<PAGE>
SEPARATE ACCOUNT FIVE
- --------------------------------------------------------------------------------
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF ASSETS & LIABILITIES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
NORTH AMERICAN
GOVERNMENT
MONEY SECURITIES
MARKET PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
----------------- ---------------
<S> <C> <C>
ASSETS:
Investments in Dean
Witter Select
Dimensions Funds:
Money Market
Portfolio
Shares 1,729,718
Cost $1,729,718
Market Value....... $1,729,718 --
North American
Government
Securities Portfolio
Shares 107
Cost $1,077
Market Value....... -- $ 1,087
Balanced Growth
Portfolio
Shares 16,442
Cost $246,224
Market Value....... -- --
Utilities Portfolio
Shares 6,005
Cost $102,524
Market Value....... -- --
Dividend Growth
Portfolio
Shares 130,515
Cost $2,606,929
Market Value....... -- --
Value-Added Market
Portfolio
Shares 17,848
Cost $317,647
Market Value....... -- --
Growth Portfolio
Shares 6,752
Cost $110,612
Market Value....... -- --
American Value
Portfolio
Shares 46,346
Cost $913,893
Market Value....... -- --
Global Equity Value
Portfolio
Shares 40,370
Cost $520,724
Market Value....... -- --
Developing Growth
Portfolio
Shares 7,671
Cost $147,781
Market Value....... -- --
Due from Hartford Life
and Annuity Insurance
Company............... 105 --
Receivable from fund
shares sold........... -- --
----------------- ---------------
Total Assets........... 1,729,823 1,087
----------------- ---------------
LIABILITIES:
Due to Hartford Life
and Annuity Insurance
Company............... -- --
Payable for fund shares
purchased............. 108 --
----------------- ---------------
Total Liabilities...... 108 --
----------------- ---------------
Net Assets (variable
life contract
liabilities).......... $1,729,715 $ 1,087
----------------- ---------------
----------------- ---------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 18
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
DIVIDEND VALUE-ADDED AMERICAN GLOBAL
BALANCED UTILITIES GROWTH MARKET GROWTH VALUE EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments in Dean
Witter Select
Dimensions Funds:
Money Market
Portfolio
Shares 1,729,718
Cost $1,729,718
Market Value....... -- -- -- -- -- -- --
North American
Government
Securities Portfolio
Shares 107
Cost $1,077
Market Value....... -- -- -- -- -- -- --
Balanced Growth
Portfolio
Shares 16,442
Cost $246,224
Market Value....... $ 269,324 -- -- -- -- -- --
Utilities Portfolio
Shares 6,005
Cost $102,524
Market Value....... -- $ 112,359 -- -- -- -- --
Dividend Growth
Portfolio
Shares 130,515
Cost $2,606,929
Market Value....... -- -- $2,877,866 -- -- -- --
Value-Added Market
Portfolio
Shares 17,848
Cost $317,647
Market Value....... -- -- -- $ 342,509 -- -- --
Growth Portfolio
Shares 6,752
Cost $110,612
Market Value....... -- -- -- -- $ 123,081 -- --
American Value
Portfolio
Shares 46,346
Cost $913,893
Market Value....... -- -- -- -- -- $1,080,324 --
Global Equity Value
Portfolio
Shares 40,370
Cost $520,724
Market Value....... -- -- -- -- -- -- $ 593,041
Developing Growth
Portfolio
Shares 7,671
Cost $147,781
Market Value....... -- -- -- -- -- -- --
Due from Hartford Life
and Annuity Insurance
Company............... -- -- 16 2 1 6 --
Receivable from fund
shares sold........... -- -- -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------ ------------
Total Assets........... 269,324 112,359 2,877,882 342,511 123,082 1,080,330 593,041
------------ ------------ ------------ ------------ ------------ ------------ ------------
LIABILITIES:
Due to Hartford Life
and Annuity Insurance
Company............... -- -- -- -- -- -- 5
Payable for fund shares
purchased............. -- -- -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------ ------------
Total Liabilities...... -- -- -- -- -- -- 5
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net Assets (variable
life contract
liabilities).......... $ 269,324 $ 112,359 $2,877,882 $ 342,511 $ 123,082 $1,080,330 $ 593,036
