<PAGE>
STAG VARIABLE LIFE PRODUCT PORTFOLIO
1999
[LOGO]
HARTFORD LIFE INSURANCE COMPANY
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNTS AND
HARTFORD HLS MUTUAL FUNDS
ANNUAL REPORT
<PAGE>
Table of Contents
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Letter to Clients................................. 1
Performance Summary............................... 2
Investment Review................................. 3
Hartford Life Insurance Company Separate Account
Financial Statements for:
Separate Account Variable Life One............ 16
Separate Account Variable Life Two............ 30
Separate Account One.......................... 44
Hartford Life and Annuity Insurance Company
Separate Account Financial Statements for:
Separate Account Variable Life One............ 52
Separate Account Variable Life Two............ 66
Hartford HLS Mutual Funds Financial Statements
for:
Hartford Bond Income Strategy HLS Fund........ MF-1
Hartford Stock HLS Fund....................... MF-6
Hartford Money Market HLS Fund................ MF-8
Hartford Advisers HLS Fund.................... MF-10
Hartford Capital Appreciation HLS Fund........ MF-15
Hartford Mortgage Securities HLS Fund......... MF-18
Hartford Index HLS Fund....................... MF-20
Hartford International Opportunities HLS
Fund......................................... MF-26
Hartford Dividend and Growth HLS Fund......... MF-30
Hartford International Advisers HLS Fund...... MF-32
Hartford Small Company HLS Fund............... MF-39
Hartford MidCap HLS Fund...................... MF-41
Hartford Growth and Income HLS Fund........... MF-43
Hartford High Yield HLS Fund.................. MF-45
Hartford Global Leaders HLS Fund.............. MF-49
</TABLE>
<PAGE>
A Message From The President
- --------------------------------------------------------------------------------
Dear Policyholder,
As 1999 drew to a close, there were daily reminders in the media and elsewhere
about the dawn of the new millennium. One of my favorites was a line that said,
"There are now three things in life that can't be avoided -- death, taxes and
the year 2000."
The hoopla is over now and the year 2000 is finally here. And with it comes new
challenges as well as new opportunities. At Hartford Life, we look forward to
the future with great confidence and enthusiasm.
Our confidence is fueled by what we accomplished over the last decade of the
20th century. We grew into an industry powerhouse -- the nation's third largest
life insurance group (Sheshunoff Information Services, 1998) and the number one
provider of variable annuities (VARDS 9/99), with almost $89 billion in assets
at year's end.
Although it's now a new century, Hartford Life will continue to be guided by the
old standards that have served our variable life insurance policyholders so well
in the past.
- - Financially strong companies to back the death benefit protection provided by
the life insurance policy.
- - Distribution and Service support to help meet the complex needs of our
customers, while striving to exceed their expectations.
- - An investment strategy that's rooted in the stock market and focused on the
long-term -- because we know it's our long-term performance that's the true
measuring stick of our value to investors.
But we don't intend to simply rest on our laurels. We know we must push our
standards even higher. Among other things, we are improving our technology to
make it even easier to do business with Hartford Life.
We remain committed to helping you reach your financial goals in 2000 and
beyond. And we intend to work even harder to retain your confidence and your
business. Thanks for continuing to be a Hartford Life variable life insurance
policyholder.
[LOGO]
Lon A. Smith
PRESIDENT & CEO
Hartford Life, Inc.
NOTE: PAST PERFORMANCE IS NOT A GUARANTEE OF FUTURE RESULTS.
[LOGO]
1
<PAGE>
SEPARATE ACCOUNT VL I
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
MONEY MARKET
BOND FUND STOCK FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ------------
<S> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS Fund, Inc. - Class IA
Shares 18,599,285
Cost $19,333,868
Market Value................................ $18,485,123 -- --
Hartford Stock HLS Fund, Inc. - Class IA
Shares 10,177,147
Cost $48,640,156
Market Value................................ -- $72,740,016 --
Hartford Money Market HLS Fund, Inc. -
Class IA
Shares 22,848,052
Cost $22,848,052
Market Value................................ -- -- $22,848,052
Hartford Advisers HLS Fund, Inc. - Class IA
Shares 13,453,423
Cost $31,687,173
Market Value................................ -- -- --
Hartford Capital Appreciation HLS Fund, Inc. -
Class IA
Shares 13,323,038
Cost $52,858,628
Market Value................................ -- -- --
Hartford Mortgage Securities HLS Fund, Inc. -
Class IA
Shares 2,542,832
Cost $2,711,678
Market Value................................ -- -- --
Hartford Index HLS Fund, Inc. - Class IA
Shares 9,105,763
Cost $24,525,644
Market Value................................ -- -- --
Hartford International Opportunities HLS
Fund, Inc. - Class IA
Shares 11,944,948
Cost $15,654,730
Market Value................................ -- -- --
Hartford Dividend and Growth HLS Fund, Inc. -
Class IA
Shares 11,420,548
Cost $21,262,462
Market Value................................ -- -- --
Due from Hartford Life Insurance Company........ 6,692 76,112 --
Receivable from fund shares sold................ -- -- 1,272,035
----------- ----------- -----------
Total Assets.................................... 18,491,815 72,816,128 24,120,087
----------- ----------- -----------
LIABILITIES:
Due to Hartford Life Insurance Company.......... -- -- 1,270,848
Payable for fund shares purchased............... 6,715 76,185 --
----------- ----------- -----------
Total Liabilities............................... 6,715 76,185 1,270,848
----------- ----------- -----------
Net Assets (variable life contract
liabilities)................................... $18,485,100 $72,739,943 $22,849,239
=========== =========== ===========
Units Owned by Participants..................... 12,701,237 19,353,316 16,706,104
Unit Values..................................... $ 1.455378 $ 3.758526 $ 1.367718
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 16
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE
ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------------- --------------- ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS Fund, Inc. - Class IA
Shares 18,599,285
Cost $19,333,868
Market Value................................ -- -- -- --
Hartford Stock HLS Fund, Inc. - Class IA
Shares 10,177,147
Cost $48,640,156
Market Value................................ -- -- -- --
Hartford Money Market HLS Fund, Inc. -
Class IA
Shares 22,848,052
Cost $22,848,052
Market Value................................ -- -- -- --
Hartford Advisers HLS Fund, Inc. - Class IA
Shares 13,453,423
Cost $31,687,173
Market Value................................ $39,886,360 -- -- --
Hartford Capital Appreciation HLS Fund, Inc. -
Class IA
Shares 13,323,038
Cost $52,858,628
Market Value................................ -- $81,209,088 -- --
Hartford Mortgage Securities HLS Fund, Inc. -
Class IA
Shares 2,542,832
Cost $2,711,678
Market Value................................ -- -- $2,643,254 --
Hartford Index HLS Fund, Inc. - Class IA
Shares 9,105,763
Cost $24,525,644
Market Value................................ -- -- -- $38,142,036
Hartford International Opportunities HLS
Fund, Inc. - Class IA
Shares 11,944,948
Cost $15,654,730
Market Value................................ -- -- -- --
Hartford Dividend and Growth HLS Fund, Inc. -
Class IA
Shares 11,420,548
Cost $21,262,462
Market Value................................ -- -- -- --
Due from Hartford Life Insurance Company........ 19,634 29,928 -- 17,026
Receivable from fund shares sold................ -- -- -- --
----------- ----------- ---------- -----------
Total Assets.................................... 39,905,994 81,239,016 2,643,254 38,159,062
----------- ----------- ---------- -----------
LIABILITIES:
Due to Hartford Life Insurance Company.......... -- -- 7 --
Payable for fund shares purchased............... 19,658 30,097 -- 16,991
----------- ----------- ---------- -----------
Total Liabilities............................... 19,658 30,097 7 16,991
----------- ----------- ---------- -----------
Net Assets (variable life contract
liabilities)................................... $39,886,336 $81,208,919 $2,643,247 $38,142,071
=========== =========== ========== ===========
Units Owned by Participants..................... 14,860,631 23,952,141 1,808,038 10,641,936
Unit Values..................................... $ 2.684027 $ 3.390466 $ 1.461942 $ 3.584129
<CAPTION>
INTERNATIONAL DIVIDEND AND
OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------
<S> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS Fund, Inc. - Class IA
Shares 18,599,285
Cost $19,333,868
Market Value................................ -- --
Hartford Stock HLS Fund, Inc. - Class IA
Shares 10,177,147
Cost $48,640,156
Market Value................................ -- --
Hartford Money Market HLS Fund, Inc. -
Class IA
Shares 22,848,052
Cost $22,848,052
Market Value................................ -- --
Hartford Advisers HLS Fund, Inc. - Class IA
Shares 13,453,423
Cost $31,687,173
Market Value................................ -- --
Hartford Capital Appreciation HLS Fund, Inc. -
Class IA
Shares 13,323,038
Cost $52,858,628
Market Value................................ -- --
Hartford Mortgage Securities HLS Fund, Inc. -
Class IA
Shares 2,542,832
Cost $2,711,678
Market Value................................ -- --
Hartford Index HLS Fund, Inc. - Class IA
Shares 9,105,763
Cost $24,525,644
Market Value................................ -- --
Hartford International Opportunities HLS
Fund, Inc. - Class IA
Shares 11,944,948
Cost $15,654,730
Market Value................................ $22,407,947 --
Hartford Dividend and Growth HLS Fund, Inc. -
Class IA
Shares 11,420,548
Cost $21,262,462
Market Value................................ -- $24,540,793
Due from Hartford Life Insurance Company........ 12,126 34,037
Receivable from fund shares sold................ -- --
----------- -----------
Total Assets.................................... 22,420,073 24,574,830
----------- -----------
LIABILITIES:
Due to Hartford Life Insurance Company.......... -- --
Payable for fund shares purchased............... 12,171 33,998
----------- -----------
Total Liabilities............................... 12,171 33,998
----------- -----------
Net Assets (variable life contract
liabilities)................................... $22,407,902 $24,540,832
=========== ===========
Units Owned by Participants..................... 9,429,518 10,014,941
Unit Values..................................... $ 2.376357 $ 2.450422
</TABLE>
---------------------------------------------------- 17
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT VL I
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
GROWTH AND INTERNATIONAL
INCOME FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT
----------- -------------
<S> <C> <C>
ASSETS:
Investments:
Hartford Growth and Income HLS Fund -
Class IA
Shares 239,374
Cost $313,340
Market Value................................ $ 342,699 --
Hartford International Advisers HLS
Fund, Inc. - Class IA
Shares 105,433
Cost $127,834
Market Value................................ -- $ 147,257
Hartford Small Company HLS Fund, Inc. -
Class IA
Shares 872,212
Cost $1,396,566
Market Value................................ -- --
Hartford MidCap HLS Fund, Inc. - Class IA
Shares 663,622
Cost $1,094,205
Market Value................................ -- --
Fidelity VIP Equity-Income Portfolio
Shares 703,207
Cost $15,421,868
Market Value................................ -- --
Fidelity VIP Overseas Portfolio
Shares 227,189
Cost $4,430,420
Market Value................................ -- --
Fidelity VIP II Asset Manager Portfolio
Shares 158,060
Cost $2,627,413
Market Value................................ -- --
Due from Hartford Life Insurance Company........ -- --
Receivable from fund shares sold................ -- --
---------- -----------
Total Assets.................................... 342,699 147,257
---------- -----------
LIABILITIES:
Due to Hartford Life Insurance Company.......... -- --
Payable for fund shares purchased............... -- --
---------- -----------
Total Liabilities............................... -- --
---------- -----------
Net Assets (variable life contract
liabilities)................................... $ 342,699 $ 147,257
========== ===========
Units Owned by Participants..................... 244,405 118,675
Unit Values..................................... $ 1.402176 $ 1.240838
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 18
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
FIDELITY VIP FIDELITY VIP FIDELITY VIP II
SMALL COMPANY MIDCAP EQUITY-INCOME OVERSEAS ASSET MANAGER
FUND FUND PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ------------ ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Growth and Income HLS Fund -
Class IA
Shares 239,374
Cost $313,340
Market Value................................ -- -- -- -- --
Hartford International Advisers HLS
Fund, Inc. - Class IA
Shares 105,433
Cost $127,834
Market Value................................ -- -- -- -- --
Hartford Small Company HLS Fund, Inc. -
Class IA
Shares 872,212
Cost $1,396,566
Market Value................................ $1,908,206 -- -- -- --
Hartford MidCap HLS Fund, Inc. - Class IA
Shares 663,622
Cost $1,094,205
Market Value................................ -- $ 1,362,746 -- -- --
Fidelity VIP Equity-Income Portfolio
Shares 703,207
Cost $15,421,868
Market Value................................ -- -- $18,079,454 -- --
Fidelity VIP Overseas Portfolio
Shares 227,189
Cost $4,430,420
Market Value................................ -- -- -- $6,234,055 --
Fidelity VIP II Asset Manager Portfolio
Shares 158,060
Cost $2,627,413
Market Value................................ -- -- -- -- $ 2,950,977
Due from Hartford Life Insurance Company........ -- -- 35,721 1,420 279
Receivable from fund shares sold................ 3,172 2,627 -- -- --
---------- ----------- ----------- ---------- -----------
Total Assets.................................... 1,911,378 1,365,373 18,115,175 6,235,475 2,951,256
---------- ----------- ----------- ---------- -----------
LIABILITIES:
Due to Hartford Life Insurance Company.......... 3,172 2,630 -- -- --
Payable for fund shares purchased............... -- -- 33,864 189 280
---------- ----------- ----------- ---------- -----------
Total Liabilities............................... 3,172 2,630 33,864 189 280
---------- ----------- ----------- ---------- -----------
Net Assets (variable life contract
liabilities)................................... $1,908,206 $ 1,362,743 $18,081,311 $6,235,286 $ 2,950,976
========== =========== =========== ========== ===========
Units Owned by Participants..................... 1,069,060 813,327 8,679,531 2,858,962 1,516,718
Unit Values..................................... $ 1.784939 $ 1.675516 $ 2.083213 $ 2.180961 $ 1.945633
</TABLE>
---------------------------------------------------- 19
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT VL I
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
MONEY MARKET
BOND FUND STOCK FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends............................. $ 1,003,435 $ 498,051 $1,145,825
----------- ----------- ----------
CAPITAL GAINS INCOME.................... 49,287 4,831,542 579
----------- ----------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized (loss) gain on security
transactions......................... (8,622) 24,190 --
Net unrealized (depreciation)
appreciation of investments during
the period........................... (1,290,579) 6,361,493 --
----------- ----------- ----------
Net (loss) gain on investments...... (1,299,201) 6,385,683 --
----------- ----------- ----------
Net (decrease) increase in net
assets resulting from operations... $ (246,479) $11,715,276 $1,146,404
=========== =========== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 20
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE
ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------------- --------------- --------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends............................. $ 833,700 $ 244,683 $ 147,468 $ 358,276
---------- ----------- --------- -------------------
CAPITAL GAINS INCOME.................... 2,827,247 3,889,973 -- 510,748
---------- ----------- --------- -------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized (loss) gain on security
transactions......................... 19,707 144,049 (1,430) 3,462
Net unrealized (depreciation)
appreciation of investments during
the period........................... 79,598 17,700,572 (117,153) 5,395,124
---------- ----------- --------- -------------------
Net (loss) gain on investments...... 99,305 17,844,621 (118,583) 5,398,586
---------- ----------- --------- -------------------
Net (decrease) increase in net
assets resulting from operations... $3,760,252 $21,979,277 $ 28,885 $ 6,267,610
========== =========== ========= ===================
<CAPTION>
INTERNATIONAL DIVIDEND AND
OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends............................. $ 215,427 $ 393,538
---------- ----------
CAPITAL GAINS INCOME.................... -- 903,512
---------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized (loss) gain on security
transactions......................... 332,449 (9,128)
Net unrealized (depreciation)
appreciation of investments during
the period........................... 5,882,813 (98,307)
---------- ----------
Net (loss) gain on investments...... 6,215,262 (107,435)
---------- ----------
Net (decrease) increase in net
assets resulting from operations... $6,430,689 $1,189,615
========== ==========
</TABLE>
---------------------------------------------------- 21
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT VL I
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
GROWTH AND INTERNATIONAL
INCOME FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT
----------- -------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends............................. $ 926 $ 2,625
------- -------
CAPITAL GAINS INCOME.................... 2,132 --
------- -------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized (loss) gain on security
transactions......................... (1,830) 131
Net unrealized appreciation of
investments during the period........ 28,644 18,289
------- -------
Net gain on investments............. 26,814 18,420
------- -------
Net increase in net assets resulting
from operations.................... $29,872 $21,045
======= =======
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 22
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
FIDELITY VIP FIDELITY VIP FIDELITY VIP II
SMALL COMPANY MIDCAP EQUITY-INCOME OVERSEAS ASSET MANAGER
FUND FUND PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------- ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends............................. $ -- $ -- $ 242,891 $ 118,924 $ 81,026
