<PAGE>
As filed with the Securities and Exchange Commission on January 22, 1997
Registration No. 333-2381
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 2 /X/
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 4 /X/
ITT HARTFORD MUTUAL FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
Hartford Plaza, Hartford, Connecticut 06115
(Address of Principal Executive Offices)
Registrant's Telephone Number Including Area Code: (860) 547-5000
Michael O'Halloran, Esquire
ITT Hartford Group, Inc.
Law Department
690 Asylum Avenue
Hartford, Connecticut 06115
(Name and Address of Agent for Service)
COPIES TO:
Thomas Mira, Esquire
Jorden, Burt, Berenson and Johnson
1025 Thomas Jefferson Street, N.W.
Suite 400 East
Washington, D.C. 20036
Pursuant to Rule 24f-2 promulgated under the Investment Company Act of 1940,
Registrant has elected to register an indefinite number of shares of its
Common Stock.
It is proposed that this filing will become effective (check appropriate box).
X
- ---- Immediately upon filing pursuant to paragraph (b)
- ---- On (date) pursuant to paragraph (b) or
- ---- 60 days after filing pursuant to paragraph (a), or
- ---- On (date) pursuant to paragraph (a) of Rule 485.<PAGE>
<PAGE>
ITT HARTFORD MUTUAL FUNDS, INC.
Cross-Reference Sheet Showing Location in each Prospectus and
Combined Statement of Additional Information of Information Required
by Items of the Registration Form
FORM N-1A ITEM
NUMBER AND CAPTION LOCATION IN PROSPECTUS
------------------- ----------------------
1. Cover Page Cover Page.
2. Synopsis Investor Expenses.
3. Condensed Financial Information Not Applicable.
4. General Description of Registrant Introduction to the ITT Hartford
Mutual Funds, Investment
Objectives and Styles of the
Funds, Common Investment
Policies and Risk Factors.
5. Management of the Fund Management of the Funds.
6. Capital Stock and other Securities Ownership and Capitalization of
the Company, Dividends, Capital
Gains and Taxes.
7. Purchase of Securities Being Offered About Your Account -- How to Buy
Shares, How to Exchange Shares,
Determination of Net Asset
Value, Shareholder Account Rules
and Policies
8. Redemption or Repurchase About Your Account -- How to
Sell Shares, How to Exchange
Shares, Determination of Net
Asset Value, Shareholder Account
Rules and Policies.
9. Pending Legal Proceedings Not Applicable.
10. Cover Page Cover Page.
11. Table of Contents Cover Page.
12. General Information and History Cover Page, General Information.
13. Investment Objectives and Policies Investment Objectives and
Policies of the Funds,
Investment Restrictions.
<PAGE>
FORM N-1A ITEM
NUMBER AND CAPTION LOCATION IN PROSPECTUS
------------------- ----------------------
14. Management of the Fund Management of the Company,
Investment Advisory
Arrangements; Fund Expenses.
15. Control Persons and Principal Management of the Company.
Holders of Securities
16. Investment Advisory and Investment Advisory
Other Services Arrangements; Fund Expenses;
Distribution Arrangements;
Distribution Financing Plan;
Custodian; Transfer Agent
Services; Independent Public
Accountants.
17. Brokerage Allocation and Portfolio and Brokerage
Other Practices Transactions.
18. Capital Stock and Other Securities Ownership and Capitalization of
the Company (Prospectus).
19. Purchase Redemption and Pricing of Determination of Net Asset
Securities Being Offered Value, Purchase and Redemption
of Shares.
20. Tax Status Taxes
21. Underwriters Distribution Arrangements.
22. Calculation of Performance Data Investment Performance.
23. Financial Statements Financial Statements.
<PAGE>
ITT HARTFORD MUTUAL FUNDS, INC.
PROSPECTUS--JANUARY 22, 1997
CLASS A AND CLASS B 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
- ------------------------------- ---------------------------- --------------------------------------------------------------------
<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>
- --------------------------------------------------------------------------------
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 JANUARY 22, 1997 ("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.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
<PAGE>
2 Hartford Life Insurance Company
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Investor Expenses..................................................... 3
Financial Highlights.................................................. 5
Introduction to the ITT Hartford Mutual Funds......................... 6
Investment Objectives and Investment Styles of the Funds.............. 6
Common Investment Policies and Risk Factors........................... 9
Performance of the Funds.............................................. 14
About Your Account.................................................... 17
How to Buy Shares................................................... 17
Special Investment Programs and Privileges.......................... 21
How to Redeem Shares................................................ 22
How to Exchange Shares.............................................. 23
Determination of Net Asset Value.................................... 24
Shareholder Account Rules and Policies.............................. 24
Investor Information Services....................................... 25
Management of the Funds............................................... 25
Dividends, Capital Gains and Taxes.................................... 28
Ownership and Capitalization of the Company........................... 29
General Information................................................... 29
</TABLE>
<PAGE>
Hartford Life Insurance Company 3
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INVESTOR EXPENSES
