<PAGE>
MORGAN STANLEY DEAN WITTER
1999
Select Dimensions
Hartford Life Insurance Company
Hartford Life & Annuity Insurance Company
SEPARATE ACCOUNTS
Annual Report
<PAGE>
Table of Contents
- --------------------------------------------------------------------------------
SELECT DIMENSIONS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Hartford Life and Annuity
Insurance Company
Separate Account Three.... 2
Hartford Life and Annuity
Insurance Company
Separate Account Five..... 18
Hartford Life Insurance
Company
Separate Account Three.... 34
Hartford Life Insurance
Company
Separate Account Five..... 50
</TABLE>
<PAGE>
SEPARATE ACCOUNT THREE
- --------------------------------------------------------------------------------
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF ASSETS & LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
NORTH AMERICAN
MONEY GOVERNMENT
MARKET SECURITIES
SUB-ACCOUNT SUB-ACCOUNT
------------ --------------
<S> <C> <C>
ASSETS:
Investments in the Morgan Stanley Dean
Witter Select Dimensions Investment
Series:
Money Market Portfolio
Shares 123,412,023
Cost $123,412,023
Market Value...................... $123,412,023 --
North American Government Securities
Portfolio
Shares 852,351
Cost $8,618,072
Market Value...................... -- $8,549,082
Balanced Growth Portfolio
Shares 7,736,563
Cost $108,754,187
Market Value...................... -- --
Utilities Portfolio
Shares 5,816,577
Cost $90,532,236
Market Value...................... -- --
Dividend Growth Portfolio
Shares 33,214,328
Cost $576,857,235
Market Value...................... -- --
Value-Added Market Portfolio
Shares 7,830,364
Cost $112,297,967
Market Value...................... -- --
Growth Portfolio
Shares 3,448,329
Cost $53,315,696
Market Value...................... -- --
American Opportunities Portfolio
Shares 21,029,679
Cost $400,724,566
Market Value...................... -- --
Global Equity Portfolio
Shares 7,738,438
Cost $95,158,830
Market Value...................... -- --
Due from Hartford Life and Annuity
Insurance Company.................... -- --
Receivable for fund shares sold....... 441,792 1,650
------------ ----------
Total Assets.......................... 123,853,815 8,550,732
------------ ----------
LIABILITIES:
Due to Hartford Life and Annuity
Insurance Company.................... 441,749 3,496
Payable for fund shares purchased..... -- --
------------ ----------
Total Liabilities..................... 441,749 3,496
------------ ----------
Net Assets (variable annuity contract
liabilities)......................... $123,412,066 $8,547,236
============ ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 2
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
BALANCED VALUE-ADDED AMERICAN
GROWTH UTILITIES DIVIDEND GROWTH MARKET GROWTH OPPORTUNITIES
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ------------ --------------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments in the Morgan Stanley Dean
Witter Select Dimensions Investment
Series:
Money Market Portfolio
Shares 123,412,023
Cost $123,412,023
Market Value...................... -- -- -- -- -- --
North American Government Securities
Portfolio
Shares 852,351
Cost $8,618,072
Market Value...................... -- -- -- -- -- --
Balanced Growth Portfolio
Shares 7,736,563
Cost $108,754,187
Market Value...................... $113,185,919 -- -- -- -- --
Utilities Portfolio
Shares 5,816,577
Cost $90,532,236
Market Value...................... -- $152,685,145 -- -- -- --
Dividend Growth Portfolio
Shares 33,214,328
Cost $576,857,235
Market Value...................... -- -- $661,629,423 -- -- --
Value-Added Market Portfolio
Shares 7,830,364
Cost $112,297,967
Market Value...................... -- -- -- $160,835,669 -- --
Growth Portfolio
Shares 3,448,329
Cost $53,315,696
Market Value...................... -- -- -- -- $80,242,606 --
American Opportunities Portfolio
Shares 21,029,679
Cost $400,724,566
Market Value...................... -- -- -- -- -- $685,567,531
Global Equity Portfolio
Shares 7,738,438
Cost $95,158,830
Market Value...................... -- -- -- -- -- --
Due from Hartford Life and Annuity
Insurance Company.................... 79,289 183,819 -- -- 148,319 498,199
Receivable for fund shares sold....... -- -- 156,744 -- -- --
------------ ------------ ------------ ------------ ----------- ------------
Total Assets.......................... 113,265,208 152,868,964 661,786,167 160,835,669 80,390,925 686,065,730
------------ ------------ ------------ ------------ ----------- ------------
LIABILITIES:
Due to Hartford Life and Annuity
Insurance Company.................... -- -- 170,323 -- -- --
Payable for fund shares purchased..... 78,002 190,294 -- 160,778 77,078 498,946
------------ ------------ ------------ ------------ ----------- ------------
Total Liabilities..................... 78,002 190,294 170,323 160,778 77,078 498,946
------------ ------------ ------------ ------------ ----------- ------------
Net Assets (variable annuity contract
liabilities)......................... $113,187,206 $152,678,670 $661,615,844 $160,674,891 $80,313,847 $685,566,784
============ ============ ============ ============ =========== ============
<CAPTION>
GLOBAL
EQUITY
SUB-ACCOUNT
------------
<S> <C>
ASSETS:
Investments in the Morgan Stanley Dean
Witter Select Dimensions Investment
Series:
Money Market Portfolio
Shares 123,412,023
Cost $123,412,023
Market Value...................... --
North American Government Securities
Portfolio
Shares 852,351
Cost $8,618,072
Market Value...................... --
Balanced Growth Portfolio
Shares 7,736,563
Cost $108,754,187
Market Value...................... --
Utilities Portfolio
Shares 5,816,577
Cost $90,532,236
Market Value...................... --
Dividend Growth Portfolio
Shares 33,214,328
Cost $576,857,235
Market Value...................... --
Value-Added Market Portfolio
Shares 7,830,364
Cost $112,297,967
Market Value...................... --
Growth Portfolio
Shares 3,448,329
Cost $53,315,696
Market Value...................... --
American Opportunities Portfolio
Shares 21,029,679
Cost $400,724,566
Market Value...................... --
Global Equity Portfolio
Shares 7,738,438
Cost $95,158,830
Market Value...................... $151,905,538
Due from Hartford Life and Annuity
Insurance Company.................... 77,140
Receivable for fund shares sold....... --
------------
Total Assets.......................... 151,982,678
------------
LIABILITIES:
Due to Hartford Life and Annuity
Insurance Company.................... --
Payable for fund shares purchased..... 77,131
------------
Total Liabilities..................... 77,131
------------
Net Assets (variable annuity contract
liabilities)......................... $151,905,547
============
</TABLE>
---------------------------------------------------- 3
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT THREE
- --------------------------------------------------------------------------------
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF ASSETS & LIABILITIES -- (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
DEVELOPING EMERGING DIVERSIFIED MID-CAP
GROWTH MARKETS INCOME EQUITY
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS:
Investments in the Morgan
Stanley Dean Witter Select
Dimensions Investment Series:
Developing Growth Portfolio
Shares 3,667,277
Cost $62,378,527
Market Value.............. $146,837,761 -- -- --
Emerging Markets Portfolio
Shares 1,449,262
Cost $15,185,950
Market Value.............. -- $20,999,807 -- --
Diversified Income Portfolio
Shares 8,679,482
Cost $87,923,712
Market Value.............. -- -- $77,768,156 --
Mid-Cap Equity Portfolio
Shares 3,076,269
Cost $39,902,446
Market Value.............. -- -- -- $69,708,246
Investments in Van Kampen Life
Investment Trust:
Strategic Stock Portfolio
Shares 979,146
Cost $11,650,835
Market Value.............. -- -- -- --
Enterprise Portfolio
Shares 841,363
Cost $18,511,018
Market Value.............. -- -- -- --
Investments in the Morgan
Stanley Dean Witter Universal
Funds Inc.:
High Yield Portfolio
Shares 2,226,015
Cost $23,778,925
Market Value.............. -- -- -- --
Mid-Cap Value Portfolio
Shares 1,226,869
Cost $18,100,377
Market Value.............. -- -- -- --
Emerging Markets Debt
Portfolio
Shares 139,096
Cost $982,205
Market Value.............. -- -- -- --
Emerging Markets Equity
Portfolio
Shares 223,485
Cost $2,343,009
Market Value.............. -- -- -- --
Active International
Allocation Portfolio
Shares 48,265
Cost $522,155
Market Value.............. -- -- -- --
Fixed Income Portfolio
Shares 153,493
Cost $1,607,669
Market Value.............. -- -- -- --
Due from Hartford Life and
Annuity Insurance Company.... 81,524 -- -- 165,728
Receivable for fund shares
sold......................... -- 42,726 -- --
------------ ----------- ----------- -----------
Total Assets.................. 146,919,285 21,042,533 77,768,156 69,873,974
------------ ----------- ----------- -----------
LIABILITIES:
Due to Hartford Life and
Annuity Insurance Company.... -- 46,859 63,821 --
Payable for fund shares
purchased.................... 76,588 -- -- 163,007
------------ ----------- ----------- -----------
Total Liabilities............. 76,588 46,859 63,821 163,007
------------ ----------- ----------- -----------
Net Assets (variable annuity
contract liabilities)........ $146,842,697 $20,995,674 $77,704,335 $69,710,967
============ =========== =========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 4
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
EMERGING
MID-CAP EMERGING MARKETS
STRATEGIC STOCK ENTERPRISE HIGH YIELD VALUE MARKETS DEBT EQUITY
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- ----------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments in the Morgan
Stanley Dean Witter Select
Dimensions Investment Series:
Developing Growth Portfolio
Shares 3,667,277
Cost $62,378,527
Market Value.............. -- -- -- -- -- --
Emerging Markets Portfolio
Shares 1,449,262
Cost $15,185,950
Market Value.............. -- -- -- -- -- --
Diversified Income Portfolio
Shares 8,679,482
Cost $87,923,712
Market Value.............. -- -- -- -- -- --
Mid-Cap Equity Portfolio
Shares 3,076,269
Cost $39,902,446
Market Value.............. -- -- -- -- -- --
Investments in Van Kampen Life
Investment Trust:
Strategic Stock Portfolio
Shares 979,146
Cost $11,650,835
Market Value.............. $11,485,382 -- -- -- -- --
Enterprise Portfolio
Shares 841,363
Cost $18,511,018
Market Value.............. -- $21,967,977 -- -- -- --
Investments in the Morgan
Stanley Dean Witter Universal
Funds Inc.:
High Yield Portfolio
Shares 2,226,015
Cost $23,778,925
Market Value.............. -- -- $22,794,394 -- -- --
Mid-Cap Value Portfolio
Shares 1,226,869
Cost $18,100,377
Market Value.............. -- -- -- $19,163,699 -- --
Emerging Markets Debt
Portfolio
Shares 139,096
Cost $982,205
Market Value.............. -- -- -- -- $961,150 --
Emerging Markets Equity
Portfolio
Shares 223,485
Cost $2,343,009
Market Value.............. -- -- -- -- -- $3,093,291
Active International
Allocation Portfolio
Shares 48,265
Cost $522,155
Market Value.............. -- -- -- -- -- --
Fixed Income Portfolio
Shares 153,493
Cost $1,607,669
Market Value.............. -- -- -- -- -- --
Due from Hartford Life and
Annuity Insurance Company.... 9,671 16,126 14,887 16,996 -- 50,258
Receivable for fund shares
sold......................... -- -- -- -- -- --
----------- ----------- ----------- ----------- -------- ----------
Total Assets.................. 11,495,053 21,984,103 22,809,281 19,180,695 961,150 3,143,549
----------- ----------- ----------- ----------- -------- ----------
LIABILITIES:
Due to Hartford Life and
Annuity Insurance Company.... -- -- -- -- 30 --
Payable for fund shares
purchased.................... 9,492 16,546 14,866 16,764 -- 50,258
----------- ----------- ----------- ----------- -------- ----------
Total Liabilities............. 9,492 16,546 14,866 16,764 30 50,258
----------- ----------- ----------- ----------- -------- ----------
Net Assets (variable annuity
contract liabilities)........ $11,485,561 $21,967,557 $22,794,415 $19,163,931 $961,120 $3,093,291
=========== =========== =========== =========== ======== ==========
<CAPTION>
ACTIVE
INTERNATIONAL
ALLOCATION FIXED INCOME
SUB-ACCOUNT SUB-ACCOUNT
------------- ------------
<S> <C> <C>
ASSETS:
Investments in the Morgan
Stanley Dean Witter Select
Dimensions Investment Series:
Developing Growth Portfolio
Shares 3,667,277
Cost $62,378,527
Market Value.............. -- --
Emerging Markets Portfolio
Shares 1,449,262
Cost $15,185,950
Market Value.............. -- --
Diversified Income Portfolio
Shares 8,679,482
Cost $87,923,712
Market Value.............. -- --
Mid-Cap Equity Portfolio
Shares 3,076,269
Cost $39,902,446
Market Value.............. -- --
Investments in Van Kampen Life
Investment Trust:
Strategic Stock Portfolio
Shares 979,146
Cost $11,650,835
Market Value.............. -- --
Enterprise Portfolio
Shares 841,363
Cost $18,511,018
Market Value.............. -- --
Investments in the Morgan
Stanley Dean Witter Universal
Funds Inc.:
High Yield Portfolio
Shares 2,226,015
Cost $23,778,925
Market Value.............. -- --
Mid-Cap Value Portfolio
Shares 1,226,869
Cost $18,100,377
Market Value.............. -- --
Emerging Markets Debt
Portfolio
Shares 139,096
Cost $982,205
Market Value.............. -- --
Emerging Markets Equity
Portfolio
Shares 223,485
Cost $2,343,009
Market Value.............. -- --
Active International
Allocation Portfolio
Shares 48,265
Cost $522,155
Market Value.............. $566,062 --
Fixed Income Portfolio
Shares 153,493
Cost $1,607,669
Market Value.............. -- $1,542,603
Due from Hartford Life and
Annuity Insurance Company.... 46,958 --
Receivable for fund shares
sold......................... -- --
-------- ----------
Total Assets.................. 613,020 1,542,603
-------- ----------
LIABILITIES:
Due to Hartford Life and
Annuity Insurance Company.... -- 62
Payable for fund shares
purchased.................... 46,959 --
-------- ----------
Total Liabilities............. 46,959 62
-------- ----------
Net Assets (variable annuity
contract liabilities)........ $566,061 $1,542,541
======== ==========
</TABLE>
---------------------------------------------------- 5
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT THREE
- --------------------------------------------------------------------------------
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF ASSETS & LIABILITIES -- (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
UNITS
OWNED BY UNIT CONTRACT
PARTICIPANTS PRICE LIABILITY
------------ ---------- --------------
<S> <C> <C> <C>
DEFERRED ANNUITY CONTRACTS IN THE
ACCUMULATION PERIOD:
Money Market Portfolio 1.25%..... 9,489,283 $12.117281 $ 114,984,311
Money Market Portfolio 1.5%...... 568,587 10.439293 5,935,646
Money Market Portfolio 1.65%..... 12,251 10.435390 127,842
Money Market Portfolio 1.4%...... 178,918 12.105339 2,165,869
North American Government
Securities Portfolio 1.25%...... 684,246 11.870066 8,122,043
North American Government
Securities Portfolio 1.5%....... 32,272 10.243966 330,591
North American Government
Securities Portfolio 1.4%....... 6,003 11.858359 71,190
Balanced Growth Portfolio
1.25%........................... 5,961,358 18.230000 108,675,549
Balanced Growth Portfolio 1.5%... 198,439 10.996556 2,182,142
Balanced Growth Portfolio
1.65%........................... 1,633 10.992443 17,953
Balanced Growth Portfolio 1.4%... 122,192 18.211833 2,225,336
Utilities Portfolio 1.25%........ 5,029,716 28.898536 145,351,426
Utilities Portfolio 1.5%......... 207,872 15.922989 3,309,952
Utilities Portfolio 1.65%........ 8,195 15.917054 130,435
Utilities Portfolio 1.4%......... 126,230 28.869918 3,644,255
Dividend Growth Portfolio
1.25%........................... 26,039,033 24.630777 641,361,625
Dividend Growth Portfolio 1.5%... 848,002 10.750975 9,116,844
Dividend Growth Portfolio
1.65%........................... 10,463 10.746952 112,442
Dividend Growth Portfolio 1.4%... 413,699 24.606272 10,179,601
Value-Added Market Portfolio
1.25%........................... 7,132,645 21.944514 156,522,435
Value-Added Market Portfolio
1.5%............................ 103,156 11.871109 1,224,574
Value-Added Market Portfolio
1.65%........................... 1,282 11.866668 15,211
Value-Added Market Portfolio
1.4%............................ 122,524 21.922750 2,686,061
Growth Portfolio 1.25%........... 3,011,788 25.416166 76,548,092
Growth Portfolio 1.5%............ 78,900 14.820183 1,169,309
Growth Portfolio 1.65%........... 5,670 14.814660 83,995
Growth Portfolio 1.4%............ 97,233 25.390936 2,468,842
American Opportunities Portfolio
1.25%........................... 16,616,077 39.531912 656,865,283
American Opportunities Portfolio
1.5%............................ 699,793 17.103552 11,968,952
American Opportunities Portfolio
1.65%........................... 21,026 17.097183 359,489
American Opportunities Portfolio
1.4%............................ 392,159 39.492620 15,487,381
Global Equity Portfolio 1.25%.... 7,432,248 19.732589 146,657,488
Global Equity Portfolio 1.5%..... 170,755 13.820388 2,359,902
Global Equity Portfolio 1.65%.... 7,150 13.815234 98,774
Global Equity Portfolio 1.4%..... 132,454 19.713070 2,611,070
Developing Growth Portfolio
1.25%........................... 3,699,371 38.573629 142,698,182
Developing Growth Portfolio
1.5%............................ 65,181 20.576241 1,341,190
Developing Growth Portfolio
1.65%........................... 7,066 20.568597 145,343
Developing Growth Portfolio
1.4%............................ 61,802 38.535362 2,381,578
Emerging Markets Portfolio
1.25%........................... 1,421,047 14.444234 20,525,934
Emerging Markets Portfolio
1.5%............................ 7,816 16.578521 129,575
Emerging Markets Portfolio
1.4%............................ 16,107 14.429938 232,425
Diversified Income Portfolio
1.25%........................... 6,139,351 12.174809 74,745,421
Diversified Income Portfolio
1.5%............................ 234,256 9.635306 2,257,129
Diversified Income Portfolio
1.65%........................... 1,036 9.631697 9,978
Diversified Income Portfolio
1.4%............................ 54,554 12.162658 663,522
Mid-Cap Equity Portfolio 1.25%... 2,887,266 22.567847 65,159,378
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 6
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
UNITS
OWNED BY UNIT CONTRACT
PARTICIPANTS PRICE LIABILITY
------------ ---------- --------------
<S> <C> <C> <C>
Mid-Cap Equity Portfolio 1.5%...... 93,418 $19.825174 $ 1,852,024
Mid-Cap Equity Portfolio 1.65%..... 13,522 19.817812 267,976
Mid-Cap Equity Portfolio 1.4%...... 107,853 22.545394 2,431,589
Strategic Stock Portfolio 1.25%.... 1,046,841 10.093336 10,566,113
Strategic Stock Portfolio 1.5%..... 39,996 10.445212 417,767
Strategic Stock Portfolio 1.65%.... 1,945 10.441396 20,309
Strategic Stock Portfolio 1.4%..... 47,740 10.083303 481,372
Enterprise Portfolio 1.25%......... 1,421,039 13.219240 18,785,060
Enterprise Portfolio 1.5%.......... 85,535 13.818024 1,181,918
Enterprise Portfolio 1.4%.......... 148,965 13.206158 1,967,250
Enterprise Portfolio 1.65%......... 2,413 13.812991 33,329
High Yield Portfolio 1.25%......... 1,926,264 10.554381 20,330,522
High Yield Portfolio 1.4%.......... 71,139 10.543954 750,083
High Yield Portfolio 1.5%.......... 162,726 10.531861 1,713,810
Mid-Cap Value Portfolio 1.25%...... 1,322,605 11.977275 15,841,201
Mid-Cap Value Portfolio 1.65%...... 1,528 13.230525 20,217
Mid-Cap Value Portfolio 1.4%....... 128,705 11.965487 1,540,020
Mid-Cap Value Portfolio 1.5%....... 133,166 13.235353 1,762,493
Emerging Markets Debt Portfolio
1.25%............................. 78,118 8.615091 672,996
Emerging Markets Debt Portfolio
1.5%.............................. 13,695 10.679132 146,251
Emerging Markets Debt Portfolio
1.4%.............................. 15,204 8.606516 130,852
Emerging Markets Debt Portfolio
1.65%............................. 1,032 10.675235 11,021
Emerging Markets Equity Portfolio
1.25%............................. 170,056 14.353528 2,440,907
Emerging Markets Equity Portfolio
1.65%............................. 2,492 14.339621 35,737
Emerging Markets Equity Portfolio
1.5%.............................. 10,403 14.342270 149,200
Emerging Markets Equity Portfolio
1.4%.............................. 32,582 14.346777 467,447
Active International Allocation
Portfolio 1.25%................... 36,203 11.718265 424,236
Active International Allocation
Portfolio 1.5%.................... 3,092 11.710114 36,210
Active International Allocation
Portfolio 1.4%.................... 9,017 11.713372 105,615
Fixed Income Portfolio 1.25%....... 109,324 10.065310 1,100,377
Fixed Income Portfolio 1.5%........ 11,984 10.057387 120,530