-------- -------- ---------- ---------- --------
CAPITAL GAINS INCOME.................... 2,440 51,503 536,917 191,813 102,633
-------- -------- ---------- ---------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized (loss) gain on security
transactions......................... 2,099 (575) (17,317) 529,176 1,290
Net unrealized appreciation of
investments during the period........ 480,688 261,154 269,024 1,340,373 104,976
-------- -------- ---------- ---------- --------
Net gain on investments............. 482,787 260,579 251,707 1,869,549 106,266
-------- -------- ---------- ---------- --------
Net increase in net assets resulting
from operations.................... $485,227 $312,082 $1,031,515 $2,180,286 $289,925
======== ======== ========== ========== ========
</TABLE>
---------------------------------------------------- 23
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT VL I
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
BOND STOCK MONEY MARKET
FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income................. $ 1,003,435 $ 498,051 $ 1,145,825
Capital gains income.................. 49,287 4,831,542 579
Net realized (loss) gain on security
transactions......................... (8,622) 24,190 --
Net unrealized (depreciation)
appreciation of investments during
the period........................... (1,290,579) 6,361,493 --
----------- ----------- ------------
Net (decrease) increase in net assets
resulting from operations............ (246,479) 11,715,276 1,146,404
----------- ----------- ------------
UNIT TRANSACTIONS:
Purchases............................. 2,265,567 8,456,024 24,230,194
Net transfers......................... 10,688,936 1,601,175 (19,300,557)
Surrenders for benefit payments and
fees................................. (160,632) (2,223,564) (3,882,409)
Net loan activity..................... (273,041) (745,624) (461,767)
Cost of insurance..................... (639,068) (2,852,500) (1,509,608)
----------- ----------- ------------
Net increase (decrease) in net assets
resulting from unit transactions..... 11,881,762 4,235,511 (924,147)
----------- ----------- ------------
Net increase in net assets............ 11,635,283 15,950,787 222,257
NET ASSETS:
Beginning of period................... 6,849,817 56,789,156 22,626,982
----------- ----------- ------------
End of period......................... $18,485,100 $72,739,943 $ 22,849,239
=========== =========== ============
</TABLE>
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
BOND STOCK MONEY MARKET
FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income.... $ 331,394 $ 426,569 $ 1,322,027
Capital gains income..... -- 1,117,421 440
Net realized gain (loss)
on security
transactions............ 71,193 (135,795) --
Net unrealized
appreciation
(depreciation) of
investments during the
period.................. 185,585 10,569,607 --
----------- ----------- ------------
Net increase in net
assets resulting from
operations.............. 588,172 11,977,802 1,322,467
----------- ----------- ------------
UNIT TRANSACTIONS:
Purchases................ 1,838,524 6,958,503 61,057,739
Net transfers............ (1,406,522) 12,649,168 (62,188,027)
Surrenders for benefit
payments and fees....... (97,508) (1,360,527) (1,774,809)
Net loan activity........ (146,115) (537,841) (2,292,059)
Cost of insurance........ (358,266) (1,755,336) (1,910,006)
----------- ----------- ------------
Net (decrease) increase
in net assets resulting
from unit
transactions............ (169,887) 15,953,967 (7,107,162)
----------- ----------- ------------
Net increase (decrease)
in net assets........... 418,285 27,931,769 (5,784,695)
NET ASSETS:
Beginning of period...... 6,431,532 28,857,387 28,411,677
----------- ----------- ------------
End of period............ $ 6,849,817 $56,789,156 $ 22,626,982
=========== =========== ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 24
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL
ADVISERS APPRECIATION SECURITIES INDEX OPPORTUNITIES DIVIDEND AND
FUND FUND FUND FUND FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ----------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income................. $ 833,700 $ 244,683 $ 147,468 $ 358,276 $ 215,427 $ 393,538
Capital gains income.................. 2,827,247 3,889,973 -- 510,748 -- 903,512
Net realized (loss) gain on security
transactions......................... 19,707 144,049 (1,430) 3,462 332,449 (9,128)
Net unrealized (depreciation)
appreciation of investments during
the period........................... 79,598 17,700,572 (117,153) 5,395,124 5,882,813 (98,307)
----------- ----------- ---------- ----------- ----------- -----------
Net (decrease) increase in net assets
resulting from operations............ 3,760,252 21,979,277 28,885 6,267,610 6,430,689 1,189,615
----------- ----------- ---------- ----------- ----------- -----------
UNIT TRANSACTIONS:
Purchases............................. 4,995,321 9,387,785 625,063 4,016,335 2,949,287 3,848,968
Net transfers......................... 1,297,298 (2,660,260) 426,413 1,537,214 (3,664,980) (82,113)
Surrenders for benefit payments and
fees................................. (1,412,715) (2,246,879) (24,433) (836,820) (610,721) (655,074)
Net loan activity..................... (488,390) (1,096,388) 14,463 (289,827) (396,381) (390,798)
Cost of insurance..................... (1,905,222) (2,984,592) (90,981) (1,392,082) (796,284) (1,127,592)
----------- ----------- ---------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from unit transactions..... 2,486,292 399,666 950,525 3,034,820 (2,519,079) 1,593,391
----------- ----------- ---------- ----------- ----------- -----------
Net increase in net assets............ 6,246,544 22,378,943 979,410 9,302,430 3,911,610 2,783,006
NET ASSETS:
Beginning of period................... 33,639,792 58,829,976 1,663,837 28,839,641 18,496,292 21,757,826
----------- ----------- ---------- ----------- ----------- -----------
End of period......................... $39,886,336 $81,208,919 $2,643,247 $38,142,071 $22,407,902 $24,540,832
=========== =========== ========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND
ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------------- --------------- ----------- ------------------ ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income.... $ 662,962 $ 310,421 $ 102,546 $ 234,014 $ 238,928 $ 339,438
Capital gains income..... 796,015 2,575,286 -- 458,685 863,200 480,886
Net realized gain (loss)
on security
transactions............ (51,519) (4,284) 9,356 (28,044) 35,100 (251)
Net unrealized
appreciation
(depreciation) of
investments during the
period.................. 4,603,991 4,194,822 (17,750) 4,990,372 808,400 1,697,176
----------- ----------- ---------- ----------- ----------- -----------
Net increase in net
assets resulting from
operations.............. 6,011,449 7,076,245 94,152 5,655,027 1,945,628 2,517,249
----------- ----------- ---------- ----------- ----------- -----------
UNIT TRANSACTIONS:
Purchases................ 4,790,269 9,637,115 210,954 3,852,289 3,475,235 3,822,100
Net transfers............ 4,065,052 10,261,936 103,107 2,901,707 4,383,777 5,421,686
Surrenders for benefit
payments and fees....... (1,153,292) (1,873,503) 10,697 (889,933) (862,986) (709,634)
Net loan activity........ (554,217) (801,337) (192,976) (135,969) (300,291) (324,543)
Cost of insurance........ (1,265,069) (1,991,294) (44,114) (857,070) (641,581) (752,950)
----------- ----------- ---------- ----------- ----------- -----------
Net (decrease) increase
in net assets resulting
from unit
transactions............ 5,882,743 15,232,917 87,668 4,871,024 6,054,154 7,456,659
----------- ----------- ---------- ----------- ----------- -----------
Net increase (decrease)
in net assets........... 11,894,192 22,309,162 181,820 10,526,051 7,999,782 9,973,908
NET ASSETS:
Beginning of period...... 21,745,600 36,520,814 1,482,017 18,313,590 10,496,510 11,783,918
----------- ----------- ---------- ----------- ----------- -----------
End of period............ $33,639,792 $58,829,976 $1,663,837 $28,839,641 $18,496,292 $21,757,826
=========== =========== ========== =========== =========== ===========
</TABLE>
---------------------------------------------------- 25
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT VL I
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
GROWTH AND INTERNATIONAL
INCOME FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT
----------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income........................... $ 926 $ 2,625
Capital gains income............................ 2,132 --
Net realized (loss) gain on security
transactions................................... (1,830) 131
Net unrealized appreciation of investments
during the period.............................. 28,644 18,289
-------- --------
Net increase in net assets resulting from
operations..................................... 29,872 21,045
-------- --------
UNIT TRANSACTIONS:
Purchases....................................... 40,452 3,088
Net transfers................................... 272,319 110,867
Surrenders for benefit payments and fees........ (1,403) (2,012)
Net loan activity............................... (4) --
Cost of insurance............................... (10,287) (7,309)
-------- --------
Net increase (decrease) in net assets resulting
from unit transactions......................... 301,077 104,634
-------- --------
Net increase (decrease) in net assets........... 330,949 125,679
NET ASSETS:
Beginning of period............................. 11,750 21,578
-------- --------
End of period................................... $342,699 $147,257
======== ========
</TABLE>
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
GROWTH AND INTERNATIONAL
INCOME FUND ADVISERS FUND
SUB-ACCOUNT* SUB-ACCOUNT*
------------ -------------
<S> <C> <C>
OPERATIONS:
Net investment income........................... $ 42 $--
Capital gains income............................ -- --
Net realized gain (loss) on security
transactions................................... 3 17
Net unrealized appreciation of investments
during the period.............................. 714 1,133
------- -------
Net increase in net assets resulting from
operations..................................... 759 1,150
------- -------
UNIT TRANSACTIONS:
Purchases....................................... 1,229 1,630
Net transfers................................... 9,925 19,068
Surrenders for benefit payments and fees........ (85) (91)
Net loan activity............................... -- --
Cost of insurance............................... (78) (179)
------- -------
Net increase (decrease) in net assets resulting
from unit transactions......................... 10,991 20,428
------- -------
Net increase in net assets...................... 11,750 21,578
NET ASSETS:
Beginning of period............................. -- --
------- -------
End of period................................... $11,750 $21,578
======= =======
* From inception, August 3, 1998 to December 31,
1998
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 26
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
FIDELITY VIP FIDELITY VIP FIDELITY VIP II
SMALL COMPANY MIDCAP EQUITY-INCOME OVERSEAS ASSET MANAGER
FUND FUND PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------- ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income........................... $ -- $ -- $ 242,891 $ 118,924 $ 81,026
Capital gains income............................ 2,440 51,503 536,917 191,813 102,633
Net realized (loss) gain on security
transactions................................... 2,099 (575) (17,317) 529,176 1,290
Net unrealized appreciation of investments
during the period.............................. 480,688 261,154 269,024 1,340,373 104,976
---------- ---------- ----------- ----------- ----------
Net increase in net assets resulting from
operations..................................... 485,227 312,082 1,031,515 2,180,286 289,925
---------- ---------- ----------- ----------- ----------
UNIT TRANSACTIONS:
Purchases....................................... 87,710 149,645 2,479,043 1,231,714 369,373
Net transfers................................... 1,208,187 891,911 44,800 (3,895,647) 99,073
Surrenders for benefit payments and fees........ (5,049) (8,029) (482,465) (356,160) (47,199)
Net loan activity............................... (6,915) (2,839) (164,909) (146,964) (19,055)
Cost of insurance............................... (21,610) (32,391) (821,815) (355,633) (132,619)
---------- ---------- ----------- ----------- ----------
Net increase (decrease) in net assets resulting
from unit transactions......................... 1,262,323 998,297 1,054,654 (3,522,690) 269,573
---------- ---------- ----------- ----------- ----------
Net increase (decrease) in net assets........... 1,747,550 1,310,379 2,086,169 (1,342,404) 559,498
NET ASSETS:
Beginning of period............................. 160,656 52,364 15,995,142 7,577,690 2,391,478
---------- ---------- ----------- ----------- ----------
End of period................................... $1,908,206 $1,362,743 $18,081,311 $ 6,235,286 $2,950,976
========== ========== =========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
FIDELITY VIP FIDELITY VIP FIDELITY VIP II
SMALL COMPANY MIDCAP EQUITY-INCOME OVERSEAS ASSET MANAGER
FUND FUND PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ------------ ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income........................... $ -- $-- $ 155,210 $ 47,702 $ 47,628
Capital gains income............................ -- -- 552,364 140,597 142,885
Net realized gain (loss) on security
transactions................................... 165,038 -- (4,853) 9,814 779
Net unrealized appreciation of investments
during the period.............................. 30,952 7,387 701,127 379,546 80,467
-------- ------- ----------- ---------- ----------
Net increase in net assets resulting from
operations..................................... 195,990 7,387 1,403,848 577,659 271,759
-------- ------- ----------- ---------- ----------
UNIT TRANSACTIONS:
Purchases....................................... 5,974 1,848 2,918,513 1,507,008 377,112
Net transfers................................... (33,766) 43,693 2,162,849 3,697,147 438,799
Surrenders for benefit payments and fees........ (1,127) (131) (307,937) (128,400) (34,663)
Net loan activity............................... (44) -- (195,032) (112,297) (13,265)
Cost of insurance............................... (6,371) (433) (588,614) (219,366) (84,019)
-------- ------- ----------- ---------- ----------
Net increase (decrease) in net assets resulting
from unit transactions......................... (35,334) 44,977 3,989,779 4,744,092 683,964
-------- ------- ----------- ---------- ----------
Net increase in net assets...................... 160,656 52,364 5,393,627 5,321,751 955,723
NET ASSETS:
Beginning of period............................. -- -- 10,601,515 2,255,939 1,435,755
-------- ------- ----------- ---------- ----------
End of period................................... $160,656 $52,364 $15,995,142 $7,577,690 $2,391,478
======== ======= =========== ========== ==========
* From inception, August 3, 1998 to December 31,
1998
</TABLE>
---------------------------------------------------- 27
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT VL I
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. ORGANIZATION:
Separate Account VL I (the Account) is a separate investment account within
Hartford Life Insurance Company (the Company) and is registered with the
Securities and Exchange Commission (SEC) as a unit investment trust under
the Investment Company Act of 1940, as amended. Both the Company and the
Account are subject to supervision and regulation by the Department of
Insurance of the State of Connecticut and the SEC. The Account invests
deposits by variable life contractholders of the Company in various mutual
funds (the Funds) as directed by the contractholders.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting
principles in the investment company industry:
a) SECURITY TRANSACTIONS--Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Realized gains and
losses on the sales of securities are computed on the basis of identified
cost of the fund shares sold. Dividend and capital gains income is
accrued as of the ex-dividend date. Capital gains income represents those
dividends from the Funds which are characterized as capital gains under
tax regulations.
b) SECURITY VALUATION--The investments in shares of the Funds are valued at
the closing net asset value per share as determined by the appropriate
Fund as of December 31, 1999.
c) UNIT TRANSACTIONS--Unit transactions are executed based on the unit
values calculated at the close of the business day.
d) FEDERAL INCOME TAXES--The operations of the Account form a part of, and
are taxed with, the total operations of the Company, which is taxed as an
insurance company under the Internal Revenue Code. Under current law, no
federal income taxes are payable with respect to the operations of the
Account.
e) USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and the reported
amounts of income and expenses during the period. Operating results in
the future could vary from the amounts derived from management's
estimates.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
a) DEDUCTIONS AND CHARGES FROM THE ACCOUNT VALUE--On the policy date and on
each subsequent monthly activity date, the Company will deduct from the
Account an amount to cover mortality and expense risk charges, cost of
insurance, administrative charges and any other benefits provided by the
rider. These charges, which may vary from month to month in accordance
which the terms of the contracts, are deducted through termination of
units of interest from the applicable contractholders' accounts.
______________________________________ 28 ______________________________________
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
TO HARTFORD LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VL I AND TO THE
OWNERS OF UNITS OF INTEREST THEREIN:
We have audited the accompanying statements of assets and liabilities of
Hartford Life Insurance Company Separate Account VL I (Bond Fund, Stock Fund,
Money Market Fund, Advisers Fund, Capital Appreciation Fund, Mortgage Securities
Fund, Index Fund, International Opportunities Fund, Dividend and Growth Fund,
Growth and Income Fund, International Advisers Fund, Small Company Fund, MidCap
Fund, Fidelity VIP Equity-Income Portfolio, Fidelity VIP Overseas Portfolio and
Fidelity VIP II Asset Manager Portfolio) (collectively, the Account) as of
December 31, 1999, and the related statements of operations and the statements
of changes in net assets for the periods presented. These financial statements
are the responsibility of the Account's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Account as of December 31,
1999, and the results of their operations and the changes in their net assets
for the periods presented in conformity with generally accepted accounting
principles.
