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ITT HARTFORD MUTUAL FUNDS, INC.
PROSPECTUS--JULY 22, 1996
CLASS Y SHARES
ITT Hartford Mutual Funds, Inc. (the "Company") is an open-end management
investment company comprised of eight diversified investment portfolios (each a
"Fund" and together the "Funds"). The Funds, which have different investment
objectives and policies, are listed below:
<TABLE>
<CAPTION>
ITT HARTFORD FUND GOAL INVESTMENT STYLE
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<S> <C> <C>
Small Company Growth of capital Equity: Invests primarily in stocks of companies with market
capitalizations of less than $2 billion; portfolio is broadly
diversified across industries.
Capital Appreciation Growth of capital Equity: Invests in small, medium, and large companies; portfolio is
comprised primarily of a blend of growth and value stocks and is
broadly diversified across industries.
International Opportunities Growth of capital International Equity: Invests primarily in large, high-quality non-
U.S. companies in established markets, and on a limited basis, in
smaller companies and emerging markets; portfolio is broadly
diversified across industries and countries.
Stock Growth of capital, income is Equity: Invests primarily in large, high quality U.S. companies;
secondary portfolio is broadly diversified across industries which are
expected to grow faster than the overall economy.
Dividend and Growth High level of income, growth Equity: Invests primarily in large, well-known U.S. companies that
of capital have historically paid above average dividends and have the ability
to sustain and potentially increase dividends; portfolio is broadly
diversified across industries.
Advisers Long-term total return Asset Allocation: Invests in a mix of stocks, bonds and money market
instruments; portfolio assets are allocated gradually among the
asset classes based upon the portfolio managers' view of the economy
and valuation of the market sectors; short term market timing is not
used.
Bond Income Strategy High level of income, total Bond: Invests primarily in investment grade bonds; up to 30% may be
return invested in the highest quality tier of the high yield rating
category.
Money Market Maximum current income Money Market: Invests in money market instruments and seeks to
consistent with preservation maintain a stable share price of $1.00.
of capital
</TABLE>
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AN INVESTMENT IN THE MONEY MARKET FUND IS NEITHER INSURED NOR GUARANTEED BY THE
U.S. GOVERNMENT. WHILE THE MONEY MARKET FUND SEEKS TO MAINTAIN A STABLE NET
ASSET VALUE OF $1.00 PER SHARE, THERE CAN BE NO ASSURANCE THAT THE FUND WILL
ACHIEVE THIS GOAL.
THIS PROSPECTUS SETS FORTH CONCISELY THE INFORMATION ABOUT THE FUNDS THAT A
PROSPECTIVE INVESTOR SHOULD KNOW BEFORE INVESTING. PLEASE READ AND KEEP THIS
PROSPECTUS FOR FUTURE REFERENCE. ADDITIONAL INFORMATION ABOUT THE FUNDS HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ("SEC") IN A STATEMENT OF
ADDITIONAL INFORMATION DATED JULY 22, 1996 ("SAI"), WHICH IS INCORPORATED BY
REFERENCE INTO THIS PROSPECTUS. TO OBTAIN A COPY OF THE SAI WITHOUT CHARGE, CALL
1-888-843-7824, OR WRITE TO ITT HARTFORD MUTUAL FUNDS, INC., P.O. BOX 8416,
BOSTON, MA 02266-8416.
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MUTUAL FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED BY, ANY
BANK OR OTHER DEPOSITORY INSTITUTION. SHARES ARE NOT INSURED BY THE FDIC, THE
FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY, AND ARE SUBJECT TO INVESTMENT RISK,
INCLUDING THE POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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2 ITT Hartford Mutual Funds
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ITT HARTFORD MUTUAL FUNDS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Investor Expenses..................................................... 3
Introduction to the ITT Hartford Mutual Funds......................... 4
Investment Objectives and Styles of the Funds......................... 4
Common Investment Policies and Risk Factors........................... 7
Performance of the Funds.............................................. 12
About Your Account.................................................... 14
How to Buy Shares................................................... 14
How to Redeem Shares................................................ 15
How to Exchange Shares.............................................. 16
Determination of Net Asset Value.................................... 16
Shareholder Account Rules and Policies.............................. 16
Investor Information Services....................................... 17
Management of the Funds............................................... 17
Dividends, Capital Gains and Taxes.................................... 20
Ownership and Capitalization of the Company........................... 20
General Information................................................... 21
</TABLE>
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ITT Hartford Mutual Funds 3
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INVESTOR EXPENSES
The expenses and the maximum transaction costs associated with investing in
Class Y shares of each Fund and the estimated aggregate operating expenses for
each Fund are reflected in the following table.
<TABLE>
<CAPTION>
SMALL CAPITAL INTERNATIONAL
COMPANY APPRECIATION OPPORTUNITIES STOCK DIVIDEND AND ADVISERS
FUND FUND FUND FUND GROWTH FUND FUND
------- ------------- ------------- -------- ------------- -----------
CLASS Y CLASS Y CLASS Y CLASS Y CLASS Y CLASS Y
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<S> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge on purchases
(as % of Offering Price).......... None None None None None None
Maximum Deferred Sales Charge...... None None None None None None
Redemption Fees (1)................ None None None None None None
Exchange Fees...................... None None None None None None
ANNUAL OPERATING EXPENSES
(AS % OF AVERAGE NET ASSETS)
Management Fees.................... 0.85% 0.80% 0.85% 0.80% 0.75% 0.75%
12b-1 Distribution and Service
Fees.............................. None None None None None None
Other Expenses (after
reimbursements) (2)............... 0.15% 0.20% 0.35% 0.20% 0.20% 0.20%
Total Operating Expenses (after
reimbursements) (2)............... 1.00% 1.00% 1.20% 1.00% 0.95% 0.95%
<CAPTION>
MONEY
BOND INCOME MARKET
STRATEGY FUND FUND
--------------- --------
CLASS Y CLASS Y
--------------- --------
<S> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge on purchases
(as % of Offering Price).......... None None
Maximum Deferred Sales Charge...... None None
Redemption Fees (1)................ None None
Exchange Fees...................... None None
ANNUAL OPERATING EXPENSES
(AS % OF AVERAGE NET ASSETS)
Management Fees.................... 0.65% 0.50%
12b-1 Distribution and Service
Fees.............................. None None
Other Expenses (after
reimbursements) (2)............... 0.15% 0.05%
Total Operating Expenses (after
reimbursements) (2)............... 0.80% 0.55%
</TABLE>
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(1) An $8 charge may be imposed on redemptions of less than $50,000 requested
to be paid by wire transfer. See "Redeeming Shares by Telephone".
(2) ITT Hartford Group, Inc. ("ITT Hartford"), the ultimate parent company of
the Hartford Investment Management Company ("HIMCO"), has voluntarily
agreed to limit the Total Operating Expenses of each Fund, exclusive of
taxes, interest, brokerage commissions and extraordinary expenses, until at
least July 1, 1997, as follows: Small Company Fund, 1.00%; Capital
Appreciation Fund, 1.00%, International Opportunities Fund, 1.20%, Stock
Fund, 1.00%, Dividend and Growth Fund, 1.00%; Advisers Fund, 1.00%; Bond
Income Strategy Fund, .80% and Money Market Fund, .55%. This policy may be
discontinued at any time after July 1, 1997. In the absence of such an
agreement, the estimated Other Expenses of the following Funds would be:
Small Company Fund, .20%; International Opportunities Fund, .65%; Bond
Income Strategy Fund, .20% and Money Market Fund, .20%; and the estimated
Total Operating Expenses of the following Funds would be: Small Company
Fund, 1.05%, International Opportunities Fund, 1.50%; Bond Income Strategy
Fund, .85%; and Money Market Fund, .70%.
EXPENSE EXAMPLES
An investor would have paid the following expenses at the end of the period
shown on a $1,000 investment, assuming a 5% annual return and redemption at the
end of each period.
<TABLE>
<CAPTION>
YEAR 1 YEAR 3
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CLASS Y CLASS Y
------- -------
<S> <C> <C>
Small Company Fund........................... $10 $32
Capital Appreciation Fund.................... 10 32
International Opportunities Fund............. 12 38
Stock Fund................................... 10 32
Dividend and Growth Fund..................... 10 32
Advisers Fund................................ 10 32
Bond Income Strategy Fund.................... 8 26
Money Market Fund............................ 6 18
</TABLE>
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4 ITT Hartford Mutual Funds
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INTRODUCTION TO THE ITT HARTFORD MUTUAL FUNDS
The Company is an open-end management investment company, commonly known as
a mutual fund, which was organized as a Maryland corporation on March 21, 1996.
The Company consists of eight series, each of which is divided into Class A,
Class B and Class Y shares except the Money Market Fund which is divided into
Class A and Class Y shares. Each Class may have different expenses which may
affect performance. Each Fund has different investment objectives, styles and
policies. These differences affect the types of securities in which each Fund
may invest and, therefore, the potential return of each Fund and the associated
risks. There is no assurance, however, that any Fund will meet its investment
goals. Whether an investment in a particular Fund is appropriate for you depends
on your investment goals, including the return you seek, the expected duration
of your investment and the level of risk you are willing to bear.
The Hartford Investment Management Company ("HIMCO") is the investment
adviser to each Fund. In addition, under HIMCO's general management, Wellington
Management Company ("Wellington Management") serves as a sub-adviser to the
Small Company Fund, Capital Appreciation Fund, International Opportunities Fund,
Stock Fund, Dividend and Growth Fund and Advisers Fund.
HIMCO was incorporated in Connecticut in 1981 and is a wholly-owned indirect
subsidiary of ITT Hartford Group, Inc. ("ITT Hartford"), a Connecticut insurance
holding company with over $94 billion in assets. Wellington Management, a
Massachusetts general partnership, is a professional investment counseling firm
that provides services to investment companies, employee benefit plans,
endowments, foundations and other institutions and individuals. Wellington
Management and its predecessor organizations have provided investment advisory
services since 1933. As of June 30, 1996, HIMCO and its affiliates and
Wellington Management had investment management authority with respect to
approximately $47.4 billion and $118.8 billion of assets, respectively, for
various clients. Since 1977, HIMCO and its affiliates have served as the
investment manager to a family of mutual funds in which variable annuity and
variable life insurance contracts issued by subsidiaries of ITT Hartford are
invested. Since 1984, Wellington Management has served as sub-adviser to certain
of those funds. HIMCO and Wellington Management collectively manage over $13
billion of assets in these mutual funds.