The expenses and the maximum transaction costs associated with investing in
Class A or Class B 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
FUND FUND FUND FUND
----------------- ----------------- ----------------- -----------------
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge on purchases
(as % of Offering Price) (1)...... 5.50% None 5.50% None 5.50% None 5.50% None
Maximum Deferred Sales Charge
(2)............................... None 5.00% None 5.00% None 5.00% None 5.00%
Redemption Fees (3)................ None None None None None None None None
Exchange Fees (4).................. None None None None None None None None
ANNUAL OPERATING EXPENSES (AS % OF
AVERAGE NET ASSETS)
Management Fees.................... 0.85% 0.85% 0.80% 0.80% 0.85% 0.85% 0.80% 0.80%
12b-1 Distribution and Service Fees
(after waiver) (5)................ 0.30% 1.00% 0.30% 1.00% 0.30% 1.00% 0.30% 1.00%
Other Expenses (after
reimbursements) (6)............... 0.30% 0.30% 0.35% 0.35% 0.50% 0.50% 0.35% 0.35%
Total Operating Expenses (after
reimbursements) (6)............... 1.45% 2.15% 1.45% 2.15% 1.65% 2.35% 1.45% 2.15%
<CAPTION>
MONEY
DIVIDEND AND ADVISERS BOND INCOME MARKET
GROWTH FUND FUND STRATEGY FUND FUND
----------------- ----------------- ----------------- -------
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B CLASS A
------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge on purchases
(as % of Offering Price) (1)...... 5.50% None 5.50% None 4.50% None None
Maximum Deferred Sales Charge
(2)............................... None 5.00% None 5.00% None 5.00% None
Redemption Fees (3)................ None None None None None None None
Exchange Fees (4).................. None None None None None None None
ANNUAL OPERATING EXPENSES (AS % OF
AVERAGE NET ASSETS)
Management Fees.................... 0.75% 0.75% 0.75% 0.75% 0.65% 0.65% 0.50%
12b-1 Distribution and Service Fees
(after waiver) (5)................ 0.30% 1.00% 0.30% 1.00% 0.30% 1.00% 0.30%
Other Expenses (after
reimbursements) (6)............... 0.35% 0.35% 0.35% 0.35% 0.30% 0.30% 0.20%
Total Operating Expenses (after
reimbursements) (6)............... 1.40% 2.10% 1.40% 2.10% 1.25% 1.95% 1.00%
</TABLE>
- ----------------------------------
(1) If you purchase Class A shares, except for Class A shares in the Money
Market Fund, you will pay a sales charge equal to the amount of your
investment multiplied by the percentage set forth in the table above.
However, a lesser or no sales charge may be imposed depending on the size
of the investment in Class A shares. Although purchases of Class A shares
of $1 million or more are not subject to an initial sales charge, they may
be subject to a contingent deferred sales charge ("CDSC") if redeemed
within 18 months of the calendar month of purchase. If you purchase Class B
shares, you do not pay an initial sales charge but you may incur a CDSC if
you redeem some or all of your Class B Shares before the end of the sixth
year after which you purchased Class B Shares. The CDSC is 5%, 4%, 3%, 3%,
2%, and 1% for redemptions occurring in years one through six respectively.
After the sixth year, the CDSC is eliminated. See "How to Buy Shares."
(2) Shares of the Money Market Fund acquired by exchange from Class A or Class
B shares of any other Fund which are subject to a CDSC may be subject to a
CDSC if redeemed. The CDSC will be assessed at a rate equal to the CDSC
rate that would be applicable to the original shares as exchanged.
Long-term shareholders may pay more than the economic equivalent of the
maximum front-end sales charges permitted by the National Association of
Securities Dealers (" NASD"). See "How To Buy Shares."
(3) 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".
(4) All exchanges in excess of 12 exchanges in a 12-month period may be subject
to an exchange fee of $10 per exchange. Any exchange fee is paid directly
to the Fund from which shares have been redeemed. See "How To Exchange
Shares."
(5) Although the Rule 12b-1 fee for Class A shares is .35%, Hartford Securities
Distribution Company, Inc. (the "Distributor") has voluntarily agreed to
waive .05% of such fee through July 1, 1997. This waiver may be
discontinued at any time after July 1, 1997. See "Distribution and Service
Plan for Class A Shares" and "Distribution and Service Plan for Class B
Shares".
(6) ITT Hartford Group, Inc. ("The Hartford"), the ultimate parent company of
the Hartford Investment Management Company ("HIMCO"), has voluntarily
agreed to limit the Total Operating Expenses of the Class A shares of the
Money Market Fund and the Class A and Class B shares of each other Fund,
exclusive of taxes, interest, brokerage commissions, certain distribution
fees and extraordinary expenses, until at least July 1, 1997. This policy
may be discontinued at any time after July 1, 1997. In the absence of such
an agreement, the estimated Other Expenses for the Class A shares of the
Money Market Fund and the Class A and Class B shares of the following Funds
would be: Money Market Fund, 2.01%; Small Company Fund, 3.18% and 7.15%;
Capital Appreciation Fund, 3.31% and 4.84%; International Opportunities
Fund, 4.80% and 9.56%; Stock Fund, 3.08% and 3.92%; Dividend and Growth
Fund, 3.28% and 7.38%; Advisers Fund, 2.11% and 3.26%; and Bond Income
Strategy Fund, 1.97% and 3.10%; respectively, and the Total Operating
Expenses of such Funds would be: Money Market Fund, 2.81%; Small Company
Fund, 4.33% and 9.00%; Capital Appreciation Fund, 4.41% and 6.64%;
International Opportunities Fund, 5.95% and 11.41%; Stock Fund, 4.18% and
5.72%; Dividend and Growth Fund, 4.33% and 9.13%; Advisers Fund, 3.16% and
5.01%; and Bond Income Strategy Fund, 2.92% and 4.75%, respectively.