------------ ------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------ ------------
<CAPTION>
DEVELOPING
GROWTH
PORTFOLIO
SUB-ACCOUNT
------------
<S> <C>
ASSETS:
Investments in Dean
Witter Select
Dimensions Funds:
Money Market
Portfolio
Shares 1,729,718
Cost $1,729,718
Market Value....... --
North American
Government
Securities Portfolio
Shares 107
Cost $1,077
Market Value....... --
Balanced Growth
Portfolio
Shares 16,442
Cost $246,224
Market Value....... --
Utilities Portfolio
Shares 6,005
Cost $102,524
Market Value....... --
Dividend Growth
Portfolio
Shares 130,515
Cost $2,606,929
Market Value....... --
Value-Added Market
Portfolio
Shares 17,848
Cost $317,647
Market Value....... --
Growth Portfolio
Shares 6,752
Cost $110,612
Market Value....... --
American Value
Portfolio
Shares 46,346
Cost $913,893
Market Value....... --
Global Equity Value
Portfolio
Shares 40,370
Cost $520,724
Market Value....... --
Developing Growth
Portfolio
Shares 7,671
Cost $147,781
Market Value....... $ 159,625
Due from Hartford Life
and Annuity Insurance
Company............... --
Receivable from fund
shares sold........... --
------------
Total Assets........... 159,625
------------
LIABILITIES:
Due to Hartford Life
and Annuity Insurance
Company............... --
Payable for fund shares
purchased............. --
------------
Total Liabilities...... --
------------
Net Assets (variable
life contract
liabilities).......... $ 159,625
------------
------------
</TABLE>
---------------------------------------------------- 19
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT FIVE
- --------------------------------------------------------------------------------
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF ASSETS & LIABILITIES -- (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
EMERGING DIVERSIFIED
MARKETS INCOME
PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
------------ ------------
<S> <C> <C>
ASSETS:
Investments in Dean
Witter Select
Dimensions Funds:
Emerging Markets
Portfolio
Shares 2,711
Cost $31,522
Market Value....... $ 21,444 --
Diversified Income
Portfolio
Shares 44,837
Cost $459,908
Market Value....... -- $ 445,233
Mid-Cap Growth
Portfolio
Shares 17,061
Cost $189,578
Market Value....... -- --
Investments in Morgan
Stanley Universal
Funds:
High Yield Portfolio
Shares 3,741
Cost $39,540
Market Value....... -- --
Mid-Cap Portfolio
Shares 68
Cost $1,032
Market Value....... -- --
Emerging Markets Debt
Fund
Shares 111
Cost $1,081
Market Value....... -- --
Investments in Van
Kampen Funds:
Strategic Stock Fund
Shares 87
Cost $1,000
Market Value....... -- --
Enterprise Fund
Shares 458
Cost $8,456
Market Value....... -- --
Due from Hartford Life
and Annuity Insurance
Company............... -- --
Receivable from fund
shares sold........... -- --
------------ ------------
Total Assets........... 21,444 445,233
------------ ------------
LIABILITIES:
Due to Hartford Life
and Annuity Insurance
Company............... -- 1
Payable for fund shares
purchased............. -- --
------------ ------------
Total Liabilities...... -- 1
------------ ------------
Net Assets (variable
life contract
liabilities).......... $ 21,444 $ 445,232
------------ ------------
------------ ------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 20
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
MID-CAP EMERGING
GROWTH HIGH YIELD MID-CAP MARKETS DEBT STRATEGIC STOCK ENTERPRISE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ------------ ------------ ------------- ---------------- ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments in Dean
Witter Select
Dimensions Funds:
Emerging Markets
Portfolio
Shares 2,711
Cost $31,522
Market Value....... -- -- -- -- -- --
Diversified Income
Portfolio
Shares 44,837
Cost $459,908
Market Value....... -- -- -- -- -- --
Mid-Cap Growth
Portfolio
Shares 17,061
Cost $189,578
Market Value....... $ 202,346 -- -- -- -- --
Investments in Morgan
Stanley Universal
Funds:
High Yield Portfolio
Shares 3,741
Cost $39,540
Market Value....... -- $ 38,722 -- -- -- --
Mid-Cap Portfolio
Shares 68