INVESTMENT OBJECTIVES AND INVESTMENT STYLES OF THE FUNDS
The Funds have different investment objectives and policies, as described
below. The differences among the Funds can be expected to affect the investment
return of each Fund and the degree of market and financial risk to which each
Fund is subject. Each Fund is subject to certain fundamental investment
restrictions that are enumerated in detail in the SAI and may not be changed
without shareholder approval. All other investment policies (including each
Fund's investment objective) are non-fundamental and may be changed by the Board
of Directors without shareholder approval. Stated below is the investment
objective and investment style for each Fund. For a description of each Fund's
investment policies and risk factors, see "COMMON INVESTMENT POLICIES AND RISK
FACTORS."
ITT HARTFORD SMALL COMPANY FUND
INVESTMENT OBJECTIVE.
The Small Company Fund seeks growth of capital by investing primarily in
equity securities selected on the basis of potential for capital appreciation.
INVESTMENT STYLE.
Under normal market and economic conditions at least 65% of the Small
Company Fund's total assets are invested in equity securities of companies which
have less than $2 billion in market capitalization ("Small Capitalization
Securities"). Wellington Management identifies, through fundamental analysis,
companies that it believes have substantial near-term capital appreciation
potential regardless of industry sector. However, overall industry exposure is
monitored by Wellington Management so as to maintain broad industry
diversification. In selecting investments Wellington Management considers
securities of companies that, in its opinion, have potential for above-average
earnings growth, are undervalued in relation to their investment potential, have
business and/or fundamental financial characteristics that are misunderstood by
investors, or are relatively obscure, i.e., undiscovered by the overall
investment community. Fundamental analysis involves the assessment of a company
through such factors as its business environment, management, balance sheet,
income statement, anticipated earnings, revenues, dividends, and other related
measures of value. Up to 20% of the Small Company Fund's total assets may be
invested in securities of non-U.S. companies. Investing in Small Capitalization
Securities involves special risks. See "COMMON INVESTMENT POLICIES AND RISK
FACTORS -- Small Capitalization Securities".
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ITT HARTFORD MUTUAL FUNDS 5
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ITT HARTFORD CAPITAL APPRECIATION FUND
INVESTMENT OBJECTIVE.
The Capital Appreciation Fund seeks growth of capital by investing primarily
in equity securities selected on the basis of potential for capital
appreciation.
INVESTMENT STYLE.
The Capital Appreciation Fund invests in a diversified portfolio of
primarily equity securities. Wellington Management identifies, through
fundamental analysis, companies that it believes have substantial near-term
capital appreciation potential regardless of company size or industry sector.
This approach is sometimes referred to as a "stock picking" approach and results
in having all market capitalization sectors (i.e., small, medium, and large
companies) represented. Small and medium sized companies are selected primarily
on the basis of dynamic earnings growth potential. Larger companies are selected
primarily based on the expectation for a catalyst event that will trigger stock
price appreciation. Fundamental analysis involves the assessment of a company
through such factors as its business environment, management, balance sheet,
income statement, anticipated earnings, revenues, dividends, and other related
measures of value. Up to 20% of the Capital Appreciation Fund's total assets may
be invested in securities of non-U.S. companies.
ITT HARTFORD INTERNATIONAL OPPORTUNITIES FUND
INVESTMENT OBJECTIVE.
The International Opportunities Fund seeks growth of capital by investing
primarily in equity securities issued by non-U.S. companies.
INVESTMENT STYLE.
The International Opportunities Fund invests in a diversified portfolio of
primarily equity securities covering a broad range of countries, industries, and
companies. Securities in which the International Opportunities Fund invests are
denominated in both U.S. dollars and non-U.S. currencies (including the European
Currency Unit) and generally are traded in non-U.S. markets. Wellington
Management uses a three-pronged approach. First, Wellington Management
determines the relative attractiveness of the many countries in which the
International Opportunities Fund may invest based upon the economic and
political environment of each country. Second, Wellington Management evaluates
industries on a global basis to determine which industries offer the most value
and potential for capital appreciation given current and projected global and
local economic and market conditions. Finally, Wellington Management conducts
fundamental research on individual companies and considers companies for
inclusion in the International Opportunities Fund's portfolio that are typically
larger, high quality companies that operate in established markets. Fundamental
analysis involves the assessment of a company through such factors as its
business environment, management, balance sheet, income statement, anticipated
earnings, revenues, dividends, and other related measures of value. In analyzing
companies for investment, Wellington Management looks for, among other things, a
strong balance sheet, attractive industry dynamics, strong competitive
advantages and attractive relative value within the context of a security's
primary trading market. The International Opportunities Fund may also invest on
a limited basis in smaller companies and less developed markets. The
International Opportunities Fund anticipates that, under normal market
conditions, it will diversify its investments in at least three countries other
than the United States. The International Opportunities Fund will be subject to
certain risks because it invests primarily in securities issued by non-U.S.
companies.
ITT HARTFORD STOCK FUND
INVESTMENT OBJECTIVE.
The Stock Fund seeks long-term growth of capital, with income as a secondary
consideration, by investing primarily in equity securities.
INVESTMENT STYLE.
Under normal market and economic conditions at least 65% of the Stock Fund's
total assets are invested in stocks. The Stock Fund invests in a diversified
portfolio of primarily equity securities using a two-tiered investment approach.
First, under what is sometimes referred to as a "top down" approach, Wellington
Management analyzes the macro economic and investment environment. This includes
an evaluation of economic conditions, U.S. fiscal and monetary policy,
demographic trends, and investor sentiment. Through top down analysis,
Wellington Management anticipates secular and cyclical changes and identifies
industries and economic sectors that are expected to grow faster than the
overall economy. Second, top down analysis is followed by what is sometimes
referred to as a "bottom up" approach, which is the use of fundamental analysis
to identify specific securities for purchase or sale. The Stock Fund's portfolio
emphasizes high-quality growth companies. The key characteristics of
high-quality growth companies include a leadership position within an industry,
a strong balance sheet, a high return on equity, sustainable or increasing
dividends, a strong management team, and a globally competitive position.
Fundamental analysis involves the assessment of a company through such factors
as its business environment, management, balance sheet, income statement,
anticipated earnings, revenues, dividends, and other related measures of value.
Up to 20% of the Stock Fund's total assets may be invested in securities of
non-U.S. companies.
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6 ITT HARTFORD MUTUAL FUNDS
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ITT HARTFORD DIVIDEND AND GROWTH FUND
INVESTMENT OBJECTIVE.
The Dividend and Growth Fund seeks a high level of current income consistent
with growth of capital by investing primarily in equity securities.
INVESTMENT STYLE.
The Dividend and Growth Fund invests in a diversified portfolio of primarily
equity securities that typically have above average income yield and whose
prospects for capital appreciation are considered favorable by Wellington
Management. Under normal market and economic conditions at least 65% of the
Dividend and Growth Fund's total assets are invested in dividend paying equity
securities. Wellington Management uses fundamental analysis to evaluate a
security for purchase or sale by the Dividend and Growth Fund. Fundamental
analysis involves the assessment of a company through such factors as its
business environment, management, balance sheet, income statement, anticipated
earnings, revenues, dividends, and other related measures of value. As a key
component of the fundamental analysis done for the Dividend and Growth Fund,
Wellington Management evaluates a company's ability to sustain and potentially
increase its dividend. The Dividend and Growth Fund's portfolio will be broadly
diversified by industry and company. Up to 20% of the Dividend and Growth Fund's
total assets may be invested in securities of non-U.S. companies.
ITT HARTFORD ADVISERS FUND
INVESTMENT OBJECTIVE.
The Advisers Fund seeks maximum long-term total rate of return by investing
in common stocks and other equity securities, bonds and other debt securities
and money market instruments.
INVESTMENT STYLE.
The Advisers Fund seeks to achieve its objective through the active
allocation of its assets among the asset categories of equity securities, debt
securities and money market instruments based upon Wellington Management's
judgment of the projected investment environment for financial assets, relative
fundamental values and attractiveness of each asset category, and expected
future returns of each asset category. Wellington Management bases its asset
allocation decisions on fundamental analysis and does not attempt to make
short-term market timing decisions among asset categories. As a result, shifts
in asset allocation are expected to be gradual and continuous and the Advisers
Fund will normally have some portion of its assets invested in each asset
category. The Advisers Fund does not have percentage limitations on the amount
that may be allocated to each asset category. The Advisers Fund's investments in
equity securities and securities that are convertible into equity securities
will be substantially similar to the investments permitted for the Stock Fund.
See "Hartford Stock Fund." The debt securities in which the Advisers Fund may
invest include securities issued or guaranteed by the U.S. Government and its
agencies or instrumentalities, securities rated investment grade, or if unrated,
are deemed by Wellington Management to be of comparable quality, and with
respect to 5% of the Advisers Fund's assets, securities rated below investment
grade which are known as high yield-high risk securities or junk bonds. The
money market instruments in which the Adviser's Fund may invest are described
under "COMMON INVESTMENT POLICIES AND RISK FACTORS -- Money Market Instruments
and Temporary Investment Strategies." Up to 20% of the Advisers Fund's total
assets may be invested in securities of non-U.S. companies.
ITT HARTFORD BOND INCOME STRATEGY FUND
INVESTMENT OBJECTIVE.
The Bond Income Strategy Fund seeks a high level of current income,
consistent with a competitive total return, as compared to bond funds with
similar investment objectives and policies, by investing primarily in debt
securities.
INVESTMENT STYLE.
The Bond Income Strategy Fund will have a diversified portfolio of
investments in fixed-income securities. Under normal circumstances at least 70%
of the Bond Income Strategy Fund's portfolio will be invested in investment
grade bond-type securities. Up to 30% of the Bond Income Strategy Fund may be
invested in the highest category of below investment grade bonds ("Ba" by
Moody's Investors Service, Inc. ("Moody's") or "BB" by Standard and Poors
Corporation ("S&P")). Securities rated below investment grade are commonly
referred to as "high yield-high risk securities" or "junk bonds". No investments
will be made in debt securities rated below "Ba" or "BB", or if unrated,
determined to be of comparable quality by HIMCO. Investments in securities rated
in the highest category below investment grade may offer an attractive
risk/reward trade-off and investment in this sector may enhance the current
yield and total return of the Bond Income Strategy Fund over time. Investing in
securities within this rating category combined with the investment grade
portion of the portfolio is designed to provide investors with both a high level
of current income and attractive relative total returns.
The Bond Income Strategy Fund will invest at least 65% of its total assets
in bonds and debt securities with a maturity of at least one year. The Bond
Income Strategy Fund may invest up to 15% of its total assets in preferred
stocks, convertible securities, and securities carrying warrants to purchase
equity securities. The Bond Income Strategy Fund will not invest in common
stocks directly, but may retain, for reasonable periods of time, common stocks
acquired upon conversion of debt securities or upon exercise of warrants
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ITT HARTFORD MUTUAL FUNDS 7
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acquired with debt securities. Up to 30% of the Bond Income Strategy Fund's
total assets may be invested in securities of non-U.S. companies.