Hartford, Connecticut
February 17, 2000 ARTHUR ANDERSEN LLP
______________________________________ 29 ______________________________________
<PAGE>
SEPARATE ACCOUNT VL II
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
MONEY MARKET
BOND FUND STOCK FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ------------
<S> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS Fund, Inc. - Class IA
Shares 7,183,854
Cost $7,594,577
Market Value................................ $7,139,760 -- --
Hartford Stock HLS Fund, Inc. - Class IA
Shares 3,038,583
Cost $16,092,310
Market Value................................ -- $21,717,930 --
Hartford Money Market HLS Fund, Inc. -
Class IA
Shares 5,008,118
Cost $5,008,118
Market Value................................ -- -- $5,008,118
Hartford Advisers HLS Fund, Inc. - Class IA
Shares 3,614,492
Cost $9,282,357
Market Value................................ -- -- --
Hartford Capital Appreciation HLS Fund, Inc. -
Class IA
Shares 3,543,798
Cost $15,045,160
Market Value................................ -- -- --
Hartford Mortgage Securities HLS Fund, Inc. -
Class IA
Shares 320,876
Cost $344,638
Market Value................................ -- -- --
Hartford Index HLS Fund, Inc. - Class IA
Shares 5,331,733
Cost $16,328,752
Market Value................................ -- -- --
Hartford International Opportunities HLS
Fund, Inc. - Class IA
Shares 3,009,268
Cost $4,055,348
Market Value................................ -- -- --
Hartford Dividend and Growth HLS Fund, Inc. -
Class IA
Shares 4,249,199
Cost $8,022,852
Market Value................................ -- -- --
Due from Hartford Life Insurance Company........ 6,406 8,652 --
Receivable from fund shares sold................ -- -- 531
---------- ----------- ----------
Total Assets.................................... 7,146,166 21,726,582 5,008,649
---------- ----------- ----------
LIABILITIES:
Due to Hartford Life Insurance Company.......... -- -- 207
Payable for fund shares purchased............... 6,432 10,078 --
---------- ----------- ----------
Total Liabilities............................... 6,432 10,078 207
---------- ----------- ----------
Net Assets (variable life contract
liabilities)................................... $7,139,734 $21,716,504 $5,008,442
========== =========== ==========
Units Owned by Participants..................... 4,905,759 5,777,931 3,661,897
Unit Values..................................... $ 1.455378 $ 3.758526 $ 1.367718
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 30
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE
ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------------- --------------- ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS Fund, Inc. - Class IA
Shares 7,183,854
Cost $7,594,577
Market Value................................ -- -- -- --
Hartford Stock HLS Fund, Inc. - Class IA
Shares 3,038,583
Cost $16,092,310
Market Value................................ -- -- -- --
Hartford Money Market HLS Fund, Inc. -
Class IA
Shares 5,008,118
Cost $5,008,118
Market Value................................ -- -- -- --
Hartford Advisers HLS Fund, Inc. - Class IA
Shares 3,614,492
Cost $9,282,357
Market Value................................ $10,716,151 -- -- --
Hartford Capital Appreciation HLS Fund, Inc. -
Class IA
Shares 3,543,798
Cost $15,045,160
Market Value................................ -- $21,600,824 -- --
Hartford Mortgage Securities HLS Fund, Inc. -
Class IA
Shares 320,876
Cost $344,638
Market Value................................ -- -- $ 333,548 --
Hartford Index HLS Fund, Inc. - Class IA
Shares 5,331,733
Cost $16,328,752
Market Value................................ -- -- -- $22,333,459
Hartford International Opportunities HLS
Fund, Inc. - Class IA
Shares 3,009,268
Cost $4,055,348
Market Value................................ -- -- -- --
Hartford Dividend and Growth HLS Fund, Inc. -
Class IA
Shares 4,249,199
Cost $8,022,852
Market Value................................ -- -- -- --
Due from Hartford Life Insurance Company........ 3,873 5,956 -- 6,419
Receivable from fund shares sold................ -- -- -- --
----------- ----------- ---------- -----------
Total Assets.................................... 10,720,024 21,606,780 333,548 22,339,878
----------- ----------- ---------- -----------
LIABILITIES:
Due to Hartford Life Insurance Company.......... -- -- -- --
Payable for fund shares purchased............... 3,899 5,690 -- 11,085
----------- ----------- ---------- -----------
Total Liabilities............................... 3,899 5,690 -- 11,085
----------- ----------- ---------- -----------
Net Assets (variable life contract
liabilities)................................... $10,716,125 $21,601,090 $ 333,548 $22,328,793
=========== =========== ========== ===========
Units Owned by Participants..................... 3,992,555 6,371,127 228,153 6,229,908
Unit Values..................................... $ 2.684027 $ 3.390466 $ 1.461942 $ 3.584129
<CAPTION>
INTERNATIONAL DIVIDEND AND
OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------
<S> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS Fund, Inc. - Class IA
Shares 7,183,854
Cost $7,594,577
Market Value................................ -- --
Hartford Stock HLS Fund, Inc. - Class IA
Shares 3,038,583
Cost $16,092,310
Market Value................................ -- --
Hartford Money Market HLS Fund, Inc. -
Class IA
Shares 5,008,118
Cost $5,008,118
Market Value................................ -- --
Hartford Advisers HLS Fund, Inc. - Class IA
Shares 3,614,492
Cost $9,282,357
Market Value................................ -- --
Hartford Capital Appreciation HLS Fund, Inc. -
Class IA
Shares 3,543,798
Cost $15,045,160
Market Value................................ -- --
Hartford Mortgage Securities HLS Fund, Inc. -
Class IA
Shares 320,876
Cost $344,638
Market Value................................ -- --
Hartford Index HLS Fund, Inc. - Class IA
Shares 5,331,733
Cost $16,328,752
Market Value................................ -- --
Hartford International Opportunities HLS
Fund, Inc. - Class IA
Shares 3,009,268
Cost $4,055,348
Market Value................................ $5,645,191 --
Hartford Dividend and Growth HLS Fund, Inc. -
Class IA
Shares 4,249,199
Cost $8,022,852
Market Value................................ -- $9,130,798
Due from Hartford Life Insurance Company........ 1,276 7,196
Receivable from fund shares sold................ -- --
---------- ----------
Total Assets.................................... 5,646,467 9,137,994
---------- ----------
LIABILITIES:
Due to Hartford Life Insurance Company.......... -- --
Payable for fund shares purchased............... 1,438 7,391
---------- ----------
Total Liabilities............................... 1,438 7,391
---------- ----------
Net Assets (variable life contract
liabilities)................................... $5,645,029 $9,130,603
========== ==========
Units Owned by Participants..................... 2,375,497 3,726,135
Unit Values..................................... $ 2.376357 $ 2.450422
</TABLE>
---------------------------------------------------- 31
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT VL II
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
GROWTH AND INTERNATIONAL
INCOME FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT
----------- -------------
<S> <C> <C>
ASSETS:
Investments:
Hartford Growth and Income HLS Fund -
Class IA
Shares 117,729
Cost $148,694
Market Value................................ $ 168,547 --
Hartford International Advisers HLS
Fund, Inc. - Class IA
Shares 1,349
Cost $1,573
Market Value................................ -- $ 1,884
Hartford Small Company HLS Fund, Inc. -
Class IA
Shares 352,657
Cost $557,910
Market Value................................ -- --
Hartford MidCap HLS Fund, Inc. - Class IA
Shares 132,124
Cost $218,119
Market Value................................ -- --
Fidelity VIP Equity-Income Portfolio
Shares 421,647
Cost $9,768,013
Market Value................................ -- --
Fidelity VIP Overseas Portfolio
Shares 176,253
Cost $3,681,545
Market Value................................ -- --
Fidelity VIP II Asset Manager Portfolio
Shares 104,549
Cost $1,767,222
Market Value................................ -- --
Due from Hartford Life Insurance Company........ -- --
Receivable from fund shares sold................ -- --
---------- -----------
Total Assets.................................... 168,547 1,884
---------- -----------
LIABILITIES:
Due to Hartford Life Insurance Company.......... -- --
Payable for fund shares purchased............... -- --
---------- -----------
Total Liabilities............................... -- --
---------- -----------
Net Assets (variable life contract
liabilities)................................... $ 168,547 $ 1,884
========== ===========
Units Owned by Participants..................... 120,204 1,518
Unit Values..................................... $ 1.402176 $ 1.240838
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 32
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
FIDELITY VIP FIDELITY VIP FIDELITY VIP II
SMALL COMPANY MIDCAP EQUITY-INCOME OVERSEAS ASSET MANAGER
FUND FUND PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ------------ ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Growth and Income HLS Fund -
Class IA
Shares 117,729
Cost $148,694
Market Value................................ -- -- -- -- --
Hartford International Advisers HLS
Fund, Inc. - Class IA
Shares 1,349
Cost $1,573
Market Value................................ -- -- -- -- --
Hartford Small Company HLS Fund, Inc. -
Class IA
Shares 352,657
Cost $557,910
Market Value................................ $ 771,535 -- -- -- --
Hartford MidCap HLS Fund, Inc. - Class IA
Shares 132,124
Cost $218,119
Market Value................................ -- $ 271,316 -- -- --
Fidelity VIP Equity-Income Portfolio
Shares 421,647
Cost $9,768,013
Market Value................................ -- -- $10,840,547 -- --
Fidelity VIP Overseas Portfolio
Shares 176,253
Cost $3,681,545
Market Value................................ -- -- -- $4,836,377 --
Fidelity VIP II Asset Manager Portfolio
Shares 104,549
Cost $1,767,222
Market Value................................ -- -- -- -- $ 1,951,926
Due from Hartford Life Insurance Company........ 1,103 1,113 4,845 8,819 --
Receivable from fund shares sold................ -- -- -- -- --
---------- ----------- ----------- ---------- -----------
Total Assets.................................... 772,638 272,429 10,845,392 4,845,196 1,951,926
---------- ----------- ----------- ---------- -----------
LIABILITIES:
Due to Hartford Life Insurance Company.......... -- -- -- -- 7,000
Payable for fund shares purchased............... 1,103 1,103 8,151 966 --
---------- ----------- ----------- ---------- -----------
Total Liabilities............................... 1,103 1,103 8,151 966 7,000
---------- ----------- ----------- ---------- -----------
Net Assets (variable life contract
liabilities)................................... $ 771,535 $ 271,326 $10,837,241 $4,844,230 $ 1,944,926
========== =========== =========== ========== ===========
Units Owned by Participants..................... 432,247 161,935 5,202,176 2,221,144 999,637
Unit Values..................................... $ 1.784939 $ 1.675516 $ 2.083213 $ 2.180961 $ 1.945633
</TABLE>
---------------------------------------------------- 33
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT VL II
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
MONEY MARKET
BOND FUND STOCK FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends............................. $ 389,916 $ 148,629 $ 270,522
---------- ---------- ---------
CAPITAL GAINS INCOME.................... 27,919 1,376,125 138
---------- ---------- ---------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized (loss) gain on security
transactions......................... (217) (1,037) --
Net unrealized (depreciation)
appreciation of investments during
the period........................... (528,300) 1,855,342 --
---------- ---------- ---------
Net (loss) gain on investments...... (528,517) 1,854,305 --
---------- ---------- ---------
Net (decrease) increase in net
assets resulting from operations... $ (110,682) $3,379,059 $ 270,660
========== ========== =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 34
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE
ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------------- --------------- --------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends............................. $ 223,535 $ 64,817 $ 18,656 $ 204,111
--------- ---------- -------- -------------------
CAPITAL GAINS INCOME.................... 710,073 982,513 -- 242,973
--------- ---------- -------- -------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized (loss) gain on security
transactions......................... (2,197) 46,004 (164) (8,989)
Net unrealized (depreciation)
appreciation of investments during
the period........................... 32,325 4,620,392 (14,413) 2,990,567
--------- ---------- -------- -------------------
Net (loss) gain on investments...... 30,128 4,666,396 (14,577) 2,981,578
--------- ---------- -------- -------------------
Net (decrease) increase in net
assets resulting from operations... $ 963,736 $5,713,726 $ 4,079 $ 3,428,662
========= ========== ======== ===================
<CAPTION>
INTERNATIONAL DIVIDEND AND
OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends............................. $ 54,978 $ 147,722
---------- ---------
CAPITAL GAINS INCOME.................... -- 342,313
---------- ---------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized (loss) gain on security
transactions......................... 237,802 32,258
Net unrealized (depreciation)
appreciation of investments during
the period........................... 1,473,851 (30,149)
---------- ---------
Net (loss) gain on investments...... 1,711,653 2,109
---------- ---------
Net (decrease) increase in net
assets resulting from operations... 1,766,631 $ 492,144
========== =========
</TABLE>
---------------------------------------------------- 35
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT VL II
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
GROWTH AND INTERNATIONAL
INCOME FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT
----------- -------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends............................. $ 462 $ 55
------- ------
CAPITAL GAINS INCOME.................... 1,064 --
------- ------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on security
transactions......................... 51 90
Net unrealized appreciation of
investments during the period........ 19,702 303
------- ------
Net gain on investments............. 19,753 393
------- ------
Net increase in net assets resulting
from operations.................... $21,279 $ 448
======= ======
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 36
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
FIDELITY VIP FIDELITY VIP FIDELITY VIP II
SMALL COMPANY MIDCAP EQUITY-INCOME OVERSEAS ASSET MANAGER
FUND FUND PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------- ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends............................. $ -- $-- $ 135,354 $ 55,675 $ 49,346
-------- ------- --------- ---------- --------
CAPITAL GAINS INCOME.................... 924 12,242 299,204 89,799 62,505
-------- ------- --------- ---------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on security
transactions......................... (1,319) 2,552 (5,697) 163,510 110
Net unrealized appreciation of
investments during the period........ 199,277 53,093 134,510 1,066,662 70,100
-------- ------- --------- ---------- --------
Net gain on investments............. 197,958 55,645 128,813 1,230,172 70,210
-------- ------- --------- ---------- --------
Net increase in net assets resulting
from operations.................... $198,882 $67,887 $ 563,371 $1,375,646 $182,061
======== ======= ========= ========== ========
</TABLE>
---------------------------------------------------- 37
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT VL II
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECAMBER 31, 1999
<TABLE>
<CAPTION>
MONEY MARKET
BOND FUND STOCK FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income....... $ 389,916 $ 148,629 $ 270,522
Capital gains income........ 27,919 1,376,125 138
Net realized (loss) gain on
security transactions...... (217) (1,037) --
Net unrealized
(depreciation) appreciation
of investments during the
period..................... (528,300) 1,855,342 --
---------- ----------- -----------
Net (decrease) increase in
net assets resulting from
operations................. (110,682) 3,379,059 270,660
---------- ----------- -----------
UNIT TRANSACTIONS:
Purchases................... 906,756 2,808,097 5,256,362
Net transfers............... 3,046,307 985,523 (5,594,076)
Surrenders for benefit
payments and fees.......... (72,647) (408,643) (332,938)
Net loan activity........... (580) 113,577 (1,129)
Cost of insurance........... (178,194) (730,808) (410,504)
---------- ----------- -----------
Net increase (decrease) in
net assets resulting from
unit transactions.......... 3,701,642 2,767,746 (1,082,285)
---------- ----------- -----------
Net increase (decrease) in
net assets................. 3,590,960 6,146,805 (811,625)
NET ASSETS:
Beginning of period......... 3,548,774 15,569,699 5,820,067
---------- ----------- -----------
End of period............... $7,139,734 $21,716,504 $ 5,008,442
========== =========== ===========
</TABLE>
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECAMBER 31, 1998
<TABLE>
<CAPTION>
MONEY MARKET
BOND FUND STOCK FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income....... $ 166,560 $ 116,844 $ 524,273
Capital gains income........ -- 289,691 --
Net realized gain (loss) on
security transactions...... 20,736 (19,525) --
Net unrealized appreciation
of investments during the
period..................... 48,115 2,840,198 --
---------- ----------- -----------
Net increase in net assets
resulting from
operations................. 235,411 3,227,208 524,273
---------- ----------- -----------
UNIT TRANSACTIONS:
Purchases................... 408,130 2,041,519 27,722,133
Net transfers............... 1,509,453 4,810,627 (33,879,254)
Surrenders for benefit
payments and fees.......... (69,652) (576,595) (1,840,672)
Net loan activity........... (519) (125,205) (66,865)
Cost of insurance........... (87,306) (456,787) (501,588)
---------- ----------- -----------
Net increase (decrease) in
net assets resulting from
unit transactions.......... 1,760,106 5,693,559 (8,566,246)
---------- ----------- -----------
Net increase (decrease) in
net assets................. 1,995,517 8,920,767 (8,041,973)
NET ASSETS:
Beginning of period......... 1,553,257 6,648,932 13,862,040
---------- ----------- -----------
End of period............... $3,548,774 $15,569,699 $ 5,820,067
========== =========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 38
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND
ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------------- --------------- ----------- ------------------ ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income....... $ 223,535 $ 64,817 $ 18,656 $ 204,111 $ 54,978 $ 147,722
Capital gains income........ 710,073 982,513 -- 242,973 -- 342,313
Net realized (loss) gain on
security transactions...... (2,197) 46,004 (164) (8,989) 237,802 32,258
Net unrealized
(depreciation) appreciation
of investments during the
period..................... 32,325 4,620,392 (14,413) 2,990,567 1,473,851 (30,149)
----------- ----------- -------- ----------- ---------- ----------
Net (decrease) increase in
net assets resulting from
operations................. 963,736 5,713,726 4,079 3,428,662 1,766,631 492,144
----------- ----------- -------- ----------- ---------- ----------
UNIT TRANSACTIONS:
Purchases................... 1,915,900 2,681,591 176,753 5,504,772 677,267 1,433,200
Net transfers............... 635,438 (289,293) (29,483) 842,727 (1,859,466) (565,534)
Surrenders for benefit
payments and fees.......... (349,009) (473,077) (12,808) (300,584) (121,807) (285,404)
Net loan activity........... 9,903 21,822 -- 37,126 26,015 26,838
Cost of insurance........... (544,241) (771,602) (37,402) (596,819) (219,619) (453,821)
----------- ----------- -------- ----------- ---------- ----------
Net increase (decrease) in
net assets resulting from
unit transactions.......... 1,667,991 1,169,441 97,060 5,487,222 (1,497,610) 155,279
----------- ----------- -------- ----------- ---------- ----------
Net increase (decrease) in
net assets................. 2,631,727 6,883,167 101,139 8,915,884 269,021 647,423
NET ASSETS:
Beginning of period......... 8,084,398 14,717,923 232,409 13,412,909 5,376,008 8,483,180
----------- ----------- -------- ----------- ---------- ----------
End of period............... $10,716,125 $21,601,090 $333,548 $22,328,793 $5,645,029 $9,130,603
=========== =========== ======== =========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND
ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------------- --------------- ----------- ------------------ ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income....... $ 158,735 $ 77,525 $ 14,559 $ 107,603 $ 69,373 $ 132,007
Capital gains income........ 148,349 573,895 -- 176,994 235,374 182,157
Net realized gain (loss) on
