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5.63 Original Contract
MEMO: June 12, 1981 TO: Dave Flodstrom, City Manager FROM: Marian Parrish, Personnel Director City Clerk i° RE: Deferred Compensation Program I distributed copies of The Hartford letter to Pat and Rob. Pat and I are the only participants in the City's I.C.M.A. program at the present time. After reviewing Mr. Bee's detailed program comparisons, and our current agreement with I.C.M.A., I offer the following comments. I. I.C.M.A. Agreement, dated January 1, 1976. A. The agreement has not been amended to conform with the 1979 I.R.S. Revenue Coding Regulation, Section 457. B. The agreement provides for termination upon written notice by the employer to the Trustee. C. The agreement provides for I.C.M.A. to act as agent of the employer for purposes of disbursing retirement benefit payments, with the ultimate obligation of making such payments remaining with the employer. D. The plan levies two fees; i.e., an administrative fee and an investment charge. Current rates are 1.5% on all contributions and 0.5% on the first $200,000 in each fund, II. The Hartford Plan A. The Hartford plan appears to be superior to the I.C.M.A. program in all aspects. B. In reference to administrative fees, Mr. Bee's indicates that the Hartford has no. policy fee nor asset fee on the Fixed Interest account. Does this "qo charge" policy also apply to their other variable investment accounts? C. Hartford proposes the City adopt their plan in addition to our present I.C.M.A. plan. If this action should occur, would it be possible for current I.C.M.A. participants to withdraw their assets from I.C.M.A. and re- invest the assets in total in the Hartford plan? Would there be a fee levied for this type of service? Would there be any income tax liability associated with such a transaction? Perhaps it would be advisable to have representatives from each agency meet with our management and administrative group. If sufficient interest in participating in the deferred compensation program could be generated, it would warrant the City to pursue the matter of either adopting a second plan or replacing our current plan with the Hartford plan. MCP /dp cc: R. Orton, Director of Finance and Administrative Services. Pacific' Northwest Regional Office 1820 Eastlake Avenue East P.O. Box 1875 Seattle, Washington 98111 T ephone. (206) 325 -8600 May 15, 1981 Mr. David Flodstrom, City Manager City of Port Angeles P.O. Box 1150 Port Angeles, Washington 98362 Dear Mr. Flodstrom: 1 THE HARTFORD The following is a detailed caparison between the I,C.M.A. program and that which could be offered to your eligible employees by the Hartford. This is not intended to request that the City of Port Angeles stop any involvement with ICMA or to ask that any of the present plan participants involuntarily discontinue contributions to the ICMA program, but is merely a suggestion on how you can perhaps upgrade your present plan and offer the investment choices to your employees in order that they make their awn, impartial decision as to which program they would prefer. 'We recognize that there is no reason to make an addition or a change in your Deferred Compensation Plan unless there is significant evi- dence that the change will positively effect 1) the employees and the plan participants and 2) the City of Port Angeles. It me begin by discussing the significant advantages to the employees presently participating in the Plan. Firstly, the Hartford is currently paying 11% on our Fixed Interest Account. ICMA is paying 9.5% on the Guaranteed Interest Account which they began in 1979. The Transamerica Life Insurance Company handles the Guaranteed Interest Account for ICMA and the Hartford handles their an Fixed Interest Account. The Hartford has no policy fee nor an asset fee on the Fixed Interest Account whereas the ICMA assesses a 1.5% charge on all incoming deposits as well as a .5% asset fee annually. Therefore, the employee investing in the Hart- ford program will be earning 37.5% more interest than that being earned in the ICMA program. 5. 63 Page 2 May 15, 1981 David Flodstrom Secondly, the Hartford and ICMA both offer three variable investments. In 1979 the Hartford's Stock Account appreciated 21% versus the yield on MIA's Balanced Fund which appreciated 17.5% and in 1980 the Hartford Stock Account awciated 34.0% versus ICS's same Balanced Fund which had an approximate appreciation of 25.0% in 1980. The Hartford has recently developed a Money Market account which was paying a current interest rate of 13.08% on 5 -01 -81. The Hartford has approximately 280 million in existing assets whereas ICMA has approximately 35.4 million. This perhaps explains the vast difference in performance between the variable funds as discussed in the preceding paragraph. Along that same vein, the Hartford has in excess of 55,000 plan participants nationally where ICMA has 5,126 (as of 12/31/80). Thirdly, the Hartford will allow transferability of assets to any of our accounts (Stock, Bond, Fixed Interest or Money Market) at no penalty to the employee and at no cost to the Employer in order that he /she maintains financial flexibility as his or her personal needs change. The Hartford does not want to put our client in a position of being in a financial straightjacket with no safeguard against the protection on the monies he may have earned on a sizeable gain in either the Stock, Bond or Money Market accounts. IcMA does not allow for transferring assets. Fourthly, the Hartford offers seven financially different options upon withdrawal of funds accumulated. Again, this is to insure total flex- ibility not only in the duration of accumulation but especially in the inevitable eventuality of payout, while IcMA offers three to four such options. Finally, the Hartford will conduct both in- coming participants' interviews as well as exit interviews_ in order to insure that the plan participant is totally aware of the options available to him/her and that his financial future best fits his personal needs. ICMA does neither of these interviews. Insofar as the benefits to the City of Port Angeles, with the adoption of the Hartford as a funding /administrative vehicle, I have recapped the follow- ing items which we can provide for you at, again, no cost to the employee, the City of Port Angeles, or the taxpayers of Port Angeles. During the accumulation period (the pay -in period) the Hartford does the administration, as does ICMA. However, the key difference occurs during the payout period (during which the employee begins to enjoy benefits from the plan). When that time canes to make payments and because these monies are deferred wages, someone must pay taxes on these monies, calcu- late the taxes, withhold these taxes: both state and federal. Also pay the proper taxing authorities, issue a W -2 form to the Employee, and finally, issue a net check to the Employee. If the employee moves to another Page 3 May 15, 1981 David Flodstrorrr City, State, or, even Country, someone will have to keep track of that ex- employee in order to send him/her that benefit check. Under your present plan administrators of the City of Port Angeles must do this- ICMA will not whereas the Hartford will provide these services, again at no cost to the Employer, the employee or the taxpayers of the City of Port Angeles. In ac9dition, a concern which has been expressed by other jurisdictions as to the potential liability of the City on issues which involve a City employee "signing up" the plan participant handing out literature or a City employee encouraging a new employee to join the program. Who actually is liable in the event that full disclosure as to charges, yields, variable versus fixed accounts, etc., is brought up as public issue by an employee? The City of Port Angeles? Because the Hartford takes full responsibility as to the Group Nleetings,and the individual, confidential conferences with each and every plan partic- ipant at the time of sign up, and the issuance of a prospectus and an infor- mational booklet at the time the employee joins the plan, the Hartford will take full responsibility as to any disclosure of product information, charges, deferred compensation rulings as set by the IRS., etc. In essence, we take the burden from the City. Because the Hartford is so involved in the proper enrollment of those who are eligible and who actually "should" be involved in such a plan, we will do everything possible to bring the concept to all those employees that the City names as eligible. We will leave the City of Port Angeles free from any possibility of liability and will assure such re,sibility as regards Deferred Compensation. Finally, our Senior Trust Attorney was a member of the Ad Hoc Committee on Deferred Compensation in 1978 when the IRS passed the new Revenue Codings in Section 457. I urge you to review your plan document and be certain that it has been properly amended to conform with Section 457 of the Code. Again, there are numerous changes which should be made. One Section of the code said that such changes be made prior to January 1, 1982. I have seen many plans which have been 'amended" by merely submitting a Resolution to the Board suggesting that the Plan Docent has been amended in its entirety or that the maximum contribution will be 25% of compensation (33 1/3% of participant's includible income) with no mention at all about the "catchup" provision or the numerous other regulations which the IRS has placed on the credibility of such a plan. The Hartford can help amend your plan. We can tailor-make the plan document to fit your particular needs -the City of Port Angeles' which differ greatly, I'm sure, from those of the City of Everett's or the City of Bellingham's: with one major exception to that difference- -they all need amending carefully. Page 4 May 15, 1981 David Flodstram The Hartford can help both every single participant to insure that the deferred compensation dollars they have deferred since inception of your particular plan, will be valid in the IRS's rulings in the next two or three years when they again consider Deferred Compensation. I trust that you will discuss this concept with your fellow management team. There are five major reasons to consider adoption of the Hartford in addition to your present plan: 1) To insure the integrity of the plan itself; 2) Lessen costs to the employees, employer, and to the taxpayers; 3) Higher interest rates; 4) Higher variable yields; and 5) Avoidance of the City liability in the event of employee dissatisfaction. 1 trust that you will call me shortly after receipt of this letter in order to discuss our next step. Sincerely, Encl. ITEM 1. Sate's Change 2. AnnuaC adminL.ttta.t on cha/ge 3. Te'w i nc ti.on change 4. Ability to ttta►t her pant a ccumuLa ti.o nz 5. Ccvvtent Intereat Rate. COMPARISON OF HVA 8 ICMA FIXED ACCOUNTS .(E1XED.ACCOUNT) HVA ,None $25.00 none payment made to emp.Coyee oven 3 ycwt' OA .longer (-i..s .lea's than 3 yearns then c thdkaux1 lice depend's on o. yeaAz ob depoa-• to as 6ottowa .E as than 8 yrcto o6 depot 8 ytus £eo s than 15 yre 3S 15 yu on .Conger 0% I4 payments arse made to a bengici.any any a.CC w.i thdrawt. 6eeto cute waived. yez ($5.00 t an action bee) company could limit to :1/6 ob account pen yn. S. G3 ICMA 1.5% on ea. dcpoa.ct .5% o i 6 acct. va.Eue none 5% yea but onYiy dunbig ann,(vc`Gs ch.!' mou th 06 the pCvA.t-l.0 to le-t conttiLbu.t,Lcni. 11.250 ITEM 1. Types 06 accounts ava i .ab.ce 2. Saeeo Change 3. Annuae PoZicy lee 4. Annual admini nation bee 5. Annuat management tee 6. T ctminizt Lan change 7. Management 06 van,i.ab.ce a, tz 8. ,',tuwnwn Death bene6 t ay. Cabte 9. Abti.F.i t y to tan 6 en pa.a.t accuinuonis COMPARISION OF HVA AND ICMA VARIABLE ACCOUNTS (STOCK,.BOND AND MONEY MARKET) HVA 1. .stock 2'. bond 3. money mahh.et None $25.00 pen pan-ti.eipant 1.25% atocfz 6 bond .5% money manfaet• 325% usee6 managed none .is paymento made to emp.eo yee oven 3 yeah on £ongen (i6 £ezz than 3 yeatz then withdnawae bee depends on 06 yeatus o b depoo az 6oUam £ebb than 8 ye.atco 06 depo s tito 5% 8 yeas £.e�.� than 15 pit 3% 15 ynz oh £ongci 0% I6 paymento ate made to a bene6ici.anu any 8 at w-ithdnawat6eez ate waived. Thonndtilic, Dorian Patine g Lewtie Inc. (TDPL) Yez Yea ($5.00 t aivsaction 6 e) u tim ted ah to 6nequency and /on amount ICMA 1. Bai'a.nced Fund (50% equ.iti.ez 20% bonda 30% 6hoAt term z ec 2. Bond Fund 3. Gov't Secuniti.eS 1.5% 06 6uncLs depois.i ted none 1% 0 none No 5 e,L' 6 managed wi.th gudancc 6' wm Inveztmcnt co tn,ecC Yens but oney du,t,ing annivenany month 06-the pact i.c ipants 1b-t cont'L(,butLcn Item 1. P.tan Document 2. EmpLo yee Statement o6 Account 3. Envto.Cement 4. Payout Opti_ono 5. Selection os payout option 6. Bene6 t Payment4 7. Payment o.6 taxez withheld 8. W-2 FOAMS 9. Pon.tabiZity 10. To.ta.i, Plan pantLc i.pantz 11. 11l tc'ces t Ecvuung4 Recctpt o a moni.ez 12. I nteJtezt Eakning4 -D.v6 bw'to ement 06 mo nc.c3 13. Conpo'ate abbet6 ADDITIONAL ITEMS TO BE CONSIDERED HVA "Can be aieonmade to juki4d cc tiovvs need 2uakty I nd.iv.LdwiZ C o wt cLLng 6.inancc.al planning) Seven Individual Co un6 ce i.ng Made dikect to Empi o yee on net ba4siz Paid di kect to IRS and estate HVA -c4.6LLC s Comp Bete pontabiZity Appnox&natay 60,000 nationwide (average 200 peJL plan) InteJLCe t ckedi ted .same day monie4 neccived InteAeat ckedited until monies paid out 300 Mc; t i.on :1CMA No changes can 'be made AnnuaC1 y Employee ennotLs eE Limited Employee decision Made d kect to Emp.eoyee on gnozs baziz EmOo yee OA empto yen pays Emp.ioyee on empto yen kezpon/sibility Comp.eete pontab.i..Cit y App/Lo tau 6, 700 nat i.onwide f av crag e 6 p e,`z. pLan I No -Llltc7 ealncd month 111O1tcC3 -sec d No .inteneist eau ed in month t No loco di.s pwtis ed 52 Mti IP.i.0 n 14. 1980 Penbonmance o� Vatiab.Ce accounts net bees 15. AvaitabLUty ofi Daelvte.d Compe►vsa.,Lon Spec,cati.sts 1. stock account 300 2. bond account 5% ,3: money mkt acct 16% 1. 4.tocfz acct 25% 2. bond acct 7% 3. Gov't Sec 4 15 on West' Coast Zocated none on west in San Fnancisaco, Lois Coast Angetes, San Diego, Sea tte 1. Adams County (TnTh 2. Alaska Clinic (AK) 3. City of Bellingham (W,) 4. City of Bothell (WA) 4( 5. Chelan County (WA) 6. Clallam County (WA) l 7. City of Clyde Hill OM) t tSf V� 8. City of Cordova (AK) 9. City of Everett (WA) 10. Eugene Water Electric Board'(OR) 11. Fairbanks North Star Borough (AK) 12. Franklin County (WA) 13. Grant County (WA) 14. Grant County Board of Health (M) 15. Jackson County (OR) 16. Josephine General Hospital (OR) 17. City of Ketchikan (AK) 18. Ketchikan Gateway Borough (AK) 19. King County Fire District #1 (WA) 20. King County Fire District #11 OM) 21. Kitsap County (WA) 22. Klamath County (OR) 23. Linn County (OR) 24. Mason County (WA) HVA DEFERRED COMPENSATION PLANS W7SHINGIt ALASKA, OREGON 25. Municipality of Anchorage (AK) 26. North Slope Borough (AK) 27. Port of Moses Lake (WA) 28. Oregon Dairy Counsel (OR) 29. Port of Pasco (PA) 30. City of Renton (WAA) 4 31. City of Shelton (WAA) 4- 32. City of Stanwood (WA) 4 33. Port of Tacoma (WA) 34. Thurston County (w) 35. .City of Tukwila OM) 36. City of Tumwater (WA) 37. Unified Sewerage Agency (OR) 38. Walla Walla County (WA) 39. Washington County (OR) 40. Whitman County (WA) 41. Yakima County (4M) 42. Port of Grays Harbour (WA) 43. City of Prosser, (WA) 4. 44. Skamania County (Fg1) 45. City of Moses Lake (WA) 4 46. City of Wenatchee (WA) MFG.CO. HASTINGS MN LOS ANGELES CHICAGO LOGAN OH MCGREGOR TX LOCUST GROVE GA E TITLE PAGE -STOCK NO. 100TP d m (7 1 d ,c, :,4 R N E4 L I INTRODUCTION DEFERRED COMPENSATION PLAN PROPOSAL This proposal is submitted for your consideration in developing a Deferred Compensation Program with The Hartford Variable Annuity Life Insurance Company. The Hartford Variable Annuity Life Insurance Company began specializing in state, county and municipal Public Employee Deferred Compensation Plans in 1973. Since that time, it has grown to become an industry leader in new premiums written and is a consistent innovator in the development of new contract provisions to benefit participants. The Hartford currently funds, administers and coordinates the enrollment for more than 400 Public Employee Deferred Compensation Plans nationwide. In addition to being a leader in the field of non qualified Deferred Compensation programs for state, county and municipal employees, the Company is also a major writer of Tax Deferred Annuities for public school and non profit organization employees. Also, The Hartford was one of the first companies to write Individual Retirement Annuities (IRA) cn a group basis for large group IRA accounts. The Company is also a major source for funding corporate and public retirement plans. We have attempted herein, to present typical questions and answers and to provide certain information that will enable the reader to fully understand the important features of the program. These features include investment options, expense guarantees, annuity settlement options, data processing capabilities, servicing facilities and overall experience in administering Deferred Compensation Programs for state, county and municipal employees. 5.63 REFERENCES Following are examples of The Hartford's exclusively funded Deferred Compensation Plans: State of Alaska City and County of San Francisco State of Nebraska City of Detroit Municipality of Anchorage University of Southern California 2 Paul B. Arnoldt, Director Division of Retirement Benefits State of Alaska Department of Administration Pouch CR Juneau, Alaska 99811 Telephone: (907) 465 -4460 Daniel Mattrocce, General Manager Employees Retirement System 770 Golden Gate Avenue San Francisco, California 94102 Telephone: (415) 558 -3991 Kenneth D. Steinmiller, Director Nebraska Public Employees Retirement System 301 Centenial Mall, South P. 0. Box 94816 Lincoln, Nebraska 68509 Telephone: (402) 471 -2053 Larry Solomon, Coordinator of Debit Management City of Detroit 110 City County Building Detroit, Michigan 48226 Telephone: (313) 224 -3310 Stanley A. Montague Director of Employee Relations Municipality of Anchorage Pouch 6 -650 Anchorage, Alaska 99502 Telephone: (907) 277 -5416 John H. Schneider Director of Personnel PVW 104 University of Southern California University Park Los Angeles, California 90007 Telephone: (213) 743 -4102 City of Santa Maria Robert Hossli, Finance Director 110 East Cook Street Santa Maria, California 93454 Telephone: (805) 925 -09b1 City of San Diego County of Clark Montgomery County City of Santa Clara City of Reno Eunice E. Winston Treasurer Plan Administrator Deferred Compensation Committee City of San Diego 202 C Street P. 0. Box 2289 San Diego, California 92112 Telephone: (714) 236 -6112 Darrel R. Daines, Comptroller Ccunty of Clark 200 East Carson Avenue Las Vegas, Nevada 89101 Telephone: (702) 386 -4011 E. Hilton Wade, Jr., Chief Division of Employee Services Executive Office Building 8th Floor 101 Monroe Street Rockville, Maryland 20802 Telephone: (301) 251 -2257 F. Thomas Shreve Deferred Comp. Committee Chairman City of Santa Clara Administrative Offices 1500 Warburton Avenue Santa Clara, California 95050 Telephone: (408) 984 -3045 James H. Berry Director of Personnel City of Reno P. 0. Box 1900 Reno, NV 89505 Telephone: (702) 785 -2285 GENERAL COMPANY REQUIREMENTS 1. Indicate whether you can provide one computer listing, whether on tapes or on cards within 60 days of the end of each calendar year, showing the current value for each contract purchased. Yes. A mechanized payment processing system will provide this data after each payment. Additionally, annual statements will be sent shortly after the close of each calendar year. 2. Describe and enclose any sales literature or promotional materials exclusively designed for Deferred Compensation Programs that your organization provides. Generic Deferred Compensation promotional literature has been enclosed. Other materials, such as a specially designed booklet outlining the specifics of your Deferred Compensation Plan may be prepared and printed by The Hartford. 3 What documents are necessary to install such a plan? The following documents are necessary to establish and install the deferred compensation plan: a. board Resolution b. Plan Document Samples of the Board Resolution and Plan Document are available from your Hartford Representative. 4. What requirements does your Company consider necessary in selecting investment vehicles offered for the Plan? For example, do you recommend a Bond Account, a Stock Account, a Money Market Account and some form of a Guaranteed Interest Account? The basic requirements that Hartford Variable Annuity considers necessary include: A reasonable choice of investment alternatives is necessary since not all employees have the same goals or investment philosophy. Younger employees, with longer time for accumulation, may wish a more aggressive investment approach for greater possible long term growth. For these, The Hartford offers a diversified high quality stock account. Older employees may place greater emphasis on stability of investment and high current income; a high yielding bond account is available for these employees. Others may desire to take advantage of short term interest rates; a money market fund is available for this purpose. Then there are others that may wish only guaranteed deposits at interest and this is offered in the guaranteed interest account. Any combination of these investments is available in a single account. The Plan should provide a practical method for maintaining accounts at minimum cost. ine necessary administration and record keeping tacilities tor receipt and disbursal of funds, and periodic reporting of plan status of the total plan and for each participant's account is provided by both The Hartford's variety of Investment alternatives and administrative facilities. The projected interest return beyond the minimum guarantees, and the annuity based on the projected returns should be both reasonable and competitive. Unusually high projections are less likely to be realized than reasonable projections. Hartford has a history of meeting or exceeding its projections, as shown in this proposal. A variety of annuity options is available and includes Life income with U b IU lb 1U year period certain, Joint and Last Survivor, installments of a Specified Period, and Life Income with Cash Refund. A quality cornpany enjoys a high rating by A.M. Best, the nationally recognized insurance company evaluation organization. The Hartford does enjoy such a rating. The primary business of the underwriting company should be the sale and service of annuity retirement programs. This would indicate their capability of administering the programs on a long -term basis. Hartford Variable Annuity Life Insurance Company's sole business is administering programs for the accumulation of funds during a participant's working years and the payment of annuity benefits during a participant's retirement years. Because The Hartford proposal offers both a guaranteed interest account and a variable account which includes a Bond, Stock, and Money Market investment alternative, the financial planning needs of each participant can be met. Contract fees should be both reasonable and competitive. Hartford otters a "no front load" product which assesses a charge only in the event of premature withdrawal. Death benefits should always equal or exceed total deposits and are provided as such in the Hartford contract up to age 65. A participant's account should be transferable in the event that he or she became employed elsewhere, assuming the new employer has a Deferred Compensation Plan. If not, it should be possible to leave the account with the first employer to continue on a tax deferred accumulation basis, without additional contributions until benefits would normally commence. The Hartford's product provides for both of these events. 5. What criteria have you established for the selection of participants in a Deferred Compensation Plan? Generally, the following should not participate: a. Those who cannot afford to save money. b. Those who have not first set aside funds for emergencies. c. Those who may have more taxable income after retirement then they have at present. Individuals who fall in the following categories should investigate the plan: a. Generally those who are paying substantial amounts of federal and state income taxes. b. Families with dual incomes. c. Single individuals with no dependents. d. Those approaching retirement. e. Those currently saving on an after -tax basis. 6. How do you recommend handling the enrollment of interested employees? a. Salaried Hartford Staff persons will coordinate and monitor the entire enrollment process. b. The Hartford Staff persons will conduct group meetings using a brief audio visual presentation. c. Individual, confidential conferences will be conducted Hartford Representatives. 7. Does your product allow for experience refunds or for reduced sales expenses for participants who continue to make contributions? Are these contractual provisions? HVA's Contract provides for experience rating (either prospectively or retrospectively) of the deduction for Contingent Deferred Sales Charges and /or the Annual Policy Fee. Depending on its size, a case may be experience rated (1) by a reduction in the amount of any applicable Contingent Deferred Sales Charge; or (2) by reduction in the amount of, or waiving of, the Annual Policy Fee or (3) by a combination of the above. 6 GENERAL CONTRACT PROVISIONS 1. Minimum number of participants required. No minimum number of participants is required. 2. Minimum purchase payment required. In accordance with the Employer's Plan Document. 3. The most recent prospectus issued must be included. A current prospectus for DC Variable Account -I is enclosed. 4. Sales /Administrative Charges There are no sales /administrative charges applicable to either the Variable or General (fixed) Account. 5. Are your fixed annuity and variable annuity issued in the same or separate contracts? The fixed interest annuity account is issued in the same contract as the variable annuity account. 6. Annual Charges (Variable Accounts only) During both the Accumulation Period and the Annuity Period a charge is made by HVA for providing the expense, mortality and administrative undertakings under the contract. Such charge is 1.25% of the average daily net assets of the Bond, Stock and Money Market Accounts. There is also an annual charge of .50% against the average daily net assets of The Hartford Fund for the provision of investment advisory and administrative services with respect to the Bond and Stock series and .375% for the Money Market series. The total charge for the Bond and Stock Accounts is, therefore, no more than 1.75 The Money Market Account has an annual charge of no more than 1.625 These charges do'not apply to the Fixed Account. 7. Annual Policy Fee An Annual Policy Fee of $25 is deducted from each Participant's Individual Account on the last business day of each participant's contract year. 8. Termination Charges a. Upon individual termination. A deduction for the Contingent Deferred Sales Charge is made only if there is a withdrawal of an individual's account value. 7 During the first eight (8) years there is a deduction of five percent (5 made against the full amount of any withdrawal. During the next seven (7) years thereof, a deduction of three percent (3 will be made against the full amount of any such withdrawal. Beyond fifteen (15) years there is no charge. If payments are elected for a designated period of three (3) years or more, there would be no rear -end charge. b. Upon termination of the master /group contract. In addition to those charges described above in a any withdrawals from the General (fixed) Account which exceed one -sixth (1/6) of the General (fixed) Account values in any contract year may be paid in six (6) equal installments, plus interest due, annually over a period of five (5) years. This provision applies to General (fixed) Account values only and not to the variable account values. 9. Is a Pre Retirement Death Benefit available? Is it included in the above figures? If not, what is the charge for the Death Benefit? A Pre Retirement Death Benefit (prior to age 65) applicable to the Variable Accounts is provided and is included in the above figures. The Company will pay the total of the contribution made to the account or the value of the participant's account, whichever is greater, less any prior withdrawals. 10. To what extent are the above charges guaranteed and for what length of time? Charges applicable to an individual participant are guaranteed for as long as the participant's account is active under the contract. Charges applicable to the master /group contract are guaranteed for five years. Changes, if any, to charges under the master /group contract will not affect any individual who became a participant in the Deferred Compensation Plan prior to the effective date of such change to the master /group contract. 11 Can future contributions and /or past accumulations be changed within the same contract? Yes, since the "Stock "Bond" and "Money Market" Accounts, as well as the "Fixed Account" are all provided in one contract. a. Future Contributions (1) How often? As often as desired, within the terms of the Plan Document. (2) In what amounts: Any amounts desired, within the terms of the Plan Document. (3) Is there any additional charge to do this? There is no charge to change future contributions. b. Past Accumulations Each exchange of accumulated values is subject to a $5.00 Transfer Fee. Amounts transferred from the Fixed Account to the Variable Accounts are subject to a limitation of one -sixth (1/6) of the fixed account value of a participant's individual account in any participant's Contract Year. 12. What annuity benefit options are available upon retirement, disability, termination, etc.? a. To the participant. The following are standard annuity benefit options and are available if provided for by the Plan Document on a fixed or variable basis or any combination thereof. Life Annuity Life Annuity with 60, 120, 180 or 240 monthly payments certain Unit Refund Life Annuity Joint and Last Survivor Annuity Payments for a designated period b. To the beneficiary. The annuity benefit available to the beneficiary will usually be the same as those available to the participant. 13. What are the guaranteed and current annuity rates per $1,000? a. Male age 65 Straight Life b. Female age 65 Straight Life c. Male age 65 10 Year Certain Life d. Female age 65 10 Year Certain Life not applicable to Variable. 