Fixed Income Portfolio 1.4%........ 31,970 10.060554 321,634
--------------
SUB-TOTAL.......................... 2,531,587,631
--------------
ANNUITY CONTRACTS IN THE ANNUITY
PERIOD:
Money Market Portfolio........... 16,373 12.117281 198,398
North American Government
Securities Portfolio............ 1,972 11.870066 23,412
Balanced Growth Portfolio........ 4,730 18.230000 86,226
Utilities Portfolio.............. 8,395 28.898536 242,602
Dividend Growth Portfolio........ 34,320 24.630777 845,332
Value-Added Market Portfolio..... 10,326 21.944514 226,610
Growth Portfolio................. 1,716 25.416166 43,609
American Opportunities
Portfolio....................... 22,404 39.531912 885,679
Global Equity Portfolio.......... 9,036 19.732589 178,313
Developing Growth Portfolio...... 7,166 38.573629 276,404
Emerging Markets Portfolio....... 7,459 14.444234 107,740
Diversified Income Portfolio..... 2,323 12.174809 28,285
--------------
SUB-TOTAL........................ 3,142,610
--------------
GRAND TOTAL:....................... $2,534,730,241
==============
</TABLE>
---------------------------------------------------- 7
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT THREE
- --------------------------------------------------------------------------------
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
NORTH AMERICAN
MONEY GOVERNMENT
MARKET SECURITIES
SUB-ACCOUNT SUB-ACCOUNT
----------- --------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends.................................. $ 5,523,647 $ 391,465
EXPENSES:
Mortality and expense undertakings......... (1,488,588) (109,310)
----------- ---------
Net investment income (loss)............. 4,035,059 282,155
----------- ---------
CAPITAL GAINS INCOME......................... -- --
----------- ---------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized (loss) gain on security
transactions.............................. -- (2,295)
Net unrealized (depreciation) appreciation
of investments during the period.......... -- (98,426)
----------- ---------
Net (loss) gain on investments........... -- (100,721)
----------- ---------
Net increase (decrease) in net assets
resulting from operations............... $ 4,035,059 $ 181,434
=========== =========
</TABLE>
* Formerly American Value Sub-Account; change effective May 1, 1999.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 8
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
BALANCED VALUE-ADDED
GROWTH UTILITIES DIVIDEND GROWTH MARKET GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ----------- --------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.................................. $ 3,309,619 $ 1,677,499 $ 12,763,908 $ 1,694,354 $ 3,451
EXPENSES:
Mortality and expense undertakings......... (1,365,537) (1,320,691) (8,729,052) (1,934,373) (708,134)
------------ ----------- ------------ ----------- -----------
Net investment income (loss)............. 1,944,082 356,808 4,034,856 (240,019) (704,683)
------------ ----------- ------------ ----------- -----------
CAPITAL GAINS INCOME......................... 12,263,090 719,571 61,332,549 5,499,038 4,191,496
------------ ----------- ------------ ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized (loss) gain on security
transactions.............................. (73,288) 19,860 (2,732,578) 275,018 164,575
Net unrealized (depreciation) appreciation
of investments during the period.......... (12,320,805) 40,186,992 (70,396,747) 9,944,964 16,049,317
------------ ----------- ------------ ----------- -----------
Net (loss) gain on investments........... (12,394,093) 40,206,852 (73,129,325) 10,219,982 16,213,892
------------ ----------- ------------ ----------- -----------
Net increase (decrease) in net assets
resulting from operations............... $ 1,813,079 $41,283,231 $ (7,761,920) $15,479,001 $19,700,705
============ =========== ============ =========== ===========
<CAPTION>
AMERICAN GLOBAL
OPPORTUNITIES EQUITY
SUB-ACCOUNT* SUB-ACCOUNT
------------- -----------
<S> <C> <C>
INVESTMENT INCOME:
Dividends.................................. $ 1,449,748 $ 433,055
EXPENSES:
Mortality and expense undertakings......... (5,636,258) (1,486,761)
------------ -----------
Net investment income (loss)............. (4,186,510) (1,053,706)
------------ -----------
CAPITAL GAINS INCOME......................... 40,966,154 --
------------ -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized (loss) gain on security
transactions.............................. (200,293) 105,344
Net unrealized (depreciation) appreciation
of investments during the period.......... 185,622,773 37,067,653
------------ -----------
Net (loss) gain on investments........... 185,422,480 37,172,997
------------ -----------
Net increase (decrease) in net assets
resulting from operations............... $222,202,124 $36,119,291
============ ===========
</TABLE>
* Formerly American Value Sub-Account; change effective May 1, 1999.
---------------------------------------------------- 9
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT THREE
- --------------------------------------------------------------------------------
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
DEVELOPING EMERGING DIVERSIFIED MID-CAP
GROWTH MARKETS INCOME EQUITY
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT***
----------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends....................................... $ 48,080 $ 26,969 $ 6,753,074 $ 154,413
EXPENSES:
Mortality and expense undertakings.............. (1,106,088) (192,804) (1,009,251) (409,231)
----------- ---------- ----------- -----------
Net investment (loss) income.................. (1,058,008) (165,835) 5,743,823 (254,818)
----------- ---------- ----------- -----------
CAPITAL GAINS INCOME.............................. -- -- -- --
----------- ---------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) on security
transactions................................... 1,312,196 (203,975) (39,961) 103,985
Net unrealized appreciation (depreciation) of
investments during the period.................. 66,388,520 9,904,528 (8,188,376) 27,634,475
----------- ---------- ----------- -----------
Net gain (loss) on investments................ 67,700,716 9,700,553 (8,228,337) 27,738,460
----------- ---------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations.................... $66,642,708 $9,534,718 $(2,484,514) $27,483,642
=========== ========== =========== ===========
</TABLE>
* From inception, September 7, 1999, to December 31, 1999.
** From inception, September 20, 1999, to December 31, 1999.
*** Formerly Mid-Cap Growth Sub-Account; change effective September 8, 1999.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 10
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
MID-CAP EMERGING
STRATEGIC STOCK ENTERPRISE HIGH YIELD VALUE MARKETS DEBT
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends....................................... $ 72,628 $ 24,469 $1,710,348 $ 27,823 $113,374
EXPENSES:
Mortality and expense undertakings.............. (117,755) (142,466) (225,656) (162,785) (6,990)
--------- ---------- ---------- ---------- --------
Net investment (loss) income.................. (45,127) (117,997) 1,484,692 (134,962) 106,384
--------- ---------- ---------- ---------- --------
CAPITAL GAINS INCOME.............................. 19,014 576,428 -- 2,170,992 --
--------- ---------- ---------- ---------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) on security
transactions................................... (1,919) 4,371 3,214 23,187 867
Net unrealized appreciation (depreciation) of
investments during the period.................. (445,298) 2,973,314 (563,346) 629,983 46,701
--------- ---------- ---------- ---------- --------
Net gain (loss) on investments................ (447,217) 2,977,685 (560,132) 653,170 47,568
--------- ---------- ---------- ---------- --------
Net increase (decrease) in net assets
resulting from operations.................... $(473,330) $3,436,116 $ 924,560 $2,689,200 $153,952
========= ========== ========== ========== ========
<CAPTION>
EMERGING ACTIVE
MARKETS INTERNATIONAL
EQUITY ALLOCATION FIXED INCOME
SUB-ACCOUNT* SUB-ACCOUNT** SUB-ACCOUNT*
------------ ------------- ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends....................................... $ -- $ 848 $ 65,663
EXPENSES:
Mortality and expense undertakings.............. (5,722) (782) (4,582)
-------- ------- --------
Net investment (loss) income.................. (5,722) 66 61,081
-------- ------- --------
CAPITAL GAINS INCOME.............................. -- -- --
-------- ------- --------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized gain (loss) on security
transactions................................... 4,110 499 5,167
Net unrealized appreciation (depreciation) of
investments during the period.................. 750,282 43,907 (65,066)
-------- ------- --------
Net gain (loss) on investments................ 754,392 44,406 (59,899)
-------- ------- --------
Net increase (decrease) in net assets
resulting from operations.................... $748,670 $44,472 $ 1,182
======== ======= ========
</TABLE>
* From inception, September 7, 1999, to December 31, 1999.
** From inception, September 20, 1999, to December 31, 1999.
*** Formerly Mid-Cap Growth Sub-Account; change effective September 8, 1999.
---------------------------------------------------- 11
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT THREE
- --------------------------------------------------------------------------------
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
NORTH AMERICAN
MONEY MARKET GOVERMENT SECURITIES
SUB-ACCOUNT SUB-ACCOUNT
------------ --------------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 4,035,059 $ 282,155
Capital gains income.................. -- --
Net realized (loss) gain on security
transactions......................... -- (2,295)
Net unrealized (depreciation)
appreciation of investments during
the period........................... -- (98,426)
------------ ----------
Net increase (decrease) in net assets
resulting from operations............ 4,035,059 181,434
------------ ----------
UNIT TRANSACTIONS:
Purchases............................. 23,817,068 563,929
Net transfers......................... 15,198,089 928,086
Surrenders for benefit payments and
fees................................. (28,455,931) (661,447)
Net annuity transactions.............. 66,438 (6,541)
------------ ----------
Net increase (decrease) in net assets
resulting from unit transactions..... 10,625,664 824,027
------------ ----------
Total increase in net assets.......... 14,660,723 1,005,461
NET ASSETS:
Beginning of period................... 108,751,343 7,541,775
------------ ----------
End of period......................... $123,412,066 $8,547,236
============ ==========
</TABLE>
* Formerly American Value Sub-Account; change effective May 1, 1999.
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
NORTH AMERICAN
MONEY MARKET GOVERMENT SECURITIES
SUB-ACCOUNT SUB-ACCOUNT
------------ --------------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 3,234,850 $ 165,577
Capital gains income.................. -- --
Net realized gain (loss) on security
transactions......................... -- 558
Net unrealized (depreciation)
appreciation of investments during
the period........................... -- (10,221)
------------ ----------
Net increase in net assets resulting
from operations...................... 3,234,850 155,914
------------ ----------
UNIT TRANSACTIONS:
Purchases............................. 26,624,283 1,435,170
Net transfers......................... 22,818,051 1,932,564
Surrenders for benefit payments and
fees................................. (18,966,767) (689,182)
Net annuity transactions.............. 122,565 28,537
------------ ----------
Net increase in net assets resulting
from unit transactions............... 30,598,132 2,707,089
------------ ----------
Total increase in net assets.......... 33,832,982 2,863,003
NET ASSETS:
Beginning of period................... 74,918,361 4,678,772
------------ ----------
End of period......................... $108,751,343 $7,541,775
============ ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 12
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
BALANCED VALUE-ADDED AMERICAN
GROWTH UTILITIES DIVIDEND GROWTH MARKET GROWTH OPPORTUNITIES
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT*
------------ ------------ --------------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 1,944,082 $ 356,808 $ 4,034,856 $ (240,019) $ (704,683) $ (4,186,510)
Capital gains income.................. 12,263,090 719,571 61,332,549 5,499,038 4,191,496 40,966,154
Net realized (loss) gain on security
transactions......................... (73,288) 19,860 (2,732,578) 275,018 164,575 (200,293)
Net unrealized (depreciation)
appreciation of investments during
the period........................... (12,320,805) 40,186,992 (70,396,747) 9,944,964 16,049,317 185,622,773
------------ ------------ ------------ ------------ ----------- ------------
Net increase (decrease) in net assets
resulting from operations............ 1,813,079 41,283,231 (7,761,920) 15,479,001 19,700,705 222,202,124
------------ ------------ ------------ ------------ ----------- ------------
UNIT TRANSACTIONS:
Purchases............................. 8,636,011 11,974,424 47,158,874 8,568,182 6,335,812 49,350,136
Net transfers......................... 16,333,341 28,022,803 42,003,115 (84,774) 11,373,024 112,929,991
Surrenders for benefit payments and
fees................................. (8,597,616) (8,175,407) (62,420,672) (10,796,247) (4,922,308) (32,300,071)
Net annuity transactions.............. 40,306 170,763 484,672 165,381 24,763 592,185
------------ ------------ ------------ ------------ ----------- ------------
Net increase (decrease) in net assets
resulting from unit transactions..... 16,412,042 31,992,583 27,225,989 (2,147,458) 12,811,291 130,572,241
------------ ------------ ------------ ------------ ----------- ------------
Total increase in net assets.......... 18,225,121 73,275,814 19,464,069 13,331,543 32,511,996 352,774,365
NET ASSETS:
Beginning of period................... 94,962,085 79,402,856 642,151,775 147,343,348 47,801,851 332,792,419
------------ ------------ ------------ ------------ ----------- ------------
End of period......................... $113,187,206 $152,678,670 $661,615,844 $160,674,891 $80,313,847 $685,566,784
============ ============ ============ ============ =========== ============
<CAPTION>
GLOBAL
EQUITY
SUB-ACCOUNT
------------
<S> <C>
OPERATIONS:
Net investment income (loss).......... $ (1,053,706)
Capital gains income.................. --
Net realized (loss) gain on security
transactions......................... 105,344
Net unrealized (depreciation)
appreciation of investments during
the period........................... 37,067,653
------------
Net increase (decrease) in net assets
resulting from operations............ 36,119,291
------------
UNIT TRANSACTIONS:
Purchases............................. 8,046,187
Net transfers......................... 7,428,110
Surrenders for benefit payments and
fees................................. (8,976,935)
Net annuity transactions.............. 152,229
------------
Net increase (decrease) in net assets
resulting from unit transactions..... 6,649,591
------------
Total increase in net assets.......... 42,768,882
NET ASSETS:
Beginning of period................... 109,136,665
------------
End of period......................... $151,905,547
============
</TABLE>
<TABLE>
<CAPTION>
BALANCED VALUE-ADDED AMERICAN
GROWTH UTILITIES DIVIDEND GROWTH MARKET GROWTH OPPORTUNITIES
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT*
----------- ----------- --------------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ 1,054,616 $ 448,142 $ 2,575,707 $ (279,408) $ (588,893) $ (1,870,856)
Capital gains income.................. 1,697,873 657,872 23,297,871 1,970,707 1,177,870 22,283,610
Net realized gain (loss) on security
transactions......................... (35,053) (5,860) (116,773) (165,573) (47,737) (129,194)
Net unrealized (depreciation)
appreciation of investments during
the period........................... 6,624,190 10,977,754 63,796,492 11,736,937 4,134,094 47,944,751
----------- ----------- ------------ ------------ ----------- ------------
Net increase in net assets resulting
from operations...................... 9,341,626 12,077,908 89,553,297 13,262,663 4,675,334 68,228,311
----------- ----------- ------------ ------------ ----------- ------------
UNIT TRANSACTIONS:
Purchases............................. 9,515,720 10,420,385 61,282,019 11,743,594 5,811,059 31,893,265
Net transfers......................... 14,734,535 12,899,339 59,525,570 7,479,605 2,982,317 38,226,729
Surrenders for benefit payments and
fees................................. (3,951,159) (4,262,502) (32,837,181) (5,597,839) (2,297,690) (14,448,089)
Net annuity transactions.............. 15,874 (2,553) 271,624 12,632 (1,811) 18,420
----------- ----------- ------------ ------------ ----------- ------------
Net increase in net assets resulting
from unit transactions............... 20,314,970 19,054,669 88,242,032 13,637,992 6,493,875 55,690,325
----------- ----------- ------------ ------------ ----------- ------------
Total increase in net assets.......... 29,656,596 31,132,577 177,795,329 26,900,655 11,169,209 123,918,636
NET ASSETS:
Beginning of period................... 65,305,489 48,270,279 464,356,446 120,442,693 36,632,642 208,873,783
----------- ----------- ------------ ------------ ----------- ------------
End of period......................... $94,962,085 $79,402,856 $642,151,775 $147,343,348 $47,801,851 $332,792,419
=========== =========== ============ ============ =========== ============
<CAPTION>
GLOBAL
EQUITY
SUB-ACCOUNT
------------
<S> <C>
OPERATIONS:
Net investment income (loss).......... $ (91,170)
Capital gains income.................. 368,656
Net realized gain (loss) on security
transactions......................... (522,068)
Net unrealized (depreciation)
appreciation of investments during
the period........................... 11,960,357
------------
Net increase in net assets resulting
from operations...................... 11,715,775
------------
UNIT TRANSACTIONS:
Purchases............................. 8,280,760
Net transfers......................... 5,278,620
Surrenders for benefit payments and
fees................................. (5,716,942)
Net annuity transactions.............. (440)
------------
Net increase in net assets resulting
from unit transactions............... 7,841,998
------------
Total increase in net assets.......... 19,557,773
NET ASSETS:
Beginning of period................... 89,578,892
------------
End of period......................... $109,136,665
============
</TABLE>
---------------------------------------------------- 13
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT THREE
- --------------------------------------------------------------------------------
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
DEVELOPING EMERGING DIVERSIFIED MID-CAP
GROWTH MARKETS INCOME EQUITY
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT****
------------ ----------- ----------- ---------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment (loss) income.......... $ (1,058,008) $ (165,835) $ 5,743,823 $ (254,818)
Capital gains income.................. -- -- -- --
Net realized gain (loss) on security
transactions......................... 1,312,196 (203,975) (39,961) 103,985
Net unrealized appreciation
(depreciation) of investments during
the period........................... 66,388,520 9,904,528 (8,188,376) 27,634,475
------------ ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations............ 66,642,708 9,534,718 (2,484,514) 27,483,642
------------ ----------- ----------- -----------
UNIT TRANSACTIONS:
Purchases............................. 5,143,087 798,422 4,716,433 5,404,680
Net transfers......................... 7,894,645 (219,128) 1,271,481 14,052,003
Surrenders for benefit payments and
fees................................. (7,509,093) (1,275,935) (6,571,543) (1,960,056)
Net annuity transactions.............. 192,035 67,560 9,251 --
------------ ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from unit transactions..... 5,720,674 (629,081) (574,378) 17,496,627
------------ ----------- ----------- -----------
Total increase (decrease) in net
assets............................... 72,363,382 8,905,637 (3,058,892) 44,980,269
NET ASSETS:
Beginning of period................... 74,479,315 12,090,037 80,763,227 24,730,698
------------ ----------- ----------- -----------
End of period......................... $146,842,697 $20,995,674 $77,704,335 $69,710,967