<PAGE>
4 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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
----------------- -----------------
CLASS A CLASS B CLASS A CLASS B
------- ------- ------- -------
<S> <C> <C> <C> <C>
Small Company Fund........................... $69 $72 $ 99 $98
Capital Appreciation Fund.................... 69 72 99 98
International Opportunities Fund............. 71 74 105 104
Stock Fund................................... 69 72 99 98
Dividend and Growth Fund..................... 69 72 99 98
Advisers Fund................................ 69 72 99 98
Bond Income Strategy Fund.................... 57 70 83 92
Money Market Fund............................ 10 N/A 30 N/A
</TABLE>
Using the same assumptions for the first table but assuming that you did not
redeem your shares at the end of each period, you would bear the following
expenses:
<TABLE>
<CAPTION>
YEAR 1 YEAR 3
----------------- -----------------
CLASS A CLASS B CLASS A CLASS B
------- ------- ------- -------
<S> <C> <C> <C> <C>
Small Company Fund........................... $69 $22 $ 99 $68
Capital Appreciation Fund.................... 69 22 99 68
International Opportunities Fund............. 71 24 105 74
Stock Fund................................... 69 22 99 68
Dividend and Growth Fund..................... 69 22 99 68
Advisers Fund................................ 69 22 99 68
Bond Income Strategy Fund.................... 57 29 83 62
Money Market Fund............................ 19 N/A 30 N/A
</TABLE>
These examples illustrate the effect of expenses, but are not meant to
suggest actual or expected costs or returns, all of which may vary.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 5
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The following table sets forth certain unaudited financial information from
each Fund's inception (July 22, 1996) through November 30, 1996.
<TABLE>
<CAPTION>
SMALL CAPITAL INTERNATIONAL
COMPANY APPRECIATION OPPORTUNITIES STOCK
FUND FUND FUND FUND
------------------- ------------------- ------------------- -------------------
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of
period............................ $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $10.00
-------- -------- -------- -------- -------- -------- -------- --------
Income from investment
operations........................ (0.02) (0.01) (0.02) (0.01) 0.06 0.01 0.02 0.00
Net realized and unrealized
gain/(loss)....................... 1.49 1.46 3.28 3.24 0.66 0.69 1.61 1.80
-------- -------- -------- -------- -------- -------- -------- --------
Total from investment operations... 1.47 1.45 3.26 3.23 0.72 0.70 1.83 1.80
-------- -------- -------- -------- -------- -------- -------- --------
DISTRIBUTIONS:
Dividends from net investment
income............................ 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Distributions from net realized
gains............................. 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
-------- -------- -------- -------- -------- -------- -------- --------
Total distributions................ 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
-------- -------- -------- -------- -------- -------- -------- --------
Change in net asset value.......... 1.47 1.45 3.26 3.23 0.72 0.70 1.83 1.80
-------- -------- -------- -------- -------- -------- -------- --------
Net asset value, end of period..... $11.47 $11.45 $13.26 $13.23 $10.72 $10.70 $11.83 $11.80
-------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- --------
Total Return**..................... 14.70% 14.50% 32.60% 32.30% 7.20% 7.00% 18.30% 18.00%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................ $4,325 $ 184 $6,900 $ 592 $3,929 $ 96 $5,484 $ 738
Ratio of expenses to average net
assets*........................... 4.33% 9.00% 4.41% 6.64% 5.95% 11.41% 4.18% 5.72%
Ratio of expenses to average net
assets net of reimbursements*..... 1.45% 2.15% 1.45% 2.15% 1.65% 2.35% 1.45% 2.15%
Ratio of net investment income
(loss) to average net assets*..... -0.57% -1.07% -0.78% -1.55% 1.99% 1.02% 0.78% 0.04%
Portfolio turnover rate............ 73.75% 144.5% 16.13% 10.91%
Average brokerage commission rate
($)............................... 0.0313 0.0369 0.0176 0.0283
<CAPTION>
MONEY
DIVIDEND AND ADVISERS BOND INCOME MARKET
GROWTH FUND FUND STRATEGY FUND FUND
------------------- ------------------- ------------------- --------
CLASS A CLASS B CLASS A CLASS B CLASS A CLASS B CLASS A
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of
period............................ $10.00 $10.00 $10.00 $10.00 $10.00 $10.00 $ 1.00
-------- -------- -------- -------- -------- -------- --------
Income from investment
operations........................ 0.06 0.01 0.08 0.01 0.20 0.06 0.02
Net realized and unrealized
gain/(loss)....................... 1.57 1.59 1.32 1.37 0.44 0.55 0.00
-------- -------- -------- -------- -------- -------- --------
Total from investment operations... 1.63 1.60 1.40 1.38 0.64 0.61 0.02
-------- -------- -------- -------- -------- -------- --------
DISTRIBUTIONS:
Dividends from net investment
income............................ 0.00 0.00 0.00 0.00 (0.20) (0.18) (0.02)
Distributions from net realized
gains............................. 0.00 0.00 0.00 0.00 0.00 0.00 0.00
-------- -------- -------- -------- -------- -------- --------
Total distributions................ 0.00 0.00 0.00 0.00 (0.20) (0.18) (0.02)
-------- -------- -------- -------- -------- -------- --------
Change in net asset value.......... 1.63 1.60 1.40 1.38 0.44 0.43 0.00
-------- -------- -------- -------- -------- -------- --------
Net asset value, end of period..... $11.63 $11.60 $11.40 $11.38 $10.44 $10.43 $ 1.00
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
Total Return**..................... 16.30% 16.00% 14.00% 13.80% 6.40% 6.10%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................ $5,321 $ 222 $12,944 $ 949 $10,812 $ 117 $10,644
Ratio of expenses to average net
assets*........................... 4.33% 9.13% 3.16% 5.01% 2.92% 4.75% 2.81%
Ratio of expenses to average net
assets net of reimbursements*..... 1.40% 2.10% 1.40% 2.15% 1.25% 1.95% 1.00%
Ratio of net investment income
(loss) to average net assets*..... 2.16% 1.52% 2.21% 1.19% 5.71% 4.95% 4.52%
Portfolio turnover rate............ 30.69% 19.61% 67.41% NA
Average brokerage commission rate
($)............................... 0.0316 0.0290 NA NA
</TABLE>
- ----------------------------------
* Annualized.