14. What charges are deducted prior to the application of the annuity rates? State premium tax, if applicable. Guaranteed Current* 6.92 11.21 6.14 9.86 6.51 10.38 5.96 9.54 INVESTMENT ALTERNATIVE PROVISIONS 1. VARIABLE ACCOUNTS a. Inception date of the account currently being used. September 1, 1977 was the effective date for DC Variable Account -I described in the enclosed prospectus. The Company has been in the business of writing fixed and variable annuities since 1968. b. State the investment objective of each variable investment option. (1) STOCK ACCOUNT Investments will be made in equity type securities with emphasis on obtaining long term capital growth primarily through capital appreciation with income a secondary consideration. While long -term capital appreciation is emphasized, the investment manager may, from time -to -time, choose investments in equity -type securities selected primarily for high current income potential. This series offers the greatest potential for return on investments. (2) BOND ACCOUNT Investments will be made primarily in fixed income securities with emphasis placed on obtaining as high a level of current income as possible within the framework which also recognizes the need to preserve the shareholder's capital. From time -to -time the investment manager may invest in fixed income securities which offer high capital appreciation potential. It is expected that the portfolio of debt securities will have varying maturities, and be invested in various industry classifications, depending on the investment advisor's evaluation of current and anticipated market conditions, as well as industry outlook and Company operations. (3) MONEY MARKET Investments will be made' in high grade money market instruments such as securities guaranteed by the U.S. Government, its agencies or instrumentalities; bank certificates of deposit and banker's acceptances; high grade commercial paper; and other obligations as such. c. Federal Tax Status (1) Are reserves established within the account for payment of taxes on capital gains? 1G Under present interpretations of existing federal income tax law, (sub- chapter L) realized capital gains taken into the account are not taxable in relation to contracts issued as Qualified Plans, therefore, no reserves are provided. (2) Is an additional charge made in lieu of taxes? No. d. Investment Manager (1) Who is the present investment manager and how long have they had responsibility for managing the assets of these funds? Thorndike, Doran, Paine Lewis, Inc. was approved on December 19, 1978 by a majority of the Board of Directors to act as Investment Advisor effective January 1, 1979, to provide investment advisory services to the Fund. Thorndike, Doran, Paine Lewis, Inc. provides discretionary investment advice to private counselling accounts with combined assets in excess of $2 billion. 2. GENERAL (FIXED) ACCOUNT a. Interest Rate (1) What minimum rate of interest is guaranteed by the contract? 9.00% for Contract Years 1 and 2, 7.00% for Contract Years 3, 4 and 5, 4.00% thereafter. b. How long will such minimum interest rate be guaranteed? The interest rates are guaranteed for the periods shown in 2. a. (1) above. c. What is your current rate of interest? The interest rate currently being credited is 12.50% d. What is your Company policy concerning declaration of current interest rates? It is the Company's intention to periodically review interest rates and to issue new interest rate amendments to ensure the interest being credited is competitive within the industry. 11 e. Show the guaranteed rate of interest and the actual credited rate of interest for each of the past ten years. FROM January, 1971 April, 1972 May, 1975 January, 1979 April, 1980 January, 1981 September, 1981 Year 1 1,200 3 3,600 5 6,000 10 12,000 15 18,000 20 24,000 25 30,400 30 36,000 35 42,000 40 48,000 PERIOD INTEREST RATE TO Apri 1T 1972 May, 1975 January, 1979 March, 1980 January, 1981 September, 1981 Present Guaranteed b.UU% 7.10% 7.50% 8.25% 9.00% 9.00% 9.00% Credited 0.UU% 7.10% 7.50% 8.25% 10.25% 11.00% 12.50% f. How often is interest credited to current and prior year deposits? Interest is credited daily to yield an effective annual rate of interest. g. Assume contributions of $100 per month; deduct all sales, administration and other charges; show the amount to be accumulated for the following period using: (1) Your guaranteed rate of interest (2) Your current rate of interest Total Gross Annuity Value Contribution Guaranteed Projected 12 1,231.53 1,253.13 3,973.16 4,248.88 7,072.38 8,040.39 15,105.86 22,529.47 24,879.83 48,639.30 36,771.33 95,690.17 51,239.16 180,477.50 68,841.48 333,267.31 90,257.31 608,600.13 116,312.95 1,104,759.75 ADMINISTRATIVE SERVICES PROPOSAL FOR THE CITY OF PORT ANGLES INTRODUCTION Hartford Variable Annuity Life Insurance Company is a stock life insurance company organized under the laws of the State of Connecticut. It is a member of the Hartford Insurance Group. The HVA staff responsible for Deferred Compensation Plan Administration has the expertise, necessary to support the requirements of your plan. This expertise developed over the years, spans the highly technical areas of tax withholding and reporting, data processing and general Variable (stock, bond, and money market) and Fixed annuity administration. The Company actively entered the Deferred Compensation market and began specializing in State and Municipal Deferred Compensation Plans in 1973. Since that time, it has grown to become an industry leader in new premium writings and a consistent innovator in the development of new contract provisions and sim- plified administrative capabilities to benefit Deferred Compensation Plan employers as well as participants. DEFERRED COMPENSATION PLAN ADMINISTRATION Hartford Variable Annuity (HVA) will allocate deferrals to individual accounts in accordance with the instructions provided by the and pursuant to the Deferred Compensation Plan. In addition, HVA will agree to assume certain responsibilities and provide services which would otherwise be the obligation of the Employer. This proposal provides a general description of such services which include the following: 1. A convenient Data Processing, tape to tape system is available for transmission of data between the Employer and HVA. 2. HVA will provide appropriate reports for both the Employer and the Participant. 3. Disbursements of all benefits including retirement payments and withdrawals, will be made directly to the participant. 4. All Federal, State and Local taxes will be withheld as required and forwarded directly to the applicable taxing authority. 5. A report of such taxes will be provided to the Employer and Participants. 6. HVA will prepare the appropriate tax reporting forms (W -2 or W -2P) and mail them directly to the Participants with copies to the Employer and the applicable taxing authorities at the close of the year. 1. Tax Withholding Transactions Such transactions include payment of contract values resulting from termination of employment prior to retirement, hardship withdrawals, and retirement benefits (lump sum or annuity payments). 2. Amount Withheld 4. Taxpayer Reporting TAX WITHHOLDING SERVICES A percentage of the proceeds as specified by the Employer will be withheld for Federal, State and Local Taxes, if any. The percentage to be appropriate for Annuity Benefit Payments and Withdrawals. 3. Transmittal of Taxes Withheld A detailed report, along with a check representing the amount of taxes withheld for the prior month will be forwarded directly to the applicable taxing authority, with a copy to the Employer within the time frame prescribed by law (Exhibit 1.). A record of the amounts withheld for taxes will be provided to the recipient at the time an annuity benefit or withdrawal payment is sent. At the end of each year, the appropriate tax reporting form(s) will be prepared by HVA and mailed directly to the Participants. Appropriate copies of the forms with the ledger records, will be mailed to the Employer and the applicable taxing authorities. 1. Confirmations OTHER REPORTS Payment /transaction confirmations are produced for each Participant account at the time a payment or other transaction is processed to the account. All financial data relating to the transaction is displayed on the form (Exhibit 2). Confir- mations are usually retained by the Employer on Deferred Compensation Plans. 2. Statement of Account (Annual, Semi Annual, Quarterly) This is the status of the account as of the end of the reporting period (Exhibit 3). Under the terms of the Administrative Services Agreement, this report can be mailed directly to the Participant or as directed by the Employer. SERVICE HVA recognizes the need and desirability to service the Deferred Compensation Plan on a special attention basis. To that end, a Special Accounts Unit at The Hartford is responsible for working directly with you so as to provide service on a priority basis. The Special Accounts Unit is in the Hartford's Home Office at (203) 547 -4082. Address correspondence to Hartford Variable Annuity Life Insurance Company Hartford Plaza Hartford, Connecticut 06115 Attention: Director, Special Accounts State of Alaska City County of San Francisco City of San Diego County of Clark REFERENCES Among the State and Municipal employers who have chosen Hartford Variable Annuity Life Insurance Company to fund and administer their Deferred Compensation Plans are: Paul B. Arnoldt, Director Division of Retirement Benefits State of Alaska Department of Administration Pouch CR Juneau, Alaska 99811 Telephone: (907) 465 -4460 Walt Johnson, Executive Assistant Employees Retirement System 770 Golden Gate Avenue San Francisco, California 94102 Telephone: (415) 558 -3991 State of Nebraska Kenneth D. Steinmiller, Director Nebraska Public Employees Retirement System 301 Centennial Mall, South P.O. Box 94816 Lincoln, Nebraska 68509 Telephone: (402) 471 -2053 City of Detroit Larry Solomon, Coordinator of Debit Management City of Detroit 110 City County Building Detroit, Michigan 48226 Telephone: (313) 224 -3310 University of Southern Jack H. Schnieder California Director of Personnel Personnel Department University of Southern California University Park Los Angeles, California 90007 Telephone: (213) 741 -6027 Eunice E. Winston Treasurer Plan Administrator Deferred Compensation Committee City of San Diego 202 C Street P.O. Box 2289 San Diego, California 92119 Telephone: (714) 236 -6112 Darrel R. Daines, Comptroller County of Clark 200 East Carson Avenue Las Vegas, Nevada 90101 Telephone: (702) 386 -4011 IMPLEMENTATION 1. Execute an Administrative Services Agreement The purpose of the Administrative Services Agreement is to define those services which HVA will assume on behalf of the Employer. 2. Establish Lines of Communication Who is the person designated by the Employer to act in its behalf and to serve as coordinator with HVA? 3. Develop Procedures to Implement Provisions of Agreement Establish the appropriate percentage for Federal, State and Local Withholding taxes as applicable to Annuity Benefit Payment and Withdrawals. Develop reporting requirements. VA 52491 145 -36 -5602 VA 52371 115 -14 -6045 VA 53671 540 -56 -9324 VA 53140 566 -22 -9786 VA 52463 528 -12 -3446 VA 52596 517 -34 -4092 VA 52459 522 -14 -3443 VA 52521 376 -42 -9632 EMPLOYER PAYMENTS TAXABLE FEDERAL STATE AMOUNT OF DATE OF TYPE OF VA NO. S.S. NUMBER NAME OF ANNUITANT AMOUNT WITHHOLDING WITHHOLDING CHECK CHECK CHECK $215.12 43.02 9.03 163.07 4/14/78 Bene. 104.86 20.97 4.40 79.49 4/14/78 Bene. 3681.48 736.30 154.62 2790.56 4/18/78 Surr. 510.00 102.00 21.42 386.58 4/18/78 Surr. 146.10 29.22 6.14 110.74 4/18/78 Bene. 343.67 68.73 14.43 260.51 4/18/78 Bene. 108.04 21.61 4.54 81.89 4/17/78 Bene. 1436.91 287.38 -60.35 1089.18 3/02/78 Surr. TOTALS AS OF 4/20/78 $734.47 548.43 CK# 106325 The Federal Taxes were de- posited on 4/21/78. The State Taxes were not de- posited at this time. HARTFORD VARIABLE ANNUITY LIFE INSURANCE COMPANY ISSUER HARTFORD EQUITY SALES COMPANY, INC. "HESCO PRINCIPAL UNDERWRITER Type of Transaction Current Date Effective Date TR ACTION (Fixed) l Account f Separate Account Separate Account Gross Amount Received Sales and Administrative Charges State Premium Taxes (if any) Insurance (Other Charges Deductions Net Amount Credited or Deducted Urns Value on 1 Units Credited or Deducted 1CURRENT ACCOUNT BALANCES Unit Value on Cash Value E 7 Form HV -287 -6 J Pnnted in USA L Units NOTE: See reverse side for descnptions of Column Headings 1 Acct No Agent Control No Division Gross Payments Since Issue 1$ Total Surrender to Date 1$ WHEN A SEPARATE ACCOUNT TRANSACTION IS BEING EFFECTED THIS CONFIRMATION IS ISSUED ON BEHALF OF HESCO ACTING AS AGENT FOR THE SEPARATE ACCOUNT L_ Form y{V-571 -3 Punted m U.S A Statement of Account lex FIXED STOCK BOND LOTS HELD TOTAL CASH VALUE *On statement valuation date 1 T REFLECT PURCHASES OR TRANSACTIONS MA AFTER THE ABOVE THIS TON DATE DOES NO VALUATION ADMINISTRATIVE SERVICES AGREEMENT This agreement is made and entered into by and between the and Hartford Variable Annuity Life Insurance Company, a Connecticut corporation. The intent of this agreement is to facilitate the administration of the Deferred Compensation Plan as it pertains to accounting for deferrals, the disbursement of funds, withholding of taxes and the proper reporting to participants, annuitants and governmental agencies. Section 1. Definitions Unless this agreement expressly provides otherwise, the following definitions shall apply herein. A. "Agent" means the Hartford Variable Annuity Life Insurance Company. B. "Contractowner" means the in the State of C. "Participant" means an employee of the Contractowner electing to participate in the Deferred Compensation Plan. D. "Annuity Contract" means the Master Group Annuity Contracts between the Contractowner and the Hartford Variable Annuity Life 411 Insurance Company. E. "Plan" means the Contractowner's Deferred Compensation Plan. Section 2. Scope of Service The Agent shall perform the administrative services described below. Section 3. Term This agreement shall become effective immediately upon execution by both parties and shall remain in force until terminated by either party as provided herein. Section 4. Relationship of the Parties The Agent shall perform its obligations hereunder as an Agent for the Contractowner. The Contractowner may administer this agreement and monitor the Agent's compliance with its obligations hereunder. The Contractowner shall not supervise or direct the Agent other than as expressly provided in this agreement. Section 5. Services to be Performed The Contractowner shall notify the Agent in writing of the participants entitled to receive disbursements under the terms of the Plan and the Contractowner shall indemnify the Agent for any damage suffered by the Agent due to any incorrect information provided hereunder to the Agent by the Contractowner. A. The Agent shall issue the disbursements to the participants 2 in accordance with the provisions of the Annuity Contract and the Plan. B. Disbursements shall be made from the account maintained by the Agent on behalf of the Contractowner in accordance with the terms of the Annuity Contract and the Plan provided, however, if the Contractowner terminates the Annuity Contract, the Agent shall be obligated to make disbursements only to the extent that funds are still available in the Account of the Contractowner. C. The Agent shall compute and deduct from the disbursements all appropriate Federal, State and Local income taxes required by law to be withheld from plan distributions by the Contractowner in accordance with the percentage rates illustrated in the attached Supplemental Information Addendum. A detailed report including such withheld taxes will be forwarded by the Agent to the applicable taxing authority, with a copy to the Contractowner, within the time frame prescribed by law unless other instructions, are provided in the attached Supplemental Information Addendum. D. The Agent shall furnish annually to all annuitants /partici- pants receiving payment or benefits from the plan the tax reporting form(s) required by the applicable taxing authority within the time frame prescribed by law. Section 6. Financial Management System The Agent shall establish and maintain a financial management system for the purposes of this agreement in accordance with generally accepted accounting practices and procedures including: 1. For each disbursement: a. A record of all notifications from the Contractowner concerning participants who are to receive disbursements under this agreement. b. Statements of gross disbursements under the agreement. c. Statements of all Federal, State and Local income taxes withheld under this agreement. 2. Records of all income taxation reports filed with the Federal, State and Local governments on behalf of the Contractowner. Section 7. Financial Reporting and Audits A. The Agent shall furnish directly to the participants a statement of the gross disbursement under the agreement which includes the amount of Federal, State and Local taxes withheld and the net amount paid with each disbursement to a participant. B. The agent shall furnish to the Contractowner: 1. A report containing a statement of each and every dis- bursement made under this agreement which includes the amount of Federal, State and Local taxes withheld pursuant to Section 5, paragraph C above. 2. A payment /transaction confirmation for each participant including pertinent financial data relating to the transaction unless otherwise instructed in the attached Supplemental Information Addendum. 3. A Statement of Account for each participant (in duplicate) 411 reflecting a summary of appropriate financial data will be prepared and mailed as instructed in the attached Supplemental Information Addendum. 4. At the discretion of the Contractowner, an annual and semiannual report for the Hartford Variable Annuity Life Insurance Separate Account and /or Hartford Fund for distribution. 5. Such other reports as the Contractowner may reasonably require or as are required under the Annuity Contract. Section 8. Records Management A. Retention: Except as provided otherwise, the Agent shall retain all financial records, supporting documents, statistical re- cords, reports, minutes, correspondence and other written materials kept or used by the Agent during the course of its performance of obligations under this agreement for three years following the date of termination. Agent may retain such records and documents on microfilm. B. Late Audits: If any audit by or on behalf of the Contract- owner has begun but has not been completed at the end of the three year period or if audit findings have not been resolved at the end of the three -year period, the Agent shall retain the records described in subsection A of this section until audit findings are resolved. C. Termination or Cessation Before Expiration of Retention Period: If, for any reason, the Agent ceases operations prior to the expiration of records retention period required by this section, all records as described in subsection A of this section immediately shall be delivered to the Contractowner. 5 D. Emergency Custody of Records: If the Agent fails to ade- quately protect records from fire, theft, damage, deterioration or any other type of loss during the required period of retention, the Contractowner hereby reserves the right to take custody of all records in danger of being lost, destroyed or damaged. E. Inspection of Records: Upon prior request and during normal business hours, the Agent shall allow the Contractowner full and complete access to all records required to be retained by the Agent. The contractowner shall have the right upon reasonable notice, exercised directly or through its independent'auditors, to examine and audit the Agent's records and accounts to determine the Agent's compliance with the terms and conditions herein. Section 9. Termination A. This agreement may be terminated without any further liability of either party for any obligation maturing subsequent to the date of such termination. 1. By either party upon sixty(60) days' written notice to the other party of the intent to terminate. 2. By the Contractowner, upon learning of the Agent's violation of any Federal, State or Local law, ordinance or regulation that governs activities related to the Agent's performance of this agreement. B. Duties Upon Termination 1. The Agent shall deliver to the Contractowner all records and reports required by this agreement. 6 2. The Agent shall submit within thirty(30) days after the date of termination of this agreement all financial, performance and any other reports required by this agreement. Section 10. Nondiscrimination The Agent agrees to comply with all requirements of law, including the nondiscrimination and affirmative action requirements applicable to the Contractowner. Section 11. Nonwaiver The failure of the Contractowner or Agent at any time to enforce a provision of this agreement shall in no way constitute a waiver of the provision, nor in any way affect the validity of this agreement or any part hereof, or the right of the Contractowner or Agent thereafter to enforce each and every provision hereof. Section 12. Assignments Any attempted assignment of this agreement or any part of it without the written consent of the other party shall be void. Section 13. Amendment The parties may amend this agreement only by written agreement and approved by the President or a Vice President of Hartford Variable Annuity and an authorized person for the Contractowner. Section 14. Notices Any notice provided for herein shall be in writing and shall be deemed to have been given when received by personal delivery or United States mail addressed as follows: Contractowner: Agent: Dean L. Hones Vice President /Administration Hartford Variable Annuity Life Insurance Company Hartford Plaza Hartford, Ct 06115 or to such other persons or addresses which the Contractowner or Agent may from time to time designate in writing. Section 15. Jurisdiction: Choice of Law The Law of the State of Shall govern the rights and obligations of the parties under this agreement. Section 16. Integration This instrument and any written appendices and amendments hereto embody the entire agreement of the parties. There are no promises, terms, conditions, or obligations other than those contained herein; and this agreement shall supersede all previous communications, representations or agreements, either oral or written, between the parties hereto with respect to this agreement. 8 ATTEST: Section 17. No Cost to the Contractowner The services rendered by the Agent pursuant to this agreement shall be performed without cost to the Contractowner. IN WITNESS WHEREOF, the Parties hereto have caused this agree- ment to be signed as of the date shown below: ATTEST: 9 By Date HARTFORD VARIABLE ANNUITY LIFE INSURANCE COMPANY Date: Vice President /Administration 1 2. Effective Date: 3. Contractowner Contact: 1 1 to the following address: SUPPLEMENTAL INFORMATION ADDENDUM %Name) (Address) (Phone Nutter) 4. Tax Withholding Percentage (Flat Rate) (a) Benefit Payments: Federal: State: Local: (b) Withdrawal Payments and Refunds after Withdrawal: Federal: 20 State: Local: 5. Tax Depositing and Reporting Federal (a) n Use The Hartford's Tax ID Number. Deposit and report withheld taxes directly with the local IRS depository with a copy to the Contractowner. (b) El Use the Contractowner's Tax ID Number Remit withheld taxes to the Contractowner on a Weekly basis, or 1 Monthly basis, Deferred Compensation Plan. (•rltle) for deposit and reporting to the IRS. 6. Tax Depositing and Reporting State and Local (a) n Withheld taxes will be remitted to the Contractowner as designated in Section 14 of the A.S.A. on a M !weekly M 1uonthly basis for deposit and re- porting to the applicable taxing authority. (b) D*Withheld taxes will be remitted directly to the applicable taxing authority(s) as indicated below, with a copy to the Contractowner. *Provide the State/Local Tax Registration form with this addendum. 7. Statement of Account (a) Prepare on the following basis: 1 Annual FT Semi Annual n Quarterly (b) Mail to: (l Contractowner for distribution 0 One to Contractowner and one directly to participants. FOR Oa (Signature) (Title) (Date) k qraltMAgf11111 kw* i11 to l 'Stir t. k **41 THE HARTFORD S V HARTFORD VARIABLE ANNUITY LIFE INSURANCE COMPANY HARTFORD PLAZA HARTFORD, CONNECTICUT 06115 PORTFOLIO LISTING BOND SERIES AND STOCK SERIES HARTFORD FUND, INCORPORATED JUNE 30, 1981 INVESTMENT ADVISER Thorndike, Doran, Paine Lewis Boston, MA 02109 PRINCIPAL UNDERWRITER Hartford Equity Sales Company, Inc., (HESCO) Hartford Plaza, Hartford, CT 06115 s. 1..4 't: I 71:111 Cash Cash Equivalents Cash 0 27 39.28 Maturities Under 1 Year ACF Industries Equip TR 10 00096 due 05/15/82 3 27 500,000 10 5 477 50 Federal Farm CR Banks 16 60096 due 12/01/1981 6 86 1,000,000 16.6 1,000.00 FNMA DIS Notes due 07/02/1981 3 37 500,000 17 7 491 86 U S GOVT REPO 15 00096 due 07/01/1981 7 42 1,083,000 15 0 1,083.00 U S Treasury Bill due 07/23/1981 680 1,000,000 14 3 991 63 TOTAL MATURITIES UNDER 1 YEAR 27 72 15.0 4,043.98 TOTAL CASH CASH EQUIVALENTS 27 99 14 9 4,083 27 Maturities 1 To 2 Years U.S. Treasury Note 13 875% due 02/28/1983 U 5 Treasury Note 14 50096 due 04/30/1983 TOTAL MATURITIES 1 TO 2 YEARS HARTFORD FUND, INC. BOND SERIES TOTAL OF UNITS ANNUAL MARKET TOTAL YIELD VALUE ASSETS (in thousands) 6 73 1,000,000 14 1 6 80 1,000,000 14 6 13 53 14 4 981 25 992.50 1,973.75 Maturities 2 To 10 Years U.S. Securities U.S. Governments U 5 Treasury Note 13 250% due 05/15/1984 6 68 1,000,000 13.6 973.75 U 5 Treasury Note 14 000% due 12/31/1984 6.80 1,000,000 14.1 991.25 U 5 Treasury Note 13 250% due 04/15/1988 660 1,000,000 13.8 963.12 TOTAL U.S. GOVERNMENTS 20 07 13 8 2,928 12 U.S. Agencies Federal Farm Credit 13 200% due 03/04/1985 6 51 1,000,000 13 9 950 00 Federal Farm Credits 14 30096 due 12/02/1985 6 74 1,000,000 14 5 983 75 FNMA 13 000% due 01/10/1986 6 38 1,000,000 14 0 930 00 TOTAL U.S. AGENCIES 19.63 14 1 2,863 75 TOTAL US. SECURITIES 39 71 14 0 5,791.87 Finance General Motors Accept 9 000% due 06/01/84 2 97 500,000 10.4 432.68 Republic NY BK 15 75096 due 05/01/1991 3.43 500,000 15.8 500 00 TOTAL FINANCE 6.39 13.3 932.68 Industrial Tenneco Inc 14 50096 due 06/01/1991 3.34 500,000 14.9 486.87 Transportation Burlington Northern RR 11 12596 due 02/01/88 2 93 500,000 13 0 428.03 Utilities Electric Utilities Indiana Michigan Elect 14 75096 due 03/01/1989 3.30 500,000 15.3 481 87 Telephone Pacific Tel Tel 11 350% due 07/15/1990 2 80 500,000 13.9 408.07 TOTAL UTILITIES 610 14 7 889 95 TOTAL MATURITIES 2 TO 10 YEARS 58 47 14 0 8,529 41 TOTAL ASSETS UNDER MANAGEMENT 100.00 14 3 14,586.44 Cash Cash Equivalents Cash Maturities Under 1 Year U.S GOVT REPO 15 000% due 07/01/1981 TOTAL CASH CASH EQUIVALENTS Common Stocks Utilities Telephone American Tel Tel Co Gas Electric Houston Natural Gas Southern Nat Resources Tenneco Inc TOTAL GAS ELECTRIC TOTAL UTILITIES Finance Banks Related First Intl Bancshares Texas Comm Bancshares Wachovia Corp TOTAL BANKS RELATED Insurance Related American Express Company General RE Corp Frank B Hall Co U S Fidelity Guarantee TOTAL INSURANCE RELATED TOTAL FINANCE Basic Industrial Energy International Oils Exxon Corp Mobil Corp Royal Dutch PTM NY ORD 1 Standard Oil Co of Calif TOTAL INTERNATIONAL OILS Domestic Oils Atlantic Richfield Getty Oil Co Marathon Oil Phillips Petroleum Co Standard Oil Co Indiana Sun Co Inc OTAL DOMESTIC OILS OF TOTAL ASSETS Other Energy Services 0 20 69 32 Halliburton Company Helmench Payne Petrolane Inc Schlumberger Ltd Sedco TOTAL OTHER ENERGY SERVICES TOTAL ENERGY 9 79 3,285,000 3,285 00 9 58 3,215 67 2 68 1 53 1.71 1 38 4 62 7 30 1 06 1 40 1 12 3.58 0 43 2 12 0 84 1 17 4 57 815 2 45 2 06 1 44 1 63 7 58 071 1 24 091 1 14 0 98 1 03 601 HARTFORD FUND, INC. STOCK SERIES TOTAL MARKET VALUE (in UNITS thousands) 16,000 900 00 12,000 9,500 12,000 5,875 12,000 13,500 3,000 9,000 11,000 8,000 24,000 23,000 15,000 14,600 5,000 6,000 5,000 10,000 6,000 10,000 51300 574.75 463 50 1,551 26 2,451 25 356 91 471 00 374 62 1,202 53 145 12 711 00 283 25 393 00 1,532 37 2,734.91 822 00 690 00 483 75 547 50 2,543 25 237 50 415 50 306 25 382 50 329 25 345 00 2,01600 Materials Building Mat, HSG, Paper Pacific Lumber Co Chemicals Avery International Metals Minerals Aluminum Co of America Engelhard Corp Phibro Corp TOTAL METALS MINERALS TOTAL MATERIALS Producers Durables Machinery Other Cooper Industries Inc Timken Co TOTAL MACHINERY OTHER TOTAL PRODUCERS DURABLES Transportation Federal Express Corp Southwest Airlines TOTAL TRANSPORTATION TOTAL BASIC INDUSTRIAL Consumer Service Durables Snap On Tools Corp Stanley Works TOTAL DURABLES Non-Durables Food, Beverage Tobacco Coca -Cola Company Pepsico Inc Philip Morris Ralston Purina Company TOTAL FOOD, BEVERAGE TOBACCO OF TOTAL ASSETS 1 78 1 55 1 28 1.41 1 48 7 50 21 08 0 87 0 74 0 89 0 34 1 28 2 52 4 12 1 46 0 77 2 23 2 23 1 32 1 43 2 75 3018 1 43 0 33 1 77 1 55 1 05 1 78 1 12 551 TOT MARI VALI (in UNITS thousi 10,000 12,000 24,000 5,000 17,000 15,000 10,000 12,000 29,000 597 519 429 473 497 2,516 7,075 10,000 291 10,000 248 10,000 297 4,800 115 15,000 431 844 1,384 11,000 490 3,500 258 749 749 7,000 442 9,000 479 922 10,131 18,000 481 6,000 111 592 521 353 597 377 1,849 Household Products Eastman Kodak Levi Strauss Co TOTAL HOUSEHOLD PRODUCTS TOTAL NON DURABLES Retail Malone and Hyde McDonalds Corp Melville Corp Pic N Save Corp Super Valu Stores Inc Tandy Corp TOTAL RETAIL Media Capital Cities Comm General Cinema Corp Lin Broadcasting Corp Warner Communications TOTAL MEDIA TOTAL CONSUMER SERVICE Applied Science RSCH Computers Office EQ Applicon Digital Equipment Intl Business Machines NCR Corp Xerox OF TOTAL ASSETS 1 56 0 53 2 09 7 60 1 35 1 35 1 30 0 63 1 45 0 74 681 1 62 1 22 1 42 1 82 6 08 22 25 1 04 1 77 2 50 0 75 0 64 TOTAL COMPUTERS OFFICE EQ 6 70 HARTFORD FUND, INC. STOCK SERIES TOTAL MARKET VALUE (in UNITS thousands) 7,000 523 25 5,000 178 75 702 00 2,551 00 14,000 7,000 10,000 12,000 13,000 8,000 7,000 11,000 14,000 12,000 11,500 6,000 14,500 4,000 4,000 451 50 453 25 437 50 21000 485 87 247 00 2,285 12 545 12 408 37 476 00 61200 2,041.50 7,470.12 350 75 592 50 839 19 25200 216 00 2,250 44 Defense Aerospace Raytheon Co Tre Corp United Technologies Corp TOTAL DEFENSE AEROSPACE Electronics Burndy Corp M/A-Com Inc Perkin -Elmer Corp Scientific Atlanta Inc Unitrode Corp TOTAL ELECTRONICS Medical Drugs Squibb Corp Upjohn Company TOTAL DRUGS Hosp Sup Medical Tech Baxter Travenol Labs Inc Johnson Johnson Medtronic Pall Corp U S Surgical TOTAL HOSP SUP MEDICAL TECH TOTAL MEDICAL TOTAL APPLIED SCIENCE RSCH TOTAL COMMON STOCKS TOTAL ASSETS UNDER MANAGEMENT OF TOTAL ASSETS 1 61 0 93 0 82 3 36 1 44 0 86 0 64 1 00 1 00 4 94 TOTAL MARKET VALUE (in UNITS thousands) 0 99 10,000 332 50 0 87 5,000 293 12 1 86 625 62 0 65 1 41 0 89 1 33 1 39 5 66 7 53 22 54 90 42 100 00 12,000 10,500 5,000 11,000 10,000 8,000 12,000 6,000 4,000 13,500 8,500 14,000 14,000 540 00 312 37 276 87 1,129 25 484 00 288 75 215 00 336 00 334 50 1,658 25 217 50 472 50 297 50 448 00 465 50 1,901 00 2,526 62 7,564 56 30,352 14 33,567 82 o 0 When you purchase Hartford Variable Annuities through a program of systematic monthly investments, your DOLLARS are invested at a cost which when AVERAGED is Tess than the average market price of the units during the period. Through Dollar Cost Averaging —time, not timing, works in your favor. In an UP In a DOWN market market you accumulate fewer units. you accumulate more units. But your cost, in an up or down market, is always less than the average unit price. HERE'S A SPECIFIC EXAMPLE OF HOW DOLLAR COST AVERAGING CAN WORK! NET* $100.00 INVESTMENT PER MONTH FOR 12 MONTHS MONTH AMOUNT INVESTED Explanation PRICE PER UNIT NUMBER OF UNITS PURCHASED January 100 $10 10 0 February 100 8 12.5 March 100 7 14 3 April 100 5 20 0 May 100 6 16.7 June 100 6 16.7 July 100 4 25.0 August 100 6 16 7 September 100 7 14.3 October 100 8 12.5 November 100 10 10 0 December 100 12 8 3 $1200 7 40 177 0 Total Average Total Units Investment Unit Price Purchased *See a current prospectus of the appropriate Hartford Variable Annuity Life Insur- ance Company's Separate Account for an explanation of deductions and charges made on each purchase payment. Overthe twelve month investment period in the above example, the average unit price came out to $7.40 However, by dividing the total net amount invested ($1200) by the total number of units purchased (177) you get an average cost per unit of only $6.78, a difference of $.62 per unit from the average price' TAKE ADVANTAGE OF DOLLAR COST AVERAGING BY SYSTEMATICALLY INVESTING FIXED AMOUNTS IN YOUR HARTFORD VARIABLE ANNUITY. Note: Dollar cost averaging cannot protect against loss in a continuously declining market and it cannot assure a profit, but i t does guarantee that your average cost w i l l be less than the average price An investor would take a loss if he discontinued when his market value was less than his cost I nvestments are made in securities that fluctuate in value and investments must be continued at regular intervals regardless of price levels The investor must have the financial ability to continue purchases during low price levels AVERAGE PRICE PER UNIT $7.40 AVERAGE COST PER UNIT $6.78 THE HARTFORD This presentation is authorized only when preceded or accompanied by a currently effective prospectus of the appropriate Hartford Variable Annuity Life Insurance Company separate account and of the underlying security, Hartford Fund, Incorporated. 