ITT HARTFORD MONEY MARKET FUND
INVESTMENT OBJECTIVE.
The Money Market Fund seeks maximum current income consistent with liquidity
and preservation of capital.
INVESTMENT POLICIES.
The Money Market Fund seeks to maintain a stable net asset value of $1.00
per share; however, there can be no assurance that the Fund will achieve this
goal. The Money Market Fund's portfolio will consist entirely of cash, cash
equivalents and high quality debt securities as permitted under Rule 2a-7 of the
Investment Company Act of 1940 (the "1940 Act"). Each investment will have an
effective maturity date of 397 days or less computed in accordance with Rule
2a-7. The average maturity of the portfolio will vary according to HIMCO's
appraisal of money market conditions and will not exceed 90 days. All securities
purchased by the Money Market Fund will be U.S. dollar denominated.
COMMON INVESTMENT POLICIES AND RISK FACTORS
MONEY MARKET INSTRUMENTS AND TEMPORARY INVESTMENT STRATEGIES
In addition to the Money Market Fund which may invest in cash, cash
equivalents and money market instruments at any time, all other Funds may hold
cash or cash equivalents and invest in high quality money market instruments
under appropriate circumstances as determined by HIMCO or Wellington Management.
Such Funds may invest up to 100% of their assets in cash, cash equivalents or
money market instruments only for temporary defensive purposes.
Money market instruments include: (1) banker's acceptances; (2) obligations
of governments (whether U.S. or non-U.S.) and their agencies and
instrumentalities; (3) short-term corporate obligations, including commercial
paper, notes, and bonds; (4) other short-term debt obligations; (5) obligations
of U.S. banks, non-U.S. branches of U.S. banks (Eurodollars), U.S. branches and
agencies of non-U.S. banks (Yankee dollars), and non-U.S. branches of non-U.S.
banks; (6) asset-backed securities; and (7) repurchase agreements.
REPURCHASE AGREEMENTS
Each Fund is permitted to enter into fully collateralized repurchase
agreements. A repurchase agreement is an agreement by which the seller of a
security agrees to repurchase the security sold at a mutually agreed upon time
and price. It may also be viewed as the loan of money by a Fund to the seller.
The resale price would be in excess of the purchase price, reflecting an agreed
upon market interest rate. Delays or losses could result if the other party to
the agreement defaults or becomes insolvent. The Company's Board of Directors
has established standards for evaluation of the creditworthiness of the banks
and securities dealers with which the Funds may engage in repurchase agreements
and monitors on a quarterly basis HIMCO'S and Wellington Management's compliance
with such standards. Presently, each Fund may enter into repurchase agreements
only with commercial banks with at least $500 million in capital and $1 billion
in assets or with recognized government securities dealers with a minimum net
capital of $100 million.
REVERSE REPURCHASE AGREEMENTS
Each Fund may also enter into reverse repurchase agreements. Reverse
repurchase agreements involve sales by a Fund of portfolio assets concurrently
with an agreement by a Fund to repurchase the same assets at a later date at a
fixed price. Reverse repurchase agreements carry the risk that the market value
of the securities which a Fund is obligated to repurchase may decline below the
repurchase price. A reverse repurchase agreement is viewed as a collateralized
borrowing by a Fund. Borrowing magnifies the potential for gain or loss on the
portfolio securities of a Fund and, therefore, increases the possibility of
fluctuation in a Fund's net asset value. A Fund will establish a segregated
account with the Company's custodian bank in which a Fund will maintain cash,
cash equivalents or other high quality debt securities equal in value to a
Fund's obligations in respect of reverse repurchase agreements. As a non-
fundamental policy, a Fund will not enter into reverse repurchase transactions
if the combination of all borrowings from banks and the value of all reverse
repurchase agreements for the particular Fund equals more than 33 1/3% of the
value of the Fund's total assets.
DEBT SECURITIES
Each Fund is permitted to invest in debt securities including (1) securities
issued or guaranteed as to principal or interest by the U.S. Government, its
agencies or instrumentalities; (2) debt securities issued or guaranteed by U.S.
corporations or other issuers (including foreign governments or corporations);
(3) asset-backed securities and mortgage-related securities, including
collateralized mortgage obligations ("CMO's"); and (4) securities issued or
guaranteed as to principal or interest by a sovereign government or one of its
agencies or political subdivisions,
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8 ITT HARTFORD MUTUAL FUNDS
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supranational entities such as development banks, non-U.S. corporations, banks
or bank holding companies, or other non-U.S. issuers. In addition, the Advisers
Fund, International Opportunities Fund and the Bond Income Strategy Fund are
permitted to invest in Brady Bonds, which are debt securities issued under the
framework of the Brady Plan, an initiative announced by former U.S. Treasury
Secretary Nicholas F. Brady in 1989 as a mechanism for debtor nations to
restructure their outstanding external commercial bank debt. See "Non-U.S.
Securities" in the SAI.
INVESTMENT GRADE DEBT SECURITIES
Each Fund is permitted to invest in debt securities rated within the four
highest rating categories (i.e., Aaa, Aa, A or Baa by Moody's or AAA, AA, A or
BBB by S&P), or, if unrated, securities of comparable quality as determined by
HIMCO or Wellington Management. These securities are generally referred to as
"investment grade securities." Each rating category has within it different
gradations or sub-categories. If a Fund is authorized to invest in a certain
rating category, the Fund is also permitted to invest in any of the
sub-categories or gradations within that rating category. If a security is
downgraded to a rating category which does not qualify for investment, HIMCO or
Wellington Management will use its discretion on whether to hold or sell based
upon its opinion on the best method to maximize value for shareholders over the
long term. Debt securities carrying the fourth highest rating (i.e., "Baa" by
Moody's and "BBB" by S&P, and unrated securities of comparable quality (as
determined by HIMCO or Wellington Management) are viewed as having adequate
capacity for payment of principal and interest, but do involve a higher degree
of risk than that associated with investments in debt securities in the higher
rating categories.
HIGH YIELD-HIGH RISK DEBT SECURITIES
The Small Company Fund, Capital Appreciation Fund, International
Opportunities Fund, Stock Fund, Dividend and Growth Fund and Advisers Fund each
may invest up to 5% of its assets in high yield debt securities (i.e., rated as
low as "C" by Moody's or "CC" by S&P, and unrated securities of comparable
quality as determined by Wellington Management). The Bond Income Strategy Fund
may invest up to 30% of its assets in securities rated in the highest level
below investment grade ("Ba" by Moody's or "BB" by S&P) or if unrated,
determined to be of comparable quality by HIMCO. Securities rated below
investment grade are commonly referred to as "high yield-high risk securities"
or "junk bonds". Each rating category has within it different gradations or
sub-categories. If a Fund is authorized to invest in a certain rating category,
the Fund is also permitted to invest in any of the sub-categories or gradations
within that rating category. If a security is downgraded to a rating category
which does not qualify for investment, HIMCO or Wellington Management will use
its discretion on whether to hold or sell based upon its opinion on the best
method to maximize value for shareholders over the long term. Securities in the
rating categories below "Baa" as determined by Moody's and "BBB" as determined
by S&P are considered to be of poor standing and predominantly speculative. The
rating services' descriptions of securities are set forth in the SAI. High
yield-high risk securities are considered speculative with respect to the
issuer's capacity to pay interest and repay principal in accordance with the
terms of the obligations. Accordingly, it is possible that these types of
factors could, in certain instances, reduce the value of securities held by a
Fund with a commensurate effect on the value of the Fund's shares.
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES
The Advisers Fund and the Bond Income Strategy Fund may invest in
mortgage-backed securities and the Advisers Fund, Bond Income Strategy Fund and
Money Market Fund may invest in asset-backed securities. Mortgage-backed
securities represent a participation in, or are secured by, mortgage loans and
include securities issued or guaranteed by the U.S. Government or one of its
agencies or instrumentalities; securities issued by private issuers that
represent an interest in, or are collateralized by, mortgage-backed securities
issued or guaranteed by the U.S. Government or one or its agencies or
instrumentalities; or securities issued by private issuers that represent an
interest in or are collateralized by mortgage loans or mortgage-backed
securities without a government guarantee but usually having some form of
private credit enhancement. Asset-backed securities are structured like
mortgage-backed securities, but instead of mortgage loans or interests in
mortgage loans, the underlying assets may include motor vehicle installment
sales or installment loan contracts, leases of various types of real and
personal property, and receivables from credit card agreements.
Due to the risk of prepayment, especially when interest rates decline,
mortgage-backed and asset-backed securities are less effective than other types
of securities as a means of "locking in" attractive long-term interest rates
and, as a result, may have less potential for capital appreciation during
periods of declining interest rates than other securities of comparable
maturities. The ability of an issuer of asset-backed securities to enforce its
security interest in the underlying assets may be limited.
Up to 25% of the value of the Bond Income Strategy Fund's total assets may
be applied to mortgage dollar roll transactions. In a mortgage dollar roll a
fund sells mortgage-backed securities for delivery in the current month and
simultaneously contracts to repurchase substantially similar (same type, coupon
and maturity) securities on a specified future date. The Fund will engage in
"covered rolls" or, if not covered, the Fund will establish a segregated account
with the Company's custodian consisting of cash, U.S.
<PAGE>
ITT HARTFORD MUTUAL FUNDS 9
- --------------------------------------------------------------------------------
Government securities and other liquid, high quality debt securities. A "covered
roll" is a specific type of dollar roll for which there is an offsetting cash
position or a cash equivalent security position which matures on or before the
forward settlement date of the dollar roll transaction.
EQUITY SECURITIES
All Funds except the Money Market Fund and Bond Income Strategy Fund may
invest all or a portion of their assets in equity securities including common
stocks, preferred stocks, convertible preferred stock and rights to acquire such
securities. In addition, these Funds may invest in securities such as bonds,
debentures and corporate notes which are convertible into common stock at the
option of the holder. The Bond Income Strategy Fund may invest up to 15% of its
total assets in preferred stocks, convertible securities, and securities
carrying warrants to purchase equity securities. The Bond Income Strategy Fund
will not invest in common stocks directly, but may retain, for reasonable
periods of time, common stocks acquired upon conversion of debt securities or
upon exercise of warrants acquired with debt securities.