** Does not include sales charges.
<PAGE>
6 Hartford Life Insurance Company
- --------------------------------------------------------------------------------
- -------------------------------------------
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. Class Y shares are offered to certain institutional
investors by a separate prospectus. 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, LLP ("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. ("The 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 1928. As of September 30, 1996, HIMCO and its affiliates and
Wellington Management had investment management authority with respect to
approximately $48.2 billion and $123 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 The 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".
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 7
- --------------------------------------------------------------------------------
- ---------------------------------------------------
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.
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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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8 HARTFORD LIFE INSURANCE COMPANY
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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.
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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.
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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 securities rated 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")), or securities which, if unrated, are determined
by HIMCO to be of comparable quality. 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
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HARTFORD LIFE INSURANCE COMPANY 9
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reasonable periods of time, common stocks acquired upon conversion of debt
securities or upon exercise of warrants 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.
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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.
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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.
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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.
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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.
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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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10 HARTFORD LIFE INSURANCE COMPANY
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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.
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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.
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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.
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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.
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HARTFORD LIFE INSURANCE COMPANY 11
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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.
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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.
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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.
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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.
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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
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12 HARTFORD LIFE INSURANCE COMPANY
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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.
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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.
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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.
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HARTFORD LIFE INSURANCE COMPANY 13
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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.
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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>
14 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
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.
- ---------------------------------------------------
INVESTMENT LIMITATIONS
The Funds have adopted certain limitations in an attempt to reduce their
exposure to specific situations. Some of these limitations are that each Fund
will not:
(a) invest more than 25% of its assets in any one industry;
(b) borrow money, except from banks, and then only in
amounts not exceeding 33 1/3% of the value of a Fund's total assets
(although for purposes of this restriction reverse repurchase agreements are
not considered borrowings, as a non-fundamental operating policy each Fund
will limit combined borrowings and reverse repurchase transactions to
33 1/3% of the value of a Fund's total assets);
(c) with respect to 75% of the value of each Fund's total
assets, purchase the securities of any issuer (other than cash, cash items
or securities issued or guaranteed by the U.S. Government, its agencies,
instrumentalities or authorities) if:
(1) such purchase would cause more than 5% of the Fund's total assets taken
at market value to be invested in the securities of such issuer; or
(2) such purchase would at the time result in more than 10% of the
outstanding voting securities of such issuer being held by the Fund.
These investment restrictions are considered at the time investment
securities are purchased. The limitations described above, except as noted under
(b), and those listed under Fundamental Restrictions of the Funds in the SAI,
are considered fundamental and as such can only be changed with the approval of
a majority of each Fund's shareholders.
- ---------------------------------------------------
PERFORMANCE OF THE FUNDS
The figures set forth below reflect each Fund's total return for the period
from July 22, 1996 to November 30, 1996. These figures are based on the actual
performance of the Funds. The Hartford has voluntarily agreed to limit certain
Fund expenses. Without this agreement total return figures would have been
lower. Past performance is not necessarily indicative and is no guarantee of
future performance of the Funds.
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES
------------------------ ------------------------
WITH WITHOUT WITH WITHOUT
SALES SALES SALES SALES
CHARGE CHARGE(1) CHARGE CHARGE(1)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Small Company Fund............... 8.39% 14.70% 9.50% 14.50%
Capital Appreciation Fund........ 25.31% 32.60% 27.30% 32.30%
International Opportunities
Fund............................ 1.30% 7.20% 2.00% 7.00%
Stock Fund....................... 11.79% 18.30% 13.00% 18.00%
Dividend and Growth Fund......... 9.90% 16.30% 11.00% 16.00%
Advisers Fund.................... 7.73% 14.00% 8.80% 13.80%
Bond Income Strategy Fund........ 1.67% 6.46% 1.17% 6.17%
Money Market Fund................ 1.62% 1.62% N/A N/A
</TABLE>
- ------------------------
(1)Certain persons may purchase Class A Shares that are not subject to the Class
A Initial Sales Charge (see "Waiver of Class A Initial Sales Charge" in this
Prospectus) and certain other persons may purchase Class A Shares subject to
less than the maximum Initial Sales Charge (see "Reduced Sales Charges for Class
A Share Purchases" in this Prospectus).
- ----------------------------------------------------------------
PRIOR PERFORMANCE OF SIMILAR FUNDS
Because the Funds commenced operations in July, 1996 they have limited
operating history and 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
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 15
- --------------------------------------------------------------------------------
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. 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 may borrow up to 20%, 15% and 5% of their respective
assets.