97679 14th Rev Printed in U S A Hartford Variable Annuity Life Insurance Company's Semi Annual Report June 1981 Hartford Fund, Incorporated QP Variable Account DC Variable Account —I DC Variable Account —II HVA Separate Account THE HARTFORD 1!L Contract Ofivwkinial aid CPu7G00P proposal ble Letter artfor Varia Varia Variab artfor Contract Ron I0 O 0 0 O 0 Separate 0 Varia nsurance Owners ncorporate Account Account Account Accou nt Annuity C®m any u a n c alb? am t�n1O 98 Annual 8 Contents 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 it 0 0 0 0 0 0 0 0 00000 0 0 0 0000000000000 4 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ��o 7 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0! J f��/S/ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 /S(/ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 e82 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 2 Contract deseription should prospectus, complete along up -to -date alternatives WM MG financial prospectus available financial information provided Ofi trio information particular regarding contained Separate Oh OM Separate Account pure o nl Semi Annual Accounts. Report contraet provides participat pertinent general connection information information in cludin g contraet e appli cable sales, administrative nom- hase CQ P WM Cm Efftg xcept fhnl conjunction Rig W4 received September Q rT contracts appropriate other Variable Prospee- charges. 98 0 r To Our Contract Owners: We are pleased to report that our Separate Accounts performed well during the first half of 1981, considering the uneven economy and the cautious response of fi- nancial markets to the new fiscal and monetary policies of the Reagan administration A historical record of per- formance of each Separate Account is set forth in the following Semi Annual Report. The ability of the U S. economy to resist the constraints of very high interest rates continued to be impressive during the first half of 1981. Thorndike, Doran, Paine and Lewis (TDP &L), the investment advisor to the HVA Separate Account and Hartford Fund, expects real Gross National Product to increase by 3 to 4% in 1981, aided in part by capital investment, inventory building and defense expenditures. At the same time, declining oil prices and lower- than expected agricultural prices have caused TDP &L to lower their inflation outlook. Fol- lowing a 13.5% increase in the Consumer Price Index in 1980, TDP &L expects a 10 to 12% increase in 1981. Despite these favorable developments, corporate prof- its in general are under some pressure. Labor compen- sation continues to increase 10 to 12% a year. High interest rates, an increase in the minimum wage and high social security taxes have pushed costs up more rapidly than corporations were able to raise prices. Ac- cordingly, TDP &L's profit forecast has been lowered to about a 10% gain in 1981. TDP &L continues to anticipate high interest rates. The expected tax cut and increase in defense expenditures contained in recent budget proposals are predicted to result in a Federal deficit higher than many others ex- pected. Since both government and business have continuing financing needs, TDP &L expects the de- mand for funds from the fixed income markets to re- main high. Throughout the first 6 months of 1981, this investment advisor maintained a very short maturity in the Bond Series of Hartford Fund. This strategy proved beneficial in the first half of 1981, and the Bond Account unit of interest appreciated by 3 3% despite a decline in the bond market generally. The first half of 1981 has been a challenging period for the stock market. High short -term interest rates have been formidable competition for common stocks in general, and lower oil prices have led to declines in many energy stocks. HVA Separate Account unit prices declined by 3.2% and 2.0% for qualified and non -qual- ified units while the Stock Account unit of interest ap- preciated by 0.5% by mid -year. TDP &L's emphasis in selecting stocks is on those companies that have the management, financial strength and product demand that will enable them to achieve growth in both earnings and dividends. TDP &L believes that the holdings in the stock portfolios are very reasonably priced and have good potential for growth. Contract owners in the HVA Separate Account will vote on the proposed dissolution of that account at a meet- ing of contract owners to be held on December 16, 1981 If contract owners approve the dissolution, the assets of the HVA Separate Account, some time during 1982, will be merged into the Stock Series of Hartford Fund. The Separate Account Committee has approved the plan of merger. HVA and the Separate Account Committee urge you to exercise your voting rights. Very truly yours, Robert B Goode Jr. Executive Vice President and Chief Operating Officer President and Chairman, Separate Account Committee and Hartford Fund, Incorporated 1 Hartford Fund, Incorporated Statement of Assets and Liabilities (unaudited) June 30, 1981 Money Bond Stock Market Series Series Series Assets Investments (Note 1). Common stocks, at closing market quotations (cost $26,284,981) -0- $30,466,894 -0- Long -term bonds, at closing market quotations (cost$11,293,610) 11,012,815 -0- -0- Short -term securities at yield equivalent (cost $956,757) -0- -0- 956,080 Short -term securities, at cost (approximates market) 3,540,380 3,285,000 1,269,860 14,553,195 33,751,894 2,225,940 Cash 40,650 60,830 17 Dividends and interest receivable (Note 1) 412,367 79,534 17,935 Due from Hartford Variable Annuity Life Insurance Company QP Variable Account 2,520 68,789 -0- Total assets 15,008,732 33,961,047 2,243,892 Liabilities Due to Hartford Variable Annuity Life Insurance Company 2,793 5,925 503 Due to Hartford Variable Annuity Life Insurance Company DC Variable Account -I 55 43 -0- Due to Hartford Variable Annuity Life Insurance Company DC Variable Account -II 14 503 -0- Accrued expenses 7,180 13,059 -0- Payable for securities purchased -0- 202,725 -0- Total liabilities 10,042 222,255 503 Net assets Net asset value per share equivalent at June 30, 1981 Outstanding series shares at June 30, 1981 (Note 4) The accompanying notes are an integral part of these financial statements $14,998,690 $33,738,792 $2,243,389 .956004 1573555 .998822 15,688,934 21,441,127 2,246,035 5 u 1 1 6 Hartford Fund, Incorporated Statement of Operations (unaudited) For The Six Months Ended June 30, 1981 1 Money Bond Stock Market Series Series Series INVESTMENT INCOME Income (Note 1). Dividends -0- 499,575 -0- Interest 958,917 236,550 59,660 Total income 958,917 736,125 59,660 Expenses (Note 2)• Investment advisory services 22,974 49,281 794 Administrative services 12,370 26,536 695 State corporation tax 1,632 3,497 -0- Directors' fees 1,670 3,573 -0- Audit fees 1,327 2,838 -0- Legal fees 1,265 2,734 -0- Other expenses 529 1,520 -0- Total expenses 41,767 89,979 1,489 Net investment income 917,150 646,146 58,171 Realized and Unrealized Gain (Loss) On Investments Realized gain (loss) from security transactions: Common stocks: Proceeds from sales -0- 3,713,383 -0- Cost of securities sold -0- 3,088,485 -0- -0- 624,898 -0- Long -term bonds Proceeds from sales 11,394,065 -0- Cost of securities sold 11,888,744 -0- -0- (494,679) -0- -0- Short -term securities Proceeds from sales 87,373,990 230,777,829 17,560,922 Cost of securities sold 87,376,077 230,777,829 17,561,056 (2,087) -0- (134) Net realized gain (loss) from security transactions (496,766) 624,898 (134) Unrealized appreciation (depreciation) of investments. Beginning of period (396,328) 5,130,512 108 End of period (280,795) 4,181,913 (677) Unrealized apprecia- tion (depreciation) of investments 115,533 (948,599) (785; Net realized and unrealized (loss) on investments (381,233) (323,701) (91 The accompanying notes are an integral part of these financial statements u Hartford Fund, Incorporated Statement of Changes in Net Assets (unaudited) From Investment Activities (Notes 1, 3 and 5) Net investment income 917,150 646,146 58,171 1,307,569 823,517 6,17 Distribution from net investment income (Note 5) (1,307,569) (823,517) (58,171) (700,587) (351,651) (6,17 Net realized gain (loss) from security transactions (496,766) 624,898 (134) (625,354) 560,770 -i Unrealized appre- ciation (deprecia- tion) of investments during the period 115,533 (948,599) (785) 60,868 4,084,943 1( Increase (decrease) in net assets derived from investment activities (771,652) (501,072) (919) 42,496 5,117,579 1( From Capital Share Transactions (Note 4) Net proceeds from sale of shares 3,137,727 7,271,284 2,055,898 6,633,338 15,174,633 190,1: Cost of shares reacquired (1,024,152) (593,736) (1,557) (3,005,571) (2,594,984) (2E Increase in net assets derived from capital share transactions 2,113,575 6,677,548 2,054,341 3,627,767 12,579,649 189,84 Increase in net assets 1,341,923 6,176,476 2,053,422 3,670,263 17,697,228 189,9E Net Assets (Note 6) Beginning of period End of period The accompanying notes are an integral part of these financial statements Six Months Ended Year Ended June 30, 1981 December 31, 1980 Money Money Bond Stock Market Bond Stock Market Series Series Series Series Series Series 13,656,767 27,562,316 189,967 9,986,504 9,865,088 $14,998,690 $33,738,792 $2,243,389 $13,656,767 $27,562,316 189,9E 8 Principal Amount Hartford Fund, Incorporated (BOND SERIES PORTFOLIO) SCHEDULE OF INVESTMENTS (unaudited) June 30, 1981 LONG -TERM BONDS 73.43% Government Bonds Notes- 51.86% $1,000,000 Federal Farm Credit Banks 13.200% due March 4, 1985 1,000,000 Federal Farm Credit Banks 14.300% due December 2, 1985 1,000,000 Federal National Mortgage Association 13.000% due January 10, 1986 1,000,000 U.S. Treasury Note 14.500% due April 30, 1983 1,000,000 U.S. Treasury Note 13.250% due April 15, 1988 1,000,000 U.S. Treasury Note 13.250% due May 15, 1984 1,000,000 U.S. Treasury Note 13.875% due February 28, 1983 1,000,000 U.S. Treasury Note 14.000% due December 31, 1984 Conglomerates- 3.30% 500,000 Tenneco Inc. 14.500% due June 1, 1991 Cost 1,000,000 Market Value 996,250 955,000 982,500 936,875 930,000 995,625 996,250 979,687 964,375 998,438 976,250 991,875 985,314 999,550 988,750 7,898,300 7,778,439 495,000 495,000 The accompanying notes are an integral part of these financial statements. Principal Amount Finance 6.19% 500,000 General Motors Acceptance Corporation 9.000% due June 1, 1984 500,000 Republic New York Co. 15.750% due May 1,1991 Telephones -2.67% 500,000 Pacific Telephone Telegraph Co. 11.350% due July 15, 1990 Transportation -6.15% 500,000 ACF Industries Equipment Trust 10.000% due May 15, 1982 500,000 Burlington Northern Railroad 11.125% due February 1, 1988 Utilities Electric Gas -3.26% 500,000 Indiana Michigan Electric Company 14.750% due March 1, 1989 Total Long -Term Bonds MI Cost V, 490,963 497,500 988,463 451,070 500,000 486,570 986,570 474,207 $11,293,610 $11, LL (t► Principal Amount SHORT TERM SECURITIES 23.60% $1,000,000 Federal Farm Credit Bank 16.600% due December 1, 1981 500,000 Federal National Mortgage Association 16.750% due July 2, 1981 1,000,000 U.S. Treasury Bills 14.220% due July 23, 1981 Hartford Fund, Incorporated Bond Series Portfolio Market Cost Value $1,000,000 $1,000,000 491,857 491,857 965,523 965,523 Principal Investment Changes (unaudited) Six Months Ended June 30, 1981 (Exclusive of holdings increased or decreased) Additions— Securities now owned which were not owned at December 31, 1980. Federal Farm Credit Banks 13.200% due March 4, 1985 Federal Farm Credit Banks 14.300% due December 2, 1985 Federal National Mortgage Association 13.000% due January 10, 1986 Indiana Michigan Electric Company 14.750% due March 1, 1989 Republic New York Co. 15 750% due May 1, 1991 Tenneco Inc. 14.500% due June 1, 1991 U.S. Treasury Note 14.500% due April 30, 1983 U.S Treasury Note 13.250% due April 15, 1988 U.S. Treasury Note 14.000% due December 31, 1984 U.S. Treasury Note 13.875% due February 28, 1983 The accompanying notes are an integral part of these financial statements Principal Amount Repurchase Agreement 1,083,000 Hartford National Bank and Trust Co. 15.000% due July 1, 1981 (Collateralized by GNMA due July 17, 2006) 1,083,000 1,083,1 $3,540,380 DIVERSIFICATION OF ASSETS Total long -term bonds 73.43% Total short -term securities 23.60% Total Short -Term Securities Total investment in securities 97.03% Mark( Cost Vaiuf $11,012,, 3,540,: 14,553, Cash and receivables, less liabilities 2.97% 445, Net Assets 100.00% $14,998, Eliminations— Securities owned at December 31, 19f which are not now owned. Consolidated Natural Gas Co. 12.875% due October 1, 2000 Continental Telephones Corporation 10.500% due May 1, 1983 Federal Farm Credit Banks 12.650% due April 20, 1988 Federal Farm Credit Banks 11.700% due July 20, 1988 Florida Power Corp. 13.300% due November 1, 1990 Indiana Michigan Electric Company 11.375% due June 1, 1990 McDonalds Corp. 9.625% due October 15, 1982 Missouri Pacific R.R. Equipment Trust 11.750% due October 1, 1986 Ryder System Inc. 12.250% due December 15, 1986 U.S. Treasury Note 13.875% due November 30, 1982 u 10 Hartford Fund, Incorporated (STOCK SERIES PORTFOLIO) SCHEDULE OF INVESTMENTS (unaudited) June 30, 1981 Number of Shares COMMON STOCK 90.30% Aerospace -3.35% 12,000 Raytheon Co 501,614 540,000 10,500 THE Corp 257,181 312,375 5,000 United Technologies 292,225 276,875 1,051,020 1,129,250 Air Transportation- 1.42% 9,000 Southwest Airlines 234,248 Auto Parts and Accessories -2.19% 18,000 Snap -On -Tools 3,500 Timken Co Banks -3.56% 5,875 First International Bancshares Inc 12,000 Texas Commerce Bancshares Inc 13,500 Wachovia Corp 11,500 3,000 7,000 29,000 11,000 12,000 Computer Software 1.04% Applicon Inc. Consumer Services Business -.43% American Express Co Consumer Services General -2.43% Federal Express Corp. Ralston Purina Co Consumer Services Entertainment -3.02% General Cinema Corp Warner Communications Market Cost Value 400,876 196,557 597,433 479,250 481,500 258,125 739,625 226,667 356,906 340,340 255,805 822,812 471,000 374,625 1,202,531 392,725 350,750 89,410 145,125 292,327 320,325 612,652 245,265 276,237 521,502 442,750 377,000 819,750 408,375 612,000 1,020,375 Number of Shares Conglomerates -1.37% 12,000 Tenneco Inc. Drugs -1.85% 10,000 Squibb Corp. 5,000 Upjohn Co. 11,000 8,000 12,000 6,000 Electronics and Electrical Equipment -4.06% Burndy Corp. Perkin -Elmer Corp Scientific Atlanta Inc Unitrode Corp Foods -2.59% 15,000 Coca Cola Company 10,000 Pepsico, Inc. 10,000 4,000 13,500 8,500 14,000 9,000 11,000 8,000 Forest Products -.86% Pacific Lumber Company Hospital Supply -4.31% Baxter Travenol Laboratories Inc. Johnson Johnson Medtronics Inc. United States Surgical Corp Insurance-4.11% General Re Corporation Hall Frank B Co. Inc. United States Fidelity Guaranty Co Machinery -1.45% 11,000 Cooper Industries Inc. Cost 307,311 268,100 575,411 434,833 105,598 228,939 220,669 990,039 525,450 269,336 794,786 Mark Valu 477,384 46: 33� 29: 62E 484 21E 33E 334 1,36E 52' 35: 87E. 280,734 291 171,409 21'; 330,190 47 226,995 291 390,250 46E 1,118,844 1,45< 447,131 71' 271,770 28: 301,257 39: 1,020,158 1,38 393,240 49( The accompanying notes are an integral part of these financial state u 1 Number of Shares Manufacturing General -2.39% 10,000 Avery International Inc 14,000 Pall Corp 6,000 Stanley Works Metals Mining -2.50% 10,000 Aluminum Co. of America 4,800 Engelhard Corp 15,000 Phibro Corp 12,000 9,500 Office Equipment -5.64% Digital Equipment Corp 14,500 International Business Machines Inc 4,000 NCR Corp 4,000 Xerox Corp 6,000 5,000 13 ,000 6,000 Natural Gas -3.22% Houston Natural Gas Southern Natural Resources Inc Oil Integrated Domestic -4.06% 5,000 Atlantic Richfield Co. Marathon 011 Co Phillips Petroleum Co Standard 011 Company of Indiana Oil Integrated International- 9.79% 24,000 Exxon Corp 6,000 Getty 011 Co 23,000 Mobil Corp 15,000 Royal Dutch Petroleum Co 14,600 Standard Oil Company of California 10,000 Sun Co Inc Oil Services -1.28% 24,000 Petrolane Inc. Cost Market Value 10,000 209,013 248,750 12,000 453,835 448,000 98,695 111,000 5,000 761,543 807,750 17,000 337,498 297,500 85,992 115,800 335,363 431,250 758,853 844,550 572,725 513,000 568,916 574,750 1,141,641 1,087,750 459,504 592,500 960,827 839,188 281,889 252,000 241,918 216,000 1,944,138 1,899,688 196,804 237,500 200,641 306,250 563,856 497,250 283,543 329,250 1,244,844 1,370,250 711,370 822,000 482,392 415,500 720,552 690,000 728,002 483,750 474,947 547,500 405,466 345,000 3,522,729 3,303,750 563,259 429,000 Number of Shares Photo /Optics -1.55% 7,000 Eastman Kodak Co. 7,000 14,000 10,000 Oil Well Drilling Equipment -6.19% Halliburton Co Helmerich Payne Inc Schlumberger Ltd SEDCO Inc Radio Television Communications -3.88% Capital Cities Communications, Inc Lin Broadcasting Corp M. A. Com Inc. Retail Foods Grocery- 2.79% 14,000 Malone Hyde Inc 13,000 Super Valu Stores Inc. Retail Foods Restaurants -1.34% 7,000 McDonald's Corp Retail General Merchandise -2.65% 10,000 Melville Shoe Corp 12,000 Pic'N Save Corp 8,000 Tandy Corp Telephones -2.67% 16,000 American Telephone and Telegraph Co. Textiles -.54% 5,000 Levi Strauss Co 12,000 Tobacco -1.77% Philip Morris Inc Total Common Stocks *non income producing during period Cost Marke Value 578,392 597,E 334,792 519,C 339,944 473,7 628,894 497,2 1,882,022 2,087,E 423,090 523,2 446,050 545,1 399,000 476,C 245,043 288,i 1,090,093 1,309,E 412,696 451,E 292,887 485,E 705,583 937,0 313,833 453,2 285,313 437,f 207,900 210,( 69,390 247,( 562,603 894,E 849,173 900,( 116,468 178,i 432,711 597,C $26,284,981 $30,466,E The accompanying notes are an integral part of these financial statem u NI 12 Principal Amount SHORT -TERM SECURITIES -9.74% Repurchase Agreement $3,285,000 Hartford National Bank and Trust Co 15.000% due July 1, 1981 (Collateralized by U.S. Treasury Note due May 31, 1983) Total Short -Term Securities HARTFORD FUND INCORPORATED Stock Series Portfolio Market Cost Value $3,285,000 $3,285,000 $3,285,000 $3,285,000 Principal Investment Changes (unaudited) Six Months Ended June 30, 1981 (Exclusive of holdings increased or decreased) Additions Securities now owned which were not owned at December 31, 1980 Applicon Inc. Coca Cola Company Engelhard Corp. Federal Express Corp. Pall Corp Pic'N Save Corp SEDCO Inc. Scientific Atlanta Inc. United State Surgical Corp. United Technologies Unitrode Corp. The accompanying notes are an integral part of these financial statements DIVERSIFICATION OF ASSETS Total common stocks 90 30% $30,466,1 Total short -term securities 9 74% 3,285,1 Total investment in securities 100 04% 33,751,1 Excess of liabilities over cash receivables (.04 (13; Net Assets 100 00% $33,738,' Eliminations— Securities owned at December 31, 1980 are not now owned. American Home Products Boeing Company Cobe Laboratories Inc. General Mills Inc Monsanto Co. Northwest Bancorporation Reynolds, R J Industries Smith Kline Corp. Union Camp Corp Hartford Fund, Incorporated (MONEY MARKET SERIES PORTFOLIO) SCHEDULE OF INVESTMENTS (unaudited) June 30, 1981 Principal Amount $100,000 100,000 50,000 50,000 100,000 100,000 100,000 100,000 100,000 50,000 50,000 100,000 100,000 50,000 100,000 100,000 50,000 50,000 50,000 50,000 100,000 100,000 100,000 100,000 79,750 104,033 U.S. Government Agencies 33.91% Federal Home Loan Bank Federal Home Loan Bank Federal National Mortgage Association Federal National Mortgage Association Federal National Mortgage Association Federal National Mortgage Association U.S Treasury Bills U.S. Treasury Bills U.S Treasury Bills Commercial Paper 58.18% American Express Co. American Express Co. B.P. Capital Corp. Beneficial Finance CIT Financial Corp. First Interstate Bank of California Federal National Bank of Boston General Electric Credit Co. General Electric Credit Co. General Motors Acceptance Corp. General Motors Acceptance Corp. Household Finance Corp. Irving Trust Co. J C. Penney John Deere Credit Corp. Manufacturers Hanover International Morgan Guaranty Trust Repurchase Agreement -7.13% 160,000 Hartford National Bank and Trust Company (Collateralized by Government National Mortgage Association 8.000% due September 15, 2005) Total investment in securities DIVERSIFICATION OF ASSETS Total investment in securities Cash and receivables, less liabilities Net Assets The accompanying notes are an integral part of these financial statements Interest Maturity Rate Date 15.125% 15.125% 16.500% 16.000% 17.000% 17.000% 12.750% 11.700% 13.700% 10/29/81 11/19/81 8/20/81 8/20/81 9/10/81 9/24/81 7/09/81 8/06/81 12/10/81 17.500% 7/23/81 15.750% 7/23/81 18.000% 8/04/81 16.500% 8/19/81 17.875% 7/16/81 16.550% 7/30/81 17.380% 8/11/81 17.750% 7/02/81 17.000% 7/02/81 17.000% 8/13/81 16.000% 8/13/81 16.500% 7/29/81 16.450% 10/19/81 16.625% 8/21/81 16 375% 7/31/81 17.125% 7/20/81 16.200% 9/03/81 15.000% 7/01/81 Cost 94,580 93,698 48,098 48,600 96,222 95,561 96,033 95,483 93,074 761,349 48,590 49,234 97,850 97,388 48,957 100,000 100,000 48,718 49,669 48,607 48,733 98,075 94,699 97,275 98,000 78,764 100,709 1,305,268 Market Value 94,581 93,706 48,041 48,506 96,307 95,671 95,928 94,975 92,913 760,628 48,590 49,234 97,850 97,388 48,957 100,000 100,000 48,718 49,669 48,607 48,733 98,075 94,809 97,275 98,000 78,764 100,643 1,305,312 160,000 160,000 $2,226,617 $2,225,940 99.22% $2,225,940 .78% 17,449 100.00% $2,243,389 14 Hartford Fund, Incorporated Notes to Financial Statements (unaudited) 1. Accounting policies: Hartford Fund, Incorporated (Fund) is registered under the Investment Company Act of 1940, as amended, as a diversified, open -end management investment company. The Fund was organized under the laws of the State of Maryland on March 11, 1976 as a series fund, authorized to issue two series of shares, known as the "Bond Series Shares" and the "Stock Series Shares" On November 28, 1979 an additional series was established to issue the "Money Market Series Shares" The following is a sum- mary of the significant accounting policies of the Fund, which are in accordance with the accounting principles generally accepted in the investment company industry. a) Security Transactions Security transactions are recorded on the trade date The cost of investments sold is determined on the basis of identified cost. It is not practicable to determine the net realized gain (loss) computed on the basis of average cost Dividend income is accrued as of the ex- dividend date and interest income is accrued on a daily basis Ex- penses are also accrued on a daily basis b) Security Valuation Bond and Stock Series Securities traded on national securities exchanges are valued at the closing prices on these exchanges on June 30, 1981, and securities traded on over -the- counter markets are valued at the closing bid price as of that day. Short -term securities are valued at cost plus accrued interest, which approximates market value on June 30, 1981 Money Market Series Investments maturing more than sixty days after the valuation date are valued at the most recent bid price or yield equivalent as obtained from dealers that make markets in such securities When such securities are valued with sixty days or less to maturity, the differ- ence between the valuation existing on the sixty -first day before maturity and maturity value is amortized on a straight line basis to maturity Investments ma- turing within sixty days from their date of acquisition are valued at amortized cost, which approximates market c) Federal Income Taxes For Federal income tax purposes, the Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code by dis- tributing substantially all of its taxable income to its shareholders and otherwise complying with the re- quirements for regulated investment companies. Ac- cordingly, no provision for Federal income taxes has been made (See Note 5 for applicable dividend distribution) The identified tax cost of portfolio securities at June 30, 1981 was $14,833,990 for the "Bond" Series, $29,569,981 for the "Stock" Series and for the "Money Market" Series For purposes of determining net realized 1 ital gains to be distributed, the capital gain; of each series are combined Distributioi realized capital gains so determined will the shareholders of the series having net r ital gains The cumulative realized capital to offset realized capital gains in each si considered in the determination of future of realized capital gains to each series (se applicable realized capital gains distributi 2. Investment Advisory Agreemer Administrative Services Agrees a) Investment Advisor Thorndike, Doran, Paine and Lewis, (1 served as investment advisor to the Funs uary 1, 1979 pursuant to an Investme Agreement and makes all determinations to the purchase and sale of portfolio securi is compensated at a maximum annual fi of the Fund's "Bond Series" and "Stock erage daily net assets and at a maximun of 20% of the Fund's "Money Market Seri daily net assets b) Administrative Services Hartford Variable Annuity Life Insuranc (Company) provides administrative set Fund, and receives an annual fee equal the fund's average daily net assets. In addition to the fees stated above, if sumes and pays certain expenses (inclu limited to auditing and directors' fees) foe and "Stock" Series as agreed to under 1 trative Services Agreement with the Corr Directors' fees represent remuneration crued to directors not affiliated with Hartf Annuity Life Insurance Company or any company. 3. Purchases and Sales of Securi a) Cost of purchases and proceeds from SE Mies other than short-term securities and ernment obligations during the six months 30, 1981 were Bond Series Cost ProcE $2,143,678 $4,131 Stock Series Cost ProcE $9,435,531 $3,71; 1 b) Cost of purchases and proceeds from sales of short term securities and U S Government obligations dur- ing the six months ended June 30. 