SMALL CAPITALIZATION SECURITIES
All Funds except the Money Market Fund and Bond Income Strategy Fund may
invest in equity securities which have less than $2 billion in market
capitalization ("Small Capitalization Securities"). Because the issuers of Small
Capitalization Securities tend to be smaller or less well-established companies,
they may have limited product lines, market share or financial resources. As a
result, Small Capitalization Securities are often less marketable and experience
a higher level of price volatility than securities of larger or more
well-established companies.
NON-U.S. SECURITIES
Under normal circumstances the International Opportunities Fund intends to
invest at least 65% of its assets in securities issued by non-U.S. companies
("non-U.S. securities"). In addition, the International Opportunities Fund may
invest in commingled pools offered by non-U.S. banks. Each other Fund is
permitted to invest up to 20% of its assets, and the Money Market Fund and Bond
Income Strategy Fund are permitted to invest up to 25% and 30% of their assets,
in non-U.S. securities. The Bond Income Strategy Fund intends to purchase
securities denominated in U.S. dollars, or if not so denominated, to use
currency transactions to reflect U.S. dollar valuation at the time of purchase
or while the security is held by the Fund. Each Fund except the Money Market
Fund and the Bond Income Strategy Fund may invest in American Depositary
Receipts ("ADRs") and Global Depositary Receipts ("GDRs"). ADRs are certificates
issued by a U.S. bank or trust company and represent the right to receive
non-U.S. securities. ADRs are traded on a U.S. securities exchange, or in an
over-the-counter market, and are denominated in U.S. dollars. GDRs are
certificates issued globally and evidence a similar ownership arrangement. GDRs
are traded on non-U.S. securities exchanges and are denominated in non-U.S.
currencies. The value of an ADR or a GDR will fluctuate with the value of the
underlying security, will reflect any changes in exchange rates and otherwise
will involve risks associated with investing in non-U.S. securities.
When selecting non-U.S. securities HIMCO or Wellington Management will
evaluate the economic and political climate and the principal securities markets
of the country in which the company is located. Investing in non-U.S. securities
involves considerations and potential risks not typically associated with
investing in securities issued by U.S. companies. Less information may be
available about non-U.S. companies than about U.S. companies and non-U.S.
companies generally are not subject to uniform accounting, auditing and
financial reporting standards or to other regulatory practices and requirements
comparable to those applicable to U.S. companies. The values of non-U.S.
securities are affected by changes in currency rates or exchange control
regulations, restrictions or prohibitions on the repatriation of non-U.S.
currencies, application of non-U.S. tax laws, including withholding taxes,
changes in governmental administration or economic or monetary policy (in the
U.S. or outside the U.S.) or changed circumstances in dealings between nations.
Costs are also incurred in connection with conversions between various
currencies. Although the International Opportunities Fund will focus on
companies that operate in established markets, from time to time the Fund may
invest up to 25% of its assets in companies located in emerging countries.
Compared to the United States and other developed countries, developing
countries may have relatively unstable governments, economies based on only a
few industries, and securities markets that are less liquid and trade a small
number of securities. Prices on these exchanges tend to be volatile and, in the
past, securities in these countries have offered greater potential for gain (as
well as loss) than securities of companies located in developed countries. See
the SAI for additional risk disclosure concerning non-U.S. securities.
CURRENCY TRANSACTIONS
Each Fund, except the Money Market Fund, may engage in currency transactions
to hedge the value of portfolio securities denominated in particular currencies
against fluctuations in relative value. Currency transactions include forward
currency contracts, currency swaps, exchange-listed and over-the-counter ("OTC")
currency futures contracts and options thereon and exchange listed and OTC
options on currencies.
Forward currency contracts involve a privately negotiated obligation to
purchase or sell a specific currency at a
<PAGE>
10 ITT HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
future date, which may be any fixed number of days from the date of the contract
agreed upon by the parties, at a price set at the time of the contract. Currency
swaps are agreements to exchange cash flows based on the notional difference
between or among two or more currencies. See "Swap Agreements."
The use of currency transactions to protect the value of a Fund's assets
against a decline in the value of a currency does not eliminate potential losses
arising from fluctuations in the value of the Fund's underlying securities.
Further, the Funds may enter into currency transactions only with counterparties
that HIMCO or Wellington Management deem to be creditworthy.
The Funds may also enter into options and futures contracts relative to
foreign currency to hedge against fluctuations in foreign currency rates. See
"Options and Futures Contracts" for a discussion of risk factors relating to
foreign currency transactions including related options and futures contracts.
OPTIONS AND FUTURES CONTRACTS
Each Fund, except the Money Market Fund, may employ certain hedging, income
enhancement and risk management techniques involving options and futures
contracts, though such techniques may result in losses to the Fund. The Funds
may write covered call options or purchase put and call options on individual
securities, write covered put and call options and purchase put and call options
on foreign currencies, aggregates of equity and debt securities, indices of
prices of equity and debt securities and other financial indices, and enter into
futures contracts and options thereon for the purchase or sale of aggregates of
equity and debt securities, indices of equity and debt securities and other
financial indices.
A Fund may write covered options only. "Covered" means that, so long as a
Fund is obligated as the writer of an option, it will own either the underlying
securities or currency or an option to purchase or sell the same underlying
securities or currency having an expiration date not earlier than the expiration
date of the covered option and an exercise price equal to or less than the
exercise price of the covered option, or will establish or maintain with its
custodian for the term of the option a "segregated account" consisting of cash,
U.S. Government securities or other liquid, high grade debt obligations having a
value equal to the fluctuating market value of the optioned securities or
currencies. A Fund receives a premium from writing a call or put option, which
increases the Fund's return if the option expires unexercised or is closed out
at a net profit.
To hedge against fluctuations in currency exchange rates, these Funds may
purchase or sell foreign currency futures contracts, and write put and call
options and purchase put and call options on such futures contracts. To the
extent that a Fund enters into futures contracts, options on futures contracts
and options on foreign currencies that are traded on an exchange regulated by
the Commodities Futures Trading Commission ("CFTC"), in each case that are not
for BONA FIDE hedging purposes (as defined by the CFTC), the aggregate initial
margin and premiums required to establish those non-hedging positions may not
exceed 5% of the liquidation value of Fund's portfolio, after taking into
account the unrealized profits and unrealized losses on any such contracts the
Fund has entered into.
A Fund's use of options, futures and options thereon and forward currency
contracts (as described under "Currency Transactions") would involve certain
investment risks and transaction costs to which it might not be subject were
such strategies not employed. Such risks include: (1) dependence on the ability
of HIMCO or Wellington Management to predict movements in the prices of
individual securities, fluctuations in the general securities markets or market
sections and movements in interest rates and currency markets; (2) imperfect
correlation between movements in the price of the securities or currencies
hedged or used for cover; (3) the fact that skills and techniques needed to
trade options, futures contracts and options thereon or to use forward currency
contracts are different from those needed to select the securities in which a
Fund invests; (4) lack of assurance that a liquid secondary market will exist
for any particular option, futures contract, option thereon or forward contract
at any particular time, which may affect a Fund's ability to establish or close
out a position; (5) possible impediments to effective portfolio management or
the ability to meet current obligations caused by the segregation of a large
percentage of a Fund's assets to cover its obligations; and (6) the possible
need to defer closing out certain options, futures contracts, options thereon
and forward contracts in order to continue to qualify for the beneficial tax
treatment afforded "regulated investment companies" under the Internal Revenue
Code (the "Code"). See the SAI for additional information on options and futures
contracts. Options and futures contracts are commonly known as "derivative"
securities.
SWAP AGREEMENTS
Each Fund, except the Money Market Fund, may enter into interest rate swaps,
currency swaps, equity swaps and other types of swap agreements such as caps,
collars, and floors. In a typical interest rate swap, one party agrees to make
regular payments equal to a floating interest rate multiplied by a "notional
principal amount," in return for payments equal to a fixed rate multiplied by
the same amount, for a specified period of time. If a swap agreement provides
for payments in different currencies, the parties might agree to exchange the
notional principal amount as well. Swaps may also depend on other prices or
rates, such as the value of an index or mortgage prepayment rates.
<PAGE>
ITT HARTFORD MUTUAL FUNDS 11
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In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by the
other party. For example, the buyer of an interest rate cap obtains the right to
receive payments to the extent that a specified interest rate exceeds an
agreed-upon level, while the seller of an interest rate floor is obligated to
make payments to the extent that a specified interest rate falls below an
agreed-upon level. An interest rate collar combines elements of buying a cap and
selling a floor.
Swap agreements will tend to shift a Fund's investment exposure from one
type of investment to another. For example, if a Fund agreed to exchange
floating rate payments for fixed rate payments, the swap agreement would tend to
decrease the Fund's exposure to rising interest rates. Caps and floors have an
effect similar to buying or writing options. Depending on how they are used,
swap agreements may increase or decrease the overall volatility of a Fund's
investments and its share price and yield. Swap agreements are commonly known as
"derivative" securities.
The successful utilization of hedging and risk management transactions
requires skills different from those needed in the selection of a Fund's
portfolio securities and depends on HIMCO's or Wellington Management's ability
to predict correctly the direction and degree of movement in interest rates.
Although the Funds believe that the use of the hedging and risk management
techniques described above will benefit the Funds, if HIMCO's or Wellington
Management's judgment about the direction or extent of the movement in interest
rates is incorrect, a Fund's overall performance would be worse than if it had
not entered into any such transactions. These activities are commonly used when
managing derivative investments.
ILLIQUID SECURITIES
Each Fund is permitted to invest up to 15% of its net assets in illiquid
securities except the Money Market Fund which may invest up to 10% of its net
assets in such securities. "Illiquid Securities" are securities that may not be
sold or disposed of in the ordinary course of business within seven days at
approximately the price used to determine a Fund's net asset value. Each Fund
may purchase, certain restricted securities commonly known as Rule 144A
securities that can be resold to institutions and which may be determined to be
liquid pursuant to policies and guidelines of the Board of Directors.
Under current interpretations of the SEC Staff, the following securities may
be considered illiquid: (1) repurchase agreements maturing in more than seven
days; (2) certain restricted securities (securities whose public resale is
subject to legal or contractual restrictions); (3) options, with respect to
specific securities, not traded on a national securities exchange that are not
readily marketable; and (4) any other securities in which a Fund may invest that
are not readily marketable.
WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES
Each Fund is permitted to purchase or sell securities on a when-issued or
delayed-delivery basis. When-issued or delayed-delivery transactions arise when
securities are purchased or sold with payment and delivery taking place in the
future in order to secure what is considered to be an advantageous price and
yield at the time of entering into the transaction. While the Funds generally
purchase securities on a when-issued basis with the intention of acquiring the
securities, the Funds may sell the securities before the settlement date if
HIMCO or Wellington Management deems it advisable. At the time a Fund makes the
commitment to purchase securities on a when-issued basis, the Fund will record
the transaction and thereafter reflect the value, each day, of such security in
determining net asset value. At the time of delivery of the securities, the
value may be more or less than the purchase price.