The table below sets forth each Fund, and its corresponding Insurance Fund,
its inception date and asset size as of November 30, 1996:
<TABLE>
<CAPTION>
CORRESPONDING INSURANCE FUND
FUND (INCEPTION DATE AND ASSET SIZE)
----------------------------------------------------------------------------
<S> <C>
Capital Appreciation........... Hartford Capital Appreciation Fund, Inc.
(April 2, 1984) $3,336,685,505
International Opportunities.... Hartford International Opportunities Fund,
Inc. (July 2, 1990)
$974,700,504
Stock.......................... Hartford Stock Fund, Inc. (August 31, 1977)
$3,025,849,553
Dividend and Growth............ Hartford Dividend and Growth Fund, Inc.
(March 8, 1994) $845,785,858
Advisers....................... Hartford Advisers Fund, Inc. (March 31, 1983)
$5,944,631,324
Money Market................... HVA Money Market Fund, Inc. (June 30, 1980)
$453,490,794
</TABLE>
The following four tables show 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 November 30, 1996. 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.
The first table for each Class shown reflects a deduction for the maximum
applicable sales charge, while the second table for each Class shown reflects no
deduction for sales charges. Performance figures will be lower when sales
charges are taken into effect.
<PAGE>
16 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
- ---------------------------------------------------
ASSUMING CLASS A SHARE TOTAL FUND OPERATING
EXPENSES AND THE MAXIMUM INITIAL SALES LOAD
APPLICABLE TO CLASS A SHARES
<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..................... 13.90% 15.15% 18.85% 15.25%
(April 2, 1984)
Hartford International Opportunities Fund, Inc.............. 8.12% 8.19% 9.18% 5.87%
(July 2, 1990)
Hartford Stock Fund, Inc.................................... 20.59% 16.03% 15.91% 13.04%
(August 31, 1977)
Hartford Dividend and Growth Fund, Inc...................... 20.18% N/A N/A 18.76%
(March 8, 1994)
Hartford Advisers Fund, Inc................................. 12.98% 11.51% 11.97% 11.08%
(March 31, 1983)
HVA Money Market Fund, Inc.................................. 4.58% 4.32% 3.75% 5.35%
(June 30, 1980)
</TABLE>
- ---------------------------------------------------
ASSUMING CLASS A SHARE TOTAL FUND OPERATING
EXPENSES WITH NO INITIAL SALES LOAD(1)
<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..................... 20.53% 17.34% 20.20% 15.91%
(April 2, 1984)
Hartford International Opportunities Fund, Inc.............. 14.42% 10.25% 10.42% 6.80%
(July 2, 1990)
Hartford Stock Fund, Inc.................................... 27.61% 18.23% 17.23% 13.68%
(August 31, 1977)
Hartford Dividend and Growth Fund, Inc...................... 27.18% N/A N/A 21.25%
(March 8, 1994)
Hartford Advisers Fund, Inc................................. 19.56% 13.63% 13.25% 11.71%
(March 31, 1983)
HVA Money Market Fund, Inc.................................. 4.58% 4.32% 3.75% 5.35%
(June 30, 1980)
</TABLE>
- ------------------------
(1)Certain persons may purchase Class A Shares that are not subject to the Class
A Initial Sales Charge (see "Waiver of Class A Initial Sales Charge" in this
Prospectus) and certain other persons may purchase Class A Shares subject to
less than the maximum Initial Sales Charge (see "Reduced Sales Charges for Class
A Share Purchases" in this Prospectus).
- ---------------------------------------------------
ASSUMING CLASS B SHARE TOTAL FUND OPERATING
EXPENSES AND REDEMPTION AT THE END OF THE
APPLICABLE TIME PERIOD
<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..................... 14.70% 15.79% 19.18% 15.11%
(April 2, 1984)
Hartford International Opportunities Fund, Inc.............. 8.63% 8.64% 9.38% 5.95%
(July 2, 1990)
Hartford Stock Fund, Inc.................................... 21.74% 16.69% 16.21% 12.89%
(August 31, 1977)
Hartford Dividend and Growth Fund, Inc...................... 21.31% N/A N/A 19.61%
(March 8, 1994)
Hartford Advisers Fund, Inc................................. 13.74% 12.06% 12.21% 10.94%
(March 31, 1983)
HVA Money Market Fund, Inc.................................. N/A N/A N/A N/A
(June 30, 1980)
</TABLE>
- ---------------------------------------------------
ASSUMING CLASS B SHARE TOTAL FUND OPERATING
EXPENSES AND NO REDEMPTION AT THE END OF
THE APPLICABLE TIME PERIOD
<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..................... 19.70% 16.53% 19.37% 15.11%
(April 2, 1984)
Hartford International Opportunities Fund, Inc.............. 13.63% 9.48% 9.65% 6.06%
(July 2, 1990)
Hartford Stock Fund, Inc.................................... 26.74% 17.42% 16.43% 12.89%
(August 31, 1977)
Hartford Dividend and Growth Fund, Inc...................... 26.31% N/A N/A 20.41%
(March 8, 1994)
Hartford Advisers Fund, Inc................................. 18.74% 12.85% 12.47% 10.94%
(March 31, 1983)
HVA Money Market Fund, Inc.................................. N/A N/A N/A N/A
(June 30, 1980)
</TABLE>
<PAGE>
Hartford Life Insurance Company 17
- --------------------------------------------------------------------------------
- -------------------------------------------
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.