1981 were Cost $98,784,377 Cost $231,306,472 Number of Shares Shares sold Shares reacquired Net Increase Number of Shares Shares sold Shares reacquired Net Increase Bond Series Stock Series Proceeds $94,636,802 Proceeds $230,777,829 Money Market Series Cost Proceeds $19,611,095 $17,560,922 4. Capital Stock: At June 30, 1981 there were 450,000,000 shares at $.10 par value capital stock authorized The Board of Directors designated 150,000,000 shares to each of the Series "Bond "Stock" and "Money Market" series. Paid -in cap- ital aggregated $14,183,378, $25,420,971 and $2,019,957 for the "Bond "Stock" and "Money Market" series, re- spectively, at June 30, 1981 Transactions in capital stock were as follows Six Months Ended June 30, 1981 Bond Stock Series Series 3,349,292 4,660,848 (1,093,713) (377,204) 2,255,579 4,283,644 Year Ended December 31, 1980 Bond Stock Series Series 6,724,237 11,364,266 (3,009,058) (1,986,077) 3,715,179 9,378,189 Money Market Series 2,057,747 (1,561) 2,056,186 Money Market Series 190,124 (285) 189,839 5. Distributed and Undistributed Income: As of December 31, 1980 there was $1,307,569 and $823,517 of undistributed net income included in the net assets of the Bond and Stock Series, respectively, per- taining to 1980 net investment income. On January 21, 1981, the Board of Directors declared dividends payable January 22, 1981 to shareholders of record as of January 21, 1981 of $1,307,569 095325 per share) from 1980 net investment income for the Bond Series and $823,517 ($.046710 per share) from 1980 net investment income for the Stock Series. The consolidation of the Bond Series' cumulative realized losses of ($893,177) and the Stock Series' cumulative undistributed realized gains of $720,- 753 resulted in no net realized taxable gains available for distribution in either series at December 31, 1980 The Money Market Series declares dividends on a daily basis, each day that the New York Stock Exchange is open for business Distributions from net investment income over the six month period ended June 30, 1981 amounted to $58,171 Undistributed net investment income included in the be- ginning and ending net assets for the six months ended June 30, 1981 and the year ended December 31, 1980 were June 30, 1981 Money Bond Stock Market Series Series Series Undistributed net investment income beginning of period $1,307,569 $823,517 -0- Undistributed net investment income end of period 917,150 $646,146 -0- December 31, 1980 Money Bond Stock Market Series Series Series Undistributed net investment income beginning of period 700,587 $351,651 -0- Undistributed net investment income end of period $1,307,569 $823,517 -0- If I 16 6. Supplemental information: PER SHARE INCOME AND CAPITAL CHANGES (For a share outstanding throughout the indicated period) Six Months Ended June 30, 1981 Year Ended December 31, 1980 Year Ended December 31, 1979 Money Money Mont Bond Stock Market Bond Stock Market Bond Stock Mark Series Series Series Series Series Series Series Series Seri( Income and Expense Total investment income .059 033 .074 .101 .054 .057 .066 .037 Operating expenses .003 .004 .002 .006 .007 001 003 003 Net investment income .056 029 072 095 .047 056 063 .034 Dividends from net investment income (.095) 047) (.072) (.070) (.044) 056) (.038) (.030) Capital Changes Net asset value at beginning of period 1.017 1 606 1 001 1 028 1.268 1 000 1 045 1 067 1.0( Net realized and unrealized gains (losses) on investments (.022) 014) (.002) 036) .335 001 042) .201 Dividend from short- term capital gains -0- -0- -0- -0- -0- -0- -0- (.004) Net asset value at end of period 956 $1 574 .999 $1.017 $1.606 $1.001 $1.028 $1.268 $1 0( Ratio of Operating Expenses to Average Net Assets 0.3% 0.3% 0 2% 0.6% 0.6% 0 2% 0 5% 0.5% Ratio of Net Investment Income to Average Net Assets 6.7% 2 4% 7 5% 10 7% 4.4% 5 7% 9 0% 4 7% Number of Shares Outstanding end of period 15,688,934 21,441,127 2,246,035 13,433,355 17,157,483 189,849 9,718,176 7,779,294 r 18 QP Variable Account Hartford Variable Annuity Life Insurance Company Statement of Assets and Liabilities (unaudited) June 30, 1981 Money Bond Stock Market Account Account Accoun Assets Investments (Note 1). Hartford Fund, Incorporated Bond Series, 15,161,122 shares at net asset value of $.956004 per share (cost $15,195,050) $14,494,099 Hartford Fund, Incorporated Stock Series, 20,669,972 shares at net asset value of $1.573555 per share (cost $27,117,300) 32,525,338 Hartford Fund, Incorporated Money Market Series 443,666 shares at net asset value of $.998822 per share (cost $443,261) Due from Hartford Variable Annuity Life Insurance Company 2,525 68,793 Total assets 14,496,624 32,594,131 Liabilities Payable to Hartford Fund, Incorporated for shares purchased 2,520 68,789 Total liabilities 2,520 68,789 Net assets (variable annuity contract liabilities) $14,494,104 $32,525,342 Variable Annuity Contract Liabilities At June 30, 1981 the variable annuity contract liabilities of the Account consisted of the following Type of Contract Deferred annuity contracts in the accumulation period: Equity of Contract Owners: Bond Account Stock Account Money Market Account Annuity contracts in the annuity period. Equity of Contract Owners: Bond Account Stock Account The accompanying notes are an integral part of these financial statements. Units Owned By Unit Contrac Participants Price Liability 12,747,073 19,277,947 410,382 15,596 147,567 443,1 443,1 443,1; $1.135664 $14,476,31 1.674362 32,278,21 1 079785 443,1; 1 135664 17,7 1 674362 247,0l $47,462,5 QP Variable Account Hartford Variable Annuity Life Insurance Company Statement of Operations (unaudited) For The Six Months Ended June 30, 1981 Investment Income Income (Note 1). $1,257,229 783,245 $17,553 Expenses Mortality and expense undertakings (Note 2) 68,120 145,330 459 Net investment income $1,189,109 637,915 $17,094 Realized and Unrealized Gain (Loss) on Investments Realized gain from security transactions Proceeds from sales of shares 938,103 312,818 861 Cost of shares sold 936,958 312,293 861 Net realized gain from security transactions 1,145 525 0- Unrealized appreciation (depreciation) of investments Beginning of period 40,514 5,882,805 4 End of period (700,951) 5,408,038 (118) Unrealized (depreciation) of investments during the period (741,465) (474,767) (122) Net realized and unrealized (loss) on investments (740,320) (474,242) (122) The accompanying notes are an integral part of these financial statements. Money Bond Stock Market Account Account Account 1 20 OP Variable Account Hartford Variable Annuity Life Insurance Company Statement of Changes in Net Assets (unaudited) Six Months Ended For Year Ended June 30, 1981 December 31, 1980 Money Money Bond Stock Market Bond Stock Market Account Account Account Account Account Account From Investment Activities (Note 1) Net investment income 1,189,109 637,915 17,094 506,636 120,635 50 New realized gain (loss) from security transactions 1,145 525 -0- (2,678) 1,043 -0- Unrealized appreciation (depreciation) of invest- ments during the period (741,465) (474,767) (122) 77,615 4,789,614 4 Increase in net assets derived from investment activites 448,789 163,673 16,972 581,573 4,911,292 54 From Unit Transactions Purchased 2,620,998 5,481,493 386,740 5,563,067 6,891,001 18,905 Net Transfers from (to) other Hartford annuity contracts (212,263) 2,380,791 21,157 455,751 8,541,070 7 Contract surrenders (Note 2) (1,477,478) (1,749,094) (711) (2,259,060) (2,156,203) -0- Annuity payments (810) (6,078) -0- (1,468) (3,512) -0- Mortality deviation -0- -0- -0- 62 4,036 -0- Increase in net assets derived from unit transactions 930,447 6,107,112 407,186 3,758,352 13,276,392 18,912 Increase in net assets 1,379,236 6,270,785 424,158 4,339,925 18,187,684 18,966 Net Assets Beginning of period 13,114,868 26,254,557 18,966 8,774,943 8,066,873 -0- End of period $14,494,104 $32,525,342 $443,124 $13,114,868 $26,254,557 $18,966 The accompanying notes are an integral part of these financial statements. QP Variable Account Hartford Variable Annuity Life Insurance Company Notes to Financial Statements (unaudited) 1. Accounting policies: The QP Variable Account (Account) is a separate invest- ment account within Hartford Variable Annuity Life Insur- ance Company (Company) and is registered with the Securities and Exchange Commission 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 Division of Insurance of the State of Connecticut. The following is a summary of the significant accounting policies of the Account which are in accordance with the accounting principles generally accepted in the investment company industry: a) Security Transactions Security transactions are recorded on the trade date. Cost of investments sold is determined on the basis of identified cost Dividend income is accrued as of the ex- dividend date and expenses are accrued on a daily basis. b) Security Valuation The investments in shares of Hartford Fund, Incor- porated (Bond, Stock and Money Market Series) are valued at the closing net asset value per share as determined by the appropriate Fund series on June 30, 1981. The cost of investments represents shares of Hartford Fund, Incorporated (Bond, Stock and Money Market Series) which were purchased by the Account. Pur- chases were made at the net asset value from net purchase payments or through reinvestment of all dis- tributions made by the appropriate Fund series. c) Federal Income Taxes The Account, as part of the Company, is subject to Federal income taxes applicable to life insurance companies and is not considered to be a regulated investment company for income tax purposes. Under present interpretation of existing Federal income tax laws, no taxes are payable on the investment income of the Account or on realized capital gains applicable to contracts issued under plans qualified for tax -de- ferred treatment. 2. 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 receives an annual fee equal to 1.00% of the Ac- count's average daily net assets with respect to the Bond and Stock Accounts. With respect to the Money Market Account, the Company provides mortality and expense undertakings and receives an annual fee equal to .375% of that Account's average daily net assets. b) Deduction for Annual Policy Fee Annual policy fees are deducted through termination of units of interest from applicable contract owners' accounts, in accordance with the terms of the contracts. DC Variable Account -I Hartford Variable Annuity Life Insurance Company Statement of Assets and Liabilities (unaudited) June 30, 1981 Bond Stock Account Account Assets Investments (Note 1): Hartford Fund, Incorporated Bond Series, 418,178 shares at net asset value of 956004 per share (cost $422,832) $399,780 Hartford Fund, Incorporated Stock Series, 706,567 shares at net asset value of $1.573555 per share (cost $726,295) 1,111,822 Receivable from Hartford Fund, Incorporated for shares sold 55 43 Total assets 399,835 1,111,865 Liabilities Due to Hartford Variable Annuity Life Insurance Company 55 43 Total liabilities 55 43 Net assets (variable annuity contract liabilities) $399,780 $1,111,822 Variable Annuity Contract Liabilities At June 30, 1981 the variable annuity contract liabilities of the Account consisted of the following• Units Owned by Unit Contract Type of Contract Participants Price Liability Deferred annuity contracts in the accumulation period: Equity of Contract Owners. Bond Account 352,023 $1 135664 399,780 Stock Account 664,027 1 674362 1,111 822 $1,511,602 The accompanying notes are an integral part of these financial statements. air 24 DC Variable Account -I Hartford Variable Annuity Life Insurance Company Statement of Operations (unaudited) For The Six Months Ended June, 30 1981 The accompanying notes are an integral part of these financial statements. Bond Stock Account Account Investment Income Income (Note 1)• 40,543 37,220 Expenses: Mortality and expense undertakings (Note 2) 2,054 5,792 Net investment income 38,489 31,428 Realized and Unrealized Gain (Loss) on Investments Realized gain (loss) from security transactions: Proceeds from sales of shares 82,119 273,349 Cost of shares sold 82,140 243,659 Net realized gain (loss) from security transactions (Note 3) (21) 29,690 Unrealized appreciation (depreciation) of investments: Beginning of period 2,315 440,037 End of period (23,052) 385,527 Unrealized (depreciation) of investments during the period (25,367) (54,510) Net realized and unrealized (loss) on investments $(25,388) (24,820) DC Variable Account -I Hartford Variable Annuity Life Insurance Company Statement of Changes in Net Assets (unaudited) From Investment Activities (Notes 1, 3 and 4) Net investment income Net realized gain (loss) from security transactions Unrealized appreciation (depreciation) of investments during the period Increase in net assets derived from investment activities From Unit Transactions Purchased Net transfers (to) other Hartford annuity contracts Contract surrenders (Note 2) (Decrease) in net assets derived from unit transactions (Decrease) in net assets Net Assets Beginning of period End of period The accompanying notes are an integral part of these financial statements. Six Months Ended June 30, 1981 Bond Stock Account Account 38,489 31,428 (21) 29,690 (25,367) (54,510) 13,101 6,608 39,803 117,949 (43,049) (87,253) (47,089) (127,988) (50,335) (97,292) (37,234) (90,684) 437,014 1,202,506 $399,780 $1,111,822 For Year Ended December 31, 1980 Bond Stock Account Account 65,396 42,586 (20,676) 214,935 (10,918) 89,644 33,802 347,165 157,908 252,259 (798,987) (971,110; (62,215) (140,807; (703,294) (859,658; (669,492) (512,493; 1,106,506 437,014 1,714,999 $1,202,506 26 DC Variable Account -I Hartford Variable Annuity Life Insurance Company Notes to Financial Statements (unaudited) 1. Accounting policies: The DC Variable Account -I (Account) is a separate in- vestment account within Hartford Variable Annuity Life Insurance Company (Company) and is registered with the Secunties and Exchange Commission as a unit in- vestment trust under the Investment Company Act of 1940, as amended Both the Company and the Account are subject to supervision and regulation by the Division of Insurance of the State of Connecticut. The following is a summary of the significant accounting policies of the Account which are in accordance with the accounting principles generally accepted in the investment company industry a) Security Transactions Security transactions are recorded on the trade date Cost of investments sold is determined on the basis of identified cost. Dividend income is accrued as of the ex- dividend date and expenses are accrued on a daily basis b) Security Valuation The investments in shares of Hartford Fund, Incor- porated (both Bond and Stock Series) are valued at the closing net asset value per share as determined by the appropriate Fund series on June 30, 1981 The cost of investments represents shares of Hart- ford Fund, Incorporated (both Bond and Stock Se- ries) which were purchased by the Account Purchases were made at the net asset value from net purchase payments or through reinvestment of all distributions made by the appropriate Fund series. c) Federal Income Taxes For Federal income tax purposes, the Account in- tends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code by distributing substantially all of its taxable income to variable annuity contract owners and otherwise complying with the requirements for regulated in- vestment companies. Accordingly, no provision for Federal income taxes has been made. For purposes of determining net realized taxable capital gains to be distributed, the capital gains and losses of each Account are combined. Distribution of any net real- ized capital gains so determined will be made to the contract holders of the account having net realized capital gains The cumulative realized capital losses used to offset realized capital gains in each Account will be considered in the determination of future dis- tributions of realized capital gains to each Account. 2. Administration of the Account and related charges: a) Mortality and Expense Undertakings The Company, as issuer of variable annuity cc tracts, provides the mortality and expense undertE rags and receives an annual fee equal to 1.00% the Account's average daily net assets with respc to the Bond and Stock Accounts. With respect to t Money Market Account, the Company will provi mortality and expense undertakings and receive annual fee equal to .375% of that Account's avera daily net assets. b) Deduction for Annual Policy Fee Annual policy fees are deducted through termmati of units of interest from applicable contract owne accounts in accordance with terms of the contract 3. Undistributed Income: As of December 31, 1980 there was $65,396 and $42,5 of undistributed net income included in the net assets the Bond and Stock Accounts, respectively, pertaining 1980 net investment income The consolidation of t Bond Account's cumulative realized losses of ($23,9 and the Stock Account's cumulative undistnbuted re ized gains of $218,193 resulted in a net realized taxat gain available for distribution in the Stock Account $194,259 at December 31, 1980. 4. Dividend and Capital Gain Distributions: On February 10, 1981, the Board of Directors of the Co pany declared a dividend distribution from net investmi income of $.165806 and 055493 per unit of interest the Bond and Stock Accounts respectively, distribut February 10, 1981, to contract owners of record Febru, 9, 1981 Additionally a distribution from capital gains $.253135 per unit of interest was declared payable contract owners of the Stock Account of record, Febru 9, 1981 28 DC Variable Account -II Hartford Variable Annuity Life Insurance Company Statement of Assets and Liabilities (unaudited) June 30, 1981 Assets Investments (Note 1): Hartford Fund, Incorporated Bond Series, 109,634 shares at net asset value of $.956004 per share (cost $110,971) $104,811 Hartford Fund, Incorporated Stock Series, 64,588 shares at net asset value or $1.573555 per share (cost $65,612) 101,6; Receivable from Hartford Fund, Incorporated for shares sold 14 5( Total assets 104,825 102,1; Liabilities Due to Hartford Variable Annuity Life Insurance Company 14 5( Total liabilities 14 5( Net assets (variable annuity contract liabilities) $104,811 $101,6; Variable Annuity Contract Liabilities At June 30, 1981 the variable annuity contract liabilities of the Account consisted of the following: Type of Contract Annuity contracts in the annuity period: Equity of Contract Owners: Bond Account 46,693 $1.130731 52,7 Stock Account 57,083 1.664970 95,0 Equity of Hartford Variable Annuity Life Insurance Company: Bond Account 46,000 1.130731 52,0 Stock Account 3,959 1 664970 6,E $206,' The accompanying notes are an integral part of these financial statements. Bond Stool Account Accou Units Owned by Unit Contra Participants Price Liabili DC Variable Account -II Hartford Variable Annuity Life Insurance Company Statement of Operations (unaudited) For the Six Months Ended June 30, 1981 The accompanying notes are an integral part of these financial statements. Bond St( Account Acc Investment Income Income (Note 1): 9,796 3, Expenses: Mortality and expense undertakings (Note 2) 514 Net investment income 9,282 Realized and Unrealized Gain (Loss) on Investments Realized gain from security transactions: Proceeds from sales of shares 3,929 7, Cost of shares sold 3,888 7, Net realized gain from security transactions 41 Unrealized appreciation (depreciation) of investments: Beginning of period (174) 38,E End of period (6,160) 36,( Unrealized (depreciation) of investments during the period (5,986) (2,; Net realized and unrealized (loss) on investments $(5,945) 2 DC Variable Account -II Hartford Variable Annuity Life Insurance Company Statement of Changes in Net Assets (unaudited) From Investment Activities (Note 1) Net investment income 9,282 2,538 6,111 Net realized gain from security transactions 41 391 270 Unrealized appreciation (depreciation) of investments during the penod (5,986) (2,397) (1,115) Increase in net assets derived from investment activities 3,337 532 5,266 From Unit Transactions Purchased Contract surrenders Annuity payments Mortality deviation (Decrease) in net assets derived from unit transactions Increase (decrease) in net assets Net Assets Beginning of period End of period The accompanying notes are an integral part of these financial statements Six Months Ended June 30, 1981 Bond Stock Bond Stogy Account Account Account Acco (3,414) (4,147) (5,432) (77) (3,615) (166) 104,888 105,248 105,054 104,811 101,633 104,888 For Year Ended December 31, 198( 22, 24, -0- 59,380 2,777 8, (59,421) (2,662) (7, (3,414) (4,106) (5,618) (2, -0- -0- 71 (2, 22, 83 105 DC Variable Account -II Hartford Variable Annuity Life Insurance Company 3 Notes to Financial Statements (unaudited) 1. Accounting policies: The DC Variable Account -II (Account) is a separate in- vestment account within Hartford Variable Annuity Life In- surance Company (Company) and is registered with the Securities and Exchange Commission 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 Division of Insurance of the State of Connecticut The following is a summary of the significant accounting policies of the Account, which are in accordance with the accounting principles generally accepted in the investment company industry. a) Security Transactions Security transactions are recorded on the trade date Cost of investments sold is determined on the basis of identified cost Dividend income is accrued as of the ex- dividend date and expenses are accrued on a daily basis b) Security Valuation The investments in shares of Hartford Fund, Incor- porated (both Bond and Stock Series) are valued at the closing net asset value per share as determined by the appropriate Fund series on June 30, 1981 The cost of investments represents shares of Hartford Fund, Incorporated (both Bond and Stock Series) which were purchased by the Account Purchases were made at the net asset value from net purchase payments or through reinvestment of all distributions made by the appropriate Fund series. c) Federal Income Taxes The Account, as part of the Company, is subject to Federal income taxes applicable to life insurance companies and is not considered to be a regulated investment company for income tax purposes. Under present interpretation of existing Federal income tax laws, no taxes are payable on the investment income of the Account or on realized capital gains applicable to contracts issued under qualified plans. Taxes will be provided for realized capital gains and unrealized portfolio appreciation applicable to non qualified deferred compensation plans when and if these plans enter the Account 2. Administration of the Account and related charges: Mortality and Expense Undertakings The Company, as issuer of variable annuity contracts, provides mortality and expense undertakings and re- ceives an annual fee equal to 1.00% of the Account's average daily net assets with respect to the Bond and Stock Accounts. With respect to the Money Market Account, the Company will provide mortality and ex- pense undertakings and receive an annual fee equal to 375% of that Account's average daily net assets. (1 Separate Account Hartford Variable Annuity Life Insurance Company Statement of Assets and Liabilities (unaudited) June 30, 1981 Assets Investments (Note 1): Common stocks, at closing market quotations (cost $14,023,452) $17,813,848 Short -term securities, at cost (approximates market) 471,000 18, 284, 848 Cash 65,365 Dividends and interest receivable (Note 1) 54,178 Receivable for securities sold 297,645 Total assets 18,702,036 Liabilities Current Federal income taxes 43,870 Deferred Federal income taxes 198,422 Payable for securities purchased 235,625 Due to Hartford Variable Annuity Life Insurance Company 38,654 Total liabilities 516,571 Net assets (variable annuity contract liabilities) $18,185,465 Variable Annuity Contract Liabilities At June 30, 1981 the variable annuity contract liabilities of the Separate Account consisted of the following: The accompany notes are an integral part of these financial statements. Units Owned by Unit Contract Participants Price Liability Type of Contract Deferred annuity contracts in the accumulation period: Qualified (contracts issued until 3/31/76) 7,999,240 $1.372931 $10,982,405 Non Qualified (contracts issued until 3/31/76) (Note 4) 3,114,366 1.345077 4,189,062 Qualified (contracts issued after 3/31/76) 1,698,767 1.360954 2,311,944 Non Qualified (contracts issued after 3/31/76) 193,823 1.334312 258,620 Annuity contracts in the annuity period: Qualified (contracts issued until 3/31/76) 122,149 1.372931 167,702 Non Qualified (contracts issued until 3/31/76) 190,935 1.345077 256,822 Qualified (contracts issued after 3/31/76) 11,563 1.360954 15,737 Non Qualified (contracts issued after 3/31/76) 2,378 1.334312 3,173 $18,185,465 33 34 Separate Account Hartford Variable Annuity Life Insurance Company Statement of Operations (unaudited) For the Six Months Ended June 30, 1981 Investment Income Income (Note 1) Dividends 356,635 Interest 57,361 Total income Expenses (Note 2). Mortality and expense undertakings 102,264 Investment advisory services 32,293 Total expenses 134,557 Net investment income 279,439 Realized and Unrealized Gain (Loss) on Investments (Notes 1 and 3) Realized gain from security transactions (excludes short -term securities) Common stocks. Proceeds from sales Cost of securities sold Net realized gain from security transactions Provision for current Federal income taxes Unrealized appreciation (depreciation) of investments. Beginning of period End of period Unrealized (depreciation) of investments Reversal of deferred Federal income taxes Net realized and unrealized (loss) on investments The accompanying notes are an integral part of these financial statements. $6,465,570 5,159, 799 6,080,968 3,790,396 413,996 $1,305,771 (43,870) (2,290,572) 111,015 (917,656) Separate Account Hartford Variable Annuity Life Insurance Company Statement of Changes in Net Assets (unaudited) From Investment Activities (Note 1) Net investment income Net realized gain from security transactions Provision for current Federal income taxes Unrealized appreciation (depreciation) of investments during the period Reversal of (provision for) deferred Federal income taxes Increase (decrease) in net assets derived from investment activities Six Months Ended For Year Ende June 30, 1981 December 31, 1 279,439 705,732 1,305,771 2,331,957 (43,870) -o- (2,290,572) 3,027,131 111,015 (309,437) (638,217) 5,755,383 From Separate Account Unit Transactions Purchased 678,188 1,861,121 Transfers to other Hartford annuity contracts (2,148,473) (7,664,660) Contract surrenders (Note 2) (2,348,875) (4,975,961) Annuity payments (18,444) (27,140) Mortality deviation -0- (2,326) Increase (decrease) in net assets derived from unit transactions (3,837,604) (10,808,966) Increase (decrease) in net assets (4,475,821) (5,053,583) Net Assets Beginning of period 22,661,286 27,714,869 End of period $18,185,465 $22,661,286 The accompanying notes are an integral part of these financial statements I I 1 36 Separate Account Hartford Variable Annuity Life Insurance Company SCHEDULE OF INVESTMENTS June 30, 1981 (unaudited) Number of Shares COMMON STOCK 97.96% Aerospace 4.53% 6,000 Boeing Company 177,300 8,000 Raytheon Co. 245,511 9,400 THE Corp. 243,147 665,958 11,000 4,000 Banks 2.34% 7,000 First International Bancshares Inc. .333 Seafirst Corporation Chemicals 1.35% 3,000 Monsanto Co. Computer Software .92% *5,500 Apphcon Inc Conglomerates -1.59% 7,500 Tenneco Inc. Consumer Services Entertainment 2.24% 8,000 Warner Communications 11,000 4,200 8,000 5,000 Auto Parts and Accessories 3.24% Snap -On Tools Timken Co. Drugs 2.01% Squibb Corp. Electronics and Electrical Equipment 3.73% Burndy Corp. Perkin -Elmer Corp. Unitrode Corp. Foods 5.14% 9,000 Coca -Cola Company 8,000 General Mills Inc. 9,000 Pepsico Inc. Cost 223,798 215,860 439,658 230,384 425,250 8 10 230,392 425,260 142,524 245,625 182,875 167,750 248,201 289,688 286,706 408,000 344,831 365,750 142,033 123,320 282,163 547,516 296,068 204,560 251,505 752,133 Market Value 183,750 360,000 279,650 823,400 294,250 295,000 589,250 184,800 215,000 278,750 678,550 312,750 303,000 318,375 934,125 Number of Shares Hospital Supply 7.19% 5,000 Baxter Travenol Laboratories Inc. 12,000 Johnson Johnson 10,000 Medtronic Inc. *8,000 United States Surgical Corp. Insurance 4.99% 6,500 General Re Corporation 8,000 United States Fidelity Guaranty Co. Machinery -1.72% 7,000 Cooper Industries Inc. Manufacturing General -1.84% 9,000 Avery International Inc. 6,000 Stanley Works Metals Mining 1.48% 2,800 Englehard Corp. 91,529 67,' 7,000 Phibro Corp 271,683 201,: 363,212 268, Natural Gas 3.64% 7,000 Houston Natural Gas 6,000 Southern Natural Resources Inc Office Equipment 7.22% *4,000 Digital Equipment Corp. 8,000 International Business Machines Inc 5,500 NCR Corp 2,000 Xerox Corp. Cost Marke Value 217,487 271,8 265,593 420,0 177,741 350,0 262,128 266,0 922,949 1,307,8 273,500 513,5 263,040 393,0 536,540 906,5 200,764 312,3 176,070 223,E 95,460 111,( 271,530 334,E 356,488 299, 318,435 363, 674,923 662 194,634 395 444,601 46; 343,653 34( 114,455 10f 1,097,343 1,31: The accompanying notes are an integral part of these financial state Number of Shares 011 Integrated Domestic 5.98% 5,000 Atlantic Richfield Co. 4,000 Marathon Oil Co. 5,000 Phillips Petroleum Co. 4,000 Standard Oil Company of Indiana 4,000 Standard Oil Company Ohio 14,000 3,000 18,000 10,000 011 Integrated International 8.52% Exxon Corp. Getty Oil Co. Mobil Corp. Royal Dutch Petroleum Co. 011 Well Drilling Equipment and Services 9.21% 7,000 Halliburton Co. 10,200 Helmerich Payne Inc. Parker Drilling Co. Schlumberger Ltd. SEDCO Inc. 7,000 4,000 9,000 Photo /Optics 2.06% 5,000 Eastman Kodak Co. Market Cost Value 176,578 131,950 180,350 111,660 219,500 681,714 345,060 288,932 314,935 506,322 1,455,249 81,176 194,000 5,000 1,087,250 479,500 207,750 540,000 322,500 1,549,750 378,914 418,250 112,305 441,150 187,675 173,250 145,836 379,000 370,630 263,250 1,195,360 1,674,900 500,847 373,750 Radio Television 4.82% 4,000 Capital Cities Communications, Inc. 248,320 311,500 4,000 Cox Broadcasting Corp 10,000 M.A. Com Inc. Retail Foods Grocery 4.27% 9,000 Malone Hyde Inc. 13,000 Super Valu Stores, Inc. Retail Foods Restaurants 1.42% 4,000 McDonald's Corp. 206,280 276,000 245,043 288,750 699,643 876,250 265,880 290,250 215,410 485,875 481,290 776,125 186,070 259,000 Number of Shares 237,500 245,000 191,250 8,000 Retail General Merchandise .87% 9,000 Pic' N Save Corp. Tobacco 2.19% 8,000 Philip Morris Inc. 267,618 Total Common Stocks $14,023,452 $17. Principal Amount Telephones 2.47% American Telephone and Telegraph Co. 402,731 Textiles .98% Levi Strauss Co. 87,125 SHORT -TERM SECURITIES 2,59% Repurchase Agreement $471,000 Hartford National Bank and Trust Co. 15.000% due July 1, 1981 (Collateralized by GNMA due October 15, 2006) 471,000 Total Short -Term Securities 471,000 DIVERSIFICATION OF ASSETS Total common stocks 97.96% $17, Total short-term securities 2.59% Total investment in securities 100.55% 18. Excess liabilities over cash receivables (.55 Net Assets 100.00% $18 income producing during period Cost Cost 157,750 M The accompanying notes are an integral part of these financia 38 Separate Account Hartford Variable Annuity Life Insurance Company Notes to Financial Statements (unaudited) 1. Accounting policies: The Separate Account is a separate investment account within Hartford Variable Annuity Life Insurance Company (Company) and is registered with the Securities and Ex- change Commission as an open -end diversified manage- ment investment company under the Investment Company Act of 1940, as amended. Both the Company and the Sep- arate Account are subject to supervision and regulation by the Division of Insurance of the State of Connecticut. The following is a summary of the significant accounting policies of the Separate Account, which are in accordance with the accounting principles and procedures generally accepted in the investment company industry: a) Security Transactions Security transactions are recorded on the trade date The cost of investments sold is determined on the basis of identified cost. It is not practicable to determine the net realized gain (loss) computed on the basis of average cost. Dividend income is accrued as of the ex- dividend date and interest income is accrued on a daily basis Ex- penses are also accrued on a daily basis. b) Security Valuation Secunties traded on national secunties exchanges are valued at the closing price on these exchanges on June 30, 1981, and securities traded on over -the- counter markets are valued at the closing bid price as of that date. Short -term securities are valued at cost plus accrued interest, which approximates market value on June 30, 1981 c) Federal Income Taxes The Separate Account, as part of the Company, is subject to Federal income taxes applicable to life in- surance companies and is not considered to be a reg- ulated investment company for income tax purposes. Under present interpretation of existing Federal in- come tax laws, no taxes are payable on the investment income of the Separate Account, or on realized capital gains applicable to contracts issued under qualified plans and for certain non qualified plans which are afforded qualified tax treatment under the tax laws However, taxes are provided on realized gains and unrealized portfolio appreciation applicable to all other contracts issued under non qualified plans With respect to realized capital losses and unrealized port- folio depreciation applicable to these plans, the Board of Directors of the Company has directed that no tax benefits will be recorded as an asset of the Separate Account until it is determined that such net realized losses can be utilized in a consolidated income tax return filed by the Company and certain of its affiliates The identified tax cost of portfolio securities at De- cember 31, 1980 was $14,023,452. 