<PAGE>
As filed with the Securities and Exchange Commission on September 6, 2000.
File No. 333-39620
811-07426
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No.__1__ [X]
Post-Effective Amendment No._____ [ ]
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 61 [X]
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT ONE
(Exact Name of Registrant)
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
(Name of Depositor)
P. O. BOX 2999
HARTFORD, CT 06104-2999
(Address of Depositor's Principal Offices)
(860) 843-6733
(Depositor's Telephone Number, Including Area Code)
MARIANNE O'DOHERTY
HARTFORD LIFE
P. O. BOX 2999
HARTFORD, CT 06104-2999
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of the registration statement.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration shall because effective on such
date as the Commission, acting pursuant to Section 8(a), may determine.
<PAGE>
<TABLE>
<S> <C>
THE DIRECTOR OUTLOOK
SEPARATE ACCOUNT ONE
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
P.O. BOX 5085
HARTFORD, CONNECTICUT 06102-5085
TELEPHONE: 1-800-862-6668 (CONTRACT OWNERS)
1-800-862-7155 (REGISTERED REPRESENTATIVES) [LOGO]
</TABLE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
This Prospectus describes information you should know before you purchase The
Director Outlook variable annuity. Please read it carefully.
The The Director Outlook variable annuity is a contract between you and Hartford
Life and Annuity Insurance Company where you agree to make at least one Premium
Payment to us and we agree to make a series of Annuity Payouts at a later date.
This Annuity is a flexible premium, tax-deferred, variable annuity offered to
both individuals and groups. It is:
x Flexible, because you may add Premium Payments at any time.
x Tax-deferred, which means you don't pay taxes until you take money out or
until we start to make Annuity Payouts.
x Variable, because the value of your Annuity will fluctuate with the
performance of the underlying funds.
--------------------------------------------------------------------------------
At the time you purchase your Annuity, you allocate your Premium Payment to
"Sub-Accounts". These are subdivisions of our Separate Account, an account that
keeps your Annuity assets separate from our company assets. The Sub-Accounts
then purchase shares of mutual funds set up exclusively for variable annuity or
variable life insurance products. These are not the same mutual funds that you
buy through your stockbroker or through a retail mutual fund. They may have
similar investment strategies and the same portfolio managers as retail mutual
funds. This Annuity offers you Funds with investment strategies ranging from
conservative to aggressive and you may pick those Funds that meet your
investment goals and risk tolerance. The Sub-Accounts and the Funds are listed
below:
- HARTFORD ADVISERS HLS FUND SUB-ACCOUNT which purchases shares of Class IB of
Hartford Advisers HLS Fund, Inc.
- HARTFORD BOND HLS FUND SUB-ACCOUNT which purchases shares of Class IB of
Hartford Bond HLS Fund, Inc.
- HARTFORD CAPITAL APPRECIATION HLS FUND SUB-ACCOUNT which purchases shares of
Class IB of Hartford Capital Appreciation HLS Fund, Inc.
- HARTFORD DIVIDEND AND GROWTH HLS FUND SUB-ACCOUNT which purchases shares of
Class IB of Hartford Dividend and Growth HLS Fund, Inc.
- HARTFORD GLOBAL HEALTH HLS FUND SUB-ACCOUNT which purchases shares of Class IB
of Hartford Global Health HLS Fund of Hartford Series Fund, Inc.
- HARTFORD GLOBAL LEADERS HLS FUND SUB-ACCOUNT which purchases shares of Class
IB of Hartford Global Leaders HLS Fund of Hartford Series Fund, Inc.
- HARTFORD GLOBAL TECHNOLOGY HLS FUND SUB-ACCOUNT which purchases shares of
Class IB of Hartford Global Technology HLS Fund of Hartford Series Fund, Inc.
- HARTFORD GROWTH AND INCOME HLS FUND SUB-ACCOUNT which purchases shares of
Class IB of Hartford Growth and Income HLS Fund of Hartford Series Fund, Inc.
- HARTFORD HIGH YIELD HLS FUND SUB-ACCOUNT which purchases shares of Class IB of
Hartford High Yield HLS Fund of Hartford Series Fund, Inc.
- HARTFORD INDEX HLS FUND SUB-ACCOUNT which purchases shares of Class IB of
Hartford Index HLS Fund, Inc.
- HARTFORD INTERNATIONAL ADVISERS HLS FUND SUB-ACCOUNT which purchases shares of
Class IB of Hartford International Advisers HLS Fund, Inc.
- HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND SUB-ACCOUNT which purchases
shares of Class IB of Hartford International Opportunities HLS Fund, Inc.
- HARTFORD MIDCAP HLS FUND SUB-ACCOUNT which purchases shares of Class IB of
Hartford MidCap HLS Fund, Inc.
- HARTFORD MONEY MARKET HLS FUND SUB-ACCOUNT which purchases shares of Class IB
of Hartford Money Market HLS Fund, Inc.
- HARTFORD MORTGAGE SECURITIES HLS FUND SUB-ACCOUNT that purchases shares of
Class IB of Hartford Mortgage Securities HLS Fund, Inc.
<PAGE>
- HARTFORD SMALL COMPANY HLS FUND SUB-ACCOUNT which purchases shares of Class IB
of Hartford Small Company HLS Fund, Inc.
- HARTFORD STOCK HLS FUND SUB-ACCOUNT which purchases of Class IB of Hartford
Stock HLS Fund, Inc.
You may also allocate some or all of your Premium Payment to the "Fixed
Accumulation Feature", which pays an interest rate guaranteed for a certain time
period from the time the Premium Payment is made. Premium Payments allocated to
the Fixed Accumulation Feature are not segregated from our company assets like
the assets of the Separate Account.
If you decide to buy this Annuity, you should keep this prospectus for your
records. You can also call us at 1-800-862-6668 to get a Statement of Additional
Information, free of charge. The Statement of Additional Information contains
more information about this Annuity and, like this prospectus, is filed with the
Securities and Exchange Commission ("SEC"). We have included the Table of
Contents for the Statement of Additional Information at the end of this
prospectus.
Although we file the prospectus and the Statement of Additional Information with
the SEC, the SEC doesn't approve or disapprove these securities or determine if
the information is truthful or complete. Anyone who represents that the SEC does
these things may be guilty of a criminal offense. This Prospectus and the
Statement of Additional Information can also be obtained from the SEC's website
(HTTP://WWW.SEC.GOV).
This Annuity IS NOT:
- A bank deposit or obligation
- Federally insured
- Endorsed by any bank or governmental agency
This Annuity may not be available for sale in all states.
--------------------------------------------------------------------------------
PROSPECTUS DATED: SEPTEMBER 15, 2000
STATEMENT OF ADDITIONAL INFORMATION DATED: SEPTEMBER 15, 2000
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 3
--------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
----------------------------------------------------------------------
DEFINITIONS 4
----------------------------------------------------------------------
FEE TABLE 6
----------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES 7
----------------------------------------------------------------------
ACCUMULATION UNIT VALUES 8
----------------------------------------------------------------------
HIGHLIGHTS 10
----------------------------------------------------------------------
GENERAL CONTRACT INFORMATION 11
----------------------------------------------------------------------
Hartford Life and Annuity Insurance Company 11
----------------------------------------------------------------------
The Separate Account 11
----------------------------------------------------------------------
The Funds 11
----------------------------------------------------------------------
PERFORMANCE RELATED INFORMATION 13
----------------------------------------------------------------------
THE FIXED ACCUMULATION FEATURE 14
----------------------------------------------------------------------
THE CONTRACT 15
----------------------------------------------------------------------
Purchases and Contract Value 15
----------------------------------------------------------------------
Charges and Fees 17
----------------------------------------------------------------------
Death Benefit 19
----------------------------------------------------------------------
Surrenders 21
----------------------------------------------------------------------
ANNUITY PAYOUTS 22
----------------------------------------------------------------------
OTHER PROGRAMS AVAILABLE 24
----------------------------------------------------------------------
OTHER INFORMATION 25
----------------------------------------------------------------------
Legal Matters and Experts 25
----------------------------------------------------------------------
More Information 26
----------------------------------------------------------------------
FEDERAL TAX CONSIDERATIONS 26
----------------------------------------------------------------------
TABLE OF CONTENTS TO STATEMENT OF ADDITIONAL INFORMATION 30
----------------------------------------------------------------------
APPENDIX I -- INFORMATION REGARDING TAX-QUALIFIED RETIREMENT
PLANS 31
----------------------------------------------------------------------
APPENDIX II -- OPTIONAL DEATH BENEFIT -- EXAMPLES 34
----------------------------------------------------------------------
</TABLE>
<PAGE>
4 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
--------------------------------------------------------------------------------
DEFINITIONS
These terms are capitalized when used throughout this prospectus. Please refer
to these defined terms if you have any questions as you read your prospectus.
ACCOUNT: Any of the Sub-Accounts or Fixed Accumulation Feature.
ACCUMULATION UNITS: If you allocate your Premium Payment to any of the
Sub-Accounts, we will convert those payments into Accumulation Units in the
selected Sub-Accounts. Accumulation Units are valued at the end of each
Valuation Day and are used to calculate the value of your Contract prior to
Annuitization.
ACCUMULATION UNIT VALUE: The daily price of Accumulation Units on any Valuation
Day.
ADMINISTRATIVE OFFICE OF THE COMPANY: Our location and overnight mailing address
is: 200 Hopmeadow Street, Simsbury, Connecticut 06089. Our standard mailing
address is: Investment Product Services, P.O. Box 5085, Hartford, Connecticut
06102-5085.
ANNIVERSARY VALUE: The value equal to the Contract Value as of a Contract
Anniversary, increased by the dollar amount of any Premium Payments made since
that anniversary and reduced by the dollar amount of any partial Surrenders
since that anniversary.
ANNUAL MAINTENANCE FEE: An annual $30 charge deducted on a Contract Anniversary
or upon full Surrender if the Contract Value at either of those times is less
than $50,000. The charge is deducted proportionately from each Account in which
you are invested.
ANNUAL WITHDRAWAL AMOUNT: This is the amount you can Surrender per Contract Year
without paying a Contingent Deferred Sales Charge. This amount is
non-cumulative, meaning that it cannot be carried over from one year to the
next.
ANNUITANT: The person on whose life the Contract is based. The Annuitant may not
be changed after your Contract is issued.
ANNUITY CALCULATION DATE: The date we calculate the first Annuity Payout.
ANNUITY PAYOUT: The money we pay out after the Annuity Commencement Date for the
duration and frequency you select.
ANNUITY PAYOUT OPTION: Any of the options available for payout after the Annuity
Commencement Date or death of the Contract Owner or Annuitant.
ANNUITY UNIT: The unit of measure we use to calculate the value of your Annuity
Payouts under a variable dollar amount Annuity Payout Option.
ANNUITY UNIT VALUE: The daily price of Annuity Units on any Valuation Day.
BENEFICIARY: The person(s) entitled to receive a Death Benefit upon the death of
the Contract Owner or Annuitant.
CHARITABLE REMAINDER TRUST: An irrevocable trust, where an individual donor
makes a gift to the trust, and in return receives an income tax deduction. In
addition, the individual donor has the right to receive a percentage of the
trust earnings for a specified period of time.
CODE: The Internal Revenue Code of 1986, as amended.
COMMUTED VALUE: The present value of any remaining guaranteed Annuity Payouts.
CONTINGENT ANNUITANT: The person you may designate to become the Annuitant if
the original Annuitant dies before the Annuity Commencement Date. You must name
a Contingent Annuitant before the original Annuitant's death.
CONTINGENT DEFERRED SALES CHARGE: The deferred sales charge that may apply when
you make a full or partial Surrender.
CONTRACT: The individual Annuity Contract and any endorsements or riders. Group
participants and some individuals will receive a certificate rather than a
Contract.
CONTRACT ANNIVERSARY: The anniversary of the date we issued your Contract. If
the Contract Anniversary falls on a Non-Valuation Day, then the Contract
Anniversary will be the next Valuation Day.
CONTRACT VALUE: The total value of the Accounts on any Valuation Day.
CONTRACT YEAR: Any 12 month period between Contract Anniversaries, beginning
with the date the Contract was issued.
DEATH BENEFIT: The amount payable after the Contract Owner or the Annuitant
dies.
DOLLAR COST AVERAGING: A program that allows you to systematically make
transfers between Accounts available in your Contract.
FIXED ACCUMULATION FEATURE: Part of our General Account, where you may allocate
all or a portion of your Contract Value. In your Contract, this is defined as
the "Fixed Account".
GENERAL ACCOUNT: The General Account includes our company assets and any money
you have invested in the Fixed Accumulation Feature.
HARTFORD, WE OR OUR: Hartford Life and Annuity Insurance Company. Only Hartford
is a capitalized term in the prospectus.
JOINT ANNUITANT: The person on whose life Annuity Payouts are based if the
Annuitant dies after Annuitization. You may name a Joint Annuitant only if your
Annuity Payout Option provides for a survivor. The Joint Annuitant may not be
changed.
MAXIMUM ANNIVERSARY VALUE: This is the highest Anniversary Value prior to the
deceased's 81st birthday or the date of death, if earlier.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 5
--------------------------------------------------------------------------------
NET INVESTMENT FACTOR: This is used to measure the investment performance of a
Sub-Account from one Valuation Day to the next, and is also used to calculate
your Annuity Payout amount.
NON-VALUATION DAY: Any day the New York Stock Exchange is not open for trading.
PAYEE: The person or party you designate to receive Annuity Payouts.
PREMIUM PAYMENT: Money sent to us to be invested in your Annuity.
PREMIUM TAX: A tax charged by a state or municipality on Premium Payments.
REQUIRED MINIMUM DISTRIBUTION: A federal requirement that individuals age 70 1/2
and older must take a distribution from their tax-qualified retirement account
by December 31, each year. For employer sponsored Qualified Contracts, the
individual must begin taking distributions at the age of 70 1/2 or upon
retirement, whichever comes later.
SUB-ACCOUNT VALUE: The value on or before the Annuity Calculation Date, which is
determined on any day by multiplying the number of Accumulation Units by the
Accumulation Unit Value for that Sub-Account.
SURRENDER: A complete or partial withdrawal from your Contract.
SURRENDER VALUE: The amount we pay you if you terminate your Contract before the
Annuity Commencement Date. The Surrender Value is equal to the Contract Value
minus any applicable charges.
VALUATION DAY: Every day the New York Stock Exchange is open for trading. Values
of the Separate Account are determined as of the close of the New York Stock
Exchange, generally 4:00 p.m. Eastern Time.
VALUATION PERIOD: The time span between the close of trading on the New York
Stock Exchange from one Valuation Day to the next.
<PAGE>
6 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
--------------------------------------------------------------------------------
FEE TABLE
<TABLE>
<S> <C>
CONTRACT OWNER TRANSACTION EXPENSES
Sales Charge Imposed on Purchases (as a percentage of
Premium Payments) None
-------------------------------------------------------------------
Contingent Deferred Sales Charge (as a percentage of
Premium Payments) (1)
First Year (2) 6%
-------------------------------------------------------------------
Second Year 5%
-------------------------------------------------------------------
Third Year 4%
-------------------------------------------------------------------
Fourth Year 0%
-------------------------------------------------------------------
ANNUAL MAINTENANCE FEE (3) $ 30
-------------------------------------------------------------------
SEPARATE ACCOUNT ANNUAL EXPENSES (as a percentage of average
daily Sub-Account Value)
Mortality and Expense Risk Charge 1.45%
-------------------------------------------------------------------
Total Separate Account Annual Expenses 1.45%
-------------------------------------------------------------------
OPTIONAL CHARGES (as a percentage of average daily
Sub-Account Value)
Optional Death Benefit Charge 0.15%
-------------------------------------------------------------------
Total Separate Account Annual Expenses with the Optional
Death Benefit Charge 1.60%
-------------------------------------------------------------------
</TABLE>
(1) Each Premium Payment has its own Contingent Deferred Sales Charge schedule.
See "Charges and Fees -- The Contingent Deferred Sales Charge." The
Contingent Deferred Sales Charge is not assessed on partial Surrenders which
do not exceed the Annual Withdrawal Amount.
(2) Length of time from each Premium Payment.
(3) An annual $30 charge deducted on a Contract Anniversary or upon Surrender if
the Contract Value at either of those times is less than $50,000. It is
deducted proportionately from the Accounts in which you are invested at the
time of the charge.
The purpose of the Fee Table and Examples is to assist you in understanding
various costs and expenses that you will pay directly or indirectly. The Fee
Table and Examples reflect expenses of the Separate Account and underlying
Funds. We will deduct any Premium Taxes that apply. The Examples assume that any
fee waivers or expense reimbursements for the underlying Funds will continue for
the period shown in the Examples.
The Examples should not be considered a representation of past or future
expenses and actual expenses may be greater or less than those shown. The Annual
Maintenance Fee has been reflected in the Examples by a method intended to show
the "average" impact of the Annual Maintenance Fee on an investment in the
Separate Account. We do this by approximating an "average" 0.06% annual charge.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 7
--------------------------------------------------------------------------------
Annual Fund Operating Expenses
As of the Fund's Year End
(As a percentage of net assets)
<TABLE>
<CAPTION>
12B-1 TOTAL FUND
DISTRIBUTION OPERATING
AND/OR OTHER EXPENSES
MANAGEMENT FEES SERVICING FEES EXPENSES (INCLUDING ANY
(INCLUDING ANY (INCLUDING ANY (INCLUDING ANY WAIVERS AND ANY
WAIVERS) WAIVERS)(1) REIMBURSEMENTS) REIMBURSEMENTS)
<S> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------------
Hartford Advisers HLS Fund 0.63% 0.18% 0.02% 0.83%
------------------------------------------------------------------------------------------------------------------------
Hartford Bond HLS Fund 0.49% 0.18% 0.03% 0.70%
------------------------------------------------------------------------------------------------------------------------
Hartford Capital Appreciation HLS Fund 0.64% 0.18% 0.02% 0.84%
------------------------------------------------------------------------------------------------------------------------
Hartford Dividend and Growth HLS Fund 0.65% 0.18% 0.03% 0.86%
------------------------------------------------------------------------------------------------------------------------
Hartford Global Health HLS Fund (2) 0.85% 0.18% 0.25% 1.28%
------------------------------------------------------------------------------------------------------------------------
Hartford Global Leaders HLS Fund 0.74% 0.18% 0.12% 1.04%
------------------------------------------------------------------------------------------------------------------------
Hartford Global Technology HLS Fund (2) 0.85% 0.18% 0.25% 1.28%
------------------------------------------------------------------------------------------------------------------------
Hartford Growth and Income HLS Fund 0.78% 0.18% 0.04% 1.00%
------------------------------------------------------------------------------------------------------------------------
Hartford High Yield HLS Fund 0.66% 0.18% 0.06% 0.90%
------------------------------------------------------------------------------------------------------------------------
Hartford Index HLS Fund 0.40% 0.18% 0.03% 0.61%
------------------------------------------------------------------------------------------------------------------------
Hartford International Advisers HLS Fund 0.76% 0.18% 0.09% 1.03%
------------------------------------------------------------------------------------------------------------------------
Hartford International Opportunities HLS Fund 0.69% 0.18% 0.09% 0.96%
------------------------------------------------------------------------------------------------------------------------
Hartford MidCap HLS Fund 0.76% 0.18% 0.03% 0.97%
------------------------------------------------------------------------------------------------------------------------
Hartford Money Market HLS Fund 0.45% 0.18% 0.02% 0.65%
------------------------------------------------------------------------------------------------------------------------
Hartford Mortgage Securities HLS Fund 0.45% 0.18% 0.03% 0.66%
------------------------------------------------------------------------------------------------------------------------
Hartford Small Company HLS Fund 0.75% 0.18% 0.03% 0.96%
------------------------------------------------------------------------------------------------------------------------
Hartford Stock HLS Fund 0.46% 0.18% 0.02% 0.66%
------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Class IB shares of the Funds sponsored by Hartford are subject to fees
imposed under a distribution plan (herein, the "Distribution Plan") adopted
by the Funds pursuant to Rule 12b-1 of the 1940 Act. The Distribution Plan
provides that the Funds sponsored by Hartford may pay annually up to 0.25%
of the average daily net assets of a Fund attributable to its Class IB
shares to certain distributors with respect to activities primarily intended
to result in the sale of the Class IB shares. Hartford has agreed to waive
0.07% of this fee through at least April 30, 2001. Absent such waiver, the
12b-1 Distribution and/or Servicing Fees would be 0.25% and the Total Fund
Operating Expenses would be as follows: Hartford Advisers HLS Fund -- 0.90%;
Hartford Bond HLS Fund -- 0.77%; Hartford Capital Appreciation HLS Fund --
0.91%; Hartford Dividend and Growth HLS Fund -- 0.93%; Hartford Global
Health HLS Fund -- 1.35%; Hartford Global Leaders HLS Fund -- 1.11%;
Hartford Global Technology Fund -- 1.35%; Hartford Growth and Income HLS
Fund -- 1.07%; Hartford High Yield HLS Fund -- 0.97%; Hartford Index HLS
Fund -- 0.68%; Hartford International Advisers HLS Fund -- 1.10%; Hartford
International Opportunities HLS Fund -- 1.03%; Hartford MidCap HLS Fund --
1.04%; Hartford Money Market HLS Fund -- 0.72%; Hartford Mortgage Securities
HLS Fund -- 0.73%; Hartford Small Company HLS Fund -- 1.03%; Hartford Stock
HLS Fund -- 0.73%.
(2) Hartford Global Health HLS Fund and Hartford Global Technology HLS Fund are
new Funds. "Total Fund Operating Expenses" are based on annualized estimates
of such expenses to be incurred during the current fiscal year.
<PAGE>
8 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
--------------------------------------------------------------------------------
EXAMPLE
THE FOLLOWING EXAMPLE ASSUMES THE OPTION DEATH BENEFIT IS NOT SELECTED:
<TABLE>
<CAPTION>
If you Surrender your Contract at the If you annuitize your Contract at the
end of the applicable time period you end of the applicable time period you
would pay the following expenses on would pay the following expenses on
a $1,000 investment, assuming a 5% a $1,000 investment, assuming a 5%
annual return on assets: annual return on assets:
SUB-ACCOUNT 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------------
Hartford Advisers HLS Fund $79 $113 $126 $270 $23 $73 $126 $269
--------------------------------------------------------------------------------------------------------------------
Hartford Bond HLS Fund $78 $109 $120 $257 $22 $69 $119 $256
--------------------------------------------------------------------------------------------------------------------
Hartford Capital Appreciation
HLS Fund $79 $113 $127 $271 $23 $74 $126 $270
--------------------------------------------------------------------------------------------------------------------
Hartford Dividend & Growth
HLS Fund $79 $114 $128 $273 $24 $74 $127 $272
--------------------------------------------------------------------------------------------------------------------
Hartford Global Health HLS
Fund $84 $126 N/A N/A $28 $87 N/A N/A
--------------------------------------------------------------------------------------------------------------------
Hartford Global Leaders HLS
Fund $81 $119 $137 $291 $26 $80 $136 $291
--------------------------------------------------------------------------------------------------------------------
Hartford Global Technology
HLS Fund $84 $126 N/A N/A $28 $87 N/A N/A
--------------------------------------------------------------------------------------------------------------------
Hartford Growth and Income
HLS Fund $81 $118 $135 $287 $25 $78 $134 $287
--------------------------------------------------------------------------------------------------------------------
Hartford High Yield HLS Fund $80 $115 $130 $277 $24 $75 $129 $276
--------------------------------------------------------------------------------------------------------------------
Hartford Index HLS Fund $77 $106 $115 $247 $21 $66 $114 $246
--------------------------------------------------------------------------------------------------------------------
Hartford International
Advisers HLS Fund $81 $119 $137 $290 $25 $79 $136 $290
--------------------------------------------------------------------------------------------------------------------
Hartford International
Opportunities HLS Fund $81 $117 $133 $283 $25 $77 $132 $282
--------------------------------------------------------------------------------------------------------------------
Hartford MidCap HLS Fund $81 $117 $134 $284 $25 $78 $133 $283
--------------------------------------------------------------------------------------------------------------------
Hartford Money Market HLS
Fund $77 $107 $117 $251 $22 $68 $116 $251
--------------------------------------------------------------------------------------------------------------------
Hartford Mortgage Securities
HLS Fund $77 $108 $118 $252 $22 $68 $117 $252
--------------------------------------------------------------------------------------------------------------------
Hartford Small Company HLS
Fund $81 $117 $133 $283 $25 $77 $132 $282
--------------------------------------------------------------------------------------------------------------------
Hartford Stock HLS Fund $77 $108 $118 $252 $22 $68 $117 $252
--------------------------------------------------------------------------------------------------------------------
<CAPTION>
If you do not Surrender your
Contract, you would pay the
following expenses on a $1,000
investment, assuming a 5% annual
return on assets:
SUB-ACCOUNT 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
-----------------------------
Hartford Advisers HLS Fund $24 $74 $126 $270
-----------------------------
Hartford Bond HLS Fund $23 $70 $120 $257
-----------------------------
Hartford Capital Appreciation
HLS Fund $24 $74 $127 $271
-----------------------------
Hartford Dividend & Growth
HLS Fund $24 $75 $128 $273
-----------------------------
Hartford Global Health HLS
Fund $29 $88 N/A N/A
-----------------------------
Hartford Global Leaders HLS
Fund $26 $80 $137 $291
-----------------------------
Hartford Global Technology
HLS Fund $29 $88 N/A N/A
-----------------------------
Hartford Growth and Income
HLS Fund $26 $79 $135 $287
-----------------------------
Hartford High Yield HLS Fund $25 $76 $130 $277
-----------------------------
Hartford Index HLS Fund $22 $67 $115 $247
-----------------------------
Hartford International
Advisers HLS Fund $26 $80 $137 $290
-----------------------------
Hartford International
Opportunities HLS Fund $25 $78 $133 $283
-----------------------------
Hartford MidCap HLS Fund $25 $78 $134 $284
-----------------------------
Hartford Money Market HLS
Fund $22 $68 $117 $251
-----------------------------
Hartford Mortgage Securities
HLS Fund $22 $69 $118 $252
-----------------------------
Hartford Small Company HLS
Fund $25 $78 $133 $283
-----------------------------
Hartford Stock HLS Fund $22 $69 $118 $252
-----------------------------
</TABLE>
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 9
--------------------------------------------------------------------------------
THE FOLLOWING EXAMPLE ASSUMES THE OPTION DEATH BENEFIT IS SELECTED:
<TABLE>
<CAPTION>
If you Surrender your Contract at the If you annuitize your Contract at the
end of the applicable time period you end of the applicable time period you
would pay the following expenses on would pay the following expenses on
a $1,000 investment, assuming a 5% a $1,000 investment, assuming a 5%
annual return on assets: annual return on assets:
SUB-ACCOUNT 1 YEAR 3 YEARS 5 YEARS 10 YEARS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------------
Hartford Advisers HLS Fund $81 $117 $134 $285 $25 $78 $133 $284
--------------------------------------------------------------------------------------------------------------------
Hartford Bond HLS Fund $79 $113 $127 $272 $24 $74 $127 $271
--------------------------------------------------------------------------------------------------------------------
Hartford Capital Appreciation
HLS Fund $81 $118 $135 $286 $25 $78 $134 $286
--------------------------------------------------------------------------------------------------------------------
Hartford Dividend & Growth
HLS Fund $81 $118 $136 $288 $25 $79 $135 $288
--------------------------------------------------------------------------------------------------------------------
Hartford Global Health HLS
Fund $85 $131 N/A N/A $30 $92 N/A N/A
--------------------------------------------------------------------------------------------------------------------
Hartford Global Leaders HLS
Fund $83 $124 $145 $306 $27 $84 $144 $306
--------------------------------------------------------------------------------------------------------------------
Hartford Global Technology
HLS Fund $85 $131 N/A N/A $30 $92 N/A N/A
--------------------------------------------------------------------------------------------------------------------
Hartford Growth and Income
HLS Fund $82 $122 $143 $302 $27 $83 $142 $302
--------------------------------------------------------------------------------------------------------------------
Hartford High Yield HLS Fund $81 $119 $138 $292 $26 $80 $137 $292
--------------------------------------------------------------------------------------------------------------------
Hartford Index HLS Fund $78 $111 $123 $263 $23 $71 $122 $262
--------------------------------------------------------------------------------------------------------------------
Hartford International
Advisers HLS Fund $83 $123 $144 $305 $27 $84 $144 $305
--------------------------------------------------------------------------------------------------------------------
Hartford International
Opportunities HLS Fund $82 $121 $141 $298 $26 $82 $140 $298
--------------------------------------------------------------------------------------------------------------------
Hartford MidCap HLS Fund $82 $122 $141 $299 $26 $82 $140 $299
--------------------------------------------------------------------------------------------------------------------
Hartford Money Market HLS
Fund $79 $112 $125 $267 $23 $72 $124 $266
--------------------------------------------------------------------------------------------------------------------
Hartford Mortgage Securities
HLS Fund $79 $112 $125 $268 $23 $73 $125 $267
--------------------------------------------------------------------------------------------------------------------
Hartford Small Company HLS
Fund $82 $121 $141 $298 $26 $82 $140 $298
--------------------------------------------------------------------------------------------------------------------
Hartford Stock HLS Fund $79 $112 $125 $268 $23 $73 $125 $267
--------------------------------------------------------------------------------------------------------------------
<CAPTION>
If you do not Surrender your
Contract, you would pay the
following expenses on a $1,000
investment, assuming a 5% annual
return on assets:
SUB-ACCOUNT 1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
-----------------------------
Hartford Advisers HLS Fund $26 $78 $134 $285
-----------------------------
Hartford Bond HLS Fund $24 $74 $127 $272
-----------------------------
Hartford Capital Appreciation
HLS Fund $26 $79 $135 $286
-----------------------------
Hartford Dividend & Growth
HLS Fund $26 $79 $136 $288
-----------------------------
Hartford Global Health HLS
Fund $30 $92 N/A N/A
-----------------------------
Hartford Global Leaders HLS
Fund $28 $85 $145 $306
-----------------------------
Hartford Global Technology
HLS Fund $30 $92 N/A N/A
-----------------------------
Hartford Growth and Income
HLS Fund $27 $84 $143 $302
-----------------------------
Hartford High Yield HLS Fund $26 $81 $138 $292
-----------------------------
Hartford Index HLS Fund $23 $72 $123 $263
-----------------------------
Hartford International
Advisers HLS Fund $28 $85 $144 $305
-----------------------------
Hartford International
Opportunities HLS Fund $27 $82 $141 $298
-----------------------------
Hartford MidCap HLS Fund $27 $83 $141 $299
-----------------------------
Hartford Money Market HLS
Fund $24 $73 $125 $267
-----------------------------
Hartford Mortgage Securities
HLS Fund $24 $73 $125 $268
-----------------------------
Hartford Small Company HLS
Fund $27 $82 $141 $298
-----------------------------
Hartford Stock HLS Fund $24 $73 $125 $268
-----------------------------
</TABLE>
<PAGE>
10 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
--------------------------------------------------------------------------------
HIGHLIGHTS
HOW DO I PURCHASE THIS ANNUITY?
You must complete our application or order request and submit it to us for
approval with your first Premium Payment. Your first Premium Payment must be at
least $10,000 and subsequent Premium Payments must be at least $500, unless you
take advantage of our InvestEase-Registered Trademark- Program or are part of
certain retirement plans.
- For a limited time, usually within ten days after you receive your Contract,
you may cancel your Annuity without paying a Contingent Deferred Sales
Charge. You may bear the investment risk for your Premium Payment prior to
our receipt of your request for cancellation.
WHAT TYPE OF SALES CHARGE WILL I PAY?
You don't pay a sales charge when you purchase your Annuity. We may charge you a
Contingent Deferred Sales Charge when you partially or fully Surrender your
Annuity. The Contingent Deferred Sales Charge will depend on the amount you
choose to Surrender and the length of time the Premium Payment you made has been
in your Annuity. The percentage used to calculate the Contingent Deferred Sales
Charge is equal to:
<TABLE>
<CAPTION>
NUMBER OF YEARS FROM CONTINGENT DEFERRED
PREMIUM PAYMENT SALES CHARGE
<S> <C>
-----------------------------------------
1 6%
-----------------------------------------
2 5%
-----------------------------------------
3 4%
-----------------------------------------
4 or more 0%
-----------------------------------------
</TABLE>
You won't be charged a Contingent Deferred Sales Charge on:
- The Annual Withdrawal Amount
- Premium Payments or earnings that have been in your Annuity for more than
three years.