============ =========== =========== ===========
</TABLE>
** From inception, September 7, 1999, to December 31, 1999.
*** From inception, September 20, 1999, to December 31, 1999.
**** Formerly Mid-Cap Growth Sub-Account; change effective September 8, 1999.
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
DEVELOPING EMERGING DIVERSIFIED MID-CAP
GROWTH MARKETS INCOME EQUITY
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT****
------------ ------------ ------------ ---------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment (loss) income.......... $ (862,789) $ (25,420) $ 4,075,834 $ (163,766)
Capital gains income.................. 110,206 44,837 85,594 198,842
Net realized (loss) gain on security
transactions......................... (327,553) (1,361,056) 548 (166,311)
Net unrealized appreciation
(depreciation) of investments during
the
period............................... 5,740,263 (4,702,323) (2,456,320) 790,477
----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations............ 4,660,127 (6,043,962) 1,705,656 659,242
----------- ----------- ----------- -----------
UNIT TRANSACTIONS:
Purchases............................. 4,110,151 726,460 8,572,861 4,768,336
Net transfers......................... (5,495,094) (3,374,149) 21,054,049 2,911,337
Surrenders for benefit payments and
fees................................. (4,440,843) (1,031,340) (5,684,565) (810,632)
Net annuity transactions.............. (3,733) (3,230) 6,816 --
----------- ----------- ----------- -----------
Net (decrease) increase in net assets
resulting from unit transactions..... (5,829,519) (3,682,259) 23,949,161 6,869,041
----------- ----------- ----------- -----------
Total (decrease) increase in net
assets............................... (1,169,392) (9,726,221) 25,654,817 7,528,283
NET ASSETS:
Beginning of period................... 75,648,707 21,816,258 55,108,410 17,202,415
----------- ----------- ----------- -----------
End of period......................... $74,479,315 $12,090,037 $80,763,227 $24,730,698
=========== =========== =========== ===========
</TABLE>
* From inception, April 1, 1998, to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 14
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
MID-CAP EMERGING
STRATEGIC STOCK ENTERPRISE HIGH YIELD VALUE MARKETS DEBT
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment (loss) income.......... $ (45,127) $ (117,997) $ 1,484,692 $ (134,962) $106,384
Capital gains income.................. 19,014 576,428 -- 2,170,992 --
Net realized gain (loss) on security
transactions......................... (1,919) 4,371 3,214 23,187 867
Net unrealized appreciation
(depreciation) of investments during
the period........................... (445,298) 2,973,314 (563,346) 629,983 46,701
----------- ----------- ----------- ----------- --------
Net increase (decrease) in net assets
resulting from operations............ (473,330) 3,436,116 924,560 2,689,200 153,952
----------- ----------- ----------- ----------- --------
UNIT TRANSACTIONS:
Purchases............................. 2,332,280 5,182,021 4,749,557 3,567,981 294,224
Net transfers......................... 4,383,997 10,043,099 8,661,074 5,842,947 284,171
Surrenders for benefit payments and
fees................................. (299,166) (1,024,385) (1,647,709) (355,169) (31,896)
Net annuity transactions.............. -- -- -- -- --
----------- ----------- ----------- ----------- --------
Net increase (decrease) in net assets
resulting from unit transactions..... 6,417,111 14,200,735 11,762,922 9,055,759 546,499
----------- ----------- ----------- ----------- --------
Total increase (decrease) in net
assets............................... 5,943,781 17,636,851 12,687,482 11,744,959 700,451
NET ASSETS:
Beginning of period................... 5,541,780 4,330,706 10,106,933 7,418,972 260,669
----------- ----------- ----------- ----------- --------
End of period......................... $11,485,561 $21,967,557 $22,794,415 $19,163,931 $961,120
=========== =========== =========== =========== ========
<CAPTION>
EMERGING ACTIVE
MARKETS INTERNATIONAL FIXED
EQUITY ALLOCATION INCOME
SUB-ACCOUNT** SUB-ACCOUNT*** SUB-ACCOUNT**
------------- -------------- -------------
<S> <C> <C> <C>
OPERATIONS:
Net investment (loss) income.......... $ (5,722) $ 66 $ 61,081
Capital gains income.................. -- -- --
Net realized gain (loss) on security
transactions......................... 4,110 499 5,167
Net unrealized appreciation
(depreciation) of investments during
the period........................... 750,282 43,907 (65,066)
---------- -------- ----------
Net increase (decrease) in net assets
resulting from operations............ 748,670 44,472 1,182
---------- -------- ----------
UNIT TRANSACTIONS:
Purchases............................. 637,643 303,214 271,824
Net transfers......................... 1,712,968 221,037 1,291,003
Surrenders for benefit payments and
fees................................. (5,990) (2,662) (21,468)
Net annuity transactions.............. -- -- --
---------- -------- ----------
Net increase (decrease) in net assets
resulting from unit transactions..... 2,344,621 521,589 1,541,359
---------- -------- ----------
Total increase (decrease) in net
assets............................... 3,093,291 566,061 1,542,541
NET ASSETS:
Beginning of period................... -- -- --
---------- -------- ----------
End of period......................... $3,093,291 $566,061 $1,542,541
========== ======== ==========
</TABLE>
<TABLE>
<CAPTION>
MID-CAP EMERGING
STRATEGIC STOCK ENTERPRISE HIGH YIELD VALUE MARKETS DEBT
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT*
--------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment (loss) income.......... $ (23,290) $ (18,104) $ 496,873 $ (20,531) $ 29,495
Capital gains income.................. -- -- 96,662 161,531 --
Net realized (loss) gain on security
transactions......................... 53 (1,243) (1,146) 458 (1,631)
Net unrealized appreciation
(depreciation) of investments during
the
period............................... 279,845 483,645 (421,185) 433,339 (67,755)
----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations............ 256,608 464,298 171,204 574,797 (39,891)
----------- ----------- ----------- ----------- -----------
UNIT TRANSACTIONS:
Purchases............................. 1,952,495 1,417,282 3,719,605 2,520,643 119,619
Net transfers......................... 3,478,285 2,480,461 6,350,686 4,446,588 185,592
Surrenders for benefit payments and
fees................................. (145,608) (31,335) (134,562) (123,056) (4,651)
Net annuity transactions.............. -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Net (decrease) increase in net assets
resulting from unit transactions..... 5,285,172 3,866,408 9,935,729 6,844,175 300,560
----------- ----------- ----------- ----------- -----------
Total (decrease) increase in net
assets............................... 5,541,780 4,330,706 10,106,933 7,418,972 260,669
NET ASSETS:
Beginning of period................... -- -- -- -- --
----------- ----------- ----------- ----------- -----------
End of period......................... $ 5,541,780 $ 4,330,706 $10,106,933 $ 7,418,972 $ 260,669
=========== =========== =========== =========== ===========
</TABLE>
---------------------------------------------------- 15
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT THREE
- --------------------------------------------------------------------------------
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. ORGANIZATION:
Separate Account Three (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 contractowners of the Company in various mutual
funds (the Funds) as directed by the contractowners.
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
dividends from the Funds which are characterized as capital gains under
tax regulations.
b) SECURITY VALUATION--The investments in shares of the Morgan Stanley Dean
Witter Select Dimensions Investment Series, the Van Kampen Life
Investment Trust, and the Morgan Stanley Dean Witter Universal Funds,
Inc. are valued at the closing net asset value per share as determined by
the appropriate Fund as of December 31, 1999.
c) UNIT TRANSACTIONS--Unit transactions are executed based on the unit
values calculated at the close of the business day.
d) FEDERAL INCOME TAXES--The operations of the Account form a part of, and
are taxed with, the total operations of the Company, which is taxed as an
insurance company under the Internal Revenue Code. Under current law, no
Federal income taxes are payable with respect to the operations of the
Account.
e) USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and the reported
amounts of income and expenses during the period. Operating results in
the future could vary from the amounts derived from management's
estimates.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
a) MORTALITY AND EXPENSE UNDERTAKINGS--The Company, as issuer of variable
annuity contracts, provides the mortality and expense undertakings and,
with respect to the Account, receives a maximum annual fee of up to 1.50%
of the Account's average daily net assets. The Company also provides
administrative services and receives an annual fee of 0.15% of the
Account's average daily net assets.
b) DEDUCTION OF ANNUAL MAINTENANCE FEE--Annual maintenance fees are deducted
through termination of units of interest from applicable contract owners'
accounts, in accordance with the terms of the contracts. These charges
are reflected in surrenders for benefit payments and fees on the
accompanying statements of changes in net assets.
______________________________________ 16 ______________________________________
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
TO HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT THREE 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 Three (Money
Market, North American Government Securities, Balanced Growth, Utilities,
Dividend Growth, Value-Added Market, Growth, American Opportunities, Global
Equity, Developing Growth, Emerging Markets, Diversified Income, Mid-Cap Equity,
Strategic Stock, Enterprise, High Yield, Mid-Cap Value, Emerging Markets Debt,
Emerging Markets Equity, Active International Allocation, and Fixed Income
sub-accounts), (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 its operations and the changes in its net assets for
the periods presented in conformity with generally accepted accounting
principles.
Hartford, Connecticut
February 17, 2000 ARTHUR ANDERSEN LLP
______________________________________ 17 ______________________________________
<PAGE>
SEPARATE ACCOUNT FIVE
- --------------------------------------------------------------------------------
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF ASSETS & LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
NORTH AMERICAN
MONEY GOVERNMENT
MARKET SECURITIES
SUB-ACCOUNT SUB-ACCOUNT
----------- --------------
<S> <C> <C>
ASSETS:
Investments in the
Morgan Stanley Dean
Witter Select
Dimensions Investment
Series:
Money Market
Portfolio
Shares 1,370,819
Cost $1,370,819
Market Value....... $1,370,819 --
North American
Government
Securities Portfolio
Shares 112
Cost $1,126
Market Value....... -- $1,124
Balanced Growth
Portfolio
Shares 20,001
Cost $297,912
Market Value....... -- --
Utilities Portfolio
Shares 19,305
Cost $369,955
Market Value....... -- --
Dividend Growth
Portfolio
Shares 158,081
Cost $3,177,992
Market Value....... -- --
Value-Added Market
Portfolio
Shares 21,797
Cost $400,397
Market Value....... -- --
Growth Portfolio
Shares 8,694
Cost $147,613
Market Value....... -- --
American
Opportunities
Portfolio
Shares 77,016
Cost $1,730,315
Market Value....... -- --
Global Equity
Portfolio
Shares 45,844
Cost $612,136
Market Value....... -- --
Developing Growth
Portfolio
Shares 6,952
Cost $135,833
Market Value....... -- --
Due from Hartford Life
and Annuity Insurance
Company............... 1 --
Receivable for fund
shares sold........... -- --
---------- ------
Total Assets........... 1,370,820 1,124
---------- ------
LIABILITIES:
Due to Hartford Life
and Annuity Insurance
Company............... -- --
Payable for fund shares
purchased............. -- --
---------- ------
Total Liabilities...... -- --
---------- ------
Net Assets (variable
life contract
liabilities).......... $1,370,820 $1,124
========== ======
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 18
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
BALANCED DIVIDEND VALUE-ADDED AMERICAN GLOBAL DEVELOPING
GROWTH UTILITIES GROWTH MARKET GROWTH OPPORTUNITIES EQUITY GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments in the
Morgan Stanley Dean
Witter Select
Dimensions Investment
Series:
Money Market
Portfolio
Shares 1,370,819
Cost $1,370,819
Market Value....... -- -- -- -- -- -- -- --
North American
Government
Securities Portfolio
Shares 112
Cost $1,126
Market Value....... -- -- -- -- -- -- -- --
Balanced Growth
Portfolio
Shares 20,001
Cost $297,912
Market Value....... $292,608 -- -- -- -- -- -- --
Utilities Portfolio
Shares 19,305
Cost $369,955
Market Value....... -- $506,766 -- -- -- -- -- --
Dividend Growth
Portfolio
Shares 158,081
Cost $3,177,992
Market Value....... -- -- $3,148,968 -- -- -- -- --
Value-Added Market
Portfolio
Shares 21,797
Cost $400,397
Market Value....... -- -- -- $447,704 -- -- -- --
Growth Portfolio
Shares 8,694
Cost $147,613
Market Value....... -- -- -- -- $202,312 -- -- --
American
Opportunities
Portfolio
Shares 77,016
Cost $1,730,315
Market Value....... -- -- -- -- -- $2,510,718 -- --
Global Equity
Portfolio
Shares 45,844
Cost $612,136
Market Value....... -- -- -- -- -- -- $899,923 --
Developing Growth
Portfolio
Shares 6,952
Cost $135,833
Market Value....... -- -- -- -- -- -- -- $278,372
Due from Hartford Life
and Annuity Insurance
Company............... -- 2 -- -- -- -- 19 7
Receivable for fund
shares sold........... -- -- -- -- -- -- -- --
-------- -------- ---------- -------- -------- ---------- -------- --------
Total Assets........... 292,608 506,768 3,148,968 447,704 202,312 2,510,718 899,942 278,379
-------- -------- ---------- -------- -------- ---------- -------- --------
LIABILITIES:
Due to Hartford Life
and Annuity Insurance
Company............... -- -- 192 58 76 92 -- --
Payable for fund shares
purchased............. -- -- -- -- -- -- -- --
-------- -------- ---------- -------- -------- ---------- -------- --------
Total Liabilities...... -- -- 192 58 76 92 -- --
-------- -------- ---------- -------- -------- ---------- -------- --------
Net Assets (variable
life contract
liabilities).......... $292,608 $506,768 $3,148,776 $447,646 $202,236 $2,510,626 $899,942 $278,379
======== ======== ========== ======== ======== ========== ======== ========
</TABLE>
---------------------------------------------------- 19
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT FIVE
- --------------------------------------------------------------------------------
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF ASSETS & LIABILITIES -- (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
EMERGING DIVERSIFIED
MARKETS INCOME
SUB-ACCOUNT SUB-ACCOUNT
----------- -----------
<S> <C> <C>
ASSETS:
Investments in the
Morgan Stanley Dean
Witter Select
Dimensions Investment
Series:
Emerging Markets
Portfolio
Shares 4,540
Cost $50,107
Market Value....... $65,786 --
Diversified Income
Portfolio
Shares 60,721
Cost $605,775
Market Value....... -- $544,061
Mid-Cap Equity
Portfolio
Shares 19,416
Cost $234,988
Market Value....... -- --
Investments in the
Morgan Stanley Dean
Witter Universal Funds
Inc.:
High Yield Portfolio
Shares 5,052
Cost $53,359
Market Value....... -- --
Mid-Cap Value
Portfolio
Shares 2,142
Cost $33,497
Market Value....... -- --
Emerging Markets Debt
Portfolio
Shares 2,690
Cost $18,988
Market Value....... -- --
Investments in Van
Kampen Life Investment
Trust:
Strategic Stock
Portfolio
Shares 550
Cost $6,866
Market Value....... -- --
Enterprise Portfolio
Shares 5,294
Cost $119,283
Market Value....... -- --
Due from Hartford Life
and Annuity Insurance
Company............... 13 --
Receivable for fund
shares sold........... -- --
------- --------
Total Assets........... 65,799 544,061
------- --------
LIABILITIES:
Due to Hartford Life
and Annuity Insurance
Company............... -- 20
Payable for fund shares
purchased............. -- --
------- --------
Total Liabilities...... -- 20
------- --------
Net Assets (variable
life contract
liabilities).......... $65,799 $544,041
======= ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 20
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
MID-CAP MID-CAP EMERGING
EQUITY HIGH YIELD VALUE MARKETS DEBT STRATEGIC STOCK ENTERPRISE
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ------------ --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments in the
Morgan Stanley Dean
Witter Select
Dimensions Investment
Series:
Emerging Markets
Portfolio
Shares 4,540
Cost $50,107
Market Value....... -- -- -- -- -- --
Diversified Income
Portfolio
Shares 60,721
Cost $605,775
Market Value....... -- -- -- -- -- --
Mid-Cap Equity
Portfolio
Shares 19,416
Cost $234,988
Market Value....... $439,968 -- -- -- -- --
Investments in the
Morgan Stanley Dean
Witter Universal Funds
Inc.:
High Yield Portfolio
Shares 5,052
Cost $53,359
Market Value....... -- $51,737 -- -- -- --
Mid-Cap Value
Portfolio
Shares 2,142
Cost $33,497
Market Value....... -- -- $33,465 -- -- --
Emerging Markets Debt
Portfolio
Shares 2,690
Cost $18,988
Market Value....... -- -- -- $18,591 -- --
Investments in Van
Kampen Life Investment
Trust:
Strategic Stock
Portfolio
Shares 550
Cost $6,866
Market Value....... -- -- -- -- $6,451 --
Enterprise Portfolio
Shares 5,294
Cost $119,283
Market Value....... -- -- -- -- -- $138,222
Due from Hartford Life
and Annuity Insurance
Company............... 23 -- -- -- -- --
Receivable for fund
shares sold........... -- -- -- -- -- --
-------- ------- ------- ------- ------ --------
Total Assets........... 439,991 51,737 33,465 18,591 6,451 138,222
-------- ------- ------- ------- ------ --------
LIABILITIES:
Due to Hartford Life
and Annuity Insurance
Company............... -- -- -- -- -- --
Payable for fund shares
purchased............. -- -- -- -- -- --
-------- ------- ------- ------- ------ --------
Total Liabilities...... -- -- -- -- -- --
-------- ------- ------- ------- ------ --------
Net Assets (variable
life contract
liabilities).......... $439,991 $51,737 $33,465 $18,591 $6,451 $138,222
======== ======= ======= ======= ====== ========
</TABLE>
---------------------------------------------------- 21
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT FIVE
- --------------------------------------------------------------------------------
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF ASSETS & LIABILITIES -- (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
UNITS
OWNED BY UNIT CONTRACT
PARTICIPANTS PRICE LIABILITY
------------ ---------- -----------
<S> <C> <C> <C>
VARIABLE LIFE CONTRACTS:
Money Market Portfolio........... 1,205,116 $ 1.1375 $ 1,370,820
North American Government
Securities Portfolio............ 100 11.235263 1,124
Balanced Growth Portfolio........ 22,053 13.268484 292,608
Utilities Portfolio.............. 23,428 21.631144 506,768
Dividend Growth Portfolio........ 234,392 13.433818 3,148,776
Value-Added Market Portfolio..... 30,725 14.569531 447,646
Growth Portfolio................. 11,183 18.084596 202,236
American Opportunities
Portfolio....................... 97,564 25.733152 2,510,626
Global Equity Portfolio.......... 58,261 15.446837 899,942
Developing Growth Portfolio...... 11,015 25.271683 278,379
Emerging Markets Portfolio....... 5,443 12.088774 65,799
Diversified Income Portfolio..... 49,996 10.881692 544,041
Mid-Cap Equity Portfolio......... 18,302 24.040915 439,991
High Yield Portfolio............. 4,805 10.767198 51,737
Mid-Cap Value Portfolio.......... 2,759 12.129625 33,465
Emerging Markets Debt
Portfolio....................... 2,118 8.777081 18,591
Strategic Stock Portfolio........ 627 10.280613 6,451
Enterprise Portfolio............. 10,365 13.335134 138,222
-----------
GRAND TOTAL........................ $10,957,222
===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 22
----------------------------------------------------
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
SEPARATE ACCOUNT FIVE
- --------------------------------------------------------------------------------
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
NORTH AMERICAN
GOVERNMENT
MONEY MARKET SECURITIES
SUB-ACCOUNT SUB-ACCOUNT
------------ --------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends.............. $69,562 $ 50
------- ----
Net investment
income.............. 69,562 50
------- ----
CAPITAL GAINS INCOME..... -- --
------- ----
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... -- --
Net unrealized
(depreciation)
appreciation of
investments during the
period................ -- (13)
------- ----
Net (loss) gain on
investments......... -- (13)
------- ----
Net increase in net
assets resulting
from operations..... $69,562 $ 37
======= ====
</TABLE>
* Formerly American Value Sub-Account; change effective May 1, 1999.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 24
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
BALANCED DIVIDEND VALUE-ADDED AMERICAN GLOBAL DEVELOPING
GROWTH UTILITIES GROWTH MARKET GROWTH OPPORTUNITIES EQUITY GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 8,122 $ 4,661 $ 55,367 $ 4,329 $ 9 $ 4,261 $ 2,417 $ 108
-------- -------- --------- ------- ------- -------- -------- --------
Net investment
income.............. 8,122 4,661 55,367 4,329 9 4,261 2,417 108
-------- -------- --------- ------- ------- -------- -------- --------
CAPITAL GAINS INCOME..... 29,269 2,276 260,547 14,979 12,458 122,775 -- --
-------- -------- --------- ------- ------- -------- -------- --------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 961 597 7,056 1,058 1,433 12,138 (9) 10,634
Net unrealized
(depreciation)
appreciation of
investments during the
period................ (28,404) 126,977 (299,961) 22,445 42,230 613,973 215,470 130,695
-------- -------- --------- ------- ------- -------- -------- --------
Net (loss) gain on
investments......... (27,443) 127,574 (292,905) 23,503 43,663 626,111 215,461 141,329
-------- -------- --------- ------- ------- -------- -------- --------
Net increase in net
assets resulting
from operations..... $ 9,948 $134,511 $ 23,009 $42,811 $56,130 $753,147 $217,878 $141,437
======== ======== ========= ======= ======= ======== ======== ========
</TABLE>
* Formerly American Value Sub-Account; change effective May 1, 1999.