2. Administration of the Separate Account and related charges: a) Mortality and Expense Undertakings The Company, as issuer of Separate Account variable annuity contracts, provides the mortality and expense undertakings for such contracts. A maximum com- bined deduction of up to 1.50% per annum of the value of the Separate Account assets is made on a daily basis for the provision of investment advisory services by the investment advisor and for the provision of the mortality and expense undertakings by the Company. The Company makes payment to the investment ad- visor for its services and retains the balance of any deduction to cover its expenses for providing the mor- tality and expense undertakings under the contracts. However, effective January 1, 1979 the combined maximum deduction with respect to contracts sold on or before March 31, 1976 has been set at 1.325% b) Investment Advisor Thorndike, Doran, Paine and Lewis, (TDP &L) serves as investment advisor to the Separate Account pur- suant to an Investment Advisory Agreement and makes all determinations with respect to the purchase and sale of portfolio securities. TDP &L is compen- sated at a maximum rate of .325% of the Separate Account average daily net assets for services provided. c) Deduction for Annual Maintenance Fee Annual maintenance fees are deducted through ter- mination of units of interest from applicable contract owners' accounts in accordance with the terms of the contracts 3. Purchases and sales of securities: a) The cost of purchases and proceeds from sales of securities other than short -term securities and U.S Government obligations during the six months ended June 30, 1981 were. Cost Proceeds $3,109,744 $6,465,570 b) The cost of purchases and proceeds from sales of short -term securities and U.S. Government obliga- tions during the six months ended June 30, 1981 were. Cost Proceeds $84,660,000 $85,069,000 a 4. Equity of the Company: The Company's ownership in the Separate Account A amounted to 98,370 units at a per unit price of $1.345077 as of June 30, 1981. 40 Balance Sheet Hartford Variable Annuity Life Insurance Company December 31, 1980 Assets Cash and investments: Cash 714,3( Bonds and notes, at amortized cost (market value $146,865,361) 187,392,62 Equity securities, at market (Note 1): Investment in Hartford Fund, Incorporated (cost $10) Investment in Separate Accounts (cost $286,968) 356,4; Total cash and investments 188,463,4( Equity in subsidiary (cost $22,153) (Note 1) 22,0; Accounts receivable and agents' balances (net of allowance for doubtful accounts of $11,345) (Note 1) 968,4E Federal income tax receivable 318,6E Accrued investment income 2,512,5E Deferred acquisition costs (Note 1) 11,943,0( Furniture and equipment (net of accumulated depreciation of $524,716) 387,1; Assets of Separate Accounts (Note 3) 65,653,41 $270,268,7E Liabilities and Stockholder's Equity Liabilities. Fixed annuity contract liabilities in the accumulation period $167,276,41 Aggregate reserves for fixed annuity and life contracts 8,186,6 Accrued expenses and other liabilities 2,444,7 Deferred Federal income taxes (Note 2) 12,875,8; Liabilities of Separate Accounts (Note 3) 65,653,41 Total liabilities 256,437,0E Stockholder's equity (Note 7)• Common stock (voting), $80 par value, 100 shares authorized and outstanding (Note 6) 8,0( Common stock (non voting), $80 par value, 24,900 shares authorized and outstanding (Note 6) 1,992,0( Paid -in capital (Note 6) 22,190,5 Unrealized appreciation of equity securities (net of deferred tax of $19,452) (Note 1) 50,0' Retained earnings (deficit) (10,408,85 Total stockholder's equity 13,831,71 $270,268,71 The accompanying notes are an integral part of these financial statements. Statement of Operations Hartford Variable Annuity Life Insurance Company tor the Year Ended December 31, 1980 Revenue: Stipulated and purchase payments for annuity contracts. Fixed 40,61; Variable 16,41f. 57,03 Life insurance premiums Investment income (net of related expenses of $158,570) Fee from Separate Accounts (mortality and expense undertakings) Annual maintenance fee and miscellaneous revenue (Note 5) Total revenues Insurance benefits and expenses: Increase in liability for variable annuity contracts Increase in fixed annuity contract liabilities in the accumulation period Increase in aggregate reserves for fixed annuity and life contracts Surrenders and other policy benefits Commissions and underwriting fees (Note 1) General insurance expenses (Notes 1 and 4) Taxes, licenses and fees Amortization of deferred acquisition costs (Note 1) Total insurance benefits and expenses Operating income before Federal income taxes 641 Provision for (Benefit from) Federal income taxes (Note 2)• Current (42( Deferred 70c 28E Operating income after Federal income taxes 35E Net realized investment gains (Notes 1 and 2) Increase in unrealized appreciation of equity securities of $44,609 (net of deferred tax of $12,491) has not been included in reported income Net income (Note 7) 36� The accompanying notes are an integral part of these financial statements 7� 15,78 43f 1,111 74,44; 15,37: 15,64; 60i 34,83( 1,591 4,15: 27; 1,32: 73,80( 42 Statement of Retained Earnings (Deficit) Hartford Variable Annuity Life Insurance Company For the Year Ended December 31, 1980 Retained earnings (deficit), beginning of year $(10,77 Net income 36; Retained earnings (deficit), end of year $(10,401 Statement of Changes in Financial Position For the Year Ended December 31, 1980 Funds were provided by: Operations: Net income 36; Charges not requiring funds Increase in fixed annuity contract liabilities in the accumulation period 15,64: Increase in aggregate reserves for fixed annuity and life contracts 60 Provision for deferred Federal income taxes 701 Depreciation of furniture and equipment 7, Credits not providing funds Increase in deferred acquisition costs (net of current year amortization) (93! Increase in accrued investment income (31 Increase in accounts receivable and agents' balances (661 Amortization of bond discount, net (2; Increase in Federal income tax receivable (311 Decrease in accrued expenses and other liabilities (24; Total provided by operations 14 Cost of bonds and notes sold (other than temporary investments) 9,46! Sale of investment in Separate Accounts 1 Sale of temporary investments, net 5,31! Increase of common stock par value 501 Increase in paid -1n capital 1,501 $31,68. Funds were used to: Purchase bonds and notes (other than temporary investments) $30,82 Increase investment in Separate Accounts 10 Purchase furniture and equipment 14 Increase cash 62 $31,68 The accompanying notes are an integral part of these financial statements Notes to Financial Statements Hartford Variable Annuity Life Insurance Company (fecember 31, 1980 1. Accounting policies: The following is a summary of the Company's significant accounting policies: a) The financial statements, including the accounts of a subsidiary carried on the equity basis, have been prepared in conformity with generally accepted accounting principles which vary in certain material respects from accounting practices prescribed or permitted by insurance regulatory authorities (see Note 7). b) Purchase payments for annuity contracts are reported as earned when collected since the amounts and frequency of payments are determined by the contract holders. Benefits and acquisition related expenses are associated with earned premiums resulting in the recognition of profits over the anticipated life of the contracts. The current year costs of acquiring new business (principally commissions of $81,000, and sales and underwriting expenses of $2,181,000) which vary with, and are primarily related to, the production of first year premiums received, have been deferred These deferred acquisition costs are being amortized over the anticipated life of the contracts in proportion to the ratio of annual revenue to the total revenue anticipated. Amounts amortized are adjusted to reflect actual renewal experience levels. There is no deferral of expenses associated with non recurring single premium payments The Company makes advances to certain agents based upon estimated commissions on annualized first year premiums These advances are charged against income as future premiums are received from contract holders. The distribution of first year, renewal and single premiums for the major lines of business is as follows First Year Renewal Single Total Stipulated and purchase payments for annuity contracts Individual 649,554 4,813,384 $1,795,757 7,258,695 Group 29,741,125 15,797,301 4,235,421 49,773,847 $30,390,679 $20,610,685 $6,031,178 $57,032,542 Life insurance premiums -0- 79,735 -0- 79,735 c) The net realized investment gains (losses) on sale of bonds and notes and equity securities have been determined on a specific cost identification basis. Net investment gains (losses) are as follows Realized gains (losses): Bonds and notes 4,750 Equity securities 1,639 6,389 Changes in unrealized appreciation (depreciation): Equity securities 44,609 Bonds and notes (14,020,785) (13,976,176) Net investment gains (losses) $(13,969,787) d) Fixed annuity contract liabilities in the accumulation period represent the accumulation of net purchase payments for fixed annuity contracts with interest. The interest credited to such accounts (over and above the guaranteed rate) is determined by the Board of Directors of the Company, and may be changed at its discretion. During 1980 fixed annuity contracts were credited with guaranteed interest rates as follows: Contracts First Two Next Three Years Years Thereafter Tax qualified 7.1%, 7.5 8.25 8.5% or 9.0% 6.5% or 7.0% 3.5% or 4.0% Non tax qualified 6.0% or 6.5% 6.0% or 6.5% 3.5% Deferred compensation 7 1%, 7.5 8.25 8.5% or 9 0% 6.5% or 7.0% 3.5% or 4.0% 44 2. Federal income taxes: The Company is included in a consolidated Federal income tax return with Hartford Life Insurance Company and ITT Life Insurance Corporation In accordance with the tax sharing agreement among the consolidated companies, the Company pays its share of the consolidated tax liability or is reimbursed for the tax benefits of its losses which are used in the consolidated tax return. During 19 in accordance with the tax sharing agreement, the Company recorded a current tax benefit of $420,875. The principal items affectin income for tax reporting purposes were the current deductions for incurred policy acquisition costs and changes in statutory aggregate reserves For financial statement purposes, the Company provides deferred Federal income taxes on timing differences between income for financial and tax reporting purposes. No financial statement tax provision is provided on realized capital gains which are utilized to offset the consolidated companies realized capital loss carryforwards. The financial statement tax provision differs from an expected tax provision of $296,539 (computed by applying the Federal income tax rate of 46% to the operating income before realized gains) because of investment'tax credits and special deductions applicable to life insurance companies 3. Separate Accounts: The Company has established investment accounts to segregate the assets and liabilities applicable to various classes of contracts providing for variable benefits. 4. Pension plan: The Company's employees are included in Hartford Fire Insurance Company's non contributory retirement and death benefit plans. As such, the Company's position regarding the value of the accumulated plan benefits and the plan's net assets available for benefits is not determinable. Costs of such plans are provided in accordance with actuarial determinations and past service costs of the plans are being amortized over thirty years. Total pension expense amounted to $192,892 in 1980. Pension costs are funded through contributions to trust funds and purchase of group annuity contracts. 5. Reinsurance: In 1980, the Company entered into an agreement with another insurance company (the ceding company) to assume risks under certain nonparticipating individual life insurance contracts written by that company. These risks are reinsured on a modified coin- surance basis whereby the ceding company administers the contracts and retains the reserves for payment of future benefits The Company receives reinsurance premiums and investment income, and reimburses the ceding company for all commissions, expense allowances, current benefits and reserve increases related to these risks. The 1980 income, net of expenses, from these transaction, was $741,000, which is included in annual maintenance fee and miscellaneous revenue. 6. Stockholder's Equity: Par value of common stock and capital surplus were increased through a $2,000,000 capital contribution made by Hartford Life Insurance Company. 7. Reconciliation of net income and stockholder's equity: The following reconciles net income and stockholder's equity determined in accordance with accounting practices prescribed or permitted by regulatory authorities to such amounts determined in conformity with generally accepted accounting principles for the year ended December 31, 1980 Net Income Net loss statutory basis (464,536) Change in deferred acquisition costs (Note 1) 939,000 Provision for deferred Federal income taxes (Note 2) (709,419) Adjustments to aggregate reserves for fixed annuity and life contracts 514,408 Increase in furniture and equipment 68,720 Decrease in allowance for doubtful accounts 7,932 Operating income after Federal income taxes 356,105 Net realized investment gains 6,389 Net income, as reported 362,494 Stockholder's Equity Stockholder's equity statutory basis 6,926,318 Deferred acquisition costs (Note 1) 11,943,000 Deferred Federal income taxes (12,875,871 Adjustments to aggregate reserves for fixed annuity and life contracts 6,472,699 Mandatory securities valuation reserve 943,920 Furniture and equipment, net of accumulated depreciation 387,176 Other nonadmitted assets 34,470 Stockholder's equity, as reported $13,831,705 VD ort Hartford 0 subsidiary owned earnings accepted considered CMP Company conformity examined deficit) auditing opinion, necessary mo3 vAlk gkG +iartford standards financial December generally balan changes M o 9 Leh 980, accepted Insurance financial circumstances. statements accordingly, Hartford position referred efflieg accounting included tb results Variable Comp any) above dtlg principles Annuity present operations applied December 33901 ended. Insurance 980 accounting financial changes consistent Company fig related i i CDEP Who ill @MN Cage ex amination records p osition d"nl Cf1 Connecticut Hartford financial Variable position auditing preceding corporation d1 accordance operations, Annuity procedures wholly retained generally Insurance ended, Hartford, February Connecticut 98 9 @EF0 John deceased EY a 0 t 0g vU0 NJ Variable dP autd Separate and Directors Account Committee Hartfor Fund, Members ncorporate obert Robert Albert Goode, Harvey Chai Heidt Committee rman Separate Hartford Committee la Fu 0 member /Director member /Director member Account ncorporated rector member /Director Committee do Committee Mad Go o Pryor J Committee G3. 00 nger —Com mittee member, rector Adviser Thorndi State Boston Doran Street ndependent dh Big WA M OO Independent Arthu Hartford Auditors Andersen Annuity �nl OOP RD CVICO Lewis Company, Ung M051115 Principal Hartford Hartford nderwriter Equrraw Plaza, Sales Hartford Separate Co Accounts SCO Lflb m d� ()JP f n� i}�C t n E Q c0 M- my Re eiou Pa@ oh s Qe) 901do3 Rig Ead gaGy;a7for ARTHUR ANDERSEN A 71) ri PLEASE REDLY BY SIGNATUe:E. SIGN Y /1-0--) Stale ot Washington 'A, u e' .0073 ri N() REPLst 4 tez,L,/ i 6) i --a-G. I;44 err ?1 rt L Kr" ()Mg R SEND c H riE ND Y II O'N CUP r REc pl EN r i:ECIPIENT ;'LITURN: ELLO`A COPY IF A REPLY IS RECEIVED BY INTERNATIONAL CITY MANAGEMENT ASSOCIA''ION RETIREMENT CORPORATION DEFERRED COMPENSATION PLAN Amended as of June 28, 1974 THIS DEFERRED COMPENSATION PLAN, hereby established by F:(7 hereinafter the Employer; by agreements with the International City Management Association Retirement corpora rstramfwit1l h-- employees, officers, and officials of said employer who become party to this agreement, by reason of a "Joinder Agreement" signed at this time, or at some time in the future. WHEREAS, the Employer has certain employees rendering to it valuable services; and t` H ER EAS, the Employer is able to provide its employees with certain benefits under this Plan which assure to those participating employees reasonable retirement security; and WHEREAS, the Employer receives benefits from this Plan by increasing its ability to attract and retain competent personnel and by increasing its flexibility in personnel management. NOW THEREFORE WITNESSETH that the Employer has established this International City Management Association Retirement Ccrporation Deferred Compensation Plan and has caused it to be executed by the official affixing his signature on behalf of the Employer's governing body. Conversion Provision: Where an Employer has previously established the ICMA -RC deferred compensation plan for its employees, this Plan shall supercede all previous documents and provisions thereof except that existing deferred compensation employment agreements will continue in full force and effect in lieu of Part 1 of this plan, and as such, have the immediate force and effect of a "Joinder Agreement" to this Plan. If the Employer and Employee desire to amend the existing Deferred Compensation Employment Agreement by substituting Part 1 of this Plan therefor, this may be done by execution of a "Joinder Agreement Attest for Employer: Signature of Authorized Official Approved as to For' Attorney for the Employer 'Stanley Taylor Attest for ICMA- Retirement Corporation (Seal) By: 10,1t, Signature of Authorized Official 7 Signature of Authorized Official /Date Oto Peter Iseall)e^�ronf'd General Mana &er Complete the following prior to mailing this agreement to the Retirement Corporation Full Name (City of, County of, etc Address (include zip code) Title cf Official to whom correspondence and reports are to be mailed. (not name) City MrtnF1- ne_r f. Employers' Federal Tax Identification Number' 11 60n 1 2..66W Enter your amendment date here January 1, 197E (It may be January 1 or the beginning date of your fiscal year) Number of employees 165 FEB 0 J 1976 4 For the Employer: By Signature of Authorized Official /Date Carleton B. Olson. Mayor Print Name and Title For the ICMA Retirement Corporation William E. Besuden, Secretar y- Trews::_ ea• Port ?ngelc f^lallafn oitnt State of Washington Washington- 983 9 Number of employees eligible to participate 34 PRELIMINARY STATEMENT ESTABLISHMENT OF THE PLAN AMENDMENTS The International City Management Association Retirement Corporation, hereinafter the Retirement Corporation or ICMA -RC, is a nonprofit Delaware Corporation. It has been classified as a tax-exempt organization under the provisions of Section 501(c)(3) of the Internal Revenue Code. As an aid in the improvement of state and municipal administration in general, the Retirement Corpora- tion is organized for the purpose of receiving and investing deferred compensation funds of state and local governments and their related and controlled public interest organizations which are tax exempt under Section 501 of the Internal Revenue Code, hereinafter referred to as "Employers to act as trustee and /or agent for the collection and reinvestment of the income therefrom; and to act as agent for such Employers and at their explicit direction for the distribution of the funds and assets of their accounts to their participating Employees in accordance with options provided in this International City Management Association Retirement Corporation Deferred Compensation Plan, hereinafter referred to as the "Plan or the "ICMA -RC Plan The ICMA -RC Plan is set out below in two parts: I. The Deferred Compensation Employment Agreement; and 1I. The Master Trust Agreement. As set out below, the Employer adopts this plan as its agreement with the participating Employees and ICMA -RC, and the Employees shall participate in the Plan through the execution of a Joinder Agreement, which by its terms incorporates all of the provisions of the Plan. A copy of the Plan shall be supplied to each Employee for his study and understanding prior to his execution of the Joinder Agreement. The Employers, through their participation in the Plan, express their desire to have the benefit of the continued loyalty, service and counsel of their Employees and to assist them in providing for the contingencies of old age dependency, disability, and death. This Plan may be amended from time to time for purposes of assuring its conformance to the requirements of any applicable law or rule or regulation pursuant thereto, and to preserve the =x-exempt status of the Plan and the Retirement Corporation. No amendment may either directly or indirectly operate to deprive any participating Employer of its beneficial interest in the Trust as it is then constituted. The Retirement Corporation will notify the participating Employers of any amendment to this Plan no later teas sixty days prior to its effective date. Any such amendment will become effective after the expiration of that period of time, except to those Employers as may file an objection. No arnendment proposed by participating Employers shall be effective unless agreed to by the ICMA Retirement Corporation over the signature of an Officer. PART I. DEFERRED COMPENSATION EMPLOYMENT AGREEMENT 1. Deferred Compensation Initial Decision— Future Changes 1.1 There is no limit on the amount or percentage of the total compensation of the Employee which may be deferred by the Employer under this Plan. 1.2 For the purpose of this Plan the following definitions apply: a. "Total compensation" us the total of compensation to be paid by the Employer for the services of the Employee, regardless of the terms used for its components, as, for example, "base pay," "in addition to base pay," "employer's contributions," etc.; b. "Deferred compensation" is that amount or percentage of the total compensation of the Employee which the Employer currently defers from the payment to the Employee, and, instead, deposits same into a Deferred Compensation Account with the Retirement Corporation under the terms of this Plan. Deferred compensation may include amounts from or percentages of both "base pay" and "employers contributions" or it may include amounts from or percentages of only one of these components; c. "Current compensation" is that portion of the Employee's total compensation which is not deferred compensation as deferred compensation is defined herein; and d. "Base pay" is the stated salary of the Employee. 1.3 The determination of the initial amount or percentage and of any future change in amount or percentage of deferred compensation must be made before the beginning of the period of service for which the compensation is payable. 1.4 The amount of total compensation may be adjusted from time to time without altering the terms of this Plan. However, the percentage or amount of deferred compensation may be adjusted in accordance with 1.3 above. Any such adjustment of the percentage or amount of deferred compensation shall be communicated to the Employer's agent, the Retirement Corporation, and the deposits in the adjusted percentages or amounts, if changed from the prior existing percentages or amounts, shall thereafter be made by the Employer into its Retirement Corporation Account. 2. Deferred Compensation Account. Under this Plan, deferred compensation shall be credited and paid into the Trust established and maintained with the International City Management Association Retirement Corporation as Trustee. The Retirement Corporation is a *nonprofit corporation formed for the specific purpose of investing and otherwise administering the funds of said Trust. The Trust may be revoked at any time by the Employer, and upon revocation of said Trust, all of the assets thereof shall return to and revert to the Employer. The Employer shall keep accurate books and records with respect to the Employee's total compensation or other earned income and with respect to amounts paid into said Trust. 3. Ownership of Funds. Neither the Employee nor any beneficiary thereof shall have any interest whatsoever in the funds paid into the Deferred Compensation Account or in the accumulations or any increments on such funds, which shall at all times remain as an asset of the Employer, subject to its absolute dominion, control, and right of withdrawal until such time as the funds or assets of the Account are are distributed to the Employee in accordance with the provisions of this Plan. The obligations of the Employer to pay deferred compensation is contractual only, the Employee having no preferred or special interest or claim, by way of trust, annuity, or otherwise, in and to the specific funds and assets held in the Deferred Compensation Account. The contractual obligations of the Employer to pay the funds and assets in its Deferred Compensation Account to the Employee or his beneficiary on the applicable distribution date shall be a continuing obligation upon the. Employer, and shall not be relieved by any agreement between the Employer and any other party, except as provided in Section 2 of Paragraph 12 of this Plan, and shall not be affected in any manner by amendment or revocation of the Trust referred to in Pargraph 2 herein or by reversion of the Trust Funds to the Employer. The provisions of this Paragraph shall supersede and control any other provision of this Plan which could be interpreted to be in conflict therewith. 4. Administration of Funds. The funds deposited in the Deferred Compensation Account shall be invested and reinvested by the Retirement Corporation, as provided for in the Trust Fund described in Part I1 of this Plan, in any manner which in its sole discretion it deems desirable, without regard at any time to any legal limitation governing the investment of such funds The Account shall also reflect the gain or loss resulting from the investment and reinvestment thereof. This Trust Fund may be commingled with others established by the Trustee with other Employers under this Plan. 5. Designation of Investments Each participating Employer, being advised of the preferences of, and for the benefit of each of its participating Employees, shall designate the percentage of the deferred compensation involved which shall be invested in the respective types of investment funds (accounts) of the Retirement Corporation, such as the Equity (Variable) Fund or the Fixed- Income Fund, unless the laws of the applicable state or local government require otherwise, in which case those laws shall govern. Future elections to change the percentage to be invested in each type of Fund may only be made prior to and for the next succeeding annual period of service for which the compensation is payable by filing written notice thereof with the Retirement Corporation. Such notice will not be effective until received by the Retirement Corporation. 6. Payment of Deferred Compensation. The words "designated age"; as used in this Paragraph and in Paragraph 9 of this Plan, shall mean the designated age which appears in the Joinder Agreement executed by the participating Employee. These words, as used in this Paragraph, in Paragraph 9, and in the Joinder Agreement, shall also include the following, without repetition therein: "or later, in the sole discretion of the Employer, at the end of his employment agreement, if Employee continues in the employ of the Employer after he attains the designated age." At such time as the Employee reaches the designated age, becomes permanently disabled, or dies, whichever occurs first, he, or his beneficiary or beneficiaries, nominee or estate is /are entitled to receive payment in the Deferred Compensation Account outstanding on the date on which one of the foregoing occurs. Payments occasioned by the Employee having reached the designated age, becoming permanently disabled, or by his death shall be made in accordance with the provisions of Paragraph 7 hereof as follows: a. Payments in monthly, quarterly, semi annual, or annual payments over the period of life expectancy of the Employee in accordance with the following procedure: Upon reaching the designated age, or becoming permanently disabled from permanent full -time employment, whichever first occurs, the Employee's life expectancy shall be determined by reference to Standard U.S. Mortality Tables. the amounts of assets and accumulations in the Deferred Compensation Account shall be computed together with a reasonable rate of return on said assets, less the amount of expected monthly distribution, over the life expectancy of the Employee; and a monthly amount shall then be mathematically determined, the payment of which, in equal monthly installments over the period of the life expectancy of the Employee, shall completely deplete the said Account at the end of the last year of life expectancy; or b. Payments in monthly, quarterly, semi annual, or annual payments in accordance with the following procedure: Unless the Employee's employment terminates prior to the time he attains the designated age, amounts equal to the benefits received by the Employer, under retirement annuity policies, shall be paid to the Employee, at such time as he attains the designated age, or, in the case of death, payment to his beneficiary or beneficiaries, nominee or estate pursuant to the procedures provided in said policies and Paragraphs 7 and 8 of this Plan; or c. Payments in monthly, quarterly, semi annual, or annual installments over a period of not exceeding ten (10) years, said payments to include a reasonable return on the funds, assets and accumulations in the Deferred Compensation Account, Tess the amount of expected monthly, quarterly, semi annual, or annual distribution, over the said ten (10) year period, or d One lump sum payment. 7. Selection of Method of Payment. The method of payment shall be selected by the Employer, acting through the Retirement Corporation as its duly authorized agent, due consideration being given to health, financial circumstances and family obligations of the Employee. In this regard, the Employee may be consulted; however, he shall have no voice in the decision reached. 