- Distributions made due to death
- Most payments we make to you as part of your Annuity Payout
IS THERE AN ANNUAL MAINTENANCE FEE?
We deduct this $30.00 fee each year on your Contract Anniversary or when you
fully Surrender your Annuity, if, on either of those dates, the value of your
Annuity is less than $50,000.
WHAT CHARGES WILL I PAY ON AN ANNUAL BASIS?
In addition to the Annual Maintenance Fee, you pay two other types of charges
each year. The first type of charge is the fee you pay for insurance. This
charge is:
A mortality and expense risk charge that is subtracted daily and is equal to an
annual charge of 1.45% of your Contract Value invested in the Funds.
The second type of charge is the fee you pay for the Funds. See the Annual Fund
Operating Expenses table for more complete information and the Funds'
prospectuses accompanying this prospectus.
If you elect the Optional Death Benefit, we will subtract an additional charge
on a daily basis that is equal to an annual charge of .15% of your Contract
Value invested in the Funds.
CAN I TAKE OUT ANY OF MY MONEY?
You may Surrender all or part of the amounts you have invested at any time
before we start making Annuity Payouts. Once Annuity Payouts begin, you may take
full or partial Surrenders under the Payments for a Period Certain, Life Annuity
with Payments for a Period Certain or the Joint and Last Survivor Annuity with
Payments for a Period Certain Annuity Options, but only if you selected the
variable dollar amount Annuity Payouts.
- You may have to pay income tax on the money you take out and, if you
Surrender before you are age 59 1/2, you may have to pay an income tax
penalty.
- You may have to pay a Contingent Deferred Sales Charge on the money you
Surrender.
WILL HARTFORD PAY A DEATH BENEFIT?
There is a Death Benefit if the Contract Owner, joint owner or the Annuitant die
before we begin to make Annuity Payouts. The Death Benefit will be calculated as
of the date we receive a certified death certificate or other legal document
acceptable to us. The Death Benefit amount will remain invested in the Sub-
Accounts according to your last instructions and will fluctuate with the
performance of the underlying Funds.
If death occurs prior to the Annuity Commencement Date, the Death Benefit is the
greatest of:
- The total Premium Payments you have made to us minus the dollar amount of
any partial Surrenders,
- The Contract Value of your Annuity, or
- Your Maximum Anniversary Value, which is described below.
The Maximum Anniversary Value is based on a series of calculations on Contract
Anniversaries of Contract Values, Premium Payments and partial Surrenders. We
will calculate an Anniversary Value for each Contract Anniversary prior to the
deceased's 81st birthday or date of death, whichever is earlier. The Anniversary
Value is equal to the Contract Value as of a Contract Anniversary, increased by
the dollar amount of any Premium Payments made since that anniversary and
reduced by the dollar amount of any partial Surrenders since that anniversary.
The Maximum Anniversary Value is equal to the greatest Anniversary Value
attained from this series of calculations.
If you elect the Optional Death Benefit at an additional charge, the Death
Benefit will be the greater of:
- the total Premium Payments you have made to us minus the dollar amount of
any partial Surrenders;
- the Contract Value of your Annuity;
- your Maximum Anniversary Value; or
- your Interest Accumulation Value on the date your Optional Death Benefit is
added to your annuity.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 11
--------------------------------------------------------------------------------
The Optional Death Benefit may not be available if the Contract Owner or
Annuitant is age 75 or older. The Optional Death Benefit is not available in the
state of Washington.
WHAT ANNUITY PAYOUT OPTIONS ARE AVAILABLE?
When it comes time for us to make Annuity Payouts, you may choose one of the
following Annuity Payout Options: Life Annuity, Life Annuity with Cash Refund,
Life Annuity with Payments for a Period Certain, Joint and Last Survivor Life
Annuity, Joint and Last Survivor Life Annuity with Payments for a Period Certain
and Payments for a Period Certain. We may make other Annuity Payout Options
available at any time.
You must begin to take payouts by the Annuitant's 90th birthday or the end of
the 10th Contract Year, whichever is later, unless you elect a later date to
begin receiving payments subject to the laws and regulations then in effect and
our approval. If you do not tell us what Annuity Payout Option you want before
the Annuity Commencement Date, we will make payments under the Life Annuity with
a 10-year Period Certain Annuity Option.
GENERAL CONTRACT INFORMATION
--------------------------------------------------------------------------------
HARTFORD LIFE AND ANNUITY
INSURANCE COMPANY
Hartford Life and Annuity Insurance Company is a stock life insurance company
engaged in the business of writing life insurance and annuities, both individual
and group, in all states of the United States, the District of Columbia and
Puerto Rico, except New York. On January 1, 1998, Hartford's name changed from
ITT Hartford Life and Annuity Insurance Company to Hartford Life and Annuity
Insurance Company. We were originally incorporated under the laws of Wisconsin
on January 9, 1956, and subsequently redomiciled to Connecticut. Our offices are
located in Simsbury, Connecticut; however, our mailing address is P.O. Box 2999,
Hartford, Connecticut 06104-2999. We are ultimately controlled by The Hartford
Financial Services Group, Inc., one of the largest financial service providers
in the United States.
HARTFORD'S RATINGS
<TABLE>
<CAPTION>
EFFECTIVE DATE
RATING AGENCY OF RATING RATING BASIS OF RATING
<S> <C> <C> <C>
--------------------------------------------------------------------------------
A.M. Best and
Company, Inc. 4/1/00 A+ Financial performance
--------------------------------------------------------------------------------
Standard & Poor's 8/1/99 AA Insurer financial strength
--------------------------------------------------------------------------------
Fitch 7/1/99 AA+ Financial strength
--------------------------------------------------------------------------------
</TABLE>
THE SEPARATE ACCOUNT
The Separate Account is where we set aside and invest the assets of some of our
annuity contracts, including this Contract. The Separate Account was established
on May 20, 1991 and is registered as a unit investment trust under the
Investment Company Act of 1940. This registration does not involve supervision
by the Commission of the management or the investment practices of the Separate
Account or Hartford. The Separate Account meets the definition of "separate
account" under federal securities law. This Separate Account holds only assets
for variable annuity contracts. The Separate Account:
- Holds assets for the benefit of you and other Contract Owners, and the persons
entitled to the payments described in the Contract.
- Is not subject to the liabilities arising out of any other business Hartford
may conduct.
- Is not affected by the rate of return of Hartford's General Account or by the
investment performance of any of Hartford's other separate accounts.
- May be subject to liabilities from a Sub-Account of the Separate Account which
holds assets of other variable annuity contracts or variable life insurance
policies offered by the Separate Account which are not described in this
Prospectus.
- Is credited with income and gains, and takes losses, whether or not realized,
from the assets it holds.
We do not guarantee the investment results of the Separate Account. There is no
assurance that the value of your Annuity will equal the total of the payments
you make to us.
THE FUNDS
Hartford HLS Funds are sponsored and administered by Hartford Life Insurance
Company. HL Investment Advisors, LLC ("HL Advisors") serves as the investment
adviser to each of the Hartford HLS Funds. Wellington Management Company, LLP
("Wellington Management") and Hartford Investment Management Company ("HIMCO")
serve as sub-investment advisors and provide day to day investment services.
Each Hartford HLS Fund, except for Hartford Global Health HLS Fund, Hartford
Global Leaders HLS Fund, Hartford Global Technology HLS Fund, Hartford Growth
and Income HLS Fund and Hartford High Yield HLS Fund, is a separate Maryland
corporation registered with the Securities and Exchange Commission as an
open-end management investment company. Hartford Global Leaders HLS Fund,
Hartford Growth and Income HLS Fund and Hartford High Yield HLS Fund are
diversified series of Hartford Series Fund, Inc., a Maryland corporation, also
registered with the Securities and Exchange Commission as an open-end management
investment company. Hartford Global Health HLS Fund and Hartford Global
Technology HLS Fund are non-diversified series of Hartford Series Fund, Inc. The
shares of each Fund have been divided into Class IA and Class IB. Only Class IB
shares are available in this Annuity.
We do not guarantee the investment results of any of the underlying Funds. Since
each underlying Fund has different investment objectives, each is subject to
different risks. These risks and the Funds' expenses are more fully described in
the accompanying
<PAGE>
12 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
--------------------------------------------------------------------------------
Funds' prospectus and Statement of Additional Information, which may be ordered
from us. The Funds' prospectus should be read in conjunction with this
Prospectus before investing.
The Funds may not be available in all states.
The investment goals of each of the Funds are as follows:
HARTFORD ADVISERS HLS FUND -- Seeks maximum long-term total rate of return by
investing in common stocks and other equity securities, bonds and other debt
securities, and money market instruments. Sub-advised by Wellington Management.
HARTFORD BOND HLS FUND -- Seeks maximum current income consistent with
preservation of capital by investing primarily in investment grade fixed-income
securities. Up to 20% of the total assets of this Fund may be invested in debt
securities rated in the highest category below investment grade ("Ba" by Moody's
Investor Services, Inc. or "BB" by Standard & Poor's) or, if unrated, are
determined to be of comparable quality by the Fund's investment adviser.
Securities rated below investment grade are commonly referred to as "high
yield-high risk securities" or "junk bonds." For more information concerning the
risks associated with investing in such securities, please refer to the section
in the accompanying prospectus for the Funds entitled "Hartford Bond HLS Fund,
Inc." Sub-advised by HIMCO.
HARTFORD CAPITAL APPRECIATION HLS FUND -- Seeks growth of capital by investing
in equity securities selected solely on the basis of potential for capital
appreciation. Sub-advised by Wellington Management.
HARTFORD DIVIDEND AND GROWTH HLS FUND -- Seeks a high level of current income
consistent with growth of capital by investing primarily in dividend paying
equity securities. Sub-advised by Wellington Management.
HARTFORD GLOBAL HEALTH HLS FUND -- Seeks long-term capital appreciation by
investing in equity securities of health care companies worldwide. Sub-advised
by Wellington Management.
HARTFORD GLOBAL LEADERS HLS FUND -- Seeks growth of capital by investing
primarily in equity securities issued by high quality growth companies worldwide
that, in the opinion of Wellington Management, are leaders within their
respective industries as indicated by an established market presence and strong
competitive position on a global, regional or country basis. Sub-advised by
Wellington Management.
HARTFORD GLOBAL TECHNOLOGY HLS FUND -- Seeks long-term capital appreciation by
investing in equity securities technology companies worldwide. Sub-advised by
Wellington Management.
HARTFORD GROWTH AND INCOME HLS FUND -- Seeks growth of capital and current
income by investing primarily in equity securities with earnings growth
potential and steady or rising dividends. Sub-advised by Wellington Management.
HARTFORD HIGH YIELD HLS FUND -- Seeks high current income by investing in
non-investment grade fixed-income securities. Growth of capital is a secondary
objective. Securities rated below investment grade are commonly referred to as
"high yield-high risk securities" or "junk bonds." For more information
concerning the risks associated with investing in such securities, please refer
to the section in the accompanying prospectus for the Funds entitled "Hartford
High Yield HLS Fund." Sub-advised by HIMCO.
HARTFORD INDEX HLS FUND -- Seeks to provide investment results that approximate
the price and yield performance of publicly traded common stocks in the
aggregate, as represented by the Standard & Poor's 500 Composite Stock Price
Index.* Sub-advised by HIMCO.
HARTFORD INTERNATIONAL ADVISERS HLS FUND -- Seeks maximum long-term total return
by investing in a portfolio of equity, debt and money market securities.
Securities in which the Fund invests primarily will be denominated in non-U.S.
currencies and will be traded in non-U.S. markets. Sub-advised by Wellington
Management.
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND -- Seeks growth of capital by
investing primarily in equity securities issued by non-U.S. companies.
Sub-advised by Wellington Management.
HARTFORD MIDCAP HLS FUND -- Seeks to achieve long-term capital growth through
capital appreciation by investing primarily in equity securities of companies
with market capitalizations within the range represented by the Standard &
Poor's MidCap 400 Index. Sub-advised by Wellington Management.
HARTFORD MONEY MARKET HLS FUND -- Seeks maximum current income consistent with
liquidity and preservation of capital. Sub-advised by HIMCO.
HARTFORD MORTGAGE SECURITIES HLS FUND -- Seeks maximum current income consistent
with safety of principal and maintenance of liquidity by investing primarily in
mortgage-related securities. Sub-advised by HIMCO.
HARTFORD SMALL COMPANY HLS FUND -- Seeks growth of capital by investing
primarily in equity securities within the range represented by the Russell 2000
Index selected on the basis of potential for capital appreciation. Sub-advised
by Wellington Management.
HARTFORD STOCK HLS FUND -- Seeks long-term growth by investing primarily in
equity securities. Sub-advised by Wellington Management.
MIXED AND SHARED FUNDING -- Shares of the Funds may be sold to our other
separate accounts and our insurance company affiliates or other unaffiliated
insurance companies to serve as the underlying investment for both variable
annuity contracts and variable life insurance policies, a practice known as
"mixed and shared funding." As a result, there is a possibility that a material
conflict may arise between the interests of Contract Owners,
* "Standard & Poor's," "S&P-Registered Trademark-," "S&P
500-Registered Trademark-," "Standard & Poor's 500," and "500" are trademarks
of The McGraw-Hill Companies, Inc. and have been licensed for use by Hartford.
The Index Fund is not sponsored, endorsed, sold or promoted by Standard &
Poor's and Standard & Poor's makes no representation regarding the
advisability of investing in the Index Fund.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 13
--------------------------------------------------------------------------------
and of owners of other contracts whose contract values are allocated to one or
more of these other separate accounts investing in any one of the Funds. In the
event of any such material conflicts, we will consider what action may be
appropriate, including removing the Fund from the Separate Account or replacing
the Fund with another underlying fund. There are certain risks associated with
mixed and shared funding, as disclosed in the Funds' prospectus.
VOTING RIGHTS -- We are the legal owners of all Fund shares held in the Separate
Account and we have the right to vote at the Fund's shareholder meetings. To the
extent required by federal securities laws or regulations, we will:
- Notify you of any Fund shareholders' meeting if the shares held for your
Contract may be voted.
- Send proxy materials and a form of instructions that you can use to tell us
how to vote the Fund shares held for your Contract.
- Arrange for the handling and tallying of proxies received from Contract
Owners.
- Vote all Fund shares attributable to your Contract according to instructions
received from you, and
- Vote all Fund shares for which no voting instructions are received in the same
proportion as shares for which instructions have been received.
If any federal securities laws or regulations, or their present interpretation,
change to permit us to vote Fund shares on our own, we may decide to do so. You
may attend any Shareholder Meeting at which shares held for your Contract may be
voted. After we begin to make Annuity Payouts to you, the number of votes you
have will decrease.
SUBSTITUTIONS, ADDITIONS, OR DELETIONS OF FUNDS -- We reserve the right, subject
to any applicable law, to make certain changes to the Funds offered under your
contract. We may, in our sole discretion, establish new Funds. New Funds will be
made available to existing Contract Owners as we determine appropriate. We may
also close one or more Funds to additional Payments or transfers from existing
Sub-Accounts.
We reserve the right to eliminate the shares of any of the Funds for any reason
and to substitute shares of another registered investment company for the shares
of any Fund already purchased or to be purchased in the future by the Separate
Account. To the extent required by the Investment Company Act of 1940 (the "1940
Act"), substitutions of shares attributable to your interest in a Fund will not
be made until we have the approval of the Commission and we have notified you of
the change.
In the event of any substitution or change, we may, by appropriate endorsement,
make any changes in the Contract necessary or appropriate to reflect the
substitution or change. If we decide that it is in the best interest of the
Contract Owners, the Separate Account may be operated as a management company
under the 1940 Act or any other form permitted by law, may be de-registered
under the 1940 Act in the event such registration is no longer required, or may
be combined with one or more other Separate Accounts.
ADMINISTRATIVE SERVICES -- Hartford has entered into agreements with the
investment advisers or distributors of many of the Funds. Under the terms of
these agreements, Hartford provides adminstrative services and the Funds pay a
fee to Hartford that is usually based on an annual percentage of the average
daily net assets of the Funds. These agreements may be different for each Fund
or each Fund family.
PERFORMANCE RELATED INFORMATION
--------------------------------------------------------------------------------
The Separate Account may advertise certain performance-related information
concerning the Sub-Accounts. Performance information about a Sub-Account is
based on the Sub-Account's past performance only and is no indication of future
performance.
When a Sub-Account advertises its STANDARDIZED TOTAL RETURN, it will usually be
calculated since the date of the Sub-Account's inception for one year, five
years, and ten years or some other relevant periods if the Sub-Account has not
been in existence for at least ten years. Total return is measured by comparing
the value of an investment in the Sub-Account at the beginning of the relevant
period to the value of the investment at the end of the period.
The Separate Account may also advertise NON-STANDARD TOTAL RETURNS THAT PRE-DATE
THE INCEPTION DATE OF THE SEPARATE ACCOUNT. These non-standardized total returns
are calculated by assuming that the Sub-Accounts have been in existence for the
same periods as the underlying Funds and by taking deductions for charges equal
to those currently assessed against the Sub-Accounts. These non-standardized
returns must be accompanied by standardized total returns.
If applicable, the Sub-Accounts may advertise YIELD IN ADDITION TO TOTAL RETURN.
The yield will be computed in the following manner: The net investment income
per unit earned during a recent one month period is divided by the unit value on
the last day of the period. This figure includes the recurring charges at the
Separate Account level including the Annual Maintenance Fee.
The Hartford Money Market HLS Fund Sub-Account may advertise YIELD AND EFFECTIVE
YIELD. The yield of a Sub-Account is based upon the income earned by the
Sub-Account over a seven-day period and then annualized, i.e. the income earned
in the period is assumed to be earned every seven days over a 52-week period and
stated as a percentage of the investment. Effective yield is calculated
similarly but when annualized, the income earned by the investment is assumed to
be reinvested in Sub-Account units and thus compounded in the course of a
52-week period. Yield and effective yield include the recurring charges at
<PAGE>
14 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
--------------------------------------------------------------------------------
the Separate Account level including the Annual Maintenance Fee.
We may provide information on various topics to Contract Owners and prospective
Contract Owners in advertising, sales literature or other materials. These
topics may include the relationship between sectors of the economy and the
economy as a whole and its effect on various securities markets, investment
strategies and techniques (such as systematic investing, Dollar Cost Averaging
and asset allocation), the advantages and disadvantages of investing in
tax-deferred and taxable instruments, customer profiles and hypothetical
purchase scenarios, financial management and tax and retirement planning, and
other investment alternatives, including comparisons between the Contract and
the characteristics of and market for such alternatives.
THE FIXED ACCUMULATION FEATURE
--------------------------------------------------------------------------------
IMPORTANT INFORMATION YOU SHOULD KNOW: THIS PORTION OF THE PROSPECTUS RELATING
TO THE FIXED ACCUMULATION FEATURE IS NOT REGISTERED UNDER THE SECURITIES ACT OF
1933 ("1933 ACT") AND THE FIXED ACCUMULATION FEATURE IS NOT REGISTERED AS AN
INVESTMENT COMPANY UNDER THE 1940 ACT. THE FIXED ACCUMULATION FEATURE OR ANY OF
ITS INTERESTS ARE NOT SUBJECT TO THE PROVISIONS OR RESTRICTIONS OF THE 1933 ACT
OR THE 1940 ACT, AND THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
REVIEWED THE DISCLOSURE REGARDING THE FIXED ACCUMULATION FEATURE. THE FOLLOWING
DISCLOSURE ABOUT THE FIXED ACCUMULATION FEATURE MAY BE SUBJECT TO CERTAIN
GENERALLY APPLICABLE PROVISIONS OF THE FEDERAL SECURITIES LAWS REGARDING THE
ACCURACY AND COMPLETENESS OF DISCLOSURE.
Premium Payments and Contract Values allocated to the Fixed Accumulation Feature
become a part of our General Account assets. We invest the assets of the General
Account according to the laws governing the investments of insurance company
General Accounts.
Currently, we guarantee that we will credit interest at a rate of not less than
3% per year, compounded annually, to amounts you allocate to the Fixed
Accumulation Feature. We reserve the right to change the rate subject only to
applicable state insurance law. We may credit interest at a rate in excess of 3%
per year. We will periodically publish the Fixed Accumulation Feature interest
rates currently in effect. There is no specific formula for determining interest
rates. Some of the factors that we may consider in determining whether to credit
excess interest are; general economic trends, rates of return currently
available and anticipated on our investments, regulatory and tax requirements
and competitive factors. We will account for any deductions, Surrenders or
transfers from the Fixed Accumulation Feature on a "first-in first-out" basis.
IMPORTANT: ANY INTEREST CREDITED TO AMOUNTS YOU ALLOCATE TO THE FIXED
ACCUMULATION FEATURE IN EXCESS OF 3% PER YEAR WILL BE DETERMINED AT OUR SOLE
DISCRETION. YOU ASSUME THE RISK THAT INTEREST CREDITED TO THE FIXED ACCUMULATION
FEATURE MAY NOT EXCEED THE MINIMUM GUARANTEE OF 3% FOR ANY GIVEN YEAR.
From time to time, we may credit increased interest rates under certain programs
established in our sole discretion.
DOLLAR COST AVERAGING PLUS ("DCA") PROGRAMS -- Currently, you may enroll in a
special pre-authorized transfer program known as our DCA Plus Program (the
"Program"). Under this Program, Contract Owners who enroll may allocate a
minimum of $5,000 of their Premium Payment into the Program (we may allow a
lower minimum Premium Payment for qualified plan transfers or rollovers,
including IRAs) and pre-authorize transfers to any of the Sub-Accounts under
either the 6 Month Transfer Program or 12 Month Transfer Program. The 6-Month
Transfer Program and the 12-Month Transfer Program will generally have different
credited interest rates. Currently, the 6-Month and 12-Month Transfer Programs
are credited the same interest rate as the Fixed Accumulation Feature. At some
time in the future Hartford may offer interest rates specific to the transfer
programs.
Under the 6-Month Transfer Program, the interest rate can accrue up to 6 months
and all Premium Payments and accrued interest must be transferred from the
Program to the selected Sub-Accounts in 3 to 6 months. Under the 12-Month
Transfer Program, the interest rate can accrue up to 12 months and all Premium
Payments and accrued interest must be transferred to the selected Sub-Accounts
in 7 to 12 months. This will be accomplished by monthly transfers for the period
selected and a final transfer of the entire amount remaining in the Program.
The pre-authorized transfers will begin within 15 days of receipt of the Program
payment provided we receive complete enrollment instructions. If we do not
receive complete Program enrollment instructions within 15 days of receipt of
the initial Program payment, the Program will be voided and the entire balance
in the Program will be transferred to the Accounts designated by you. If you do
not designate an Account, you will receive the Fixed Accumulation Feature's
current effective interest rate. Any subsequent payments we receive within the
Program period selected will be allocated to the Sub-Accounts over the remainder
of that Program transfer period.
You may elect to terminate the pre-authorized transfers by calling or writing us
of your intent to cancel enrollment in the Program. Upon cancellation, you will
no longer receive the Program interest rate and unless we receive instructions
to the contrary, the amounts remaining in the Program may accrue the interest
rate currently in effect for the Fixed Accumulation Feature.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 15
--------------------------------------------------------------------------------
We reserve the right to discontinue, modify or amend the Program or any other
interest rate program we establish. Any change to the Program will not affect
Contract Owners currently enrolled in the Program.
You may only have one DCA program in place at one time. There is no charge for
Dollar Cost Averaging.
THE CONTRACT
--------------------------------------------------------------------------------
PURCHASES AND CONTRACT VALUE
WHAT TYPES OF CONTRACTS ARE AVAILABLE?
The Contract is an individual or group tax-deferred variable annuity contract.
It is designed for retirement planning purposes and may be purchased by any
individual, group or trust, including:
- Any trustee or custodian for a retirement plan qualified under Sections 401(a)
or 403(a) of the Code;
- Annuity purchase plans adopted by public school systems and certain tax-exempt
organizations according to Section 403(b) of the Code;
- Individual Retirement Annuities adopted according to Section 408 of the Code;
- Employee pension plans established for employees by a state, a political
subdivision of a state, or an agency of either a state or a political
subdivision of a state, and
- Certain eligible deferred compensation plans as defined in Section 457 of the
Code.
The examples above represent Qualified Contracts, as defined by the Code. In
addition, individuals and trusts can also purchase Contracts that are not part
of a tax qualified retirement plan. These are known as Non-Qualified Contracts.
If you are purchasing the Contract for use in an IRA or other qualified
retirement plan, you should consider other features of the Contract besides tax
deferral, since any investment vehicle used within an IRA or other qualified
plan receives tax deferred treatment under the Code.
HOW DO I PURCHASE A CONTRACT?
You may purchase a Contract by completing and submitting an application or an
order request along with an initial Premium Payment. For most Contracts, the
minimum Premium Payment is $10,000. For additional Premium Payments, the minimum
Premium Payment is $500. Under certain situations, we may allow smaller Premium
Payments, for example, if you enroll in our InvestEase Program or are part of
certain tax qualified retirement plans. Prior approval is required for Premium
Payments of $1,000,000 or more.
You and your Annuitant must not be older than age 90 on the date that your
Contract is issued. You must be of legal age in the state where the Contract is
being purchased or a guardian must act on your behalf.
HOW ARE PREMIUM PAYMENTS APPLIED TO MY CONTRACT?
Your initial Premium Payment will be invested within two Valuation Days of our
receipt of a properly completed application or an order request and the Premium
Payment. If we receive your subsequent Premium Payment before the close of the
New York Stock Exchange, it will be invested on the same Valuation Day. If we
receive your Premium Payment after the close of the New York Stock Exchange, it
will be invested on the next Valuation Day. If we receive your subsequent
Premium Payment on a Non-Valuation Day, the amount will be invested on the next
Valuation Day. Unless we receive new instructions, we will invest the Premium
Payment based on your last allocation instructions. We will send you a
confirmation when we invest your Premium Payment.
If the request or other information accompanying the Premium Payment is
incomplete when received, we will hold the money in a non-interest bearing
account for up to five Valuation Days while we try to obtain complete
information. If we cannot obtain the information within five Valuation Days, we
will either return the Premium Payment and explain why the Premium Payment could
not be processed or keep the Premium Payment if you authorize us to keep it
until you provide the necessary information.
CAN I CANCEL MY CONTRACT AFTER I PURCHASE IT?
We want you to be satisfied with the Contract you have purchased. We urge you to
closely examine its provisions. If for any reason you are not satisfied with
your Contract, simply return it within ten days after you receive it with a
written request for cancellation that indicates your tax-withholding
instructions. In some states, you may be allowed more time to cancel your
Contract. We will not deduct any Contingent Deferred Sales Charges during this
time. We may require additional information, including a signature guarantee,
before we can cancel your Contract.
You bear the investment risk from the time the Contract is issued until we
receive your complete cancellation request.
The amount we pay you upon cancellation depends on the requirements of the state
where you purchased your Contract, the method of purchase, the type of Contract
you purchased and your age.
HOW IS THE VALUE OF MY CONTRACT CALCULATED BEFORE THE ANNUITY COMMENCEMENT DATE?
The Contract Value is the sum of all Accounts. There are two things that affect
your Sub-Account value: (1) the number of
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16 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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Accumulation Units and (2) the Accumulation Unit Value. The Sub-Account value is
determined by multiplying the number of Accumulation Units by the Accumulation
Unit Value. Therefore, on any Valuation Day your Contract Value reflects the
investment performance of the Sub-Accounts and will fluctuate with the
performance of the underlying Funds.
When Premium Payments are credited to your Sub-Accounts, they are converted into
Accumulation Units by dividing the amount of your Premium Payments, minus any
Premium Taxes, by the Accumulation Unit Value for that day. The more Premium
Payments you put into your Contract, the more Accumulation Units you will own.
You decrease the number of Accumulation Units you have by requesting Surrenders,
transferring money out of an Account, settling a Death Benefit claim or by
annuitizing your Contract.
To determine the current Accumulation Unit Value, we take the prior Valuation
Day's Accumulation Unit Value and multiply it by the Net Investment Factor for
the current Valuation Day.
The Net Investment Factor is used to measure the investment performance of a
Sub-Account from one Valuation Day to the next. The Net Investment Factor for
each Sub-Account equals:
- The net asset value per share of each Fund held in the Sub-Account at the end
of the current Valuation Day divided by
- The net asset value per share of each Fund held in the Sub-Account at the end
of the prior Valuation Day; minus
- The daily mortality and expense risk charge and any other applicable charge,
such as any Optional Death Benefit charge, adjusted for the number of days in
the period.
We will send you a statement in each calendar quarter, which tells you how many
Accumulation Units you have, their value and your total Contract Value.
CAN I TRANSFER FROM ONE SUB-ACCOUNT TO ANOTHER?
TRANSFERS BETWEEN SUB-ACCOUNTS -- You may transfer from one Sub-Account to
another before and after the Annuity Commencement Date at no extra charge. Your
transfer request will be processed on the day that it is received as long as it
is received on a Valuation Day before the close of the New York Stock Exchange.
Otherwise, your request will be processed on the following Valuation Day. We
will send you a confirmation when we process your transfer. You are responsible
for verifying transfer confirmations and promptly advising us of any errors
within 30 days of receiving the confirmation.
SUB-ACCOUNT TRANSFER RESTRICTIONS -- We reserve the right to limit the number of
transfers to 12 per Contract Year, with no transfers occurring on consecutive
Valuation Days. We also have the right to restrict transfers if we believe that
the transfers could have an adverse effect on other Contract Owners. In all
states except New York, Florida, Maryland and Oregon, we may:
- Require a minimum time period between each transfer,
- Limit the dollar amount that may be transferred on any one Valuation Day, and
- Not accept transfer requests from an agent acting under a power of attorney
for more than one Contract Owner.
We also have a restriction in place that involves individuals who act under a
power of attorney for multiple Contract Owners. If the value of the Contract
Owners' Accounts add up to more than $2 million, we will not accept transfer
instructions from the power of attorney unless the power of attorney has entered
into a Third Party Transfer Services Agreement with us.
Some states may have different restrictions.
FIXED ACCUMULATION FEATURE TRANSFERS -- During each Contract Year, you may make
transfers out of the Fixed Accumulation Feature to Sub-Accounts. All transfer
allocations must be in whole numbers (e.g., 1%). You may transfer either:
- 30% of your total amount in the Fixed Accumulation Feature, or
- An amount equal to the largest previous transfer.
These transfer limits do not include transfers done through Dollar Cost
Averaging or the DCA Plus Program.
If your interest rate renews at a rate at least 1% lower than your prior
interest rate, you may transfer an amount equal to up to 100% of the amount to
be invested at the renewal rate. You must make this transfer request within 60
days of being notified of the renewal rate.
FIXED ACCUMULATION FEATURE TRANSFER RESTRICTIONS -- We reserve the right to
defer transfers from the Fixed Accumulation Feature for up to 6 months from the
date of your request. After any transfer, you must wait six months before moving
Sub-Account Values back to the Fixed Accumulation Feature.
TELEPHONE AND INTERNET TRANSFERS -- In most states, you can make transfers:
- By calling us at (800) 862-6668
- Electronically, when available, by the Internet through our website at
http://online.hartfordlife.com
Transfer instructions received by telephone on any Valuation Day before the
close of the New York Stock Exchange will be carried out that day. Otherwise,
the instructions will be carried out at the close of the New York Stock Exchange
on the next Valuation Day.
Transfer instructions you send electronically are considered to be received by
Hartford at the time and date stated on the electronic acknowledgement Hartford
returns to you. If the time and date indicated on the acknowledgement is before
the close of the New York Stock Exchange on a Valuation Day, the instructions
will be carried out that day. Otherwise, the instructions will
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 17
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be carried out at the close of the New York Stock Exchange the next Valuation
Day. If you do not receive an electronic acknowledgement, you should telephone
us as soon as possible.
We will send you a confirmation when we process your transfer. You are
responsible for verifying transfer confirmations and promptly advising us of any
errors within 30 days of receiving the confirmation.
Telephone or Internet transfer requests may currently only be cancelled by
calling us at (800) 862-6668 before the close of the New York Stock Exchange.
Hartford, our agents or our affiliates are not responsible for losses resulting
from telephone or electronic requests that we believe are genuine. We will use
reasonable procedures to confirm that instructions received by telephone or
through our website are genuine, including a requirement that contract owners
provide certain identification information, including a personal identification
number. We record all telephone transfer instructions. We reserve the right to
suspend, modify, or terminate telephone or electronic transfer privileges at any
time.