---------------------------------------------------- 25
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT FIVE
- --------------------------------------------------------------------------------
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
EMERGING DIVERSIFIED
MARKETS INCOME
SUB-ACCOUNT SUB-ACCOUNT
----------- -----------
<S> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 69 $ 38,498
------- --------
Net investment
income.............. 69 38,498
------- --------
CAPITAL GAINS INCOME..... -- --
------- --------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 440 (66)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 25,757 (47,039)
------- --------
Net gain (loss) on
investments......... 26,197 (47,105)
------- --------
Net increase
(decrease) in net
assets resulting
from operations..... $26,266 $ (8,607)
======= ========
</TABLE>
* Formerly Mid-Cap Growth Sub-Account; change effective September 8, 1999.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 26
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
MID-CAP MID-CAP EMERGING
EQUITY HIGH YIELD VALUE MARKETS DEBT STRATEGIC STOCK ENTERPRISE
SUB-ACCOUNT* SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ----------- ----------- ------------ --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 1,210 $4,014 $ 51 $2,330 $ 10 $ 32
-------- ------ ------ ------ ----- -------
Net investment
income.............. 1,210 4,014 51 2,330 10 32
-------- ------ ------ ------ ----- -------
CAPITAL GAINS INCOME..... -- -- 3,632 -- 3 752
-------- ------ ------ ------ ----- -------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 4,027 40 92 19 (94) 37
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 192,212 (804) (6) 5 (448) 17,143
-------- ------ ------ ------ ----- -------
Net gain (loss) on
investments......... 196,239 (764) 86 24 (542) 17,180
-------- ------ ------ ------ ----- -------
Net increase
(decrease) in net
assets resulting
from operations..... $197,449 $3,250 $3,769 $2,354 $(529) $17,964
======== ====== ====== ====== ===== =======
</TABLE>
* Formerly Mid-Cap Growth Sub-Account; change effective September 8, 1999.
---------------------------------------------------- 27
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT FIVE
- --------------------------------------------------------------------------------
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
NORTH AMERICAN
MONEY MARKET GOVERMENT SECURITIES
SUB-ACCOUNT SUB-ACCOUNT
------------ --------------------
<S> <C> <C>
OPERATIONS:
Net investment
income................ $ 69,562 $ 50
Capital gains income... -- --
Net realized gain
(loss) on security
transactions.......... -- --
Net unrealized
(depreciation)
appreciation of
investments during the
period................ -- (13)
---------- ------
Net increase in net
assets resulting from
operations............ 69,562 37
---------- ------
UNIT TRANSACTIONS:
Purchases.............. 1,959,285 --
Net transfers.......... (2,210,610) --
Surrenders for benefit
payments and fees..... (56,096) --
Loan withdrawals....... (91,966) --
Cost of insurance...... (29,070) --
---------- ------
Net (decrease) increase
in net assets
resulting from unit
transactions.......... (428,457) --
---------- ------
Total (decrease)
increase in net
assets................ (358,895) 37
NET ASSETS:
Beginning of period.... 1,729,715 1,087
---------- ------
End of period.......... $1,370,820 $1,124
========== ======
</TABLE>
* Formerly American Value Sub-Account; change effective May 1, 1999.
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
NORTH AMERICAN
MONEY MARKET GOVERMENT SECURITIES
SUB-ACCOUNT SUB-ACCOUNT
------------ --------------------
<S> <C> <C>
OPERATIONS:
Net investment
income................ $ 61,978 $ 47
Capital gains income... -- --
Net realized gain
(loss) on security
transactions.......... -- --
Net unrealized
(depreciation)
appreciation of
investments during the
period................ -- (2)
---------- ------
Net increase in net
assets resulting from
operations............ 61,978 45
---------- ------
UNIT TRANSACTIONS:
Purchases.............. 4,120,230 --
Net transfers.......... (2,500,521) --
Surrenders for benefit
payments and fees..... (28,583) --
Loan withdrawals....... (705,994) --
Cost of insurance...... (13,832) --
---------- ------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 871,300 --
---------- ------
Total increase
(decrease) in net
assets................ 933,278 45
NET ASSETS:
Beginning of period.... 796,437 1,042
---------- ------
End of period.......... $1,729,715 $1,087
========== ======
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 28
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
BALANCED DIVIDEND VALUE-ADDED AMERICAN GLOBAL DEVELOPING
GROWTH UTILITIES GROWTH MARKET GROWTH OPPORTUNITIES EQUITY GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment
income................ $ 8,122 $ 4,661 $ 55,367 $ 4,329 $ 9 $ 4,261 $ 2,417 $ 108
Capital gains income... 29,269 2,276 260,547 14,979 12,458 122,775 -- --
Net realized gain
(loss) on security
transactions.......... 961 597 7,056 1,058 1,433 12,138 (9) 10,634
Net unrealized
(depreciation)
appreciation of
investments during the
period................ (28,404) 126,977 (299,961) 22,445 42,230 613,973 215,470 130,695
-------- -------- ---------- -------- -------- ---------- -------- --------
Net increase in net
assets resulting from
operations............ 9,948 134,511 23,009 42,811 56,130 753,147 217,878 141,437
-------- -------- ---------- -------- -------- ---------- -------- --------
UNIT TRANSACTIONS:
Purchases.............. -- -- -- -- -- -- -- --
Net transfers.......... 42,689 272,250 448,984 103,577 35,318 754,331 129,076 17,691
Surrenders for benefit
payments and fees..... (3,655) (5,087) (112,852) (33,015) (9,766) (28,694) (28,550) (37,343)
Loan withdrawals....... (21,216) (1,292) (37,255) (1,188) (1) (26,398) (826) --
Cost of insurance...... (4,482) (5,973) (50,992) (7,050) (2,527) (22,090) (10,672) (3,031)
-------- -------- ---------- -------- -------- ---------- -------- --------
Net (decrease) increase
in net assets
resulting from unit
transactions.......... 13,336 259,898 247,885 62,324 23,024 677,149 89,028 (22,683)
-------- -------- ---------- -------- -------- ---------- -------- --------
Total (decrease)
increase in net
assets................ 23,284 394,409 270,894 105,135 79,154 1,430,296 306,906 118,754
NET ASSETS:
Beginning of period.... 269,324 112,359 2,877,882 342,511 123,082 1,080,330 593,036 159,625
-------- -------- ---------- -------- -------- ---------- -------- --------
End of period.......... $292,608 $506,768 $3,148,776 $447,646 $202,236 $2,510,626 $899,942 $278,379
======== ======== ========== ======== ======== ========== ======== ========
</TABLE>
<TABLE>
<CAPTION>
BALANCED DIVIDEND VALUE-ADDED AMERICAN GLOBAL DEVELOPING
GROWTH UTILITIES GROWTH MARKET GROWTH OPPORTUNITIES EQUITY GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment
income................ $ 5,437 $ 759 $ 44,248 $ 2,839 $ -- $ 5,939 $ 8,325 $ 538
Capital gains income... 4,004 337 100,866 3,121 4,218 72,714 2,380 428
Net realized gain
(loss) on security
transactions.......... 135 36 11,571 57 (855) (392) (10,224) (8,135)
Net unrealized
(depreciation)
appreciation of
investments during the
period................ 20,528 9,408 254,099 22,097 11,029 151,290 68,384 9,871
-------- -------- ---------- -------- -------- ---------- -------- --------
Net increase in net
assets resulting from
operations............ 30,104 10,540 410,784 28,114 14,392 229,551 68,865 2,702
-------- -------- ---------- -------- -------- ---------- -------- --------
UNIT TRANSACTIONS:
Purchases.............. -- -- -- -- -- -- -- --
Net transfers.......... 80,467 96,911 1,259,474 189,519 29,229 289,585 215,976 38,891
Surrenders for benefit
payments and fees..... (3,478) (617) (186,767) (4,266) (39,946) (113,881) (195,324) (89,310)
Loan withdrawals....... (1,939) (883) (168,807) (533) (504) (836) (1,413) (13)
Cost of insurance...... (1,457) (279) (19,772) (1,660) (959) (5,820) (4,229) (1,611)
-------- -------- ---------- -------- -------- ---------- -------- --------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 73,593 95,132 884,128 183,060 (12,180) 169,048 15,010 (52,043)
-------- -------- ---------- -------- -------- ---------- -------- --------
Total increase
(decrease) in net
assets................ 103,697 105,672 1,294,912 211,174 2,212 398,599 83,875 (49,341)
NET ASSETS:
Beginning of period.... 165,627 6,687 1,582,970 131,337 120,870 681,731 509,161 208,966
-------- -------- ---------- -------- -------- ---------- -------- --------
End of period.......... $269,324 $112,359 $2,877,882 $342,511 $123,082 $1,080,330 $593,036 $159,625
======== ======== ========== ======== ======== ========== ======== ========
</TABLE>
---------------------------------------------------- 29
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT FIVE
- --------------------------------------------------------------------------------
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
EMERGING DIVERSIFIED
MARKETS INCOME
SUB-ACCOUNT SUB-ACCOUNT
----------- -----------
<S> <C> <C>
OPERATIONS:
Net investment
income................ $ 69 $ 38,498
Capital gains income... -- --
Net realized gain
(loss) on security
transactions.......... 440 (66)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 25,757 (47,039)
------- --------
Net increase (decrease)
in net assets
resulting from
operations............ 26,266 (8,607)
------- --------
UNIT TRANSACTIONS:
Purchases.............. -- --
Net transfers.......... 21,042 120,871
Surrenders for benefit
payments and fees..... (2,378) (5,042)
Loan withdrawals....... -- (930)
Cost of insurance...... (575) (7,483)
------- --------
Net increase in net
assets resulting from
unit transactions..... 18,089 107,416
------- --------
Total increase in net
assets................ 44,355 98,809
NET ASSETS:
Beginning of period.... 21,444 445,232
------- --------
End of period.......... $65,799 $544,041
======= ========
</TABLE>
** Formerly Mid-Cap Growth Sub-Account; change effective September 8, 1999.
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
EMERGING DIVERSIFIED
MARKETS INCOME
SUB-ACCOUNT SUB-ACCOUNT
----------- -----------
<S> <C> <C>
OPERATIONS:
Net investment
income................ $ 417 $ 36,443
Capital gains income... 93 659
Net realized (loss)
gain on security
transactions.......... (3,076) (3,330)
Net unrealized
(depreciation)
appreciation of
investments during the
period................ (9,164) (14,655)
------- --------
Net (decrease) increase
in net assets
resulting from
operations............ (11,730) 19,117
------- --------
UNIT TRANSACTIONS:
Purchases.............. -- --
Net transfers.......... 7,343 102,041
Surrenders for benefit
payments and fees..... (10,978) (126,211)
Loan withdrawals....... -- (1,348)
Cost of insurance...... (204) (3,354)
------- --------
Net (decrease) increase
in net assets
resulting from unit
transactions.......... (3,839) (28,872)
------- --------
Total (decrease)
increase in net
assets................ (15,569) (9,755)
NET ASSETS:
Beginning of period.... 37,013 454,987
------- --------
End of period.......... $21,444 $445,232
======= ========
</TABLE>
* From inception, April 1, 1998, to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 30
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
MID-CAP MID-CAP EMERGING
EQUITY HIGH YIELD VALUE MARKETS DEBT STRATEGIC STOCK ENTERPRISE
SUB-ACCOUNT** SUB-ACCOUNT SUB-ACCOUNT** SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------- ------------- ------------ --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment
income................ $ 1,210 $ 4,014 $ 51 $ 2,330 $ 10 $ 32
Capital gains income... -- -- 3,632 -- 3 752
Net realized gain
(loss) on security
transactions.......... 4,027 40 92 19 (94) 37
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 192,212 (804) (6) 5 (448) 17,143
-------- ------- ------- ------- ------ --------
Net increase (decrease)
in net assets
resulting from
operations............ 197,449 3,250 3,769 2,354 (529) 17,964
-------- ------- ------- ------- ------ --------
UNIT TRANSACTIONS:
Purchases.............. -- -- -- -- -- --
Net transfers.......... 80,849 15,593 30,133 16,500 7,015 114,693
Surrenders for benefit
payments and fees..... (36,778) (5,148) (1,287) (896) (1,037) (2,134)
Loan withdrawals....... -- -- -- -- -- (845)
Cost of insurance...... (3,876) (680) (156) (46) (31) (1,708)
-------- ------- ------- ------- ------ --------
Net increase in net
assets resulting from
unit transactions..... 40,195 9,765 28,690 15,558 5,947 110,006
-------- ------- ------- ------- ------ --------
Total increase in net
assets................ 237,644 13,015 32,459 17,912 5,418 127,970
NET ASSETS:
Beginning of period.... 202,347 38,722 1,006 679 1,033 10,252
-------- ------- ------- ------- ------ --------
End of period.......... $439,991 $51,737 $33,465 $18,591 $6,451 $138,222
======== ======= ======= ======= ====== ========
</TABLE>
<TABLE>
<CAPTION>
MID-CAP MID-CAP EMERGING
EQUITY HIGH YIELD VALUE MARKETS DEBT STRATEGIC STOCK ENTERPRISE
SUB-ACCOUNT** SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT*
------------- ------------ ------------ ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment
income................ $ 1,252 $ 2,177 $ 2 $ 81 $-- $ --
Capital gains income... 1,772 358 29 -- -- --
Net realized (loss)
gain on security
transactions.......... (6,378) -- -- -- -- 1
Net unrealized
(depreciation)
appreciation of
investments during the
period................ 8,297 (818) (26) (402) 33 1,796
-------- ------- ------- ------- ------ --------
Net (decrease) increase
in net assets
resulting from
operations............ 4,943 1,717 5 (321) 33 1,797
-------- ------- ------- ------- ------ --------
UNIT TRANSACTIONS:
Purchases.............. -- 1,000 1,001 1,000 1,000 1,000
Net transfers.......... 147,383 36,207 -- -- -- 7,500
Surrenders for benefit
payments and fees..... (82,257) (146) -- -- -- (43)
Loan withdrawals....... (448) -- -- -- -- --
Cost of insurance...... (1,305) (56) -- -- -- (2)
-------- ------- ------- ------- ------ --------
Net (decrease) increase
in net assets
resulting from unit
transactions.......... 63,373 37,005 1,001 1,000 1,000 8,455
-------- ------- ------- ------- ------ --------
Total (decrease)
increase in net
assets................ 68,316 38,722 1,006 679 1,033 10,252
NET ASSETS:
Beginning of period.... 134,031 -- -- -- -- --
-------- ------- ------- ------- ------ --------
End of period.......... $202,347 $38,722 $ 1,006 $ 679 $1,033 $ 10,252
======== ======= ======= ======= ====== ========
</TABLE>
* From inception, April 1, 1998, to December 31, 1998.