8. Payments in the Event of Death. a. During the Period of Distribution. In the event of the Employee's death during the period of distribution, the Employee's beneficiary shall be entitled to receive payments in accordance with the payment method being employed at the time of the Employee's death. With the consent of the Employer, acting through the Retirement Corporation as its duly authorized agent, said beneficiary may elect to receive a lump -sum in lieu of installment payments. b. Prior to Distribution. In the event of the death of the Employee prior to the distribution, the funds and assets of the Deferred Compensation Account shall be paid in accordance with one of the methods described in subparagraphs a, b, c, or d of Paragraph 6 hereof. The selection of said method shall be made by the Employer acting through the Retirement Corporation as its duly authorized agent. 9. Payment Dates. Payments shall commence on the first day of the month, following the attainment of the designated age, or later, on the first day of the month after the end of his employment agreement, if Employee continues in the employ of the Employer after he attains the designated age, or likewise following permanent disability, or death; and, in the case of installment payments, shall be made continuously thereafter on the first day of each succeeding month, or, in the event quarterly, semi annual, or annual payment installment periods are applied, then continuously thereafter on the first day of each succeeding month which begins the time period (quarterly, etc) involved until such time as the Deferred Compensation Account is depleted in its entirety. 10. Disbursing Agent. The Retirement Corporation shall act as agent of the Employer for purposes of disbursing payments. The ultimate. obligation for making such payments, however, shall remain it zh the Employer. 11. Accu nulation During the Distribution Period. During the period of distribution, the Employee or his beneficiary or beneficiaries, nominee or estate, as the case may be, shall continue to be credited with all the interest, accumulations, and increments on t .:nuistributed funds and assets in the Deferred Compensation Account, until such Account is depleted in its entirety. 12. Section 1. Termination of Employment. Upon termination of the Employee's services, for any reason other than death, the funds, assess, and accumulations in the Deferred Compensation Account shall not be transferred to an account with a new employer of the Emp'oys, and, instead, they shall remain in the original Account as. assets of the old Employer until such time as they are distributed in acce-cance with the provisions of this Plan, except as provided in Section. 2 of this Paragraph. Section 2. Transfer of Employment with Consideration Between Employers— Tripartite Agreement. In the event she Employee accepts employment with a new employer participating in the ICMA -RC Deferred Compensation Plan, then, if the past Employer finds that it has no present or future need of the funds, assets, and accumulations in the said Account for the pays e-t of its general creditors or for any other purpose whatsoever, in consideration of its desire to avoid the continuing expense of maintaining records, and receiving, examining, verifying and ft annual reports of the Retirement Corporation, and in cons.oe,e .on of avoiding the possible future expeses of litigation of Emploiee's continuing contractual rights to payment of deferred compensation on his retirement as herein provided in the event of any possible future revocation and withdrawal by the past Employer of the funds, assets, and accumulations in the said Account, the past Employer may, at its discretion, authorize the Retirement Corporation, as its agent, to propose to the new Employer that the finds, assets, and accumulations of the said Account be transferred to the ownership, control, and right of withdrawal of the new Employer, and to do so in the event the new Employer, in consideration of the increased value of the Employee's services by reason of the experience gained while in past employment, agrees to accept same, and the respective Employers and the Employee sign an appropriate form of Agreement in which the new Employer also agrees to assume the continuing contractual liability to pay deferred compensation so transferred upon retirement of the Employee and the Employee releases the past Employer from said continuing obligation to do same. 13. Losses. The Employer shall not be responsible for any loss due to investment or failure of investment of funds and assets in said Deferred Compensation Account nor shall the Employer be required to replace any loss whatsoever which may result from said investments. 14 Nonassignability of Deferred Compensation. The Employee during his lifetime shall not be entitled to commute, encumber, sell or otherwise dispose of his rights to receive deferred compensation payments provided for herein, and the right thereto shall be nonassignable and nontransferable, In the event of any attempted assignment or transfer thereof, the Employer shall have no further liability under this Agreement. 15. Participation in other Employee Benefit Plans. Nothing herein contained shall in any manner modify, impair, or affect the existing or future rights or shall in any manner modify, impair, or affect the existing or future rights or interest of the Employee (a) to receive any employee benefits to which he would otherwise be entitled, or (b) as a participant in any future pension plan, it being understood that the rights and interests of the Employee to any employee benefits or as a participant or beneficiary in or under any or all such plans respectively shall continue in full force and effect unimpaired, and the Employee shall have the right at any time hereafter to become a beneficiary under or pursuant to any and all such plans. 16. Definitions. The meaning of any term or terms, phrase, clause, or sentence used in this Agreement, which is also used in the By -Laws of the Retirement Corporation, shall be defined as these are defined in ARTICLE II, Section 2 of the By -Laws. Masculine pronouns, whenever used herein, include the feminine pronouns, and the singular includes the plural unless the context requires another meaning. 17. Validity of Agreement. This Agreement shall not be valid or enforceable unless signed by an officer of Employer, authorized. by the governing body of the Employer, as, for example, the City Council, and unless this Agreement is implemented by the execution of the Joinder Agreement. PART II. MASTER TRUST AGREEMENT AGREEMENT made by and between the aforenamed Employer and the International City Management Association Retirement Corporation (hereinafter the "Trustee" or "Retirement Corporation a nonprofit corporation organized and existing under the laws of the State of Delaware, for the purpose of investing and otherwise administering the funds set aside by Employers in con nection with Deferred Compensation Agreements with Employees WHEREAS, The Employer desires to enter into agreements with its Employees whereby its Employees agree to defer payments of specified percentages of or amounts from their total compensation as "deferred compensation" is defined in said agreements until the occurence of certain events; WHEREAS, in order that there will be sufficient funds available to discharge the foregoing contractual obligations, the Employer desires to set aside periodic amounts equal to the percentage or amount of total periodic compensation deferred; WHEREAS, the funds set aside, together with any and all investments thereto, are to be exclusively within the dominion, control, and ownership of the Employer, and subject to the Employer's absolute right of withdrawal, the Employee having no interest whatsoever therein; NOW, THEREFORE, this Agreement witnesseth that (a) the Employer will pay monies to the Trustee to be placed in deferred compensation accounts for the Employer; (b) the Trustee covenants that it will hold said sums, and any other funds which it may receive hereunder, in trust for the uses and purposes and upon the terms and conditions hereinafter stated; and (c) the parties hereto agree as follows: ARTICLE 1. General Duties of the Parties. Section 1.1 General Duty of the Employer. The Employer shall make regular periodic payments equal to the percentages of or amounts from its participating Employees' total periodic compensations which are deferred in accordance with the terms and conditions of Deferred Compensation Employment Agreements with such Employees, or with any subsequent modification thereof. Section 1.2. General Duties of the Trustee. The Trustee shall hold all funds received by it hereunder, which, together with the income therefrom, shall constitute the Trust Funds. It shall administer the Trust Funds, collect the income thereof, and make payments therefrom, all as hereinafter provided. The Trustee shall also hold all Trust Funds which are transferred to it as successor Trustee by the Employer from existing deferred compensation arrangements with its Employees which meet the same Internal Revenue Code requirements which govern the ICMA -RC Deferred Compensation Plan. Such Trust Funds shall be subject to all of the terms and provisions of this Agreement. ARTICLE 11. Powers and Duties of the Trustee in Investment, Administration, and Disbursement of the Trust Fund. Section 2.1 Investment Powers and Duties of the Trustee. The Trustee shall have the power in its discretion to invest and reinvest the principal and income of the Trust Fund and keep the Trust Fund invested, without distinction between principal and income, in such securities or in other property, real or personal, wherever situated, as the Trustee shall deem advisable, including, but not limited to, stocks, common or preferred, bonds, retirement annuity and insurance policies, mortgages, and other evidences of indebtedness or ownership, and in common trust funds of approved financial or investment institutions, with such institutions acting as Trustee of such common trust funds, or separate and different types of funds (accounts) including equity, fixed- income, and those which fulfill requirements of state and local governmental laws, established with such approved financial or investment institutions. For these purposes, this Trust Fund may be commingled with others established by the Trustee under this form of agreement with other Employers. In making such investments, the Trustee shall not be subject at any time to any legal limitation governing the investment of such funds. Investment powers and investment discretion vested in the Trustee by this Section may be delegated by the Trustee to any bank, insurance or trust company, or any investment advisor, manager or agent selected by it. Section 2 2. Administrative Powers of the Trustee. The Trustee shall have the power in its discretion: (a) To purchase. or subscribe for, any securities or other property and to retain the same in trust. (b) To sell, exchange, convey, transfer or otherwise dispose of any securities or other property held by it, by private contract, or at public auction. No person dealing with the Trustee shall be bound to see the application of the purchase money or to inquire into the validity, expediency, or propriety of any such sale or other disposition. (c) To vote upon any stocks, bonds, or other securities; to give general or special proxies or powers of attorney with of without power of substitution; to exercise any conversion privileges, subscription rights, or other options, and to make any payments incidental thereto; to oppose, or to Consent to or otherwise participate in, corporate reorganizations or other changes affecting corporate securities, and to delegate discretionary powers, and to pay any assessments or charges in connection therewith; and generally to exercise any of the powers of an owner with respect to stocks, bonds, securities or other property held as part of the Trust Funds. Id) To cause any securities or other property held as part of the Trust Funds to be registered in its own name, and to hold any Investments in bearer form, but the books and records of the Trustee shall at all times show that all such investments are a part of the Trust Funds. (e) To borrow or raise money for the purpose of the Trust in such amount, and upon such terms and conditions, as the Trustee shall deem advisable; and, for any sum so borrowed, to issue its promissory note as Trustee, and to secure the repayment thereof by pledging all, or any part, of the Trust Funds. No person lending money to the Trustee shall be bound to see the application of the money lent or to inquire into its validity, expediency or propriety of any such borrowing. (f) To keep such portion of the Trust Funds in cash or cash balances as the Trustee, from time to time, may deem to be in the best interests of the Trust created hereby, without liability for interest thereon. Ig) To accept and retain for such time as it may deem advisable any securities or other property received or acquired by it as Trustee hereunder, whether or not such securities or other property would normally be purchased as investments hereunder. (h) To make, execute, acknowledge, and deliver any and all documents of transfer and conveyance and any and all other I nstruments that may be necessary or appropriate to carry out the powers herein granted. II) To settle, compromise, or submit to arbitration any claims, debts, or damages due or owing to or from the Trust Funds, to commence or defend suits or legal or administrative proceedings; and to represent the Trust Funds in all suits and legal and administrative proceedings. (t) To do all such acts, take all such proceedings, and exercise all such rights and privileges, although not specifically mentioned herein, as the Trustee may deem necessary to administer the Trust Funds and to carry out the purposes of this Trust Section 2 3. Distributions from the Trust Funds. The Employer hereby appoints the Trustee as its agent for purposes of selecting the method by which distributions from the Trust Funds are to be made, as well as for purposes of making such distributions In this regard the terms and conditions set forth in the Agreements to be executed between the Employer and its Employees, and any subseouent modifications thereof, are to guide and control the Trustee's power. Section 2 4. Valuation of Trust Funds At least once a year as of Valuation Dates designated by the Trustees, the Trustee shall determine the value of the Trust Funds. Assets of the Trust Funds shall he valued at their market values at the close of business on the Valuation Date, or, in the absence of readily ascertainable market values as the Trustee shall determine, in accordance with methods consistently followed and uniformly applied. ARTICLE 11I. For Protection of Trustee. Section 3.1. Evidence of Action by Employer. The Trustee may rely upon any certificate, notice or direction purporting to have been signed on behalf of the Employer which the Trustee believes to have been signed by a duly designated official of the Employer. No communication shall be binding upon any of the Trust Funds or Trustee until they are received by the Trustee. Section 3 2. Advice of Counsel. The Trustee may consult with any legal counsel with respect to the construction of this Agreement, its duties hereunder, or any act, which it proposes to take or omit, and shall not be liable for any action taken or omitted in good faith pursuant to such advice. Section 3 3. Miscellaneous. The Trustee shall use ordinary care and reasonable diligence, but shall not be liable for any mistake of judgment or other action taken in good faith. The Trustee shall not be liable for any loss sustained by the Trust Funds by reason of any investment made in good faith and in accordance with the provisions of this Agreement. The Trustee's duties and obligations shall be limited to those expressly imposed upon it by this agreement, notwithstanding any reference of the Plan. ARTICLE IV. Taxes, Expenses and Compensation of Trustee. Section 4.1 Taxes. The Trustee shall deduct from and charge against the Trust Funds any taxes on the Trust Funds or the income thereof or which the Trustee is required to pay with respect to the interest of any person therein. Section 4.2. Expenses. The Trustee shall deduct from any charge against the Trust funds all reasonable expenses incurred by the Trustee in the administration of the Trust Funds, including counsel, agency and other necessary fees. ARTICLE V. Settlement of Accounts. The trustee shall keep accurate and detailed accounts of all investments, receipts, disbursements, and other transactions hereunder. Within 90 days after the close of each fiscal year, the Trustee shall render in duplicate to the Employer an account of its acts and transactions as Trustee hereunder. If any part of the Trust Fund shall be invested through the medium of any common, collective or commingled Trust Funds, the last annual report of such Trust Funds shall be submitted with and incorporated in the account. If within 90 days after the mailing of the account or any amended account the Employer has not filed with the Trustee notice of any objection to any act or transaction of the Trustee, the account or amended account shall become an account stated. If any objection has been filed, and if the Employer is satisfied that it should be withdrawn or if the account is adjusted to the Employer's satisfaction, the Employer shall in writing filed with the Trustee signify approval of the account and it shall become an account stated. When an account becomes an account stated, such account shall be finally settled, and the Trustee shall be completely discharged and released, as if such account had been settled and allowed by a judgment or decree of a court of competent jurisdiction in an action or proceeding in which the Trustee and the Employer were parties. The Trustee shall have the right to apply at any time to a court of competent jurisdiction for th- judicial settlement of its account. ARTICLE VI. Resignation and Removal of Trustee. Section 6.1 Resignation of Trustee. The Trustee may resign at any time by filing with the Employer its written resignation. Such resignation shall take effect 60 days from the date of such filing and upon appointment of a successor pursuant to Section 6.3, whichever shall first occur Section 6.2. Removal of Trustee. The Employer may remove the Trustee at any time by delivering to the Trustee a written notice of its removal and an appointment of a successor pursuant to Section 6 3 Such removal shall not take effect prior to 60 days from such delivery unless the Trustee agrees to an earlier effective date. Section 6.3. Appointment of Successor Trustee. The appointment of a successor to the Trustee shall take effect upon the delivery to the Trustee (a) an instrument in writing executed by the Employer appointing such successor, and exonerating such successor from liability for the acts and omissions of its predecessor, and (b) an acceptance in writing, executed by such successor. All of the provisions set forth herein with respect to the Trustee shall relate to each successor with the same force and effect as if such successor had been originally named as Trustee hereunder. If a successor is not appointed within 60 days after the Trustee gives notice of its resignation pursuant to Section 6.1, the Trustee may apply to any court of competent jurisdiction for appointment of a successor. Section 6.4 Transfer of Funds to Successor. Upon the resignation or removal of the Trustee and appointment of a successor, and after the final account of the Trustee has been properly settled, the Trustee shall transfer and deliver any of the Trust Funds involved to such successor. ARTICLE VII. Duration and Revocation of Trust Agreement. Section 7.1. Duration and Revocation. This Trust shall continue for such time as may be necessary to accomp,ish the purpose for which it was created but may be terminated or revoked at any time by the Employer as it relates to any and /or all related participating Employees. Written notice of such termination or revocation shall be given to the Trustee by the Employer. Upon termination or revocation of this Trust, all of the assets thereof shall return to and revert to the Employer. Termination of this Trust shall not, however, relieve the Employer of the Employer's continuing obligation to pay deferred compensation upon the applicable distribution date to any and/or each Employee with whom the Employer has entered into a Deferred Compensation Employment Agreement. Section 7 2, Amendment. The Employer shall have the right to amend this Agreement in whole and in part but only with the Trustee's written consent. Any such amendment shall become effective upon la) delivery to the Trustee of a written instrument of amendment, and (b) the endorsement by the Trustee on such instrument of its consent thereto. ARTICLE VIII. Miscellaneous. Section 8.1. Laws of the State of Delaware to Govern. This agreement and the Trust hereby created shall be construed and regulated by the laws of the State of Delaware. Section 8.2. Successor Employers. The term "Employer" shall include any person who succeeds the Employer and who adopts the Deferred Compensation Plan of the Retirement Corporation and becomes a party to this agreement with the consent of the Trustee. Section 8.3. Withdrawals. The Employer may, at any time, and from time to time, withdraw a portion or all of the Trust Funds created by this Agreement and related Deferred Compensation Employment Agreements. Section 8.4. Definitions. Definitions in the fly -Laws of terms, phrases, etc., used herein apply to the same herein. The masculine includes the feminine and the singular includes the plural unless the context requires another meaning. o' You havethe 0 tojoin atuuque retirem plan. The ICMA Retirement Corpo- ration deferred compensation plan: is the only plan that provides portable benefits offers you the widest range of investment options administers more local gov- ernment deferred compensa- tion plans than any other agency is a nonprofit service organi- zation that returns to you the benefits of its growth is endorsed and sponsored by the 15 major public service associations serving local government Participation in the ICMA Retirement Corporation will allow you to: IN pay no income tax this year on up to 25% of your salary II pay no current tax on the earnings from the investment of your deferred compensa- tion funds continue building retirement income even when you change jobs choose from a wider range of investment options 2 c PROS ONS A DEFERRED COMPENSA- TION PLAN IS an agreement be- tween you and your employer that provides for a specific amount of your salary to be paid to you at a later date (payment of part of your salary is deferred) This deferred income is depos- ited in your RC account and in- vested through RC's retirement Funds You qualify to receive payments at retirement (age 55 or later), disability, or your beneficiaries will be the recipients in the event of your death The law also per- mits payment upon termination of employment or in the event of an unforeseen emergency, subject to the rules of the U S Internal Revenue Service YOU DO NOT PAY INCOME TAXES on money you defer As a result, you pay less taxes each year and the money you would have paid in taxes is invested for your future security During retirement you will pay income taxes only on the amount you receive each year, usually at lower tax rates since most retired persons are in a lower tax bracket (See "How Deferral Effects Your Taxes," Table 1 TAXES ARE NOT PAID ON EARNINGS. Your employer continues to be the owner of the deferred income until it is paid to you Since your public employer is exempt from taxes, no tax is charged on the investment earn- ings while they are owned by your employer There is no "double taxation This results in even more money working for you each year NO EFFECT ON SOCIAL SECURITY BENEFITS. You will receive full social security bene- fits during retirement since all required Social Security taxes continue to be paid each year This means that you will receive full social security benefits dur- ing retirement without any inter- ruptions caused by the payment of your deferred compensation DEFER UP TO 25% OR $7,500 under current law You may defer up to 25% of your total income or $7,500, whichever is less The RC plan has no minimum amount required for deferral, although some employers may impose a minimum LOWER COSTS. RC charges only two fees, and these are lower than in any similar national plan They are 1 An Administrative Fee: A one -time charge of 1 5% on all contributions as they are received (A note for pres- ent participants This fee was reduced from 3% effective July 1, 1979 2 An Annual Management Fee: For the Balanced, Bond, and Government Secu- rities Funds A 1% fee annually charged against the total Fund, prorated monthly For the Guaranteed Interest Fund A 0 5% fee annually charged against the total Fund, prorated monthly This fee does not reduce the guaranteed interest rate The RC plan costs less because: we're a nonprofit tax exempt agency of the local governments we serve we have no stock- holders to pay, sur- pluses are returned to our participants by low- ering administrative and management fees our sponsors receive no financial benefit for their endorsement we pay no commissions to agents or represen- tatives HOW EFERRALIEff '1S Table 1 illustrates the short term effect on your paycheck of defer- ring compensation This exam- ple compares two employees, each earning $20,000 annually Each employee has decided to set aside 10% of annual salary, or $2,000 this year, for retire- ment John Doe is a participant in the RC deferred compensation plan so he defers income and the subsequent taxes until he actually receives these monies during retirement Mary Smith is saving for retirement through a conventional savings plan, she Table 1. The Short Term: Participant's Paycheck* Semi Monthly Paycheck A SPECIAL NOTE ON EARLY WITHDRAWALS. You may withdraw the balance of your de- ferred compensation account upon termination of employment The portion of your account necessary to cover an "unfore- seeable emergency" may also be withdrawn Conditions for emergency withdrawal are to pays most of the tax on the savings now Over the short term, John Doe and Mary Smith set aside the same amount for savings, BUT John pays $20 less in fed- eral income taxes out of each paycheck, or a total of $480 a year As a result, he has $480 more each year than Mary to either use as spendable income or to apply to additional savings It only costs John $1,520 this year to set aside $2,000 for retirement John Doe RC Plan $833.00 10% of paycheck in savings through RC's deferred compensation plan 83.00 NONE 10% of paycheck in savings through conventional channels NONE 83.00 Amount of paycheck subject to current income taxes $750.00 $833.00 Spendable or net income per semi monthly paycheck $656.00 $636.00 *This illustration, based on 1979 federal tax tables, assumes that both John Doe and Mary Smith are married and claiming three (3) exemptions State and local taxes are not included in this illustration but in some cases there would be further savings resulting from lower state and local tax be defined by Internal Revenue Service regulations and are subject to change Although this flexibility may be beneficial to some participants, you should keep in mind that a deferred compensation plan is best used for accumulating re- tirement benefits, not emergency savings Here's why Mary Smith Conventional Savings $833.00 3 4 The advantage of a deferred compensation plan is maximized when a participant receives payments during retirement, when most will be in a lower tax bracket Income taxes are due in the year the funds are withdrawn When you receive a lump -sum payment upon termination of employment or for an unfore- seeable emergency, rather than in installment payments during retirement, you could pay taxes at a much higher rate than if you had paid taxes on the compen- sation when it was earned This financial trap could be even more detrimental if you withdraw funds while you are still drawing your salary as both will be reported as taxable income in the year received WHEN YOU CHANGE JOBS complete portability of retirement benefits is provided through RC Our plan is available to public employers nationwide When you change employers within the public sector you may continue to accumulate benefits under one plan, if your second em- ployer agrees Upon retirement, you will receive only one pay- ment and deal with only one organization If you go to work for a private company the funds you have contributed up to that time may continue to accrue tax -free earn- ings in our Trust Funds until you qualify for payment at retirement age Upon returning to work for a public employer, you may once again begin contributing to our plan without penalty NO LOAN PRIVILEGES OR CLAIMS BY YOUR CRED- ITORS. Since the deferred compensation funds remain an asset of your employer until you are eligible to receive benefits, you may not borrow against the account nor may deferred com- pensation be used as collateral of any kind For the same reason, your creditors may not place a claim against your account As with all deferred compensation arrangements, the account must legally be subject to claims of the employer's creditors RC REPORTS TO YOU. At the end of each year, you will receive a report detailing your account's activity You will also receive our corporate annual report so you can see exactly how your money is invested BEFORE YOU JOIN RC evaluate your financial condition First, if you are spending every- thing you earn you cannot afford to participate Second, you need accessible savings which you can use to cover an emergency The most common vehicle for accumulating savings is through a savings account at your bank or credit union Also, if you are trying to save money for a car, a home, or some other major purchase, another type of sav- ings plan is necessary The RC plan is a retirement planning tool Short -term participation may not be to your advantage GROUP INSURANCE POLI- CIES. An additional benefit of participation in RC is the avail- ability of insurance policies at very attractive group rates Included are long -term disability insurance which many gov- ernments do not offer in their employee benefit package, life insurance coverage of up to $100,000 to age 65, and the abil- ity to add on life insurance cov- erage for family members These benefits are separate from, and not purchased with, deferred compensation I K,I 1trJf SAT E. 