POWER OF ATTORNEY -- You may authorize another person to make transfers on your
behalf by submitting a completed Power of Attorney form. Once we have the
completed form on file, we will accept transfer instructions, subject to our
transfer restrictions, from your designated third party until we receive new
instructions in writing from you. You will not be able to make transfers or
other changes to your Contract if you have authorized someone else to act under
a Power of Attorney.
CHARGES AND FEES
There are 5 charges and fees associated with the Contract and the Optional Death
Benefit Charge:
1. THE CONTINGENT DEFERRED SALES CHARGE
The Contingent Deferred Sales Charge covers some of the expenses relating to the
sale and distribution of the Contract, including commissions paid to registered
representatives and the cost of preparing sales literature and other promotional
activities.
We may assess a Contingent Deferred Sales Charge when you request a full or
partial Surrender. The Contingent Deferred Sales Charge is based on the amount
to choose to Surrender and how long your Premium Payments have been in the
Contract. The Contingent Deferred Sales Charge will not exceed the total amount
of the Premium Payments made. Each Premium Payment has its own Contingent
Deferred Sales Charge schedule. Premium Payments are Surrendered in the order in
which they were received. The longer you leave your Premium Payments in the
Contract, the lower the Contingent Deferred Sales Charge will be when you
Surrender. The amount assessed a Contingent Deferred Sales Charge will not
exceed your total Premium Payments.
The percentage used to calculate the Contingent Deferred Sales Charge is equal
to:
<TABLE>
<CAPTION>
NUMBER OF YEARS FROM CONTINGENT DEFERRED
PREMIUM PAYMENT SALES CHARGE
<S> <C>
-----------------------------------------
1 6%
-----------------------------------------
2 5%
-----------------------------------------
3 4%
-----------------------------------------
4 or more 0%
-----------------------------------------
</TABLE>
THE FOLLOWING SURRENDERS ARE NOT SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE:
- ANNUAL WITHDRAWAL AMOUNT -- During the first three years from each Premium
Payment, you may, each Contract Year, take partial Surrenders up to 10% of the
total Premium Payments. If you do not take 10% one year, you may not take more
than 10% the next year. These amounts are different for Contracts issued to a
Charitable Remainder Trust.
UNDER THE FOLLOWING SITUATIONS, THE CONTINGENT DEFERRED SALES CHARGE IS WAIVED:
- Upon eligible confinement as described in the Waiver of Sales Charge Rider. We
will waive any Contingent Deferred Sales Charge applicable to a partial or
full Surrender if you, the joint owner or the Annuitant, is confined for at
least 180 calendar days to a: (a) facility recognized as a general hospital by
the proper authority of the state in which it is located; or (b) facility
recognized as a general hospital by the Joint Commission on the Accreditation
of Hospitals; or (c) facility certified as a hospital or long-term care
facility; or (d) nursing home licensed by the state in which it is located and
offers the services of a registered nurse 24 hours a day. If you, the joint
owner or the Annuitant is confined when you purchase the Contract, this waiver
is not available. For it to apply, you must: (a) have owned the Contract
continuously since it was issued, (b) provide written proof of confinement
satisfactory to us, and (c) request the Surrender within 90 calendar days of
the last day of confinement. This waiver may not be available in all states.
Please contact your Registered Representative or us to determine if it is
available for you.
- For Required Minimum Distributions. This allows Annuitants who are age 70 1/2
or older, with a Contract held under an Individual Retirement Account or
403(b) plan, to Surrender an amount equal to the Required Minimum Distribution
for the Contract without a Contingent Deferred Sales Charge. All requests for
Required Minimum Distributions must be in writing.
- We will waive any applicable Contingent Deferred Sales Charge if you take part
in a program for partial surrenders where you receive a scheduled series of
substantially equal periodic payments. Payments under this program must be
made at least annually for your life (or your life expectancy) or the joint
lives (or joint life expectancies) of you and your designated Beneficiary.
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18 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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- On or after the Annuitant's 90th birthday.
THE FOLLOWING SITUATIONS ARE NOT SUBJECT TO A CONTINGENT DEFERRED SALES CHARGE:
- Upon death of the Annuitant or Contract Owner. No Contingent Deferred Sales
Charge will be deducted if the Annuitant or Contract Owner dies, unless the
Contract Owner is not a natural person (e.g. a trust).
- Upon Annuitization. The Contingent Deferred Sales Charge is not deducted when
you annuitize the Contract. We will charge a Contingent Deferred Sales Charge
if the Contract is fully Surrendered during the Contingent Deferred Sales
Charge period under an Annuity Payout Option which allows Surrenders.
- Upon cancellation during the Right to Cancel Period
SURRENDER ORDER -- During the first three Contract Years all Surrenders in
excess of the Annual Withdrawal Amount will be taken first from Premium
Payments, then from earnings. Surrenders from Premium Payments in excess of the
Annual Withdrawal Amount will be subject to a Contingent Deferred Sales Charge.
After the third Contract Year, all Surrenders in excess of the Annual Withdrawal
Amount will be taken first from earnings, then from Premium Payments held in
your Contract for more than three years and then from Premium Payments invested
for less than three years. Only Premium Payments invested for less than three
years are subject to a Contingent Deferred Sales Charge.
2. MORTALITY AND EXPENSE RISK CHARGE
For assuming mortality and expense risks under the Contract, we deduct a daily
charge at an annual rate of 1.45% of Sub-Account Value (estimated at .90% for
mortality and .55% for expenses). The mortality and expense risk charge is
broken into charges for mortality risks and for an expense risk:
MORTALITY RISK -- There are two types of mortality risks that we assume, those
made while your Premium Payments are accumulating and those made once Annuity
Payouts have begun.
During the period your Premium Payments are accumulating, we are required to
cover any difference between the Death Benefit paid and the Surrender Value.
These differences may occur during periods of declining value or in periods
where the Contingent Deferred Sales Charges would have been applicable. The risk
that we bear during this period is that actual mortality rates, in aggregate,
may exceed expected mortality rates.
Once Annuity Payouts have begun, we may be required to make Annuity Payouts as
long as the Annuitant is living, regardless of how long the Annuitant lives. We
would be required to make these payments if the Payout Option chosen is the Life
Annuity, Life Annuity With Payments for a Period Certain or Joint and Last
Survivor Life Annuity Payout Option. The risk that we bear during this period is
that the actual mortality rates, in aggregate, may be lower than the expected
mortality rates.
EXPENSE RISK -- We also bear an expense risk that the Contingent Deferred Sales
Charges and the Annual Maintenance Fee collected before the Annuity Commencement
Date may not be enough to cover the actual cost of selling, distributing and
administering the Contract.
Although variable Annuity Payouts will fluctuate with the performance of the
underlying Fund selected, your Annuity Payouts will NOT be affected by (a) the
actual mortality experience of our Annuitants, or (b) our actual expenses if
they are greater than the deductions stated in the Contract. Because we cannot
be certain how long our Annuitants will live, we charge this percentage fee
based on the mortality tables currently in use. The mortality and expense risk
charge enables us to keep our commitments and to pay you as planned.
3. ANNUAL MAINTENANCE FEE
The Annual Maintenance Fee is a flat fee that is deducted from your Contract
Value to reimburse us for expenses relating to the administrative maintenance of
the Contract and the Accounts. The annual $30 charge is deducted on a Contract
Anniversary or when the Contract is fully Surrendered if the Contract Value at
either of those times is less than $50,000. The charge is deducted
proportionately from each Account in which you are invested.
WHEN IS THE ANNUAL MAINTENANCE FEE WAIVED?
We will waive the Annual Maintenance Fee if your Contract Value is $50,000 or
more on your Contract Anniversary or when you fully Surrender your Contract. In
addition, we will waive one Annual Maintenance Fee for Contract Owners who own
more than one Contract with a combined Contract Value between $50,000 and
$100,000. If you have multiple Contracts with a combined Contract Value of
$100,000 or greater, we will waive the Annual Maintenance Fee on all Contracts.
However, we reserve the right to limit the number of waivers to a total of six
Contracts. We also reserve the right to waive the Annual Maintenance Fee under
certain other conditions.
4. PREMIUM TAXES
We deduct Premium Taxes, if required, by a state or other government agency.
Some states collect the taxes when Premium Payments are made; others collect at
Annuitization. Since we pay Premium Taxes when they are required by applicable
law, we may deduct them from your Contract when we pay the taxes, upon
Surrender, or on the Annuity Commencement Date. The Premium Tax rate varies by
state or municipality. Currently, the maximum rate charged by any state is 3.5%
and 4% in Puerto Rico.
5. CHARGES AGAINST THE FUNDS
The Separate Account purchases shares of the Funds at net asset value. The net
asset value of the Fund reflects investment advisory fees and administrative
expenses already deducted from the assets of the Funds. These charges are
described in the Funds' prospectuses accompanying this prospectus.
OPTIONAL DEATH BENEFIT CHARGE: If you elect the Optional Death Benefit, we will
subtract an additional charge on a daily
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 19
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basis that is equal to an annual charge of .15% of your Contract Value invested
in the Funds.
WE MAY OFFER, IN OUR DISCRETION, REDUCED FEES AND CHARGES INCLUDING, BUT NOT
LIMITED TO CONTINGENT DEFERRED SALES CHARGES, THE MORTALITY AND EXPENSE RISK
CHARGE, AND THE ANNUAL MAINTENANCE FEE, FOR CERTAIN CONTRACTS (INCLUDING
EMPLOYER SPONSORED SAVINGS PLANS) WHICH MAY RESULT IN DECREASED COSTS AND
EXPENSES. REDUCTIONS IN THESE FEES AND CHARGES WILL NOT BE UNFAIRLY
DISCRIMINATORY AGAINST ANY CONTRACT OWNER.
DEATH BENEFIT
WHAT IS THE DEATH BENEFIT AND HOW IS IT CALCULATED?
The Death Benefit is the amount we will pay upon the death of the Contract
Owner, joint owner or the Annuitant. The Death Benefit is calculated when we
receive a certified death certificate or other legal document acceptable to us.
The calculated Death Benefit will remain invested in the same Accounts,
according to the Contract Owner's last instructions until we receive complete
written settlement instructions from the Beneficiary. Therefore, the Death
Benefit amount will fluctuate with the performance of the underlying Funds. When
there is more than one Beneficiary, we will calculate the Accumulation Units for
each Sub-account and the dollar amount for the Fixed Accumulation Feature for
each Beneficiary's portion of the proceeds.
If death occurs before the Annuity Commencement Date, the Death Benefit is the
greatest of:
- The Contract Value on the date the death certificate or other legal document
acceptable to us is received; or
- 100% of all Premium Payments paid into the Contract minus any partial
Surrenders; or
- The Maximum Anniversary Value, which is described below.
The Maximum Anniversary Value is based on a series of calculations on Contract
Anniversaries of Contract Values, Premium Payments and partial Surrenders. We
will calculate an Anniversary Value for each Contract Anniversary prior to the
deceased's 81st birthday or date of death, whichever is earlier. The Anniversary
Value is equal to the Contract Value as of a Contract Anniversary, increased by
the dollar amount of any Premium Payments made since that anniversary and
reduced by the dollar amount of any partial Surrenders since that anniversary.
The Maximum Anniversary Value is equal to the greatest Anniversary Value
attained from this series of calculations.
The Maximum Anniversary Value is only calculated until the earlier of the
Contract Owner or Annuitant's 81st birthday or death.
You may also elect the Optional Death Benefit for an additional fee. The
Optional Death Benefit adds the Interest Accumulation Value to the Death Benefit
calculation.
If you elect the Optional Death Benefit, the Death Benefit prior to the
deceased's date of death or the deceased's 81st birthday, whichever is earlier,
will be the greater of:
- the total Premium Payments you have made to us minus the dollar amount of any
partial Surrenders;
- The Contract Value of your annuity;
- Your Maximum Anniversary Value; or
- The Interest Accumulation Value on the date the Optional Death Benefit is
added to your contract.
The Interest Accumulation Value prior to the deceased's date of death or 81st
birthday, whichever is earlier is equal to:
- Your Contract Value on the date the Optional Death Benefit is added;
- Plus any Premium Payments made after the date the Optional Death Benefit is
added;
- Minus any proportional adjustments for any partial Surrenders taken after the
Optional Death Benefit was added;
- Compounded daily at an annual rate of 5.0%.
If you have taken any partial Surrenders, the Interest Accumulation Value will
be adjusted to reduce the Optional Death Benefit proportionally for any partial
Surrenders.
On or after the deceased's 81st birthday or date of death, the Interest
Accumulation Value will not continue to compound, but will be adjusted to add
any Premium Payments or subtract any proportional adjustments for any partial
Surrenders.
The Optional Death Benefit is limited to a maximum of 200% of the Contract Value
on the date the Optional Death Benefit was added, plus 200% of any Premium
Payments made since the addition of the Optional Death Benefit minus any
proportional adjustments for any Surrenders from that date.
If you elect the Optional Death Benefit, we will subtract an additional charge
on a daily basis that is equal to an annual charge of .15% of your Contract
Value invested in the Funds. The Optional Death Benefit may not be available if
the Contract Owner or Annuitant is age 75 or older. The Optional Death Benefit
is not available in Washington.
HOW IS THE DEATH BENEFIT PAID?
The Death Benefit may be taken in one lump sum or under any of the Annuity
Payout Options then being offered by us. On the date we receive complete
instructions from the Beneficiary, we will compute the Death Benefit amount to
be paid out or applied to a selected Annuity Payout Option. When there is more
than one Beneficiary, we will calculate the Death Benefit amount for each
Beneficiary's portion of the proceeds and then pay it out or apply it to a
selected Annuity Payout Option according to each Beneficiary's instructions. If
we receive the complete instructions on a Non-Valuation Day, computations will
take place on the next Valuation Day.
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20 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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The Beneficiary may elect under the Annuity Proceeds Settlement Option "Death
Benefit Remaining with the Company" to leave proceeds from the Death Benefit
with us for up to five years from the date of the Contract Owner's death if the
Contract Owner died before the Annuity Commencement Date. Once we receive a
certified death certificate or other legal documents acceptable to us, the
Beneficiary can: (a) make Sub-Account transfers and (b) take Surrenders without
paying Contingent Deferred Sales Charges.
REQUIRED DISTRIBUTIONS -- If the Contract Owner dies before the Annuity
Commencement Date, the Death Benefit must be distributed within five years after
death. The Beneficiary can choose any Annuity Payout Option that results in
complete Annuity Payout within five years.
If the Contract Owner dies on or after the Annuity Commencement Date under an
Annuity Payout Option with a Death Benefit, any remaining value must be
distributed at least as rapidly as under the payment method being used as of the
Contract Owner's death.
If the Contract Owner is not an individual (e.g. a trust), then the original
Annuitant will be treated as the Contract Owner in the situations described
above and any change in the original Annuitant will be treated as the death of
the Contract Owner.
WHAT SHOULD THE BENEFICIARY CONSIDER?
ALTERNATIVES TO THE REQUIRED DISTRIBUTIONS -- The selection of an Annuity Payout
Option and the timing of the selection will have an impact on the tax treatment
of the Death Benefit. To receive favorable tax treatment, the Annuity Payout
Option selected: (a) cannot extend beyond the Beneficiary's life or life
expectancy, and (b) must begin within one year of the date of death.
If these conditions are NOT met, the Death Benefit will be treated as a lump sum
payment for tax purposes. This sum will be taxable in the year in which it is
considered received.
SPOUSAL CONTRACT CONTINUATION -- If the Beneficiary is the Contract Owner's
spouse, the Beneficiary may elect to continue the Contract as the contract
owner, receive the death benefit in one lump sum payment or elect an Annuity
Payout Option. If you elect the Optional Death Benefit for an additional charge
and the Contract continues with the spouse as Contract Owner, we will adjust the
Contract Value to the amount that we would have paid as the Death Benefit, if
the Spouse had elected to receive the Death Benefit. This spousal continuation
is available only once for each Contract.
WHO WILL RECEIVE THE DEATH BENEFIT?
The distribution of the Death Benefit is based on whether death is before, on or
after the Annuity Commencement Date.
IF DEATH OCCURS BEFORE THE ANNUITY COMMENCEMENT DATE:
<TABLE>
<CAPTION>
IF THE DECEASED IS THE . . . AND . . . AND . . . THEN THE . . .
<S> <C> <C> <C>
Contract Owner There is a surviving joint The Annuitant is living or Joint Contract Owner
Contract Owner deceased receives the Death
Benefit.
Contract Owner There is no surviving The Annuitant is living or Designated Beneficiary
joint Contract Owner deceased receives the Death
Benefit.
Contract Owner There is no surviving The Annuitant is living or Contract Owner's estate
joint Contract Owner and deceased receives the Death
the Beneficiary Benefit.
predeceases the Contract
Owner
Annuitant The Contract Owner is There is no named Death Benefit is paid to
living Contingent Annuitant the Contract Owner and not
the designated
Beneficiary.
Annuitant The Contract Owner is The Contingent Annuitant Contingent Annuitant
living is living becomes the Annuitant, and
the Contract continues.
</TABLE>
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 21
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IF DEATH OCCURS ON OR AFTER THE ANNUITY COMMENCEMENT DATE:
<TABLE>
<CAPTION>
IF THE DECEASED IS THE . . . AND . . . THEN THE . . .
<S> <C> <C>
Contract Owner The Annuitant is living Designated Beneficiary becomes the
Contract Owner
Annuitant The Contract Owner is living Contract Owner receives the Death
Benefit.
Annuitant The Annuitant is also the Contract Owner Designated Beneficiary receives the
Death Benefit.
</TABLE>
THESE ARE THE MOST COMMON DEATH BENEFIT SCENARIOS, HOWEVER, THERE ARE OTHERS.
SOME OF THE ANNUITY PAYOUT OPTIONS MAY NOT RESULT IN A DEATH BENEFIT PAYOUT. IF
YOU HAVE QUESTIONS ABOUT THESE AND ANY OTHER SCENARIOS, PLEASE CONTACT YOUR
REGISTERED REPRESENTATIVE OR US.
SURRENDERS
WHAT KINDS OF SURRENDERS ARE AVAILABLE?
FULL SURRENDERS BEFORE THE ANNUITY COMMENCEMENT DATE -- When you Surrender your
Contract before the Annuity Commencement Date, the Surrender Value of the
Contract will be made in a lump sum payment. The Surrender Value is the Contract
Value minus any applicable Premium Taxes, Contingent Deferred Sales Charges and
the Annual Maintenance Fee. The Surrender Value may be more or less than the
amount of the Premium Payments made to a Contract.
PARTIAL SURRENDERS BEFORE THE ANNUITY COMMENCEMENT DATE -- You may request a
partial Surrender of Contract Values at any time before the Annuity Commencement
Date. There are two restrictions:
- The partial Surrender amount must be at least equal to $100, our current
minimum for partial Surrenders, and
- The Contract must have a minimum Contract Value of $500 after the Surrender.
The minimum Contract Value in New York must be $1000 after the Surrender. We
reserve the right to close your Contract and pay the full Surrender Value if
the Contract Value is under the minimum after the Surrender. If your Contract
was issued in Texas, a remaining value of $500 is not required to continue the
Contract if Premium Payments were made in the last two Contract Years.
FULL SURRENDERS AFTER THE ANNUITY COMMENCEMENT DATE -- You may Surrender your
Contract on or after the Annuity Commencement Date only if you selected the
Payments for a Period Certain, Life Annuity with Payments for a Period Certain,
or Joint and Last Survivor Life Annuity with Payments for a Period Certain
Annuity Payout Options. Under these options, we pay you the Commuted Value of
your Contract minus any applicable Contingent Deferred Sales Charges. The
Commuted Value is determined on the day we receive your written request for
Surrender.
PARTIAL SURRENDERS AFTER THE ANNUITY COMMENCEMENT DATE -- Partial Surrenders are
allowed after the Annuity Commencement Date if you elect the Payments for a
Period Certain, Life Annuity with Payments for a Period Certain, or Joint and
Last Survivor Life Annuity with Payments for a Period Certain Annuity Payout
Options, but check with your qualified tax adviser because there could be
adverse tax consequences.
HOW DO I REQUEST A SURRENDER?
Requests for full Surrenders must be in writing. Requests for partial Surrenders
can be made in writing or by telephone. We will send your money within seven
days of receiving complete instructions. However, we may postpone payment of
Surrenders whenever: (a) the New York Stock Exchange is closed, (b) trading on
the New York Stock Exchange is restricted by the SEC, (b) the SEC permits and
orders postponement or (c) the SEC determines that an emergency exists to
restrict valuation.
WRITTEN REQUESTS -- To request a full or partial Surrender, complete a Surrender
Form or send us a letter, signed by you, stating:
- the dollar amount that you want to receive, either before or after we withhold
taxes and deduct for any applicable charges,
- your tax withholding amount or percentage, if any, and
- your mailing address.
If there are joint Contract Owners, both must authorize all Surrenders. For a
partial Surrender, specify the Accounts that you want your Surrender to come
from, otherwise, the Surrender will be taken in proportion to the value in each
Account.
TELEPHONE REQUESTS -- To request a partial Surrender by telephone, we must have
received your completed Telephone Redemption Program Enrollment Form. If there
are joint Contract Owners, both must sign this form. By signing the form, you
authorize us to accept telephone instructions for partial Surrenders from either
Contract Owner. Telephone authorization will remain in effect until we receive a
written cancellation notice from you or your joint Contract Owner, we
discontinue the program, or you are no longer the owner of the Contract. There
are some restrictions on telephone surrenders, please call us with any
questions.
We may record telephone calls and use other procedures to verify information and
confirm that instructions are genuine. We will not be liable for losses or
expenses arising from telephone instructions reasonably believed to be genuine.
WE MAY MODIFY THE REQUIREMENTS FOR TELEPHONE REDEMPTIONS AT ANY TIME.
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22 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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Telephone Surrender instructions received before the close of the New York Stock
Exchange will be processed on that Valuation Day. Otherwise, your request will
be processed on the next Valuation Day.
COMPLETING A POWER OF ATTORNEY FORM FOR ANOTHER PERSON TO ACT ON YOUR BEHALF MAY
PREVENT YOU FROM MAKING SURRENDERS VIA TELEPHONE.
WHAT SHOULD BE CONSIDERED ABOUT TAXES?
There are certain tax consequences associated with Surrenders:
PRIOR TO AGE 59 1/2 -- If you make a Surrender prior to age 59 1/2, there may be
adverse tax consequences including a 10% federal income tax penalty on the
taxable portion of the Surrender payment. Surrendering before age 59 1/2 may
also affect the continuing tax-qualified status of some Contracts.
WE DO NOT MONITOR SURRENDER REQUESTS. TO DETERMINE WHETHER A SURRENDER IS
PERMISSIBLE, WITH OR WITHOUT FEDERAL INCOME TAX PENALTY, PLEASE CONSULT YOUR
PERSONAL TAX ADVISER.
MORE THAN ONE CONTRACT ISSUED IN THE SAME CALENDAR YEAR:
If you own more than one contract issued by us or our affiliates in the same
calendar year, then these contracts may be treated as one contract for the
purpose of determining the taxation of distributions prior to the Annuity
Commencement Date. Please consult your tax adviser for additional information.
INTERNAL REVENUE CODE SECTION 403(b) ANNUITIES -- As of December 31, 1988, all
section 403(b) annuities have limits on full and partial Surrenders.
Contributions to your Contract made after December 31, 1988 and any increases in
cash value after December 31, 1988 may not be distributed unless you are: (a)
age 59 1/2, (b) no longer employed, (c) deceased, (d) disabled, or
(e) experiencing a financial hardship (cash value increases may not be
distributed for hardships prior to age 59 1/2). Distributions prior to age
59 1/2 due to financial hardship; unemployment or retirement may still be
subject to a penalty tax of 10%.
WE ENCOURAGE YOU TO CONSULT WITH YOUR QUALIFIED TAX ADVISER BEFORE MAKING ANY
SURRENDERS. PLEASE SEE THE "FEDERAL TAX CONSIDERATIONS" SECTION FOR MORE
INFORMATION.
ANNUITY PAYOUTS
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THIS SECTION DESCRIBES WHAT HAPPENS WHEN WE BEGIN TO MAKE REGULAR ANNUITY
PAYOUTS FROM YOUR CONTRACT. YOU, AS THE CONTRACT OWNER, SHOULD ANSWER FIVE
QUESTIONS:
- When do you want Annuity Payouts to begin?
- Which Annuity Payout Option do you want to use?
- How often do you want the payee to receive Annuity Payouts?
- What is the Assumed Investment Return?
- Do you want Annuity Payouts to be fixed-dollar amount or variable-dollar
amount?
Please check with your financial advisor to select the Annuity Payout Option
that best meets your income needs.
1. WHEN DO YOU WANT ANNUITY PAYOUTS TO BEGIN?
You select an Annuity Commencement Date when you purchase your Contract or at
any time before you begin receiving Annuity Payouts. You may change the Annuity
Commencement Date by notifying us within thirty days prior to the date. The
Annuity Commencement Date cannot be deferred beyond the Annuitant's 90th
birthday or the end of the 10th Contract Year, whichever is later. You may elect
a later Annuity Commencement Date if we allow and subject to the laws and
regulations then in effect. If this Contract is issued to the trustee of a
Charitable Remainder Trust, the Annuity Commencement Date may be deferred to the
Annuitant's 100th birthday.
The Annuity Calculation Date is when the amount of your Annuity Payout is
determined. This occurs within five Valuation Days before your selected Annuity
Commencement Date.
All Annuity Payouts, regardless of frequency, will occur on the same day of the
month as the Annuity Commencement Date. After the initial payout, if an Annuity
Payout date falls on a Non-Valuation Day, the Annuity Payout is computed on the
prior Valuation Day. If the Annuity Payout date does not occur in a given month
due to a leap year or months with only 28 days (i.e. the 31st), the Annuity
Payout will be computed on the last Valuation Day of the month.
2. WHICH ANNUITY PAYOUT OPTION DO YOU WANT TO USE?
Your Contract contains the Annuity Payout Options described below. The Annuity
Proceeds Settlement Option is an option that can be elected by the Beneficiary
after the death of the Contract Owner and is described in the "Death Benefit"
section. We may at times offer other Annuity Payout Options. Once we begin to
make Annuity Payouts, the Annuity Payout Option cannot be changed.
LIFE ANNUITY
We make Annuity Payouts as long as the Annuitant is living. When the Annuitant
dies, we stop making Annuity Payouts. A Payee would receive only one Annuity
Payout if the Annuitant dies after the first payout, two Annuity Payouts if the
Annuitant dies after the second payout, and so forth.
LIFE ANNUITY WITH A CASH REFUND
We will make Annuity Payouts as long as the Annuitant is living. When the
Annuitant dies, if the Annuity Payouts already made are less than the Contract
Value minus any Premium Tax, the remaining value will be paid to the
Beneficiary. The remaining value is equal to the Contract Value minus any
Premium Tax minus the Annuity Payouts already made. This option is only
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 23
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available for Annuity Payouts using the 5% Assumed Investment Return.
LIFE ANNUITY WITH PAYMENTS FOR A PERIOD CERTAIN
We will make Annuity Payouts during the lifetime of the Annuitant but Annuity
Payouts are at least guaranteed for the number of years you select. If, at the
death of the Annuitant, Annuity Payouts have been made for less than the minimum
elected number of years, then the Beneficiary may elect to continue the
remaining Annuity Payouts or receive the present value of the remaining Annuity
Payouts.
JOINT AND LAST SURVIVOR LIFE ANNUITY
We will make Annuity Payouts as long as the Annuitant and Joint Annuitant are
living. When one Annuitant dies, we continue to make Annuity Payouts to the
other Annuitant until that second Annuitant dies. When choosing this option, you
must decide what will happen to the Annuity Payouts; either fixed or variable,
after the first Annuitant dies. You must select Annuity Payouts that:
- Remain the same at 100%, or
- Decrease to 66.67%, or
- Decrease to 50%.
For variable Annuity Payouts, these percentages represent Annuity Units; for
fixed Annuity Payouts, they represent actual dollar amounts. The percentage will
also impact the Annuity Payout amount we pay while both Annuitants are living.
If you pick a lower percentage, your original Annuity Payouts will be higher
while both Annuitants are alive.
JOINT AND LAST SURVIVOR LIFE ANNUITY WITH PAYMENTS FOR A PERIOD CERTAIN
We will make Annuity Payouts as long as either the Annuitant or Joint Annuitant
are living, but we at least guarantee to make Annuity Payouts for a time period
you select, between 5 years and 100 years minus the Annuitant's age. If the
Annuitant and the Joint Annuitant both die before the guaranteed number of years
have passed, then the Beneficiary has two options, continue Annuity Payouts for
the remainder of the guaranteed number of years or receive the Commuted Value in
one sum.
When choosing this option, you must decide what will happen to the Annuity
Payouts after the first Annuitant dies. You must select Annuity Payouts that:
- Remain the same at 100%, or
- Decrease to 66.67%, or
- Decrease to 50%.
For variable-dollar amount Annuity Payouts, these percentages represent Annuity
Units. For fixed-dollar amount Annuity Payouts, these percentages represent
actual dollar amounts. The percentage will also impact the Annuity Payout amount
we pay while both Annuitants are living. If you pick a lower percentage, your
original Annuity Payouts will be higher while both Annuitants are alive.
PAYMENTS FOR A PERIOD CERTAIN
We will make Annuity Payouts for the number of years that you select. You can
select any number of years between 5 years and 100 years minus the Annuitant's
age. If, at the death of the Annuitant, Annuity Payouts have been made for less
than the time period selected, then the Beneficiary may elect to continue the
remaining Annuity Payouts or receive the Commuted Value in one sum.
IMPORTANT INFORMATION:
- YOU CANNOT SURRENDER YOUR CONTRACT ONCE ANNUITY PAYOUTS BEGIN, UNLESS YOU HAVE
SELECTED THE LIFE ANNUITY WITH PAYMENTS FOR A PERIOD CERTAIN, JOINT AND LAST
SURVIVOR LIFE ANNUITY WITH PAYMENTS FOR A PERIOD CERTAIN OR PAYMENTS FOR A
PERIOD CERTAIN ANNUITY PAYOUTS OPTIONS. A CONTINGENT DEFERRED SALES CHARGE MAY
BE DEDUCTED.
- For Non-Qualified Contracts, if you do not elect an Annuity Payout Option,
Annuity Payouts will automatically begin on the Annuity Commencement Date
under the Life Annuity with Payments for a 10 year Period Certain Annuity
Payout Option.
- For Qualified Contracts and Contracts issued in Texas, if you do not elect an
Annuity Payout Option, Annuity Payouts will begin automatically on the Annuity
Commencement Date, under the Life Annuity Payout Option.
3. HOW OFTEN DO YOU WANT THE PAYEE TO RECEIVE ANNUITY PAYOUTS?
In addition to selecting an Annuity Commencement Date and an Annuity Payout
Option, you must also decide how often you want the Payee to receive Annuity
Payouts. You may choose to receive Annuity Payouts:
- monthly,
- quarterly,
- semi-annually, or
- annually.
Once you select a frequency, it cannot be changed. If you do not make a
selection, the Payee will receive monthly Annuity Payouts. You must select a
frequency that results in an Annuity Payout of at least $50. If the amount falls
below $50, we have the right to change the frequency to bring the Annuity Payout
up to at least $50.
4. WHAT IS THE ASSUMED INVESTMENT RETURN?
The Assumed Investment Return ("AIR") is the investment return you select before
we start to make Annuity Payouts. It is a critical assumption for calculating
variable dollar amount Annuity Payouts. The first Annuity Payout will be based
upon the AIR. The remaining Annuity Payouts will fluctuate based on the
performance of the underlying Funds.
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24 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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Subject to the approval of your State, you can select one of three AIRs: 3%, 5%
or 6%. The greater the AIR, the greater the initial Annuity Payout. A higher AIR
may result in smaller potential growth in the Annuity Payouts. On the other
hand, a lower AIR results in a lower initial Annuity Payout, but future Annuity
Payouts have the potential to be greater.
For example, if the second monthly Annuity Payout is the same as the first, the
sub-accounts earned exactly the same return as the AIR. If the second monthly
Annuity Payout is more than the first, the sub-accounts earned more than the
AIR. If the second Annuity Payout is less than the first, the sub-account earned
less than the AIR.
Level variable dollar amount Annuity Payouts would be produced if the investment
returns remained constant and equal to the AIR. In fact, Annuity Payouts will
vary up or down as the investment rate varies up or down from the AIR.
5. DO YOU WANT ANNUITY PAYOUTS TO BE FIXED-DOLLAR AMOUNT OR VARIABLE-DOLLAR
AMOUNT?