Cost $1,032
Market Value....... -- -- $ 1,006 -- -- --
Emerging Markets Debt
Fund
Shares 111
Cost $1,081
Market Value....... -- -- -- $ 679 -- --
Investments in Van
Kampen Funds:
Strategic Stock Fund
Shares 87
Cost $1,000
Market Value....... -- -- -- -- $ 1,033 --
Enterprise Fund
Shares 458
Cost $8,456
Market Value....... -- -- -- -- -- $ 10,252
Due from Hartford Life
and Annuity Insurance
Company............... 1 -- -- -- -- --
Receivable from fund
shares sold........... -- -- -- -- -- --
------------ ------------ ------------ ------------- ---------------- ------------
Total Assets........... 202,347 38,722 1,006 679 1,033 10,252
------------ ------------ ------------ ------------- ---------------- ------------
LIABILITIES:
Due to Hartford Life
and Annuity Insurance
Company............... -- -- -- -- -- --
Payable for fund shares
purchased............. -- -- -- -- -- --
------------ ------------ ------------ ------------- ---------------- ------------
Total Liabilities...... -- -- -- -- -- --
------------ ------------ ------------ ------------- ---------------- ------------
Net Assets (variable
life contract
liabilities).......... $ 202,347 $ 38,722 $ 1,006 $ 679 $ 1,033 $ 10,252
------------ ------------ ------------ ------------- ---------------- ------------
------------ ------------ ------------ ------------- ---------------- ------------
</TABLE>
---------------------------------------------------- 21
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT FIVE
- --------------------------------------------------------------------------------
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF ASSETS & LIABILITIES -- (CONTINUED)
DECEMBER 31, 1998
<TABLE>
<CAPTION>
UNITS
OWNED BY UNIT CONTRACT
PARTICIPANTS PRICE LIABILITY
------------ ----------- -----------
<S> <C> <C> <C>
INDIVIDUAL DEFERRED ANNUITY
CONTRACTS IN THE ACCUMULATION
PERIOD:
Money Market Portfolio........... 1,593,267 $ 1.085641 $ 1,729,715
North American Government
Securities Portfolio............ 100 10.866400 1,087
Balanced Portfolio............... 21,012 12.817596 269,324
Utilities Portfolio.............. 7,465 15.051545 112,359
Dividend Growth Portfolio........ 215,358 13.363243 2,877,882
Value-Added Market Portfolio..... 26,364 12.991413 342,511
Growth Portfolio................. 9,467 13.000700 123,082
American Value Portfolio......... 65,412 16.515884 1,080,330
Global Equity Portfolio.......... 51,498 11.515729 593,036
Developing Growth Portfolio...... 12,160 13.126689 159,625
Emerging Markets Portfolio....... 3,256 6.586700 21,444
Diversified Income Portfolio..... 40,167 11.084591 445,232
Mid-Cap Growth Portfolio......... 16,169 12.514755 202,347
-----------
SUB-TOTAL........................ 7,957,974
-----------
GROUP DEFERRED ANNUITY CONTRACTS IN
THE ACCUMULATION PERIOD:
High Yield Portfolio............. 3,852 10.053100 38,722
Mid-Cap Portfolio................ 100 10.058200 1,006
Emerging Markets Debt
Portfolio....................... 100 6.783341 679
Strategic Stock Portfolio........ 100 10.329000 1,033
Enterprise Portfolio............. 968 10.596300 10,252
-----------
SUB-TOTAL........................ 51,692
-----------
GRAND TOTAL........................ $ 8,009,666
-----------
-----------
</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, 1998
<TABLE>
<CAPTION>
NORTH AMERICAN
GOVERNMENT
MONEY MARKET SECURITIES
PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
------------- ---------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends.............. $61,978 $47
------------- ---
Net investment income
(loss).............. 61,978 47
------------- ---
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................ -- (2)
------------- ---
Net gain (loss) on
investments......... -- (2)
------------- ---
Net increase
(decrease) in net
assets resulting
from operations..... $61,978 $45
------------- ---
------------- ---
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 24
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
DIVIDEND VALUE-ADDED AMERICAN GLOBAL