security transactions...... 3,423 (40,897) (1) 41,466 (12,897) (22,437)
Net unrealized appreciation
of investments during the
period..................... 925,117 1,053,772 632 2,102,732 226,926 652,784
----------- ----------- -------- ----------- ---------- ----------
Net increase in net assets
resulting from
operations................. 1,235,624 1,664,295 15,190 2,428,795 518,776 944,511
----------- ----------- -------- ----------- ---------- ----------
UNIT TRANSACTIONS:
Purchases................... 1,892,134 2,473,509 56,332 1,752,558 707,600 1,129,533
Net transfers............... 1,620,594 3,402,616 (58,529) 3,270,849 1,517,699 2,842,341
Surrenders for benefit
payments and fees.......... (400,056) (595,743) (8,870) (264,762) (221,694) (358,785)
Net loan activity........... 20,293 35,831 -- (56,810) (97,052) (33,764)
Cost of insurance........... (299,823) (540,583) (20,595) (313,799) (144,802) (302,161)
----------- ----------- -------- ----------- ---------- ----------
Net increase (decrease) in
net assets resulting from
unit transactions.......... 2,833,142 4,775,630 (31,662) 4,388,036 1,761,751 3,277,164
----------- ----------- -------- ----------- ---------- ----------
Net increase (decrease) in
net assets................. 4,068,766 6,439,925 (16,472) 6,816,831 2,280,527 4,221,675
NET ASSETS:
Beginning of period......... 4,015,632 8,277,998 248,881 6,596,078 3,095,481 4,261,505
----------- ----------- -------- ----------- ---------- ----------
End of period............... $ 8,084,398 $14,717,923 $232,409 $13,412,909 $5,376,008 $8,483,180
=========== =========== ======== =========== ========== ==========
</TABLE>
---------------------------------------------------- 39
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT VL II
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECAMBER 31, 1999
<TABLE>
<CAPTION>
GROWTH AND INTERNATIONAL
INCOME FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT
----------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income........................... $ 462 $ 55
Capital gains income............................ 1,064 --
Net realized gain (loss) on security
transactions................................... 51 90
Net unrealized appreciation of investments
during the period.............................. 19,702 303
-------- -------
Net increase in net assets resulting from
operations..................................... 21,279 448
-------- -------
UNIT TRANSACTIONS:
Purchases....................................... 8,474 --
Net transfers................................... 143,243 2,134
Surrenders for benefit payments and fees........ (3,898) (1,686)
Net loan activity............................... -- --
Cost of insurance............................... (2,157) (19)
-------- -------
Net increase (decrease) in net assets resulting
from unit transactions......................... 145,662 429
-------- -------
Net increase in net assets...................... 166,941 877
NET ASSETS:
Beginning of period............................. 1,606 1,007
-------- -------
End of period................................... $168,547 $ 1,884
======== =======
</TABLE>
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECAMBER 31, 1998
<TABLE>
<CAPTION>
GROWTH AND INTERNATIONAL
INCOME FUND ADVISERS FUND
SUB-ACCOUNT* SUB-ACCOUNT*
------------ -------------
<S> <C> <C>
OPERATIONS:
Net investment income............................. $ 6 $--
Capital gains income.............................. -- --
Net realized gain (loss) on security
transactions..................................... -- --
Net unrealized appreciation of investments during
the period....................................... 150 7
------ ------
Net increase in net assets resulting from
operations....................................... 156 7
------ ------
UNIT TRANSACTIONS:
Purchases....................................... 1,000 1,000
Net transfers................................... 450 --
Surrenders for benefit payments and fees........ -- --
Net loan activity............................... -- --
Cost of insurance............................... -- --
------ ------
Net increase in net assets resulting from unit
transactions................................... 1,450 1,000
------ ------
Net increase in net assets...................... 1,606 1,007
NET ASSETS:
Beginning of period............................. -- --
------ ------
End of period................................... $1,606 $1,007
====== ======
* From inception, August 3, 1998 to December 31,
1998
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 40
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
FIDELITY VIP FIDELITY VIP FIDELITY VIP II
SMALL COMPANY MIDCAP EQUITY-INCOME OVERSEAS ASSET MANAGER
FUND FUND PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------- ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income........................... -- -- $ 135,354 $ 55,675 $ 49,346
Capital gains income............................ 924 12,242 299,204 89,799 62,505
Net realized gain (loss) on security
transactions................................... (1,319) 2,552 (5,697) 163,510 110
Net unrealized appreciation of investments
during the period.............................. 199,277 53,093 134,510 1,066,662 70,100
-------- -------- ----------- ---------- ----------
Net increase in net assets resulting from
operations..................................... 198,882 67,887 563,371 1,375,646 182,061
-------- -------- ----------- ---------- ----------
UNIT TRANSACTIONS:
Purchases....................................... 130,785 26,831 1,305,399 434,002 397,109
Net transfers................................... 407,361 190,145 669,108 (532,883) 51,243
Surrenders for benefit payments and fees........ (2,001) (7,597) (217,417) (99,612) (78,051)
Net loan activity............................... -- -- (1,401) 19,098 --
Cost of insurance............................... (20,448) (7,044) (400,372) (113,429) (80,468)
-------- -------- ----------- ---------- ----------
Net increase (decrease) in net assets resulting
from unit transactions......................... 515,697 202,335 1,355,317 (292,824) 289,833
-------- -------- ----------- ---------- ----------
Net increase in net assets...................... 714,579 270,222 1,918,688 1,082,822 471,894
NET ASSETS:
Beginning of period............................. 56,956 1,104 8,918,553 3,761,408 1,473,032
-------- -------- ----------- ---------- ----------
End of period................................... $771,535 $271,326 $10,837,241 $4,844,230 $1,944,926
======== ======== =========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
FIDELITY VIP FIDELITY VIP FIDELITY VIP II
SMALL COMPANY MIDCAP EQUITY-INCOME OVERSEAS ASSET MANAGER
FUND FUND PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ------------ ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income............................. $-- $-- $ 64,760 $ 22,698 $ 29,183
Capital gains income.............................. -- -- 230,469 66,900 87,549
Net realized gain (loss) on security
transactions..................................... 41 -- 16 (12,367) (943)
Net unrealized appreciation of investments during
the period....................................... 14,348 104 303,166 80,752 48,191
------- ------ ---------- ---------- ----------
Net increase in net assets resulting from
operations....................................... 14,389 104 598,411 157,983 163,980
------- ------ ---------- ---------- ----------
UNIT TRANSACTIONS:
Purchases....................................... 1,344 1,000 1,148,707 296,446 276,627
Net transfers................................... 41,605 -- 3,213,980 2,455,676 218,464
Surrenders for benefit payments and fees........ (271) -- (198,212) (66,416) (46,101)
Net loan activity............................... -- -- (929) (1,217) --
Cost of insurance............................... (111) -- (201,357) (50,423) (44,434)
------- ------ ---------- ---------- ----------
Net increase in net assets resulting from unit
transactions................................... 42,567 1,000 3,962,189 2,634,066 404,556
------- ------ ---------- ---------- ----------
Net increase in net assets...................... 56,956 1,104 4,560,600 2,792,049 568,536
NET ASSETS:
Beginning of period............................. -- -- 4,357,953 969,359 904,496
------- ------ ---------- ---------- ----------
End of period................................... $56,956 $1,104 $8,918,553 $3,761,408 $1,473,032
======= ====== ========== ========== ==========
* From inception, August 3, 1998 to December 31,
1998
</TABLE>
---------------------------------------------------- 41
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT VL II
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. ORGANIZATION:
Separate Account Variable Life Two (the Account) is a separate investment
account within Hartford Life Insurance Company (the Company) and is
registered with the Securities and Exchange Commission (SEC) as a unit
investment trust under the Investment Company Act of 1940, as amended. Both
the Company and the Account are subject to supervision and regulation by the
Department of Insurance of the State of Connecticut and the SEC. The Account
invests deposits by variable life contractholders of the Company in various
mutuals funds (the Funds) as directed by the contractholders.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting
principles in the investment company industry:
a) SECURITY TRANSACTIONS--Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Realized gains and
losses on the sales of securities are computed on the basis of identified
cost of the fund shares sold. Dividend and capital gains income is
accrued as of the ex-dividend date. Capital gains income represents those
dividends from the Funds which are characterized as capital gains under
tax regulations.
b) SECURITY VALUATION--The investments in shares of the Funds are valued at
the closing net asset value per share as determined by the appropriate
Fund as of December 31, 1999.
c) UNIT TRANSACTIONS--Unit transactions are executed based on the unit
values calculated at the close of the business day.
d) FEDERAL INCOME TAXES--The operations of the Account form a part of, and
are taxed with, the total operations of the Company, which is taxed as an
insurance company under the Internal Revenue Code. Under current law, no
federal income taxes are payable with respect to the operations of the
Account.
e) USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and the reported
amounts of income and expenses during the period. Operating results in
the future could vary from the amounts derived from management's
estimates.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
a) DEDUCTIONS AND CHARGES FROM THE ACCOUNT VALUE--On the policy date and on
each subsequent monthly activity date, the Company will deduct from the
Account an amount to cover mortality and expense risk charges, cost of
insurance, administrative charges and any other benefits provided by the
rider. These charges, which may vary from month to month in accordance
with the terms of the contracts, are deducted through termination of
units of interest from the applicable contractholders' accounts.
______________________________________ 42 ______________________________________
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
TO HARTFORD LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VL II AND TO THE
OWNERS OF UNITS OF INTEREST THEREIN:
We have audited the accompanying statements of assets and liabilities of
Hartford Life Insurance Company Separate Account VL II (Bond Fund, Stock Fund,
Money Market Fund, Advisers Fund, Capital Appreciation Fund, Mortgage Securities
Fund, Index Fund, International Opportunities Fund, Dividend and Growth Fund,
Growth and Income Fund, International Advisers Fund, Small Company Fund, MidCap
Fund, Fidelity VIP Equity-Income Portfolio, Fidelity VIP Overseas Portfolio and
Fidelity VIP II Asset Manager Portfolio) (collectively, the Account) as of
December 31, 1999, and the related statements of operations and the statements
of changes in net assets for the periods presented. These financial statements
are the responsibility of the Account's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Account as of December 31,
1999, and the results of their operations and the changes in their net assets
for the periods presented in conformity with generally accepted accounting
principles.
Hartford, Connecticut
February 17, 2000 ARTHUR ANDERSEN LLP
______________________________________ 43 ______________________________________
<PAGE>
SEPARATE ACCOUNT ONE
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
BOND FUND STOCK FUND
SUB-ACCOUNT SUB-ACCOUNT
----------- -----------
<S> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS Fund, Inc. - Class IA
Shares 1,822,928
Cost $1,844,255
Market Value................................ $1,811,739 --
Hartford Stock HLS Fund, Inc. - Class IA
Shares 1,283,546
Cost $3,391,771
Market Value................................ -- $9,174,001
Hartford Money Market HLS Fund, Inc. -
Class IA
Shares 2,528,023
Cost $2,528,023
Market Value................................ -- --
Hartford Advisers HLS Fund, Inc. - Class IA
Shares 6,870,930
Cost $8,980,599
Market Value................................ -- --
Hartford Capital Appreciation HLS Fund, Inc. -
Class IA
Shares 1,854,536
Cost $3,501,240
Market Value................................ -- --
Hartford Mortgage Securities HLS Fund, Inc. -
Class IA
Shares 2,751,920
Cost $2,974,429
Market Value................................ -- --
Hartford Index HLS Fund, Inc. - Class IA
Shares 114,793
Cost $192,725
Market Value................................ -- --
Due from Hartford Life Insurance Company........ 86,339 542
Receivable from fund shares sold................ -- --
---------- ----------
Total Assets.................................... 1,898,078 9,174,543
---------- ----------
LIABILITIES:
Due to Hartford Life Insurance Company.......... -- --
Payable for fund shares purchased............... 86,343 550
---------- ----------
Total Liabilities............................... 86,343 550
---------- ----------
Net Assets (variable life contract
liabilities)................................... $1,811,735 $9,173,993
========== ==========
Units Owned by Participants..................... 743,469 1,124,166
Unit Values..................................... $ 2.436868 $ 8.160709
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 44
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET CAPITAL MORTGAGE
FUND ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ------------- ----------------- --------------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS Fund, Inc. - Class IA
Shares 1,822,928
Cost $1,844,255
Market Value................................ -- -- -- -- --
Hartford Stock HLS Fund, Inc. - Class IA
Shares 1,283,546
Cost $3,391,771
Market Value................................ -- -- -- -- --
Hartford Money Market HLS Fund, Inc. -
Class IA
Shares 2,528,023
Cost $2,528,023
Market Value................................ $2,528,023 -- -- -- --
Hartford Advisers HLS Fund, Inc. - Class IA
Shares 6,870,930
Cost $8,980,599
Market Value................................ -- $20,370,754 -- -- --
Hartford Capital Appreciation HLS Fund, Inc. -
Class IA
Shares 1,854,536
Cost $3,501,240
Market Value................................ -- -- $11,304,114 -- --
Hartford Mortgage Securities HLS Fund, Inc. -
Class IA
Shares 2,751,920
Cost $2,974,429
Market Value................................ -- -- -- $2,860,599 --
Hartford Index HLS Fund, Inc. - Class IA
Shares 114,793
Cost $192,725
Market Value................................ -- -- -- -- $ 480,844
Due from Hartford Life Insurance Company........ 9,661 1,641 1,163 -- --
Receivable from fund shares sold................ -- -- -- -- 24,602
---------- ----------- ----------- ---------- ---------
Total Assets.................................... 2,537,684 20,372,395 11,305,277 2,860,599 505,446
---------- ----------- ----------- ---------- ---------
LIABILITIES:
Due to Hartford Life Insurance Company.......... -- -- -- -- 24,602
Payable for fund shares purchased............... 12,291 1,664 1,261 3,069 --
---------- ----------- ----------- ---------- ---------
Total Liabilities............................... 12,291 1,664 1,261 3,069 24,602
---------- ----------- ----------- ---------- ---------
Net Assets (variable life contract
liabilities)................................... $2,525,393 $20,370,731 $11,304,016 $2,857,530 $ 480,844
========== =========== =========== ========== =========
Units Owned by Participants..................... 1,306,829 3,751,241 1,295,171 1,164,553 81,955
Unit Values..................................... $ 1.932459 $ 5.430398 $ 8.727815 $ 2.453757 $5.867170
</TABLE>
---------------------------------------------------- 45
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT ONE
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
BOND FUND STOCK FUND
SUB-ACCOUNT SUB-ACCOUNT
----------- -----------
<S> <C> <C>
INVESTMENT INCOME:
Dividends....................................... $ 99,582 $ 63,030
EXPENSES:
Mortality and expense undertakings.............. (17,344) (80,118)
--------- ----------
Net investment income (loss).................. 82,238 (17,088)
--------- ----------
CAPITAL GAINS INCOME.............................. 13,742 732,963
--------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized (loss) gain on security
transactions................................... (7,894) 194,036
Net unrealized (depreciation) appreciation of
investments during the period.................. (146,976) 569,111
--------- ----------
Net (loss) gain on investments................ (154,870) 763,147
--------- ----------
Net (decrease) increase in net assets
resulting from operations.................... $ (58,890) $1,479,022
========= ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 46
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET CAPITAL MORTGAGE
FUND ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ------------- ----------------- --------------- -----------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends....................................... $115,127 $ 428,353 $ 34,087 $ 159,922 $ 4,521
EXPENSES:
Mortality and expense undertakings.............. (21,569) (188,190) (86,472) (27,722) (3,742)
-------- ---------- ---------- --------- -------
Net investment income (loss).................. 93,558 240,163 (52,385) 132,200 779
-------- ---------- ---------- --------- -------
CAPITAL GAINS INCOME.............................. 52 1,714,755 576,221 -- 6,365
-------- ---------- ---------- --------- -------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized (loss) gain on security
transactions................................... -- 250,602 104,375 3,825 (5,372)
Net unrealized (depreciation) appreciation of
investments during the period.................. -- (292,466) 2,432,488 (117,818) 69,325
-------- ---------- ---------- --------- -------
Net (loss) gain on investments................ -- (41,864) 2,536,863 (113,993) 63,953
-------- ---------- ---------- --------- -------
Net (decrease) increase in net assets
resulting from operations.................... $ 93,610 $1,913,054 $3,060,699 $ 18,207 $71,097
======== ========== ========== ========= =======
</TABLE>
---------------------------------------------------- 47
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT ONE
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
BOND STOCK
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
----------- -----------
<S> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 82,238 $ (17,088)
Capital gains income.................. 13,742 732,963
Net realized (loss) gain on security
transactions......................... (7,894) 194,036
Net unrealized (depreciation)
appreciation of investments during
the period........................... (146,976) 569,111
---------- -----------
Net (decrease) increase in net assets
resulting from operations............ (58,890) 1,479,022
---------- -----------
UNIT TRANSACTIONS:
Purchases............................. -- --
Net transfers......................... (15,875) (221,796)
Surrenders for benefit payments and
fees................................. (118,548) (467,369)
Net loan activity..................... (7,787) (275,022)
Cost of insurance and other fees...... (13,777) (42,049)
---------- -----------
Net (decrease) increase in net assets
resulting from unit transactions..... (155,987) (1,006,236)
---------- -----------
Net (decrease) increase in net
assets............................... (214,877) 472,786
NET ASSETS:
Beginning of period................... 2,026,612 8,701,207
---------- -----------
End of period......................... $1,811,735 $ 9,173,993
========== ===========
</TABLE>
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
BOND STOCK
FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
----------- -----------
<S> <C> <C>
OPERATIONS:
Net investment income
(loss).................. $ 80,846 $ (1,612)
Capital gains income..... -- 246,858
Net realized gain on
security transactions... 3,142 234,844
Net unrealized
appreciation of
investments during the
period.................. 42,024 1,660,727
---------- ----------
Net increase in net
assets resulting from
operations.............. 126,012 2,140,817
---------- ----------
UNIT TRANSACTIONS:
Purchases................ -- --
Net transfers............ 492,699 162,134