'NI YOU WILL BECOME ELIGIBLE TO RECEIVE BENEFIT PAY- MENTS AT RETIREMENT (AGE 55 OR LATER) OR IN THE EVENT OF DISABILITY. Your beneficiary is eligible for benefits in the event of your death RETIREMENT OR DISABILITY PAYMENTS MAY BE MADE BY ANY ONE OF SEVERAL OPTIONS: a lump -sum payment, monthly, quarterly, semi- annual, or annual pay- ments for a specified number of years, or monthly, quarterly, semi- annual, or annual pay- ments for life YOUR BENEFIT PAYMENTS ARE BASED ON the entire amount of income you have deferred during the years of employment, together with all of the earnings accrued from the investment and reinvestment of your funds 5 6 \1 Table 2 is an example of how much an employee might re- ceive after contributing $1,000 each year for different numbers of years assuming the Fund's earnings average 8% These examples show payments under the options for (1) a lump -sum payment, (2) monthly payments for 10 years, and (3) monthly payments for life The calcula- tions are based on the receipt of Table 2. Approximate Benefit Payments If you defer $1,000 each 10 year for: Years At the end of the period an average 8% annual growth will result in total earnings of: The amounts that would be available to you at the end of the period would be: OR (3) monthly payments for the rest of the participant's life each equal to *(a) if the participant is 60 years old at the time payments begin: *(b) if the participant is 65 years old at the time payments begin: 1. E I �L S )�JS A 1�1 U 4JJ monthly payments, earnings on which are compounded monthly The anticipation of an average earnings rate of 8% is merely an assumption for the purposes of this illustration Payments for life are based on currently available annuity rates You will pay in- come tax on these payments as you receive them, the amount depending on your Individual tax situation 20 Years 25 Years Your total contribution will be: $10,000 $20,000 $25,000 30 Years $30,000 $5,246 $29,085 $54,252 $94,197 (1) a lump -sum equal to: $15,246 $49,085 $79,252 $124,197 OR (2) monthly payments for 10 years each equal to: $185 $596 $962 $1,507 $141.46 $455.43 $735.33 $1,152.35 $159.58 $513.79 $829.55 $1,300.01 *Note The actuarialy determined monthly payments for life shown in this table refer only to men Because of the increased life expectancy of women, monthly payments for women are reduced from the examples of payments given for men by 9% at age 60, and by 11 5% at age 65 Currently, debate continues regarding whether or not retirement benefit payment calculations may differentiate between sexes These annuity rates, which are examples only, are of course subject to change to comply with any changes in law Experience has taught us that our participants require several choices in planning their retire- ment investment Decisions are typically based on your age, the degree of risk you will live with, and your obligations Also, some governments are restricted by law as to the types of investments in which deferred compensation can be placed When joining, you should consult with your employer on possible local restrictions To meet your diverse needs we offer four investment choices, summarized below (Also see the information contained in the Employee Enrollment Form before making your choices 1 THE BALANCED FUND is designed to allow your par- ticipation in the overall economy of the United States Its emphasis is on common stocks but that emphasis is balanced against current market conditions to protect your account against losses In this Fund you should ex- pect significant fluctuations in earnings on a year -to- year basis In any given year a loss may be experi- enced The strategy is for the long -term Over two -to- three market cycles, you should come out ahead of the other Funds 2 THE BOND FUND is de- signed to take advantage of the significant earnings which can be made by investing in high quality corporate bonds Offering less risk than the Balanced Fund, you should expect steady gains over one or two market cycles Year to -year fluctuations of earnings will also occur in this Fund, but losses are unlikely 3 THE GOVERNMENT SECURITIES FUND is in- vested only in securities of the U S Government and those guaranteed by the U S Government When compared to the Balanced and the Bond Funds, it offers even less nsk Over the long -term its returns are likely to be slightly lower Year -to -year fluctuations in earnings are to be ex- pected The Government Securities Fund allows par- ticipation by employees who work for governments that restrict the amounts that can be invested in commercial securities 4 THE GUARANTEED IN- TEREST FUND is the most recent addition to the RC investment options It offers guaranteed interest for those who choose not to accommodate themselves to yearly fluctuations This Fund includes guaranteed investments offering a specific rate of return The current guaranteed rate is 8 5% annually This interest rate will change periodically How- ever, year -to -year fluctua- tions are minimized Over the long -term, participants should not expect a higher return than our other Funds will show In summarizing each Fund, we have pointed out that all invest- ments have a degree of risk As a general rule you may assume that the greater the risk, the greater is the possibility for a higher long -term return On the other hand, all of RC's Funds are for retirement planning and represent conservative invest- ment policies when compared to the complete range of possi- bilities 7 The Retirement Corporation does not offer recommendations as to your appropriate invest- ment vehicle Likewise, your employer has no responsibility to advise you on this decision If your employer does offer guide- lines or suggestions, they are not to be construed, in any way, as actions for which your employer assumes liability or ethical responsibility YOUR CHOICE OF INVESTING IN MORE THAN ONE RC FUND offers you the opportunity to ef- fect the long -term growth of your retirement benefits in relation to your personal preferences and needs You may allocate all of your deferred compensation to a single Fund or you may split it between Funds in any way you choose ICMA RETIREMENT CORPORATION 1101 Connecticut Avenue Northwest Washington DC 20036 SPONSORS: Area Code 202 293 -2716 Toll free 800 424 -9249 International City Management Association Municipal Finance Officers Association International Personnel Management Association National Institute of Municipal Law Officers National League of Cities National Association of Counties American Society for Public Administration American Planning Association American Public Works Association American Public Power Association Building Officials and Code Administrators International American Association of Airport Executives International Institute of Municipal Clerks American Public Gas Association International Association of Assessing Officers 9/79 w .,;1- f) February 1, 1988 ;0 6 V" MEMORANDUM TO EMPLOYERS RE: AMENDMENT OF DEFERRED COMPENSATION PLAN ICM A RETIREMENT CORPORATION The Tax Reform Act of 1986 amended section 457 of the Internal Revenue Code to permit the transfer of deferred amounts between eligible deferred compensation plans of different employers. IRS regulations previously permitted such transfers only between employers in the same state. In order to take advantage of this change, we are proposing the enclosed amendment to your deferred compensation plan. This amendment will automatically become part of your plan unless you notify us before March 1, 1988, that you disapprove of it. Under the amendment, a new employee who has an account in an eligible deferred compensation plan (section 457 plan) of another employer may have his or her account balance transferred into your plan, if the other plan also permits such transfers. Similarly, a former employee may have his or her account balance transferred from your plan into his or her new employer's eligible deferred compensation plan, if the other plan also permits such transfers. If one of your current or former employees wishes to transfer an account into or out of your plan, the employee and both employers must execute a written agreement. Upon your request, ICMA Retirement Corporation will provide you with a form of a tripartite agreement for this purpose. If you have any questions about the amendment or if you wish to make a transfer either out of or into your plan, please contact the Participant Services department at ICMA Retirement Corporation, at (800) 424 -9249. ICMA RETIREMENT CORPORATION PROPOSED AMENDMENT TO DIIEPRED COMPENSATION PLANS ICM A RETIREMENT CORPORATION ICMA Retirement Corporation hereby proposes that each Deferred Compensation Plan of which it is the Administrator (the "Plan be amended as follows. Pursuant to Article X of the Plan, this amendment shall become effective unless before March 1, 1988, the Employer maintaining the Plan notifies ICMA Retirement Corporation that it disapproves such amendment, in which case the amendment shall not became effective. follows: Section 6.03 of the Plan is hereby amended in its entirety to read as "6.03 Transfers: "(a) Incoming Transfers: A transfer may be accepted from an eligible deferred compensation plan maintained by another employer and credited to a Participant's Account under this Plan if (i) the Participant has separated from service with that employer and become an Employee of the Employer, and (ii) the other employer's plan provides that such transfer will be made. The Employer may require such documentation from the predecessor plan as it deems necessary to effectuate the transfer, to confirm that such plan is an eligible deferred compensation plan within the meaning of section 457 of the Internal Revenue Code, and to assure that transfers are provided for under such plan. The employer may refuse to accept a transfer in the form of assets that are impossible or impracticable for the Employer or Administrator to hold or administer. Any such transferred amount shall not be treated as a deferral subject to the limitations of Article V, except that, for purposes of applying the limitations of Sections 5.01 and 5.02, an amount deferred during any taxable year under the plan from which the transfer is accepted shall be treated as if it has been deferred under this Plan during such taxable year end compensation paid by the transferor employer shall be treated as if it had been paid by the Employer. "(b) Outgoing Transfers: An amount may be transferred to an eligible deferred compensation plan maintained by another employer, and charged to a Participant's Account under this Plan, if (i) the Participant has separated from service with the Employer and become an employee of the other employer, and (ii) the other employer's plan provides that such transfer will be made. The Employer may require such documentation from the other plan as it deems necessary to effectuate the transfer, to confirm that such plan is an eligible deferred compensation plan within the meaning of section 457 of the Internal Revenue Code, and to assure that transfers are provided for under such plan." ICMA RETIREMENT 1 CORPORATION Employer A: Employer B: Employee: ICMA RETIREMENT CORPORATION TRIPARTITE AGREEMENT Parties to this Agreement: AGREEMENT, made and entered into this day of 19 by and among Employers A and B and Employee. WHEREAS, Employer A has established and maintains an "eligible deferred compensation plan," within the meaning of section 457(b) of the Internal Revenue Code of 1986 "Plan A and has entered into a deferred compensation agreement with Employee pursuant to Plan A "Deferred Compensation Agreement A and WHEREAS, Employer B has established and maintains an "eligible deferred compensation plan," within the meaning of section 457(b) of the Internal Revenue Code of 1986 "Plan B and has entered into a deferred compensation agreement with Employee pursuant to Plan B "Deferred Compensation Agreement B and WHEREAS, Employee has terminated his /her employment with Employer A, and is now employed by Employer B; and WHEREAS, Employee desires to have his /her interest in Plan A transferred to Plan B, and to substitute Employer B for Employer A as the party obligated to pay his /her deferred compensation accrued under Plan A; and WHEREAS, Employers A and B desire to transfer Employee's interest in Plan A to Plan B, and to have Employer B assume Employer A's obligation to pay Employee's deferred compensation accrued under Plan A; NOW, THEREFORE, in consideration of the above, the parties hereto agree as follows: 1. Employer A shall transfer an amount equal to the entire value of Employee's interest in Plan A, to Employer B. In order to accomplish this, Employer A hereby directs which holds the assets of Employer A related to its obligations under Plan A, to transfer the amount stated in the preceding sentence, to which holds the assets of Employer B related to its obligations under Plan B. The amount so transferred shall be charged to the account held under "Plan A for the benefit of Employee, and credited to the account held under Plan B for the benefit of Employee. 2. Employee releases Employer A from all of its obligations to Employee under Plan A. 3. Employer B shall assume the obligation of Employer A to pay benefits to Employee or his /her beneficiary under Plan A. Employer B shall fulfill this obligation by accepting the amount transferred in accordance with paragraph 1, above, and crediting such amount to the account held under Plan B for the benefit of Employee. Employee's rights with respect to amounts transferred under this Agreement shall be determined in accordance with Plan B and Deferred Compensation Agreement B. 4. Employee shall have no further rights under Plan A or Deferred Compensation Agreement A. 5. Nothing contained in this Agreement shall create or modify any right of the Employee to the amount transferred in accordance with paragraph 1, above, or to any assets of Employer A or Employer B, except as specifically provided in Plan B or Deferred Compensation Agreement B. 6. The parties shall take all actions necessary to carry out the intent of this Agreement, including, but not limited to, notifying and directing any persons holding funds under Plan A or Plan B to make or accept the required transfers. 7. This Agreement shall be binding upon the parties, and their beneficiaries, successors, assigns, and heirs. IN WITNESS WHEREOF, the parties hereto have set forth their signatures and affixed their seals on the day and year first written above. EMPLOYER A BY: TITLE ATTEST: TITLE EMPLOYER B BY: TITLE ATTEST: TITLE EMPLOYEE: ATTEST: RESOLUTION NO. A RESOLUTION of the City Council of the City of Port Angeles, Washington, c.• pt- ing the International City Management Association Retirement Trust for the purpose of continuing to offer a De- ferred Compensation Plan to all City employees. WHEREAS, the City of Port Angeles maintains a deferred I compensation plan for its employees which is administered by the ICMA Retirement Corporation (the "Administrator and WHEREAS, other public employers have joined together to establish the ICMA Retirement Trust for the purpose of representing the interests of the participating employers with respect to the collective investment of funds held under their deferred compensa- tion plans; and WHEREAS, said Trust is a salutary development which further advances the quality of administration of plans administered by. I the ICMA Retirement Corporation: NOW, THEREFORE BE IS RESOLVED THAT THE City of Port Angeles I hereby executes the ICMA Retirement Trust, attached hereto; and BE IT FURTHER RESOLVED THAT THE City Clerk of the City of Port Angeles shall be the coordinator for this program and shall receive necessary reports, notices, etc. from the ICMA Retirement Corporation as Administrator, and shall cast, on behalf of the City of Port Angeles, any required votes under the program. PASSED by the City Council of the City of Port Angeles at a regular meeting of the Council held on the :&L day of 1984. n_COO CX13_t v Sherri Anderson, Deputy City Clerk i APPROD AS TO FORM: Cra 'g Kn \son,''City Attorney A Y 0 R 5. G3 CERTIFICATION OF ADOPTION OF RESOLUTION I, Sherri Anderson, Deputy City Clerk of the City of Port Angeles, Washington, do hereby certify that the attached resolution was duly passed and adopted by the City Council at a regular meeting thereof asembled this 16 day of October, 1984 by the following vote: AYES: NAYS: ABSENT: Sherri Anderson, Deputy City Clerk The information you provide on this sheet is essential for proper plan administration As you complete this form, please refer to the instructions on the reverse side 1 Employer's full name (City of, County of, etc.) City of Port Angeles 2 Plan Coordinator (Name and title of official to whom all correspondence and reports are to be mailed) Merri A. Lannove. Citv Clerk /Personnel Director 3 Employer's address 140 _Wes t F'ront, P_0 $fix LI SO (stree• PO Box etc Port Angeles, Washington 98362 4 Phone number (co (206) 457 -0411 5 Employer's Federal Tax Identification Number 6 How often will you make contributions? Every two_we 7. What is the first pay date of plan implementation? 8 Number of employees eligible to participate FILE INFORMATION SHEET 185 91- 600 -1266 ICMA RETIREMENT CORPORATION 1120 G Street Northwest Suite 700 Washington DC 20005 Area Code 202 737 -6616 Toll free 800 424-9249 Istate) izip code) (under trust) October 16, 1984 9 Total number of employees 79__seas_o a? K. part time _264 INSTRUCTIONS 1 Employer's name. Please provide the full name of the organizatioh 2 Plan Coordinator. This official is designated in the resolution as the person who will receive all correspondence, literature, reports, and financial information from RC. 3. Address. Please give the address RC should use to mail account statements, reports, literature, etc. 4 Phone number. The Plan Coordinator's phone number should be provided 5 Employer's Federal Tax Identification Number This is the number the Internal Revenue Service has assigned to you for the purpose of federal tax reporting. It is the same number appearing on your federal withholding reports, federal W -2 forms, and Social Security reports. 6. Contribution frequency. You should make con- tributions so they can be standardized to equal payments (Corrections for rounding may be made periodically.) Our experience has been that employers find it convenient to make contribu- tions each payday or every other payday We are able to handle contributions at these intervals a. Weekly b Biweekly (every two weeks) c Semimonthly (twice each month, use only if your payday is twice each rnonth) d. Monthly (do not use if your payday is weekly or biweekly) e. Every 4 weeks (use if your payday is every 4 weeks or every 2 weeks) f. Quarterly g. Semiannually h. Annually Earnings may be affected if contributions are made less frequently than payroll deductions if deducted funds are accumulated by the employer over a number of pay periods before being con- tributed, employees' deferred compensation account earnings will accrue at a slower rate. 7. First paydate of plan implementation. This is to establish timing for our computer program which prepares contribution statements for you If you cannot estimate when the first employees will actually enroll, leave this blank. You will receive a blank contribution statement with your plan acceptance package. When you are ready to send the first contribution, use this blank form and indicate the next contribution date on the form. 8 Employees eligible to participate. This applies especially to those employers whose plan re- stricts participation to certain employees or groups of employees. 9 Total number of employees Give approximate number of current employees of the municipality. August 20, 1984 TO: FROM: SUBJECT: AUG 29198 CITY OF PORT ANGELES 12177 rl CPK RC's Participating Employers in Washington James W. Randall, Western Area M Deferred Compensation and the Wa Employee Retirement System (PERS) Recently enacted legislation (Senate Bill 4477) provides local public agencies with the option that PERS employee contributions can be exempt from current federal income tax by having the employer "pick -up" the employee contribution. Several Washington public employers who also participate in the ICMA Retirement Corporation's deferred compensation plan have raised questions concerning the impact of the legislation on contributions to the RC plan. Basically, the legislation affects the amount of gross compensation on which maximum annual contributions to the RC plan are based. The normal maximum deferral for an RC account, based on IRS regulations, is 25 percent of annual salary or $7,500 per year, whichever is less. This maximum deferral is altered, however, if an employer elects to "pick -up" the employee's contributions to PERS. In this situation, the six percent (or 5.11 percent) employee contribution to PERS must be subtracted from gross salary before the 25 percent maximum contribution is calculated. Below are several examples. PERS 1 or LEOFF 1 6% Contribution Current Gross Annual Salary $15,000.00 20,000.00 30,000.00 31,915.00 33,000.00 PERS /LEOFF Contrib. 900.00 1,200.00 1,800.00 1,914.90 1,980.00 Adjusted Gross $14,100.00 18,800.00 28,200.00 30,000.10 31,020.00 1800 Harrison Street Suite 1661 Oakland California 94612 Maximum RC Con- tribution (25% of adj. gross) $3,525.00 4,700.00 7,050.00 7,500.00 7,500.00 ICMA RETIREMENT CORPORATION Area Code 415 836 -4527 California. Toll free 1 -800 772 -4075 Other states Toll free 1 -800 227 -0938 Maximum RC Contrib. prior to S.B. 4477 $3,750.00 5,000.00 7,500.00 7,500.00 7,500.00 In general, if the six percent employee contribution to PERS is tax- sheltered, the maximum RC deferral is reduced to 23.5 percent of the current gross annual salary (or $7,500, whichever is less). Although the 25 percent maximum for deferred compensation is reduced by 1 -1/2 percent, the "cut -off" salary is increased from $30,000 to $31,915. (This is the salary where the percentage maximum deferral equals $7,500.) The same kinds of charts and calculations can be made for employees covered by PERS 2, LEOFF 2 and the Judicial retirement systems. If you have any questions, feel free to contact either Jill Monley, RC's Pacific Northwest Service Representative, or me, toll -free at 800 227-4)938. cc: Jill Monley, Pacific Northwest Service Representative Home Office 1 120 G Street. N W Suite 700, Washington, D C 20005 600-424 -9249 The ICMA Retirement Corporation Is the administrator of a deferred compensation retirement plan for state and local government under the sponsorship of International City Management Association Municipal Finance Officers Association National Institute of Municipal Law Officers National L eague of Cities American Society for Public Administration American Planning Association American Public Works Association American Public Power Association Budding Officials and Code Administrators tnternational American Association of Airport Executives International Institute of Municipal Clerks American Public Gas Association Internahonal Association of Assessing Officers American Public Transit Association RESOLUTION NO. 3 7G A RESOLUTION of the City Council of the City of Port Angeles adopting the Deferred Compensation Retirement Plan of the Inter- national City Management Association Retire- ment Corporation. WHEREAS, the International City Management Association Retirement Corporation, hereinafter referred to as the "Retire- ment Corporation" is organized to provide retirement security particularly to State and Municipal employees whose careers require periodic changes in employment from one governmental unit to another; and WHEREAS, the City of Port Angeles has certain employees rendering to it valuable services who can benefit by the Retire- ment Corporation's Plan; and WHEREAS, the City benefits from this plan by increasing its ability to attract and retain competent personnel: NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Port Angeles as follows: Section 1. The City of Port Angeles hereby adopts the Deferred Compensation Retirement Plan of the International City Manager's Association Retirement Corporation and authorizes the Mayor of the City to execute such documents as may be necessary to make the plan effective in the City for the benefit of its employees. This includes the entering into a master trust agree- ment with the Retirement Corporation authorizing said corporation to invest and administer the funds that are set aside by the City in connection with the Deferred Compensation Agreements made by it with its employees under said Plan. c PASSED by the City Council of the City of Port Angeles and approved by its Mayor at a regular meeting of the Council held on the 3rd day of February, 1976. ATTEST: By: �'Ii.d'cee; L �4�✓ Marian C. Parrish City Clerk Approved as to Form: -1 6,—, Stanley A.[Taylor City Attorney 2 MAYOR RESOLUTION NO. 3-76 7C A RESOLUTION of the City Council of the City of Port Angeles adopting the Deferred Compensation Retirement Plan of the Inter- national City Management Association Retire- ment Corporation. WHEREAS, the International City Management Association Retirement Corporation, hereinafter referred to as the "Retire- ment Corporation" is organized to provide retirement security particularly to State and Municipal employees whose careers require periodic changes in employment from one governmental unit to another; and WHEREAS, the City of Port Angeles has certain employees rendering to it valuable services who can benefit by the Retire- ment Corporation's Plan; and WHEREAS, the City benefits from this plan by increasing its ability to attract and retain competent personnel: NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Port Angeles as follows: Section 1. The City of Port Angeles hereby adopts the Deferred Compensation Retirement Plan of the International City Manager's Association Retirement Corporation and authorizes the Mayor of the City to execute•such documents as may be necessary to make the plan effective in the City for the benefit of its employees. ,This includes the entering into a master trust agree- ment with the Retirement Corporation authorizing said corporation to invest and administer the funds that are set aside by the City in connection with the Deferred Compensation Agreements made by it with its employees under said Plan. c PASSED by the City Council of the City of Port Angeles and approved by its Mayor at a regular meeting of the Council held on the 3rd day of February, 1976. ATTEST: By: :IL et-At lct�Z Marian C. Parrish City Clerk Approved as to Form: Stanley A.(Taylor City Attorney cZL-t7-t J) (0-az t MAYOR 3 Employer's address (cty) 6 How often will you make contributions? 7. What is the first pay date of plan implementation? 