You may choose an Annuity Payout Option with fixed-dollar amounts or
variable-dollar amounts, depending on your income needs.
FIXED-DOLLAR AMOUNT ANNUITY PAYOUTS -- Once a fixed-dollar amount Annuity Payout
begins, you cannot change your selection to receive variable-dollar amount
Annuity Payout. You will receive equal fixed-dollar amount Annuity Payouts
throughout the Annuity Payout period. Fixed-dollar amount Annuity Payout amounts
are determined by multiplying the Contract Value, minus any applicable Premium
Taxes, by an Annuity rate. The annuity rate is set by us and is not less than
the rate specified in the Fixed Payment Annuity tables in your Contract.
VARIABLE-DOLLAR AMOUNT ANNUITY PAYOUTS -- A variable-dollar amount Annuity
Payout is based on the investment performance of the Sub-Accounts. The
variable-dollar amount Annuity Payouts may fluctuate with the performance of the
underlying Funds. To begin making variable-dollar amount Annuity Payouts, we
convert the first Annuity Payout amount to a set number of Annuity Units and
then price those units to determine the Annuity Payout amount. The number of
Annuity Units that determines the Annuity Payout amount remains fixed unless you
transfer units between Sub-Accounts.
The dollar amount of the first variable Annuity Payout depends on:
- the Annuity Payout Option chosen,
- the Annuitant's attained age and gender (if applicable), and,
- the applicable annuity purchase rates based on the 1983a Individual Annuity
Mortality table
- the Assumed Investment Return
The total amount of the first variable-dollar amount Annuity Payout is
determined by dividing the Contract Value minus any applicable Premium Taxes, by
$1,000 and multiplying the result by the payment factor defined in the Contract
for the selected Annuity Payout Option.
The dollar amount of each subsequent variable-dollar amount Annuity Payout is
equal to the total of:
Annuity Units for each Sub-Account multiplied by Annuity Unit Value of each
Sub-Account.
The Annuity Unit Value of each Sub-Account for any Valuation Period is equal to
the Accumulation Unit Value Net Investment Factor for the current Valuation
Period multiplied by the Annuity Unit factor, multiplied by the Annuity Unit
Value for the preceding Valuation Period.
TRANSFER OF ANNUITY UNITS -- After the Annuity Calculation Date, you may
transfer dollar amounts of Annuity Units from one Sub-Account to another. On the
day you make a transfer, the dollar amounts are equal for both Sub-Accounts and
the number of Annuity Units will be different. We will transfer the dollar
amount of your Annuity Units the day we receive your written request if received
before the close of the New York Stock Exchange. Otherwise, the transfer will be
made on the next Valuation Day.
OTHER PROGRAMS AVAILABLE
--------------------------------------------------------------------------------
INVESTEASE-REGISTERED TRADEMARK- PROGRAM -- InvestEase is an electronic transfer
program that allows you to have money automatically transferred from your
checking or savings account, and invested in your Contract. It is available for
Premium Payments made after your initial Premium Payment. The minimum amount for
each transfer is $50. You can elect to have transfers occur either monthly or
quarterly, and they can be made into any Account available in your Contract.
AUTOMATIC INCOME PROGRAM -- The Automatic Income Program allows you to Surrender
up to 10% of your total Premium Payments each Contract Year. We can Surrender
from the Accounts you select systematically on a monthly, quarterly, semiannual,
or annual basis. The Automatic Income Program may change based on your
instructions after your third Contract Year.
ASSET ALLOCATION PROGRAM -- Asset Allocation is a program that allows you to
choose an allocation for your Sub-Accounts to help you reach your investment
goals. Some Contracts offer model allocations with pre-selected Sub-Accounts and
percentages that have been established for each type of investor -- ranging from
conservative to aggressive. Over time, Sub-Account performance may cause your
Contract's allocation percentages to change, but under the Asset Allocation
Program, your Sub-Account allocations are rebalanced to the percentages
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 25
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in the current model you have chosen. You can transfer freely between allocation
models up to twelve times per year. You can also allocate a portion of your
investment to Sub-Accounts that may not be part of the model. You can only
participate in one asset allocation model at a time.
ASSET REBALANCING -- Asset Rebalancing is another type of asset allocation
program in which you customize your Sub-Accounts to meet your investment needs.
You select the Sub-Accounts and the percentages you want allocated to each Sub-
Account. Based on the frequency you select, your model will automatically
rebalance to the original percentages chosen. You can transfer freely between
models up to twelve times per year. You can also allocate a portion of your
investment to Sub-Accounts that are not part of the model. You can only
participate in one asset rebalancing model at a time.
OTHER INFORMATION
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ASSIGNMENT -- Ownership of this Contract is generally assignable. However, if
the Contract is issued to a tax qualified retirement plan, it is possible that
the ownership of the Contract may not be transferred or assigned. An assignment
of a Non-Qualified Contract may subject the Contract Values or Surrender Value
to income taxes and certain penalty taxes.
CONTRACT MODIFICATION -- The Annuitant may not be changed. However, if the
Annuitant is still living, the Contingent Annuitant may be changed at any time
prior to the Annuity Commencement Date by sending us written notice. We may
modify the Contract, but no modification will effect the amount or term of any
Contract unless a modification is required to conform the Contract to applicable
Federal or State law. No modification will effect the method by which Contract
Values are determined.
HOW CONTRACTS ARE SOLD -- Hartford Securities Distribution Company, Inc. ("HSD")
serves as Principal Underwriter for the securities issued with respect to the
Separate Account. HSD is registered with the Securities and Exchange Commission
under the Securities Exchange Act of 1934 as a Broker-Dealer and is a member of
the National Association of Securities Dealers, Inc. HSD is an affiliate of
ours. Both HSD and Hartford are ultimately controlled by The Hartford Financial
Services Group, Inc. The principal business address of HSD is the same as ours.
The securities will be sold by individuals who represent us as insurance agents
and who are registered representatives of Broker-Dealers that have entered into
distribution agreements with HSD.
Commissions will be paid by Hartford and will not be more than 7% of Premium
Payments. From time to time, Hartford may pay or permit other promotional
incentives, in cash or credit or other compensation.
Broker-dealers or financial institutions are compensated according to a schedule
set forth by HSD and any applicable rules or regulations for variable insurance
compensation. Compensation is generally based on Premium Payments made by
policyholders or Contract Owners. This compensation is usually paid from the
sales charges described in this Prospectus.
In addition, a broker-dealer or financial institution may also receive
additional compensation for, among other things, training, marketing or other
services provided. HSD, its affiliates or Hartford may also make compensation
arrangements with certain broker-dealers or financial institutions based on
total sales by the broker-dealer or financial institution of insurance products.
These payments, which may be different for different broker-dealers or financial
institutions, will be made by HSD, its affiliates or Hartford out of their own
assets and will not effect the amounts paid by the policyholders or Contract
Owners to purchase, hold or Surrender variable insurance products.
The Contract may be sold directly to certain individuals under certain
circumstances that do not involve payment of any sales compensation to a
registered representative. In such case, Hartford will credit the Contract with
an additional 5.0% of the Premium Payment. This additional percentage of Premium
Payment in no way affects present or future charges, rights, benefits or current
values of other Contract Owners. The following class of individuals are eligible
for this feature: (1) current or retired officers, directors, trustees and
employees (and their families) of the ultimate parent and affiliates of
Hartford; and (2) employees and registered representatives (and their families)
of registered broker-dealers (or their financial institutions) that have a sales
agreement with Hartford and its principal underwriter to sell the Contracts.
LEGAL MATTERS AND EXPERTS
There are no material legal proceedings pending to which the Separate Account is
a party.
Counsel with respect to federal laws and regulations applicable to the issue and
sale of the Contracts and with respect to Connecticut law is Lynda Godkin,
Senior Vice President, General Counsel and Corporate Secretary, Hartford Life
and Annuity Insurance Company, P.O. Box 2999, Hartford, Connecticut 06104-2999.
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26 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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The audited financial statements included in this registration statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.
Reference is made to the report on the statutory financial statements of
Hartford Life and Annuity Insurance Company which states the statutory financial
statements are presented in accordance with statutory accounting practices
prescribed or permitted by the National Association of Insurance Commissioners
and the State of Connecticut Insurance Department, and are not presented in
accordance with generally accepted accounting principles. The principal business
address of Arthur Andersen LLP is One Financial Plaza, Hartford, Connecticut
06103.
MORE INFORMATION
You may call your Representative if you have any questions or write or call us
at the address below:
Hartford Life and Annuity Insurance Company
Attn: Investment Product Services
P.O. Box 5085
Hartford, Connecticut 06102-5085
Telephone: (800) 862-6668 (Contract Owners)
(800) 862-7155 (Registered Representatives)
FEDERAL TAX CONSIDERATIONS
--------------------------------------------------------------------------------
What are some of the federal tax consequences which affect these Contracts?
A. GENERAL
Since federal tax law is complex, the tax consequences of purchasing this
contract will vary depending on your situation. You may need tax or legal advice
to help you determine whether purchasing this contract is right for you.
Our general discussion of the tax treatment of this contract is based on our
understanding of federal income tax laws as they are currently interpreted. A
detailed description of all federal income tax consequences regarding the
purchase of this contract cannot be made in the prospectus. We also do not
discuss state, municipal or other tax laws that may apply to this contract. For
detailed information, you should consult with a qualified tax adviser familiar
with your situation.
B. TAXATION OF HARTFORD AND THE SEPARATE ACCOUNT
The Separate Account is taxed as part of Hartford which is taxed as a life
insurance company in accordance with the Internal Revenue Code of 1986, as
amended (the "Code"). Accordingly, the Separate Account will not be taxed as a
"regulated investment company" under subchapter M of Chapter 1 of the Code.
Investment income and any realized capital gains on the assets of the Separate
Account are reinvested and are taken into account in determining the value of
the Accumulation and Annuity Units (See "Value of Accumulation Units"). As a
result, such investment income and realized capital gains are automatically
applied to increase reserves under the Contract.
No taxes are due on interest, dividends and short-term or long-term capital
gains earned by the Separate Account with respect to Qualified or Non-Qualified
Contracts.
C. TAXATION OF ANNUITIES -- GENERAL PROVISIONS AFFECTING PURCHASERS OTHER THAN
QUALIFIED RETIREMENT PLANS
Section 72 of the Code governs the taxation of annuities in general.
1. NON-NATURAL PERSONS, CORPORATIONS, ETC.
Code Section 72 contains provisions for contract owners which are not natural
persons. Non-natural persons include corporations, trusts, limited liability
companies, partnerships and other types of legal entities. The tax rules for
contracts owned by non-natural persons are different from the rules for
contracts owned by individuals. For example, the annual net increase in the
value of the contract is currently includible in the gross income of a
non-natural person, unless the non-natural person holds the contract as an agent
for a natural person. There are additional exceptions from current inclusion
for:
- certain annuities held by structured settlement companies,
- certain annuities held by an employer with respect to a terminated qualified
retirement plan and
- certain immediate annuities.
A non-natural person which is a tax-exempt entity for federal tax purposes will
not be subject to income tax as a result of this provision.
If the contract owner is a non-natural person, the primary annuitant is treated
as the contract owner in applying mandatory distribution rules. These rules
require that certain distributions be made upon the death of the contract owner.
A change in the primary annuitant is also treated as the death of the contract
owner.
2. OTHER CONTRACT OWNERS (NATURAL PERSONS).
A Contract Owner is not taxed on increases in the value of the Contract until an
amount is received or deemed received, e.g., in the form of a lump sum payment
(full or partial value of a Contract) or as Annuity payments under the
settlement option elected.
The provisions of Section 72 of the Code concerning distributions are summarized
briefly below. Also summarized are special rules affecting distributions from
Contracts obtained in a tax-free exchange for other annuity contracts or life
insurance contracts which were purchased prior to August 14, 1982.
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HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 27
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a. DISTRIBUTIONS PRIOR TO THE ANNUITY COMMENCEMENT DATE.
i. Total premium payments less amounts received which were not includable in
gross income equal the "investment in the contract" under Section 72 of the
Code.
ii. To the extent that the value of the Contract (ignoring any surrender
charges except on a full surrender) exceeds the "investment in the
contract," such excess constitutes the "income on the contract."
iii. Any amount received or deemed received prior to the Annuity Commencement
Date (e.g., upon a partial surrender) is deemed to come first from any
such "income on the contract" and then from "investment in the contract,"
and for these purposes such "income on the contract" shall be computed by
reference to any aggregation rule in subparagraph 2.c. below. As a result,
any such amount received or deemed received (1) shall be includable in
gross income to the extent that such amount does not exceed any such
"income on the contract," and (2) shall not be includable in gross income
to the extent that such amount does exceed any such "income on the
contract." If at the time that any amount is received or deemed received
there is no "income on the contract" (e.g., because the gross value of the
Contract does not exceed the "investment in the contract" and no
aggregation rule applies), then such amount received or deemed received
will not be includable in gross income, and will simply reduce the
"investment in the contract."
iv. The receipt of any amount as a loan under the Contract or the assignment or
pledge of any portion of the value of the Contract shall be treated as an
amount received for purposes of this subparagraph a. and the next
subparagraph b.
v. In general, the transfer of the Contract, without full and adequate
consideration, will be treated as an amount received for purposes of this
subparagraph a. and the next subparagraph b. This transfer rule does not
apply, however, to certain transfers of property between spouses or incident
to divorce.
b. DISTRIBUTIONS AFTER ANNUITY COMMENCEMENT DATE.
Annuity payments made periodically after the Annuity Commencement Date are
includable in gross income to the extent the payments exceed the amount
determined by the application of the ratio of the "investment in the contract"
to the total amount of the payments to be made after the Annuity Commencement
Date (the "exclusion ratio").
i. When the total of amounts excluded from income by application of the
exclusion ratio is equal to the investment in the contract as of the
Annuity Commencement Date, any additional payments (including surrenders)
will be entirely includable in gross income.
ii. If the annuity payments cease by reason of the death of the Annuitant and,
as of the date of death, the amount of annuity payments excluded from gross
income by the exclusion ratio does not exceed the investment in the
contract as of the Annuity Commencement Date, then the remaining portion of
unrecovered investment shall be allowed as a deduction for the last taxable
year of the Annuitant.
iii. Generally, nonperiodic amounts received or deemed received after the
Annuity Commencement Date are not entitled to any exclusion ratio and
shall be fully includable in gross income. However, upon a full surrender
after such date, only the excess of the amount received (after any
surrender charge) over the remaining "investment in the contract" shall be
includable in gross income (except to the extent that the aggregation
rule referred to in the next subparagraph c. may apply).
c. AGGREGATION OF TWO OR MORE ANNUITY CONTRACTS.
Contracts issued after October 21, 1988 by the same insurer (or affiliated
insurer) to the same Contract Owner within the same calendar year (other than
certain contracts held in connection with a tax-qualified retirement
arrangement) will be treated as one annuity Contract for the purpose of
determining the taxation of distributions prior to the Annuity Commencement
Date. An annuity contract received in a tax-free exchange for another annuity
contract or life insurance contract may be treated as a new Contract for this
purpose. Hartford believes that for any annuity subject to such aggregation, the
values under the Contracts and the investment in the contracts will be added
together to determine the taxation under subparagraph 2.a., above, of amounts
received or deemed received prior to the Annuity Commencement Date. Withdrawals
will first be treated as withdrawals of income until all of the income from all
such Contracts is withdrawn. As of the date of this Prospectus, there are no
regulations interpreting this provision.
d. 10% PENALTY TAX -- APPLICABLE TO CERTAIN WITHDRAWALS AND ANNUITY
PAYMENTS.
i. If any amount is received or deemed received on the Contract (before or
after the Annuity Commencement Date), the Code applies a penalty tax equal
to ten percent of the portion of the amount includable in gross income,
unless an exception applies.
ii. The 10% penalty tax will not apply to the following distributions
(exceptions vary based upon the precise plan involved):
1. Distributions made on or after the date the recipient has attained the
age of 59 1/2.
2. Distributions made on or after the death of the holder or where the
holder is not an individual, the death of the primary annuitant.
3. Distributions attributable to a recipient's becoming disabled.
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28 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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4. A distribution that is part of a scheduled series of substantially equal
periodic payments (not less frequently than annually) for the life (or
life expectancy) of the recipient (or the joint lives or life
expectancies of the recipient and the recipient's designated
Beneficiary).
5. Distributions of amounts which are allocable to the "investment in the
contract" prior to August 14, 1982 (see next subparagraph e.).
e. SPECIAL PROVISIONS AFFECTING CONTRACTS OBTAINED THROUGH A TAX-FREE
EXCHANGE OF OTHER ANNUITY OR LIFE INSURANCE CONTRACTS PURCHASED PRIOR TO
AUGUST 14, 1982.
If the Contract was obtained by a tax-free exchange of a life insurance or
annuity Contract purchased prior to August 14, 1982, then any amount received or
deemed received prior to the Annuity Commencement Date shall be deemed to come
(1) first from the amount of the "investment in the contract" prior to August
14, 1982 ("pre-8/14/82 investment") carried over from the prior Contract, (2)
then from the portion of the "income on the contract" (carried over to, as well
as accumulating in, the successor Contract) that is attributable to such
pre-8/14/82 investment, (3) then from the remaining "income on the contract" and
(4) last from the remaining "investment in the contract." As a result, to the
extent that such amount received or deemed received does not exceed such
pre-8/14/82 investment, such amount is not includable in gross income., In
addition, to the extent that such amount received or deemed received does not
exceed the sum of (a) such pre-8/14/82 investment and (b) the "income on the
contract" attributable thereto, such amount is not subject to the 10% penalty
tax. In all other respects, amounts received or deemed received from such post-
exchange Contracts are generally subject to the rules described in this
subparagraph 3.
f. REQUIRED DISTRIBUTIONS
i. Death of Contract Owner or Primary Annuitant
Subject to the alternative election or spouse beneficiary provisions in ii or
iii below:
1. If any Contract Owner dies on or after the Annuity Commencement Date and
before the entire interest in the Contract has been distributed, the
remaining portion of such interest shall be distributed at least as
rapidly as under the method of distribution being used as of the date of
such death;
2. If any Contract Owner dies before the Annuity Commencement Date, the
entire interest in the Contract will be distributed within 5 years after
such death; and
3. If the Contract Owner is not an individual, then for purposes of 1. or
2. above, the primary annuitant under the Contract shall be treated as
the Contract Owner, and any change in the primary annuitant shall be
treated as the death of the Contract Owner. The primary annuitant is the
individual, the events in the life of whom are of primary importance in
affecting the timing or amount of the payout under the Contract.
ii. Alternative Election to Satisfy Distribution Requirements
If any portion of the interest of a Contract Owner described in i. above is
payable to or for the benefit of a designated beneficiary, such beneficiary may
elect to have the portion distributed over a period that does not extend beyond
the life or life expectancy of the beneficiary. Distributions must begin within
a year of the Contract Owner's death.
iii. Spouse Beneficiary
If any portion of the interest of a Contract Owner is payable to or for the
benefit of his or her spouse, and the Annuitant or Contingent Annuitant is
living, such spouse shall be treated as the Contract Owner of such portion for
purposes of section i. above. This spousal continuation shall apply only once
for this contract.
3. DIVERSIFICATION REQUIREMENTS.
The Code requires that investments supporting your contract be adequately
diversified. Code Section 817 provides that a variable annuity contract will not
be treated as an annuity contract for any period during which the investments
made by the separate account or underlying fund are not adequately diversified.
If a contract is not treated as an annuity contract, the contract owner will be
subject to income tax on annual increases in cash value.
The Treasury Department's diversification regulations require, among other
things, that:
- no more than 55% of the value of the total assets of the segregated asset
account underlying a variable contract is represented by any one investment,
- no more than 70% is represented by any two investments,
- no more than 80% is represented by any three investments and
- no more than 90% is represented by any four investments.
In determining whether the diversification standards are met, all securities of
the same issuer, all interests in the same real property project, and all
interests in the same commodity are each treated as a single investment. In the
case of government securities, each government agency or instrumentality is
treated as a separate issuer.
A separate account must be in compliance with the diversification standards on
the last day of each calendar quarter or within 30 days after the quarter ends.
If an insurance company inadvertently fails to meet the diversification
requirements, the company may still comply within a reasonable period and avoid
the taxation of contract income on an ongoing basis. However, either the company
or the contract owner must agree to pay the tax due for the period during which
the diversification requirements were not met.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 29
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We monitor the diversification of investments in the separate accounts and test
for diversification as required by the Code. We intend to administer all
contracts subject to the diversification requirements in a manner that will
maintain adequate diversification.
4. OWNERSHIP OF THE ASSETS IN THE SEPARATE ACCOUNT.
In order for a variable annuity contract to qualify for tax deferral, assets in
the separate accounts supporting the contract must be considered to be owned by
the insurance company and not by the contract owner. It is unclear under what
circumstances an investor is considered to have enough control over the assets
in the separate account to be considered the owner of the assets for tax
purposes.
The IRS has issued several rulings discussing investor control. These rulings
say that certain incidents of ownership by the contract owner, such as the
ability to select and control investments in a separate account, will cause the
contract owner to be treated as the owner of the assets for tax purposes.
In its explanation of the diversification regulations, the Treasury Department
recognized that the temporary regulations "do not provide guidance concerning
the circumstances in which investor control of the investments of a segregated
asset account may cause the investor, rather than the insurance company, to be
treated as the owner of the assets in the account." The explanation further
indicates that "the temporary regulations provide that in appropriate cases a
segregated asset account may include multiple sub-accounts, but do not specify
the extent to which policyholders may direct their investments to particular
sub-accounts without being treated as the owners of the underlying assets.
Guidance on this and other issues will be provided in regulations or revenue
rulings under Section 817(d), relating to the definition of variable contract."
The final regulations issued under Section 817 did not provide guidance
regarding investor control, and as of the date of this prospectus, guidance has
yet to be issued. We do not know if additional guidance will be issued. If
guidance is issued, we do not know if it will have a retroactive effect.
Due to the lack of specific guidance on investor control, there is some
uncertainty about when a contract owner is considered the owner of the assets
for tax purposes. We reserve the right to modify the contract, as necessary, to
prevent you from being considered the owner of assets in the separate account.
D. FEDERAL INCOME TAX WITHHOLDING
Any portion of a distribution that is (or is deemed to be) current taxable
income to the Contract Owner will be subject to federal income tax withholding
and reporting under the Code. Generally, however, a Contract Owner may elect not
to have income taxes withheld or to have income taxes withheld at a different
rate by filing a completed election form with us. Election forms will be
provided at the time distributions are requested.
E. GENERAL PROVISIONS AFFECTING QUALIFIED RETIREMENT PLANS
The Contract may be used for a number of qualified retirement plans. If the
Contract is being purchased with respect to some form of qualified retirement
plan, please refer to Appendix I for information relative to the types of plans
for which it may be used and the general explanation of the tax features of such
plans.
F. ANNUITY PURCHASES BY NONRESIDENT ALIENS AND FOREIGN CORPORATIONS
The discussion above provides general information regarding U.S. federal income
tax consequences to annuity purchasers that are U.S. citizens or residents.
Purchasers that are not U.S. citizens or residents will generally be subject to
U.S. federal income tax and withholding on annuity distributions at a 30% rate,
unless a lower treaty rate applies. In addition, purchasers may be subject to
state premium tax, other state and/or municipal taxes, and taxes that may be
imposed by the purchaser's country of citizenship or residence. Prospective
purchasers are advised to consult with a qualified tax adviser regarding U.S.,
state, and foreign taxation with respect to an annuity purchase.
G. GENERATION-SKIPPING TRANSFERS
Under certain circumstances, the Internal Revenue Code may impose a "generation
skipping transfer tax" when all or part of an annuity is transferred to, or a
death benefit is paid to, an individual two or more generations younger than the
owner. Federal tax law may require us to deduct the tax from your contract, or
from any applicable payment, and pay it directly to the Internal Revenue
Service.
<PAGE>
30 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
--------------------------------------------------------------------------------
TABLE OF CONTENTS TO STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
SECTION
<S> <C>
------------------------------------------------------------------------------
DESCRIPTION OF HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
------------------------------------------------------------------------------
SAFEKEEPING OF ASSETS
------------------------------------------------------------------------------
INDEPENDENT PUBLIC ACCOUNTANTS
------------------------------------------------------------------------------
DISTRIBUTION OF CONTRACTS
------------------------------------------------------------------------------
CALCULATION OF YIELD AND RETURN
------------------------------------------------------------------------------
PERFORMANCE COMPARISONS
------------------------------------------------------------------------------
FINANCIAL STATEMENTS
------------------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 31
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APPENDIX I -- INFORMATION REGARDING TAX-QUALIFIED RETIREMENT PLANS
This summary does not attempt to provide more than general information about the
federal income tax rules associated with use of a Contract by a tax-qualified
retirement plan. Because of the complexity of the federal tax rules, owners,
participants and beneficiaries are encouraged to consult their own tax advisors
as to specific tax consequences.
The federal tax rules applicable to owners of Contracts under tax-qualified
retirement plans vary according to the type of plan as well as the terms and
conditions of the plan itself. Contract owners, plan participants and
beneficiaries are cautioned that the rights and benefits of any person may be
controlled by the terms and conditions of the tax-qualified retirement plan
itself, regardless of the terms and conditions of a Contract. We are not bound
by the terms and conditions of such plans to the extent such terms conflict with
a Contract, unless we specifically consent to be bound.
Some tax-qualified retirement plans are subject to distribution and other
requirements that are not incorporated into our administrative procedures.
Contract owners, participants and beneficiaries are responsible for determining
that contributions, distributions and other transactions comply with applicable
law. Tax penalties may apply to transactions with respect to tax-qualified
retirement plans if applicable federal income tax rules and restrictions are not
carefully observed.
We do not currently offer the Contracts in connection with all of the types of
tax-qualified retirement plans discussed below and may not offer the Contracts
for all types of tax-qualified retirement plans in the future.
1. TAX-QUALIFIED PENSION OR PROFIT-SHARING PLANS -- Eligible employers can
establish certain tax-qualified pension and profit-sharing plans under section
401 of the Code. Rules under section 401(k) of the Code govern certain "cash or
deferred arrangements" under such plans. Rules under section 408(k) govern
"simplified employee pensions". Tax-qualified pension and profit-sharing plans
are subject to limitations on the amount that may be contributed, the persons
who may be eligible to participate and the time when distributions must
commence. Employers intending to use the Contracts in connection with
tax-qualified pension or profit-sharing plans should seek competent tax and
other legal advice.
2. TAX SHELTERED ANNUITIES UNDER SECTION 403(b) -- Public schools and certain
types of charitable, educational and scientific organizations, as specified in
section 501(c)(3) of the Code, can purchase tax-sheltered annuity contracts for
their employees. Tax-deferred contributions can be made to tax-sheltered annuity
contracts under section 403(b) of the Code, subject to certain limitations.
Generally, such contributions may not exceed the lesser of $10,500 (indexed) or
20% of the employee's "includable compensation" for such employee's most recent
full year of employment, subject to other adjustments. Special provisions under
the Code may allow some employees to elect a different overall limitation.
Tax-sheltered annuity programs under section 403(b) are subject to a PROHIBITION
AGAINST DISTRIBUTIONS FROM THE CONTRACT ATTRIBUTABLE TO CONTRIBUTIONS MADE
PURSUANT TO A SALARY REDUCTION AGREEMENT, unless such distribution is made:
- after the participating employee attains age 59 1/2;
- upon separation from service;
- upon death or disability; or
- in the case of hardship (and in the case of hardship, any income attributable
to such contributions may not be distributed).
Generally, the above restrictions do not apply to distributions attributable to
cash values or other amounts held under a section 403(b) contract as of December
31, 1988.
3. DEFERRED COMPENSATION PLANS UNDER SECTION 457 -- A governmental employer or a
tax-exempt employer other than a governmental unit can establish a Deferred
Compensation Plan under section 457 of the Code. For these purposes, a
"governmental employer" is a State, a political subdivision of a State, or an
agency or an instrumentality of a State or political subdivision of a State.
Employees and independent contractors performing services for a governmental or
tax-exempt employer can elect to have contributions made to a Deferred
Compensation Plan of their employer in accordance with the employer's plan and
section 457 of the Code.
Deferred Compensation Plans that meet the requirements of section 457(b) of the
Code are called "eligible" Deferred Compensation Plans. Section 457(b) limits
the amount of contributions that can be made to an eligible Deferred
Compensation Plan on behalf of a participant. Generally, the limitation on
contributions is 33 1/3% of a participant's includable compensation (typically
25% of gross compensation) or, for 2000, $8,000 (indexed), whichever is less.
The plan may provide for additional "catch-up" contributions during the three
taxable years ending before the year in which the participant attains normal
retirement age.
All of the assets and income of an eligible Deferred Compensation Plan of a
governmental employer must be held in trust for the exclusive benefit of
participants and their beneficiaries. For this purpose, custodial accounts and
certain annuity contracts are treated as trusts. The requirement of a trust does
not apply to amounts under a Deferred Compensation Plan of a tax-exempt
(non-governmental) employer. In addition, the requirement of a trust does not
apply to amounts under a Deferred Compensation Plan of a governmental employer
if the Deferred Compensation Plan is not an eligible plan within the meaning of
section 457(b) of the Code. In the absence of such a trust,
<PAGE>
32 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
--------------------------------------------------------------------------------
amounts under the plan will be subject to the claims of the employer's general
creditors.
In general, distributions from an eligible Deferred Compensation Plan are
prohibited under section 457 of the Code unless made after the participating
employee:
- attains age 70 1/2,
- separates from service,
- dies, or
- suffers an unforeseeable financial emergency as defined in the Code.
Under present federal tax law, amounts accumulated in a Deferred Compensation
Plan under section 457 of the Code cannot be transferred or rolled over on a
tax-deferred basis except for certain transfers to other Deferred Compensation
Plans under section 457 in limited cases.
4. INDIVIDUAL RETIREMENT ANNUITIES ("IRAS") UNDER SECTION 408
TRADITIONAL IRAS -- Eligible individuals can establish individual retirement
programs under section 408 of the Code through the purchase of an IRA. Section
408 imposes limits with respect to IRAs, including limits on the amount that may
be contributed to an IRA, the amount of such contributions that may be deducted
from taxable income, the persons who may be eligible to contribute to an IRA,
and the time when distributions commence from an IRA. Distributions from certain
tax-qualified retirement plans may be "rolled-over" to an IRA on a tax-deferred
basis.
SIMPLE IRAS -- Eligible employees may establish SIMPLE IRAs in connection with a
SIMPLE IRA plan of an employer under section 408(p) of the Code. Special
rollover rules apply to SIMPLE IRAs. Amounts can be rolled over from one SIMPLE
IRA to another SIMPLE IRA. However, amounts can be rolled over from a SIMPLE IRA
to a Traditional IRA only after two years have expired since the employee first
commenced participation in the employer's SIMPLE IRA plan. Amounts cannot be
rolled over to a SIMPLE IRA from a qualified plan or a Traditional IRA. Hartford
is a non-designated financial institution for purposes of the SIMPLE IRA rules.
ROTH IRAS -- Eligible individuals may establish Roth IRAs under section 408A of
the Code. Contributions to a Roth IRA are not deductible. Subject to special
limitations, a Traditional IRA may be converted into a Roth IRA or a
distribution from a Traditional IRA may be rolled over to a Roth IRA. However, a
conversion or a rollover from a Traditional IRA to a Roth IRA is not excludable
from gross income. If certain conditions are met, qualified distributions from a
Roth IRA are tax-free.
5. FEDERAL TAX PENALTIES AND WITHHOLDING -- Distributions from tax-qualified
retirement plans are generally taxed as ordinary income under section 72 of the
Code. Under these rules, a portion of each distribution may be excludable from
income. The excludable amount is the portion of the distribution that bears the
same ratio as the after-tax contributions bear to the expected return.
(a) PENALTY TAX ON EARLY DISTRIBUTIONS Section 72(t) of the Code imposes an
additional penalty tax equal to 10% of the taxable portion of a
distribution from certain tax-qualified retirement plans. However, the 10%
penalty tax does not apply to a distribution that is:
- Made on or after the date on which the employee reaches age 59 1/2;
- Made to a beneficiary (or to the estate of the employee) on or after the death
of the employee;
- Attributable to the employee becoming disabled (as defined in the Code);
- Part of a series of substantially equal periodic payments (not less frequently
than annually) made for the life (or life expectancy) of the employee or the
joint lives (or joint life expectancies) of the employee and his or her
designated beneficiary;
- Except in the case of an IRA, made to an employee after separation from
service after reaching age 55; or
- Not greater than the amount allowable as a deduction to the employee for
eligible medical expenses during the taxable year.