Surrenders for benefit
payments and fees....... (91,551) (101,584)
Net loan activity........ 1,626 (349,986)
Cost of insurance and
other fees.............. (13,618) (36,443)
---------- ----------
Net increase (decrease)
in net assets resulting
from unit
transactions............ 389,156 (325,879)
---------- ----------
Net increase (decrease)
in net assets........... 515,168 1,814,938
NET ASSETS:
Beginning of period...... 1,511,444 6,886,269
---------- ----------
End of period............ $2,026,612 $8,701,207
========== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 48
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET ADVISERS CAPITAL MORTGAGE INDEX
FUND FUND APPRECIATION FUND SECURITIES FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ----------- ----------------- --------------- -----------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 93,558 $ 240,163 $ (52,385) $ 132,200 $ 779
Capital gains income.................. 52 1,714,755 576,221 -- 6,365
Net realized (loss) gain on security
transactions......................... -- 250,602 104,375 3,825 (5,372)
Net unrealized (depreciation)
appreciation of investments during
the period........................... -- (292,466) 2,432,488 (117,818) 69,325
---------- ----------- ----------- ---------- --------
Net (decrease) increase in net assets
resulting from operations............ 93,610 1,913,054 3,060,699 18,207 71,097
---------- ----------- ----------- ---------- --------
UNIT TRANSACTIONS:
Purchases............................. -- -- -- -- --
Net transfers......................... 630,725 (18,180) (329,138) (82,022) 36,286
Surrenders for benefit payments and
fees................................. (200,457) (1,766,164) (361,515) (465,674) (372)
Net loan activity..................... 7,503 (680,372) (133,871) (14,161) (758)
Cost of insurance and other fees...... (30,853) (103,331) (43,747) (24,024) (1,929)
---------- ----------- ----------- ---------- --------
Net (decrease) increase in net assets
resulting from unit transactions..... 406,918 (2,568,047) (868,271) (585,881) 33,227
---------- ----------- ----------- ---------- --------
Net (decrease) increase in net
assets............................... 500,528 (654,993) 2,192,428 (567,674) 104,324
NET ASSETS:
Beginning of period................... 2,024,865 21,025,724 9,111,588 3,425,204 376,520
---------- ----------- ----------- ---------- --------
End of period......................... $2,525,393 $20,370,731 $11,304,016 $2,857,530 $480,844
========== =========== =========== ========== ========
</TABLE>
<TABLE>
<CAPTION>
MONEY MARKET CAPITAL MORTGAGE
FUND ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ------------- ----------------- --------------- -----------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss).................. $ 97,874 $ 241,380 $ (29,465) $ 184,290 $ (1,323)
Capital gains income..... -- 635,067 575,189 -- 10,423
Net realized gain on
security transactions... -- 533,821 115,209 5,202 56,730
Net unrealized
appreciation of
investments during the
period.................. -- 2,722,020 569,309 1,929 58,103
---------- ----------- ---------- ---------- ---------
Net increase in net
assets resulting from
operations.............. 97,874 4,132,288 1,230,242 191,421 123,933
---------- ----------- ---------- ---------- ---------
UNIT TRANSACTIONS:
Purchases................ -- -- -- -- --
Net transfers............ (74,776) (228,502) (189,359) -- (162,196)
Surrenders for benefit
payments and fees....... (168,673) (981,260) (196,186) (131,470) (3,051)
Net loan activity........ (81,767) (217,376) (263,471) (39,378) (79)
Cost of insurance and
other fees.............. (33,960) (97,971) (39,901) (26,561) (2,129)
---------- ----------- ---------- ---------- ---------
Net increase (decrease)
in net assets resulting
from unit
transactions............ (359,176) (1,525,109) (688,917) (197,409) (167,455)
---------- ----------- ---------- ---------- ---------
Net increase (decrease)
in net assets........... (261,302) 2,607,179 541,325 (5,988) (43,522)
NET ASSETS:
Beginning of period...... 2,286,167 18,418,545 8,570,263 3,431,192 420,042
---------- ----------- ---------- ---------- ---------
End of period............ $2,024,865 $21,025,724 $9,111,588 $3,425,204 $ 376,520
========== =========== ========== ========== =========
</TABLE>
---------------------------------------------------- 49
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT ONE
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. ORGANIZATION:
Separate Account One (the Account) is a separate investment account within
Hartford Life Insurance Company (the Company) and is registered with the
Securities and Exchange Commission (SEC) as a unit investment trust under
the Investment Company Act of 1940, as amended. Both the Company and the
Account are subject to supervision and regulation by the Department of
Insurance of the State of Connecticut and the SEC. The Account invests
deposits by variable annuity contractholders of the Company in various
mutual funds (the Funds) as directed by the contractholders.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting
principles in the investment company industry:
a) SECURITY TRANSACTIONS--Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Realized gains and
losses on the sales of securities are computed on the basis of identified
cost of the fund shares sold. Dividend and capital gains income is
accrued as of the ex-dividend date. Capital gains income represents those
dividends from the Funds which are characterized as capital gains under
tax regulations.
b) SECURITY VALUATION--The investments in shares of the Funds are valued at
the closing net asset value per share as determined by the appropriate
Fund as of December 31, 1999.
c) UNIT TRANSACTIONS--Unit transactions are executed based on the unit
values calculated at the close of the business day.
d) FEDERAL INCOME TAXES--The operations of the Account form a part of, and
are taxed with, the total operations of the Company, which is taxed as an
insurance company under the Internal Revenue Code. Under current law, no
federal income taxes are payable with respect to the operations of the
Account.
e) USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and the reported
amounts of income and expenses during the period. Operating results in
the future could vary from the amounts derived from management's
estimates.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
a) DEDUCTIONS AND CHARGES FROM THE ACCOUNT VALUE--On the policy date and on
each subsequent monthly activity date, the Company will deduct from the
Account an amount to cover mortality and expense risk charges, cost of
insurance, administrative charges and any other benefits provided by the
rider. These charges, which may vary from month to month in accordance
with the terms of the contracts, are deducted through termination of
units of interest from the applicable contractholders' accounts.
______________________________________ 50 ______________________________________
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
TO HARTFORD LIFE INSURANCE COMPANY
SEPARATE ACCOUNT ONE AND TO THE
OWNERS OF UNITS OF INTEREST THEREIN:
We have audited the accompanying statements of assets and liabilities of
Hartford Life Insurance Company Separate Account One (Bond Fund, Stock Fund,
Money Market Fund, Advisers Fund, Capital Appreciation Fund, Mortgage Securities
Fund and Index Fund) (collectively, the Account) as of December 31, 1999, and
the related statements of operations and the statements of changes in net assets
for the periods presented. These financial statements are the responsibility of
the Account's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Account as of December 31,
1999, and the results of their operations and the changes in their net assets
for the periods presented in conformity with generally accepted accounting
principles.
Hartford, Connecticut
February 17, 2000 ARTHUR ANDERSEN LLP
______________________________________ 51 ______________________________________
<PAGE>
SEPARATE ACCOUNT VL I
- --------------------------------------------------------------------------------
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
MONEY MARKET
BOND FUND STOCK FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ------------
<S> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS Fund, Inc. - Class IA
Shares 13,036,853
Cost $13,751,074
Market Value................................ $12,956,833 -- --
Hartford Stock HLS Fund, Inc. - Class IA
Shares 7,774,248
Cost $48,538,058
Market Value................................ -- $ 55,565,565 --
Hartford Money Market HLS Fund, Inc. -
Class IA
Shares 37,911,835
Cost $37,911,835
Market Value................................ -- -- $37,911,835
Hartford Advisers HLS Fund, Inc. - Class IA
Shares 9,140,726
Cost $26,035,509
Market Value................................ -- -- --
Hartford Capital Appreciation HLS Fund, Inc. -
Class IA
Shares 6,532,743
Cost $30,616,570
Market Value................................ -- -- --
Hartford Mortgage Securities HLS Fund, Inc. -
Class IA
Shares 899,159
Cost $983,616
Market Value................................ -- -- --
Hartford Index HLS Fund, Inc. - Class IA
Shares 7,223,298
Cost $25,320,046
Market Value................................ -- -- --
Hartford International Opportunities HLS
Fund, Inc. - Class IA
Shares 5,137,704
Cost $7,043,176
Market Value................................ -- -- --
Hartford Dividend and Growth HLS Fund, Inc. -
Class IA
Shares 9,320,261
Cost $19,378,338
Market Value................................ -- -- --
Due from Hartford Life & Annuity Insurance
Company........................................ 10,232 216,368 8,988,784
Receivable from fund shares sold................ -- -- --
----------- ------------ -----------
Total Assets.................................... 12,967,065 55,781,933 46,900,619
----------- ------------ -----------
LIABILITIES:
Due to Hartford Life & Annuity Insurance
Company........................................ -- -- --
Payable for fund shares purchased............... 10,267 216,831 8,987,649
----------- ------------ -----------
Total Liabilities............................... 10,267 216,831 8,987,649
----------- ------------ -----------
Net Assets (variable life contract
liabilities)................................... $12,956,798 $ 55,565,102 $37,912,970
=========== ============ ===========
Units Owned by Participants..................... 8,902,703 14,783,748 27,719,873
Unit Values..................................... $ 1.455378 $ 3.758526 $ 1.367718
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 52
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE
ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------------- --------------- ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS Fund, Inc. - Class IA
Shares 13,036,853
Cost $13,751,074
Market Value................................ -- -- -- --
Hartford Stock HLS Fund, Inc. - Class IA
Shares 7,774,248
Cost $48,538,058
Market Value................................ -- -- -- --
Hartford Money Market HLS Fund, Inc. -
Class IA
Shares 37,911,835
Cost $37,911,835
Market Value................................ -- -- -- --
Hartford Advisers HLS Fund, Inc. - Class IA
Shares 9,140,726
Cost $26,035,509
Market Value................................ $ 27,100,188 -- -- --
Hartford Capital Appreciation HLS Fund, Inc. -
Class IA
Shares 6,532,743
Cost $30,616,570
Market Value................................ -- $ 39,819,603 -- --
Hartford Mortgage Securities HLS Fund, Inc. -
Class IA
Shares 899,159
Cost $983,616
Market Value................................ -- -- $ 934,668 --
Hartford Index HLS Fund, Inc. - Class IA
Shares 7,223,298
Cost $25,320,046
Market Value................................ -- -- -- $ 30,256,807
Hartford International Opportunities HLS
Fund, Inc. - Class IA
Shares 5,137,704
Cost $7,043,176
Market Value................................ -- -- -- --
Hartford Dividend and Growth HLS Fund, Inc. -
Class IA
Shares 9,320,261
Cost $19,378,338
Market Value................................ -- -- -- --
Due from Hartford Life & Annuity Insurance
Company........................................ 41,538 160,115 4,896 236,972
Receivable from fund shares sold................ -- -- -- --
------------ ------------ ----------- ------------
Total Assets.................................... 27,141,726 39,979,718 939,564 30,493,779
------------ ------------ ----------- ------------
LIABILITIES:
Due to Hartford Life & Annuity Insurance
Company........................................ -- -- -- --
Payable for fund shares purchased............... 41,631 160,427 4,899 238,322
------------ ------------ ----------- ------------
Total Liabilities............................... 41,631 160,427 4,899 238,322
------------ ------------ ----------- ------------
Net Assets (variable life contract
liabilities)................................... $ 27,100,095 $ 39,819,291 $ 934,665 $ 30,255,457
============ ============ =========== ============
Units Owned by Participants..................... 10,096,804 11,744,489 639,331 8,441,509
Unit Values..................................... $ 2.684027 $ 3.390466 $ 1.461942 $ 3.584129
<CAPTION>
INTERNATIONAL DIVIDEND AND
OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------
<S> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS Fund, Inc. - Class IA
Shares 13,036,853
Cost $13,751,074
Market Value................................ -- --
Hartford Stock HLS Fund, Inc. - Class IA
Shares 7,774,248
Cost $48,538,058
Market Value................................ -- --
Hartford Money Market HLS Fund, Inc. -
Class IA
Shares 37,911,835
Cost $37,911,835
Market Value................................ -- --
Hartford Advisers HLS Fund, Inc. - Class IA
Shares 9,140,726
Cost $26,035,509
Market Value................................ -- --
Hartford Capital Appreciation HLS Fund, Inc. -
Class IA
Shares 6,532,743
Cost $30,616,570
Market Value................................ -- --
Hartford Mortgage Securities HLS Fund, Inc. -
Class IA
Shares 899,159
Cost $983,616
Market Value................................ -- --
Hartford Index HLS Fund, Inc. - Class IA
Shares 7,223,298
Cost $25,320,046
Market Value................................ -- --
Hartford International Opportunities HLS
Fund, Inc. - Class IA
Shares 5,137,704
Cost $7,043,176
Market Value................................ $ 9,637,998 --
Hartford Dividend and Growth HLS Fund, Inc. -
Class IA
Shares 9,320,261
Cost $19,378,338
Market Value................................ -- $20,027,637
Due from Hartford Life & Annuity Insurance
Company........................................ 9,830 17,725
Receivable from fund shares sold................ -- --
----------- -----------
Total Assets.................................... 9,647,828 20,045,362
----------- -----------
LIABILITIES:
Due to Hartford Life & Annuity Insurance
Company........................................ -- --
Payable for fund shares purchased............... 9,969 18,148
----------- -----------
Total Liabilities............................... 9,969 18,148
----------- -----------
Net Assets (variable life contract
liabilities)................................... $ 9,637,859 $20,027,214
=========== ===========
Units Owned by Participants..................... 4,055,729 8,172,965
Unit Values..................................... $ 2.376357 $ 2.450422
</TABLE>
---------------------------------------------------- 53
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT VL I
- --------------------------------------------------------------------------------
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
GROWTH AND INTERNATIONAL
INCOME FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT
----------- -------------
<S> <C> <C>
ASSETS:
Investments:
Hartford Growth and Income HLS Fund, Inc. -
Class IA
Shares 2,064,778
Cost $2,667,080
Market Value................................ $2,956,020 --
Hartford International Advisers HLS
Fund, Inc. - Class IA
Shares 152,987
Cost $188,594
Market Value................................ -- $ 213,675
Hartford Small Company HLS Fund, Inc. -
Class IA
Shares 1,397,014
Cost $2,316,312
Market Value................................ -- --
Hartford MidCap HLS Fund, Inc. - Class IA
Shares 1,972,567
Cost $3,402,425
Market Value................................ -- --
Fidelity VIP Equity-Income Portfolio
Shares 436,302
Cost $10,702,619
Market Value................................ -- --
Fidelity VIP Overseas Portfolio
Shares 140,975
Cost $2,808,265
Market Value................................ -- --
Fidelity VIP II Asset Manager Portfolio
Shares 106,942
Cost $1,840,697
Market Value................................ -- --
Due from Hartford Life & Annuity Insurance
Company........................................ 109,761 5,155
Receivable from fund shares sold................ -- --
----------- ------------
Total Assets.................................... 3,065,781 218,830
----------- ------------
LIABILITIES:
Due to Hartford Life & Annuity Insurance
Company........................................ -- --
Payable for fund shares purchased............... 109,761 5,155
----------- ------------
Total Liabilities............................... 109,761 5,155
----------- ------------
Net Assets (variable life contract
liabilities)................................... $2,956,020 $ 213,675
=========== ============
Units Owned by Participants..................... 2,108,166 172,203
Unit Values..................................... $ 1.402176 $ 1.240838
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 54
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
FIDELITY VIP FIDELITY VIP FIDELITY VIP II
SMALL COMPANY MIDCAP EQUITY-INCOME OVERSEAS ASSET MANAGER
FUND FUND PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ------------ ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Growth and Income HLS Fund, Inc. -
Class IA
Shares 2,064,778
Cost $2,667,080
Market Value................................ -- -- -- -- --
Hartford International Advisers HLS
Fund, Inc. - Class IA
Shares 152,987
Cost $188,594
Market Value................................ -- -- -- -- --
Hartford Small Company HLS Fund, Inc. -
Class IA
Shares 1,397,014
Cost $2,316,312
Market Value................................ $ 3,056,355 -- -- -- --
Hartford MidCap HLS Fund, Inc. - Class IA
Shares 1,972,567
Cost $3,402,425
Market Value................................ -- $ 4,050,665 -- -- --
Fidelity VIP Equity-Income Portfolio
Shares 436,302
Cost $10,702,619
Market Value................................ -- -- $ 11,217,330 -- --
Fidelity VIP Overseas Portfolio
Shares 140,975
Cost $2,808,265
Market Value................................ -- -- -- $ 3,868,358 --
Fidelity VIP II Asset Manager Portfolio
Shares 106,942
Cost $1,840,697
Market Value................................ -- -- -- -- $ 1,996,605
Due from Hartford Life & Annuity Insurance
Company........................................ 12,928 11,087 11,324 14,038 885
Receivable from fund shares sold................ -- -- -- -- --
----------- ------------ ------------ ----------- ------------
Total Assets.................................... 3,069,283 4,061,752 11,228,654 3,882,396 1,997,490
----------- ------------ ------------ ----------- ------------
LIABILITIES:
Due to Hartford Life & Annuity Insurance
Company........................................ -- -- -- -- --
Payable for fund shares purchased............... 12,917 11,092 11,560 14,004 913
----------- ------------ ------------ ----------- ------------
Total Liabilities............................... 12,917 11,092 11,560 14,004 913
----------- ------------ ------------ ----------- ------------
Net Assets (variable life contract
liabilities)................................... $ 3,056,366 $ 4,050,660 $ 11,217,094 $ 3,868,392 $ 1,996,577
=========== ============ ============ =========== ============
Units Owned by Participants..................... 1,712,309 2,417,559 5,384,516 1,773,710 1,026,184
Unit Values..................................... $ 1.784939 $ 1.675516 $ 2.083213 $ 2.180961 $ 1.945633
</TABLE>
---------------------------------------------------- 55
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT VL I
- --------------------------------------------------------------------------------
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
MONEY MARKET
BOND FUND STOCK FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends....................................... $ 699,011 $ 372,982 $1,047,023
--------- ---------- ----------
CAPITAL GAINS INCOME.............................. 18,913 2,119,332 562
--------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized (loss) gain on security
transactions................................... (2,719) (22,268) --
Net unrealized (depreciation) appreciation of
investments during the period.................. (842,711) 4,413,611 --
--------- ---------- ----------
Net (loss) gain on investments................ (845,430) 4,391,343 --
--------- ---------- ----------
Net (decrease) increase in net assets
resulting from operations.................... $(127,506) $6,883,657 $1,047,585
========= ========== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 56
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE
ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------------- --------------- --------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends....................................... $ 551,404 $ 119,226 $ 52,036 $ 260,644