- ---------------------------------------------------
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., P.O. Box 8416, Boston, MA
02266-8416, a completed account application and a check, payable to the 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.
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 receives 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 for each Fund must be at least $1,000, except
for purchases made by employees of The Hartford, Wellington Management and
broker-dealer wholesalers and their affiliates and investors using periodic
investment plans, for which the minimum may be waived, and except for
participants in employer-sponsored tax qualified retirement plans for which the
minimum is $250. There is a $100 minimum amount for subsequent purchases ($25
for participants in employer-sponsored tax qualified retirement plans) except as
referenced above.
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.
<PAGE>
18 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
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 A and Class B 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. All share purchase orders that fail to specify a
class will be invested in Class A shares.
PURCHASES OF CLASS A SHARES.
Class A shares are sold subject to an initial sales load the amount of which
decreases as the amount of funds invested increases. In addition, the initial
sales load is waived entirely for investments in excess of $1 million and for
certain categories of investors (as described below). Any portion of any
applicable sales charge may be retained by the Distributor or allocated to your
broker-dealer as commission. There is no initial sales charge for shares of the
Money Market Fund. The current sales charge rates and commissions paid to
dealers and brokers are as follows:
- ---------------------------------------------------
SMALL COMPANY FUND, CAPITAL APPRECIATION
FUND, INTERNATIONAL OPPORTUNITIES FUND,
STOCK FUND, DIVIDEND AND GROWTH FUND,
AND ADVISERS FUND
<TABLE>
<CAPTION>
FRONT-END FRONT-END
SALES CHARGE SALES CHARGE
AS A AS A COMMISSION AS
PERCENTAGE PERCENTAGE PERCENTAGE OF
OF OFFERING OF AMOUNT OFFERING
AMOUNT OF PURCHASE PRICE INVESTED PRICE
- -------------------------------------------------- ------------- ------------- -------------
<S> <C> <C> <C>
Less than $50,000................................. 5.50% 5.82% 4.75%
$50,000 or more but less than $100,000............ 4.50% 4.71% 4.00%
$100,000 or more but less than $250,000........... 3.50% 3.63% 3.00%
$250,000 or more but less than $500,000........... 2.50% 2.56% 2.00%
$500,000 or more but less than $1 million......... 2.00% 2.04% 1.75%
$1 million or more................................ 0% 0% 0%
</TABLE>
- ---------------------------------------------------
THE BOND INCOME STRATEGY FUND
<TABLE>
<CAPTION>
FRONT-END FRONT-END
SALES CHARGE SALES CHARGE
AS A AS A COMMISSION AS
PERCENTAGE PERCENTAGE PERCENTAGE OF
OF OFFERING OF AMOUNT OFFERING
AMOUNT OF PURCHASE PRICE INVESTED PRICE
- -------------------------------------------------- ------------- ------------- -------------
<S> <C> <C> <C>
Less than $50,000................................. 4.50% 4.71% 3.75%
$50,000 or more but less than $100,000............ 4.00% 4.17% 3.50%
$100,000 or more but less than $250,000........... 3.50% 3.63% 3.00%
$250,000 or more but less than $500,000........... 2.50% 2.56% 2.00%
$500,000 or more but less than $1 million......... 2.00% 2.04% 1.75%
$1 million or more................................ 0% 0% 0%
</TABLE>
The Distributor reserves the right to remit the entire amount of the sales
commission to broker-dealers. The Distributor may pay dealers of record
commissions on purchases over $1 million an amount equal to the sum of 1.0% of
the first $2.5 million, plus 0.50% of the next $2.5 million, plus 0.25% of share
purchases over $5 million. In addition, the distributor may provide compensation
to dealers of record for shares purchased without a sales charge under
circumstances described in "Waiver of Class A Initial Sales Charge."
The Distributor may provide promotional incentives including cash
compensation in excess of the applicable sales charge 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.
CLASS A CONTINGENT DEFERRED SALES CHARGE.
There is no initial sales charge on purchases of Class A shares of any one
or more of the Funds aggregating $1 million, on Class A shares purchased through
certain employer-sponsored tax qualified retirement plans and in certain
instances as described below. However, if you redeem such Class A shares within
18 months of purchase, a contingent deferred sales charge (called the "Class A
contingent deferred sales charge") will be deducted from the redemption
proceeds. That sales charge will be equal to 1.0% of the aggregate net asset
value of the lesser of (1) the redeemed shares at the time of redemption (not
including shares purchased by reinvestment of dividends or capital gain
distributions) or (2) the original cost of the redeemed shares.
In determining whether a contingent deferred sales charge is payable, the
Fund will first redeem shares that are not subject to the sales charge,
including shares purchased by reinvestment of dividends and capital gains, and
then will redeem other shares in the order that you purchased them. The Class A
contingent deferred sales charge is waived in certain cases described in
"Waivers of Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on exchanges of such
shares under the Fund's Exchange Privilege (described below). However, if the
Class A shares acquired by exchange are redeemed within 18 months of purchase of
the exchanged shares (i.e. the Class A shares purchased without an initial sales
charge), the Class A contingent deferred sales charge will apply.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 19
- --------------------------------------------------------------------------------
REDUCED SALES CHARGES FOR CLASS A SHARE PURCHASES.