In addition, the 10% penalty tax does not apply to a distribution from an IRA
that is:
- Made after separation from employment to an unemployed IRA owner for health
insurance premiums, if certain conditions are met;
- Not in excess of the amount of certain qualifying higher education expenses,
as defined by section 72(t)(7) of the Code; or
- A qualified first-time homebuyer distribution meeting the requirements
specified at section 72(t)(8) of the Code.
If you are a participant in a SIMPLE IRA plan, you should be aware that the 10%
penalty tax is increased to 25% with respect to non-exempt early distributions
made from your SIMPLE IRA during the first two years following the date you
first commenced participation in any SIMPLE IRA plan of your employer.
(b) MINIMUM DISTRIBUTION PENALTY TAX If the amount distributed is less than
the minimum required distribution for the year, the Participant is subject
to a 50% penalty tax on the amount that was not properly distributed.
An individual's interest in a tax-qualified retirement plan generally must be
distributed, or begin to be distributed, not later than the Required Beginning
Date. Generally, the Required Beginning Date is April 1 of the calendar year
following the later of:
- the calendar year in which the individual attains age 70 1/2; or
- the calendar year in which the individual retires from service with the
employer sponsoring the plan.
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY 33
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The Required Beginning Date for an individual who is a five (5) percent owner
(as defined in the Code), or who is the owner of an IRA, is April 1 of the
calendar year following the calendar year in which the individual attains age
70 1/2.
The entire interest of the Participant must be distributed beginning no later
than the Required Beginning Date over:
- the life of the Participant or the lives of the Participant and the
Participant's designated beneficiary, or
- over a period not extending beyond the life expectancy of the Participant or
the joint life expectancy of the Participant and the Participant's designated
beneficiary.
Each annual distribution must equal or exceed a "minimum distribution amount"
which is determined by dividing the account balance by the applicable life
expectancy. This account balance is generally based upon the account value as of
the close of business on the last day of the previous calendar year. In
addition, minimum distribution incidental benefit rules may require a larger
annual distribution.
If an individual dies before reaching his or her Required Beginning Date, the
individual's entire interest must generally be distributed within five years of
the individual's death. However, this rule will be deemed satisfied, if
distributions begin before the close of the calendar year following the
individual's death to a designated beneficiary and distribution is over the life
of such designated beneficiary (or over a period not extending beyond the life
expectancy of the beneficiary). If the beneficiary is the individual's surviving
spouse, distributions may be delayed until the individual would have attained
age 70 1/2.
If an individual dies after reaching his or her Required Beginning Date or after
distributions have commenced, the individual's interest must generally be
distributed at least as rapidly as under the method of distribution in effect at
the time of the individual's death.
(c) WITHHOLDING In general, regular wage withholding rules apply to
distributions from IRAs and plans described in section 457 of the Code.
Periodic distributions from other tax-qualified retirement plans that are
made for a specified period of 10 or more years or for the life or life
expectancy of the participant (or the joint lives or life expectancies of
the participant and beneficiary) are generally subject to federal income
tax withholding as if the recipient were married claiming three exemptions.
The recipient of periodic distributions may generally elect not to have
withholding apply or to have income taxes withheld at a different rate by
providing a completed election form.
Mandatory federal income tax withholding at a flat rate of 20% will generally
apply to other distributions from such other tax-qualified retirement plans
unless such distributions are:
- the non-taxable portion of the distribution;
- required minimum distributions; or
- direct transfer distributions.
Direct transfer distributions are direct payments to an IRA or to another
eligible retirement plan under Code section 401(a)(31).
Certain states require withholding of state taxes when federal income tax is
withheld.
<PAGE>
34 HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
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APPENDIX II -- OPTIONAL DEATH BENEFIT -- EXAMPLES
EXAMPLE 1
Assume that you make a Premium Payment of $100,000. On the first Contract
Anniversary assume your Contract Value is $108,000.00. The Interest Accumulation
Value is $105,000 or 5% accumulation on the $100,000 Premium Payment.
<TABLE>
<C> <S>
$100,000 Premium Payment
$ 5,000 Interest of 5%
--------
$105,000 Interest Accumulation Value
</TABLE>
If you request a partial Surrender of $10,000 the next day, your Interest
Accumulation Value will change. The adjustment for the partial Surrender is
determined by dividing the partial Surrender amount by the Contract Value prior
to the Surrender and multiplying that amount by the Interest Accumulation Value
prior to the Surrender. To determine the new Interest Accumulation Value, that
total is then subtracted from the Interest Accumulation Value prior to the
Surrender.
<TABLE>
<C> <S>
$ 10,000 partial Surrender divided by
$108,000 Contract Value prior to Surrender equals
.09259 multiplied by
$105,000 Interest Accumulation Value for a total of
$ 9,722 to be deducted from the Interest Accumulation Value equals
$ 95,278 the new Interest Accumulation Value
</TABLE>
EXAMPLE 2
Assume that you make a Premium Payment of $100,000. On the first Contract
Anniversary assume your Contract Value is $92,000.00. The Interest Accumulation
Value is $105,000 or 5% accumulation on the $100,000 Premium Payment.
<TABLE>
<C> <S>
$100,000 Premium Payment
$ 5,000 Interest of 5%
--------
$105,000 Interest Accumulation Value
</TABLE>
If you request a partial Surrender of $10,000 the next day, your Interest
Accumulation Value will change. The adjustment for the partial Surrender is
determined by dividing the partial Surrender amount by the Contract Value prior
to the Surrender and multiplying that amount by the Interest Accumulation Value
prior to the Surrender. To determine the new Interest Accumulation Value, that
total is then subtracted from the Interest Accumulation Value prior to the
Surrender.
<TABLE>
<C> <S>
$ 10,000 partial Surrender divided by
$ 92,000 Contract Value prior to Surrender equals
.10870 multiplied by
$105,000 Interest Accumulation Value for a total of
$ 11,413 to be deducted from the Interest Accumulation Value equals
$ 93,587 the New Interest Accumulation Value
</TABLE>
--------------------------------------------------------------------------------
<PAGE>
This form must be completed for all tax-sheltered annuities.
SECTION 403(b)(11) ACKNOWLEDGMENT FORM
The variable annuity contract that you have recently purchased is subject to
certain restrictions imposed by the Tax Reform Act of 1986. Contributions to the
Contract after December 31, 1988 and any increases in cash value after
December 31, 1988 may not be distributed to you unless you have:
- Attained age 59 1/2,
- Separated from service,
- Died, or
- Become disabled.
Distributions of post December 31, 1988 contributions (excluding any income
thereon) may also be made if you have experienced a financial hardship.
Also, there may be a 10% penalty tax for distributions made prior to age
59 1/2 because of financial hardship or separation from service.
Also, please be aware that your 403(b) Plan may also offer other financial
alternatives other than your variable annuity. Please refer to your Plan.
Please complete the following and return to:
Hartford Life and Annuity Insurance Company
Investment Product Services
P.O. Box 5085
Hartford, Connecticut 06102-5085
Name of Contract Owner/Participant: ___________________________________________
Address: ______________________________________________________________________
City or Plan/School District: _________________________________________________
Date: _________________________________________________________________________
Contract No.: _________________________________________________________________
Signature: ____________________________________________________________________
<PAGE>
To obtain a Statement of Additional Information, please complete the form below
and mail to:
Hartford Life and Annuity Insurance Company
Attn: Investment Product Services
P.O. Box 5085
Hartford, Connecticut 06102-5085
Please send a Statement of Additional Information for THE DIRECTOR OUTLOOK
variable annuity to me at the following address:
--------------------------------------------------------------------------------
Name
--------------------------------------------------------------------------------
Address
--------------------------------------------------------------------------------
City/State Zip Code
<PAGE>
PART B
<PAGE>
-1-
STATEMENT OF ADDITIONAL INFORMATION
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT ONE
THE DIRECTOR OUTLOOK
This Statement of Additional Information is not a prospectus. The information
contained herein should be read in conjunction with the Prospectus.
To obtain a Prospectus, send a written request to Hartford Life and Annuity
Insurance Company Attn: Investment Product Services, P.O. Box 5085, Hartford,
Connecticut 06102-5085.
Date of Prospectus: September 15, 2000
Date of Statement of Additional Information: September 15, 2000
<PAGE>
-2-
<TABLE>
<CAPTION>
TABLE OF CONTENTS
SECTION PAGE
<S> <C>
DESCRIPTION OF HARTFORD LIFE AND ANNUITY INSURANCE
COMPANY............................................................................................3
SAFEKEEPING OF ASSETS ...................................................................................3
INDEPENDENT PUBLIC ACCOUNTANTS ..........................................................................3
DISTRIBUTION OF CONTRACTS................................................................................4
CALCULATION OF YIELD AND RETURN..........................................................................5
PERFORMANCE COMPARISONS..................................................................................8
FINANCIAL STATEMENTS .....................................................................................
</TABLE>
<PAGE>
-3-
DESCRIPTION OF HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
Hartford Life and Annuity Insurance Company is a stock life insurance company
engaged in the business of writing life insurance and annuities, both
individual and group, in all states of the United States, the District of
Columbia and Puerto Rico, except New York. On January 1, 1998, Hartford's
name changed from ITT Hartford Life and Annuity Insurance Company to Hartford
Life and Annuity Insurance Company. We were originally incorporated under the
laws of Wisconsin on January 9, 1956, and subsequently redomiciled to
Connecticut. Our offices are located in Simsbury, Connecticut; however, our
mailing address is P.O. Box 2999, Hartford, Connecticut 06104-2999. We are
ultimately controlled by The Hartford Financial Services Group, Inc., one of
the largest financial service providers in the United States.
<TABLE>
<CAPTION>
HARTFORD'S RATINGS
------------------------------------------- ---------------------- -------------- ------------------------------------
Rating Agency Effective Rating Basis of Rating
Date of Rating
------------------------------------------- ---------------------- -------------- ------------------------------------
<S> <C> <C> <C>
A.M. Best and Company, Inc. 4/1/00 A+ Financial performance
------------------------------------------- ---------------------- -------------- ------------------------------------
Standard & Poor's 8/1/99 AA Insurer financial strength
------------------------------------------- ---------------------- -------------- ------------------------------------
Fitch 7/1/99 AA+ Financial strength
------------------------------------------- ---------------------- -------------- ------------------------------------
</TABLE>
SAFEKEEPING OF ASSETS
Title to the assets of the Separate Account is held by Hartford. The assets are
kept physically segregated and are held separate and apart from Hartford's
general corporate assets. Records are maintained of all purchases and
redemptions of Fund shares held in each of the Sub-Accounts.
INDEPENDENT PUBLIC ACCOUNTANTS
The audited financial statements included in this registration statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said reports.
Reference is made to the report on the statutory financial statements of
Hartford Life and Annuity Insurance Company which states the statutory financial
statements are presented in accordance with statutory accounting practices
prescribed or permitted by the National Association of Insurance Commissioners
and the State of Connecticut Insurance Department, and are not presented in
accordance with generally accepted accounting principles. The principal business
address of Arthur Andersen LLP is One Financial Plaza, Hartford, Connecticut
06103.
<PAGE>
-4-
DISTRIBUTION OF CONTRACTS
Hartford Securities Distribution Company, Inc. ("HSD") serves as Principal
Underwriter for the securities issued with respect to the Separate Account. HSD
is registered with the Securities and Exchange Commission under the Securities
Exchange Act of 1934 as a Broker-Dealer and is a member of the National
Association of Securities Dealers, Inc. HSD is an affiliate of ours. Both HSD
and Hartford are ultimately controlled by The Hartford Financial Services Group,
Inc. The principal business address of HSD is the same as ours. The securities
will be sold by individuals who represent us as insurance agents and who are
registered representatives of Broker-Dealers that have entered into distribution
agreements with HSD.
Commissions will be paid by Hartford and will not be more than 7% of Premium
Payments. From time to time, Hartford may pay or permit other promotional
incentives, in cash or credit or other compensation.
Broker-dealers or financial institutions are compensated according to a schedule
set forth by HSD and any applicable rules or regulations for variable insurance
compensation. Compensation is generally based on Premium Payments made by
policyholders or Contract Owners. This compensation is usually paid from the
sales charges described in this Prospectus.
In addition, a broker-dealer or financial institution may also receive
additional compensation for, among other things, training, marketing or other
services provided. HSD, its affiliates or Hartford may also make compensation
arrangements with certain broker-dealers or financial institutions based on
total sales by the broker-dealer or financial institution of insurance products.
These payments, which may be different for different broker-dealers or financial
institutions, will be made by HSD, its affiliates or Hartford out of their own
assets and will not effect the amounts paid by the policyholders or Contract
Owners to purchase, hold or Surrender variable insurance products.
The Contract may be sold directly to certain individuals under certain
circumstances that do not involve payment of any sales compensation to a
registered representative. In such case, Hartford will credit the Contract with
an additional 5.0% of the Premium Payment. This additional percentage of Premium
Payment in no way affects present or future charges, rights, benefits or current
values of other Contract Owners. The following class of individuals are eligible
for this feature: (1) current or retired officers, directors, trustees and
employees (and their families) of the ultimate parent and affiliates of
Hartford; and (2) employees and registered representatives (and their families)
of registered broker-dealers (or their financial institutions) that have a sales
agreement with Hartford and its principal underwriter to sell the Contracts.
<PAGE>
-5-
Hartford currently pays HSD underwriting commissions for its role as
Principal Underwriter of all variable annuities associated with this Separate
Account. For the past three years, the aggregate dollar amount of
underwriting commissions paid to HSD in its role as Principal Underwriter has
been: 1999: $226,178,603; 1998: $107,925,386; and 1997: $134,304,585. HSD has
retained none of these commissions.
CALCULATION OF YIELD AND RETURN
YIELD OF A MONEY MARKET SUB-ACCOUNT. As summarized in the Prospectus under the
heading "Performance Related Information," the yield of a Money Market
Sub-Account for a seven-day period (the "base period") will be computed by
determining the "net change in value" (calculated as set forth below) of a
hypothetical account having a balance of one accumulation unit of the
Sub-Account at the beginning of the period, subtracting a hypothetical charge
reflecting deductions from Contract Owner accounts, and dividing the difference
by the value of the account at the beginning of the base period to obtain the
base period return, and then multiplying the base period return by 365/7 with
the resulting yield figure carried to the nearest hundredth of one percent. Net
changes in value of a hypothetical account will include net investment income of
the account (accrued daily dividends as declared by the underlying funds, less
daily expense charges of the account) for the period, but will not include
realized gains or losses or unrealized appreciation or depreciation on the
underlying fund shares.
The effective yield is calculated by compounding the base period return by
adding 1, raising the sum to a power equal to 365/7 and subtracting 1 from the
result, according to the following formula:
365/7
Effective Yield = [(Base Period Return + 1) ] - 1
A MONEY MARKET SUB-ACCOUNT'S YIELD AND EFFECTIVE YIELD WILL VARY IN RESPONSE TO
FLUCTUATIONS IN INTEREST RATES AND IN THE EXPENSES OF THE SUB-ACCOUNT. THE
CURRENT YIELD AND EFFECTIVE YIELD REFLECT RECURRING CHARGES ON THE SEPARATE
ACCOUNT LEVEL, INCLUDING THE MAXIMUM ANNUAL MAINTENANCE FEE.
<TABLE>
<CAPTION>
YIELD AND EFFECTIVE YIELD FOR THE SEVEN-DAY PERIOD ENDING DECEMBER 31, 1999
--------------------------------------------------------------------------------------------------------------------
SUB-ACCOUNT YIELD EFFECTIVE YIELD
--------------------------------------------------------------------------------------------------------------------
<S> <S> <C>
Hartford Money Market HLS Fund 3.71% 3.78%
--------------------------------------------------------------------------------------------------------------------
</TABLE>
YIELD OF FUND SUB-ACCOUNTS. As summarized in the Prospectus under the heading
"Performance Related Information," yields of Sub-Accounts will be computed by
annualizing a recent month's net investment income, divided by a Fund share's
net asset value on the last trading day of that month. Net changes in the value
of a hypothetical account will assume the change in the underlying mutual fund's
"net asset
<PAGE>
-6-
value per share" for the same period in addition to the daily expense charge
assessed, at the sub-account level for the respective period. The
Sub-Accounts' yields will vary from time-to-time depending upon market
conditions and, the composition of the underlying funds' portfolios. Yield
should also be considered relative to changes in the value of the
Sub-Accounts' shares and to the relative risks associated with the investment
objectives and policies of the underlying Fund.
THE YIELD REFLECTS RECURRING CHARGES ON THE SEPARATE ACCOUNT LEVEL, INCLUDING
THE ANNUAL MAINTENANCE FEE.
Yield calculations of the Sub-Accounts used for illustration purposes reflect
the interest earned by the Sub-Accounts, less applicable asset charges assessed
against a Contract Owner's account over the base period. Yield quotations based
on a 30-day period were computed by dividing the dividends and interest earned
during the period by the maximum offering price per unit on the last day of the
period, according to the following formula:
Example:
6
Current Yield Formula for the Sub-Account 2[((A-B)/(CD) + 1) - 1]
Where A = Dividends and interest earned during the period.
B = Expenses accrued for the period (net of reimbursements).
C = The average daily number of units outstanding during the period
that were entitled to receive dividends.
D = The maximum offering price per unit on the last day of the
period.
YIELD QUOTATION BASED ON A 30-DAY PERIOD ENDED DECEMBER 31, 1999
-----------------------------------------------------------------------
SUB-ACCOUNT YIELD
-----------------------------------------------------------------------
Hartford Bond HLS Fund 5.29%
-----------------------------------------------------------------------
Hartford High Yield HLS Fund 7.89%
-----------------------------------------------------------------------
Hartford Mortgage Securities HLS Fund 5.11%
-----------------------------------------------------------------------
At any time in the future, yields and total return may be higher or lower than
past yields and there can be no assurance that any historical results will
continue.
The method of calculating yields described above for these Sub-Accounts differs
from the method used by the Sub-Accounts prior to May 1, 1988. The denominator
of the fraction used to calculate yield was previously the average unit value
for the period calculated. That denominator will hereafter be the unit value of
the Sub-Accounts on the last trading day of the period calculated.
CALCULATION OF TOTAL RETURN. As summarized in the Prospectus under the heading
<PAGE>
-7-
"Performance Related Information," total return is a measure of the change in
value of an investment in a Sub-Account over the period covered. The formula
for total return used herein includes three steps: (1) calculating the value of
the hypothetical initial investment of $1,000 as of the end of the period by
multiplying the total number of units owned at the end of the period by the
unit value per unit on the last trading day of the period; (2) assuming
redemption at the end of the period and deducting any applicable contingent
deferred sales charge and (3) dividing this account value for the hypothetical
investor by the initial $1,000 investment and annualizing the result for
periods of less than one year. Standardized total return will be calculated for
one year, five years and ten years or some other relevant periods if a
Sub-Account has not been in existence for at least ten years.
The following are the standardized average annualized total return quotations
for the Sub-Accounts. No information is shown for Hartford Global Health HLS
Fund Sub-Account and Hartford Global Technology HLS Fund Sub-Account because,
as of December 31, 1999, the Sub-Accounts had not commenced operation.
<TABLE>
<CAPTION>
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN FOR YEAR ENDED DECEMBER 1, 1999
-----------------------------------------------------------------------------------------------------------------------------
SUB-ACCOUNT 1 YEAR 5 YEAR 10 YEAR SINCE
SUB-ACCOUNT INCEPTION INCEPTION
DATE
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Hartford Advisers HLS Fund 5/20/91 -0.20% 16.64% N/A 10.62%
-----------------------------------------------------------------------------------------------------------------------------
Hartford Bond HLS Fund 5/20/91 -12.60% 3.30% N/A 2.72%
-----------------------------------------------------------------------------------------------------------------------------
Hartford Capital Appreciation HLS Fund 5/20/91 26.24% 20.84% N/A 17.86%
-----------------------------------------------------------------------------------------------------------------------------
Hartford Dividend and Growth HLS Fund 3/9/94 -5.39% 18.12% N/A 14.95%
-----------------------------------------------------------------------------------------------------------------------------
Hartford Global Health HLS Fund 5/1/00 N/A N/A N/A N/A
-----------------------------------------------------------------------------------------------------------------------------
Hartford Global Leaders HLS Fund 10/1/98 38.94% N/A N/A 61.75%
-----------------------------------------------------------------------------------------------------------------------------
Hartford Global Technology HLS Fund 5/1/00 N/A N/A N/A N/A
-----------------------------------------------------------------------------------------------------------------------------
Hartford Growth and Income HLS Fund 5/29/98 10.86% N/A N/A 17.86%
-----------------------------------------------------------------------------------------------------------------------------
Hartford High Yield HLS Fund 10/1/98 -5.99% N/A N/A -3.66%
-----------------------------------------------------------------------------------------------------------------------------
Hartford Index HLS Fund 5/20/91 9.54% 23.78% N/A 14.98%
-----------------------------------------------------------------------------------------------------------------------------
Hartford International Advisers HLS Fund 3/1/95 12.17% N/A N/A 9.78%
-----------------------------------------------------------------------------------------------------------------------------
Hartford International Opportunities HLS Fund 5/20/91 28.60% 10.80% N/A 7.86%
-----------------------------------------------------------------------------------------------------------------------------
Hartford MidCap HLS Fund 7/30/97 40.36% N/A N/A 29.79%
-----------------------------------------------------------------------------------------------------------------------------
Hartford Money Market HLS Fund 5/20/91 -5.80% 0.63% N/A -0.19%
-----------------------------------------------------------------------------------------------------------------------------
Hartford Mortgage Securities HLS Fund 5/20/91 -9.12% 3.17% N/A 2.10%
-----------------------------------------------------------------------------------------------------------------------------
Hartford Small Company HLS Fund 8/9/96 54.15% N/A N/A 23.46%
-----------------------------------------------------------------------------------------------------------------------------
Hartford Stock HLS Fund 5/20/91 8.85% 24.44% N/A 15.26%
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Performance figures above do not reflect any deductions for
Optional Death Benefit charges. Performance would have been
lower had the Optional Death Benefit been available and been
chosen.
<PAGE>
-8-
In addition to the standardized total return, the Sub-Account may advertise a
non-standardized total return. This figure will usually be calculated since the
inception of the underlying fund for one year, five years, and ten years or
other periods. Non-standardized total return is measured in the same manner as
the standardized total return described above, except that the contingent
deferred sales charge and the Annual Maintenance Fee are not deducted.
Therefore, non-standardized total return for a Sub-Account is higher than
standardized total return for a Sub-Account.
The following are the non-standardized average annualized total return
quotations for the Sub-Accounts. No information is shown for Hartford Global
Health HLS Fund Sub-Account and Hartford Global Technology HLS Fund Sub-Account
because, as of December 31, 1999, the Sub-Accounts had not yet commenced
operations.
<TABLE>
<CAPTION>
NON-STANDARDIZED ANNUALIZED TOTAL RETURN THAT PRE-DATE THE INCEPTION DATE OF
THE SEPARATE ACCOUNT FOR YEAR ENDED
DECEMBER 31, 1999
-------------------------------------------------------------------------------------------------------------------
FUND
SUB-ACCOUNT INCEPTION DATE 1 YEAR 5 YEAR 10 YEAR SINCE INCEPTION OF
FUND
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Hartford Advisers HLS Fund 3/31/83 8.80% 18.81% 12.14% N/A
-------------------------------------------------------------------------------------------------------------------
Hartford Bond HLS Fund 8/31/77 (3.60%) 5.93% 5.67% N/A
-------------------------------------------------------------------------------------------------------------------
Hartford Capital Appreciation
HLS Fund 4/2/84 35.24% 22.99% 17.83% N/A
-------------------------------------------------------------------------------------------------------------------
Hartford Dividend and Growth
HLS Fund 3/8/94 3.61% 20.09% N/A 17.16%
-------------------------------------------------------------------------------------------------------------------
Hartford Global Leaders HLS Fund 9/30/98 47.94% N/A N/A 70.17%
-------------------------------------------------------------------------------------------------------------------
Hartford Growth and Income
HLS Fund 5/29/98 19.86% N/A N/A 24.27%
-------------------------------------------------------------------------------------------------------------------
Hartford High Yield HLS Fund 9/30/98 3.01% N/A N/A 5.07%
-------------------------------------------------------------------------------------------------------------------
Hartford Index HLS Fund 5/1/87 18.54% 25.75% 15.54% N/A
-------------------------------------------------------------------------------------------------------------------
Hartford International Advisers
HLS Fund 3/1/95 21.17% N/A N/A 12.43%
-------------------------------------------------------------------------------------------------------------------
Hartford International
Opportunities HLS Fund 7/2/90 37.60% 13.50% N/A 8.61%
-------------------------------------------------------------------------------------------------------------------
Hartford MidCap HLS Fund 7/30/97 49.35% N/A N/A 35.87%
-------------------------------------------------------------------------------------------------------------------
Hartford Money Market HLS Fund 6/30/80 3.19% 3.58% 3.40% N/A
-------------------------------------------------------------------------------------------------------------------
Hartford Mortgage Securities
HLS Fund 1/1/85 (0.12%) 5.85% 5.37% N/A
-------------------------------------------------------------------------------------------------------------------
Hartford Small Company HLS Fund 8/9/96 63.15% N/A N/A 26.51%
-------------------------------------------------------------------------------------------------------------------
Hartford Stock HLS Fund 8/31/77 17.85% 26.42% 15.97% N/A
-------------------------------------------------------------------------------------------------------------------
</TABLE>
Performance figures above do not reflect any deductions for Optional Death
Benefit charges. Performance would have been lower had the Optional Death
Benefit been available and been chosen.
<PAGE>
-9-
PERFORMANCE COMPARISONS
YIELD AND TOTAL RETURN. Each Sub-Account may from time-to-time include its total
return in advertisements or in information furnished to present or prospective
shareholders. Each Sub-Account may from time-to-time include its yield and total
return in advertisements or information furnished to present or prospective
shareholders. Each Sub-Account may from time-to-time include in advertisements
its total return (and yield in the case of certain Sub-Accounts) the ranking of
those performance figures relative to such figures for groups of other annuities
analyzed by Lipper Analytical Services and Morningstar, Inc. as having the same
investment objectives.
The total return and yield may also be used to compare the performance of the
Sub-Accounts against certain widely acknowledged outside standards or indices
for stock and bond market performance. The Standard & Poor's Composite Index of
500 Stocks (the "S&P 500") is a market value-weighted and unmanaged index
showing the changes in the aggregate market value of 500 stocks relative to the
base period 1941-43. The S&P 500 is composed almost entirely of common stocks of
companies listed on the New York Stock Exchange, although the common stocks of a
few companies listed on the American Stock Exchange or traded over-the-counter
are included. The 500 companies represented include 400 industrial, 60
transportation and 40 financial services concerns. The S&P 500 represents about
80% of the market value of all issues traded on the New York Stock Exchange.
The NASDAQ-OTC Composite Price Index (The "NASDAQ Index") is a market
value-weighted and unmanaged index showing the changes in the aggregate market
value of approximately 3,500 stocks relative to the base measure of 100.00 on
February 5, 1971. The NASDAQ Index is composed entirely of common stocks of
companies traded over-the-counter and often through the National Association of
Securities Dealers Automated Quotations ("NASDAQ") system. Only those
over-the-counter stocks having only one market maker or traded on exchanges are
excluded.
<PAGE>
-10-
The Morgan Stanley Capital International EAFE Index (the "EAFE Index") is an
unmanaged index, which includes over 1,000 companies representing the stock
markets of Europe, Australia, New Zealand, and the Far East. The EAFE Index is
weighted by market capitalization, and therefore, it has a heavy representation
in countries with large stock markets, such as Japan.
The Shearson Lehman Government Bond Index (the "SL Government Index") is a
measure of the market value of all public obligations of the U.S. Treasury; all
publicly issued debt of all agencies of the U.S. Government and all
quasi-federal corporations; and all corporate debt guaranteed by the U.S.
Government. Mortgage-backed securities, flower bonds and foreign targeted issues
are not included in the SL Government Index.
The Shearson Lehman Government/Corporate Bond Index (the "SL
Government/Corporate Index") is a measure of the market value of approximately
5,300 bonds with a face value currently in excess of $1.3 trillion. To be
included in the SL Government/Corporate Index, an issue must have amounts
outstanding in excess of $1 million, have at least one year to maturity and be
rated "Baa" or higher ("investment grade") by a nationally recognized rating
agency.
The Composite Index for Hartford Advisers HLS Fund is comprised of the S&P 500
(55%), the Lehman Government/Corporate Bond Index (35%), both mentioned above,
and 90 Day U.S. Treasury Bills (10%).