OTHER INVESTMENT COMPANIES
Each Fund is permitted to invest in other investment companies. Securities
in certain countries are currently accessible to the Funds only through such
investments. The investment in other investment companies is limited in amount
by the 1940 Act, and will involve the indirect payment of a portion of the
expenses, including advisory fees, of such other investment companies. A Fund
will not purchase a security if, as a result, (1) more than 10% of the Fund's
assets would be invested in securities of other investment companies, (2) such
purchase would result in more than 3% of the total outstanding voting securities
of any one such investment company being held by the Fund or (3) more than 5% of
the Fund's assets would be invested in any one such investment company.
PORTFOLIO SECURITIES LENDING
Each Fund may lend its portfolio securities to broker/ dealers and other
institutions as a means of earning interest income. Delays or losses could
result if a borrower of portfolio securities becomes bankrupt or defaults on its
obligation to return the loaned securities. A Fund may lend securities only if:
(1) the loan is fully secured by appropriate collateral at all times as
determined by HIMCO; and (2) the value of all loaned securities of the Fund is
not more than 33 1/3% of the Fund's total assets.
OTHER RISK FACTORS
As mutual funds that primarily invest in equity and/or debt securities, each
Fund is subject to market risk, i.e., the possibility that equity and/or debt
prices in general will
<PAGE>
12 ITT HARTFORD MUTUAL FUNDS
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decline over short or even extended periods of time. The financial markets tend
to be cyclical, with periods when security prices generally rise and periods
when security prices generally decline. The value of the debt securities in
which the Funds invest will tend to increase when interest rates are falling and
to decrease when interest rates are rising.
No Fund should be considered to be a complete investment program in and of
itself. Each prospective purchaser should take into account his or her own
investment objectives as well as his or her other investments when considering
the purchase of shares of any Fund.
There can be no assurance that the investment objectives of the Funds will
be met. In addition, the risk inherent in investing in the Funds is common to
any security -- the net asset value will fluctuate in response to changes in
economic conditions, interest rates and the market's perception of the
underlying portfolio securities held by each Fund. One or more of the Funds may
experience high portfolio turnover (i.e. over 100%). See Portfolio Turnover.
In pursuit of a Fund's investment objective, HIMCO and Wellington Management
attempt to select appropriate individual securities for inclusion in a Fund's
portfolio. In addition, HIMCO and Wellington Management attempt to successfully
forecast market trends and increase investments in the types of securities best
suited to take advantage of such trends. Thus, the investor is dependent on
HIMCO or Wellington Management's success not only in selecting individual
securities, but also in identifying the appropriate mix of securities consistent
with a Fund's investment objective.
PERFORMANCE OF THE FUNDS
Because the Funds are being offered to the public for the first time, as of
the date of this Prospectus they do not have any prior operating history or
performance. However, the Capital Appreciation Fund, International Opportunities
Fund, Stock Fund, Dividend and Growth Fund, Advisers Fund and Money Market Fund
are modeled after existing funds (the "Insurance Funds") that are managed by
HIMCO or Wellington Management and have investment objectives and policies
substantially similar to the corresponding Funds. The Insurance Funds are used
as investment vehicles for the assets of variable annuity and variable life
insurance contracts issued by ITT Hartford affiliates.
Below you will find information about the performance of the Insurance
Funds. Although the six comparable Funds discussed above have substantially
similar investment objectives and policies, the same investment adviser and sub-
adviser and the same portfolio managers as the Insurance Funds, you should not
assume that the Funds offered by this Prospectus will have the same future
performance as the Insurance Funds. For example, any Fund's future performance
may be greater or less than the performance of the corresponding Insurance Fund
due to, among other things, differences in expenses and cash flows between a
Fund and the corresponding Insurance Fund.
The investment characteristics of each Fund listed below will closely
resemble the investment characteristics of the corresponding Insurance Fund.
Depending on the Fund involved, similarity of investment characteristics may
involve factors such as industry diversification, country diversification,
portfolio beta, portfolio quality, average maturity of fixed-income assets,
equity/non-equity mixes, and individual holdings.
Certain Funds do have differences from their corresponding Insurance Fund
none of which HIMCO or Wellington Management believe would cause a significant
change in investment results. Investors may note the following differences:
1. The Capital Appreciation Fund, Stock Fund and Advisers Fund may each
invest up to 15% of their assets in illiquid securities. The corresponding
Insurance Fund may invest only 10% of its assets in illiquid securities.
2. The Dividend and Growth Fund, the Stock Fund and the Advisers Fund
may invest 5% of their assets in debt securities that are rated below
investment grade by Moody's or S&P (or are of comparable quality as
determined by Wellington Management). Their corresponding Insurance Funds
may not invest any of their assets in debt securities rated below investment
grade.
3. The International Opportunities Fund may invest 5% of its assets in
debt securities rated below investment grade by Moody's or S&P, or of
comparable quality as determined by Wellington Management, and must invest
in a minimum of three countries (not including the United States). The
corresponding Insurance Fund may invest 15% of its assets in debt securities
rated below investment grade and must invest in a minimum of five countries
(including the United States.)
4. Each Fund may borrow money in amounts not to exceed 33 1/3% of the
value of its total assets. The Insurance Funds' International Opportunities
Fund, Dividend and Growth Fund and each other corresponding fund can borrow
up to 20%, 15% and 5% of their respective assets.
<PAGE>
ITT HARTFORD MUTUAL FUNDS 13
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The table below sets forth each Fund, and its corresponding Insurance Fund,
its inception date and asset size as of December 31, 1995:
<TABLE>
<CAPTION>
CORRESPONDING INSURANCE FUND
FUND (INCEPTION DATE AND ASSET SIZE)
----------------------------------------------------------------------------
<S> <C>
Capital Appreciation........... Hartford Capital Appreciation Fund, Inc.
(April 2, 1984)
$2,204,105,364
International Opportunities.... Hartford International Opportunities Fund,
Inc.
(July 2, 1990)
$688,685,636
Stock.......................... Hartford Stock Fund, Inc.
(August 31, 1977)
$1,881,501,503
Dividend and Growth............ Hartford Dividend and Growth Fund, Inc.
(March 8, 1994)
$276,245,852
Advisers....................... Hartford Advisers Fund, Inc.
(March 31, 1983)
$4,275,088,899
Money Market................... HVA Money Market Fund, Inc.
(June 30, 1980)
$364,013,082
</TABLE>
The following table shows the average annualized total returns for the
Insurance Funds for the one, three, five and ten year (or life of the Insurance
Fund, if shorter) periods ended December 31, 1995. These figures are based on
the actual gross investment performance of the Insurance Funds. From the gross
investment performance figures, the maximum Total Fund Operating Expenses
reflected in the fee table on page 3 are deducted to arrive at the net return.
<TABLE>
<CAPTION>
10 YEARS
INSURANCE FUND OR SINCE
(INCEPTION DATE) 1 YEAR 3 YEARS 5 YEARS INCEPTION
------- ------- ------- ---------
<S> <C> <C> <C> <C>
Hartford Capital Appreciation Fund, Inc..................... 29.74% 16.89% 23.51% 15.39%
(April 2, 1984)
Hartford International Opportunities Fund, Inc.............. 13.56% 13.99% 9.85% 6.45%
(July 2, 1990)
Hartford Stock Fund, Inc.................................... 33.34% 13.99% 15.04% 12.95%
(August 31, 1977)
Hartford Dividend and Growth Fund, Inc...................... 35.95% N/A N/A 19.63%
(March 8, 1994)
Hartford Advisers Fund, Inc................................. 27.81% 11.50% 12.47% 11.65%
(March 31, 1983)
HVA Money Market Fund, Inc.................................. 5.62% 4.16% 4.41% 6.00%
(June 30, 1980)
</TABLE>
CERTAIN INFORMATION ABOUT PERFORMANCE
From time to time, a Fund's yield and total return may be included in
advertisements, sales literature, or shareholder reports. In addition, the
Company may advertise the effective yield of the Money Market Fund. All figures
are based upon historical earnings and are not intended to indicate future
performance.
The "yield" of a Fund refers to the annualized net income generated by an
investment in that Fund over a specified 30-day period (7-day period for the
Money Market Fund). The effective yield is calculated similarly, but, when
annualized, the income earned by an investment in that Fund is assumed to be
reinvested. The effective yield will be slightly higher than the yield because
of the compounding effect of this assumed reinvestment.
The "total return" of a Fund refers to the average annual rate of return of
an investment in the Fund. This figure is computed by calculating the percentage
change in the value of an investment of $1,000, assuming reinvestment of all
income dividends and capital gain distributions, to the end of a specified
period. "Total return" quotations reflect the performance of the Fund and
include the effect of capital changes.
Further information about the performance of the Funds will be contained in
the Funds' annual reports to shareholders, which you may obtain without charge
by writing to the Funds' address or calling the telephone number set forth on
the cover page of this Prospectus.
<PAGE>
14 ITT HARTFORD MUTUAL FUNDS
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ABOUT YOUR ACCOUNT
HOW TO BUY SHARES
You may purchase shares from any broker-dealer that has a selling agreement
with Hartford Securities Distribution Company, Inc. (the "Distributor"). In
addition, an account may be opened for the purchase of shares of a Fund by
mailing to the ITT Hartford Mutual Funds, Inc., Institutional Services, P.O. Box
8416, Boston, MA 02266-8416, a completed account application and a check,
payable to ITT Hartford Mutual Funds. Or you may telephone 1-888-843-7824 to
obtain the number of an account to which you can wire or electronically transfer
funds and then send in a completed application.
In order to buy Class Y shares you must qualify as one of the following
types of institutional investors: (i) tax qualified retirement plans which have
(A) at least $10 million in plan assets, (B) have 750 or more employees eligible
to participate at the time of purchase, or (C) certify that they will have
projected annual contributions of $2.5 million or more, (ii) banks and insurance
companies which are not affiliated with HIMCO purchasing shares for their own
account; (iii) investment companies not affiliated with HIMCO; (iv)
tax-qualified retirement plans of HIMCO, Wellington Management or broker-dealer
wholesalers and their affiliates.