BALANCED UTILITIES GROWTH MARKET GROWTH VALUE EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
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.............. $ 5,437 $ 759 $ 44,248 $ 2,839 $-- $ 5,939 $ 8,325
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net investment income
(loss).............. 5,437 759 44,248 2,839 -- 5,939 8,325
------------ ------------ ------------ ------------ ------------ ------------ ------------
CAPITAL GAINS INCOME..... 4,004 337 100,866 3,121 4,218 72,714 2,380
------------ ------------ ------------ ------------ ------------ ------------ ------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 135 36 11,571 57 (855) (392) (10,224)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 20,528 9,408 254,099 22,097 11,029 151,290 68,384
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net gain (loss) on
investments......... 20,663 9,444 265,670 22,154 10,174 150,898 58,160
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net increase
(decrease) in net
assets resulting
from operations..... $30,104 $10,540 $410,784 $28,114 $14,392 $229,551 $ 68,865
------------ ------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------ ------------
<CAPTION>
DEVELOPING
GROWTH
PORTFOLIO
SUB-ACCOUNT
------------
<S> <C>
INVESTMENT INCOME:
Dividends.............. $ 538
------------
Net investment income
(loss).............. 538
------------
CAPITAL GAINS INCOME..... 428
------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... (8,135)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 9,871
------------
Net gain (loss) on
investments......... 1,736
------------
Net increase
(decrease) in net
assets resulting
from operations..... $ 2,702
------------
------------
</TABLE>
---------------------------------------------------- 25
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT FIVE
- --------------------------------------------------------------------------------
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF OPERATIONS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
EMERGING DIVERSIFIED
MARKETS INCOME
PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
------------ ------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 417 $ 36,443
------------ ------------
Net investment income
(loss).............. 417 36,443
------------ ------------
CAPITAL GAINS INCOME..... 93 659
------------ ------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... (3,076) (3,330)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ (9,164) (14,655)
------------ ------------
Net gain (loss) on
investments......... (12,240) (17,985)
------------ ------------
Net increase
(decrease) in net
assets resulting
from operations..... $(11,730) $ 19,117
------------ ------------
------------ ------------
</TABLE>
* From inception, April 1, 1998, to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 26
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
MID-CAP EMERGING
GROWTH HIGH YIELD MID-CAP MARKETS DEBT STRATEGIC STOCK ENTERPRISE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT*
------------ ------------- ------------- ------------- ---------------- -------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 1,252 $2,177 $ 2 $ 81 --$ $--
------------ ------ --- ----- ----- ------
Net investment income
(loss).............. 1,252 2,177 2 81 -- --
------------ ------ --- ----- ----- ------
CAPITAL GAINS INCOME..... 1,772 358 29 -- -- --
------------ ------ --- ----- ----- ------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... (6,378) -- -- -- -- 1
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 8,297 (818) (26) (402) 33 1,796
------------ ------ --- ----- ----- ------
Net gain (loss) on
investments......... 1,919 (818) (26) (402) 33 1,797
------------ ------ --- ----- ----- ------
Net increase
(decrease) in net
assets resulting
from operations..... $ 4,943 $1,717 $ 5 $(321) $ 33 $1,797
------------ ------ --- ----- ----- ------
------------ ------ --- ----- ----- ------
</TABLE>
* From inception, April 1, 1998, to December 31, 1998.