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
--------------------------------------------------------------------------------
TO HARTFORD LIFE AND ANNUITY 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 and Annuity Insurance Company Separate Account One (Bond Fund,
Stock Fund, Money Market Fund, Advisers Fund, Capital Appreciation Fund,
Mortgage Securities Fund, Index Fund, International Opportunities Fund, Dividend
and Growth Fund, International Advisers Fund, Small Company Fund, MidCap Fund,
Global Leaders Fund, High Yield Fund, Growth and Income Fund, Mentor VIP Capital
Growth Fund, Mentor VIP Perpetual International Fund, Mentor VIP Growth Fund,
Mercury VI US Large Cap Fund and Merrill Lynch Global Growth Focus 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
_____________________________________ SA-1 _____________________________________
<PAGE>
SEPARATE ACCOUNT ONE
--------------------------------------------------------------------------------
HARTFORD LIFE AND ANNUITY 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 449,867,813
Cost $471,536,987
Market Value...................... $447,106,524 --
Hartford Stock HLS Fund, Inc. -
Class IA
Shares 659,095,163
Cost $3,107,192,905
Market Value...................... -- $4,710,808,860
Hartford Money Market HLS
Fund, Inc. - Class IA
Shares 548,422,425
Cost $548,422,425
Market Value...................... -- --
Hartford Advisers HLS Fund, Inc. -
Class IA
Shares 2,366,315,491
Cost $5,444,912,732
Market Value...................... -- --
Hartford Capital Appreciation HLS
Fund, Inc. - Class IA
Shares 672,032,314
Cost $2,550,014,270
Market Value...................... -- --
Hartford Mortgage Securities HLS
Fund, Inc. - Class IA
Shares 117,880,676
Cost $127,698,156
Market Value...................... -- --
Hartford Index HLS Fund, Inc. -
Class IA
Shares 266,744,217
Cost $736,583,539
Market Value...................... -- --
Hartford International Opportunities
HLS Fund, Inc. - Class IA
Shares 480,127,442
Cost $614,510,013
Market Value...................... -- --
Hartford Dividend and Growth HLS
Fund, Inc. - Class IA
Shares 923,635,920
Cost $1,584,821,109
Market Value...................... -- --
Hartford International Advisers HLS
Fund, Inc. - Class IA
Shares 196,357,266
Cost $227,828,642
Market Value...................... -- --
Due from Hartford Life and Annuity
Insurance Company.................... -- 1,569,635
Receivable from fund shares sold...... 821,248 --
------------ --------------
Total Assets.......................... 447,927,772 4,712,378,495
------------ --------------
LIABILITIES:
Due to Hartford Life and Annuity
Insurance Company.................... 821,442 --
Payable for fund shares purchased..... -- 1,564,212
------------ --------------
Total Liabilities..................... 821,442 1,564,212
------------ --------------
Net Assets (variable annuity contract
liabilities)......................... $447,106,330 $4,710,814,283
============ ==============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
------------------------------------------------- SA-2
-------------------------------------------------
<PAGE>
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY CAPITAL MORTGAGE
MARKET 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 449,867,813
Cost $471,536,987
Market Value...................... -- -- -- -- --
Hartford Stock HLS Fund, Inc. -
Class IA
Shares 659,095,163
Cost $3,107,192,905
Market Value...................... -- -- -- -- --
Hartford Money Market HLS
Fund, Inc. - Class IA
Shares 548,422,425
Cost $548,422,425
Market Value...................... $548,422,425 -- -- -- --
Hartford Advisers HLS Fund, Inc. -
Class IA
Shares 2,366,315,491
Cost $5,444,912,732
Market Value...................... -- $7,015,590,643 -- -- --
Hartford Capital Appreciation HLS
Fund, Inc. - Class IA
Shares 672,032,314
Cost $2,550,014,270
Market Value...................... -- -- $4,096,297,700 -- --
Hartford Mortgage Securities HLS
Fund, Inc. - Class IA
Shares 117,880,676
Cost $127,698,156
Market Value...................... -- -- -- $122,536,020 --
Hartford Index HLS Fund, Inc. -
Class IA
Shares 266,744,217
Cost $736,583,539
Market Value...................... -- -- -- -- $1,117,332,843
Hartford International Opportunities
HLS Fund, Inc. - Class IA
Shares 480,127,442
Cost $614,510,013
Market Value...................... -- -- -- -- --
Hartford Dividend and Growth HLS
Fund, Inc. - Class IA
Shares 923,635,920
Cost $1,584,821,109
Market Value...................... -- -- -- -- --
Hartford International Advisers HLS
Fund, Inc. - Class IA
Shares 196,357,266
Cost $227,828,642
Market Value...................... -- -- -- -- --
Due from Hartford Life and Annuity
Insurance Company.................... 4,024,594 -- -- -- --
Receivable from fund shares sold...... -- 954,565 2,647,605 70,893 110,670
------------ -------------- -------------- ------------ --------------
Total Assets.......................... 552,447,019 7,016,545,208 4,098,945,305 122,606,913 1,117,443,513
------------ -------------- -------------- ------------ --------------
LIABILITIES:
Due to Hartford Life and Annuity
Insurance Company.................... -- 950,615 2,404,382 72,076 105,519
Payable for fund shares purchased..... 4,001,041 -- -- -- --
------------ -------------- -------------- ------------ --------------
Total Liabilities..................... 4,001,041 950,615 2,404,382 72,076 105,519
------------ -------------- -------------- ------------ --------------
Net Assets (variable annuity contract
liabilities)......................... $548,445,978 $7,015,594,593 $4,096,540,923 $122,534,837 $1,117,337,994
============ ============== ============== ============ ==============
<CAPTION>
INTERNATIONAL DIVIDEND AND INTERNATIONAL
OPPORTUNITIES FUND GROWTH FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------ -------------- -------------
<S> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond HLS Fund, Inc. -
Class IA
Shares 449,867,813
Cost $471,536,987
Market Value...................... -- -- --
Hartford Stock HLS Fund, Inc. -
Class IA
Shares 659,095,163
Cost $3,107,192,905
Market Value...................... -- -- --
Hartford Money Market HLS
Fund, Inc. - Class IA
Shares 548,422,425
Cost $548,422,425
Market Value...................... -- -- --
Hartford Advisers HLS Fund, Inc. -
Class IA
Shares 2,366,315,491
Cost $5,444,912,732
Market Value...................... -- -- --
Hartford Capital Appreciation HLS
Fund, Inc. - Class IA
Shares 672,032,314
Cost $2,550,014,270
Market Value...................... -- -- --
Hartford Mortgage Securities HLS
Fund, Inc. - Class IA
Shares 117,880,676
Cost $127,698,156
Market Value...................... -- -- --
Hartford Index HLS Fund, Inc. -
Class IA
Shares 266,744,217
Cost $736,583,539
Market Value...................... -- -- --
Hartford International Opportunities
HLS Fund, Inc. - Class IA
Shares 480,127,442
Cost $614,510,013
Market Value...................... $900,687,872 -- --
Hartford Dividend and Growth HLS
Fund, Inc. - Class IA
Shares 923,635,920
Cost $1,584,821,109
Market Value...................... -- $1,984,734,728 --
Hartford International Advisers HLS
Fund, Inc. - Class IA
Shares 196,357,266
Cost $227,828,642
Market Value...................... -- -- $274,250,426
Due from Hartford Life and Annuity
Insurance Company.................... 1,056,559 -- 1,454
Receivable from fund shares sold...... -- 765,866 --
------------ -------------- ------------
Total Assets.......................... 901,744,431 1,985,500,594 274,251,880
------------ -------------- ------------
LIABILITIES:
Due to Hartford Life and Annuity
Insurance Company.................... -- 763,409 --
Payable for fund shares purchased..... 1,313,277 -- 2,289
------------ -------------- ------------
Total Liabilities..................... 1,313,277 763,409 2,289
------------ -------------- ------------
Net Assets (variable annuity contract
liabilities)......................... $900,431,154 $1,984,737,185 $274,249,591
============ ============== ============
</TABLE>
------------------------------------------------- SA-3
-------------------------------------------------
<PAGE>
SEPARATE ACCOUNT ONE
--------------------------------------------------------------------------------
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED)
DECEMBER 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL MIDCAP
COMPANY FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------ ------------
<S> <C> <C>
ASSETS:
Investments:
Hartford Small Company HLS
Fund, Inc. - Class IA
Shares 212,076,990
Cost $280,439,845
Market Value...................... $463,977,162 --
Hartford MidCap HLS Fund, Inc. -
Class IA
Shares 191,961,289
Cost $297,691,376
Market Value...................... -- $394,192,314
Hartford Global Leaders HLS Fund -
Class IA
Shares 61,681,952
Cost $94,610,676
Market Value...................... -- --
Hartford High Yield HLS Fund -
Class IA
Shares 24,345,792
Cost $25,309,628
Market Value...................... -- --
Hartford Growth and Income HLS Fund
- Class IA
Shares 90,572,348
Cost $114,627,320
Market Value...................... -- --
Mentor VIP Capital Growth
Fund, Inc.
Shares 109,628
Cost $1,371,449
Market Value...................... -- --
Mentor VIP Perpetual International
Fund, Inc.
Shares 106,262
Cost $1,460,933
Market Value...................... -- --
Mentor VIP Growth Fund, Inc.
Shares 64,247
Cost $676,124
Market Value...................... -- --
Mercury VI US Large Cap Fund -
Class A
Shares 1,173
Cost $13,731
Market Value...................... -- --
Merrill Lynch Global Growth Focus
Fund - Class A
Shares 6,455
Cost $91,458
Market Value...................... -- --
Due from Hartford Life and Annuity
Insurance Company.................... 797,344 1,361,926
------------ ------------
Total Assets.......................... 464,774,506 395,554,240
------------ ------------
LIABILITIES:
Due to Hartford Life and Annuity
Insurance Company.................... -- --
Payable for fund shares purchased..... 797,460 1,361,681
------------ ------------
Total Liabilities..................... 797,460 1,361,681
------------ ------------
Net Assets (variable annuity contract
liabilities)......................... $463,977,046 $394,192,559
============ ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
------------------------------------------------- SA-4
-------------------------------------------------
<PAGE>
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL HIGH GROWTH AND MENTOR VIP CAPITAL MENTOR VIP PERPETUAL
LEADERS FUND YIELD FUND INCOME FUND GROWTH FUND INTERNATIONAL FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ----------- ------------ ------------------ --------------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Small Company HLS
Fund, Inc. - Class IA
Shares 212,076,990
Cost $280,439,845
Market Value...................... -- -- -- -- --
Hartford MidCap HLS Fund, Inc. -
Class IA
Shares 191,961,289
Cost $297,691,376
Market Value...................... -- -- -- -- --
Hartford Global Leaders HLS Fund -
Class IA
Shares 61,681,952
Cost $94,610,676
Market Value...................... $117,991,405 -- -- -- --
Hartford High Yield HLS Fund -
Class IA
Shares 24,345,792
Cost $25,309,628
Market Value...................... -- $24,464,405 -- -- --
Hartford Growth and Income HLS Fund
- Class IA
Shares 90,572,348
Cost $114,627,320
Market Value...................... -- -- $129,667,086 -- --
Mentor VIP Capital Growth
Fund, Inc.
Shares 109,628
Cost $1,371,449
Market Value...................... -- -- -- $1,580,833 --
Mentor VIP Perpetual International
Fund, Inc.
Shares 106,262
Cost $1,460,933
Market Value...................... -- -- -- -- $2,082,740
Mentor VIP Growth Fund, Inc.
Shares 64,247
Cost $676,124
Market Value...................... -- -- -- -- --
Mercury VI US Large Cap Fund -
Class A
Shares 1,173
Cost $13,731
Market Value...................... -- -- -- -- --
Merrill Lynch Global Growth Focus
Fund - Class A
Shares 6,455
Cost $91,458
Market Value...................... -- -- -- -- --
Due from Hartford Life and Annuity
Insurance Company.................... 429,704 74,858 432,287 -- --
------------ ----------- ------------ ---------- ----------
Total Assets.......................... 118,421,109 24,539,263 130,099,373 1,580,833 2,082,740
------------ ----------- ------------ ---------- ----------
LIABILITIES:
Due to Hartford Life and Annuity
Insurance Company.................... -- -- -- 68 104
Payable for fund shares purchased..... 429,387 74,789 431,728 -- --
------------ ----------- ------------ ---------- ----------
Total Liabilities..................... 429,387 74,789 431,728 68 104
------------ ----------- ------------ ---------- ----------
Net Assets (variable annuity contract
liabilities)......................... $117,991,722 $24,464,474 $129,667,645 $1,580,765 $2,082,636
============ =========== ============ ========== ==========
<CAPTION>
MERRILL LYNCH
MENTOR VIP MERCURY VI US GLOBAL GROWTH
GROWTH FUND LARGE CAP FUND FOCUS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- -------------- -------------
<S> <C> <C> <C>
ASSETS:
Investments:
Hartford Small Company HLS
Fund, Inc. - Class IA
Shares 212,076,990
Cost $280,439,845
Market Value...................... -- -- --
Hartford MidCap HLS Fund, Inc. -
Class IA
Shares 191,961,289
Cost $297,691,376
Market Value...................... -- -- --
Hartford Global Leaders HLS Fund -
Class IA
Shares 61,681,952
Cost $94,610,676
Market Value...................... -- -- --
Hartford High Yield HLS Fund -
Class IA
Shares 24,345,792
Cost $25,309,628
Market Value...................... -- -- --
Hartford Growth and Income HLS Fund
- Class IA
Shares 90,572,348
Cost $114,627,320
Market Value...................... -- -- --
Mentor VIP Capital Growth
Fund, Inc.
Shares 109,628
Cost $1,371,449
Market Value...................... -- -- --
Mentor VIP Perpetual International
Fund, Inc.
Shares 106,262
Cost $1,460,933
Market Value...................... -- -- --
Mentor VIP Growth Fund, Inc.
Shares 64,247
Cost $676,124
Market Value...................... $891,105
Mercury VI US Large Cap Fund -
Class A
Shares 1,173
Cost $13,731
Market Value...................... -- $14,105
Merrill Lynch Global Growth Focus
Fund - Class A
Shares 6,455
Cost $91,458
Market Value...................... -- -- $95,403
Due from Hartford Life and Annuity
Insurance Company.................... -- -- --
-------- ------- -------
Total Assets.......................... 891,105 14,105 95,403
-------- ------- -------
LIABILITIES:
Due to Hartford Life and Annuity
Insurance Company.................... 35 -- --
Payable for fund shares purchased..... -- -- --
-------- ------- -------
Total Liabilities..................... 35 -- --
-------- ------- -------
Net Assets (variable annuity contract
liabilities)......................... $891,070 $14,105 $95,403
======== ======= =======
</TABLE>
------------------------------------------------- SA-5
-------------------------------------------------
<PAGE>
SEPARATE ACCOUNT ONE
--------------------------------------------------------------------------------
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNITS
OWNED BY UNIT CONTRACT
PARTICIPANTS PRICE LIABILITY
------------- --------- ---------------
<S> <C> <C> <C>
DEFERRED ANNUITY CONTRACTS IN THE ACCUMULATION PERIOD:
GROUP SUB-ACCOUNTS:
Bond Fund Sub-Account..................................... 26,834 $0.994578 $ 26,688
Bond Fund Sub-Account..................................... 1,184,617 2.182434 2,585,349
Bond Fund Sub-Account..................................... 465 1.007093 469
Bond Fund Sub-Account..................................... 2,499 1.007410 2,518
Bond Fund Sub-Account..................................... 11,256,103 0.994947 11,199,226
Bond Fund Sub-Account..................................... 197,574,642 2.184598 431,621,166
Stock Fund Sub-Account.................................... 210,327 1.222948 257,219
Stock Fund Sub-Account.................................... 5,858,621 7.168535 41,997,729
Stock Fund Sub-Account.................................... 74,387 1.136485 84,539
Stock Fund Sub-Account.................................... 1,647,138 1.136847 1,872,544
Stock Fund Sub-Account.................................... 53,638,914 1.223394 65,621,525
Stock Fund Sub-Account.................................... 638,407,205 7.175612 4,580,962,400
Money Market Fund Sub-Account............................. 35,300 1.049997 37,065
Money Market Fund Sub-Account............................. 917,155 1.775591 1,628,493
Money Market Fund Sub-Account............................. 0 1.009271 0
Money Market Fund Sub-Account............................. 522 1.009591 527
Money Market Fund Sub-Account............................. 60,490,202 1.050377 63,537,517
Money Market Fund Sub-Account............................. 270,072,357 1.777341 480,010,674
Advisers Fund Sub-Account................................. 342,934 1.127468 386,647
Advisers Fund Sub-Account................................. 7,318,141 4.798347 35,114,981
Advisers Fund Sub-Account................................. 57,191 1.083555 61,970
Advisers Fund Sub-Account................................. 1,601,663 1.083900 1,736,043
Advisers Fund Sub-Account................................. 99,547,381 1.127880 112,277,500
Advisers Fund Sub-Account................................. 1,425,393,462 4.803097 6,846,303,062
Capital Appreciation Fund Sub-Account..................... 297,634 1.334003 397,044
Capital Appreciation Fund Sub-Account..................... 2,064,035 7.494011 15,467,902
Capital Appreciation Fund Sub-Account..................... 62,274 1.235938 76,966
Capital Appreciation Fund Sub-Account..................... 775,935 1.236331 959,313
Capital Appreciation Fund Sub-Account..................... 27,329,043 1.334491 36,470,362
Capital Appreciation Fund Sub-Account..................... 537,835,362 7.501418 4,034,527,863
Mortgage Securities Fund Sub-Account...................... 0 1.022060 0
Mortgage Securities Fund Sub-Account...................... 269,500 2.214471 596,801
Mortgage Securities Fund Sub-Account...................... 0 1.006743 0
Mortgage Securities Fund Sub-Account...................... 2,763 1.007064 2,783
Mortgage Securities Fund Sub-Account...................... 5,585,485 1.022434 5,710,790
Mortgage Securities Fund Sub-Account...................... 52,197,499 2.216665 115,704,370
Index Fund Sub-Account.................................... 83,406 1.239923 103,417
Index Fund Sub-Account.................................... 1,310,125 5.602011 7,339,336
Index Fund Sub-Account.................................... 1,381 1.144312 1,580
Index Fund Sub-Account.................................... 334,670 1.144675 383,089
Index Fund Sub-Account.................................... 27,071,357 1.240377 33,578,689
Index Fund Sub-Account.................................... 191,224,666 5.607574 1,072,306,463
International Opportunities Fund Sub-Account.............. 58,213 1.273000 74,106
International Opportunities Fund Sub-Account.............. 970,042 2.264582 2,196,739
International Opportunities Fund Sub-Account.............. 500 1.199943 600
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
------------------------------------------------- SA-6
-------------------------------------------------
<PAGE>
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNITS
OWNED BY UNIT CONTRACT
PARTICIPANTS PRICE LIABILITY
------------- --------- ---------------
<S> <C> <C> <C>
GROUP SUB-ACCOUNTS -- (CONTINUED)
International Opportunities Fund Sub-Account.............. 88,714 $1.200325 $ 106,485
International Opportunities Fund Sub-Account.............. 5,998,131 1.273461 7,638,386
International Opportunities Fund Sub-Account.............. 391,870,958 2.266827 888,303,667
Dividend and Growth Fund Sub-Account...................... 102,974 1.045671 107,677
Dividend and Growth Fund Sub-Account...................... 2,452,827 2.567396 6,297,378
Dividend and Growth Fund Sub-Account...................... 3,271 1.064013 3,480
Dividend and Growth Fund Sub-Account...................... 227,845 1.064354 242,507
Dividend and Growth Fund Sub-Account...................... 19,290,169 1.046052 20,178,520
Dividend and Growth Fund Sub-Account...................... 760,046,046 2.569946 1,953,277,297
International Advisers Fund Sub-Account................... 15,134 1.178048 17,829
International Advisers Fund Sub-Account................... 953,594 1.793926 1,710,677
International Advisers Fund Sub-Account................... 1,202 1.121881 1,348
International Advisers Fund Sub-Account................... 22,473 1.122237 25,220
International Advisers Fund Sub-Account................... 3,025,244 1.178481 3,565,193
International Advisers Fund Sub-Account................... 149,494,531 1.795704 268,447,928
Small Company Fund Sub-Account............................ 42,607 1.592576 67,856
Small Company Fund Sub-Account............................ 1,735,342 2.248401 3,901,745
Small Company Fund Sub-Account............................ 258 1.364431 352
Small Company Fund Sub-Account............................ 150,069 1.364863 204,823
Small Company Fund Sub-Account............................ 198,856,386 2.250630 447,552,149
Small Company Fund Sub-Account............................ 6,084,767 1.593152 9,693,959
MidCap Fund Sub-Account................................... 69,564 1.520083 105,743
MidCap Fund Sub-Account................................... 3,184,542 2.053534 6,539,565
MidCap Fund Sub-Account................................... 3,815 1.292197 4,930
MidCap Fund Sub-Account................................... 249,883 1.292607 323,000
MidCap Fund Sub-Account................................... 8,978,236 1.520630 13,652,575
MidCap Fund Sub-Account................................... 181,141,994 2.055574 372,350,771
Global Leaders Fund Sub-Account........................... 3,764,460 1.946293 7,326,743
Global Leaders Fund Sub-Account........................... 60,499 1.945587 117,706
Global Leaders Fund Sub-Account........................... 1,465,474 1.950512 2,858,424
Global Leaders Fund Sub-Account........................... 3,636 1.293486 4,703
Global Leaders Fund Sub-Account........................... 300,137 1.293896 388,346
Global Leaders Fund Sub-Account........................... 54,890,185 1.952453 107,170,506
High Yield Fund Sub-Account............................... 2,071,284 1.066776 2,209,596
High Yield Fund Sub-Account............................... 1,731 1.066388 1,845
High Yield Fund Sub-Account............................... 481,332 1.069043 514,565
High Yield Fund Sub-Account............................... 0 1.019709 0
High Yield Fund Sub-Account............................... 6,836 1.020038 6,973
High Yield Fund Sub-Account............................... 20,234,594 1.070110 21,653,242
Growth and Income Fund Sub-Account........................ 129,575 1.308008 169,485
Growth and Income Fund Sub-Account........................ 3,576,088 1.420460 5,079,689
Growth and Income Fund Sub-Account........................ 37,993 1.158303 44,008
Growth and Income Fund Sub-Account........................ 246,069 1.158668 285,112
Growth and Income Fund Sub-Account........................ 8,930,138 1.308485 11,684,951
Growth and Income Fund Sub-Account........................ 78,909,139 1.421882 112,199,485
Mentor VIP Capital Growth Fund Sub-Account................ 8,587 1.129778 9,701
Mentor VIP Capital Growth Fund Sub-Account................ 1,389,225 1.130892 1,571,064
</TABLE>
------------------------------------------------- SA-7
-------------------------------------------------
<PAGE>
SEPARATE ACCOUNT ONE
--------------------------------------------------------------------------------
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF ASSETS AND LIABILITIES -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNITS
OWNED BY UNIT CONTRACT
PARTICIPANTS PRICE LIABILITY
------------- --------- ---------------
<S> <C> <C> <C>
Mentor VIP Perpetual International Fund Sub-Account......... 8,183 $1.531949 $ 12,536
Mentor VIP Perpetual International Fund Sub-Account......... 1,349,950 1.533464 2,070,100
Mentor VIP Growth Fund Sub-Account.......................... 12,522 1.085030 13,586
Mentor VIP Growth Fund Sub-Account.......................... 805,875 1.086100 875,260
Mercury VI US Large Cap Fund Sub-Account.................... 2,255 1.104998 2,491
Mercury VI US Large Cap Fund Sub-Account.................... 10,508 1.105269 11,614
Merrill Lynch Global Growth Focus Fund Sub-Account.......... 46,526 1.248875 58,105
Merrill Lynch Global Growth Focus Fund Sub-Account.......... 29,858 1.249180 37,298
---------------
SUB-TOTAL................................................. 22,283,922,258
---------------
ANNUITY CONTRACTS IN THE ANNUITY PERIOD:
GROUP SUB-ACCOUNTS:
Bond Fund Sub-Account..................................... 764,861 2.184598 1,670,914
Stock Fund Sub-Account.................................... 2,789,773 7.175612 20,018,327
Money Market Fund Sub-Account............................. 1,818,279 1.777341 3,231,702
Advisers Fund Sub-Account................................. 4,104,516 4.803097 19,714,390
Capital Appreciation Fund Sub-Account..................... 1,151,979 7.501418 8,641,473
Mortgage Securities Fund Sub-Account...................... 234,629 2.216665 520,093
Index Fund Sub-Account.................................... 646,522 5.607574 3,625,420
International Opportunities Fund Sub-Account.............. 931,333 2.266827 2,111,171
Dividend and Growth Fund Sub-Account...................... 1,801,721 2.569946 4,630,326
International Advisers Fund Sub-Account................... 268,082 1.795704 481,396
Small Company Fund Sub-Account............................ 1,135,754 2.250630 2,556,162
MidCap Fund Sub-Account................................... 591,550 2.055574 1,215,975
Global Leaders Fund Sub-Account........................... 64,172 1.952453 125,294
High Yield Fund Sub-Account............................... 73,126 1.070110 78,253
Growth & Income Fund Sub-Account.......................... 144,116 1.421882 204,915
Mentor VIP Growth Fund Sub-Account........................ 2,048 1.086100 2,224
---------------
SUB-TOTAL................................................. 68,828,035
---------------
GRAND TOTAL................................................. $22,352,750,293
===============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
------------------------------------------------- SA-8
-------------------------------------------------
<PAGE>
[This Page Intentionally Left Blank]
<PAGE>
SEPARATE ACCOUNT ONE
--------------------------------------------------------------------------------
HARTFORD LIFE AND ANNUITY 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............................. $ 24,593,727 $ 32,121,491
EXPENSES:
Mortality and expense undertakings.... (5,518,904) (50,004,645)
------------ ------------
Net investment income (loss)........ 19,074,823 (17,883,154)
------------ ------------
CAPITAL GAINS INCOME.................... 2,910,226 297,745,384
------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on security
transactions......................... 58,228 170,224
Net unrealized (depreciation)
appreciation of investments during
the period........................... (36,187,007) 402,196,558
------------ ------------
Net (loss) gain on investments...... (36,128,779) 402,366,782
------------ ------------
Net (decrease) increase in net
assets resulting from operations... $(14,143,730) $682,229,012
============ ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
------------------------------------------------- SA-10
-------------------------------------------------
<PAGE>
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY CAPITAL MORTGAGE
MARKET 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............................. $21,324,529 $146,368,182 $ 12,342,082 $ 6,851,063 $ 10,341,697
EXPENSES:
Mortality and expense undertakings.... (5,620,086) (79,151,221) (40,991,208) (1,515,206) (11,624,230)
----------- ------------ -------------- ----------- ------------
Net investment income (loss)........ 15,704,443 67,216,961 (28,649,126) 5,335,857 (1,282,533)
----------- ------------ -------------- ----------- ------------
CAPITAL GAINS INCOME.................... 8,648 473,055,258 188,426,299 -- 13,517,068
----------- ------------ -------------- ----------- ------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on security
transactions......................... -- 78,597 (457,576) (16,786) 53,550
Net unrealized (depreciation)
appreciation of investments during
the period........................... -- 22,727,549 892,664,508 (5,088,216) 153,057,340
----------- ------------ -------------- ----------- ------------
Net (loss) gain on investments...... -- 22,806,146 892,206,932 (5,105,002) 153,110,890
----------- ------------ -------------- ----------- ------------
Net (decrease) increase in net
assets resulting from operations... $15,713,091 $563,078,365 $1,051,984,105 $ 230,855 $165,345,425
=========== ============ ============== =========== ============
<CAPTION>
INTERNATIONAL DIVIDEND AND INTERNATIONAL
OPPORTUNITIES FUND GROWTH FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------ -------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends............................. $ 8,691,519 $31,884,385 $ 4,847,238
EXPENSES:
Mortality and expense undertakings.... (9,068,100) (24,246,739) (2,826,348)
------------ ----------- -----------
Net investment income (loss)........ (376,581) 7,637,646 2,020,890
------------ ----------- -----------
CAPITAL GAINS INCOME.................... -- 73,317,212 --
------------ ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on security
transactions......................... 6,651,839 (442,117) 39,305
Net unrealized (depreciation)
appreciation of investments during
the period........................... 245,333,665 (4,845,420) 44,681,650
------------ ----------- -----------
Net (loss) gain on investments...... 251,985,504 (5,287,537) 44,720,955
------------ ----------- -----------
Net (decrease) increase in net
assets resulting from operations... $251,608,923 $75,667,321 $46,741,845
============ =========== ===========
</TABLE>
------------------------------------------------- SA-11
-------------------------------------------------
<PAGE>
SEPARATE ACCOUNT ONE
--------------------------------------------------------------------------------
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL MIDCAP
COMPANY FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------ -----------
<S> <C> <C>
INVESTMENT INCOME:
Dividends............................. $ -- $ --
EXPENSES:
Mortality and expense undertakings.... (3,422,328) (2,370,115)
------------ -----------
Net investment (loss) income........ (3,422,328) (2,370,115)
------------ -----------
CAPITAL GAINS INCOME.................... 617,854 16,614,969
------------ -----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on security
transactions......................... 674,034 (76)
Net unrealized appreciation
(depreciation) of investments during
the period........................... 163,127,296 82,609,085
------------ -----------
Net gain (loss) on investments...... 163,801,330 82,609,009
------------ -----------
Net increase in net assets resulting
from operations.................... $160,996,856 $96,853,863
============ ===========
</TABLE>
* From inception, May 11, 1999 to December 31, 1999
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
------------------------------------------------- SA-12
-------------------------------------------------
<PAGE>
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MENTOR VIP MENTOR VIP
GLOBAL HIGH GROWTH AND CAPITAL GROWTH PERPETUAL
LEADERS FUND YIELD FUND INCOME FUND FUND INTERNATIONAL FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ----------- ----------- -------------- ------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends............................. $ 150,490 $1,359,521 $ 347,049 $ 2,097 $--
EXPENSES:
Mortality and expense undertakings.... (440,649) (195,616) (683,916) (19,998) (20,341)
----------- ---------- ----------- -------- --------
Net investment (loss) income........ (290,159) 1,163,905 (336,867) (17,901) (20,341)
----------- ---------- ----------- -------- --------
CAPITAL GAINS INCOME.................... 539,412 2,165 799,084 2,428 1,053
----------- ---------- ----------- -------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on security
transactions......................... 12,511 (9,962) (7,190) 9,551 7,458
Net unrealized appreciation
(depreciation) of investments during
the period........................... 23,328,310 (859,225) 13,132,965 91,216 574,300
----------- ---------- ----------- -------- --------
Net gain (loss) on investments...... 23,340,821 (869,187) 13,125,775 100,767 581,758
----------- ---------- ----------- -------- --------
Net increase in net assets resulting
from operations.................... $23,590,074 $ 296,883 $13,587,992 $ 85,294 $562,470
=========== ========== =========== ======== ========
<CAPTION>
MENTOR VIP MERRILL LYNCH
GROWTH MERCURY VI US GLOBAL GROWTH
FUND LARGE CAP FUND FOCUS FUND
SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT*
----------- -------------- -------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends............................. $ 1,072 $ 27 $ 576
EXPENSES:
Mortality and expense undertakings.... (9,090) (8) (45)
-------- ---- ------
Net investment (loss) income........ (8,018) 19 531
-------- ---- ------
CAPITAL GAINS INCOME.................... -- 21 563
-------- ---- ------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain (loss) on security
transactions......................... (7,232) -- --
Net unrealized appreciation
(depreciation) of investments during
the period........................... 158,548 376 3,949
-------- ---- ------
Net gain (loss) on investments...... 151,316 376 3,949
-------- ---- ------
Net increase in net assets resulting
from operations.................... $143,298 $416 $5,043
======== ==== ======
</TABLE>
* From inception, May 11, 1999 to December 31, 1999
------------------------------------------------- SA-13
-------------------------------------------------
<PAGE>
SEPARATE ACCOUNT ONE
--------------------------------------------------------------------------------
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BOND FUND STOCK FUND
SUB-ACCOUNT SUB-ACCOUNT
------------ --------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 19,074,823 $ (17,883,154)
Capital gains income.................. 2,910,226 297,745,384
Net realized gain (loss) on security
transactions......................... 58,228 170,224
Net unrealized (depreciation)
appreciation of investments during
the period........................... (36,187,007) 402,196,558
------------ --------------
Net (decrease) increase in net assets
resulting from operations............ (14,143,730) 682,229,012
------------ --------------
UNIT TRANSACTIONS:
Purchases............................. 40,898,140 423,849,947
Net transfers......................... 40,556,582 426,490,471
Surrenders for benefit payments and
fees................................. (31,895,263) (201,860,525)
Net annuity transactions.............. 434,093 7,775,030
------------ --------------
Net increase (decrease) in net assets
resulting from unit transactions..... 49,993,552 656,254,923
------------ --------------
Net increase in net assets............ 35,849,822 1,338,483,935
NET ASSETS:
Beginning of period................... 411,256,508 3,372,330,348
------------ --------------
End of period......................... $447,106,330 $4,710,814,283
============ ==============
</TABLE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
BOND FUND STOCK FUND
SUB-ACCOUNT SUB-ACCOUNT
------------ --------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 15,464,795 $ (7,691,830)
Capital gains income.................. -- 76,061,613
Net realized (loss) gain on security
transactions......................... (5,587) (1,418,674)
Net unrealized appreciation
(depreciation) of investments during
the period........................... 5,072,560 663,245,884
------------ --------------
Net increase in net assets resulting
from operations...................... 20,531,768 730,196,993
------------ --------------
UNIT TRANSACTIONS:
Purchases............................. 58,804,116 385,880,357
Net transfers......................... 123,611,549 325,699,308
Surrenders for benefit payments and
fees................................. (20,698,247) (105,089,407)
Net annuity transactions.............. 632,000 6,055,572
------------ --------------
Net increase in net assets resulting
from unit transactions............... 162,349,418 612,545,830
------------ --------------
Net increase in net assets............ 182,881,186 1,342,742,823
NET ASSETS:
Beginning of period................... 228,375,322 2,029,587,525
------------ --------------
End of period......................... $411,256,508 $3,372,330,348
============ ==============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
------------------------------------------------- SA-14
-------------------------------------------------
<PAGE>
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY CAPITAL MORTGAGE
MARKET 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).......... $ 15,704,443 $ 67,216,961 $ (28,649,126) $ 5,335,857 $ (1,282,533)
Capital gains income.................. 8,648 473,055,258 188,426,299 -- 13,517,068
Net realized gain (loss) on security
transactions......................... -- 78,597 (457,576) (16,786) 53,550
Net unrealized (depreciation)
appreciation of investments during
the period........................... -- 22,727,549 892,664,508 (5,088,216) 153,057,340
------------ -------------- -------------- ------------ --------------
Net (decrease) increase in net assets
resulting from operations............ 15,713,091 563,078,365 1,051,984,105 230,855 165,345,425
------------ -------------- -------------- ------------ --------------
UNIT TRANSACTIONS:
Purchases............................. 121,514,425 553,278,445 204,353,783 10,455,451 117,361,306
Net transfers......................... 199,660,729 726,127,643 142,107,778 13,740,703 116,603,220
Surrenders for benefit payments and
fees................................. (136,368,048) (395,371,857) (170,334,783) (11,130,292) (45,795,636)
Net annuity transactions.............. 2,186,026 8,508,756 1,937,989 283,866 1,387,602
------------ -------------- -------------- ------------ --------------
Net increase (decrease) in net assets
resulting from unit transactions..... 186,993,132 892,542,987 178,064,767 13,349,728 189,556,492
------------ -------------- -------------- ------------ --------------
Net increase in net assets............ 202,706,223 1,455,621,352 1,230,048,872 13,580,583 354,901,917
NET ASSETS:
Beginning of period................... 345,739,755 5,559,973,241 2,866,492,051 108,954,254 762,436,077
------------ -------------- -------------- ------------ --------------
End of period......................... $548,445,978 $7,015,594,593 $4,096,540,923 $122,534,837 $1,117,337,994