Purchase orders for all Funds are accepted only on a regular business day as
defined below. Orders for shares received by Boston Financial Data Services,
Inc., (the "Transfer Agent") on any business day prior to the close of trading
on the New York Stock Exchange ("NYSE") (normally 4:00 p.m. Eastern Time) will
receive that day's offering price. Orders received by the Transfer Agent after
such time but prior to the close of business on the next business day will
receive the next business day's offering price which is net asset value plus any
applicable sales charge. If you purchase shares through a broker-dealer your
broker is responsible for forwarding payment promptly to the Transfer Agent.
With respect to shares of the Money Market Fund, orders shall not be deemed
received until the Transfer Agent has received Federal funds. A "business day"
is any day on which the NYSE is open for business. It is anticipated that the
NYSE will be closed Saturdays and Sundays and on days on which the NYSE observes
New Year's Day, President's Day, Good Friday, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day and Christmas Day.
Each Fund and the Distributor or Transfer Agent reserves the right to reject
any order for the purchase of a Fund's shares. The Company reserves the right to
cancel any purchase order for which payment has not been received by the fifth
business day following the placement of the order.
If the Transfer Agent deems it appropriate, additional documentation or
verification of authority may be required and an order will not be deemed
received unless and until such additional documentation of verification is
received by the Transfer Agent.
Your initial purchase amount must be at least $1,000,000. However, the
minimum may be waived at the discretion of the Company's officers.
For an initial purchase of shares by wire, you must first telephone the
Transfer Agent at 1-888-843-7824 between the hours of 8:00 A.M. and 4:00 P.M.
(Eastern Time) on a regular business day as defined above to receive an account
number. The following information will be requested: your name, address, tax
identification number, dividend distribution election, amount being wired and
the wiring bank. Instructions should then be given by you to your bank to
transfer funds by wire to: ABA #011000028, State Street Bank & Trust Company,
Boston, MA, Account #: 9905-205-2, FBO: ITT Hartford Funds, Fund Name and Class,
Shareholder Account Number, Shareholder Name. If you arrange for receipt by the
Transfer Agent of federal funds prior to the close of trading (currently 4:00
P.M., Eastern Time) of the NYSE on a regular business day as defined above, you
will receive that day's offering price. Your bank may charge for these services.
Presently there is no fee for receipt by the Transfer Agent of Federal funds
wired, but the right to charge for this service is reserved.
Each Fund except the Money Market Fund offers investors three different
classes of shares -- Class A, Class B and Class Y. The Money Market Fund offers
Class A and Class Y shares only. Class Y shares are offered by this prospectus.
The different classes of shares represent investments in the same portfolio of
securities but are subject to different expenses and will likely have different
share prices.
The Distributor may provide promotional incentives including cash
compensation to certain broker-dealers whose representatives have sold or are
expected to sell significant amounts of shares of one or more of the Funds.
Other programs may provide, subject to certain conditions, additional
compensation to broker-dealers based on a combination of aggregate shares sold
and increases of assets under management. All of the above payments will be made
by the Distributor or its affiliates out of their own assets. These programs
will not change the price an investor will pay for shares or the amount that a
Fund will receive from such sale.
<PAGE>
ITT Hartford Mutual Funds 15
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SPECIAL INVESTMENT PROGRAMS AND PRIVILEGES
EXCHANGE PRIVILEGE. You may exchange your shares of a Fund for shares of
the same class of any other Fund. You should consider the differences in
investment objectives and expenses of a Fund as described in this prospectus
before making an exchange. Shares are normally redeemed from one Fund and
purchased from the other Fund in the exchange transaction on the same regular
business day on which the Transfer Agent receives an exchange request that is in
proper form by the close of the NYSE that day.
Exchanges are taxable transactions and may be subject to special tax rules
about which you should consult your own tax adviser. For complete policies and
restrictions governing exchanges, including fees and circumstances under which a
shareholder's exchange privilege may be suspended or revoked, see "How to
Exchange Shares."
Details on all institutional shareholder services may be obtained by calling
the Transfer Agent at 1-888-843-7824.
HOW TO REDEEM SHARES
Shares may be redeemed on any regular business day. Your shares will be sold
at the next net asset value calculated after your order is received in good
order and accepted by the Transfer Agent. The Fund offers you a number of ways
to sell your shares: in writing, by telephone, by electronic funds transfer
through the Automated Clearing House ("ACH") or by wire transfer. There are
special income tax withholding requirements for distributions from retirement
plans and you must submit a withholding form with your request to avoid delay.
PLEASE CALL THE TRANSFER AGENT FIRST, AT 1-888-843-7824 FOR ASSISTANCE.
CERTAIN REQUESTS REQUIRE A SIGNATURE GUARANTEE.
To protect you and the Company from fraud, certain redemption requests must
be in writing and must include a signature guarantee in the following situations
(there may be other situations also requiring a signature guarantee in the
discretion of the Fund or Transfer Agent):
- You wish to redeem more than $50,000 worth of shares and receive a check
- A redemption check is not payable to all shareholders listed on the
account statement
- A redemption check is not sent to the address of record on your statement
- Shares are being transferred to a Fund account with a different owner or
name
- Shares are redeemed by someone other than the owners (such as an Executor)
REDEEMING SHARES BY MAIL.
Write a "letter of instruction" that includes:
- Your name
- The Fund's name
- Your Fund account number (from your account statement)
- The dollar amount or number of shares to be redeemed
- Any special payment instructions
- The signatures of all registered owners exactly as the account is
registered, and
- Any special requirements or documents requested by the Transfer Agent to
assure proper authorization of the person asking to sell shares.
USE THE FOLLOWING ADDRESS FOR REQUESTS BY MAIL:
ITT Hartford Mutual Funds, Inc.
Institutional Services
P.O. Box 8416
Boston, MA 02266-8416
SEND COURIER OR EXPRESS MAIL REQUESTS TO:
Boston Financial Data Services
Attn.: ITT Hartford Mutual Funds, Inc.
Institutional Services
Two Heritage Drive
Quincy, MA 02171
REDEEMING SHARES BY TELEPHONE.
You may also redeem shares by telephone by calling 1-888-843-7824. To
receive the redemption price on a regular business day, your call must be
received by the Transfer Agent by the close of the NYSE that day, which is
normally 4:00 P.M., Eastern Time. Shares held in tax-qualified retirement plans
may not be redeemed by telephone. You may have a check sent to the address on
the account statement, or, you may use electronic funds transfer to your
assigned bank account through ACH.
TELEPHONE REDEMPTIONS PAID BY CHECK. Up to $50,000 may be redeemed by
telephone once in any 7-day period. The check must be payable to all owners of
record of the shares and must be sent to the address on the account. This
service is not available within 30 days of changing the address on an account.
TELEPHONE REDEMPTIONS THROUGH ELECTRONIC FUNDS TRANSFER. If you have
selected the option on your account application, you may use electronic funds
transfer to your assigned bank account. Normally the electronic funds transfer
is initiated on the business day after the redemption.
REDEEMING SHARES THROUGH YOUR BROKER. The Distributor has made arrangements
to redeem Fund shares from brokers on behalf of their customers. Brokers may
charge for that service. The Distributor, acting as agent for the
<PAGE>
16 ITT HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
Fund, stands ready to redeem each Fund's shares upon orders from brokers at the
offering price next determined after receipt of the order.
The Transfer Agent may delay forwarding a check or processing a payment for
recently purchased shares, but only until the purchase payment has cleared. That
delay may be as much as 15 days from the date the shares were purchased.
You may be charged a fee of up to $8 for wire transfers of redemption
proceeds of less than $50,000, which will be deducted from such proceeds. There
is no fee for ACH transfers.
HOW TO EXCHANGE SHARES
Class Y shares of a Fund may be exchanged for Class Y shares of another Fund
at net asset value per share at the time of exchange. Exchanges of shares
involve a redemption of the shares of the Fund you own and a purchase of shares
of the other Fund. Exchanges may be requested in writing or by telephone.
For written exchange requests you should submit a ITT Hartford Mutual Funds
exchange request form, signed by all owners of the account. Send the form to the
Transfer Agent at the addresses listed in "How to Sell Shares."
For telephone exchange requests you should call 1-888-843-7824. Telephone
exchanges may be made only between accounts that are registered with the same
names and address.
All exchanges are subject to the following restrictions:
The Fund you are exchanging into must be registered for sale in your state.
You may exchange only between Funds that are registered in the same name,
address and taxpayer identification number.
You may only exchange your Class Y shares for Class Y shares of another
Fund.
The minimum amount you may exchange from one Fund into another is $500 or
the entire balance if less.
Each Fund reserves the right to refuse or delay exchanges by any person or
group if, in HIMCO's or Wellington Management's judgment, a Fund would be unable
to invest the money effectively in accordance with its investment objective and
policies, or would otherwise potentially be adversely affected.
Your exchanges may be restricted or refused if a Fund receives or
anticipates simultaneous orders affecting significant portions of the Fund's
assets. In particular, a pattern of exchanges that coincides with a "market
timing" strategy may be disruptive to the Fund.
Although a Fund will attempt to give you prior notice whenever it is
reasonably able to do so, it may impose these restrictions at any time. Each
Fund reserves the right to terminate or modify the exchange privilege in the
future.
Shares are normally redeemed from one Fund and purchased from the other fund
in the exchange transaction on the same regular business day on which the
Transfer Agent receives an exchange request that is in proper form by the close
of the NYSE that day.
DETERMINATION OF NET ASSET VALUE
THE NET ASSET VALUE PER SHARE is determined for each class of shares for
each Fund as of the close of the NYSE (normally 4:00 p.m. Eastern Time) on each
regular business day (as previously defined) by dividing the value of the Fund's
net assets attributable to a class by the number of shares of that class
outstanding. The assets of each Fund (except the Money Market Fund) are valued
primarily on the basis of market quotations. If quotations are not readily
available, assets are valued by a method that the Board of Directors believes
accurately reflects fair value. The assets of the Money Market Fund are valued
at their amortized cost pursuant to procedures established by the Board of
Directors. Foreign securities are valued on the basis of quotations from the
primary market in which they are traded, and are translated from the local
currency into U.S. dollars using current exchange rates. With respect to all
Funds, short-term investments that will mature in 60 days or less are also
valued at amortized cost, which approximates market value.
SHAREHOLDER ACCOUNT RULES AND POLICIES
THE OFFERING OF SHARES may be suspended during any period in which the
determination of net asset value is suspended, and the offering may be suspended
by the Board of Directors or HIMCO at any time the Board or HIMCO believes it is
in the Fund's best interest to do so.
TELEPHONE TRANSACTION PRIVILEGES for purchases, redemptions or exchanges may
be modified, suspended or terminated by a Fund at any time. If an account has
more than one owner, the Fund and the Transfer Agent may rely on the
instructions of any one owner. Telephone privileges apply to each owner of the
account and the dealer representative of record for the account unless and until
the Transfer Agent receives cancellation instructions from an owner of the
account.