---------------------------------------------------- 27
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT FIVE
- --------------------------------------------------------------------------------
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
PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
------------- ---------------------
<S> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 61,978 $ 47
Capital gains income... -- --
Net realized gain
(loss) on security
transactions.......... -- --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- (2)
------------- ------
Net increase (decrease)
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>
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM INCEPTION, MAY 20, 1997 TO DECEMBER 31, 1997
<TABLE>
<CAPTION>
NORTH AMERICAN
MONEY MARKET GOVERMENT SECURITIES
PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
------------- ---------------------
<S> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 12,586 $ 30
Capital gains income... -- --
Net realized gain
(loss) on security
transactions.......... -- --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- 12
------------- ------
Net increase (decrease)
in net assets
resulting from
operations............ 12,586 42
------------- ------
UNIT TRANSACTIONS:
Purchases.............. 5,462,868 1,000
Net transfers.......... (3,978,866) --
Surrenders for benefit
payments and fees..... (4,968) --
Loan withdrawals....... (691,140) --
Cost of insurance...... (4,043) --
------------- ------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 783,851 1,000
------------- ------
Total increase
(decrease) in net
assets ............... 796,437 1,042
NET ASSETS:
Beginning of period.... -- --
------------- ------
End of period.......... $ 796,437 $1,042
------------- ------
------------- ------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 28
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
DIVIDEND VALUE-ADDED AMERICAN GLOBAL
BALANCED UTILITIES GROWTH MARKET GROWTH VALUE EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
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)................ $ 5,437 $ 759 $ 44,248 $ 2,839 $ -- $ 5,939 $ 8,325
Capital gains income... 4,004 337 100,866 3,121 4,218 72,714 2,380
Net realized gain
(loss) on security
transactions.......... 135 36 11,571 57 (855) (392) (10,224)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 20,528 9,408 254,099 22,097 11,029 151,290 68,384
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease)
in net assets
resulting from
operations............ 30,104 10,540 410,784 28,114 14,392 229,551 68,865
------------ ------------ ------------ ------------ ------------ ------------ ------------
UNIT TRANSACTIONS:
Purchases.............. -- -- -- -- -- -- --
Net transfers.......... 80,467 96,911 1,259,474 189,519 29,229 289,585 215,976
Surrenders for benefit
payments and fees..... (3,478) (617) (186,767) (4,266) (39,946) (113,881) (195,324)
Loan withdrawals....... (1,939) (883) (168,807) (533) (504) (836) (1,413)
Cost of insurance...... (1,457) (279) (19,772) (1,660) (959) (5,820) (4,229)
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 73,593 95,132 884,128 183,060 (12,180) 169,048 15,010
------------ ------------ ------------ ------------ ------------ ------------ ------------
Total increase
(decrease) in net
assets................ 103,697 105,672 1,294,912 211,174 2,212 398,599 83,875
NET ASSETS:
Beginning of period.... 165,627 6,687 1,582,970 131,337 120,870 681,731 509,161
------------ ------------ ------------ ------------ ------------ ------------ ------------
End of period.......... $269,324 $112,359 $2,877,882 $342,511 $123,082 $1,080,330 $593,036
------------ ------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------ ------------
<CAPTION>
DEVELOPING
GROWTH
PORTFOLIO
SUB-ACCOUNT
------------
<S> <C>
OPERATIONS:
Net investment income
(loss)................ $ 538
Capital gains income... 428
Net realized gain
(loss) on security