---------------------------------------------------- 31
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT FIVE
- --------------------------------------------------------------------------------
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. ORGANIZATION:
Separate Account Five (the Account) is a separate investment account within
Hartford Life & Annuity Insurance Company (the Company) and is registered
with the Securities and Exchange Commission (SEC) as a unit investment trust
under the Investment Company Act of 1940, as amended. Both the Company and
the Account are subject to supervision and regulation by the Department of
Insurance of the State of Connecticut and the SEC. The Account invests
deposits by variable life policyowners of the Company in various mutual
funds (the Funds) as directed by the policyowners.
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 investment in shares of the Morgan Stanley Dean
Witter Select Dimensions Investment Series, the Morgan Stanley Dean
Witter Universal Funds, Inc. and Van Kampen Life Investment Trust are
valued at the closing net asset value per share as determined by the
appropriate Fund as of December 31, 1999.
c) UNIT TRANSACTIONS--Unit transactions are executed based on the unit
values calculated at the close of the business day.
d) FEDERAL INCOME TAXES--The operations of the Account form a part of, and
are taxed with, the total operations of the Company, which is taxed as an
insurance company under the Internal Revenue Code. Under current law, no
Federal income taxes are payable with respect to the operations of the
Account.
e) USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and the reported
amounts of income and expenses during the period. Operating results in
the future could vary from the amounts derived from management's
estimates.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
a) COST OF INSURANCE CHARGE--In accordance with terms of the policies, the
Company assesses deductions for costs of insurance charges to cover the
Company's anticipated mortality costs. Because a policy's account value
and death benefit may vary from month to month, the cost of insurance
charge may also vary.
b) MORTALITY AND EXPENSE UNDERTAKINGS--The Company, as issuer of variable
life policies, provides the mortality and expense undertakings and, with
respect to the Account, receives a maximum annual fee of 0.90% of the
Account's average daily net assets. The Company also provides
administrative services and receives an annual fee of 0.40% of the
Account's average daily net assets. These charges are reflected in
surrenders for benefit payments and fees on the accompanying statements
of changes in net assets.
c) DEDUCTION OF ANNUAL MAINTENANCE FEE--Annual maintenance fees are deducted
through termination of units of interest from applicable policyowner
accounts, in accordance with the terms of the policies. These charges are
reflected in surrenders for benefit payments and fees on the accompanying
statements of changes in net assets.
d) TAX EXPENSE CHARGE--The Company will deduct monthly from the account
value a tax expense charge equal to an annual rate of 0.40% for the first
ten years. During the first nine policy years, a premium tax charge will
be imposed on full or partial surrenders at a maximum rate of 2.25%.
These charges are reflected in surrenders for benefit payments and fees
on the accompanying statements of changes in net assets.
______________________________________ 32 ______________________________________
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
TO HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT FIVE 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 Five (Money Market,
North American Government Securities, Balanced Growth, Utilities, Dividend
Growth, Value-Added Market, Growth, American Opportunities, Global Equity,
Developing Growth, Emerging Markets, Diversified Income, Mid-Cap Equity, High
Yield, Mid-Cap Value, Emerging Markets Debt, Strategic Stock, and Enterprise
sub-accounts), (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 its operations and the changes in its net assets for
the periods presented in conformity with generally accepted accounting
principles.
Hartford, Connecticut
February 17, 2000 ARTHUR ANDERSEN LLP
______________________________________ 33 ______________________________________
<PAGE>
SEPARATE ACCOUNT THREE
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF ASSETS & LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
NORTH AMERICAN
MONEY GOVERNMENT
MARKET SECURITIES
SUB-ACCOUNT SUB-ACCOUNT
----------- --------------
<S> <C> <C>
ASSETS:
Investments in the Morgan Stanley Dean
Witter Select Dimensions Investment
Series:
Money Market Portfolio
Shares 10,834,994
Cost $10,834,994
Market Value...................... $10,834,994 --
North American Government Securities
Portfolio
Shares 86,378
Cost $872,727
Market Value...................... -- $866,373
Balanced Growth Portfolio
Shares 1,015,741
Cost $14,863,445
Market Value...................... -- --
Utilities Portfolio
Shares 462,270
Cost $7,714,454
Market Value...................... -- --
Dividend Growth Portfolio
Shares 3,918,333
Cost $71,722,742
Market Value...................... -- --
Value-Added Market Portfolio
Shares 1,381,279
Cost $21,243,860
Market Value...................... -- --
Growth Portfolio
Shares 699,117
Cost $12,317,177
Market Value...................... -- --
American Opportunities Portfolio
Shares 2,469,114
Cost $49,283,138
Market Value...................... -- --
Global Equity Portfolio
Shares 1,066,162
Cost $13,446,082
Market Value...................... -- --
Due from Hartford Life Insurance
Company.............................. 194,186 --
Receivable for fund shares sold....... -- 33
----------- --------
Total Assets.......................... 11,029,180 866,406
----------- --------
LIABILITIES:
Due to Hartford Life Insurance
Company.............................. -- 9,272
Payable for fund shares purchased..... -- --
----------- --------
Total Liabilities..................... -- 9,272
----------- --------
Net Assets (variable annuity contract
liabilities)......................... $11,029,180 $857,134
=========== ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 34
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
BALANCED DIVIDEND VALUE-ADDED AMERICAN
GROWTH UTILITIES GROWTH MARKET GROWTH OPPORTUNITIES
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments in the Morgan Stanley Dean
Witter Select Dimensions Investment
Series:
Money Market Portfolio
Shares 10,834,994
Cost $10,834,994
Market Value...................... -- -- -- -- -- --
North American Government Securities
Portfolio
Shares 86,378
Cost $872,727
Market Value...................... -- -- -- -- -- --
Balanced Growth Portfolio
Shares 1,015,741
Cost $14,863,445
Market Value...................... $14,860,285 -- -- -- -- --
Utilities Portfolio
Shares 462,270
Cost $7,714,454
Market Value...................... -- $12,134,575 -- -- -- --
Dividend Growth Portfolio
Shares 3,918,333
Cost $71,722,742
Market Value...................... -- -- $78,053,202 -- -- --
Value-Added Market Portfolio
Shares 1,381,279
Cost $21,243,860
Market Value...................... -- -- -- $28,371,479 -- --
Growth Portfolio
Shares 699,117
Cost $12,317,177
Market Value...................... -- -- -- -- $16,268,448 --
American Opportunities Portfolio
Shares 2,469,114
Cost $49,283,138
Market Value...................... -- -- -- -- -- $80,493,126
Global Equity Portfolio
Shares 1,066,162
Cost $13,446,082
Market Value...................... -- -- -- -- -- --
Due from Hartford Life Insurance
Company.............................. 1,289 34,817 215,046 34,589 35,476 79,433
Receivable for fund shares sold....... -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Total Assets.......................... 14,861,574 12,169,392 78,268,248 28,406,068 16,303,924 80,572,559
----------- ----------- ----------- ----------- ----------- -----------
LIABILITIES:
Due to Hartford Life Insurance
Company.............................. -- -- -- -- -- --
Payable for fund shares purchased..... 1,720 16,639 33,617 22,518 35,758 77,291
----------- ----------- ----------- ----------- ----------- -----------
Total Liabilities..................... 1,720 16,639 33,617 22,518 35,758 77,291
----------- ----------- ----------- ----------- ----------- -----------
Net Assets (variable annuity contract
liabilities)......................... $14,859,854 $12,152,753 $78,234,631 $28,383,550 $16,268,166 $80,495,268
=========== =========== =========== =========== =========== ===========
<CAPTION>
GLOBAL
EQUITY
SUB-ACCOUNT
-----------
<S> <C>
ASSETS:
Investments in the Morgan Stanley Dean
Witter Select Dimensions Investment
Series:
Money Market Portfolio
Shares 10,834,994
Cost $10,834,994
Market Value...................... --
North American Government Securities
Portfolio
Shares 86,378
Cost $872,727
Market Value...................... --
Balanced Growth Portfolio
Shares 1,015,741
Cost $14,863,445
Market Value...................... --
Utilities Portfolio
Shares 462,270
Cost $7,714,454
Market Value...................... --
Dividend Growth Portfolio
Shares 3,918,333
Cost $71,722,742
Market Value...................... --
Value-Added Market Portfolio
Shares 1,381,279
Cost $21,243,860
Market Value...................... --
Growth Portfolio
Shares 699,117
Cost $12,317,177
Market Value...................... --
American Opportunities Portfolio
Shares 2,469,114
Cost $49,283,138
Market Value...................... --
Global Equity Portfolio
Shares 1,066,162
Cost $13,446,082
Market Value...................... $20,928,768
Due from Hartford Life Insurance
Company.............................. 7,900
Receivable for fund shares sold....... --
-----------
Total Assets.......................... 20,936,668
-----------
LIABILITIES:
Due to Hartford Life Insurance
Company.............................. --
Payable for fund shares purchased..... 7,096
-----------
Total Liabilities..................... 7,096
-----------
Net Assets (variable annuity contract
liabilities)......................... $20,929,572
===========
</TABLE>
---------------------------------------------------- 35
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT THREE
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF ASSETS & LIABILITIES -- (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
DEVELOPING EMERGING DIVERSIFIED MID-CAP
GROWTH MARKETS INCOME EQUITY
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
ASSETS:
Investments in the Morgan Stanley Dean
Witter Select Dimensions Investment
Series:
Developing Growth Portfolio
Shares 334,662
Cost $5,730,184
Market Value...................... $13,399,857 -- -- --
Emerging Markets Portfolio
Shares 125,354
Cost $1,330,305
Market Value...................... -- $1,816,378 -- --
Diversified Income Portfolio
Shares 884,227
Cost $8,985,666
Market Value...................... -- -- $7,922,677 --
Mid-Cap Equity Portfolio
Shares 652,739
Cost $9,835,592
Market Value...................... -- -- -- $14,791,067
Investments in Van Kampen Life
Investment Trust:
Strategic Stock Portfolio
Shares 104,284
Cost $1,227,614
Market Value...................... -- -- -- --
Enterprise Portfolio
Shares 81,999
Cost $1,835,396
Market Value...................... -- -- -- --
Investments in the Morgan Stanley Dean
Witter Universal Funds Inc.:
High Yield Portfolio
Shares 95,293
Cost $1,019,591
Market Value...................... -- -- -- --
Mid-Cap Value Portfolio
Shares 52,228
Cost $750,722
Market Value...................... -- -- -- --
Emerging Markets Debt Portfolio
Shares 10,771
Cost $76,489
Market Value...................... -- -- -- --
Emerging Markets Equity Portfolio
Shares 8,105
Cost $88,782
Market Value...................... -- -- -- --
Active International Allocation
Portfolio
Shares 1,199
Cost $12,998
Market Value...................... -- -- -- --
Fixed Income Portfolio
Shares 4,701
Cost $48,709
Market Value...................... -- -- -- --
Due from Hartford Life Insurance
Company.............................. 4,632 -- 19,088 51,285
Receivable for fund shares sold....... -- 70 -- --
----------- ---------- ---------- -----------
Total Assets.......................... 13,404,489 1,816,448 7,941,765 14,842,352
----------- ---------- ---------- -----------
LIABILITIES:
Due to Hartford Life Insurance
Company.............................. -- 552 -- --
Payable for fund shares purchased..... 4,202 -- 18,693 51,095
----------- ---------- ---------- -----------
Total Liabilities..................... 4,202 552 18,693 51,095
----------- ---------- ---------- -----------
Net Assets (variable annuity contract
liabilities)......................... $13,400,287 $1,815,896 $7,923,072 $14,791,257
=========== ========== ========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 36
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
EMERGING
MID-CAP EMERGING MARKETS
STRATEGIC STOCK ENTERPRISE HIGH YIELD VALUE MARKETS DEBT EQUITY
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- ----------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments in the Morgan Stanley Dean
Witter Select Dimensions Investment
Series:
Developing Growth Portfolio
Shares 334,662
Cost $5,730,184
Market Value...................... -- -- -- -- -- --
Emerging Markets Portfolio
Shares 125,354
Cost $1,330,305
Market Value...................... -- -- -- -- -- --
Diversified Income Portfolio
Shares 884,227
Cost $8,985,666
Market Value...................... -- -- -- -- -- --
Mid-Cap Equity Portfolio
Shares 652,739
Cost $9,835,592
Market Value...................... -- -- -- -- -- --
Investments in Van Kampen Life
Investment Trust:
Strategic Stock Portfolio
Shares 104,284
Cost $1,227,614
Market Value...................... $1,223,252 -- -- -- -- --
Enterprise Portfolio
Shares 81,999
Cost $1,835,396
Market Value...................... -- $2,141,007 -- -- -- --
Investments in the Morgan Stanley Dean
Witter Universal Funds Inc.:
High Yield Portfolio
Shares 95,293
Cost $1,019,591
Market Value...................... -- -- $975,803 -- -- --
Mid-Cap Value Portfolio
Shares 52,228
Cost $750,722
Market Value...................... -- -- -- $815,807 -- --
Emerging Markets Debt Portfolio
Shares 10,771
Cost $76,489
Market Value...................... -- -- -- -- $74,425 --
Emerging Markets Equity Portfolio
Shares 8,105
Cost $88,782
Market Value...................... -- -- -- -- -- $112,198
Active International Allocation
Portfolio
Shares 1,199
Cost $12,998
Market Value...................... -- -- -- -- -- --
Fixed Income Portfolio
Shares 4,701
Cost $48,709
Market Value...................... -- -- -- -- -- --
Due from Hartford Life Insurance
Company.............................. 2,302 16,865 -- 2,509 -- 4,989
Receivable for fund shares sold....... -- -- -- -- -- --
---------- ---------- -------- -------- ------- --------
Total Assets.......................... 1,225,554 2,157,872 975,803 818,316 74,425 117,187
---------- ---------- -------- -------- ------- --------
LIABILITIES:
Due to Hartford Life Insurance
Company.............................. -- -- 38 -- 12 --
Payable for fund shares purchased..... 2,300 16,864 -- 2,512 -- 4,994
---------- ---------- -------- -------- ------- --------
Total Liabilities..................... 2,300 16,864 38 2,512 12 4,994
---------- ---------- -------- -------- ------- --------
Net Assets (variable annuity contract
liabilities)......................... $1,223,254 $2,141,008 $975,765 $815,804 $74,413 $112,193
========== ========== ======== ======== ======= ========
<CAPTION>
ACTIVE
INTERNATIONAL FIXED
ALLOCATION INCOME
SUB-ACCOUNT SUB-ACCOUNT
------------- -----------
<S> <C> <C>
ASSETS:
Investments in the Morgan Stanley Dean
Witter Select Dimensions Investment
Series:
Developing Growth Portfolio
Shares 334,662
Cost $5,730,184
Market Value...................... -- --
Emerging Markets Portfolio
Shares 125,354
Cost $1,330,305
Market Value...................... -- --
Diversified Income Portfolio
Shares 884,227
Cost $8,985,666
Market Value...................... -- --
Mid-Cap Equity Portfolio
Shares 652,739
Cost $9,835,592
Market Value...................... -- --
Investments in Van Kampen Life
Investment Trust:
Strategic Stock Portfolio
Shares 104,284
Cost $1,227,614
Market Value...................... -- --
Enterprise Portfolio
Shares 81,999
Cost $1,835,396
Market Value...................... -- --
Investments in the Morgan Stanley Dean
Witter Universal Funds Inc.:
High Yield Portfolio
Shares 95,293
Cost $1,019,591
Market Value...................... -- --
Mid-Cap Value Portfolio
Shares 52,228
Cost $750,722
Market Value...................... -- --
Emerging Markets Debt Portfolio
Shares 10,771
Cost $76,489
Market Value...................... -- --
Emerging Markets Equity Portfolio
Shares 8,105
Cost $88,782
Market Value...................... -- --
Active International Allocation
Portfolio
Shares 1,199
Cost $12,998
Market Value...................... $14,062 --
Fixed Income Portfolio
Shares 4,701
Cost $48,709
Market Value...................... -- $47,245
Due from Hartford Life Insurance
Company.............................. -- 19,003
Receivable for fund shares sold....... -- --
------- -------
Total Assets.......................... 14,062 66,248
------- -------
LIABILITIES:
Due to Hartford Life Insurance
Company.............................. 2 --
Payable for fund shares purchased..... -- 19,003
------- -------
Total Liabilities..................... 2 19,003
------- -------
Net Assets (variable annuity contract
liabilities)......................... $14,060 $47,245
======= =======
</TABLE>
---------------------------------------------------- 37
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT THREE
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF ASSETS & LIABILITIES -- (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
UNITS
OWNED BY UNIT CONTRACT
PARTICIPANTS PRICE LIABILITY
------------ ---------- ------------
<S> <C> <C> <C>
DEFERRED ANNUITY CONTRACTS IN THE
ACCUMULATION PERIOD:
Money Market Portfolio 1.25%..... 898,360 $12.117281 $ 10,885,676
Money Market Portfolio 1.4%...... 844 12.105339 10,216
Money Market Portfolio 1.5%...... 12,768 10.439293 133,288
North American Government
Securities Portfolio 1.25%...... 71,360 11.870066 847,053
North American Government
Securities Portfolio 1.4%....... 850 11.858359 10,081
Balanced Growth Portfolio
1.25%........................... 813,545 18.230000 14,830,927