---------- ---------- -------- -------------------
CAPITAL GAINS INCOME.............................. 1,057,290 1,346,774 -- 232,059
---------- ---------- -------- -------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized (loss) gain on security
transactions................................... (966) 18,563 (1,722) 1,101
Net unrealized (depreciation) appreciation of
investments during the period.................. 311,013 7,692,001 (39,099) 3,505,603
---------- ---------- -------- -------------------
Net (loss) gain on investments................ 310,047 7,710,564 (40,821) 3,506,704
---------- ---------- -------- -------------------
Net (decrease) increase in net assets
resulting from operations.................... $1,918,741 $9,176,564 $ 11,215 $ 3,999,407
========== ========== ======== ===================
<CAPTION>
INTERNATIONAL DIVIDEND AND
OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends....................................... $ 91,142 $314,327
---------- --------
CAPITAL GAINS INCOME.............................. -- 499,713
---------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized (loss) gain on security
transactions................................... 25,426 (2,211)
Net unrealized (depreciation) appreciation of
investments during the period.................. 2,417,612 22,405
---------- --------
Net (loss) gain on investments................ 2,443,038 20,194
---------- --------
Net (decrease) increase in net assets
resulting from operations.................... $2,534,180 $834,234
========== ========
</TABLE>
---------------------------------------------------- 57
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT VL I
- --------------------------------------------------------------------------------
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
GROWTH AND INTERNATIONAL
INCOME FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT
----------- -------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends....................................... $ 7,483 $ 3,715
-------- -------
CAPITAL GAINS INCOME.............................. 17,234 --
-------- -------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized (loss) gain on security
transactions................................... (4,508) 368
Net unrealized appreciation of investments
during the period.............................. 282,943 24,842
-------- -------
Net gain on investments....................... 278,435 25,210
-------- -------
Net increase in net assets resulting from
operations................................... $303,152 $28,925
======== =======
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 58
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
FIDELITY VIP FIDELITY VIP FIDELITY VIP II
SMALL COMPANY MIDCAP EQUITY-INCOME OVERSEAS ASSET MANAGER
FUND FUND PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------- ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends....................................... $ -- $ -- $105,625 $ 58,254 $ 35,234
-------- -------- -------- ---------- --------
CAPITAL GAINS INCOME.............................. 3,946 148,450 233,487 93,957 44,630
-------- -------- -------- ---------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized (loss) gain on security
transactions................................... 867 (12,844) 1,860 221,841 1,464
Net unrealized appreciation of investments
during the period.............................. 716,883 638,826 132,738 896,895 89,708
-------- -------- -------- ---------- --------
Net gain on investments....................... 717,750 625,982 134,598 1,118,736 91,172
-------- -------- -------- ---------- --------
Net increase in net assets resulting from
operations................................... $721,696 $774,432 $473,710 $1,270,947 $171,036
======== ======== ======== ========== ========
</TABLE>
---------------------------------------------------- 59
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT VL I
- --------------------------------------------------------------------------------
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
BOND STOCK MONEY MARKET
FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ------------- ------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income................. $ 699,011 $ 372,982 $ 1,047,023
Capital gains income.................. 18,913 2,119,332 562
Net realized (loss) gain on security
transactions......................... (2,719) (22,268) --
Net unrealized (depreciation)
appreciation of investments during
the period........................... (842,711) 4,413,611 --
------------ ------------- ------------
Net (decrease) increase in net assets
resulting from operations............ (127,506) 6,883,657 1,047,585
------------ ------------- ------------
UNIT TRANSACTIONS:
Purchases............................. 2,698,950 12,119,056 140,220,886
Net transfers......................... 9,691,325 23,050,670 (119,807,605)
Surrenders for benefit payments and
fees................................. (718,711) (1,780,707) (491,397)
Net loan activity..................... (99,513) (238,423) (5,409,347)
Cost of insurance..................... (497,251) (2,526,384) (3,444,628)
------------ ------------- ------------
Net increase in net assets resulting
from unit transactions............... 11,074,800 30,624,212 11,067,909
------------ ------------- ------------
Net increase in net assets............ 10,947,294 37,507,869 12,115,494
NET ASSETS:
Beginning of period................... 2,009,504 18,057,233 25,797,476
------------ ------------- ------------
End of period......................... $ 12,956,798 $ 55,565,102 $ 37,912,970
============ ============= ============
</TABLE>
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
BOND STOCK MONEY MARKET
FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income.... $ 94,731 $ 133,161 $ 445,803
Capital gains income..... -- 103,525 --
Net realized gain (loss)
on security
transactions............ 9,305 (98) --
Net unrealized
appreciation
(depreciation) of
investments during the
period.................. 38,190 2,521,917 --
----------- ----------- -----------
Net increase in net
assets resulting from
operations.............. 142,226 2,758,505 445,803
----------- ----------- -----------
UNIT TRANSACTIONS:
Purchases................ 683,210 3,513,223 95,425,381
Net transfers............ 571,074 10,950,874 (72,076,036)
Surrenders for benefit
payments and fees....... (31,817) (207,585) (411,072)
Net loan activity........ (7,510) (178,910) (3,001,765)
Cost of insurance........ (110,589) (599,935) (1,609,252)
----------- ----------- -----------
Net increase in net
assets resulting from
unit transactions....... 1,104,368 13,477,667 18,327,256
----------- ----------- -----------
Net increase in net
assets.................. 1,246,594 16,236,172 18,773,059
NET ASSETS:
Beginning of period...... 762,910 1,821,061 7,024,417
----------- ----------- -----------
End of period............ $ 2,009,504 $18,057,233 $25,797,476
=========== =========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 60
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL
ADVISERS APPRECIATION SECURITIES INDEX OPPORTUNITIES DIVIDEND AND
FUND FUND FUND FUND FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ------------- ----------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income................. $ 551,404 $ 119,226 $ 52,036 $ 260,644 $ 91,142 $ 314,327
Capital gains income.................. 1,057,290 1,346,774 -- 232,059 -- 499,713
Net realized (loss) gain on security
transactions......................... (966) 18,563 (1,722) 1,101 25,426 (2,211)
Net unrealized (depreciation)
appreciation of investments during
the period........................... 311,013 7,692,001 (39,099) 3,505,603 2,417,612 22,405
------------- ------------- ----------- ------------ ------------ ------------
Net (decrease) increase in net assets
resulting from operations............ 1,918,741 9,176,564 11,215 3,999,407 2,534,180 834,234
------------- ------------- ----------- ------------ ------------ ------------
UNIT TRANSACTIONS:
Purchases............................. 5,793,490 8,084,428 412,204 5,041,446 2,369,344 4,867,866
Net transfers......................... 12,348,443 8,095,535 244,979 12,746,107 (345,670) 6,916,438
Surrenders for benefit payments and
fees................................. (500,173) (913,711) (315,043) (1,035,217) (342,765) (840,062)
Net loan activity..................... (44,850) (166,948) (6,721) (149,959) (69,327) (140,021)
Cost of insurance..................... (1,188,712) (1,518,285) (71,630) (1,208,015) (382,923) (972,972)
------------- ------------- ----------- ------------ ------------ ------------
Net increase in net assets resulting
from unit transactions............... 16,408,198 13,581,019 263,789 15,394,362 1,228,659 9,831,249
------------- ------------- ----------- ------------ ------------ ------------
Net increase in net assets............ 18,326,939 22,757,583 275,004 19,393,769 3,762,839 10,665,483
NET ASSETS:
Beginning of period................... 8,773,156 17,061,708 659,661 10,861,688 5,875,020 9,361,731
------------- ------------- ----------- ------------ ------------ ------------
End of period......................... $ 27,100,095 $ 39,819,291 $ 934,665 $ 30,255,457 $ 9,637,859 $ 20,027,214
============= ============= =========== ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND
ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------------- --------------- ----------- ------------------ ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income.... $ 169,656 $ 88,276 $ 37,142 $ 84,654 $ 74,346 $ 137,525
Capital gains income..... 63,605 250,090 -- 53,874 99,646 62,013
Net realized gain (loss)
on security
transactions............ 4,573 39,470 (871) (922) (741) 1,074
Net unrealized
appreciation
(depreciation) of
investments during the
period.................. 731,402 1,421,650 (8,524) 1,330,595 214,444 561,829
----------- ----------- -------- ----------- ----------- ------------
Net increase in net
assets resulting from
operations.............. 969,236 1,799,486 27,747 1,468,201 387,695 762,441
----------- ----------- -------- ----------- ----------- ------------
UNIT TRANSACTIONS:
Purchases................ 1,751,574 3,507,330 37,276 2,118,676 1,309,658 2,087,615
Net transfers............ 5,691,550 9,794,312 550,267 6,100,193 3,666,828 5,745,039
Surrenders for benefit
payments and fees....... (489,261) (187,213) (5,125) (112,773) (64,967) (95,097)
Net loan activity........ (71,056) (101,857) (7,079) (209,775) (30,352) (128,288)
Cost of insurance........ (229,420) (489,408) (31,183) (280,128) (165,473) (288,431)
----------- ----------- -------- ----------- ----------- ------------
Net increase in net
assets resulting from
unit transactions....... 6,653,387 12,523,164 544,156 7,616,193 4,715,694 7,320,838
----------- ----------- -------- ----------- ----------- ------------
Net increase in net
assets.................. 7,622,623 14,322,650 571,903 9,084,394 5,103,389 8,083,279
NET ASSETS:
Beginning of period...... 1,150,533 2,739,058 87,758 1,777,294 771,631 1,278,452
----------- ----------- -------- ----------- ----------- ------------
End of period............ $ 8,773,156 $17,061,708 $659,661 $10,861,688 $ 5,875,020 $ 9,361,731
=========== =========== ======== =========== =========== ============
</TABLE>
---------------------------------------------------- 61
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT VL I
- --------------------------------------------------------------------------------
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
GROWTH AND INTERNATIONAL
INCOME FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT
------------ -------------
<S> <C> <C>
OPERATIONS:
Net investment income........................... $ 7,483 $ 3,715
Capital gains income............................ 17,234 --
Net realized (loss) gain on security
transactions................................... (4,508) 368
Net unrealized appreciation of investments
during the period.............................. 282,943 24,842
------------ -------------
Net increase in net assets resulting from
operations..................................... 303,152 28,925
------------ -------------
UNIT TRANSACTIONS:
Purchases....................................... 366,470 38,551
Net transfers................................... 2,340,975 169,407
Surrenders for benefit payments and fees........ (31,360) (20,325)
Net loan activity............................... (13,510) --
Cost of insurance............................... (80,442) (8,886)
------------ -------------
Net increase (decrease) in net assets resulting
from unit transactions......................... 2,582,133 178,747
------------ -------------
Net increase in net assets...................... 2,885,285 207,672
NET ASSETS:
Beginning of period............................. 70,735 6,003
------------ -------------
End of period................................... $ 2,956,020 $ 213,675
============ =============
</TABLE>
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
GROWTH AND INTERNATIONAL
INCOME FUND ADVISERS FUND
SUB-ACCOUNT* SUB-ACCOUNT*
------------ -------------
<S> <C> <C>
OPERATIONS:
Net investment income........................... $ 267 $ --
Capital gains income............................ -- --
Net realized gain (loss) on security
transactions................................... 14 5
Net unrealized appreciation of investments
during the period.............................. 5,996 239
----------- ------------
Net increase in net assets resulting from
operations..................................... 6,277 244
----------- ------------
UNIT TRANSACTIONS:
Purchases....................................... 3,992 1,111
Net transfers................................... 62,775 4,904
Surrenders for benefit payments and fees........ (315) (126)
Net loan activity............................... -- --
Cost of insurance............................... (1,994) (130)
----------- ------------
Net increase in net assets resulting from unit
transactions................................... 64,458 5,759
----------- ------------
Net increase in net assets...................... 70,735 6,003
NET ASSETS:
Beginning of period............................. -- --
----------- ------------
End of period................................... $ 70,735 $ 6,003
=========== ============
* From inception, August 3, 1998, to December 31,
1998
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 62
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
FIDELITY VIP FIDELITY VIP FIDELITY VIP II
SMALL COMPANY MIDCAP EQUITY-INCOME OVERSEAS ASSET MANAGER
FUND FUND PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ------------- ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income........................... $ -- $ -- $ 105,625 $ 58,254 $ 35,234
Capital gains income............................ 3,946 148,450 233,487 93,957 44,630
Net realized (loss) gain on security
transactions................................... 867 (12,844) 1,860 221,841 1,464
Net unrealized appreciation of investments
during the period.............................. 716,883 638,826 132,738 896,895 89,708
------------ ------------- ------------- ----------- ------------
Net increase in net assets resulting from
operations..................................... 721,696 774,432 473,710 1,270,947 171,036
------------ ------------- ------------- ----------- ------------
UNIT TRANSACTIONS:
Purchases....................................... 492,570 518,046 2,649,542 1,343,347 511,702
Net transfers................................... 1,813,451 2,801,192 2,562,251 (1,869,595) 455,197
Surrenders for benefit payments and fees........ (33,140) (25,676) (361,687) (176,455) (42,732)
Net loan activity............................... (7,461) (3,502) (14,647) (14,296) (16,010)
Cost of insurance............................... (67,116) (86,761) (516,570) (188,963) (72,617)
------------ ------------- ------------- ----------- ------------
Net increase (decrease) in net assets resulting
from unit transactions......................... 2,198,304 3,203,299 4,318,889 (905,962) 835,540
------------ ------------- ------------- ----------- ------------
Net increase in net assets...................... 2,920,000 3,977,731 4,792,599 364,985 1,006,576
NET ASSETS:
Beginning of period............................. 136,366 72,929 6,424,495 3,503,407 990,001
------------ ------------- ------------- ----------- ------------
End of period................................... $ 3,056,366 $ 4,050,660 $ 11,217,094 $ 3,868,392 $ 1,996,577
============ ============= ============= =========== ============
</TABLE>
<TABLE>
<CAPTION>
FIDELITY VIP FIDELITY VIP FIDELITY VIP II
SMALL COMPANY MIDCAP EQUITY-INCOME OVERSEAS ASSET MANAGER
FUND FUND PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ------------ ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income........................... $ -- $ -- $ 14,647 $ 7,173 $ 6,411
Capital gains income............................ -- -- 52,127 21,143 19,232
Net realized gain (loss) on security
transactions................................... 235 191 690 (6,944) 68
Net unrealized appreciation of investments
during the period.............................. 23,159 9,414 333,233 162,234 58,568
----------- ------------ ------------ ----------- ------------
Net increase in net assets resulting from
operations..................................... 23,394 9,605 400,697 183,606 84,279
----------- ------------ ------------ ----------- ------------
UNIT TRANSACTIONS:
Purchases....................................... 4,285 5,632 1,026,458 686,112 229,316
Net transfers................................... 114,315 62,276 4,607,992 2,484,394 567,140
Surrenders for benefit payments and fees........ (1,068) (433) (66,082) (24,102) (8,417)
Net loan activity............................... (3,356) (3,343) (40,966) (25,210) 5,364
Cost of insurance............................... (1,204) (808) (150,445) (74,993) (21,314)
----------- ------------ ------------ ----------- ------------
Net increase in net assets resulting from unit
transactions................................... 112,972 63,324 5,376,957 3,046,201 772,089
----------- ------------ ------------ ----------- ------------
Net increase in net assets...................... 136,366 72,929 5,777,654 3,229,807 856,368
NET ASSETS:
Beginning of period............................. -- -- 646,841 273,600 133,633
----------- ------------ ------------ ----------- ------------
End of period................................... $ 136,366 $ 72,929 $ 6,424,495 $ 3,503,407 $ 990,001
=========== ============ ============ =========== ============
* From inception, August 3, 1998, to December 31,
1998
</TABLE>
---------------------------------------------------- 63
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT VL I
- --------------------------------------------------------------------------------
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. ORGANIZATION:
Separate Account VL I (the Account) is a separate investment account within
Hartford Life & Annuity Insurance Company (the Company) and is registered
with the Securities and Exchange Commission (SEC) as a unit investment trust
under the Investment Company Act of 1940, as amended. Both the Company and
the Account are subject to supervision and regulation by the Department of
Insurance of the State of Connecticut and the SEC. The Account invests
deposits by variable life contractholders of the Company in various mutual
funds (the Funds) as directed by the contractholders.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting
principles in the investment company industry:
a) SECURITY TRANSACTIONS--Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Realized gains and
losses on the sales of securities are computed on the basis of identified
cost of the fund shares sold. Dividend and capital gains income is
accrued as of the ex-dividend date. Capital gains income represents those
dividends from the Funds which are characterized as capital gains under
tax regulations.
b) SECURITY VALUATION--The investments in shares of the Funds are valued at
the closing net asset value per share as determined by the appropriate
Fund as of December 31, 1999.
c) UNIT TRANSACTIONS--Unit transactions are executed based on the unit
values calculated at the close of the business day.
d) FEDERAL INCOME TAXES--The operations of the Account form a part of, and
are taxed with, the total operations of the Company, which is taxed as an
insurance company under the Internal Revenue Code. Under current law, no
federal income taxes are payable with respect to the operations of the
Account.
e) USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and the reported
amounts of income and expenses during the period. Operating results in
the future could vary from the amounts derived from management's
estimates.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
a) DEDUCTIONS AND CHARGES FROM THE ACCOUNT VALUE--On the policy date and on
each subsequent monthly activity date, the Company will deduct from the
Account an amount to cover mortality and expense risk charges, cost of
insurance, administrative charges and any other benefits provided by the
rider. These charges, which may vary from month to month in accordance
which the terms of the contracts, are deducted through termination of
units of interest from the applicable contractholders' accounts.