You may be eligible to buy Class A shares at reduced sales charge rates in
one or more of the following ways:
COMBINED PURCHASES.
You may aggregate purchases of shares of the Funds with the purchases of the
other persons listed below to achieve discounts in the applicable sales charges.
The sales charge applicable to a current purchase of Class A shares of each Fund
by a person listed below is determined by adding the value of Class A shares to
be purchased to the aggregate value (at current net asset value) of all shares
of any of the other Funds in the Company and shares of the Money Market Fund
previously purchased and then owned. In addition, if you are a natural owner of
an ITT Hartford Director variable annuity or variable life contract ("Qualified
Contracts"), and you notify your broker that you own one or more Qualified
Contracts, the current cash value of such contract will be aggregated with your
shares to determine your sales charge. The Transfer Agent must be notified by
you or your broker-dealer each time a qualifying purchase is made.
Qualifying investments include those by you and members of your family, if
all parties are purchasing Class A shares for their own account(s), which may
include tax qualified plans, such as an IRA, or by a company solely controlled
by such individuals as defined in the 1940 Act. Reduced sales charges also apply
to purchases by a trustee or other fiduciary if the investment is for a single
trust, estate or single fiduciary account, including pension, profit-sharing or
other employee benefit trust created pursuant to a plan qualified under the
Code. Reduced sales charges apply to combined purchases by qualified employee
benefit plans of a single corporation, or of corporations affiliated with each
other in accordance with the 1940 Act. Purchases made for nominee or street name
accounts (securities held in the name of a broker or another nominee such as a
bank trust department instead of the customer) may not be aggregated with those
made for other accounts and may not be aggregated with other nominee or street
name accounts unless otherwise qualified as described above.
RIGHTS OF ACCUMULATION.
The sales charge for new purchases of Class A shares of a Fund will be
determined by aggregating the net asset value of all the Funds (and current
value of Qualified Contracts assuming proper notification as discussed under
"Combined Purchases" above) owned by the shareholder at the time of the new
purchase. The rules listed under Combined Purchases may apply. You must identify
on the account application all accounts to be linked for Rights of Accumulation.
LETTER OF INTENT.
You may reduce your sales charge on all investments by meeting the terms of
a letter of intent, a non-binding commitment to invest a certain amount within a
13-month period. Your existing holdings in the Company may also be combined with
the investment commitment set forth in the letter of intent to further reduce
your sales charge. Up to 5% of the letter amount will be held in escrow to cover
additional sales charges which may be due if your total investments over the
letter period are not sufficient to qualify for a sales charge reduction. See
SAI and the account application for further details.
WAIVER OF CLASS A INITIAL SALES CHARGE.
No sales charge is imposed on sales of Class A shares to certain investors.
However, in order for the following sales charge waivers to be effective, the
Transfer Agent must be notified of the waiver when the purchase order is placed.
The Transfer Agent may require evidence of your qualification for the waiver. No
sales charge is imposed on the following investors: (1) any purchase of $1
million or more in the Funds, (2) present or former officers, directors and
employees (and their families) of the Company, The Hartford, Wellington
Management, Transfer Agent and their affiliates, and retirement plans
established by them for their employees if purchased directly through the
Transfer Agent, (3) any participant in a tax qualified retirement plan provided
that the total initial amount invested by the plan totals $500,000 or more, the
plan has 50 or more employees eligible to participate at the time of purchase,
or the plan certifies that it will have projected annual contributions of
$200,000 or more; (4) dealers, brokers and wholesalers that have a sales
agreement with the Distributor, if they purchase shares for their own accounts
or for retirement plans for their employees; (5) employees and registered
representatives (and their parents, spouses and dependent children) of dealers,
brokers and wholesalers described above or financial institutions that have
entered into sales arrangements with such dealers or brokers (and are identified
to the Distributor) or with the Distributor; the purchaser must certify to the
Distributor at the time of purchase that the purchase is for the purchaser's own
account (or for the benefit of such employee's parents, spouse or minor
children); (6) one or more members of a group of at least 100 persons (and
persons who are retirees from such group) engaged in a common business,
profession, civic or charitable endeavor or other activity, and the spouses and
minor dependent children of such persons pursuant to a marketing program between
the Distributor and such group; or (7) dealers, brokers, registered investment
advisers or third party administrators or consultants that have entered into an
agreement with the Distributor providing specifically for the use of shares of
the Fund in particular investment products made available to their clients. The
Class A Contingent Deferred Sales Charge may apply to categories 1, 3, 6 and 7
above.
Additionally, no sales charge is imposed on shares that are (a) issued in
plans of reorganization, such as mergers, asset acquisitions and exchange
offers, to which the Fund is
<PAGE>
20 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
a party, (b) purchased by the reinvestment of loan repayments by a participant
in retirement plans, (c) purchased by the reinvestment of dividends or other
distributions reinvested from a Fund, or (d) purchased and paid for with the
proceeds of shares redeemed in the prior 60 days from a mutual fund on which an
initial sales charge or contingent deferred sales charge was paid (other than a
fund managed by HIMCO or any of its affiliates).
WAIVER OF CLASS A CONTINGENT DEFERRED SALES CHARGE.
