a Contribution has been made on behalf of a
Participant's Account in the amount of $100 and total Contributions of $2,450
have already been made on his or her behalf, the first $50 of the payment will
be subject to a deduction of 7.00% and the remainder to a percentage of 3.50%.
Notwithstanding the above, on variable only contracts and on combination
fixed and/or variable contracts where the annualized stipulated purchase
payments or Contributions with respect to all Participants shall equal or
approximate $250,000 at the end of the second anniversary of the contract, the
sales and minimum death benefits deduction on the aggregate Contributions up
to and including $2,500 with respect to each Participant shall be at the rate
of 5% rather than 7%.
Hartford 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 Hartford 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, Hartford, 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) Hartford's actual expenses, if greater than the
deductions provided for in the contracts, or (b) Hartford's actual mortality
experience among Annuitants after retirement because of the expense and
mortality undertakings by Hartford.
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<PAGE>
In providing an expense undertaking, Hartford 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 Hartford 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 Hartford's actuarial determination of
expected mortality rates among all Annuitants. If actual experience among
Annuitants deviates from Hartford's actuarial determination of expected
mortality rates among Annuitants because, as a group, their longevity is
longer than anticipated, Hartford must provide amounts from its general funds
to fulfill its contract obligations. In that event, a loss will fall on
Hartford. Conversely, if longevity among Annuitants is lower than anticipated,
a gain will result to Hartford.
For assuming these risks Hartford 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, Stock Fund and Money Market Fund
Sub-Accounts where available, on an annual basis. This rate may be
periodically increased by Hartford subject to a maximum annual rate of 2.00%.
However, no increase will occur unless the Securities and Exchange Commission
first approves this 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. The fee is not
applicable to the Money Market Fund Sub-Account where available. In the even
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 Contributions when
received, from the proceeds at surrender, or from the amount applied to effect
an annuity at the time annuity payments commence.
39
<PAGE>
TABLE OF CONTENTS
FOR
STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
SECTION PAGE
- ------------------------------------------------------------ ----
<S> <C>
DESCRIPTION OF HARTFORD LIFE INSURANCE COMPANY..............
SAFEKEEPING OF ASSETS.......................................
INDEPENDENT PUBLIC ACCOUNTANTS..............................
DISTRIBUTION OF CONTRACTS...................................
CALCULATION OF YIELD AND RETURN.............................
PERFORMANCE COMPARISONS.....................................
FINANCIAL STATEMENTS........................................
</TABLE>
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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 DC Variable Account-I (DC-I) and
Separate Account Two (DC-II) (Form HV-1009-27) to
me at the following address.
__________________________________________
(name)
__________________________________________
(address)
__________________________________________
(city/state) (zip code)
<PAGE>
PRINCIPAL UNDERWRITER
Hartford Securities Distribution Company, Inc. (HSD)
Hartford Plaza, Hartford, CT 06115
HARTFORD
INDEPENDENT AUDITORS FOR HARTFORD
LIFE INSURANCE COMPANY AND
SEPARATE ACCOUNT
TWO
LIFE INSURANCE
Arthur Andersen LLP
Hartford, Connecticut 06103
COMPANY
INSURER
Hartford Life Insurance Company
DC VARIABLE ACCOUNT-I AND
Executive Offices: P.O. Box 2999
DC VARIABLE ACCOUNT-II PROSPECTUS
Hartford, CT 06104-2999
INCLUDING THE PROSPECTUS OF
THE FUNDS
MAY 1, 1997
Group Variable Annuity Contracts
[LOGO]
HV-1009-27
HARTFORD LIFE INSURANCE COMPANY
BULK RATE
P.O. BOX 2999, HARTFORD, CT 06104-2999
U.S. POSTAGE
PAID
PERMIT NO. 1
HARTFORD, CONN.