______________________________________ 64 ______________________________________
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
TO HARTFORD LIFE & ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT VL I AND TO THE
OWNERS OF UNITS OF INTEREST THEREIN:
We have audited the accompanying statements of assets and liabilities of
Hartford Life & Annuity Insurance Company Separate Account VL I (Bond Fund,
Stock Fund, Money Market Fund, Advisers Fund, Capital Appreciation Fund,
Mortgage Securities Fund, Index Fund, International Opportunities Fund, Dividend
and Growth Fund, Growth and Income Fund, International Advisers Fund, Small
Company Fund, MidCap Fund, Fidelity VIP Equity-Income Portfolio, Fidelity VIP
Overseas Portfolio and Fidelity VIP II Asset Manager Portfolio) (collectively,
the Account) as of December 31, 1999, and the related statements of operations
and the statements of changes in net assets for the periods presented. These
financial statements are the responsibility of the Account's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Account as of December 31,
1999, and the results of their operations and the changes in their net assets
for the periods presented in conformity with generally accepted accounting
principles.
Hartford, Connecticut
February 17, 2000 ARTHUR ANDERSEN LLP
______________________________________ 65 ______________________________________
<PAGE>
SEPARATE ACCOUNT VL II
- --------------------------------------------------------------------------------
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
MONEY MARKET
BOND FUND STOCK FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ------------
<S> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS Fund, Inc. - Class IA
Shares 6,146,042
Cost $6,517,756
Market Value........................... $6,108,317 -- --
Hartford Stock HLS Fund, Inc. - Class IA
Shares 2,762,395
Cost $17,713,082
Market Value........................... -- $ 19,743,908 --
Hartford Money Market HLS Fund, Inc. -
Class IA
Shares 35,162,986
Cost $35,162,986
Market Value........................... -- -- $35,162,986
Hartford Advisers HLS Fund, Inc. -
Class IA
Shares 4,786,407
Cost $13,734,488
Market Value........................... -- -- --
Hartford Capital Appreciation HLS
Fund, Inc. - Class IA
Shares 1,792,395
Cost $8,630,428
Market Value........................... -- -- --
Hartford Mortgage Securities HLS
Fund, Inc. - Class IA
Shares 599,557
Cost $655,939
Market Value........................... -- -- --
Hartford Index HLS Fund, Inc. - Class IA
Shares 6,529,463
Cost $22,457,967
Market Value........................... -- -- --
Hartford International Opportunities HLS
Fund, Inc. - Class IA
Shares 1,627,053
Cost $2,292,796
Market Value........................... -- -- --
Hartford Dividend and Growth HLS
Fund, Inc. - Class IA
Shares 3,004,060
Cost $6,359,805
Market Value........................... -- -- --
Due from Hartford Life & Annuity
Insurance Company....................... -- 54,616 463,281
Receivable from fund shares sold......... 1,238 -- --
----------- ------------ -----------
Total Assets............................. 6,109,555 19,798,524 35,626,267
----------- ------------ -----------
LIABILITIES:
Due to Hartford Life & Annuity Insurance
Company................................. 1,269 -- --
Payable for fund shares purchased........ -- 54,537 462,299
----------- ------------ -----------
Total Liabilities........................ 1,269 54,537 462,299
----------- ------------ -----------
Net Assets (variable life contract
liabilities)............................ $6,108,286 $ 19,743,987 $35,163,968
=========== ============ ===========
Units Owned by Participants.............. 4,197,044 5,253,119 25,709,955
Unit Values.............................. $ 1.455378 $ 3.758526 $ 1.367718
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 66
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE
ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------------- --------------- ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS Fund, Inc. - Class IA
Shares 6,146,042
Cost $6,517,756
Market Value........................... -- -- -- --
Hartford Stock HLS Fund, Inc. - Class IA
Shares 2,762,395
Cost $17,713,082
Market Value........................... -- -- -- --
Hartford Money Market HLS Fund, Inc. -
Class IA
Shares 35,162,986
Cost $35,162,986
Market Value........................... -- -- -- --
Hartford Advisers HLS Fund, Inc. -
Class IA
Shares 4,786,407
Cost $13,734,488
Market Value........................... $ 14,190,615 -- -- --
Hartford Capital Appreciation HLS
Fund, Inc. - Class IA
Shares 1,792,395
Cost $8,630,428
Market Value........................... -- $ 10,925,342 -- --
Hartford Mortgage Securities HLS
Fund, Inc. - Class IA
Shares 599,557
Cost $655,939
Market Value........................... -- -- $ 623,234 --
Hartford Index HLS Fund, Inc. - Class IA
Shares 6,529,463
Cost $22,457,967
Market Value........................... -- -- -- $ 27,350,486
Hartford International Opportunities HLS
Fund, Inc. - Class IA
Shares 1,627,053
Cost $2,292,796
Market Value........................... -- -- -- --
Hartford Dividend and Growth HLS
Fund, Inc. - Class IA
Shares 3,004,060
Cost $6,359,805
Market Value........................... -- -- -- --
Due from Hartford Life & Annuity
Insurance Company....................... 2,393 28,816 -- 23,192
Receivable from fund shares sold......... -- -- -- --
------------ ------------ ----------- ------------
Total Assets............................. 14,193,008 10,954,158 623,234 27,373,678
------------ ------------ ----------- ------------
LIABILITIES:
Due to Hartford Life & Annuity Insurance
Company................................. -- -- -- --
Payable for fund shares purchased........ 2,428 28,947 -- 23,875
------------ ------------ ----------- ------------
Total Liabilities........................ 2,428 28,947 -- 23,875
------------ ------------ ----------- ------------
Net Assets (variable life contract
liabilities)............................ $ 14,190,580 $ 10,925,211 $ 623,234 $ 27,349,803
============ ============ =========== ============
Units Owned by Participants.............. 5,287,048 3,222,333 426,305 7,630,809
Unit Values.............................. $ 2.684027 $ 3.390466 $ 1.461942 $ 3.584129
<CAPTION>
INTERNATIONAL DIVIDEND AND
OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------
<S> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS Fund, Inc. - Class IA
Shares 6,146,042
Cost $6,517,756
Market Value........................... -- --
Hartford Stock HLS Fund, Inc. - Class IA
Shares 2,762,395
Cost $17,713,082
Market Value........................... -- --
Hartford Money Market HLS Fund, Inc. -
Class IA
Shares 35,162,986
Cost $35,162,986
Market Value........................... -- --
Hartford Advisers HLS Fund, Inc. -
Class IA
Shares 4,786,407
Cost $13,734,488
Market Value........................... -- --
Hartford Capital Appreciation HLS
Fund, Inc. - Class IA
Shares 1,792,395
Cost $8,630,428
Market Value........................... -- --
Hartford Mortgage Securities HLS
Fund, Inc. - Class IA
Shares 599,557
Cost $655,939
Market Value........................... -- --
Hartford Index HLS Fund, Inc. - Class IA
Shares 6,529,463
Cost $22,457,967
Market Value........................... -- --
Hartford International Opportunities HLS
Fund, Inc. - Class IA
Shares 1,627,053
Cost $2,292,796
Market Value........................... $ 3,052,245 --
Hartford Dividend and Growth HLS
Fund, Inc. - Class IA
Shares 3,004,060
Cost $6,359,805
Market Value........................... -- $ 6,455,208
Due from Hartford Life & Annuity
Insurance Company....................... -- 577
Receivable from fund shares sold......... -- --
----------- -----------
Total Assets............................. 3,052,245 6,455,785
----------- -----------
LIABILITIES:
Due to Hartford Life & Annuity Insurance
Company................................. 114 --
Payable for fund shares purchased........ -- 588
----------- -----------
Total Liabilities........................ 114 588
----------- -----------
Net Assets (variable life contract
liabilities)............................ $ 3,052,131 $ 6,455,197
=========== ===========
Units Owned by Participants.............. 1,284,374 2,634,320
Unit Values.............................. $ 2.376357 $ 2.450422
</TABLE>
---------------------------------------------------- 67
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT VL II
- --------------------------------------------------------------------------------
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
GROWTH AND INTERNATIONAL
INCOME FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT
----------- -------------
<S> <C> <C>
ASSETS:
Investments:
Hartford Growth and Income HLS
Fund, Inc. - Class IA
Shares 1,498,531
Cost $1,943,326
Market Value........................... $2,145,358 --
Hartford International Advisers HLS
Fund, Inc. - Class IA
Shares 187,834
Cost $226,878
Market Value........................... -- $ 262,345
Hartford Small Company HLS Fund, Inc. -
Class IA
Shares 591,371
Cost $956,662
Market Value........................... -- --
Hartford MidCap HLS Fund, Inc. -
Class IA
Shares 1,055,994
Cost $1,787,486
Market Value........................... -- --
Fidelity VIP Equity-Income Portfolio
Shares 137,789
Cost $3,436,883
Market Value........................... -- --
Fidelity VIP Overseas Portfolio
Shares 72,487
Cost $1,506,287
Market Value........................... -- --
Fidelity VIP II Asset Manager Portfolio
Shares 97,000
Cost $1,710,904
Market Value........................... -- --
Due from Hartford Life & Annuity Insurance
Company................................... 2,326 --
Receivable from fund shares sold........... -- --
----------- ------------
Total Assets............................... 2,147,684 262,345
----------- ------------
LIABILITIES:
Due to Hartford Life & Annuity Insurance
Company................................... -- --
Payable for fund shares purchased.......... 2,359 --
----------- ------------
Total Liabilities.......................... 2,359 --
----------- ------------
Net Assets (variable life contract
liabilities).............................. $2,145,325 $ 262,345
=========== ============
Units Owned by Participants................ 1,529,997 211,426
Unit Values................................ $ 1.402176 $ 1.240838
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 68
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
FIDELITY VIP FIDELITY VIP FIDELITY VIP II
SMALL COMPANY MIDCAP EQUITY-INCOME OVERSEAS ASSET MANAGER
FUND PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ------------ ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Growth and Income HLS
Fund, Inc. - Class IA
Shares 1,498,531
Cost $1,943,326
Market Value........................... -- -- -- -- --
Hartford International Advisers HLS
Fund, Inc. - Class IA
Shares 187,834
Cost $226,878
Market Value........................... -- -- -- -- --
Hartford Small Company HLS Fund, Inc. -
Class IA
Shares 591,371
Cost $956,662
Market Value........................... $ 1,293,787 -- -- -- --
Hartford MidCap HLS Fund, Inc. -
Class IA
Shares 1,055,994
Cost $1,787,486
Market Value........................... -- $ 2,168,483 -- -- --
Fidelity VIP Equity-Income Portfolio
Shares 137,789
Cost $3,436,883
Market Value........................... -- -- $ 3,542,551 -- --
Fidelity VIP Overseas Portfolio
Shares 72,487
Cost $1,506,287
Market Value........................... -- -- -- $ 1,989,051 --
Fidelity VIP II Asset Manager Portfolio
Shares 97,000
Cost $1,710,904
Market Value........................... -- -- -- -- $ 1,810,995
Due from Hartford Life & Annuity Insurance
Company................................... 6,539 7,866 5,465 8,224 303
Receivable from fund shares sold........... -- -- -- -- --
----------- ------------ ------------ ----------- ------------
Total Assets............................... 1,300,326 2,176,349 3,548,016 1,997,275 1,811,298
----------- ------------ ------------ ----------- ------------
LIABILITIES:
Due to Hartford Life & Annuity Insurance
Company................................... -- -- -- -- --
Payable for fund shares purchased.......... 6,540 7,873 5,510 8,257 295
----------- ------------ ------------ ----------- ------------
Total Liabilities.......................... 6,540 7,873 5,510 8,257 295
----------- ------------ ------------ ----------- ------------
Net Assets (variable life contract
liabilities).............................. $ 1,293,786 $ 2,168,476 $ 3,542,506 $ 1,989,018 $ 1,811,003
=========== ============ ============ =========== ============
Units Owned by Participants................ 724,835 1,294,214 1,700,502 911,992 930,804
Unit Values................................ $ 1.784939 $ 1.675516 $ 2.083213 $ 2.180961 $ 1.945633
</TABLE>
---------------------------------------------------- 69
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT VL II
- --------------------------------------------------------------------------------
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
MONEY MARKET
BOND FUND STOCK FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends....................................... $ 333,423 $ 131,640 $ 800,903
--------- ---------- ----------
CAPITAL GAINS INCOME.............................. 13,422 523,019 257
--------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized (loss) gain on security
transactions................................... (10,936) (1,322) --
Net unrealized (depreciation) appreciation of
investments during the period.................. (395,236) 1,470,668 --
--------- ---------- ----------
Net (loss) gain on investments................ (406,172) 1,469,346 --
--------- ---------- ----------
Net (decrease) increase in net assets
resulting from operations.................... $ (59,327) $2,124,005 $ 801,160
========= ========== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 70
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE
ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------------- --------------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends....................................... $ 289,143 $ 32,940 $ 34,905 $ 240,349
---------- ---------- -------- ----------
CAPITAL GAINS INCOME.............................. 362,974 255,982 -- 235,278
---------- ---------- -------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized (loss) gain on security
transactions................................... 201 (11,561) (16) (2,132)
Net unrealized (depreciation) appreciation of
investments during the period.................. 228,460 1,988,151 (31,744) 3,270,915
---------- ---------- -------- ----------
Net (loss) gain on investments................ 228,661 1,976,590 (31,760) 3,268,783
---------- ---------- -------- ----------
Net (decrease) increase in net assets
resulting from operations.................... $ 880,778 $2,265,512 $ 3,145 $3,744,410
========== ========== ======== ==========
<CAPTION>
INTERNATIONAL DIVIDEND AND
OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends....................................... $ 33,938 $100,615
---------- --------
CAPITAL GAINS INCOME.............................. -- 118,987
---------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized (loss) gain on security
transactions................................... 110,868 (461)
Net unrealized (depreciation) appreciation of
investments during the period.................. 695,310 (25,993)
---------- --------
Net (loss) gain on investments................ 806,178 (26,454)
---------- --------
Net (decrease) increase in net assets
resulting from operations.................... $ 840,116 $193,148
========== ========
</TABLE>
---------------------------------------------------- 71
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT VL II
- --------------------------------------------------------------------------------
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
GROWTH AND INTERNATIONAL
INCOME FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT
----------- -------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends....................................... $ 5,788 $ 4,605
-------- -------
CAPITAL GAINS INCOME.............................. 13,333 --
-------- -------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized (loss) gain on security
transactions................................... (274) 1
Net unrealized appreciation of investments
during the period.............................. 197,340 31,108
-------- -------
Net gain on investments....................... 197,066 31,109
-------- -------
Net increase in net assets resulting from
operations................................... $216,187 $35,714
======== =======
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 72
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
FIDELITY VIP FIDELITY VIP FIDELITY VIP II
SMALL COMPANY MIDCAP EQUITY-INCOME OVERSEAS ASSET MANAGER
FUND FUND PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------- ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends....................................... $ -- $ -- $ 23,696 $ 16,232 $ 13,958
-------- -------- -------- ---------- --------
CAPITAL GAINS INCOME.............................. 1,692 82,187 52,380 26,180 17,680
-------- -------- -------- ---------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized (loss) gain on security
transactions................................... 2,003 (2,189) (4,629) 112,350 548
Net unrealized appreciation of investments
during the period.............................. 324,664 372,819 31,327 438,753 82,405
-------- -------- -------- ---------- --------
Net gain on investments....................... 326,667 370,630 26,698 551,103 82,953
-------- -------- -------- ---------- --------
Net increase in net assets resulting from
operations................................... $328,359 $452,817 $102,774 $ 593,515 $114,591
======== ======== ======== ========== ========
</TABLE>
---------------------------------------------------- 73
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT VL II
- --------------------------------------------------------------------------------
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
MONEY MARKET
BOND FUND STOCK FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ------------- ------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income...................... $ 333,423 $ 131,640 $ 800,903
Capital gains income....................... 13,422 523,019 257
Net realized (loss) gain on security
transactions.............................. (10,936) (1,322) --
Net unrealized (depreciation) appreciation
of investments during the period.......... (395,236) 1,470,668 --
------------ ------------- ------------
Net (decrease) increase in net assets
resulting from operations................. (59,327) 2,124,005 801,160
------------ ------------- ------------
UNIT TRANSACTIONS:
Purchases.................................. 1,116,710 3,539,905 97,498,245
Net transfers.............................. 2,969,489 9,958,243 (72,516,882)
Surrenders for benefit payments and fees... (65,653) (426,813) (587,181)
Net loan activity.......................... 14,226 (14,597) (595,739)
Cost of insurance.......................... (171,351) (629,327) (2,417,385)
------------ ------------- ------------
Net increase in net assets resulting from
unit transactions......................... 3,863,421 12,427,411 21,381,058
------------ ------------- ------------