8 Number of employees eligible to participate 9 Total number of employees FILE INFORMATION SHEET The Information you provide on this sheet Is essential for proper plan administration. As you complete this form, please refer to the instructions on the reverse side 1 Employer's full name (City of, County of etc City n f`P_ortt ge e s 2 Plan Coordinator (Name and title of official to whom all correspondence and reports are to be mailed) Merri A. Lannoye, Personnel Director 140 West Front St., P.O. Box 1150 tstrse' Pr Sox e'c Port Angeles 4 Phone number (206) 457 -0411 5. Employer's Federal Tax Identification Number 91 -600 -1766 178 bi- weekly 50 IC 11-1 RETIREMENT CORPORATION Washington 98362 (sia'e) zip cotle) November 4, 1983 1120 Area Code 202 G Street 737 -6515 NorThwest Suite 700 Toll free 800 Washington DC 424 -9249 20005 employer TO: ALL PARTICIPATING EMPLOYERS/ ICMA RETIREMENT CORPORATION Suite 700 1120 G Street Northwest Washingtorn,-D:G'T1 20005 PETER DeGROOTE, PRESIDENT/ SUBJECT: PHASE -OUT OF GOVERNMENT SECURITIES FUND FROM: ICMA RETIREMENT CORPORATION In 1974, the Retirement Corporation (RC) initiated the Government Securities Fund to provide an investment vehicle for those local governments prohibited by state law from investing in commercial securities. However, in 1979, RC introduced the Guaranteed Fund, in which employees in these restricted governments may also invest. Over the years, the rate of return on the Guaranteed Fund has increased to 15.25 percent, attracting many participants and, as a corollary, rapid growth. In contrast to this growth, assets in the Government Securities Fund, earning an average of 6 percent since 1974, have decreased, making operating costs disproportionately higher for this fund. For these reasons, RC will close out the Government Securities Fund by the end of 1982. During August all participants with money in the fund will be notified of the phase -out by letter. Between September 1 and November 30, these participants will be able to transfer their assets to the Balanced, Bond, and /or Guaranteed Interest Funds. RC will accept no new deposits into the Government Securities Fund after October 31; participants currently contributing to the fund must amend their joinder agreements to reallocate their investments by this date. In a continuin- g to improve service to participants, t e expect this move to help cut operating costs and allow us o implement, without raising fees, ot:ier investment options. We welcome any questions or comments; please feel free to call the Participant Services Staff in Washington toll -free at 800- 424 -9249. Employers in the western states may call our California office at 800- 277 -0928 or, in California, 800 772 -4075. .5 G 15.25 PERCENT NEW GUARANTEED %RATE At its May meeting, the ICMA Retirement Corp ra'tion s Board of Directors raised the interest rate on new contributions to the Guaranteed Fund to 15.25 percent. Effective July 1, all contributions made to the Guaranteed Fund between July 1, 1982, and June 30, 1983, will earn 15.25 percent, compounded annually, through September 30, 1987. The new rate is based on a guaranteed interest contract negotiated with The Travelers Insurance Company. The RC Board also increased the interest rate to 13.0 percent for money contributed between July 1, 1979, and September 30, 1981. This money currently earns 11.25 percent. The_new rate will take effect on July 1, 1982; earnings on this money are compounded annually through October 31, 1988. Contributions made to the Guaranteed Fund between October 1, 1981, and June 30, 1982, continue to earn 14.0 percent, compounded annually, through September 30, 1987. Employers show- id_note one change in the administrative procedures for the fund. If the employer terminates the RC Plan for all employees and requests the return of all money in the fund accumulated under this new rate, there may be a market value adjustment to the amount returned. This change will not affect normal benefit payments or other early withdrawals. Employees who wish to begin contributing to the Guaranteed Fund may do so by filing an amended joinder agreement at any time. Those wishing to transfer money accumulated in the other funds to the Guaranteed Fund should file a fund -to- fund transfer on their anniversary date. Participants with questions may call RC's toll -free number (800 -424- 9249). December 18, 1981 TO: All Partieipatin "g FROM: Patricia Clifford Director, Participant Servi 1101 Area Code 202 Connecticut 293 -2716 Avenue Northwest Toll free 800 Suite 1009 424 -9249 Washington DC 20036 SUBJECT: Annual Reports on Deferred Compensation and Federal Tax Reporting Procedures RESPONSIBILITIES FOR TAX REPORTING ICMA 5' 0 RETIREMENT CORPORATION IMPORTANT INFORMATION: Direct this memo to Staff responsible for personnel payroll and retirement forms. Early in 1982 the ICMA Retirement Corporation will provide you with a report of all 1981 calendar year activity in the accounts of your employees who participate in our deferred compensation plan. Your participating employees will also receive reports on the status of their individual accounts for the same period. Please note that one frequent source of differences between your records and ours are the contributions mailed by you late in December which are received and posted in our records in the next calendar year. In those cases, that last contribution will be shown on next year's report. The participating employer is responsible for reporting as ordinary income for the current calendar year all amounts withdrawn on behalf of participating employees for reasons other than retirement, disability, or death. The Retirement Corporation will report to the IRS and to individuals concerned all retirement benefit, disability, and death benefit payments. DEFERRED COMPENSATION AND W-2 FORMS Deferred compensation amounts contributed on behalf of participating employees or withheld from their pay are not taxable as current income until withdrawn, requiring special treatment on W-2 forms. The enclosed instructions provide a full explanation and examples. The ICMA Retirement Corporation is the administrator of a deferred compensation retirement plan for state and local govemment under the sponsorship of: Intemational City Management Association Municipal Finance Officers Association International Personnel Management Assodation National Institute of Municipal Law Officers National League of Cities Amencan Society for Public Administration Amencan Institute of Planners American Society of Planning Officials Amencan Public Works Association Amencan Public Power Association Budding Officials and Code Administrators International Amencan Association of Airport Executives International Institute of Municipal Clerks Amencan Public Gas Association International Association of Assessing Officers Instructions for Completing W -2 Forms (See examples on following page) Box 9: Federal income tax withheld: This figure represents the total amount of federal income tax withheld on the amount paid to the exployee. Income tax is not withheld on deferred wages. Box 10: Box 11: Box 13: Wages, tips, other compensation: This figure does not include the amount deferred. Since the employee has not received the funds, the amount deferred is not reported as paid to the employee. FICA employee tax withheld: FICA tax is paid on the total compensation and can include the amount deferred. The maximum amount of wages subject to FICA tax is $29,700. Total FICA wages: This box will reflect the amount of wages paid, plus the amount deferred, up to the mazimum taxable amount. FICA taxes are paid in the year the money is earned rather than the year received. Box 5: Was employee covered by a qualified pension plan, etc. RC is not classified as a qualified pension plan; therefore, the box under pension plan should not be checked, unless you have another plan which meets qualification requirements, and the employee is also participating in that plan. Boxes 18, 21: State or local wages: Deferred compensation is not generally subject to state or local income tax. The amount entered in these two boxes would be the same as Box 10. EXAMPLE 1 Employee Tom Smith (single) Current compensation $16,000 Deferred compensation $2,000 1 Control number 1 2 Employer's name, address, and ZIP code 8 Employee's social security number 9 Federal Income tax withheld A00 -00 -0000 $2,518.00 12 Employee's name, address, and ZIP code Tom Smith 3030 West Street USA City, USA 99999 Form W -2 Wage and Tax Statement 1981 2 Employer's name. address, and ZIP code 8 Employee's social security number 9 Federal income tax withheld A00 -00 -0000 $5,509.40 12 Employee's name, address, and ZIP code Bill Jones 30 South Street USA City, USA 99999 3 Employer S identif ication number 5 Sias rm ne- Prnsum road ploy, :easel, ,•sae 'rp 6 3 Employer's identification number 5 Slat em- De- Pension Legal ployee ceased plan rep 6 10 Wages, tips, other compensation $14,000.00 13 FICA wages $16,000.00 16 Employer s use 17 State income tax 20 Local Income tax 10 Wages tips, other compensation $24,500.00 13 FICA wages $29,700 16 Employer', use 17 State income tax 20 Local income tax Ire. W -2 Wage and Tax Statement 1981 This information is being furnished to the Internal Revenue Service 4 Employer's State number 942 emp 18 State Wages, tips, etc ,514_nnn 21 Local wages, tips, etc $14,000 op 18 Stale Wages tips tic $24,500 21 Local wages tins elf $24,500 Sub total 7 Advance EIC payment 11 FICA tax withheld $1064.00 14 FICA tips —0— Note that box 10 does not include the amount being deferred. Federal income tax is based on current compensation. Note that the total wages subject to FICA (box 13) include both current compensation and deferred compensation. EXAMPLE 2 Employee Bill Jones (single) Current compensation $32,000 Deferred compensation $7,500 4 Errp oy' r c State number 7 Advance EIC payment 11 FICA tax withheld 19 Name of State $1,975.05 14 FICA tips Cor- rection 22 Name of locality bar tenon 19 Name of State 22 Name of locality Void Dept of the treasury I H S 1115 App 1/19011 13 2678063 The figure in box 10 reflects total compensation minus the amount being deferred. Box 13 reflects the maximum amount of compensation subject to FICA tax. Should you have any questions regarding this matter, do not hesitate to call us. "J, 1 .1 A •S TOTAL- 6 815 I '1 ",„1„,.„ ,01■1 7) .7'-'1;"<ti.:"'1::;::" c 41) 3-1 /3±/-8- 32/32 43 3- 20 92/28 9-3/-43 /8- 0-3 /-1-8-/8-! 9-3/ 3-1-/8-1 0-5/ 31-1-8-! 9-6/3-0-/-8-! 9-7-/-3-! 38/-3-1-/8! 9-91-3-0-/81 (P/ g 4 E A 1 A TE MSNT 0 A CC0 tJNTF A-GC-044NT NC 3-454- n00(...:' --R-1-0-14-A-R-D--JC)-S-E-P-H COM RO-R I N CT A D M-P--D-A V-I-D --1W. A P 1- 9-83 A 2 TR A-N-SAGT-I-G N aA-T-L: DE-SC'? I P-T-1 A L A-N -R1N-A-R -GO-NT-R I BUT-I-0-N CO-NT-R I-BUT I-0N 30 N er -1-?-N- I-NGS-/L EA1-?-N I NCS EA R-N-I-- NC3-S-/-L-GgSS R-N-I-NGS-/-L0---SL-: EAR-N-1-1-4CS C /-E0--SE F ECS ICMA RETIREMENT CORPORATION 1101 CONNECTICUT AVENUE, N.W. NASIIINGTON, D.C. 20036 400. 00 2-ao 06 37,22- 2-40,9-0 73 1-7-3,-0 9 3 33 55,-00 4,-6-3 39-3-ce oc TO T-A-h-S 1-6-,-8-3-5,--5-5 20 EM P-60-Y-ER-:-C-1-1:-Y---0 f-:--P 0 R-T--A-N GEL-E-S A-M-O-UN T F-Et. 3-A-L-A-NC 3 L 3 ae 2. 0- 0:06 9;6-55-.-02 5-4--_1-4 9 00 1 22.51 22-0 .-6-5 3 9L 4 -5,46 1 04-06 34-3-498 9-.-0-0 10 ,-06-1-.-2-7 AREA CODE 202 293 -2716 GO-V-f-T 30N4 SEC-U-R I TY I NT-ER-E-ST 244-4-06 1 9 7 90 97,00 A n7 48 4 -8,00 73 49,14) ---49 ------49.83 1 October 16, 1981 SPECIAL NOTICE TO: All Participating Employers and Employees ICMA RETIREMENT CORPORATION 1101 Area Code 202 Connecticut 293 -2718 Avenue Northwest Toll free 800 Suite 1009 ,-424 -9249 Washington DC i 20036 7:"- 1 r J1 .7lN7 v J SUBJECT: Prohibition of Transfers out of the Guaranteed Fund and New Guarantee on Past Contributions During August we announced fund-to-fund transfers of past contributions as a new feature of our plan. After discussions with our current insurance underwriters for the Guaranteed Fund, we have concluded that we can no longer allow transfers of past contributions out of the Guaranteed Fund, except at periodic intervals. The effect of this change on you as well as an announcement of higher guaranteed earnings on past deposits follows. New Guaranteed Rate on pre October 1981 Deposits New Guarantees 11.25 11.25 11.25 Also, for all contributions received between January 1, 1981, and September 30, 1981, RC will now guarantee 11.25 percent lannually for six years. Transamerica Life Insurance and Annuity Company has agreed to a new, seven-year rate on contributions received prior to January 11981 which allows RC to offer our participants significantly higher guarantees effective November 1, 1981. This chart compares the new and current guarantees. 1981 1982 -84 1985 -88 Current Guarantees 8.5 -9.5 8.0 4.0 5.63 The tCMA Retirement Corporation is the administrator of a deferred compensation retirement plan for state and local government under the sponsorship of: International City Management Association Municipal Finanoe Officers Association International Personnel Management Association National Institute of Municipal Law Officers National League of Gales American Society for Public Administration American Institute of Planners American Society of Planning Officials American Public Works Association American Public Power Association Building Officials and Code Administrators International American Association of Airport Executives International Institute of Municipal Clerks American Public Gas Assodation international Association of Assessing Officers K As a condition of the new contract, RC has agreed to two reasonable contract conditions: No fund -to -fund transfers will be allowed prior to October 31, 1988. Plan -to -plan transfers (roll -over of funds to another deferred compensation plan) will be made at market value. All other withdrawals allowed under federal law, such as retirement benefits and unforeseeable emergencies, will be made at full value. Effect of Limitation on Transfers out of the Guaranteed Fund 1. All applications for transfers out of the Guaranteed Fund which we received through the third week in September were completed. Since these transfers have been made, they will be honored. 2. All pending applications out of the fund will not be honored. We will contact you if you are one of the participants this change effects. 3. Any person who has transferred into the Guaranteed Fund intending to later transfer out may withdraw that request and have the money returned to the original investment funds. To make this request, send a letter which must be received by us no later than November 30, 1981. We apologize for any inconvenience these changes may have caused you. Allowing unlimited fund -to -fund transfers out of the Guaranteed Fund greatly increases the market risk of our insurance underwriters. The result would be that we could not offer you the high levels of guarantees we are able to provide under this procedure. We continue to strive to make necessary changes which we feel will be in the hest, long -term interests of our overall participant population. The above changes were made in this spirit. Sincerely yours, ii Peter DeGro to President FROM THE DESK OF: MARIAN PARRISH CITY CLERK !A 0'/ &'r 1, C; °ILL ij-0-cam e. Z avt 4 "e. A: e- C1. ca.s[ ocise 01,44) mom ,f ug' L L. a1/-e2 t.a z a ■6 P D ati24 v o.2 C.¢.tl t? i J p-tL Wit• s t tx .tea AIL") ek4 l L 79 /St U V t/ -t u i b- W r-t x_ Iii 5.G3 MEMO: September 8, 1981 TO: All Administrative Management City Employees FROM: David Flodstrom, City Manager SUBJECT: Deferred Compensation Plan You are invited to attend a general informational meeting on Deferred Compensation September 17, 1981, at 4:30 P.M. in the City Council Chambers. The Hartford Variable Annuity Company in conjunction with Shearson Loeb Rhoades, Inc., and the City will explain the program in detail. Briefly, the Plan is an arrangement which permits you, on an entirely voluntary basis, to authorize a portion of your salary to be withheld and invested for payment to you at a later date. Neither the deferred amount nor the earnings on the investments are subject to current Federal Income Taxes. Taxes become payable when the deferred income plus earnings are distributed to you, presumably at retirement when you are in a lower income bracket. Your deferrals do not affect your social security or pension benefits and you can contribute up to $7,500. or 25% of gross compensation, whichever is less, per annum. j9 Fund -To -Fund Transfers ICMA Retirement Corporation 5.63 1. Participants requesting transfers must use the appropriate form which requires employer approval. 2. All 'participants may apply for fund -to -fund transfers during an initial "open season" ending October 30, 1981. 3. Thereafter, transfers are limited to annual elections. This annual transfer must be requested in the anniversary month of the participant's first contribution to RC. That is, if RC received the first contribution in July, then fund to fund transfers may only be requested in July. Applications for transfers must be received by the last day of the anniversary month; RC must make the transfer within 60 days of receipt of all completed paperwork. 4. Transfers are made_as of the last day of the month; the amount transferred will be the cash -in value or market value of the account on the -last day of the month. 5. RC does not charge a fee for these transfers; however, if Guaranteed Interest Contracts in which a participant has invested require a penalty for withdrawal, this penalty will be assesed. August 10, 1981 PAC /mam TO: RC Employer Representatives FROM: Patricia A. Cliffor SUBJECT: Procedures for Fund to Fund Transfers ICMA RETIREMENT CORPORATION 1101 Area Code 202 Connecticut 293 -2716 Avenue Northwest Toll free 800 Suite 1009 424 -9249 Washington DC 20036 As amended, the RC Plan Document now provides for fund to fund transfers of past contributions in accordance with administrative procedures issued by the Corporation. To assist you in administering this new option, we have developed the following materials which you will find enclosed. Rules for Making Fund to Fund Transfers the administrative guidelines regarding eligibility and procedures for applying for transfers. "A Word About Fund to Fund Transfers" this brochure, designed for individual participants, explains these transfers and includes the regulations. Application for Fund to Fund Transfers the form participants must use to request fund to fund transfers. In addition, an issue of RC Notes announcing the transfers will be sent to all participants at their homes. If you have questions regarding these transfers or need additional copies of either the brochure or the applications, please call the Participant Services Staff at 800 424 -9249. The ICMA Retirement Corporation is the administrator of a deferred compensation retirement plan for state and local govemment under the sponsorship of International City Management Association Municipal Finance Officers Association International Personnel Management Assoaation National Institute of Mumapal Law Officers National League of Cities Amencan Society for Public Administration Amencan Institute of Planners Amencan Soaety of Planning Officals Amencan Public Works Assoaation Amencan Public Power Association Budding Officials and Code Administrators International Amencan Association of Airport Executives International Institute of Mumapal Clerks Amencan Public Gas Association International Association of Assessing Officers Application for Fund- to-Fund Transfers TO: FROM City [1C El Advanced Business Computer Supplies Servtc�es, Inc (703) 522.0111 RETAIN COPIES 3 4 Use this form to request transfers of past allocations only; changes in future allocations must be made on Joinder Agreements. For additional information, see RC's publication entitled "A Word About Fund -to -Fund Transfers." Print Name of Employer Participant's Name Account No Address Telephone No State Zip Code Social Security No. Anniversary Month (this is the month in which RC received your first contribution): I request to make the following transfers. Transfers may be expressed as dollars or percentages. Transfer from to Transfer from to Transfer from to Transfer from to The undersigned hereby applies to amend my joinder agreement by making transfers on the effective date of this agreement subject to the approval of my employer. I understand this transfer will be governed by the plan document, its amendments, and my Joinder Agreement. Date Date Participant Signature of Authorized Official* Title *You cannot sign your own request for employer approval If you also act as your employer's authorized official, have another employee authorized to sign your agreement ICMA -RC COPY SEND COPIES 1 2 TO ICMA RETIREMENT CORPORATION ICMA RETIREMENT CORPORATION 1101 Area Code 202 Connecticut 293 -2716 Avenue Toll Free 800 Northwest 424 -9249 Washington DC 20036 July 7, 1980 MEMORANDUM TO: Dave Flodstrom, City Manager FROM: City Attorney RE: Pension Rights of Walt Sickler S.63 The City has authority, pursuant to RCW 35A.11.020, to deal, in a plenary fashion, with the compensation paid to its employees, including pension systems: The legislative body of each code city shall have power to define the functions, powers, and duties of its officers and employees; within the limitations imposed by vested rights, to fix the compensation and working condi- tions of such officers and employees and establish and main- tain civil service, or merit systems, retirement and pension systems not in conflict with the provisions of this title The limitation which would be placed upon the power to create a pension system would be contained in RCW 35A.11.030, which re- quires that: .other matters not specifically provided for in this title, shall be governed by the general law. For the purposes of this title, "the general law" means any pro- vision of state law, not inconsistent with the title, en- acted before or after the passage of this title which is by its terms applicable or available to all cities or towns." Thus, membership in the PERS system is required by the "general law" (RCW 41.40.120) however, since Mr. Sickler is prohibited from belonging to that system, RCW 41.40.120(4) that general law would not apply. General law not being applicable, the City may provide for Mr. Sickler's compensation in any manner in which the City Council deems advisable. An action by the City Council providing Mr. Sickler some type of an individual Tetirement account, annuity, etc., should include formal Council approval. This should probably occur as an amend- ment to the presently existing salary policies which were adopted by ordinance at the time of adoption of the 1980 budget. Craig L. M ller CLM:pr cc: W4 t Sickler,v arian Parrish 23. December 18, 1980 TO: All Participating Employers FROM: Patricia Cliffor SUBJECT: Annual Reports on Deferred Compensation and Federal Tax Reporting Procedures IMPORTANT INFORMATION: Direct this memo to Staff responsible for personnel payroll and retirement forms. Early in 1981 the ICMA Retirement Corporation will provide you with a report of all 1980 calendar year activity in the accounts of your employees who participate in our deferred compensation plan. Your participating employees will also receive reports on the status of their individual accounts for the same period. Please note that one frequent source of differences between your records and ours are the contributions mailed by you late in December which are received and posted in our records in the next calendar year. In those cases, that last contribution will be shown on next year's report. RESPONSIBILITIES FOR TAX REPORTING ICMA RETIREMENT CORPORATION 1101 Area Code 202 Connecticut 293 -2716 Avenue Northwest Toll free 800 Suite 1009 424 -9249 Washington DC 20036 The participating employer is, responsible for reporting as ordinary income for the current calendar year all amounts withdrawn on behalf of participating employees for reasons other than retirement or death. The Retirement Corporation will report to the IRS and to individuals concerned all retirement benefit and death benefit payments. DEFERRED COMPENSATION AND W -2 FORMS Deferred compensation amounts contributed on behalf of participating employees or withheld from their pay are not taxable as current income until withdrawn, requiring special treatment on W -2 forms. The enclosed instructions provide a full explanation and examples. 5.63 The ICMA Retirement Corporation is the administrator of a deferred compensation retirement plan for state and local govemment under the sponsorship of International City Management Assooation Mumopal Finance Officers Association International Personnel Management Association National Instiute of Municipal Law Officers National League of Cities Amencan Sooety tor Public Admnstration Amencan Institute of Planners Amencan Sooety of Planning Offioats American Public Works Association Amencan Public Power Association Building Officals and Code Administrators International Amencan Association of Airport Executives International tnstdute of Municipal Clerks Amencan Public Gas Association International Association of Assessing Officers Instructions for Completing W -2 Forms (See examples on following page) Box 9: ,Federal income tax withheld: This figure represents the total amount of federal income tax withheld on the amount paid to the employee. Income tax is not withheld on deferred wages. Box 10: Box 11: Box 13: Box 5: Boxes 18, 21: Wages, tips, other compensation: This does not include the amount deferred. Since the employee has not received the funds, the amount deferred is not reported as paid to the employee. FICA employee tax withheld: FICA tax is paid on the total compensation and can include the amount deferred. The maximum amount of wages subject to FICA tax is $25,Q00. Total FICA wages: This will reflect the amount of wages paid, plus the amount deferred, up to the maximum taxable amount. FICA taxes are paid in the year the money is earned rather than the year received. Was employee covered by a qualified pension plan, etc. RC is not classified as a qualified pension plan; therefore, the box under pension plan should not be checked, unless you have another plan which meets qualification requirements, and the employee is also participating in that plan. State or local wages: Deferred compensation is not generally subject to state or local income tax. The amount entered in these two boxes would be the same as box 10. EXAMPLE 1 Employee Tom Smith (single) Current compensation $16,000 Deferred compensation $2,000 1 Control number 1 2 Employer's name, address, and ZIP code USA City 10 Z Street USA City, USA 99999 9 Federal income tax withheld $2,555.80 12 Employee's name, address, and ZIP code 8 Employee's social security number A00 -00 -0000 Tom Smith 3030 West Street USA City, USA 99999 Note that box 10 does not include the amount being deferred. Federal income tax is based on current compensation. Note that the total wages subject to FICA (box 13) include both current compensation and deferred compensation. EXAMPLE 2 Employee Bill Jones (single) Current compensation $27,000 Deferred compensation $6,000 1 Control number 2 22222 Wage and Tax Statement 1980 22222 10 Wages, tips, other compensation 11 FICA tax withheld $14,000 $980.80 13 FICA wages 14 FICA tips $16,000 16 Employer's use 17 State income tax 18 State wages, tips, etc 19 Name of State $14,000 20 Local income tax 21 Local wages, tips, etc 22 Name of locality $14,000 Copy 1 For State, City, or Local Tax Department Employee's and employer's copy compared. 5 Stat em De Pension Legal 942 Sub- Cor ployee ceased plan rep emp total rection 6 7 Advance EIC payment 3 Employer's identification number 4 Employer's State number 2 Employer's name, address, and ZIP code 3 Employer's identification number 4 Employer's State number USA City 10 Z Street USA City, USA 99999 5 Stat em De Pension Legal 942 Sub Cor Void ployee ceased plan rep emp total rection 6 7 Advance EIC payment 8 Employee's social security number 9 Federal income tax withheld 10 Wages, tips, other compensation 11 FICA tax withheld B00 -00 -0000 $4,877.60 $21,000 $1,587.67 12 Employee's name, address, and ZIP code 13 FICA wages 14 FICA tips $25,900 Bill Jones 16 Employer's use Wage and Tax 1980 30 South Street USA City, USA 99999 17 State income tax 18 State wa es,tr g tips, etc 19 Name of State $21,000 20 Local income tax 21 Local wages, tips, etc 22 Name of locality $21,000 Copy 1 For State, City, or Local Tax Department Employee's and employer's copy compared. Void The figure in box 10 reflects total compensation minus the amount being deferred. Box 13 reflects the maximum amount of compensation subject to FICA tax. Should you have any questions regarding this matter, do not hesitate to call us. 0 •Lti 44' eb a a FROM THE DESK OF: MARIAN PARRISH CITY CLERK kagliAlta 6mtofi 64141A-t> i u-YA-1:4A2jt, d.th:44.4i414:d"A-±- Le. rvl u. .cry u. 44_ cA-44-owel -6-1) to-aid tfr. morn A Nevi- S 044,4 ti Q.pl tl?�•°� U VV AeLzo P-900f-i&ctf Ma_ 01-de Zk4 &DJ ef0. t tit. Aam 1 et0 1 2111"1"14-d-i 1;$‘- PAltf-adi filka-41/0144^-K- 41s,"0 A 3 -tfk;‘ .i. v14�! `f° tiAa. C tw tt 7 S. 63 What is the Deferred Compensation Plan? Briefly, on a voluntary ermits Van is an arrangement which p the p basis, to authorize a portion of your salary to be withheld and invested for payment to you at a later date. the the de- e Investment ferred amount nor earning Taxes a re subject to current e hen the deferred in come pl e r e payable are distributed to you, pre come p ou are in a lower sumably at retirement when y income bracket. deferrals affect my Social Security or my pension Benfits? both No Your total wages remain the same r for or bo bo purposes. Furthermore, amounts y e retire from Deferred Compensation when you will not reduce your Social Security Benefits. amount i can ing is there a maximum ou can contribute up to $7,500 or 25% of gross compensation Yes, y 33 of includible com- pensation), wh+cheVer is Special rules can years before retirement. apply In the last three y Must I continue to defer money? time by notify- No You may stop deferring at any estab- lis our employer re- enrollment periods You may restart during Y eriods for the Plan. ls Wiay I change the amount Il t to deter? Yes, during future enrollment peri may increase or decrease the amount. It 6 stop deferring may 1 start later? Yes, but only if you elect to do so during a future enrollment period. How does the amount t deter affect my income taxes? amount of Your taxable income is reduced by the salary t money you defer For example, if y our am am you defer $1,000, your taxable in $15,000 show is come n as $14,000 on your W-2 form come s in my account? Do I pay tax on the earning Not until the earnings are paid to you tax On my account? When do 1 pay y income tax is paid Under current law, ordinary on whatever amounts (contributio account and eaand Ings you receive from your as you receive them account? When do I receive the values in my At retirement, termination of employment, death, disability or an extreme financial hardship 0 0 E© FEAR What is an extreme financial h and h pu s for This means a real emergency which reasons beyond your control, and w filch was un such as unreimbursed medical i a al eV penses for our family If occurs for you and Y you may present the facts decide the occurs y Committee Compensation Come cy and is authorized to extent en t ec e emergency, s e r gamount from your account investment options? What are my Life Insurance The Hartford Variable Annuity Company was selected to handle investments They otter the following options a. A Fixed Interest Account which ccouits a high current interest lumenterest rate of 9.00% for two y guarantees a y ears, 7.00% for the next 4.00% thereafter. three years, and a b A Bond Account emphasizing as as high igh a recognizing level of current income, ital. the need to preserve shareholder's cap c. A Common Stock Account emphasizing rowth in value as a possib long term g hedge against inflation. You may request one f 10% or o of ccommo- date in finai multiples e ctives and circu ostall or part Periodically ces, date your youm a y fegUest a change or p oof ou f your account from one of the op to the others What does it cost me to participate in the plan? charge for setting uP makes no but some investment Your employer our account which m and S may be your on costs may be incurs d r equest, the amount of vestment options y and the size of the money you elect to defer, and For example total plan of your employer Fixed Interest Account is not d er certain ect to front e nd sales charges, but may, be subject to a 3% termination charge and interest adjustment of as much as 6 months charge n depending on the overall size of the case and epre e tativee of will ex Your Hartford plain the termi nation charges applicable to your plan and the nation chrg few instances where it would apply These Bond and Common Stock Accounts T hes inv p1Ve investment costs on each Cb deposit. These deposits ch a e, and cover sales expenses and Fee the Increase $10 Policy Minimum Death Bnnuail bass There are no Ali fees and other import deducted on an Prospectus and information fees a s o other ater al you wil1t receive during other it rollment p eriod RED COMpENS�T1O0 PLAN HOW A D EFER T 1O OULO WORK FOR IL•LUS R nave a taxa spouse ha re- Assume an come employee f 8 000, file pint bra -Ket, income Federal income tax an d re- h1e family Ina 150 per montb turns, are an d Inves ceive a annu return of i f ;e OCP 150 D 150 x 1 0 25 $15 37 0 +150 00 $165 37 3 P Pllonth Savings Mmes Income To 24 °I °l Balance for Investment Interes Earned Per Year (24 Minus Income Net Dollar Result Above Balance Invested Total Net Dollar Result No DCP 150 36 114 $x 10.25°!°` 116 2 80 11400 $122 882 WI H LAN 542.49 more with DC I pIFFEBE L OSSleLE 20 -YEA RESULY P Net Monthly Investment Compounded Interes4Rate Minus income Taet Compounded N Interest Rate 20-Year Total 1 Assume 10.25 °f° interest rate 2 After Taxes 9 Su bject to tax as withdrawn With DCP No $150 00 $114 p 10 25°1 10 25'° 0 -2 46°1° 10 25 °i 7 79 °!o 10 25 12 $111,865 623 $63.714 81 Yy1TW PLAN $48,15 .6 More y drth DC 548,150. RAE 00 ARAO d E Amount A Taxable Income 1st 3 Yrs. Alter 3 Yrs. YA,I(A®E Y RE 41RENEKT 8,080 Social S pension o 5,200 Average fr a g e P 1 (11 8661 $12,5783 From DC $25,8y Totals ®EDU( CURRE Amount Taxable Doubt a nd Exemption Joint Deduction TOTAL DEDUCTIONS Taxable Inn Federal no other me °me) {Aral Income Tax _--0— —0— 5,20 $12,578 $1 12,578 $12,5 17,778 UNDER 1st 3 Yrs. Abe $12,578 $174,707080 3,400 $3.0 $3 400 6 400 -$f B $10, 378 402 1,130 ONLY 51,130 TOES PAID ON 525,858 YEARLY INCOME age 65 and Spouse age 62 have bee e Male g own contributions 1 Assume ube 10 2 Not taxed until employee's to a fife ann returne of $111,8 t rates a l%l totally c onvers ion u't purchase plus Social 3 A ssume s °o using current ann y ensat� r P years certain D C ome 4 Pennon Plan plus Security life insurance Company Insurer: Annuity Hartford (H ESCO) I I principal Underwriter: Comp r, any Inc Hartford Equity Sales Hartford Plaza }Gut 06115 Hartford, Connect A NNUITY p VARIABL HARTFO L IFE INSURANCE COMPANY O X 1875 POST OFFICE 88111 S EATTLE 99169 R Rev Panted to S pre ceded d only When rprecede uthonze effective prospectus fife In- or a corn anted by a currenvy of fec Annuity or the app Hartford account and of the un app arate incorporated of the e Comp H a r tf or d Fund suranc security, derlYm e f err ed `f ax elter ®r -Y®u