transactions.......... (8,135)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 9,871
------------
Net increase (decrease)
in net assets
resulting from
operations............ 2,702
------------
UNIT TRANSACTIONS:
Purchases.............. --
Net transfers.......... 38,891
Surrenders for benefit
payments and fees..... (89,310)
Loan withdrawals....... (13)
Cost of insurance...... (1,611)
------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... (52,043)
------------
Total increase
(decrease) in net
assets................ (49,341)
NET ASSETS:
Beginning of period.... 208,966
------------
End of period.......... $159,625
------------
------------
</TABLE>
<TABLE>
<CAPTION>
DIVIDEND VALUE-ADDED AMERICAN GLOBAL
BALANCED UTILITIES GROWTH MARKET GROWTH VALUE EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
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)................ $ 238 $ 21 $ 3,650 $ 185 $ 32 $ 318 $ 257
Capital gains income... 3 4 37 2 5 22 2
Net realized gain
(loss) on security
transactions.......... 2 -- 4 (1) (3) 5 5
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 2,572 427 16,838 2,765 1,440 15,141 3,933
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease)
in net assets
resulting from
operations............ 2,815 452 20,529 2,951 1,474 15,486 4,197
------------ ------------ ------------ ------------ ------------ ------------ ------------
UNIT TRANSACTIONS:
Purchases.............. 1,000 1,000 1,000 1,000 1,000 1,000 1,000
Net transfers.......... 162,221 5,243 1,566,768 127,593 118,955 667,750 506,969
Surrenders for benefit
payments and fees..... (294) (3) (3,663) (101) (397) (1,813) (2,610)
Loan withdrawals....... -- -- (2) -- (1) (2) (1)
Cost of insurance...... (115) (5) (1,662) (106) (161) (690) (394)
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 162,812 6,235 1,562,441 128,386 119,396 666,245 504,964
------------ ------------ ------------ ------------ ------------ ------------ ------------
Total increase
(decrease) in net
assets ............... 165,627 6,687 1,582,970 131,337 120,870 681,731 509,161
NET ASSETS:
Beginning of period.... -- -- -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------ ------------
End of period.......... $165,627 $ 6,687 $1,582,970 $131,337 $120,870 $ 681,731 $509,161
------------ ------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------ ------------
<CAPTION>
DEVELOPING
GROWTH
PORTFOLIO
SUB-ACCOUNT
------------
<S> <C>
OPERATIONS:
Net investment income
(loss)................ $ 10
Capital gains income... --
Net realized gain
(loss) on security
transactions.......... 160
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 1,973
------------
Net increase (decrease)
in net assets
resulting from
operations............ 2,143
------------
UNIT TRANSACTIONS:
Purchases.............. 1,000
Net transfers.......... 206,516
Surrenders for benefit
payments and fees..... (526)
Loan withdrawals....... (1)
Cost of insurance...... (166)
------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 206,823
------------
Total increase
(decrease) in net
assets ............... 208,966
NET ASSETS:
Beginning of period.... --
------------
End of period.......... $208,966
------------
------------
</TABLE>
---------------------------------------------------- 29
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT FIVE
- --------------------------------------------------------------------------------
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
PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 417 $ 36,443
Capital gains income... 93 659
Net realized gain
(loss) on security
transactions.......... (3,076) (3,330)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ (9,164) (14,655)
------------ ------------
Net increase (decrease)
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 increase (decrease)
in net assets
resulting from unit
transactions.......... (3,839) (28,872)
------------ ------------
Total increase
(decrease) 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.