Net increase in net assets................. 3,804,094 14,551,416 22,182,218
NET ASSETS:
Beginning of period........................ 2,304,192 5,192,571 12,981,750
------------ ------------- ------------
End of period.............................. $ 6,108,286 $ 19,743,987 35,163,968
============ ============= ============
</TABLE>
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
MONEY MARKET
BOND FUND STOCK FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income........................ $ 106,052 $ 38,074 $ 178,529
Capital gains income......................... -- 18,418 --
Net realized gain (loss) on security
transactions................................ 746 (2,645) --
Net unrealized (depreciation) appreciation of
investments during the period............... (16,930) 557,352 --
----------- ------------ -----------
Net increase in net assets resulting from
operations.................................. 89,868 611,199 178,529
----------- ------------ -----------
UNIT TRANSACTIONS:
Purchases.................................. 219,212 486,207 44,552,053
Net transfers.............................. 1,873,633 4,031,316 (32,394,672)
Surrenders for benefit payments and fees... (22,489) (93,425) (423,409)
Net loan activity.......................... (63,707) (57) (6,910)
Cost of insurance.......................... (39,274) (74,817) (362,173)
----------- ------------ -----------
Net increase (decrease) in net assets
resulting from unit transactions.......... 1,967,375 4,349,224 11,364,889
----------- ------------ -----------
Net increase (decrease) in net assets...... 2,057,243 4,960,423 11,543,418
NET ASSETS:
Beginning of period........................ 246,949 232,148 1,438,332
----------- ------------ -----------
End of period.............................. $ 2,304,192 $ 5,192,571 $12,981,750
=========== ============ ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 74
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE
ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------------- --------------- ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income...................... $ 289,143 $ 32,940 $ 34,905 $ 240,349
Capital gains income....................... 362,974 255,982 -- 235,278
Net realized (loss) gain on security
transactions.............................. 201 (11,561) (16) (2,132)
Net unrealized (depreciation) appreciation
of investments during the period.......... 228,460 1,988,151 (31,744) 3,270,915
------------- ------------- ----------- ------------
Net (decrease) increase in net assets
resulting from operations................. 880,778 2,265,512 3,145 3,744,410
------------- ------------- ----------- ------------
UNIT TRANSACTIONS:
Purchases.................................. 2,459,695 2,036,106 39,491 3,166,528
Net transfers.............................. 8,314,204 3,727,669 557,329 11,023,584
Surrenders for benefit payments and fees... (205,445) (262,338) (9,550) (339,245)
Net loan activity.......................... (32,863) (3) -- (48,709)
Cost of insurance.......................... (483,197) (313,821) (10,668) (624,639)
------------- ------------- ----------- ------------
Net increase in net assets resulting from
unit transactions......................... 10,052,394 5,187,613 576,602 13,177,519
------------- ------------- ----------- ------------
Net increase in net assets................. 10,933,172 7,453,125 579,747 16,921,929
NET ASSETS:
Beginning of period........................ 3,257,408 3,472,086 43,487 10,427,874
------------- ------------- ----------- ------------
End of period.............................. $ 14,190,580 $ 10,925,211 $ 623,234 $ 27,349,803
============= ============= =========== ============
<CAPTION>
INTERNATIONAL DIVIDEND AND
OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income...................... $ 33,938 $ 100,615
Capital gains income....................... -- 118,987
Net realized (loss) gain on security
transactions.............................. 110,868 (461)
Net unrealized (depreciation) appreciation
of investments during the period.......... 695,310 (25,993)
------------ ------------
Net (decrease) increase in net assets
resulting from operations................. 840,116 193,148
------------ ------------
UNIT TRANSACTIONS:
Purchases.................................. 585,350 1,379,402
Net transfers.............................. 324,908 2,970,543
Surrenders for benefit payments and fees... (65,954) (155,404)
Net loan activity.......................... 5,695 (5,150)
Cost of insurance.......................... (108,222) (207,847)
------------ ------------
Net increase in net assets resulting from
unit transactions......................... 741,777 3,981,544
------------ ------------
Net increase in net assets................. 1,581,893 4,174,692
NET ASSETS:
Beginning of period........................ 1,470,238 2,280,505
------------ ------------
End of period.............................. $ 3,052,131 $ 6,455,197
============ ============
</TABLE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE
ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------------- --------------- ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income........................ $ 63,199 $ 17,887 $ 2,575 $ 79,420
Capital gains income......................... 11,531 30,576 -- 12,992
Net realized gain (loss) on security
transactions................................ 1,768 (3,241) (114) 14,698
Net unrealized (depreciation) appreciation of
investments during the period............... 224,740 308,545 147 1,617,496
------------ ------------ ----------- ------------
Net increase in net assets resulting from
operations.................................. 301,238 353,767 2,608 1,724,606
------------ ------------ ----------- ------------
UNIT TRANSACTIONS:
Purchases.................................. 332,157 483,397 7,687 443,474
Net transfers.............................. 2,418,661 2,506,371 (37,994) 8,055,206
Surrenders for benefit payments and fees... (40,763) (79,406) (1,565) (110,057)
Net loan activity.......................... (23,103) -- -- --
Cost of insurance.......................... (28,973) (51,821) (4,367) (60,585)
------------ ------------ ----------- ------------
Net increase (decrease) in net assets
resulting from unit transactions.......... 2,657,979 2,858,541 (36,239) 8,328,038
------------ ------------ ----------- ------------
Net increase (decrease) in net assets...... 2,959,217 3,212,308 (33,631) 10,052,644
NET ASSETS:
Beginning of period........................ 298,191 259,778 77,118 375,230
------------ ------------ ----------- ------------
End of period.............................. $ 3,257,408 $ 3,472,086 $ 43,487 $ 10,427,874
============ ============ =========== ============
<CAPTION>
INTERNATIONAL DIVIDEND AND
OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income........................ $ 18,410 $ 33,160
Capital gains income......................... 17,744 8,141
Net realized gain (loss) on security
transactions................................ 77 63
Net unrealized (depreciation) appreciation of
investments during the period............... 73,152 117,405
------------ ------------
Net increase in net assets resulting from
operations.................................. 109,383 158,769
------------ ------------
UNIT TRANSACTIONS:
Purchases.................................. 286,640 250,584
Net transfers.............................. 1,011,184 1,838,934
Surrenders for benefit payments and fees... (27,008) (49,049)
Net loan activity.......................... (17,916) --
Cost of insurance.......................... (39,292) (41,259)
------------ ------------
Net increase (decrease) in net assets
resulting from unit transactions.......... 1,213,608 1,999,210
------------ ------------
Net increase (decrease) in net assets...... 1,322,991 2,157,979
NET ASSETS:
Beginning of period........................ 147,247 122,526
------------ ------------
End of period.............................. $ 1,470,238 $ 2,280,505
============ ============
</TABLE>
---------------------------------------------------- 75
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT VL II
- --------------------------------------------------------------------------------
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
GROWTH AND INTERNATIONAL
INCOME FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT
----------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income........................... $ 5,788 $ 4,605
Capital gains income............................ 13,333 --
Net realized (loss) gain on security
transactions................................... (274) 1
Net unrealized appreciation of investments
during the period.............................. 197,340 31,108
----------- ---------
Net increase in net assets resulting from
operations..................................... 216,187 35,714
----------- ---------
UNIT TRANSACTIONS:
Purchases....................................... 378,405 10,899
Net transfers................................... 1,558,447 144,272
Surrenders for benefit payments and fees........ (16,145) (4,694)
Net loan activity............................... -- --
Cost of insurance............................... (34,387) (4,204)
----------- ---------
Net increase in net assets resulting from unit
transactions................................... 1,886,320 146,273
----------- ---------
Net increase in net assets...................... 2,102,507 181,987
NET ASSETS:
Beginning of period............................. 42,818 80,358
----------- ---------
End of period................................... $2,145,325 $ 262,345
=========== =========
</TABLE>
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
GROWTH AND INTERNATIONAL
INCOME FUND ADVISERS FUND
SUB-ACCOUNT* SUB-ACCOUNT*
------------ -------------
<S> <C> <C>
OPERATIONS:
Net investment income............................. $ 138 $--
Capital gains income.............................. -- --
Net realized gain (loss) on security
transactions..................................... 21 308
Net unrealized appreciation of investments during
the period....................................... 4,692 4,361
------- -------
Net increase in net assets resulting from
operations....................................... 4,851 4,669
------- -------
UNIT TRANSACTIONS:
Purchases....................................... 1,000 1,000
Net transfers................................... 37,221 75,134
Surrenders for benefit payments and fees........ (181) (356)
Net loan activity............................... -- --
Cost of insurance............................... (73) (89)
------- -------
Net increase in net assets resulting from unit
transactions................................... 37,967 75,689
------- -------
Net increase in net assets...................... 42,818 80,358
NET ASSETS:
Beginning of period............................. -- --
------- -------
End of period................................... $42,818 $80,358
======= =======
* From inception, August 3, 1998, to December 31,
1998
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 76
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
FIDELITY VIP FIDELITY VIP FIDELITY VIP II
SMALL COMPANY MIDCAP EQUITY-INCOME OVERSEAS ASSET MANAGER
FUND FUND PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------- ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income........................... $ -- $ -- $ 23,696 $ 16,232 $ 13,958
Capital gains income............................ 1,692 82,187 52,380 26,180 17,680
Net realized (loss) gain on security
transactions................................... 2,003 (2,189) (4,629) 112,350 548
Net unrealized appreciation of investments
during the period.............................. 324,664 372,819 31,327 438,753 82,405
----------- ----------- ----------- ---------- ----------
Net increase in net assets resulting from
operations..................................... 328,359 452,817 102,774 593,515 114,591
----------- ----------- ----------- ---------- ----------
UNIT TRANSACTIONS:
Purchases....................................... 67,151 231,734 626,931 332,337 305,467
Net transfers................................... 848,771 1,448,161 1,672,590 248,522 1,086,533
Surrenders for benefit payments and fees........ (13,485) (16,009) (105,540) (67,389) (46,507)
Net loan activity............................... (4) (4) -- -- --
Cost of insurance............................... (21,813) (37,372) (126,745) (73,427) (37,787)
----------- ----------- ----------- ---------- ----------
Net increase in net assets resulting from unit
transactions................................... 880,620 1,626,510 2,067,236 440,043 1,307,706
----------- ----------- ----------- ---------- ----------
Net increase in net assets...................... 1,208,979 2,079,327 2,170,010 1,033,558 1,422,297
NET ASSETS:
Beginning of period............................. 84,807 89,149 1,372,496 955,460 388,706
----------- ----------- ----------- ---------- ----------
End of period................................... $ 1,293,786 $ 2,168,476 $ 3,542,506 $1,989,018 $1,811,003
=========== =========== =========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
FIDELITY VIP FIDELITY VIP FIDELITY VIP II
SMALL COMPANY MIDCAP EQUITY-INCOME OVERSEAS ASSET MANAGER
FUND FUND PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ------------ ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income............................. $ -- $-- $ 1,864 $ 540 $ 5,839
Capital gains income.............................. -- -- 6,635 1,592 17,517
Net realized gain (loss) on security
transactions..................................... (148) 19 (1,856) 89 (16)
Net unrealized appreciation of investments during
the period....................................... 12,462 8,178 70,207 44,647 15,814
-------- ------- ---------- ---------- ----------
Net increase in net assets resulting from
operations....................................... 12,314 8,197 76,850 46,868 39,154
-------- ------- ---------- ---------- ----------
UNIT TRANSACTIONS:
Purchases....................................... 10,618 1,000 213,483 152,670 54,314
Net transfers................................... 62,509 80,559 1,066,683 770,437 134,602
Surrenders for benefit payments and fees........ (439) (361) (28,144) (16,660) (10,808)
Net loan activity............................... -- -- -- -- --
Cost of insurance............................... (195) (246) (15,372) (19,327) (5,833)
-------- ------- ---------- ---------- ----------
Net increase in net assets resulting from unit
transactions................................... 72,493 80,952 1,236,650 887,120 172,275
-------- ------- ---------- ---------- ----------
Net increase in net assets...................... 84,807 89,149 1,313,500 933,988 211,429
NET ASSETS:
Beginning of period............................. -- -- 58,996 21,472 177,277
-------- ------- ---------- ---------- ----------
End of period................................... $ 84,807 $89,149 $1,372,496 $ 955,460 $ 388,706
======== ======= ========== ========== ==========
* From inception, August 3, 1998, to December 31,
1998
</TABLE>
---------------------------------------------------- 77
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT VL II
- --------------------------------------------------------------------------------
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. ORGANIZATION:
Separate Account VL II (the Account) is a separate investment account within
Hartford Life & Annuity Insurance Company (the Company) and is registered
with the Securities and Exchange Commission (SEC) as a unit investment trust
under the Investment Company Act of 1940, as amended. Both the Company and
the Account are subject to supervision and regulation by the Department of
Insurance of the State of Connecticut and the SEC. The Account invests
deposits by variable life contractholders of the Company in various mutual
funds (the Funds) as directed by the contractholders.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting
principles in the investment company industry:
a) SECURITY TRANSACTIONS--Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Realized gains and
losses on the sales of securities are computed on the basis of identified
cost of the fund shares sold. Dividend and capital gains income is
accrued as of the ex-dividend date. Capital gains income represents those
dividends from the Funds which are characterized as capital gains under
tax regulations.
b) SECURITY VALUATION--The investments in shares of the Funds are valued at
the closing net asset value per share as determined by the appropriate
Fund as of December 31, 1999.
c) UNIT TRANSACTIONS--Unit transactions are executed based on the unit
values calculated at the close of the business day.
d) FEDERAL INCOME TAXES--The operations of the Account form a part of, and
are taxed with, the total operations of the Company, which is taxed as an
insurance company under the Internal Revenue Code. Under current law, no
federal income taxes are payable with respect to the operations of the
Account.
e) USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and the reported
amounts of income and expenses during the period. Operating results in
the future could vary from the amounts derived from management's
estimates.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
a) DEDUCTIONS AND CHARGES FROM THE ACCOUNT VALUE--
On the policy date and on each subsequent monthly activity date, the
Company will deduct from the Account an amount to cover mortality and
expense risk charges, cost of insurance, administrative charges and any
other benefits provided by the rider. These charges, which may vary from
month to month in accordance which the terms of the contracts, are
deducted through termination of units of interest from the applicable
contractholders' accounts.
______________________________________ 78 ______________________________________
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
TO HARTFORD LIFE & ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT VL II AND TO THE
OWNERS OF UNITS OF INTEREST THEREIN:
We have audited the accompanying statements of assets and liabilities of
Hartford Life & Annuity Insurance Company Separate Account VL II (Bond Fund,
Stock Fund, Money Market Fund, Advisers Fund, Capital Appreciation Fund,
Mortgage Securities Fund, Index Fund, International Opportunities Fund, Dividend
and Growth Fund, Growth and Income Fund, International Advisers Fund, Small
Company Fund, MidCap Fund, Fidelity VIP Equity-Income Portfolio, Fidelity VIP
Overseas Portfolio and Fidelity VIP II Asset Manager Portfolio) (collectively,
the Account) as of December 31, 1999, and the related statements of operations
and the statements of changes in net assets for the periods presented. These
financial statements are the responsibility of the Account's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Account as of December 31,
1999, and the results of their operations and the changes in their net assets
for the periods presented in conformity with generally accepted accounting
principles.
Hartford, Connecticut
February 17, 2000 ARTHUR ANDERSEN LLP
______________________________________ 79 ______________________________________
<PAGE>
- -------------------------------------------------------------------------------
Hartford Life Insurance Companies BULK RATE
P.O. Box 2999 U.S. POSTAGE PAID
Hartford, CT 06104-2999 PERMIT #20
HOLLISTON, MA 01746
HV-2232-2
Printed in U.S.A.-Registered Trademark- 1999 The Hartford, Hartford, CT 06115