<PAGE>
ITT HARTFORD MUTUAL FUNDS 17
- --------------------------------------------------------------------------------
THE TRANSFER AGENT WILL RECORD ANY TELEPHONE CALLS to verify data concerning
transactions and has adopted other procedures to confirm that telephone
instructions are genuine. If the Company does not use reasonable procedures it
may be liable for losses due to unauthorized transactions, but otherwise the
Company will not be liable for losses or expenses arising out of telephone
instructions reasonably believed to be genuine. If you are unable to reach the
Transfer Agent during periods of unusual market activity, you may not be able to
complete a telephone transaction and should consider placing your order by mail.
PURCHASE, REDEMPTION OR EXCHANGE REQUESTS will not be honored until the
Transfer Agent receives all required documents in proper form.
SHARE CERTIFICATES will not be issued for the Company's shares.
BROKERS THAT CAN PERFORM ACCOUNT TRANSACTIONS FOR THEIR CLIENTS through the
National Securities Clearing Corporation are responsible for obtaining their
clients' permission to perform those transactions and are responsible to their
clients who are shareholders of a Fund if the dealer performs any transaction
erroneously or improperly.
ALL OF YOUR PURCHASES MUST BE MADE IN U.S. DOLLARS and checks must be drawn
on U.S. banks and made payable to ITT Hartford Mutual Funds, or in the case of a
retirement account, to the custodian or trustee. You may not purchase shares
with a third party check.
PAYMENT FOR REDEEMED SHARES is forwarded ordinarily by check or by
electronic funds transfer (as elected by the shareholder) within 7 calendar days
after the business day on which the Transfer Agent receives redemption
instructions in proper form. Payment will be forwarded within 3 business days
for accounts registered in the name of a broker-dealer. Redemptions may be
suspended or payment dates postponed when the NYSE is closed (other than
weekends or holidays), when trading is restricted or as permitted by the
Securities and Exchange Commission. THE TRANSFER AGENT MAY DELAY FORWARDING A
CHECK OR PROCESSING A PAYMENT FOR RECENTLY PURCHASED SHARES, BUT ONLY UNTIL THE
PURCHASE PAYMENT HAS CLEARED. THAT DELAY MAY BE AS MUCH AS 15 CALENDAR DAYS FROM
THE DATE THE SHARES WERE PURCHASED. THAT DELAY MAY BE AVOIDED IF YOU PURCHASE
SHARES BY CERTIFIED CHECK. IF THE PURCHASE PAYMENT DOES NOT CLEAR, YOUR PURCHASE
WILL BE CANCELED AND YOU COULD BE LIABLE FOR ANY LOSSES OR FEES THE FUND OR ITS
TRANSFER AGENT HAVE INCURRED.
UNDER UNUSUAL CIRCUMSTANCES shares of a Fund may be redeemed "in kind,"
which means that the redemption proceeds will be paid with securities from the
Fund's portfolio. Please refer to "Purchase and Redemption of Shares" in the
Statement of Additional Information for more details.
"BACKUP WITHHOLDING" of Federal income tax may be applied at the rate of 31%
from dividends, distributions and redemption proceeds (including exchanges) if
you fail to furnish the Fund a certified Social Security or Employer
Identification Number when you sign your application, or if you violate Internal
Revenue Service regulations on tax reporting of income.
THE COMPANY DOES NOT CHARGE A TRANSACTION FEE, but if your broker handles
your redemption, they may charge a fee. That fee can be avoided by redeeming
your Fund shares directly through the Transfer Agent.
INVESTOR INFORMATION SERVICES
The Fund provides 24-hour information services via a toll-free number on
fund yields, prices and account balances.
In addition, telephone representatives are available during normal business
hours (8:00 A.M. to 6:00 P.M. Eastern Time) to provide the information and
services you need.
Confirmation statements will be generated after every transaction, (except
reinvestments, automatic investments and automatic payroll investments) that
affect your account balance or your account registration. Quarterly consolidated
account statements will be sent for all accounts. It is the responsibility of
the shareholder to review the accuracy of transactions and to notify the
transfer agent of any errors within 15 days of the date of the confirmation.
Financial reports will be generated for the Fund every six months.
Call 1-888-843-7824 if you need additional copies of financial reports or
historical account information. There may be a small charge for historical
account information for prior years.
MANAGEMENT OF THE FUNDS
MANAGEMENT SERVICES
HIMCO serves as investment adviser to each Fund pursuant to an Investment
Advisory Agreement dated July 22, 1996. HIMCO has overall investment supervisory
responsibility for each Fund and is responsible for the day to day investment
decisions with respect to the assets of the Bond Fund and the Money Market Fund.
In addition, HIMCO will provide administrative personnel, services, equipment
and facilities and office space for proper operation of the Company. HIMCO has
contracted with Wellington Management for the provision of day to day investment
management services to the Small Company Fund, Capital Appreciation Fund,
International Opportunities Fund, Stock Fund, Dividend and Growth Fund and
<PAGE>
18 ITT HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
Advisers Fund in accordance with each Fund's investment objective and policies.
Each Fund pays a fee to HIMCO, a portion of which may be used to compensate
Wellington Management.
MANAGEMENT FEES
MONEY MARKET FUND.
The Money Market Fund pays a monthly management fee to HIMCO which is based
on a stated percentage of the Fund's average daily net asset value as follows:
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- -------------------------------------------------- -------------
<S> <C>
First $500,000,000................................ 0.50%
Next $500,000,000................................. 0.45%
Amount Over $1 Billion............................ 0.40%
</TABLE>
BOND INCOME STRATEGY FUND.
The Bond Income Strategy Fund pays a monthly management fee to HIMCO which
is based on a stated percentage of the Fund's average daily net asset value as
follows:
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- -------------------------------------------------- -------------
<S> <C>
First $500,000,000................................ 0.65%
Next $500,000,000................................. 0.55%
Amount Over $1 Billion............................ 0.50%
</TABLE>
SMALL COMPANY FUND AND INTERNATIONAL OPPORTUNITIES FUND.
The Small Company Fund and International Opportunities Fund each pay a
monthly management fee to HIMCO which is based on a stated percentage of the
Fund's average daily net asset value as follows:
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- -------------------------------------------------- -------------
<S> <C>
First $500,000,000................................ 0.85%
Next $500,000,000................................. 0.75%
Amount Over $1 Billion............................ 0.70%
</TABLE>
CAPITAL APPRECIATION FUND AND STOCK FUND.
The Capital Appreciation Fund and Stock Fund each pay a monthly management
fee to HIMCO which is based on a stated percentage of the Fund's average daily
net asset value as follows:
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- -------------------------------------------------- -------------
<S> <C>
First $500,000,000................................ 0.80%
Next $500,000,000................................. 0.70%
Amount Over $1 Billion............................ 0.65%
</TABLE>
DIVIDEND AND GROWTH FUND AND ADVISERS FUND.
The Dividend and Growth Fund and Advisers Fund each pay a monthly management
fee to HIMCO which is based on a stated percentage of the Fund's average daily
net asset value as follows:
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- -------------------------------------------------- -------------
<S> <C>
First $500,000,000................................ 0.75%
Next $500,000,000................................. 0.65%
Amount Over $1 Billion............................ 0.60%
</TABLE>
HIMCO, Hartford Plaza, Hartford, Connecticut 06115, is an indirect
wholly-owned subsidiary of ITT Hartford and was organized under the laws of
Connecticut in 1981. ITT Hartford is a holding company for various insurance
related subsidiaries including Hartford Fire Insurance Company, one of the
largest insurance carriers in the United States. HIMCO also serves as investment
adviser to several other SEC registered funds sponsored by ITT Hartford
affiliates and which are primarily available through the purchase of variable
annuity or variable life contracts.
Certain officers of the Funds are also officers and directors of HIMCO;
Joseph H. Gareau, President and a Director of the Company, is a Director and the
President of HIMCO; Andrew W. Kohnke, Vice President of the Company, is a
Managing Director and Director of HIMCO; J. Richard Garrett, Vice President and
Treasurer of the Company, is the Treasurer of HIMCO; and Charles M. O'Halloran,
Vice President, Secretary and General Counsel of the Company, is a Director,
Secretary and General Counsel of HIMCO.
INVESTMENT SUB-ADVISORY SERVICES
Wellington Management serves as sub-adviser to the Small Company Fund,
Capital Appreciation Fund, International Opportunities Fund, Stock Fund,
Dividend and Growth Fund, and Advisers Fund pursuant to a sub-advisory
agreement, dated as of July 22, 1996.
In connection with its service as sub-adviser to these Funds, Wellington
Management makes all determinations with respect to the purchase and sale of
portfolio securities (subject to the terms and conditions of the investment
objectives, policies and restrictions of these Funds and to the general
supervision of the Company's Board of Directors and HIMCO) and places, in the
name of the Funds, all orders for execution of these Funds' portfolio
transactions. In conjunction with such activities, Wellington Management
regularly furnishes reports to the Company's Board of Directors concerning
economic forecasts, investment strategy, portfolio activity and performance of
the Funds.
For services rendered to these Funds, Wellington Management charges a
quarterly fee to HIMCO. The Funds will not pay Wellington Management's fee nor
any part thereof, nor will the Funds have any obligation or responsibility to do
so. Wellington Management has agreed to waive a portion of its fees during the
start-up phase of the Funds as described in the SAI. Wellington Management's
quarterly fee is based upon the following annual rates as applied to the average
of the calculated daily net asset value of each Fund that it advises:
<PAGE>
ITT HARTFORD MUTUAL FUNDS 19
- --------------------------------------------------------------------------------
SMALL COMPANY FUND, CAPITAL APPRECIATION FUND AND INTERNATIONAL OPPORTUNITIES
FUND.
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- -------------------------------------------------- -------------
<S> <C>
First $50,000,000................................. 0.40%
Next $100,000,000................................. 0.30%
Next $350,000,000................................. 0.25%
Next $500,000,000................................. 0.20%
Over $1 Billion................................... 0.175%
</TABLE>
DIVIDEND AND GROWTH FUND, STOCK FUND AND ADVISERS FUND.