Balanced Growth Portfolio 1.4%... 512 18.211833 9,333
Balanced Growth Portfolio 1.5%... 1,781 10.999656 19,594
Utilities Portfolio 1.25%........ 420,088 28.898536 12,139,931
Utilities Portfolio 1.4%......... 444 28.869918 12,822
Dividend Growth Portfolio
1.25%........................... 3,173,799 24.630777 78,173,127
Dividend Growth Portfolio 1.5%... 5,721 10.750975 61,504
Value-Added Market Portfolio
1.25%........................... 1,282,502 21.944514 28,143,875
Value-Added Market Portfolio
1.5%............................ 442 11.871109 5,249
Growth Portfolio 1.25%........... 638,375 25.416166 16,225,039
Growth Portfolio 1.4%............ 492 25.390936 12,486
Growth Portfolio 1.5%............ 2,068 14.820183 30,641
American Opportunities Portfolio
1.25%........................... 2,034,217 39.531891 80,416,445
American Opportunities Portfolio
1.5%............................ 4,609 17.103552 78,823
Global Equity Portfolio 1.25%.... 1,056,399 19.732589 20,845,479
Global Equity Portfolio 1.4%..... 618 19.713070 12,185
Global Equity Portfolio 1.5%..... 5,203 13.820388 71,908
Developing Growth Portfolio
1.25%........................... 345,453 38.573629 13,325,390
Developing Growth Portfolio
1.4%............................ 454 38.535362 17,499
Developing Growth Portfolio
1.5%............................ 2,790 20.576241 57,398
Emerging Markets Portfolio
1.25%........................... 124,693 14.444234 1,801,096
Emerging Markets Portfolio
1.4%............................ 1,026 14.429938 14,800
Diversified Income Portfolio
1.25%........................... 645,224 12.174809 7,855,479
Diversified Income Portfolio
1.4%............................ 799 12.162658 9,721
Diversified Income Portfolio
1.5%............................ 6,006 9.6353060 57,872
Mid-Cap Equity Portfolio 1.25%... 654,210 22.567847 14,764,106
Mid-Cap Equity Portfolio 1.4%.... 747 22.545394 16,834
Mid-Cap Equity Portfolio 1.5%.... 520 19.825174 10,317
Strategic Stock Portfolio
1.25%........................... 120,348 10.093336 1,214,717
Strategic Stock Portfolio 1.4%... 847 10.083303 8,537
Enterprise Portfolio 1.25%....... 161,076 13.219240 2,129,303
Enterprise Portfolio 1.4%........ 886 13.206158 11,705
High Yield Portfolio 1.25%....... 89,967 10.554381 949,541
High Yield Portfolio 1.4%........ 951 10.543954 10,029
High Yield Portfolio 1.5%........ 1,538 10.531861 16,195
Mid-Cap Value Portfolio 1.25%.... 67,052 11.977275 803,096
Mid-Cap Value Portfolio 1.4%..... 935 11.965487 11,191
Mid-Cap Value Portfolio 1.5%..... 115 13.235353 1,517
Emerging Markets Debt Portfolio
1.25%........................... 7,335 8.615091 63,188
Emerging Markets Debt Portfolio
1.4%............................ 1,304 8.606516 11,225
Emerging Markets Equity Portfolio
1.25%........................... 7,681 14.353528 110,254
Emerging Markets Equity Portfolio
1.4%............................ 100 14.346777 1,435
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 38
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
UNITS
OWNED BY UNIT CONTRACT
PARTICIPANTS PRICE LIABILITY
------------ ---------- ------------
<S> <C> <C> <C>
Emerging Markets Equity Portfolio
1.5%............................ 35 $14.342270 $ 504
Active International Allocation
Portfolio 1.25%................. 1,100 11.718265 12,889
Active International Allocation
Portfolio 1.4%.................. 100 11.713372 1,171
Fixed Income Portfolio 1.25%..... 4,594 10.065310 46,239
Fixed Income Portfolio 1.4%...... 100 10.060554 1,006
------------
SUB-TOTAL........................ 306,309,936
------------
ANNUITY CONTRACTS IN THE ANNUITY
PERIOD:
Value Added Market Portfolio..... 10,683 21.944514 234,426
------------
SUB-TOTAL........................ 234,426
------------
GRAND TOTAL:....................... $306,544,362
============
</TABLE>
---------------------------------------------------- 39
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT THREE
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
NORTH AMERICAN
GOVERNMENT
MONEY MARKET SECURITIES
SUB-ACCOUNT SUB-ACCOUNT
------------ --------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 453,480 $ 37,573
EXPENSES:
Mortality and expense
undertakings.......... (121,885) (10,397)
--------- --------
Net investment income
(loss).............. 331,595 27,176
--------- --------
CAPITAL GAINS INCOME..... -- --
--------- --------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... -- 10
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- (9,535)
--------- --------
Net gain (loss) on
investments......... -- (9,525)
--------- --------
Net increase
(decrease) in net
assets resulting
from operations..... $ 331,595 $ 17,651
========= ========
</TABLE>
* Formerly American Value Sub-Account; change effective May 1, 1999.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 40
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
BALANCED DIVIDEND VALUE-ADDED AMERICAN GLOBAL
GROWTH UTILITIES GROWTH MARKET GROWTH OPPORTUNITIES EQUITY
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT
------------- ----------- ----------- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 422,153 $ 130,397 $ 1,535,011 $ 303,667 $ 409 $ 167,998 $ 61,943
EXPENSES:
Mortality and expense
undertakings.......... (173,579) (102,674) (1,046,636) (345,779) (115,581) (651,253) (210,399)
----------- ---------- ----------- ---------- ---------- ----------- ----------
Net investment income
(loss).............. 248,574 27,723 488,375 (42,112) (115,172) (483,255) (148,456)
----------- ---------- ----------- ---------- ---------- ----------- ----------
CAPITAL GAINS INCOME..... 1,553,466 56,259 7,395,476 977,166 672,780 4,737,700 --
----------- ---------- ----------- ---------- ---------- ----------- ----------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... (3,262) 5,342 (480,235) 147,338 14,773 50,287 56,665
Net unrealized
appreciation
(depreciation) of
investments during the
period................ (1,541,041) 3,157,171 (8,423,738) 1,690,184 2,912,991 21,722,063 5,133,613
----------- ---------- ----------- ---------- ---------- ----------- ----------
Net gain (loss) on
investments......... (1,544,303) 3,162,513 (8,903,973) 1,837,522 2,927,764 21,772,350 5,190,278
----------- ---------- ----------- ---------- ---------- ----------- ----------
Net increase
(decrease) in net
assets resulting
from operations..... $ 257,737 $3,246,495 $(1,020,122) $2,772,576 $3,485,372 $26,026,795 $5,041,822
=========== ========== =========== ========== ========== =========== ==========
</TABLE>
* Formerly American Value Sub-Account; change effective May 1, 1999.
---------------------------------------------------- 41
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT THREE
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
DEVELOPING EMERGING DIVERSIFIED MID-CAP
GROWTH MARKETS INCOME EQUITY
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT***
----------- ----------- ------------ --------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 4,411 $ 2,473 $ 845,355 $ 18,309
EXPENSES:
Mortality and expense
undertakings.......... (100,942) (16,864) (123,142) (57,238)
---------- -------- ----------- ----------
Net investment (loss)
income.............. (96,531) (14,391) 722,213 (38,929)
---------- -------- ----------- ----------
CAPITAL GAINS INCOME..... -- -- -- --
---------- -------- ----------- ----------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 62,233 (21,948) (307,806) 38,623
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 6,141,966 877,750 (731,936) 4,731,989
---------- -------- ----------- ----------
Net gain (loss) on
investments......... 6,204,199 855,802 (1,039,742) 4,770,612
---------- -------- ----------- ----------
Net increase
(decrease) in net
assets resulting
from operations..... $6,107,668 $841,411 $ (317,529) $4,731,683
========== ======== =========== ==========
</TABLE>
* From inception, September 7, 1999, to December 31, 1999.
** From inception, September 20, 1999, to December 31, 1999.
*** Formerly Mid-Cap Growth Sub-Account; change effective September 8, 1999.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 42
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
ACTIVE
MID-CAP EMERGING EMERGING MARKETS INTERNATIONAL
STRATEGIC STOCK ENTERPRISE HIGH YIELD VALUE MARKETS DEBT EQUITY ALLOCATION
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT**
--------------- ----------- ----------- ----------- ------------ ---------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 7,539 $ 1,033 $ 72,135 $ 1,154 $ 7,432 $-- $ 32
EXPENSES:
Mortality and expense
undertakings.......... (11,779) (10,732) (8,761) (7,134) (494) (197) (20)
-------- -------- -------- -------- ------- ------- ------
Net investment (loss)
income.............. (4,240) (9,699) 63,374 (5,980) 6,938 (197) 12
-------- -------- -------- -------- ------- ------- ------
CAPITAL GAINS INCOME..... 1,974 24,329 -- 90,470 -- -- --
-------- -------- -------- -------- ------- ------- ------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 4,505 1,734 514 1,429 710 1 --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ (42,314) 296,782 (28,866) 34,523 2,962 23,416 1,064
-------- -------- -------- -------- ------- ------- ------
Net gain (loss) on
investments......... (37,809) 298,516 (28,352) 35,952 3,672 23,417 1,064
-------- -------- -------- -------- ------- ------- ------
Net increase
(decrease) in net
assets resulting
from operations..... $(40,075) $313,146 $ 35,022 $120,442 $10,610 $23,220 $1,076
======== ======== ======== ======== ======= ======= ======
<CAPTION>
FIXED INCOME
SUB-ACCOUNT*
------------
<S> <C>
INVESTMENT INCOME:
Dividends.............. $ 1,263
EXPENSES:
Mortality and expense
undertakings.......... (39)
-------
Net investment (loss)
income.............. 1,224
-------
CAPITAL GAINS INCOME..... --
-------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ (1,464)
-------
Net gain (loss) on
investments......... (1,464)
-------
Net increase
(decrease) in net
assets resulting
from operations..... $ (240)
=======
</TABLE>
* From inception, September 7, 1999, to December 31, 1999.
** From inception, September 20, 1999, to December 31, 1999.
*** Formerly Mid-Cap Growth Sub-Account; change effective September 8, 1999.
---------------------------------------------------- 43
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT THREE
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
NORTH AMERICAN
MONEY GOVERNMENT
MARKET SECURITIES
SUB-ACCOUNT SUB-ACCOUNT
----------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 331,595 $ 27,176
Capital gains income... -- --
Net realized gain
(loss) on security
transactions.......... -- 10
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- (9,535)
----------- --------
Net increase (decrease)
in net assets
resulting from
operations............ 331,595 17,651
----------- --------
UNIT TRANSACTIONS:
Purchases.............. 961,634 118,516
Net transfers.......... 2,133,467 (88,334)
Surrenders for benefit
payments and fees..... (2,078,551) (33,876)
Net annuity
transactions.......... -- --
----------- --------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 1,016,550 (3,694)
----------- --------
Total increase
(decrease) in net
assets................ 1,348,145 13,957
NET ASSETS:
Beginning of period.... 9,681,035 843,177
----------- --------
End of period.......... $11,029,180 $857,134
=========== ========
</TABLE>
* Formerly American Value Sub-Account; change effective May 1, 1999.
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
NORTH AMERICAN
MONEY GOVERNMENT
MARKET SECURITIES
SUB-ACCOUNT SUB-ACCOUNT
----------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 284,732 $ 16,349
Capital gains income... -- --
Net realized gain
(loss) on security
transactions.......... -- (53)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- (1,035)
----------- --------
Net increase (decrease)
in net assets
resulting from
operations............ 284,732 15,261
----------- --------
UNIT TRANSACTIONS:
Purchases.............. 2,269,367 193,291
Net transfers.......... (103,876) 228,171
Surrenders for benefit
payments and fees..... (1,077,714) (4,597)
Net annuity
transactions.......... -- --
----------- --------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 1,087,777 416,865
----------- --------
Total increase
(decrease) in net
assets................ 1,372,509 432,126
NET ASSETS:
Beginning of period.... 8,308,526 411,051
----------- --------
End of period.......... $ 9,681,035 $843,177
=========== ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 44
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
BALANCED DIVIDEND VALUE-ADDED AMERICAN GLOBAL
GROWTH UTILITIES GROWTH MARKET GROWTH OPPORTUNITIES EQUITY
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT
------------- ------------- ------------- ------------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 248,574 $ 27,723 $ 488,375 $ (42,112) $ (115,172) $ (483,255) $ (148,456)
Capital gains income... 1,553,466 56,259 7,395,476 977,166 672,780 4,737,700 --
Net realized gain
(loss) on security
transactions.......... (3,262) 5,342 (480,235) 147,338 14,773 50,287 56,665
Net unrealized
appreciation
(depreciation) of
investments during the
period................ (1,541,041) 3,157,171 (8,423,738) 1,690,184 2,912,991 21,722,063 5,133,613
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease)
in net assets
resulting from
operations............ 257,737 3,246,495 (1,020,122) 2,772,576 3,485,372 26,026,795 5,041,822
----------- ----------- ----------- ----------- ----------- ----------- -----------
UNIT TRANSACTIONS:
Purchases.............. 1,091,899 952,747 6,247,531 1,214,225 1,471,933 6,686,946 906,595
Net transfers.......... 1,937,530 2,307,769 (843,289) (1,516,592) 6,172,061 12,687,722 125,377
Surrenders for benefit
payments and fees..... (1,044,321) (497,161) (4,356,589) (1,148,148) (432,263) (2,669,417) (929,440)
Net annuity
transactions.......... -- -- -- (85,175) -- -- --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 1,985,108 2,763,355 1,047,653 (1,535,690) 7,211,731 16,705,251 102,532
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total increase
(decrease) in net
assets................ 2,242,845 6,009,850 27,531 1,236,886 10,697,103 42,732,046 5,144,354
NET ASSETS:
Beginning of period.... 12,617,009 6,142,903 78,207,100 27,146,664 5,571,063 37,763,222 15,785,218
----------- ----------- ----------- ----------- ----------- ----------- -----------
End of period.......... $14,859,854 $12,152,753 $78,234,631 $28,383,550 $16,268,166 $80,495,268 $20,929,572
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
* Formerly American Value Sub-Account; change effective May 1, 1999.
<TABLE>
<CAPTION>
BALANCED DIVIDEND VALUE-ADDED AMERICAN GLOBAL
GROWTH UTILITIES GROWTH MARKET GROWTH OPPORTUNITIES EQUITY
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT
------------- ------------- ------------- ------------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 122,516 $ 27,361 $ 302,194 $ (50,454) $ (61,332) $ (197,687) $ (13,504)
Capital gains income... 182,182 40,060 2,757,300 348,777 117,693 2,346,274 51,144
Net realized gain
(loss) on security
transactions.......... (246) 2,661 (39,000) 1,753 (176) (25,094) (35,419)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 757,197 764,558 7,466,831 2,080,349 465,996 5,191,767 1,627,845
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease)
in net assets
resulting from
operations............ 1,061,649 834,640 10,487,325 2,380,425 522,181 7,315,260 1,630,066
----------- ----------- ----------- ----------- ----------- ----------- -----------
UNIT TRANSACTIONS:
Purchases.............. 2,390,416 1,685,047 9,969,087 3,221,008 853,950 6,155,199 1,794,138
Net transfers.......... 3,698,381 1,330,554 8,540,385 1,399,020 760,745 4,983,345 764,415
Surrenders for benefit
payments and fees..... (379,911) (179,107) (3,044,996) (495,307) (123,045) (1,080,611) (496,235)
Net annuity
transactions.......... -- -- -- (79,558) -- -- --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 5,708,886 2,836,494 15,464,476 4,045,163 1,491,650 10,057,933 2,062,318
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total increase
(decrease) in net
assets................ 6,770,535 3,671,134 25,951,801 6,425,588 2,013,831 17,373,193 3,692,384
NET ASSETS:
Beginning of period.... 5,846,474 2,471,769 52,255,299 20,721,076 3,557,232 20,390,029 12,092,834
----------- ----------- ----------- ----------- ----------- ----------- -----------
End of period.......... $12,617,009 $ 6,142,903 $78,207,100 $27,146,664 $ 5,571,063 $37,763,222 $15,785,218
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
---------------------------------------------------- 45
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT THREE
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
DEVELOPING EMERGING DIVERSIFIED MID-CAP
GROWTH MARKETS INCOME EQUITY
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT****
----------- ----------- ----------- ---------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ (96,531) $ (14,391) $ 722,213 $ (38,929)
Capital gains income.................. -- -- -- --
Net realized gain (loss) on security
transactions......................... 62,233 (21,948) (307,806) 38,623
Net unrealized appreciation
(depreciation) of investments during
the period........................... 6,141,966 877,750 (731,936) 4,731,989
----------- ---------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations............ 6,107,668 841,411 (317,529) 4,731,683
----------- ---------- ----------- -----------
UNIT TRANSACTIONS:
Purchases............................. 429,979 60,700 474,843 631,223
Net transfers......................... 297,879 (124,138) (4,195,328) 6,606,745
Surrenders for benefit payments and
fees................................. (363,226) (127,471) (747,492) (307,651)
Net annuity transactions.............. -- -- -- --
----------- ---------- ----------- -----------
Net increase (decrease) in net assets
resulting from unit transactions..... 364,632 (190,909) (4,467,977) 6,930,317
----------- ---------- ----------- -----------
Total increase (decrease) in net
assets............................... 6,472,300 650,502 (4,785,506) 11,662,000
NET ASSETS:
Beginning of period................... 6,927,987 1,165,394 12,708,578 3,129,257
----------- ---------- ----------- -----------
End of period......................... $13,400,287 $1,815,896 $ 7,923,072 $14,791,257