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
STATEMENTS OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE PERIOD FROM INCEPTION, MAY 20, 1997 TO DECEMBER 31, 1997
<TABLE>
<CAPTION>
EMERGING DIVERSIFIED
MARKETS INCOME
PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss)..... $ 3 $ 4,938
Capital gains income............. -- 2
Net realized gain (loss) on
security transactions........... (1) 15
Net unrealized appreciation
(depreciation) of investments
during the period............... (914) (20)
------------ ------------
Net increase (decrease) in net
assets resulting from
operations...................... (912) 4,935
------------ ------------
UNIT TRANSACTIONS:
Purchases........................ 1,000 1,000
Net transfers.................... 37,031 451,162
Surrenders for benefit payments
and fees........................ (76) (1,494)
Loan withdrawals................. -- --
Cost of insurance................ (30) (616)
------------ ------------
Net increase (decrease) in net
assets resulting from unit
transactions.................... 37,925 450,052
------------ ------------
Total increase (decrease) in net
assets.......................... 37,013 454,987
NET ASSETS:
Beginning of period.............. -- --
------------ ------------
End of period.................... $37,013 $454,987
------------ ------------
------------ ------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
---------------------------------------------------- 30
----------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
MID-CAP EMERGING
GROWTH HIGH YIELD MID-CAP MARKETS DEBT STRATEGIC STOCK ENTERPRISE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT*
------------ ------------- ------------- ------------- ---------------- -------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 1,252 $ 2,177 $ 2 $ 81 -$- $--
Capital gains income... 1,772 358 29 -- -- --
Net realized gain
(loss) on security
transactions.......... (6,378) -- -- -- -- 1
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 8,297 (818) (26) (402) 33 1,796
------------ ------------- ------ ------ ------ -------------
Net increase (decrease)
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 increase (decrease)
in net assets
resulting from unit
transactions.......... 63,373 37,005 1,001 1,000 1,000 8,455
------------ ------------- ------ ------ ------ -------------
Total increase
(decrease) 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>
<TABLE>
<CAPTION>
MID-CAP
GROWTH
PORTFOLIO
SUB-ACCOUNT
------------
<S> <C>
OPERATIONS:
Net investment income (loss)..... $ 76
Capital gains income............. --
Net realized gain (loss) on
security transactions........... --
Net unrealized appreciation
(depreciation) of investments
during the period............... 4,470
------------
Net increase (decrease) in net
assets resulting from
operations...................... 4,546
------------
UNIT TRANSACTIONS:
Purchases........................ 1,000
Net transfers.................... 128,658
Surrenders for benefit payments
and fees........................ (123)
Loan withdrawals................. --
Cost of insurance................ (50)
------------
Net increase (decrease) in net
assets resulting from unit
transactions.................... 129,485
------------
Total increase (decrease) in net
assets.......................... 134,031
NET ASSETS:
Beginning of period.............. --
------------
End of period.................... $134,031
------------
------------
</TABLE>
---------------------------------------------------- 31
----------------------------------------------------
<PAGE>
SEPARATE ACCOUNT FIVE
- --------------------------------------------------------------------------------
HARTFORD LIFE & ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
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 contractholders of the Company in various mutual
funds (The Funds) as directed by the contractholders.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting
principles in the investment company industry:
a) SECURITY TRANSACTIONS--Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Cost of investments
sold is determined on the basis of identified cost. Dividend and capital
gains income is accrued as of the ex-dividend date. Capital gains income
represents those dividends from the Funds which are characterized as
capital gains under tax regulations.
b) SECURITY VALUATION--The investments in shares of the Morgan Stanley Dean
Witter Select Dimensions Series, Morgan Stanley Universal Funds, Inc. and
Van Kampen American Capital Life Investment Trust Mutual Funds is valued
at the closing net asset value per share as determined by the appropriate
Fund as of December 31, 1998.
c) 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.
d) 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 contracts, the
Company makes deductions for costs of insurance to cover the Company's
anticipated mortality cost. 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
annuity contracts, 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 expenses 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 contract owner's
accounts, in accordance with the terms of the contracts. These expenses
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 expenses 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 & 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 & Annuity Insurance Company Separate Account Five (Money Market
Portfolio, North American Government Securities Portfolio, Balanced Portfolio,
Utilities Portfolio, Dividend Growth Portfolio, Value-Added Market Portfolio,
Growth Portfolio, American Value Portfolio, Global Equity Portfolio, Developing
Growth Portfolio, Emerging Markets Portfolio, Diversified Income Portfolio,
Mid-Cap Growth Portfolio, High Yield Portfolio, Mid-Cap Portfolio, Emerging
Markets Debt Portfolio, Strategic Stock Portfolio, and Enterprise Portfolio),
(collectively, the Account) as of December 31, 1998, 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,
1998, and the results of their operations and the changes in their net assets
for the periods presented in conformity with generally accepted accounting
principles.
Hartford, Connecticut
February 15, 1999 ARTHUR ANDERSEN LLP
______________________________________ 33 ______________________________________