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- -------------------------------------------------- -------------
<S> <C>
First $50,000,000................................. 0.325%
Next $100,000,000................................. 0.25%
Next $350,000,000................................. 0.20%
Next $500,000,000................................. 0.15%
Over $1 Billion................................... 0.125%
</TABLE>
Wellington Management is a professional investment counseling firm which
provides investment services to investment companies, employee benefit plans,
endowments, foundations and other institutions and individuals. Wellington
Management and its predecessor organizations have provided investment advisory
services since 1933. As of June 30, 1996, Wellington Management held
discretionary management authority with respect to approximately $118.8 billion
of client assets. Wellington Management, 75 State Street, Boston, MA 02109, is a
Massachusetts general partnership, of which the following persons are managing
partners: Robert W. Doran, Duncan M. McFarland and John R. Ryan.
PORTFOLIO MANAGERS
Kenneth L. Abrams, Senior Vice President of Wellington Management, serves as
portfolio manager to the Small Company Fund. Mr. Abrams has been an emerging
company research analyst with Wellington Management since 1986 and, in addition,
has been a portfolio manager with Wellington Management since 1990.
Saul J. Pannell, Senior Vice President of Wellington Management, serves as
portfolio manager to the Capital Appreciation Fund. Mr. Pannell has been a
portfolio manager with Wellington Management since 1979.
The International Opportunities Fund is managed by Wellington Management's
Global Equity Strategy Group, headed by Trond Skramstad, Senior Vice President
of Wellington Management. The Global Equity Strategy Group is comprised of
global portfolio managers and senior investment professionals. No person or
persons is primarily responsible for making recommendations to or within the
Global Equity Strategy Group. Prior to joining Wellington Management in 1993,
Mr. Skramstad was a global equity portfolio manager at Scudder, Stevens & Clark
since 1990.
Rand L. Alexander, Senior Vice President of Wellington Management, serves as
portfolio manager to the Stock Fund. Mr. Alexander has been a portfolio manager
with Wellington Management since 1990.
Laurie A. Gabriel, CFA and Senior Vice President of Wellington Management,
serves as portfolio manager to the Dividend and Growth Fund. Ms. Gabriel joined
Wellington Management in 1976. She has been a quantitative research analyst with
Wellington Management since 1986, and took on portfolio management
responsibilities in 1987.
The Advisers Fund is managed by Paul D. Kaplan, Senior Vice President of
Wellington Management, and Rand L. Alexander. Mr. Kaplan has been a portfolio
manager with Wellington Management since 1982 and manages the fixed income
component of the Advisers Fund. Rand L. Alexander, who is portfolio manager to
the Stock Fund, manages the equity component of the Advisers Fund.
The Bond Income Strategy Fund is managed by Alison D. Granger. Ms. Granger,
a Senior Vice President of HIMCO and Assistant Vice President of Hartford Life
Insurance Company, joined ITT Hartford in 1993 as a senior corporate bond
trader. She became Director of Trading in 1994 and a portfolio manager in 1995.
Prior to joining ITT Hartford, Ms. Granger was a corporate bond portfolio
manager at The Home Insurance Company and Axe-Houghton Management. Ms. Granger
has over fifteen years of experience with fixed income investments.
PORTFOLIO TURNOVER
Each Fund may sell a portfolio investment soon after its acquisition if
HIMCO and /or Wellington Management believe that such a disposition is in the
Fund's best interest. A high rate of portfolio turnover involves correspondingly
greater brokerage commission expenses and other transaction costs, which must be
ultimately borne by a Fund's shareholders. High portfolio turnover may result in
the realization of substantial capital gains; distributions derived from such
gains may be treated as ordinary income for Federal income tax purposes.
Although it is not possible to predict future portfolio turnover rates
accurately, and such rates may vary from year to year, it is anticipated that
each Fund's portfolio turnover rate will not exceed 100% except the Bond Income
Strategy Fund which is estimated to be approximately 200%. High portfolio
turnover rates (above 100%) increase transaction costs and may increase taxable
capital gains. HIMCO and Wellington Management consider these effects when
evaluating the anticipated benefits of that turnover.
BROKERAGE COMMISSIONS
Although the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. prohibit its members
<PAGE>
20 ITT HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
from seeking orders for the execution of investment company portfolio
transactions on the basis of their sales of investment company shares, under
such Rules, sales of investment company shares may be considered in selecting
brokers to effect portfolio transactions. Accordingly, some portfolio
transactions are, subject to such Rules and to obtaining best prices and
executions, effected through dealers who sell shares of the Company. HIMCO or
Wellington Management may also select an affiliated broker-dealer to execute
transactions for the Company, provided that the commissions, fees or other
remuneration paid to such affiliated broker are reasonable and fair as compared
to that paid to non-affiliated brokers for comparable transactions.
DIVIDENDS, CAPITAL GAINS AND TAXES
DIVIDENDS.
Each Fund intends to distribute substantially all of its net income and
capital gains to shareholders no less frequently than once a year. Normally,
dividends from net investment income of the Small Company Fund, Capital
Appreciation Fund, International Opportunities Fund, and Stock Fund will be
declared and paid annually; dividends from the net investment income of the
Dividend and Growth Fund and Advisers Fund will be declared and paid
semi-annually; dividends from the net investment income of the Bond Income
Strategy Fund will be declared and paid monthly and dividends from net
investment income of the Money Market Fund will be declared daily and paid
monthly. Dividends from the Money Market Fund are not paid on shares until the
day following the date on which the shares are issued. Unless shareholders
specify otherwise, all dividends and distributions will be automatically
reinvested in additional full or fractional shares of each Fund.
DISTRIBUTION OPTIONS.
When you open your account, specify on your application how you want to
receive your distributions. For ITT Hartford Mutual Funds retirement accounts,
all distributions are reinvested. For other accounts, you have four options:
REINVEST ALL DISTRIBUTIONS IN THE FUND. You can elect to reinvest all
dividends and long term capital gains distributions in additional shares of the
Fund.
REINVEST INCOME DIVIDENDS ONLY. You can elect to reinvest investment income
dividends in a Fund while receiving capital gains distributions by check or sent
to your bank account.
REINVEST CAPITAL GAINS ONLY. You can elect to reinvest capital gains in the
Fund while receiving dividends by check or sent to your bank account.
RECEIVE ALL DISTRIBUTIONS IN CASH. You can elect to receive a check for all
dividends and long-term capital gain distributions or have them sent to your
bank.
TAXES.
If your account is not a tax-deferred retirement account, you should be
aware of the following tax implications of investing in the Fund. Long term
capital gains are taxable as long term capital gains when distributed to
shareholders. It does not matter how long you hold your shares. Dividends paid
from short term capital gains and net investment income are taxable as ordinary
income. Distributions are subject to federal income tax and may be subject to
state or local taxes. Your distributions are taxable when paid, whether you
reinvest them in additional shares or take them in cash. Every year the Fund
will send you and the IRS a statement showing the amount of each taxable
distribution you received in the previous year.
"BUYING A DIVIDEND". When a fund goes ex-dividend, its share price is
reduced by the amount of the distribution. If you buy shares on or just before
the ex-dividend date, or just before the Fund declares a capital gains
distribution, you will pay the full price for the shares and then receive a
portion of the price back as a taxable dividend or capital gain.
TAXES ON TRANSACTIONS. Share redemptions, including redemptions for
exchanges, are subject to capital gains tax. A capital gain or loss is the
difference between the price you paid for the shares and the price you received
when you sold them.
RETURNS OF CAPITAL. In certain cases distributions made by the Fund may be
considered a non-taxable return of capital to shareholders. If that occurs, it
will be identified in notices to shareholders. A non-taxable return of capital
may reduce your tax basis in your Fund shares.
This information is only a summary of certain federal tax information about
your investment. More information is contained in the SAI, and in addition you
should consult with your tax adviser about the effect of an investment in the
Fund on your particular tax situation.
OWNERSHIP AND CAPITALIZATION OF THE COMPANY
CAPITAL STOCK
As of the date of this Prospectus, the authorized capital stock of the
Company consisted of the following shares of a par value of $.001 per share:
Small Company Fund, 300 million; Capital Appreciation Fund, 300 million;
International Opportunities Fund, 300 million; Stock Fund, 300 million; Dividend
and Growth Fund, 300 million; Advisers
<PAGE>
ITT HARTFORD MUTUAL FUNDS 21
- --------------------------------------------------------------------------------
Fund, 400 million; Bond Income Strategy Fund, 300 million; and Money Market
Fund, 800 million.
The Board of Directors is authorized, without further shareholder approval,
to authorize additional shares and to classify and reclassify the Funds into one
or more classes. Accordingly, the Directors have authorized the issuance of
three classes of shares of each of the Funds (except the Money Market Fund),
designated as Class A, Class B and Class Y shares. Class A and Class Y shares
have been authorized for the Money Market Fund. The shares of each class
represent an interest in the same portfolio of investments of the respective
Funds and have equal rights as to voting, redemption, dividends and liquidation.
However, each class bears different sales charges, distribution and transfer
agency fees and related expenses, different exchange privileges and each class
has exclusive voting rights with respect to its respective Rule 12b-1 plan.
VOTING
Each shareholder is entitled to one vote for each share of the Funds held
upon all matters submitted to the shareholders generally. Annual meetings of
shareholders will not be held except as required by the Investment Company Act
of 1940 and other applicable law.
GENERAL INFORMATION
REPORTS TO SHAREHOLDERS
The Funds will issue unaudited semiannual reports showing current
investments in each Fund and other information and annual financial statements
examined by independent auditors for the Funds.
DISTRIBUTOR
Hartford Securities Distribution Company, Inc., P.O. Box 2999, Hartford, CT
06104-2999 serves as distributor to the Company.
TRANSFER AGENT
Boston Financial Data Services, Inc., Two Heritage Drive, Quincy, MA. 02171,
serves as transfer agent to the Company.
CUSTODIAN
State Street Bank and Trust Company serves as custodian of each Fund's
assets.
CLASS A AND B SHARES
In addition to Class Y shares, the Company also offers Class A and Class B
shares. Class A and B shares are available to individual investors. Class A and
B shares generally have operating expenses similar to Class Y shares, except for
certain sales charges and distribution and transfer agent fees. Please call
1-888-843-7824 for additional information on the purchase of Class A or B
shares.
REQUESTS FOR INFORMATION
This Prospectus does not contain all the information included in the
Registration Statement filed with the SEC. The Registration Statement, including
the exhibits filed therewith, may be examined at the SEC's office in Washington,
D.C. Statements contained in the Prospectus as to the contents of any contract
or other document referred to herein are not necessarily complete, and, in each
instance, reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement of which this Prospectus forms a
part, each such statement being qualified, in all respects by such reference.
For additional information, write to ITT Hartford Mutual Funds, Inc., P.O.
Box 8416, Boston, MA. 02266-8416, or call 1-888-843-7824.
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE FUNDS. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER BY THE FUNDS TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL FOR THE FUNDS TO MAKE SUCH OFFER.