=========== ========== =========== ===========
</TABLE>
** From inception, September 7, 1999, to December 31, 1999.
*** From inception, September 20, 1999, to December 31, 1999.
**** Formerly Mid-Cap Growth Sub-Account; change effective September 8, 1999.
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
DEVELOPING EMERGING DIVERSIFIED MID-CAP
GROWTH MARKETS INCOME EQUITY
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT****
------------ ------------ ------------ ---------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ (78,216) $ (2,506) $ 598,968 $ (19,069)
Capital gains income.................. 9,991 3,882 13,039 22,379
Net realized gain (loss) on security
transactions......................... (50,218) (98,895) (542) (12,301)
Net unrealized appreciation
(depreciation) of investments during
the period........................... 565,818 (425,945) (374,577) 93,824
----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations............ 447,375 (523,464) 236,888 84,833
----------- ----------- ----------- -----------
UNIT TRANSACTIONS:
Purchases............................. 465,093 108,809 1,329,914 627,674
Net transfers......................... (500,337) (289,983) 5,025,623 733,380
Surrenders for benefit payments and
fees................................. (302,821) (93,209) (573,911) (92,782)
Net annuity transactions.............. -- -- -- --
----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from unit transactions..... (338,065) (274,383) 5,781,626 1,268,272
----------- ----------- ----------- -----------
Total increase (decrease) in net
assets............................... 109,310 (797,847) 6,018,514 1,353,105
NET ASSETS:
Beginning of period................... 6,818,677 1,963,241 6,690,064 1,776,152
----------- ----------- ----------- -----------
End of period......................... $ 6,927,987 $ 1,165,394 $12,708,578 $ 3,129,257
=========== =========== =========== ===========
</TABLE>
* From inception, April 1, 1998, to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 46
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
MID-CAP EMERGING
STRATEGIC STOCK ENTERPRISE HIGH YIELD VALUE MARKETS DEBT
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ (4,240) $ (9,699) $ 63,374 $ (5,980) $ 6,938
Capital gains income.................. 1,974 24,329 -- 90,470 --
Net realized gain (loss) on security
transactions......................... 4,505 1,734 514 1,429 710
Net unrealized appreciation
(depreciation) of investments during
the period........................... (42,314) 296,782 (28,866) 34,523 2,962
---------- ----------- ----------- ----------- -------
Net increase (decrease) in net assets
resulting from operations............ (40,075) 313,146 35,022 120,442 10,610
---------- ----------- ----------- ----------- -------
UNIT TRANSACTIONS:
Purchases............................. 254,441 757,512 134,347 127,131 30,692
Net transfers......................... 438,182 1,024,173 414,668 201,334 23,041
Surrenders for benefit payments and
fees................................. (111,302) (30,878) (31,559) (41,098) (8,683)
Net annuity transactions.............. -- -- -- -- --
---------- ----------- ----------- ----------- -------
Net increase (decrease) in net assets
resulting from unit transactions..... 581,321 1,750,807 517,456 287,367 45,050
---------- ----------- ----------- ----------- -------
Total increase (decrease) in net
assets............................... 541,246 2,063,953 552,478 407,809 55,660
NET ASSETS:
Beginning of period................... 682,008 77,055 423,287 407,995 18,753
---------- ----------- ----------- ----------- -------
End of period......................... $1,223,254 $ 2,141,008 $ 975,765 $ 815,804 $74,413
========== =========== =========== =========== =======
<CAPTION>
EMERGING ACTIVE
MARKETS INTERNATIONAL FIXED
EQUITY ALLOCATION INCOME
SUB-ACCOUNT** SUB-ACCOUNT*** SUB-ACCOUNT**
------------- -------------- -------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ (197) $ 12 $ 1,224
Capital gains income.................. -- -- --
Net realized gain (loss) on security
transactions......................... 1 -- --
Net unrealized appreciation
(depreciation) of investments during
the period........................... 23,416 1,064 (1,464)
---------- ------- ---------
Net increase (decrease) in net assets
resulting from operations............ 23,220 1,076 (240)
---------- ------- ---------
UNIT TRANSACTIONS:
Purchases............................. 7,000 12,988 2,090
Net transfers......................... 83,321 -- 45,400
Surrenders for benefit payments and
fees................................. (1,348) (4) (5)
Net annuity transactions.............. -- -- --
---------- ------- ---------
Net increase (decrease) in net assets
resulting from unit transactions..... 88,973 12,984 47,485
---------- ------- ---------
Total increase (decrease) in net
assets............................... 112,193 14,060 47,245
NET ASSETS:
Beginning of period................... -- -- --
---------- ------- ---------
End of period......................... $ 112,193 $14,060 $ 47,245
========== ======= =========
</TABLE>
<TABLE>
<CAPTION>
MID-CAP EMERGING
STRATEGIC STOCK ENTERPRISE HIGH YIELD VALUE MARKETS DEBT
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT*
--------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss).......... $ (2,753) $ (237) $ 15,995 $ (635) $ 1,977
Capital gains income.................. -- -- 3,182 8,170 --
Net realized gain (loss) on security
transactions......................... (321) 820 (924) (287) (11,790)
Net unrealized appreciation
(depreciation) of investments during
the period........................... 37,952 8,829 (14,922) 30,563 (5,026)
----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations............ 34,878 9,412 3,331 37,811 (14,839)
----------- ----------- ----------- ----------- -----------
UNIT TRANSACTIONS:
Purchases............................. 280,816 32,385 303,764 152,667 54,001
Net transfers......................... 367,384 36,080 117,154 219,693 (20,302)
Surrenders for benefit payments and
fees................................. (1,070) (822) (962) (2,176) (107)
Net annuity transactions.............. -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from unit transactions..... 647,130 67,643 419,956 370,184 33,592
----------- ----------- ----------- ----------- -----------
Total increase (decrease) in net
assets............................... 682,008 77,055 423,287 407,995 18,753
NET ASSETS:
Beginning of period................... -- -- -- -- --
----------- ----------- ----------- ----------- -----------
End of period......................... $ 682,008 $ 77,055 $ 423,287 $ 407,995 $ 18,753
=========== =========== =========== =========== ===========
</TABLE>
---------------------------------------------------- 47
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT THREE
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. ORGANIZATION:
Separate Account Three (the Account) is a separate investment account within
Hartford Life Insurance Company (the Company) and is registered with the
Securities and Exchange Commission (SEC) as a unit investment trust under
the Investment Company Act of 1940, as amended. Both the Company and the
Account are subject to supervision and regulation by the Department of
Insurance of the State of Connecticut and the SEC. The Account invests
deposits by variable annuity contractowners of the Company in various mutual
funds (the Funds) as directed by the contractowners.
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
dividends from the Funds which are characterized as capital gains under
tax regulations.
b) SECURITY VALUATION--The investments in shares of the Morgan Stanley Dean
Witter Select Dimensions Investment Series, the Van Kampen Life
Investment Trust, and the Morgan Stanley Dean Witter Universal Funds,
Inc., are valued at the closing net asset value per share as determined
by the appropriate Fund as of December 31, 1999.
c) UNIT TRANSACTIONS--Unit transactions are executed based on the unit
values calculated at the close of the business day.
d) FEDERAL INCOME TAXES--The operations of the Account form a part of, and
are taxed with, the total operations of the Company, which is taxed as an
insurance company under the Internal Revenue Code. Under current law, no
Federal income taxes are payable with respect to the operations of the
Account.
e) USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and the reported
amounts of income and expenses during the period. Operating results in
the future could vary from the amounts derived from management's
estimates.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
a) MORTALITY AND EXPENSE UNDERTAKINGS--The Company, as issuer of variable
annuity contracts, provides the mortality and expense undertakings and,
with respect to the Account, receives a maximum annual fee of up to 1.25%
of the Account's average daily net assets. The Company also provides
administrative services and receives an annual fee of 0.15% of the
Account's average daily net assets.
b) DEDUCTION OF ANNUAL MAINTENANCE FEE--Annual maintenance fees are deducted
through termination of units of interest from applicable contract owners'
accounts, in accordance with the terms of the contracts. These charges
are reflected in surrenders for benefit payments and fees on the
accompanying statements of changes in net assets.
______________________________________ 48 ______________________________________
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
TO HARTFORD LIFE INSURANCE COMPANY
SEPARATE ACCOUNT THREE AND TO THE OWNERS OF UNITS OF INTEREST THEREIN:
We have audited the accompanying statements of assets and liabilities of
Hartford Life Insurance Company Separate Account Three (Money Market, North
American Government Securities, Balanced Growth, Utilities, Dividend Growth,
Value-Added Market, Growth, American Opportunities, Global Equity, Developing
Growth, Emerging Markets, Diversified Income, Mid-Cap Equity, Strategic Stock,
Enterprise, High Yield, Mid-Cap Value, Emerging Markets Debt, Emerging Markets
Equity, Active International Allocation, and Fixed Income sub-accounts),
(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 its operations and the changes in its net assets for
the periods presented in conformity with generally accepted accounting
principles.
Hartford, Connecticut
February 17, 2000 ARTHUR ANDERSEN LLP
______________________________________ 49 ______________________________________
<PAGE>
SEPARATE ACCOUNT FIVE
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF ASSETS & LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
NORTH AMERICAN
MONEY GOVERNMENT
MARKET SECURITIES
SUB-ACCOUNT SUB-ACCOUNT
----------- --------------
<S> <C> <C>
ASSETS:
Investments in the
Morgan Stanley Dean
Witter Select
Dimensions Investment
Series:
Money Market
Portfolio
Shares 57,384
Cost $57,384
Market Value....... $57,384 --
North American
Government
Securities Portfolio
Shares 112
Cost $1,126
Market Value....... -- $1,124
Balanced Growth
Portfolio
Shares 201
Cost $2,835
Market Value....... -- --
Utilities Portfolio
Shares 1,337
Cost $22,583
Market Value....... -- --
Dividend Growth
Portfolio
Shares 5,939
Cost $118,514
Market Value....... -- --
Value-Added Market
Portfolio
Shares 1,198
Cost $23,086
Market Value....... -- --
Growth Portfolio
Shares 78
Cost $1,153
Market Value....... -- --
American
Opportunities
Portfolio
Shares 2,313
Cost $48,168
Market Value....... -- --
Global Equity
Portfolio
Shares 2,599
Cost $37,175
Market Value....... -- --
Developing Growth
Portfolio
Shares 1,933
Cost $36,861
Market Value....... -- --
Due from Hartford Life
Insurance Company..... -- --
Receivable for fund
shares sold........... -- --
------- ------
Total Assets........... 57,384 1,124
------- ------
LIABILITIES:
Due to Hartford Life
Insurance Company..... -- --
Payable for fund shares
purchased............. -- --
------- ------
Total Liabilities...... -- --
------- ------
Net Assets (variable
life contract
liabilities).......... $57,384 $1,124
======= ======
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 50
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
BALANCED DIVIDEND VALUE-ADDED AMERICAN GLOBAL DEVELOPING
GROWTH UTILITIES GROWTH MARKET GROWTH OPPORTUNITIES EQUITY GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments in the
Morgan Stanley Dean
Witter Select
Dimensions Investment
Series:
Money Market
Portfolio
Shares 57,384
Cost $57,384
Market Value....... -- -- -- -- -- -- -- --
North American
Government
Securities Portfolio
Shares 112
Cost $1,126
Market Value....... -- -- -- -- -- -- -- --
Balanced Growth
Portfolio
Shares 201
Cost $2,835
Market Value....... $2,935 -- -- -- -- -- -- --
Utilities Portfolio
Shares 1,337
Cost $22,583
Market Value....... -- $35,102 -- -- -- -- -- --
Dividend Growth
Portfolio
Shares 5,939
Cost $118,514
Market Value....... -- -- $118,311 -- -- -- -- --
Value-Added Market
Portfolio
Shares 1,198
Cost $23,086
Market Value....... -- -- -- $24,606 -- -- -- --
Growth Portfolio
Shares 78
Cost $1,153
Market Value....... -- -- -- -- $1,808 -- -- --
American
Opportunities
Portfolio
Shares 2,313
Cost $48,168
Market Value....... -- -- -- -- -- $75,411 -- --
Global Equity
Portfolio
Shares 2,599
Cost $37,175
Market Value....... -- -- -- -- -- -- $51,021 --
Developing Growth
Portfolio
Shares 1,933
Cost $36,861
Market Value....... -- -- -- -- -- -- -- $77,410
Due from Hartford Life
Insurance Company..... -- -- -- -- -- -- -- --
Receivable for fund
shares sold........... -- -- -- -- -- -- -- --
------ ------- -------- ------- ------ ------- ------- -------
Total Assets........... 2,935 35,102 118,311 24,606 1,808 75,411 51,021 77,410
------ ------- -------- ------- ------ ------- ------- -------
LIABILITIES:
Due to Hartford Life
Insurance Company..... -- -- -- -- -- -- 1 --
Payable for fund shares
purchased............. -- -- -- -- -- -- -- --
------ ------- -------- ------- ------ ------- ------- -------
Total Liabilities...... -- -- -- -- -- -- 1 --
------ ------- -------- ------- ------ ------- ------- -------
Net Assets (variable
life contract
liabilities).......... $2,935 $35,102 $118,311 $24,606 $1,808 $75,411 $51,020 $77,410
====== ======= ======== ======= ====== ======= ======= =======
</TABLE>
---------------------------------------------------- 51
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT FIVE
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF ASSETS & LIABILITIES -- (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
EMERGING DIVERSIFIED
MARKETS INCOME
SUB-ACCOUNT SUB-ACCOUNT
----------- -----------
<S> <C> <C>
ASSETS:
Investments in the
Morgan Stanley Dean
Witter Select
Dimensions Investment
Series:
Emerging Markets
Portfolio
Shares 83
Cost $1,016
Market Value....... $1,209 --
Diversified Income
Portfolio
Shares 3,273
Cost $33,365
Market Value....... -- $29,322
Mid-Cap Equity
Portfolio
Shares 403
Cost $4,264
Market Value....... -- --
Investments in the
Morgan Stanley Dean
Witter Universal Funds
Inc.:
High Yield Portfolio
Shares 105
Cost $1,149
Market Value....... -- --
Mid-Cap Value
Portfolio
Shares 78
Cost $1,179
Market Value....... -- --
Emerging Markets Debt
Portfolio
Shares 2,576
Cost $23,778
Market Value....... -- --
Investments in Van
Kampen Life Investment
Trust:
Strategic Stock
Portfolio
Shares 88
Cost $1,013
Market Value....... -- --
Enterprise Portfolio
Shares 51
Cost $1,081
Market Value....... -- --
Due from Hartford Life
Insurance Company..... -- --
Receivable for fund
shares sold........... -- --
------ -------
Total Assets........... 1,209 29,322
------ -------
LIABILITIES:
Due to Hartford Life
Insurance Company..... -- --
Payable for fund shares
purchased............. -- --
------ -------
Total Liabilities...... -- --
------ -------
Net Assets (variable
life contract
liabilities).......... $1,209 $29,322
====== =======
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 52
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
MID-CAP MID-CAP EMERGING
EQUITY HIGH YIELD VALUE MARKETS DEBT STRATEGIC STOCK ENTERPRISE
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ------------ --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments in the
Morgan Stanley Dean
Witter Select
Dimensions Investment
Series:
Emerging Markets
Portfolio
Shares 83
Cost $1,016
Market Value....... -- -- -- -- -- --
Diversified Income
Portfolio
Shares 3,273
Cost $33,365
Market Value....... -- -- -- -- -- --
Mid-Cap Equity
Portfolio
Shares 403
Cost $4,264
Market Value....... $9,125 -- -- -- -- --
Investments in the
Morgan Stanley Dean
Witter Universal Funds
Inc.:
High Yield Portfolio
Shares 105
Cost $1,149
Market Value....... -- $1,077 -- -- -- --
Mid-Cap Value
Portfolio
Shares 78
Cost $1,179
Market Value....... -- -- $1,213 -- -- --
Emerging Markets Debt
Portfolio
Shares 2,576
Cost $23,778
Market Value....... -- -- -- $17,803 -- --
Investments in Van
Kampen Life Investment
Trust:
Strategic Stock
Portfolio
Shares 88
Cost $1,013
Market Value....... -- -- -- -- $1,028 --
Enterprise Portfolio
Shares 51
Cost $1,081
Market Value....... -- -- -- -- -- $1,334
Due from Hartford Life
Insurance Company..... -- -- -- -- -- --
Receivable for fund
shares sold........... -- -- -- -- -- --
------ ------ ------ ------- ------ ------
Total Assets........... 9,125 1,077 1,213 17,803 1,028 1,334
------ ------ ------ ------- ------ ------
LIABILITIES:
Due to Hartford Life
Insurance Company..... -- -- -- -- -- --
Payable for fund shares
purchased............. -- -- -- -- -- --
------ ------ ------ ------- ------ ------
Total Liabilities...... -- -- -- -- -- --
------ ------ ------ ------- ------ ------
Net Assets (variable
life contract
liabilities).......... $9,125 $1,077 $1,213 $17,803 $1,028 $1,334
====== ====== ====== ======= ====== ======
</TABLE>
---------------------------------------------------- 53
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT FIVE
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF ASSETS & LIABILITIES -- (CONTINUED)
DECEMBER 31, 1999
<TABLE>
<CAPTION>
UNITS
OWNED BY UNIT CONTRACT
PARTICIPANTS PRICE LIABILITY
------------ ------------ ----------
<S> <C> <C> <C>
VARIABLE LIFE CONTRACTS:
Money Market Portfolio........... 50,447 $ 1.137500 $ 57,384
North American Government
Securities Portfolio............ 100 11.235263 1,124
Balanced Growth Portfolio........ 221 13.268484 2,935
Utilities Portfolio.............. 1,623 21.631144 35,102
Dividend Growth Portfolio........ 8,807 13.433818 118,311
Value-Added Market Portfolio..... 1,689 14.569531 24,606
Growth Portfolio................. 100 18.084596 1,808
American Opportunities
Portfolio....................... 2,930 25.733152 75,411
Global Equity Portfolio.......... 3,303 15.446837 51,020
Developing Growth Portfolio...... 3,063 25.271683 77,410
Emerging Markets Portfolio....... 100 12.088774 1,209
Diversified Income Portfolio..... 2,695 10.881692 29,322
Mid-Cap Equity Portfolio......... 380 24.040915 9,125
High Yield Portfolio............. 100 10.767198 1,077
Mid-Cap Value Portfolio.......... 100 12.129625 1,213
Emerging Markets Debt
Portfolio....................... 2,028 8.777081 17,803
Strategic Stock Portfolio........ 100 10.280613 1,028
Enterprise Portfolio............. 100 13.335134 1,334
--------
GRAND TOTAL........................ $507,222
========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 54
----------------------------------------------------
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
SEPARATE ACCOUNT FIVE
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
NORTH AMERICAN
GOVERNMENT
MONEY MARKET SECURITIES
SUB-ACCOUNT SUB-ACCOUNT
------------ --------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends............................. $ 1,496 $ 50
------- ----
Net investment income............... 1,496 50
------- ----
CAPITAL GAINS INCOME.................... -- --
------- ----
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized (loss) gain on security
transactions......................... -- --
Net unrealized (depreciation)
appreciation of investments during
the period........................... -- (13)
------- ----
Net (loss) gain on investments...... -- (13)
------- ----
Net increase (decrease) in net
assets resulting from operations... $ 1,496 $ 37
======= ====
</TABLE>
* Formerly American Value Sub-Account; change effective May 1, 1999.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 56
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
BALANCED DIVIDEND VALUE-ADDED AMERICAN
GROWTH UTILITIES GROWTH MARKET GROWTH OPPORTUNITIES
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT*
----------- ----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends............................. $ 132 $ 484 $ 2,189 $ 276 -$- $ 189
----- ------- -------- ------ ---- -------
Net investment income............... 132 484 2,189 276 -- 189
----- ------- -------- ------ ---- -------
CAPITAL GAINS INCOME.................... 489 211 10,067 903 112 5,387
----- ------- -------- ------ ---- -------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized (loss) gain on security
transactions......................... (31) 729 954 43 -- 889
Net unrealized (depreciation)
appreciation of investments during
the period........................... (447) 9,952 (13,521) 1,623 395 21,069
----- ------- -------- ------ ---- -------
Net (loss) gain on investments...... (478) 10,681 (12,567) 1,666 395 21,958
----- ------- -------- ------ ---- -------
Net increase (decrease) in net
assets resulting from operations... $ 143 $11,376 $ (311) $2,845 $507 $27,534
===== ======= ======== ====== ==== =======
<CAPTION>
GLOBAL DEVELOPING
EQUITY GROWTH
SUB-ACCOUNT SUB-ACCOUNT
----------- -----------
<S> <C> <C>
INVESTMENT INCOME:
Dividends............................. $ 115 $ 28
------- -------
Net investment income............... 115 28
------- -------
CAPITAL GAINS INCOME.................... -- --
------- -------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized (loss) gain on security
transactions......................... 311 1,381
Net unrealized (depreciation)
appreciation of investments during
the period........................... 11,619 37,162
------- -------
Net (loss) gain on investments...... 11,930 38,543
------- -------
Net increase (decrease) in net
assets resulting from operations... $12,045 $38,571
======= =======
</TABLE>
* Formerly American Value Sub-Account; change effective May 1, 1999.