============ ============== ============== ============ ==============
<CAPTION>
INTERNATIONAL DIVIDEND AND INTERNATIONAL
OPPORTUNITIES FUND GROWTH FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------ -------------- -------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ (376,581) $ 7,637,646 $ 2,020,890
Capital gains income.................. -- 73,317,212 --
Net realized gain (loss) on security
transactions......................... 6,651,839 (442,117) 39,305
Net unrealized (depreciation)
appreciation of investments during
the period........................... 245,333,665 (4,845,420) 44,681,650
------------ -------------- ------------
Net (decrease) increase in net assets
resulting from operations............ 251,608,923 75,667,321 46,741,845
------------ -------------- ------------
UNIT TRANSACTIONS:
Purchases............................. 28,399,437 122,792,647 18,919,242
Net transfers......................... (2,401,768) 54,502,249 17,826,840
Surrenders for benefit payments and
fees................................. (36,408,990) (94,489,028) (10,676,542)
Net annuity transactions.............. 782,800 1,856,944 281,999
------------ -------------- ------------
Net increase (decrease) in net assets
resulting from unit transactions..... (9,628,521) 84,662,812 26,351,539
------------ -------------- ------------
Net increase in net assets............ 241,980,402 160,330,133 73,093,384
NET ASSETS:
Beginning of period................... 658,450,752 1,824,407,052 201,156,207
------------ -------------- ------------
End of period......................... $900,431,154 $1,984,737,185 $274,249,591
============ ============== ============
</TABLE>
<TABLE>
<CAPTION>
MONEY CAPITAL MORTGAGE
MARKET 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).......... $ 9,775,262 $ 53,393,050 $ (16,365,803) $ 5,495,664 $ (1,160,481)
Capital gains income.................. -- 130,454,479 150,932,848 -- 11,566,682
Net realized (loss) gain on security
transactions......................... -- (287,760) (3,541,507) 1,531 (301,028)
Net unrealized appreciation
(depreciation) of investments during
the period........................... -- 750,363,179 201,102,863 (691,300) 129,513,479
------------ -------------- -------------- ------------ --------------
Net increase in net assets resulting
from operations...................... 9,775,262 933,922,948 332,128,401 4,805,895 139,618,652
------------ -------------- -------------- ------------ --------------
UNIT TRANSACTIONS:
Purchases............................. 75,815,780 600,914,213 285,756,586 9,674,424 107,850,968
Net transfers......................... 120,297,377 671,280,081 116,427,127 20,420,247 98,345,205
Surrenders for benefit payments and
fees................................. (60,700,173) (226,423,137) (108,713,408) (6,506,845) (22,295,418)
Net annuity transactions.............. 717,935 4,552,594 2,969,562 225,614 1,399,655
------------ -------------- -------------- ------------ --------------
Net increase in net assets resulting
from unit transactions............... 136,130,919 1,050,323,751 296,439,867 23,813,440 185,300,410
------------ -------------- -------------- ------------ --------------
Net increase in net assets............ 145,906,181 1,984,246,699 628,568,268 28,619,335 324,919,062
NET ASSETS:
Beginning of period................... 199,833,574 3,575,726,542 2,237,923,783 80,334,919 437,517,015
------------ -------------- -------------- ------------ --------------
End of period......................... $345,739,755 $5,559,973,241 $2,866,492,051 $108,954,254 $ 762,436,077
============ ============== ============== ============ ==============
<CAPTION>
INTERNATIONAL DIVIDEND AND INTERNATIONAL
OPPORTUNITIES FUND GROWTH FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------ -------------- --------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 668,487 $ 9,816,261 $ 14,628,419
Capital gains income.................. 39,050,857 44,842,140 4,004,303
Net realized (loss) gain on security
transactions......................... (1,485,356) (541,832) 13,013
Net unrealized appreciation
(depreciation) of investments during
the period........................... 27,913,220 151,447,604 (335,247)
------------ -------------- -------------
Net increase in net assets resulting
from operations...................... 66,147,208 205,564,173 18,310,488
------------ -------------- -------------
UNIT TRANSACTIONS:
Purchases............................. 39,589,829 264,852,722 23,124,347
Net transfers......................... (4,225,169) 249,782,849 22,048,417
Surrenders for benefit payments and
fees................................. (26,163,417) (61,426,410) (7,181,403)
Net annuity transactions.............. 434,251 2,178,448 67,952
------------ -------------- -------------
Net increase in net assets resulting
from unit transactions............... 9,635,494 455,387,609 38,059,313
------------ -------------- -------------
Net increase in net assets............ 75,782,702 660,951,782 56,369,801
NET ASSETS:
Beginning of period................... 582,668,050 1,163,455,270 144,786,406
------------ -------------- -------------
End of period......................... $658,450,752 $1,824,407,052 $ 201,156,207
============ ============== =============
</TABLE>
------------------------------------------------- SA-15
-------------------------------------------------
<PAGE>
SEPARATE ACCOUNT ONE
--------------------------------------------------------------------------------
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL MIDCAP
COMPANY FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment (loss) income.......... $(3,422,328) $ (2,370,115)
Capital gains income.................. 617,854 16,614,969
Net realized gain (loss) on security
transactions......................... 674,034 (76)
Net unrealized appreciation
(depreciation) of investments during
the period........................... 163,127,296 82,609,085
------------ ------------
Net increase in net assets resulting
from operations...................... 160,996,856 96,853,863
------------ ------------
UNIT TRANSACTIONS:
Purchases............................... 31,132,986 54,146,905
Net transfers........................... 67,507,616 159,587,148
Surrenders for benefit payments and
fees................................... (12,711,095) (8,059,665)
Net annuity transactions................ 1,448,874 819,581
------------ ------------
Net increase in net assets resulting
from unit transactions................. 87,378,381 206,493,969
------------ ------------
Net increase in net assets.............. 248,375,237 $303,347,832
NET ASSETS:
Beginning of period................... 215,601,809 90,844,727
------------ ------------
End of period......................... $463,977,046 $394,192,559
============ ============
</TABLE>
*** From inception, May 11, 1999 to December 31, 1999
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
SMALL MIDCAP
COMPANY FUND FUND
SUB-ACCOUNT SUB-ACCOUNT
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment (loss) income.......... $(2,126,815) $ (602,824)
Capital gains income.................. 2,433,792 --
Net realized (loss) gain on security
transactions......................... (74,920) (2,834)
Net unrealized appreciation of
investments during the period........ 17,782,782 13,252,169
------------ ------------
Net increase in net assets resulting
from operations...................... 18,014,839 12,646,511
------------ ------------
UNIT TRANSACTIONS:
Purchases............................... 37,657,549 28,291,639
Net transfers........................... 31,192,792 36,483,561
Surrenders for benefit payments and
fees................................... (6,343,764) (1,424,845)
Net annuity transactions................ 298,211 109,553
------------ ------------
Net increase in net assets resulting
from unit transactions................. 62,804,788 63,459,908
------------ ------------
Net increase in net assets.............. 80,819,627 76,106,419
NET ASSETS:
Beginning of period................... 134,782,182 14,738,308
------------ ------------
End of period......................... $215,601,809 $ 90,844,727
============ ============
</TABLE>
* From inception, June 1, 1998 to December 31, 1998
** From inception, September 30, 1998 to December 31, 1998
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
------------------------------------------------- SA-16
-------------------------------------------------
<PAGE>
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MENTOR VIP MENTOR VIP PERPETUAL
GLOBAL HIGH GROWTH AND CAPITAL GROWTH INTERNATIONAL
LEADERS FUND YIELD FUND INCOME FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ----------- ------------ -------------- --------------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment (loss) income.......... $ (290,159) $ 1,163,905 $ (336,867) $ (17,901) $ (20,341)
Capital gains income.................. 539,412 2,165 799,084 2,428 1,053
Net realized gain (loss) on security
transactions......................... 12,511 (9,962) (7,190) 9,551 7,458
Net unrealized appreciation
(depreciation) of investments during
the period........................... 23,328,310 (859,225) 13,132,965 91,216 574,300
------------ ----------- ------------ ---------- ----------
Net increase in net assets resulting
from operations...................... 23,590,074 296,883 13,587,992 85,294 562,470
------------ ----------- ------------ ---------- ----------
UNIT TRANSACTIONS:
Purchases............................... 21,579,201 7,629,629 32,753,873 46,506 94,565
Net transfers........................... 72,852,417 15,016,945 70,693,683 177,612 568,196
Surrenders for benefit payments and
fees................................... (1,320,605) (979,313) (2,805,059) (199,015) (155,582)
Net annuity transactions................ 90,872 76,676 192,208 -- --
------------ ----------- ------------ ---------- ----------
Net increase in net assets resulting
from unit transactions................. 93,201,885 21,743,937 100,834,705 25,103 507,179
------------ ----------- ------------ ---------- ----------
Net increase in net assets.............. 116,791,959 22,040,820 114,422,697 110,397 1,069,649
NET ASSETS:
Beginning of period................... 1,199,763 2,423,654 15,244,948 1,470,368 1,012,987
------------ ----------- ------------ ---------- ----------
End of period......................... $117,991,722 $24,464,474 $129,667,645 $1,580,765 $2,082,636
============ =========== ============ ========== ==========
<CAPTION>
MERRILL LYNCH
MENTOR VIP MERCURY VI US GLOBAL GROWTH
GROWTH FUND LARGE CAP FUND FOCUS FUND
SUB-ACCOUNT SUB-ACCOUNT*** SUB-ACCOUNT***
----------- -------------- --------------
<S> <C> <C> <C>
OPERATIONS:
Net investment (loss) income.......... $ (8,018) $ 19 $ 531
Capital gains income.................. -- 21 563
Net realized gain (loss) on security
transactions......................... (7,232) -- --
Net unrealized appreciation
(depreciation) of investments during
the period........................... 158,548 376 3,949
-------- ------- -------
Net increase in net assets resulting
from operations...................... 143,298 416 5,043
-------- ------- -------
UNIT TRANSACTIONS:
Purchases............................... 19,924 2,499 82,968
Net transfers........................... 179,242 11,190 7,393
Surrenders for benefit payments and
fees................................... (44,998) -- (1)
Net annuity transactions................ 1,932 -- --
-------- ------- -------
Net increase in net assets resulting
from unit transactions................. 156,100 13,689 90,360
-------- ------- -------
Net increase in net assets.............. 299,398 14,105 95,403
NET ASSETS:
Beginning of period................... 591,672 -- --
-------- ------- -------
End of period......................... $891,070 $14,105 $95,403
======== ======= =======
</TABLE>
<TABLE>
<CAPTION>
GLOBAL HIGH GROWTH AND MENTOR VIP MENTOR VIP PERPETUAL
LEADERS FUND YIELD FUND INCOME FUND CAPITAL GROWTH INTERNATIONAL
SUB-ACCOUNT** SUB-ACCOUNT** SUB-ACCOUNT* SUB-ACCOUNT SUB-ACCOUNT
------------- ------------- ------------ -------------- --------------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment (loss) income.......... $ 128 $ 39,679 $ 13,479 $ (3,951) $ (3,170)
Capital gains income.................. 29,044 -- -- -- --
Net realized (loss) gain on security
transactions......................... (3,023) (1,553) 140 55 38
Net unrealized appreciation of
investments during the period........ 52,419 14,002 1,906,801 118,168 47,507
------------ ----------- ------------ ---------- ----------
Net increase in net assets resulting
from operations...................... 78,568 52,128 1,920,420 114,272 44,375
------------ ----------- ------------ ---------- ----------
UNIT TRANSACTIONS:
Purchases............................... 463,522 815,158 5,482,553 92,146 38,705
Net transfers........................... 657,728 1,561,354 7,951,308 1,266,689 937,906
Surrenders for benefit payments and
fees................................... (55) (4,986) (109,333) (2,739) (7,999)
Net annuity transactions................ -- -- -- -- --
------------ ----------- ------------ ---------- ----------
Net increase in net assets resulting
from unit transactions................. 1,121,195 2,371,526 13,324,528 1,356,096 968,612
------------ ----------- ------------ ---------- ----------
Net increase in net assets.............. 1,199,763 2,423,654 15,244,948 1,470,368 1,012,987
NET ASSETS:
Beginning of period................... -- -- -- -- --
------------ ----------- ------------ ---------- ----------
End of period......................... $ 1,199,763 $ 2,423,654 $ 15,244,948 $1,470,368 $1,012,987
============ =========== ============ ========== ==========
<CAPTION>
MENTOR VIP
GROWTH
SUB-ACCOUNT
-----------
<S> <C>
OPERATIONS:
Net investment (loss) income.......... $ (2,316)
Capital gains income.................. --
Net realized (loss) gain on security
transactions......................... 2
Net unrealized appreciation of
investments during the period........ 56,433
--------
Net increase in net assets resulting
from operations...................... 54,119
--------
UNIT TRANSACTIONS:
Purchases............................... 39,810
Net transfers........................... 497,486
Surrenders for benefit payments and
fees................................... 257
Net annuity transactions................ --
--------
Net increase in net assets resulting
from unit transactions................. 537,553
--------
Net increase in net assets.............. 591,672
NET ASSETS:
Beginning of period................... --
--------
End of period......................... $591,672
========
</TABLE>
* From inception, June 1, 1998 to December 31, 1998
** From inception, September 30, 1998 to December 31, 1998
------------------------------------------------- SA-17
-------------------------------------------------
<PAGE>
SEPARATE ACCOUNT ONE
--------------------------------------------------------------------------------
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
--------------------------------------------------------------------------------
1. ORGANIZATION:
Separate Account One (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 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 expense 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:
Certain amounts are deducted from the contracts on a monthly basis, as
decribed below:
a) MORTALITY AND EXPENSE RISK CHARGE--The Company, will make deductions at a
maximum annual rate of 1.25% of the contract's value for the mortality
and expense risks which the Company undertakes.
b) TAX EXPENSE CHARGE--If applicable, the Company will make deductions at a
maximum rate of 3.5% of the contract's value to meet premium tax
requirements. An additional tax charge based on a percentage of the
contract's value may be assessed to partial withrawals or surrenders.
These expenses are included in surrenders for benefit payments and fees
in the accompanying statements of changes in net assets.
c) ANNUAL MAINTENANCE FEE--An annual maintenance fee in the amount of $30
may be deducted from the contract's value each contract year. However,
this fee is not applicable to contracts with values of $50,000 or more,
as determined on the most recent contract anniversary. These expenses are
included in surrenders for benefit payments and fees in the accompanying
statements of changes in net assets.
_____________________________________ SA-18 ____________________________________
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------------------
To the Board of Directors of
Hartford Life and Annuity Insurance Company:
We have audited the accompanying statutory balance sheets of Hartford Life and
Annuity Insurance Company (a Connecticut Corporation and wholly owned subsidiary
of Hartford Life Insurance Company) (the Company) as of December 31, 1999 and
1998, and the related statutory statements of operations, changes in capital and
surplus, and cash flows for each of the three years in the period ended December
31, 1999. These statutory financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
statutory financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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.
The Company presents its financial statements in conformity with statutory
accounting practices as described in Note 2 of notes to statutory financial
statements. When financial statements are presented for purposes other than for
filing with a regulatory agency, auditing standards generally accepted in the
United States require that an auditors' report on them state whether they are
presented in conformity with accounting principles generally accepted in the
United States. The accounting practices used by the Company vary from accounting
principles generally accepted in the United States as explained and quantified
in Note 2.
In our opinion, because of the effects of the matter discussed in the preceding
paragraph, the statutory financial statements referred to above do not present
fairly, in conformity with accounting principles generally accepted in the
United States, the financial position of the Company as of December 31, 1999 and
1998, or the results of its operations or its cash flows for each of the three
years in the period ended December 31, 1999.
In our opinion, the statutory financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
December 31, 1999 and 1998, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1999 in conformity
with statutory accounting practices as described in Note 2.
Hartford, Connecticut
January 31, 2000 ARTHUR ANDERSEN LLP
F-1
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
BALANCE SHEETS
(STATUTORY BASIS)
($000)
--------------------------------------------------------
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
<S> <C> <C>
------------------------------------------------------------------------------------------------
<CAPTION>
1999 1998
------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Bonds $ 1,465,815 $ 1,453,792
Common stocks 42,430 40,650
Mortgage loans 63,784 59,548
Policy loans 59,429 47,212
Cash and short-term investments 267,579 469,955
------------------------------------------------------------------------------------------------
Other invested assets 2,892 2,188
------------------------------------------------------------------------------------------------
Total cash and invested assets 1,901,929 2,073,345
Investment income due and accrued 21,069 20,126
Other assets 39,576 45,691
Separate account assets 44,865,042 32,876,278
------------------------------------------------------------------------------------------------
TOTAL ASSETS $46,827,616 $35,015,440
------------------------------------------------------------------------------------------------
LIABILITIES
Aggregate reserves for future benefits $ 591,621 $ 579,140
Policy and contract claim liabilities 7,677 5,667
Liability for premium and other deposit funds 1,969,262 2,011,672
Asset valuation reserve 4,935 21,782
Payable to affiliates 14,084 19,271
Accrued expense allowances and other amounts due from
separate accounts (1,377,927) (1,173,513)
Remittances and items not allocated 111,582 87,449
Other liabilities 118,464 111,182
Separate account liabilities 44,865,042 32,876,278
------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 46,304,740 34,538,928
------------------------------------------------------------------------------------------------
CAPITAL AND SURPLUS
Common stock 2,500 2,500
Gross paid-in and contributed surplus 226,043 226,043
Unassigned funds 294,333 247,969
------------------------------------------------------------------------------------------------
TOTAL CAPITAL AND SURPLUS 522,876 476,512
------------------------------------------------------------------------------------------------
TOTAL LIABILITIES, CAPITAL AND SURPLUS $46,827,616 $35,015,440
------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statutory basis financial
statements.
F-2
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
(STATUTORY BASIS)
($000)
--------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
<S> <C> <C> <C>
-------------------------------------------------------------------------------------------------------
<CAPTION>
1999 1998 1997
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Premiums and annuity considerations $ 621,789 $ 469,343 $ 296,645
Annuity and other fund deposits 2,991,363 2,051,251 1,981,246
Net investment income 122,322 129,982 102,285
Commissions and expense allowances on reinsurance ceded 379,905 444,241 396,921
Reserve adjustment on reinsurance ceded 1,411,342 3,185,590 3,672,076
Fee income 647,565 448,260 290,675
Other revenues 842 9,930 (2,043)
-------------------------------------------------------------------------------------------------------
TOTAL REVENUES 6,175,128 6,738,597 6,737,805
-------------------------------------------------------------------------------------------------------
BENEFITS AND EXPENSES
Death and annuity benefits 47,372 43,152 65,961
Disability and other benefits 6,270 6,352 7,532
Surrenders and other fund withdrawals 1,250,813 739,663 454,417
Commissions 467,338 435,994 470,334
Increase (Decrease) in aggregate reserves for future
benefits 12,481 (10,711) 33,213
(Decrease) Increase in liability for premium and other
deposit funds (47,852) 218,642 640,840
General insurance expenses 192,196 190,979 77,237
Net transfers to separate accounts 4,160,501 4,956,007 4,914,980
Other expenses 35,385 22,091 15,671
-------------------------------------------------------------------------------------------------------
TOTAL BENEFITS AND EXPENSES 6,124,504 6,602,169 6,680,185
-------------------------------------------------------------------------------------------------------
NET GAIN FROM OPERATIONS
Before federal income tax (benefit) expense 50,624 136,428 57,620
Federal income tax (benefit) expense (10,231) 35,887 (14,878)
-------------------------------------------------------------------------------------------------------
NET GAIN FROM OPERATIONS 60,855 100,541 72,498
Net realized capital (losses) gains, after tax (36,428) 2,085 1,544
-------------------------------------------------------------------------------------------------------
NET INCOME $ 24,427 $ 102,626 $ 74,042
-------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statutory basis financial
statements.
F-3
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN CAPITAL AND SURPLUS
(STATUTORY BASIS)
($000)
--------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
DECEMBER 31,
<S> <C> <C> <C>
-------------------------------------------------------------------------------------------------
<CAPTION>
1999 1998 1997
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCK
Beginning and end of year $ 2,500 $ 2,500 $ 2,500
-------------------------------------------------------------------------------------------------
GROSS PAID-IN AND CONTRIBUTED SURPLUS
Beginning and end of year 226,043 226,043 226,043
-------------------------------------------------------------------------------------------------
UNASSIGNED FUNDS
Balance, beginning of year 247,969 143,257 74,570
Net income 24,427 102,626 74,042
Change in net unrealized capital gains on common stocks
and other invested assets 2,258 1,688 2,186
Change in asset valuation reserve 16,847 (8,112) (6,228)
Change in non-admitted assets 6,557 (1,277) (1,313)
Credit on reinsurance ceded (3,725) 9,787 --
-------------------------------------------------------------------------------------------------
Balance, end of year 294,333 247,969 143,257
-------------------------------------------------------------------------------------------------
CAPITAL AND SURPLUS,
End of year $522,876 $476,512 $371,800
-------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statutory basis financial
statements.
F-4
<PAGE>
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENTS OF CASH FLOWS
(STATUTORY BASIS)
($000)
--------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
<S> <C> <C> <C>
-------------------------------------------------------------------------------------------------------
<CAPTION>
1999 1998 1997
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Premiums and annuity considerations $3,613,217 $2,520,655 $2,277,874
Net investment income 122,998 127,425 101,991
Fee income 647,565 448,260 290,675
Other income 1,799,323 3,644,704 4,091,043
-------------------------------------------------------------------------------------------------------
Total income 6,183,103 6,741,044 6,761,583
-------------------------------------------------------------------------------------------------------
Benefits paid 1,303,801 790,051 529,733
Federal income tax (recoveries) payments (8,815) 25,780 (14,499)
Net transfers to separate accounts 4,364,914 5,222,144 5,199,354
Other expenses 669,525 626,240 547,692
-------------------------------------------------------------------------------------------------------
Total benefits and expenses 6,329,425 6,664,215 6,262,280
-------------------------------------------------------------------------------------------------------
NET CASH (USED FOR) PROVIDED BY OPERATING ACTIVITIES (146,322) 76,829 499,303
-------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
PROCEEDS FROM INVESTMENTS SOLD
Bonds 753,358 633,926 614,413
Common stocks 939 34,010 11,481
Mortgage loans 53,704 85,275 --
Other 1,490 19,990 152
-------------------------------------------------------------------------------------------------------
NET INVESTMENT PROCEEDS 809,491 773,201 626,046
-------------------------------------------------------------------------------------------------------
COST OF INVESTMENTS ACQUIRED
Bonds 804,947 586,913 848,267
Common stocks 464 7,012 28,302
Mortgage loans 57,665 59,702 85,103
Other 14,211 11,847 26,227
-------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS ACQUIRED 877,287 665,474 987,899
-------------------------------------------------------------------------------------------------------
NET CASH (USED FOR) PROVIDED BY INVESTING ACTIVITIES $ (67,796) $ 107,727 $ (361,853)
-------------------------------------------------------------------------------------------------------
FINANCING AND MISCELLANEOUS ACTIVITIES
Net other cash provided (used) 11,742 (24,033) (4,848)
-------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED FOR) FINANCING
AND MISCELLANEOUS ACTIVITIES 11,742 (24,033) (4,848)
-------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and short-term investments (202,376) 160,523 132,602
Cash and short-term investments, beginning of year 469,955 309,432 176,830
-------------------------------------------------------------------------------------------------------
CASH AND SHORT-TERM INVESTMENTS, END OF YEAR $ 267,579 $ 469,955 $ 309,432
-------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these statutory basis financial
statements.
F-5
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(STATUTORY BASIS)
DECEMBER 31, 1999
(AMOUNTS IN THOUSANDS UNLESS OTHERWISE STATED)
--------------------------------------------------------------------------------
1. ORGANIZATION AND DESCRIPTION OF BUSINESS:
Hartford Life and Annuity Insurance Company (the "Company") is a wholly owned
subsidiary of Hartford Life Insurance Company ("HLIC"), which is an indirect
subsidiary of Hartford Life, Inc. ("HLI"). HLI is indirectly majority owned by
The Hartford Financial Services Group, Inc. ("The Hartford"). On February 10,
1997, HLI filed a registration statement, as amended, with the Securities and
Exchange Commission relating to the initial public offering of HLI Class A
Common Stock (the "Offering"). Pursuant to the Offering on May 22, 1997, HLI
sold to the public 26 million shares, representing approximately 18.6% of the
equity ownership of HLI.
In 1998, the Company changed its name to Hartford Life and Annuity Insurance
Company from ITT Hartford Life and Annuity Insurance Company.
The Company offers a complete line of fixed and variable annuities, as well as
variable, universal and traditional individual life insurance.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION
The accompanying statutory basis financial statements of the Company were
prepared in conformity with statutory accounting practices prescribed or
permitted by the National Association of Insurance Commissioners ("NAIC") and
the State of Connecticut Department of Insurance. Certain reclassifications have
been made to prior year financial information to conform to the current year
presentation.
Current prescribed statutory accounting practices include accounting
publications of the NAIC, as well as state laws, regulations and general
administrative rules. Permitted statutory accounting practices encompass
accounting practices approved by state insurance departments. The Company does
not follow any permitted statutory accounting practices that have a material
effect on statutory surplus, statutory net income or risk-based capital.
The preparation of financial statements in conformity with statutory accounting
principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reported periods. Actual results could
differ from those estimates. The most significant estimates include those used
in determining the liability for aggregate reserves for future benefits and the
liability for premium and other deposit funds. Although some variability is
inherent in these estimates, management believes the amounts provided are
adequate.
STATUTORY ACCOUNTING PRACTICES VERSUS GAAP
Statutory accounting practices and generally accepted accounting principles
("GAAP") differ in certain significant respects. These differences principally
involve:
(1) treatment of policy acquisition costs (commissions, underwriting and selling
expenses, etc.) which are charged to expense when incurred for statutory
purposes rather than on a pro-rata basis over the expected life and gross
profit stream of the policy for GAAP purposes;
(2) recognition of premium revenues, which for statutory purposes are generally
recorded as collected or when due during the premium paying period of the
contract and which for GAAP purposes, for universal life policies and
investment products, generally only consist of charges assessed to policy
account balances for cost of insurance, policy administration and
surrenders. When policy charges received relate to coverage or services to
be provided in the future, the charges are recognized as revenue on a
pro-rata basis over the expected life and gross profit stream of the policy.
Also, for GAAP purposes, premiums for traditional life insurance policies
are recognized as revenues when they are due from policyholders;
(3) development of liabilities for future policy benefits, which for statutory
purposes predominantly use interest rate and mortality assumptions
prescribed by the NAIC which may vary considerably from interest and
mortality assumptions used under GAAP;
(4) providing for income taxes based on current taxable income only for
statutory purposes, rather than establishing additional assets or
liabilities for deferred Federal income taxes to recognize the tax effect
related to reporting revenues and expenses in different periods for
financial reporting and tax return purposes or required under GAAP;
(5) excluding certain assets designated as non-admitted assets (e.g., negative
Interest Maintenance Reserve, and past due agents' balances) from the
balance sheet for statutory purposes by directly charging surplus;
(6) the calculation of post retirement benefits obligation which, for statutory
accounting, excludes non-vested employees whereas GAAP liabilities include a
provision for such employees; statutory and GAAP accounting permit either
immediate recognition of the liability or straight-line amortization of the
liability over a period not to exceed 20 years. For GAAP, The Hartford's
obligation was immediately recognized, whereas for statutory accounting, the
obligation is being recognized ratably over a 20 year period;
F-6
<PAGE>
(7) establishing a formula reserve for realized and unrealized losses due to
default and equity risk associated with certain invested assets (Asset
Valuation Reserve) for statutory purposes; as well as the deferral and
amortization of realized gains and losses, caused by changes in interest
rates during the period the asset is held, into income over the remaining
life to maturity of the asset sold (Interest Maintenance Reserve) for
statutory purposes; whereas on a GAAP basis, no such formula reserve is
required and realized gains and losses are recognized in the period the
asset is sold;
(8) the reporting of reserves and benefits net of reinsurance ceded for
statutory purposes; whereas on a GAAP basis, reserves are reported gross of
reinsurance with reserve credits presented as recoverable assets;
(9) the reporting of fixed maturities at amortized cost for statutory purposes,
whereas GAAP requires that fixed maturities be classified as
"held-to-maturity," "available-for-sale" or "trading," based on the
Company's intentions with respect to the ultimate disposition of the
security and its ability to affect those intentions. The Company's bonds
were classified on a GAAP basis as available-for-sale and accordingly, those
investments and common stocks were reflected at fair value with the
corresponding impact included as a separate component of Stockholder's
Equity; as well as the change in the basis of the Company's other invested
assets, which consist primarily of limited partnership investments, which is
recognized as income under GAAP and as a change in surplus under statutory
accounting; and
(10) statutory accounting calculates separate account liabilities using
prescribed actuarial methodologies, which approximate the market value of
separate account assets less applicable surrender charges. The separate
account surplus generated by these reserving methods is recorded as an
amount due to or from the separate account on the statutory basis balance
sheet, with changes reflected in the statutory basis results of operations.
On a GAAP basis, separate account assets and liabilities are held at fair
value.
As of and for the years ended December 31, the significant differences between
Statutory and GAAP basis net income and capital and surplus for the Company are
as follows:
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
----------------------------------------
GAAP Net Income $ 75,654 $ 74,525 $ 58,050
Deferral and amortization of policy
acquisition costs, net (272,171) (331,882) (345,657)
Change in unearned revenue reserve (64,915) 23,118 4,058
Deferred taxes 57,833 2,476 47,092
Separate account expense allowance 214,388 259,287 282,818
Asset impairments and write-downs (17,250) 17,250 --
Benefit reserve adjustment 11,491 5,360 24,666
Gain on commutation of reinsurance
(Note 4) -- 52,026 --
Prepaid reinsurance premium (3,524) -- --
Statutory voluntary reserve (6,286) -- --
Other, net 29,207 466 3,015
----------------------------------------
STATUTORY NET INCOME $ 24,427 $ 102,626 $ 74,042
----------------------------------------
GAAP Stockholder's Equity $ 676,428 $ 648,097 $ 570,469
Deferred policy acquisition costs (1,887,824) (1,615,653) (1,283,771)
Unearned revenue reserve 95,965 160,951 134,789
Deferred taxes 122,105 68,936 64,522
Separate account expense allowance 1,398,030 1,183,642 924,355
Asset impairments and write-downs -- 17,250 --
Unrealized losses (gains) on
investments 26,292 (24,955) (21,451)
Benefit reserve adjustment 81,111 69,233 16,378
Asset valuation reserve (4,935) (21,782) (13,670)
Adjustment relating to Lyndon
contribution (Note 4) -- -- (23,671)
Prepaid reinsurance premium (7,728) (4,204) --
Statutory voluntary reserve (6,286) -- --
Other, net 29,718 (5,003) 3,850
----------------------------------------
STATUTORY CAPITAL AND SURPLUS $ 522,876 $ 476,512 $ 371,800
----------------------------------------
</TABLE>
F-7
<PAGE>
AGGREGATE RESERVES FOR FUTURE BENEFITS AND LIABILITY FOR PREMIUM AND OTHER
DEPOSIT FUNDS
Aggregate reserves for payment of future life, health and annuity benefits were
computed in accordance with applicable actuarial standards. Reserves for life
insurance policies are generally based on the 1958 and 1980 Commissioner's
Standard Ordinary Mortality Tables and various valuation rates ranging from 2.5%
to 6%. Accumulation and on-benefit annuity reserves are based principally on
individual annuity tables at various rates ranging from
2.5% to 8.75% and using the Commissioners Annuity Reserve Valuation Method
("CARVM").
The Company has established separate accounts to segregate the assets and
liabilities of certain life insurance and annuity contracts that must be
segregated from the Company's general assets under the terms of its contracts.
The assets consist primarily of marketable securities and are reported at market
value. Premiums, benefits and expenses of these contracts are reported in the
statutory basis statements of operations.
An analysis of Annuity Actuarial Reserves and Deposit Liabilities by Withdrawal
Characteristics as of December 31, 1999 (including general and separate account
liabilities) is as follows:
<TABLE>
<CAPTION>
% of
Amount Total
<S> <C> <C>
--------------------
Subject to discretionary withdrawal:
--------------------
With market value adjustment $ 4,564 0.0%
At book value less current surrender charge of 5% or more 1,427,302 3.2%
At market value 42,431,996 95.4%
--------------------
Total with adjustment or at market value 43,863,862 98.6%
At book value without adjustment (minimal or no charge or
adjustment): 573,583 1.3%
Not subject to discretionary withdrawal: 34,816 0.1%
--------------------
Total, gross 44,472,261 100.0%
Reinsurance ceded --
------------
Total, net $44,472,261
------------
</TABLE>
INVESTMENTS
Investments in bonds are carried at amortized cost. Bonds that are deemed
ineligible to be held at amortized cost by the NAIC Securities Valuation Office
("SVO") are carried at the appropriate SVO published value. When a reduction in
the value of a security is deemed to be unrecoverable, the decline in value is
reported as a realized loss and the carrying value is adjusted accordingly.