---------------------------------------------------- 57
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT FIVE
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
EMERGING DIVERSIFIED
MARKETS INCOME
SUB-ACCOUNT SUB-ACCOUNT
----------- -----------
<S> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 1 $ 2,609
---- -------
Net investment
income.............. 1 2,609
---- -------
CAPITAL GAINS INCOME..... -- --
---- -------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized (loss)
gain on security
transactions.......... -- (27)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 549 (3,155)
---- -------
Net gain (loss) on
investments......... 549 (3,182)
---- -------
Net increase
(decrease) in net
assets resulting
from operations..... $550 $ (573)
==== =======
</TABLE>
* Formerly Mid-Cap Growth Sub-Account; change effective September 8, 1999.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 58
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
MID-CAP MID-CAP EMERGING
EQUITY HIGH YIELD VALUE MARKETS DEBT STRATEGIC STOCK ENTERPRISE
SUB-ACCOUNT* SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ----------- ----------- ------------ --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 37 $ 81 $ 2 $2,275 $ 10 $ 3
------ ---- ---- ------ ---- ----
Net investment
income.............. 37 81 2 2,275 10 3
------ ---- ---- ------ ---- ----
CAPITAL GAINS INCOME..... -- -- 145 -- 3 78
------ ---- ---- ------ ---- ----
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized (loss)
gain on security
transactions.......... 1,280 -- -- 51 -- --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 4,213 (10) 60 1,949 (18) 193
------ ---- ---- ------ ---- ----
Net gain (loss) on
investments......... 5,493 (10) 60 2,000 (18) 193
------ ---- ---- ------ ---- ----
Net increase
(decrease) in net
assets resulting
from operations..... $5,530 $ 71 $207 $4,275 $ (5) $274
====== ==== ==== ====== ==== ====
</TABLE>
* Formerly Mid-Cap Growth Sub-Account; change effective September 8, 1999.
---------------------------------------------------- 59
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT FIVE
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
NORTH AMERICAN
GOVERNMENT
MONEY MARKET SECURITIES
SUB-ACCOUNT SUB-ACCOUNT
------------ --------------
<S> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 1,496 $ 50
Capital gains income... -- --
Net realized (loss)
gain on security
transactions.......... -- --
Net unrealized
(depreciation)
appreciation of
investments during the
period................ -- (13)
--------- ------
Net increase (decrease)
in net assets
resulting from
operations............ 1,496 37
--------- ------
UNIT TRANSACTIONS:
Purchases.............. 61,367 --
Net transfers.......... (26,487) --
Surrenders for benefit
payments and fees..... (1,394) --
Loan withdrawals....... -- --
Cost of insurance...... (574) --
--------- ------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 32,912 --
--------- ------
Total increase
(decrease) in net
assets................ 34,408 37
NET ASSETS:
Beginning of period.... 22,976 1,087
--------- ------
End of period.......... $ 57,384 $1,124
========= ======
</TABLE>
* Formerly American Value Sub-Account; change effective May 1, 1999.
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
NORTH AMERICAN
GOVERNMENT
MONEY MARKET SECURITIES
SUB-ACCOUNT SUB-ACCOUNT
------------ --------------
<S> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 1,723 $ 47
Capital gains income... -- --
Net realized gain
(loss) on security
transactions.......... -- --
Net unrealized
(depreciation)
appreciationof
investments during the
period................ -- (2)
--------- ------
Net increase (decrease)
in net assets
resulting from
operations............ 1,723 45
--------- ------
UNIT TRANSACTIONS:
Purchases.............. 164,406 --
Net transfers.......... (54,386) --
Surrenders for benefit
payments and fees..... (110,832) --
Loan withdrawals....... -- --
Cost of insurance...... (302) --
--------- ------
Net (decrease) increase
in net assets
resulting from unit
transactions.......... (1,114) --
--------- ------
Total increase
(decrease) in net
assets................ 609 45
NET ASSETS:
Beginning of period.... 22,367 1,042
--------- ------
End of period.......... $ 22,976 $1,087
========= ======
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 60
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
BALANCED DIVIDEND VALUE-ADDED AMERICAN GLOBAL DEVELOPING
GROWTH UTILITIES GROWTH MARKET GROWTH OPPORTUNITIES EQUITY GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 132 $ 484 $ 2,189 $ 276 $-- $ 189 $ 115 $ 28
Capital gains income... 489 211 10,067 903 112 5,387 -- --
Net realized (loss)
gain on security
transactions.......... (31) 729 954 43 -- 889 311 1,381
Net unrealized
(depreciation)
appreciation of
investments during the
period................ (447) 9,952 (13,521) 1,623 395 21,069 11,619 37,162
------ ------- -------- ------- ------ -------- -------- -------
Net increase (decrease)
in net assets
resulting from
operations............ 143 11,376 (311) 2,845 507 27,534 12,045 38,571
------ ------- -------- ------- ------ -------- -------- -------
UNIT TRANSACTIONS:
Purchases.............. -- -- -- -- -- -- -- --
Net transfers.......... -- -- (3,532) -- -- 16,776 13,244 --
Surrenders for benefit
payments and fees..... (1,349) (2,354) (2,344) (1,631) -- (3,044) (1,396) (2,880)
Loan withdrawals....... -- -- -- -- -- -- -- --
Cost of insurance...... (46) (431) (1,890) (370) -- (882) (608) (767)
------ ------- -------- ------- ------ -------- -------- -------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... (1,395) (2,785) (7,766) (2,001) -- 12,850 11,240 (3,647)
------ ------- -------- ------- ------ -------- -------- -------
Total increase
(decrease) in net
assets................ (1,252) 8,591 (8,077) 844 507 40,384 23,285 34,924
NET ASSETS:
Beginning of period.... 4,187 26,511 126,388 23,762 1,301 35,027 27,735 42,486
------ ------- -------- ------- ------ -------- -------- -------
End of period.......... $2,935 $35,102 $118,311 $24,606 $1,808 $ 75,411 $ 51,020 $77,410
====== ======= ======== ======= ====== ======== ======== =======
</TABLE>
* Formerly American Value Sub-Account; change effective May 1, 1999.
<TABLE>
<CAPTION>
BALANCED DIVIDEND VALUE-ADDED AMERICAN GLOBAL DEVELOPING
GROWTH UTILITIES GROWTH MARKET GROWTH OPPORTUNITIES EQUITY GROWTH
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ----------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 108 $ 310 $ 1,991 $ 170 $-- $ 167 $ 388 $ 76
Capital gains income... 86 273 4,319 331 34 1,308 96 58
Net realized gain
(loss) on security
transactions.......... -- 2 5,289 (3) -- 5,367 5,127 (34)
Net unrealized
(depreciation)
appreciationof
investments during the
period................ 338 2,358 9,599 (249) 118 3,491 2,441 1,841
------ ------- -------- ------- ------ -------- -------- -------
Net increase (decrease)
in net assets
resulting from
operations............ 532 2,943 21,198 249 152 10,333 8,052 1,941
------ ------- -------- ------- ------ -------- -------- -------
UNIT TRANSACTIONS:
Purchases.............. -- -- -- -- -- -- -- --
Net transfers.......... -- 22,647 1,712 22,647 -- (20,608) (37,288) 21,315
Surrenders for benefit
payments and fees..... (50) (225) (3,479) (212) -- (2,132) (2,292) (510)
Loan withdrawals....... -- -- 1,673 -- -- 1,673 1,723 --
Cost of insurance...... (18) (86) (674) (80) -- (164) (222) (192)
------ ------- -------- ------- ------ -------- -------- -------
Net (decrease) increase
in net assets
resulting from unit
transactions.......... (68) 22,336 (768) 22,355 -- (21,231) (38,079) 20,613
------ ------- -------- ------- ------ -------- -------- -------
Total increase
(decrease) in net
assets................ 464 25,279 20,430 22,604 152 (10,898) (30,027) 22,554
NET ASSETS:
Beginning of period.... 3,723 1,232 105,958 1,158 1,149 45,925 57,762 19,932
------ ------- -------- ------- ------ -------- -------- -------
End of period.......... $4,187 $26,511 $126,388 $23,762 $1,301 $ 35,027 $ 27,735 $42,486
====== ======= ======== ======= ====== ======== ======== =======
</TABLE>
---------------------------------------------------- 61
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT FIVE
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
EMERGING DIVERSIFIED
MARKETS INCOME
SUB-ACCOUNT SUB-ACCOUNT
----------- -----------
<S> <C> <C>
OPERATIONS:
Net investment
income................ $ 1 $ 2,609
Capital gains income... -- --
Net realized (loss)
gain on security
transactions.......... -- (27)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 549 (3,155)
------- -------
Net increase (decrease)
in net assets
resulting from
operations............ 550 (573)
------- -------
UNIT TRANSACTIONS:
Purchases.............. -- --
Net transfers.......... -- --
Surrenders for benefit
payments and fees..... -- (1,336)
Loan withdrawals....... -- --
Cost of insurance...... -- (464)
------- -------
Net (decrease) in net
assets resulting from
unit transactions..... -- (1,800)
------- -------
Total increase
(decrease) in net
assets................ 550 (2,373)
NET ASSETS:
Beginning of period.... 659 31,695
------- -------
End of period.......... $ 1,209 $29,322
======= =======
</TABLE>
** Formerly Mid-Cap Growth Sub-Account; change effective September 8, 1999.
HARTFORD LIFE INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
EMERGING DIVERSIFIED
MARKETS INCOME
SUB-ACCOUNT SUB-ACCOUNT
----------- -----------
<S> <C> <C>
OPERATIONS:
Net investment
income................ $ 9 $ 1,650
Capital gains income... 2 42
Net realized (loss) on
security
transactions.......... (1,107) --
Net unrealized
(depreciation)
appreciation of
investments during the
period................ (281) (947)
------- -------
Net (decrease) increase
in net assets
resulting from
operations............ (1,377) 745
------- -------
UNIT TRANSACTIONS:
Purchases.............. -- --
Net transfers.......... 1,107 22,647
Surrenders for benefit
payments and fees..... 1 (367)
Loan withdrawals....... -- --
Cost of insurance...... -- (137)
------- -------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 1,108 22,143
------- -------
Total (decrease)
increase in net
assets................ (269) 22,888
NET ASSETS:
Beginning of
period.............. 928 8,807
------- -------
End of period........ $ 659 $31,695
======= =======
</TABLE>
* From inception, April 1, 1998, to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 62
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
MID-CAP MID-CAP EMERGING
EQUITY HIGH YIELD VALUE MARKETS DEBT STRATEGIC STOCK ENTERPRISE
SUB-ACCOUNT** SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- ----------- ----------- ------------ --------------- -----------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment
income................ $ 37 $ 81 $ 2 $ 2,275 $ 10 $ 3
Capital gains income... -- -- 145 -- 3 78
Net realized (loss)
gain on security
transactions.......... 1,280 -- -- 51 -- --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 4,213 (10) 60 1,949 (18) 193
------ ------ ------ ------- ------ ------
Net increase (decrease)
in net assets
resulting from
operations............ 5,530 71 207 4,275 (5) 274
------ ------ ------ ------- ------ ------
UNIT TRANSACTIONS:
Purchases.............. -- -- -- -- -- --
Net transfers.......... -- -- -- -- -- --
Surrenders for benefit
payments and fees..... (2,436) -- -- (998) -- --
Loan withdrawals....... -- -- -- -- -- --
Cost of insurance...... (89) -- -- (239) -- --
------ ------ ------ ------- ------ ------
Net (decrease) in net
assets resulting from
unit transactions..... (2,525) -- -- (1,237) -- --
------ ------ ------ ------- ------ ------
Total increase
(decrease) in net
assets................ 3,005 71 207 3,038 (5) 274
NET ASSETS:
Beginning of period.... 6,120 1,006 1,006 14,765 1,033 1,060
------ ------ ------ ------- ------ ------
End of period.......... $9,125 $1,077 $1,213 $17,803 $1,028 $1,334
====== ====== ====== ======= ====== ======
</TABLE>
** Formerly Mid-Cap Growth Sub-Account; change effective September 8, 1999.
<TABLE>
<CAPTION>
MID-CAP MID-CAP EMERGING
EQUITY HIGH YIELD VALUE MARKETS DEBT STRATEGIC STOCK ENTERPRISE
SUB-ACCOUNT** SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT*
------------- ------------ ------------ ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment
income................ $ 39 $ 57 $ 2 $ 1,756 $-- $--
Capital gains income... 53 11 29 -- -- --
Net realized (loss) on
security
transactions.......... -- -- -- (60) -- --
Net unrealized
(depreciation)
appreciation of
investments during the
period................ 236 (62) (26) (7,924) 33 60
------ ------ ------ ------- ------ ------
Net (decrease) increase
in net assets
resulting from
operations............ 328 6 5 (6,228) 33 60
------ ------ ------ ------- ------ ------
UNIT TRANSACTIONS:
Purchases.............. -- 1,000 1,000 1,000 1,000 1,000
Net transfers.......... -- -- -- 20,208 -- --
Surrenders for benefit
payments and fees..... (84) -- 1 (155) -- --
Loan withdrawals....... -- -- -- -- -- --
Cost of insurance...... (30) -- -- (60) -- --
------ ------ ------ ------- ------ ------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... (114) 1,000 1,001 20,993 1,000 1,000
------ ------ ------ ------- ------ ------
Total (decrease)
increase in net
assets................ 214 1,006 1,006 14,765 1,033 1,060
NET ASSETS:
Beginning of
period.............. 5,906 -- -- -- -- --
------ ------ ------ ------- ------ ------
End of period........ $6,120 $1,006 $1,006 $14,765 $1,033 $1,060
====== ====== ====== ======= ====== ======
</TABLE>
* From inception, April 1, 1998, to December 31, 1998.
---------------------------------------------------- 63
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT FIVE
- --------------------------------------------------------------------------------
HARTFORD LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. ORGANIZATION:
Separate Account Five (the Account) is a separate investment account within
Hartford Life Insurance Company (the Company) and is registered with the
Securities and Exchange Commission (SEC) as a unit investment trust under
the Investment Company Act of 1940, as amended. Both the Company and the
Account are subject to supervision and regulation by the Department of
Insurance of the State of Connecticut and the SEC. The Account invests
deposits by variable life policyowners of the Company in various mutual
funds (the Funds) as directed by the policyowners.
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 investment in shares of the Morgan Stanley Dean
Witter Select Dimensions Investment Series, the Morgan Stanley Dean
Witter Universal Funds, Inc. and Van Kampen Life Investment Trust are
valued at the closing net asset value per share as determined by the
appropriate Fund as of December 31, 1999.
c) UNIT TRANSACTIONS--Unit transactions are executed based on the unit
values calculated at the close of the business day.
d) FEDERAL INCOME TAXES--The operations of the Account form a part of, and
are taxed with, the total operations of the Company, which is taxed as an
insurance company under the Internal Revenue Code. Under current law, no
Federal income taxes are payable with respect to the operations of the
Account.
e) USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and the reported
amounts of income and expenses during the period. Operating results in
the future could vary from the amounts derived from management's
estimates.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
a) COST OF INSURANCE CHARGE--In accordance with terms of the policies, the
Company assesses deductions for costs of insurance charges to cover the
Company's anticipated mortality costs. Because a policy's account value
and death benefit may vary from month to month, the cost of insurance
charge may also vary.
b) MORTALITY AND EXPENSE UNDERTAKINGS--The Company, as issuer of variable
life policies, provides the mortality and expense undertakings and, with
respect to the Account, receives a maximum annual fee of 0.90% of the
Account's average daily net assets. The Company also provides
administrative services and receives an annual fee of 0.40% of the
Account's average daily net assets. These charges are reflected in
surrenders for benefit payments and fees on the accompanying statements
of changes in net assets.
c) DEDUCTION OF ANNUAL MAINTENANCE FEE--Annual maintenance fees are deducted
through termination of units of interest from applicable policyowners'
accounts, in accordance with the terms of the policies. These charges are
reflected in surrenders for benefit payments and fees on the accompanying
statements of changes in net assets.
c) TAX EXPENSE CHARGE--The Company will deduct monthly from the account
value a tax expense charge equal to an annual rate of 0.40% for the first
ten years. During the first nine policy years, a premium tax charge will
be imposed on full or partial surrenders at a maximum rate of 2.25%.
These charges are reflected in surrenders for benefit payments and fees
on the accompanying statements of changes in net assets.
______________________________________ 64 ______________________________________
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
TO HARTFORD LIFE INSURANCE COMPANY
SEPARATE ACCOUNT FIVE AND TO THE OWNERS OF UNITS OF INTEREST THEREIN:
We have audited the accompanying statements of assets and liabilities of
Hartford Life Insurance Company Separate Account Five (Money Market, North
American Government Securities, Balanced Growth, Utilities, Dividend Growth,
Value-Added Market, Growth, American Opportunities, Global Equity, Developing
Growth, Emerging Markets, Diversified Income, Mid-Cap Equity, High Yield, Mid-
Cap Value, Emerging Markets Debt, Strategic Stock, and Enterprise sub-accounts),
(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 its operations and the changes in its net assets for
the periods presented in conformity with generally accepted accounting
principles.
Hartford, Connecticut
February 17, 2000 ARTHUR ANDERSEN LLP
______________________________________ 65 ______________________________________
<PAGE>
Hartford Life
P.O. Box 2999
Hartford, CT 06104-2999
PRINCIPAL UNDERWRITER FOR THE SEPARATE ACCOUNTS:
Hartford Securities Distribution Company, Inc. (HSD)
200 Hopmeadow Street
Simsbury, CT 06089
[Hartford LOGO]
Hartford Life and Annuity
Insurance Company
Individual Annuity Operations
P.O. Box 5085
Hartford, CT 05102-5085