Short-term investments consist of money market funds and are stated at cost,
which approximates fair value. Common stocks are carried at fair value with the
current year change in the difference from cost reflected in surplus. Mortgage
loans, which are carried at cost and approximate fair value, include investments
in assets backed by mortgage loan pools. Other invested assets are generally
recorded at fair value.
The Asset Valuation Reserve ("AVR") is designed to provide a standardized
reserving process for realized and unrealized losses due to default and equity
risks associated with invested assets. The AVR balances were $4,935 and $21,782
as of December 31, 1999 and 1998, respectively. Additionally, the Interest
Maintenance Reserve ("IMR") captures net realized capital gains and losses, net
of applicable income taxes, resulting from changes in interest rates and
amortizes these gains or losses into income over the life of the bond or
mortgage sold. The IMR balance as of December 31, 1999 is an asset balance of
$981 and is reflected as a component of non-admitted assets in Unassigned Funds
in accordance with statutory accounting practices. The IMR balance as of
December 31, 1998 is a liability balance of $452 and is reflected as an other
liability. The net capital (losses) gains transferred to the IMR in 1999, 1998
and 1997 were $(1,255), $852 and $(719), respectively. The amount of income
(expense) amortized from the IMR in 1999, 1998 and 1997 included in the
Company's Statements of Operations, was $178, $(207), and $(85), respectively.
Realized capital gains and losses, net of taxes, not included in the IMR are
reported in the statutory basis statements of operations. Realized investment
gains and losses are determined on a specific identification basis.
CODIFICATION
The NAIC adopted the Codification of Statutory Accounting Principles in March
1998. The proposed effective date for this statutory accounting guidance is
January 1, 2001. It is expected that Connecticut, the Company's domiciliary
state, will adopt these accounting standards and, therefore, the Company will
make the necessary accounting and reporting changes required for implementation.
The Company has not yet determined the impact that these new accounting
standards will have on its statutory basis financial statements.
F-8
<PAGE>
3. INVESTMENTS:
(a) COMPONENTS OF NET INVESTMENT INCOME
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
-----------------------------
Interest income from bonds and short-term investments $113,646 $123,370 $100,475
Interest income from policy loans 3,494 3,133 1,958
Interest and dividends from other investments 6,371 4,482 1,005
-----------------------------
Gross investment income 123,511 130,985 103,438
Less: investment expenses 1,189 1,003 1,153
-----------------------------
NET INVESTMENT INCOME $122,322 $129,982 $102,285
-----------------------------
</TABLE>
(b) COMPONENTS OF NET UNREALIZED CAPITAL (LOSSES) GAINS ON BONDS AND
SHORT-TERM INVESTMENTS
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
-----------------------------
Gross unrealized capital gains $ 561 $ 10,905 $23,357
Gross unrealized capital losses (6,441) (833) (1,906)
-----------------------------
Net unrealized capital (losses) gains (5,880) 10,072 21,451
Balance, beginning of year 10,072 21,451 7,979
-----------------------------
CHANGE IN NET UNREALIZED CAPITAL (LOSSES) GAINS ON BONDS AND
SHORT-TERM INVESTMENTS $(15,952) $(11,379) $13,472
-----------------------------
</TABLE>
(c) COMPONENTS OF NET UNREALIZED CAPITAL GAINS (LOSSES) ON COMMON STOCKS
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
--------------------------
Gross unrealized capital gains $2,508 $ 2,204 $ 537
Gross unrealized capital losses (24) (1,871) (1,820)
--------------------------
Net unrealized capital gains (losses) 2,484 333 (1,283)
Balance, beginning of year 333 (1,283) (3,447)
--------------------------
CHANGE IN NET UNREALIZED CAPITAL GAINS ON COMMON STOCKS $2,151 $ 1,616 $ 2,164
--------------------------
</TABLE>
(d) COMPONENTS OF NET REALIZED CAPITAL (LOSSES) GAINS
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
--------------------------
Bonds and short-term investments $(37,959) $1,314 $ (120)
Common stocks 104 1,624 421
Other invested assets 172 (1) (307)
--------------------------
Realized capital (losses) gains (37,683) 2,937 (6)
Capital gains benefit -- -- (831)
--------------------------
Net realized capital (losses) gains (37,683) 2,937 825
Less: amounts transferred to the IMR (1,255) 852 (719)
--------------------------
NET REALIZED CAPITAL (LOSSES) GAINS $(36,428) $2,085 $1,544
--------------------------
</TABLE>
Sales and maturities of investments in bonds and short-term investments for the
years ended December 31, 1999, 1998 and 1997 resulted in proceeds of $1,367,027,
$1,354,563 and $1,435,820, gross realized capital gains of $1,106, $1,705, and
$964 and gross realized capital losses of $39,065, $391, and $1,084,
respectively, before transfers to the IMR. Sale of common stocks for the years
ended December 31, 1999, 1998 and 1997 resulted in proceeds of $939, $33,088,
and $10,168, gross realized capital gains of $115, $1,688, and $421 and gross
realized capital losses of $11, $64, and $0, respectively.
(e) DERIVATIVE INVESTMENTS
The Company had no significant derivative holdings as of December 31, 1999, 1998
or 1997.
(f) CONCENTRATION OF CREDIT RISK
Excluding U.S. government and government agency investments, the Company is not
exposed to any significant concentrations of credit risk in fixed maturities of
a single issuer greater than 10% of capital and surplus as of December 31, 1999.
F-9
<PAGE>
(g) BONDS, SHORT-TERM INVESTMENTS AND COMMON STOCKS
<TABLE>
<CAPTION>
1999
----------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
<S> <C> <C> <C> <C>
----------------------------------------------
U.S. government and government agencies and authorities:
-- Guaranteed and sponsored $ 4,768 $ 1 $ (37) $ 4,732
-- Guaranteed and sponsored -- asset backed 170,746 -- -- 170,746
States, municipalities and political subdivisions 10,401 -- (48) 10,353
International governments 7,351 94 (15) 7,430
Public utilities 18,413 92 (73) 18,432
All other corporate -- excluding asset-backed 592,233 374 (6,194) 586,413
All other corporate -- asset-backed 539,688 -- -- 539,688
Short-term investments 228,105 -- -- 228,105
Certificates of deposit 5,158 -- (74) 5,084
Parents, subsidiaries and affiliates 117,057 -- -- 117,057
----------------------------------------------
TOTAL BONDS AND SHORT-TERM INVESTMENTS $1,693,920 $561 $(6,441) $1,688,040
----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
<S> <C> <C> <C> <C>
--------------------------------------------
Common stock -- unaffiliated $ 4,562 $1,105 $ (24) $ 5,643
Common stock -- affiliated 35,384 1,403 -- 36,787
--------------------------------------------
TOTAL COMMON STOCKS $39,946 $2,508 $ (24) $42,430
--------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
1998
----------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
<S> <C> <C> <C> <C>
----------------------------------------------
U.S. government and government agencies and authorities:
-- Guaranteed and sponsored $ 4,982 $ 35 $ (2) $ 5,015
-- Guaranteed and sponsored -- asset-backed 75,615 -- -- 75,615
States, municipalities and political subdivisions 10,402 415 -- 10,817
International governments 7,466 568 -- 8,034
Public utilities 94,475 1,330 (39) 95,766
All other corporate -- excluding asset-backed 607,679 8,473 (792) 615,360
All other corporate -- asset-backed 505,900 -- -- 505,900
Short-term investments 343,783 -- -- 343,783
Certificates of deposit 130,216 84 -- 130,300
Parents, subsidiaries and affiliates 117,057 -- -- 117,057
----------------------------------------------
TOTAL BONDS AND SHORT-TERM INVESTMENTS $1,897,575 $10,905 $(833) $1,907,647
----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
<S> <C> <C> <C> <C>
--------------------------------------------
Common stock -- unaffiliated $ 4,933 $ 290 $ (50) $ 5,173
Common stock -- affiliated 35,384 1,914 (1,821) 35,477
--------------------------------------------
TOTAL COMMON STOCKS $40,317 $2,204 $(1,871) $40,650
--------------------------------------------
</TABLE>
The amortized cost and estimated fair value of bonds and short-term investments
as of December 31, 1999 by estimated maturity year are shown below. Asset-backed
securities, including mortgage-backed securities and collaterialized mortgage
obligations, are distributed to maturity year based on the Company's estimates
of the rate of
F-10
<PAGE>
future prepayments of principal over the remaining lives of the securities.
Expected maturities differ from contractual maturities due to call or prepayment
provisions.
<TABLE>
<CAPTION>
Amortized Estimated
Maturity Cost Fair Value
<S> <C> <C>
--------------------------
One year or less $ 545,290 $ 543,397
Over one year through five years 692,881 690,476
Over five years through ten years 370,835 369,548
Over ten years 84,914 84,619
--------------------------
TOTAL $1,693,920 $1,688,040
--------------------------
</TABLE>
Bonds with a carrying value of $10,457 were on deposit as of December 31, 1999
with various regulatory authorities as required.
(h) FAIR VALUE OF FINANCIAL INSTRUMENTS-BALANCE SHEET ITEMS (IN MILLIONS):
<TABLE>
<CAPTION>
1999 1998
-------------------------- --------------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
<S> <C> <C> <C> <C>
------------------------------------------------------
ASSETS
Bonds and short-term investments $1,694 $1,688 $1,898 $1,908
Common stocks 42 42 41 41
Policy loans 59 59 47 47
Mortgage loans 64 64 60 60
Other invested assets 3 3 2 2
LIABILITIES
Deposit funds and other benefits $2,051 $2,017 $2,078 $2,053
</TABLE>
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments: fair value of bonds, short-term
investments, common stock, and other invested assets approximate those
quotations published by the NAIC; policy loans and mortgage loans carrying
amounts approximates fair value; and fair value of liabilities on deposit funds
and other benefits is determined by forecasting future cash flows and
discounting the forecasted cash flows at current market rates.
4. REINSURANCE:
The Company cedes insurance to other insurers in order to limit its maximum
losses. Such transfer does not relieve the Company of its primary liability to
the policyholder. Failure of reinsurers to honor their obligations could result
in losses to the Company. The Company reduces this risk by evaluating the
financial condition of reinsurers and monitoring for possible concentrations of
credit risk.
The Company cedes significant portions of its variable annuity business written
since 1994 to RGA Reinsurance Company ("RGA"). Certain core annuity products
were excluded from this reinsurance arrangement beginning in the second quarter
of 1999 and, as such, the amounts ceded to RGA have declined significantly.
In 1995, The Hartford was "spun-off" from ITT Industries, Inc. and became its
own, autonomous entity. In conjunction with this spin-off, the assets and
liabilities of Lyndon Insurance Company (Lyndon) were merged into the Company.
The statutory net assets contributed to the Company as a result of this
transaction were approximately $112 million and were reflected as an increase in
Gross Paid-In and Contributed Surplus at December 31, 1995. This amount was
approximately $41 million lower than the value of net assets contributed on a
GAAP basis.
The majority of the business written in Lyndon was assumed from an unaffiliated
insurer. In 1998, this unaffiliated insurer recaptured the inforce blocks of
business it had been ceding to the Company through Lyndon. In conjunction with
this commutation transaction, the Company transferred statutory basis reserves
of $26,404. Additionally, the Company received fair value consideration for the
bonds it transferred which exceeded the statutory statement value of these
assets by $25,622. As a result of this activity, the Company recognized a
pre-tax gain from this transaction of $52,026 in its 1998 Statements of
Operations.
There were no material reinsurance recoverables from reinsurers outstanding as
of and for the years ended, December 31, 1999 and 1998.
F-11
<PAGE>
The effect of reinsurance as of and for the years ended December 31, is
summarized as follows:
<TABLE>
<CAPTION>
1999 Direct Assumed Ceded Net
<S> <C> <C> <C> <C>
------------------------------------------------------
Aggregate Reserves for Future
Benefits $ 784,502 $ 53 $ (192,934) $ 591,621
Policy and Contract Claim
Liabilities $ 7,827 $ 203 $ (353) $ 7,677
Premium and Annuity Considerations $ 674,219 $ 1,261 $ (53,691) $ 621,789
Annuity and Other Fund Deposits $6,195,917 $ -- $(3,204,554) $2,991,363
Death, Annuity, Disability and
Other Benefits $ 65,251 $ 1,104 $ (12,713) $ 53,642
Surrenders $2,541,449 $ -- $(1,290,636) $1,250,813
</TABLE>
<TABLE>
<CAPTION>
1998 Direct Assumed Ceded Net
<S> <C> <C> <C> <C>
------------------------------------------------------
Aggregate Reserves for Future
Benefits $ 713,375 $ 50 $ (134,285) $ 579,140
Policy and Contract Claim
Liabilities $ 5,895 $ 85 $ (313) $ 5,667
Premium and Annuity Considerations $ 483,328 $24,954 $ (38,939) $ 469,343
Annuity and Other Fund Deposits $6,461,470 $ -- $(4,410,219) $2,051,251
Death, Annuity, Disability and
Other Benefits $ 64,331 $ 1,574 $ (16,401) $ 49,504
Surrenders $1,481,797 $ -- $ (742,134) $ 739,663
</TABLE>
<TABLE>
<CAPTION>
1997 Direct Assumed Ceded Net
<S> <C> <C> <C> <C>
------------------------------------------------------
Premium and Annuity Considerations $ 266,427 $51,630 $ (21,412) $ 296,645
Annuity and Other Fund Deposits $6,515,347 $ -- $(4,534,101) $1,981,246
Death, Annuity, Disability and
Other Benefits $ 79,779 $ 839 $ (7,126) $ 73,492
Surrenders $ 882,094 $ -- $ (427,677) $ 454,417
</TABLE>
5. RELATED PARTY TRANSACTIONS:
Transactions between the Company and its affiliates, relate principally to tax
settlements, reinsurance, insurance coverages, rental and service fees, capital
contributions and payments of dividends. In addition, certain affiliated
insurance companies purchased group annuity contracts from the Company to fund
pension costs and claim annuities to settle casualty claims. Substantially all
general insurance expenses related to the Company, including rent and benefit
plan expenses, are initially paid by The Hartford. Direct expenses are allocated
using specific identification and indirect expenses are allocated using other
applicable methods. Indirect expenses include those for corporate areas which,
depending on type, are allocated based on either a percentage of direct expenses
or on utilization.
The Company has also invested in bonds of its affiliates, Hartford Financial
Services Corporation and HL Investment Advisors, Inc., and common stock of its
subsidiary, Hartford Life, LTD.
For additional information, see Notes 4, 6, and 8.
6. FEDERAL INCOME TAXES:
The Company and The Hartford have entered into a tax sharing agreement under
which each member in the consolidated U.S. Federal income tax return will make
payments between them such that, with respect to any period, the amount of taxes
to be paid by the Company, subject to certain adjustments, generally will be
determined as though the Company were filing separate Federal, state and local
income tax returns.
As long as The Hartford continues to own at least 80% of the combined voting
power and 80% of the value of the outstanding capital stock of HLI, the Company
will be included for Federal income tax purposes in the affiliated group of
which The Hartford is the common parent. The Hartford and its non-life
subsidiaries filed a single consolidated Federal income tax return for 1998 and
1997 and intend to file a separate consolidated Federal income tax return for
1999. The life insurance companies filed a separate consolidated Federal income
tax return for 1998 and 1997 and intend to file a separate consolidated Federal
income tax return for 1999. Federal income taxes (received) paid by the Company
for operations and capital gains (losses) were $(8,815), $25,780, and $(14,499)
in 1999, 1998 and 1997, respectively. The effective tax rate was (73)%, 27%, and
(28)% in 1999, 1998 and 1997, respectively.
F-12
<PAGE>
The following schedule provides a reconciliation of the tax provision (including
realized capital gains(losses)) at the U.S. Federal Statutory rate to Federal
income tax (benefit) expense (in millions):
<TABLE>
<CAPTION>
1999 1998 1997
<S> <C> <C> <C>
------------------
Tax provision at U.S. Federal Statutory rate $ 5 $48 $ 20
Tax deferred acquisition costs 31 25 25
Statutory to tax reserve differences (7) 8 1
Investments (31) (60) (61)
Other (8) 15 (1)
------------------
FEDERAL INCOME TAX (BENEFIT) EXPENSE $(10) $36 $(16)
------------------
</TABLE>
7. CAPITAL AND SURPLUS AND SHAREHOLDER DIVIDEND RESTRICTIONS:
The maximum amount of dividends which can be paid to shareholders by Connecticut
domiciled insurance companies, without prior approval, is generally restricted
to the greater of 10% of surplus as of the preceding December 31st or the net
gain from operations for the previous year. Dividends are paid as determined by
the Board of Directors and are not cumulative. No dividends were paid in 1999,
1998 or 1997. The amount available for dividend in 2000 is approximately
$60,855.
8. PENSION, RETIREMENT, AND OTHER POST-RETIREMENT AND POST-EMPLOYMENT BENEFITS:
All employees that work for The Hartford's life insurance companies are included
in The Hartford's non-contributory defined benefit pension plans. These plans
provide pension benefits that are based on years of service and the employee's
compensation during the last ten years of employment. The Hartford's funding
policy is to contribute annually an amount between the minimum funding
requirements set forth in the Employee Retirement Income Security Act of 1974,
as amended, and the maximum amount that can be deducted for U.S. Federal income
tax purposes. Generally, pension costs are funded through the purchase of group
pension contracts sold by affiliates. The costs that were allocated to the
Company for pension related expenses were $762, $1,045 and $840 for 1999, 1998
and 1997, respectively.
Employees of The Hartford's life insurance companies are also provided, through
The Hartford, certain health care and life insurance benefits for eligible
retired employees. The contribution for health care benefits depends on the
retiree's date of retirement and years of service. In addition, this benefit
plan has a defined dollar cap, which limits average company contributions. The
Hartford has prefunded a portion of the health care and life insurance
obligations through trust funds where such prefunding can be accomplished on a
tax effective basis. Postretirement health care and life insurance benefits
expense allocated to the Company was not material to the results of operations
for 1999, 1998 or 1997.
The assumed rate in the per capita cost of health care (the health care trend
rate) was 7.1% for 1999, decreasing ratably to 5.0% in the year 2003. Increasing
the health care trend rates by one percent per year would have an immaterial
impact on the accumulated postretirement benefit obligation and the annual
expense. To the extent that the actual experience differs from the inherent
assumptions, the effect will be amortized over the average future service of
covered employees.
Substantially all of The Hartford's life insurance companies' employees are
eligible to participate in The Hartford's Investment and Savings Plan. Under
this plan, designated contributions, which may be invested in Class A Common
Stock of HLI or certain other investments, are matched to a limit of 3% of
compensation.
9. SEPARATE ACCOUNTS:
The Company maintains separate account assets totaling $44.9 billion and $32.9
billion as of December 31, 1999 and 1998, respectively. Separate account assets
are segregated from other investments and reported at fair value. Separate
account liabilities are determined in accordance with prescribed actuarial
methodologies, which approximate the market value less applicable surrender
charges. The resulting surplus is recorded in the general account statement of
operations as a component of Net Transfers to Separate Accounts. The Company's
separate accounts are non-guaranteed, wherein the policyholder assumes
substantially all the investment risk and rewards. Investment income (including
investment gains and losses) and interest credited to policyholders on separate
account assets are not separately reflected in the statutory statements of
operations.
Separate account management fees, net of minimum guarantees, were $493 million,
$363 million, and $252 million in 1999, 1998 and 1997, respectively, and are
recorded as a component of fee income on the Company's statutory basis
Statements of Operations.
F-13
<PAGE>
10. COMMITMENTS AND CONTINGENT LIABILITIES:
(a) LITIGATION
The Company is involved in pending and threatened litigation in the normal
course of its business in which claims for alleged economic and punitive damages
have been asserted. Some of these cases have been filed as purported class
actions and some cases have been filed in certain jurisdictions that permit
punitive damage awards disproportionate to the actual damages incurred. Although
there can be no assurances, at the present time, the Company does not anticipate
that the ultimate liability, arising from such pending or threatened litigation,
will have a material adverse effect on the statutory capital and surplus of the
Company.
(b) GUARANTY FUNDS
Under insurance guaranty fund laws in each state, the District of Columbia and
Puerto Rico, insurers licensed to do business can be assessed by state insurance
guaranty associations for certain obligations of insolvent insurance companies
to policyholders and claimants. Recent regulatory actions against certain large
life insurers encountering financial difficulty have prompted various state
insurance guaranty associations to begin assessing life insurance companies for
the deemed losses. Most of these laws do provide, however, that an assessment
may be excused or deferred if it would threaten an insurer's solvency and
further provide annual limits on such assessments. Part of the assessments paid
by the Company pursuant to these laws may be used as credits for a portion of
the associated premium taxes. The Company paid guaranty fund assessments of
approximately $523, $1,043 and $1,544 in 1999, 1998, and 1997, respectively, of
which $318, $995, and $548 in 1999, 1998 and 1997, respectively were estimated
to be creditable against premium taxes.
(c) TAX MATTERS
The Company's Federal income tax returns are routinely audited by the Internal
Revenue Service ("IRS"). The Company's 1997 and 1996 Federal income tax returns
are currently under audit by the IRS. As of March 31, 2000, the audit was in its
initial stage and no material issues had been raised.
F-14
<PAGE>
PART C
<PAGE>
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) All financial statements included in Part A and Part B of the
Registration Statement.
(b) (1) Resolution of the Board of Directors of Hartford Life and Annuity
Insurance Company ("Hartford") authorizing the establishment of the
Separate Account. (1)
(2) Not applicable.
(3) (a) Principal Underwriter Agreement. (2)
(3) (b) Form of Dealer Agreement. (2)
(4) Form of Individual Flexible Premium Variable Annuity Contract.
(5) Form of Application.
(6) (a) Certificate of Incorporation of Hartford. (3)
(6) (b) Bylaws of Hartford. (1)
(7) Not applicable.
(8) Form of Fund Participation Agreement.
(9) Opinion and Consent of Lynda Godkin, Senior Vice President,
General Counsel and Corporate Secretary.
--------
(1) Incorporated by reference to Post-Effective Amendment No. 2, to the
Registration Statement File No. 33-73568, dated May 1, 1995.
(2) Incorporated by reference to Post-Effective Amendment No. 3, to the
Registration Statement File No. 33-73568, dated April 29, 1996.
(3) Incorporated by reference to Post-Effective Amendment No. 11, to the
Registration Statement File No. 33-73568, filed June 1, 1998.
<PAGE>
(10) Consent of Arthur Andersen LLP, Independent Public Accountants.
(11) No financial statements are omitted.
(12) Not applicable.
(13) Not applicable.
(14) Not applicable.
(15) Copy of Power of Attorney.
(16) Organizational Chart.
Item 25. Directors and Officers of the Depositor
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
NAME POSITION WITH HARTFORD
--------------------------------------------------------------------------------
<S> <C>
David A. Carlson Vice President
--------------------------------------------------------------------------------
Peter W. Cummins Senior Vice President
--------------------------------------------------------------------------------
Bruce W. Ferris Vice President
--------------------------------------------------------------------------------
Timothy M. Fitch Vice President & Actuary
--------------------------------------------------------------------------------
Mary Jane B. Fortin Vice President & Chief Accounting Officer
--------------------------------------------------------------------------------
David T. Foy Senior Vice President, Chief Financial Officer
& Treasurer, Director*
--------------------------------------------------------------------------------
Lynda Godkin Senior Vice President, General Counsel, and
Corporate Secretary, Director*
--------------------------------------------------------------------------------
Lois W. Grady Senior Vice President
--------------------------------------------------------------------------------
Stephen T. Joyce Senior Vice President
--------------------------------------------------------------------------------
Michael D. Keeler Vice President
--------------------------------------------------------------------------------
Robert A. Kerzner Senior Vice President
--------------------------------------------------------------------------------
Thomas M. Marra President, Director*
--------------------------------------------------------------------------------
Steven L. Matthiesen Vice President
--------------------------------------------------------------------------------
Craig R. Raymond Senior Vice President and Chief Actuary
--------------------------------------------------------------------------------
Lowndes A. Smith Chief Executive Officer, Director*
--------------------------------------------------------------------------------
David M. Znamierowski Senior Vice President &Chief Investment
Officer, Director*
--------------------------------------------------------------------------------
</TABLE>
<PAGE>
Unless otherwise indicated, the principal business address of each of the above
individuals is P.O. Box 2999, Hartford, Connecticut 06104-2999.
*Denotes Board of Directors.
Item 26. Persons Controlled By or Under Common Control with the Depositor or
Registrant
Filed herewith as Exhibit 16.
Item 27. Number of Contract Owners
As of July 31, 2000, there were 331,332 Contract Owners.
Item 28. Indemnification
Sections 33-770 to 33-778, inclusive, of the Connecticut General
Statutes ("CGS") provide that a corporation may provide indemnification
of or advance expenses to a director, officer, employee or agent.
Reference is hereby made to Section 33-771(e) of CGS regarding
indemnification of directors and Section 33-776(d) of CGS regarding
indemnification of officers, employees and agents of Connecticut
corporations. These statutes provide, in general, that Connecticut
corporations incorporated prior to January 1, 1997 shall, except to the
extent that their certificate of incorporation expressly provides
otherwise, indemnify their directors, officers, employees and agents
against "liability" (defined as the obligation to pay a judgment,
settlement, penalty, fine, including an excise tax assessed with
respect to an employee benefit plan, or reasonable expenses incurred
with respect to a proceeding) when (1) a determination is made pursuant
to Section 33-775 that the party seeking indemnification has met the
standard of conduct set forth in Section 33-771 or (2) a court has
determined that indemnification is appropriate pursuant to Section
33-774. Under Section 33-775, the determination of and the
authorization for indemnification are made (a) by the disinterested
directors, as defined in Section 33-770(3); (b) by special counsel; (c)
by the shareholders; or (d) in the case of indemnification of an
officer, agent or employee of the corporation, by the general counsel
of the corporation or such other officer(s) as the board of directors
may specify. Also, Section 33-772 provides that a corporation shall
indemnify an individual who was wholly successful on the merits or
otherwise against reasonable expenses incurred by him in connection
with a proceeding to which he was a party because he was a director of
the corporation. In the case of a proceeding by or in the right of the
corporation or with respect to conduct for which the director, officer,
agent or employee was adjudged liable on the basis that he received a
financial benefit to which he was not entitled, indemnification is
limited to
-3-
<PAGE>
reasonable expenses incurred in connection with the proceeding against
the corporation to which the individual was named a party.
Under the Depositor's bylaws, the Depositor must indemnify both
directors and officers of the Depositor for (1) any claims and
liabilities to which they become subject by reason of being or having
been directors or officers of the Depositor and (2) legal and other
expenses incurred in defending against such claims, in each case, to
the extent such is consistent with statutory provisions.
Section 33-777 of CGS specifically authorizes a corporation to procure
indemnification insurance on behalf of an individual who was a
director, officer, employer or agent of the corporation. Consistent
with the statute, the directors and officers of the Depositor and
Hartford Securities Distribution Company, Inc. ("HSD") are covered
under a directors and officers liability insurance policy issued to The
Hartford Financial Services Group, Inc. and its subsidiaries.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid
by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
Item 29. Principal Underwriters
(a) HSD acts as principal underwriter for the following investment
companies:
Hartford Life Insurance Company - Separate Account One
Hartford Life Insurance Company - Separate Account Two
Hartford Life Insurance Company - Separate Account Two (DC
Variable Account I)
Hartford Life Insurance Company - Separate Account Two (DC
Variable Account II)
Hartford Life Insurance Company - Separate Account Two (QP
Variable
-4-
<PAGE>
Account) Hartford Life Insurance Company - Separate Account Two
(Variable Account "A")
Hartford Life Insurance Company - Separate Account Two (NQ
Variable Account)
Hartford Life Insurance Company - Putnam Capital Manager Trust
Separate Account
Hartford Life Insurance Company - Separate Account Three
Hartford Life Insurance Company - Separate Account Five
Hartford Life Insurance Company - Separate Account Seven
Hartford Life and Annuity Insurance Company - Separate Account One
Hartford Life and Annuity Insurance Company - Putnam Capital
Manager Trust Separate Account Two
Hartford Life and Annuity Insurance Company - Separate Account
Three
Hartford Life and Annuity Insurance Company - Separate Account Five
Hartford Life and Annuity Insurance Company - Separate Account Six
Hartford Life and Annuity Insurance Company - Separate Account
Seven
Hart Life Insurance Company - Separate Account One
Hart Life Insurance Company - Separate Account Two
American Maturity Life Insurance Company - Separate Account AMLVA
Servus Life Insurance Company - Separate Account One
Servus Life Insurance Company - Separate Account Two
(b) Directors and Officers of HSD
Positions and Offices
Name With Underwriter
----- ---------------------
David A. Carlson Vice President
Peter W. Cummins Senior Vice President
David T. Foy Treasurer
Lynda Godkin Senior Vice President, General
Counsel and Corporate Secretary
George R. Jay Controller
Robert A. Kerzner Executive Vice President
Thomas M. Marra Executive Vice President,
Director
Paul E. Olson Supervising Registered Principal
Lowndes A. Smith President and Chief Executive
Officer, Director
Unless otherwise indicated, the principal business address of
each of the above individuals is P. O. Box 2999, Hartford,
Connecticut 06104-2999.
Item 30. Location of Accounts and Records
-5-
<PAGE>
All of the accounts, books, records or other documents required to be
kept by Section 31(a) of the Investment Company Act of 1940 and rules
thereunder are maintained by Hartford at 200 Hopmeadow Street,
Simsbury, Connecticut 06089.
Item 31. Management Services
All management contracts are discussed in Part A and Part B of this
Registration Statement.
Item 32. Undertakings
(a) The Registrant hereby undertakes to file a post-effective amendment to
this Registration Statement as frequently as is necessary to ensure
that the audited financial statements in the Registration Statement
are never more than 16 months old so long as payments under the
variable annuity Contracts may be accepted.
(b) The Registrant hereby undertakes to include either (1) as part of any
application to purchase a Contract offered by the Prospectus, a space
that an applicant can check to request a Statement of Additional
Information, or (2) a post card or similar written communication
affixed to or included in the Prospectus that the applicant can
remove to send for a Statement of Additional Information.
(c) The Registrant hereby undertakes to deliver any Statement of
Additional Information and any financial statements required to be
made available under this Form promptly upon written or oral request.
(d) Hartford hereby represents that the aggregate fees and charges under
the Contract are reasonable in relation to the services rendered, the
expenses expected to be incurred, and the risks assumed by Hartford.
The Registrant is relying on the no-action letter issued by the
Division of Investment Management to American Counsel of Life
Insurance, Ref. No. IP-6-88, November 28, 1988. Registrant has
complied with conditions one through four of the no-action letter.
-6-
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant certifies that it has duly caused this Registration
Statement to be signed on its behalf, in the Town of Simsbury, and State of
Connecticut on this 6th day of September, 2000.
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT ONE
(Registrant)
*By: Thomas M. Marra *By: /s/ Marianne O'Doherty
----------------------------- -----------------------------
Thomas M. Marra, President Marianne O'Doherty
Attorney-in-Fact
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
(Depositor)
*By: Thomas M. Marra
-----------------------------
Thomas M. Marra, President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons and in the capacities and on
the dates indicated.
David T. Foy, Senior Vice President, Chief
Financial Officer & Treasurer, Director *
Lynda Godkin, Senior Vice President, *By: /s/ Marianne O'Doherty
General Counsel and Corporate Secretary, -------------------------
Director * Marianne O'Doherty
Thomas M. Marra, President, Director* Attorney-in-Fact
Lowndes A. Smith, Chief Executive Officer,
Director * Date: September 6, 2000
David M. Znamierowski, Senior Vice President and
Chief Investment Officer, Director*
<PAGE>
EXHIBIT INDEX
(4) Form of Individual Flexible Premium Variable Annuity Contract.
(5) Form of Application.
(8) Form of Fund Participation Agreement.
(9) Opinion and Consent of Lynda Godkin, Senior Vice President, General Counsel
and Corporate Secretary.
(10) Consent of Arthur Andersen LLP, Independent Public Accountants.
(15) Power of Attorney.
(16) Organizational Chart.