The Class A contingent deferred sales charge is also waived if shares are
redeemed, and the Transfer Agent is notified, in the following cases: (1) for
retirement distributions or loans to participants or beneficiaries from
qualified retirement plans, deferred compensation plans or other employee
benefit plans, (2) to return excess contributions made to employer sponsored tax
qualified retirement plans, (3) to make Systematic Withdrawal Plan payments that
are limited to no more than 10% of the original account value annually, (4)
involuntary redemptions of shares by operation of law or under the procedures
set forth in the Company's Articles of Incorporation or adopted by the Board of
Directors, (5) in connection with retirement plans: (i) following the death or
disability (as defined in the Code) of the participant or beneficiary (the death
or disability must have occurred after the account was established); (ii)
hardship withdrawals; (iii) distributions pursuant to a Qualified Domestic
Relations Order, as defined in the Code; (iv) minimum distributions as required
by section 401(a)(9) of the Code; (v) substantially equal periodic payments as
described in Section 72(t) of the Code, and (vi) separation from service, or (6)
for investors described under items 2, 4 and 5 above under "Waiver of Class A
Initial Sales Charge."
DISTRIBUTION AND SERVICE PLAN FOR CLASS A SHARES.
The Fund has adopted a Distribution and Service Plan for Class A shares to
compensate the Distributor for the distribution of Class A shares and servicing
the accounts of Class A shareholders. The Plan provides for periodic payments to
brokers who provide services to accounts that hold Class A shares and for
promotional and other sales related costs. The Distributor is compensated at an
annual rate that may not exceed 0.35% of the average daily net asset value of
Class A shares of the Fund some or all of which may be remitted to brokers. Up
to .25% of the fee may be used for shareholder servicing expenses with the
remainder used for distribution expenses. The Rule 12b-1 fee for each Fund has
been voluntarily capped at .30% through July 1, 1997. The cap may be removed at
any time after such date.
PURCHASES OF CLASS B SHARES.
Class B shares are sold at net asset value per share without an initial
sales charge. However, if Class B shares are redeemed within 6 years of their
purchase, a contingent deferred sales charge will be deducted from the
redemption proceeds. That sales charge will not apply to shares purchased by the
reinvestment of dividends or capital gains distributions and may be waived under
certain circumstances. The charge will be assessed on the lesser of the net
asset value of the shares at the time of redemption or the original purchase
price. The contingent deferred sales charge is not imposed on the amount of your
account value represented by the increase in net asset value over the initial
purchase price (including increases due to the reinvestment of dividends and
capital gains distributions). The Class B contingent deferred sales charge is
paid to the Distributor to reimburse expenses incurred in providing
distribution-related services to the Fund in connection with the sale of Class B
shares and some or all of the charge may be remitted to brokers. Because in most
cases it is more advantageous for an investor to purchase Class A shares for
amounts in excess of $500,000, orders for amounts of $500,000 or greater will be
considered purchases of Class A shares.
To determine whether the contingent deferred sales charge applies to a
redemption, the Fund redeems shares in the following order: (1) shares acquired
by reinvestment of dividends and capital gains distributions, (2) shares held
for over 6 years, and (3) shares held the longest during the 6-year period.
The amount of the contingent deferred sales charge will depend on the number
of years since you invested and the dollar amount being redeemed, according to
the following schedule:
<TABLE>
<CAPTION>
CONTINGENT DEFERRED
SALES CHARGE AS A %
REDEMPTION DURING: OF NET ASSET VALUE
- ---------------------------------------------- -----------------------
<S> <C>
1st year after purchase....................... 5.0%
2nd year after purchase....................... 4.0%
3rd year after purchase....................... 3.0%
4th year after purchase....................... 3.0%
5th year after purchase....................... 2.0%
6th year after purchase....................... 1.0%
7th year after purchase....................... None
</TABLE>
In the table, a "year" is a 12-month period. All purchases are considered to
have been made on the first regular business day of the month in which the
purchase was made.
WAIVERS OF CLASS B SALES CHARGE.
The Class B contingent deferred sales charge will be waived if the
shareholder requests it for any of the following redemptions: (1) to make
distributions under a Systematic Withdrawal Plan for no more than 10% of the
account value annually (measured from the date the Transfer Agent receives the
request), (2) redemptions from accounts following the death or disability of the
shareholder (the disability must have occurred after the account was established
and you must provide evidence of a determination of disability by the Social
Security Administration), (3) redemptions made to effect distributions from an
Individual Retirement Account either before or after age 59 1/2,
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 21
- --------------------------------------------------------------------------------
as long as the distributions are based on your life expectancy or the
joint-and-last survivor life expectancy of you and your beneficiary and such
distributions are free from penalty under the Code, (4) redemptions made to
effect mandatory distributions under the Code after age 70 1/2 from a tax-
deferred retirement plan, (5) redemptions made to effect distributions to
participants or beneficiaries from certain employer-sponsored retirement plans,
including those qualified under Section 401(a) of the Code, custodial accounts
under Section 403(b)(7) of the Code and deferred compensation plans under
Section 457 of the Code. The waiver also applies to certain returns of excess
contributions made to these plans. In all cases, the distributions must be free
from penalty under the Code. The contingent deferred sales charge is also waived
on Class B shares in the following cases: (i) shares issued in plans of
reorganization to which the Fund is a party; or (ii) shares redeemed in
involuntary redemptions as described below.
AUTOMATIC CONVERSION OF CLASS B SHARES.
96 months after you purchase Class B shares, those shares will automatically
convert to Class A shares. This conversion feature relieves Class B shareholders
of the higher asset-based sales charge that otherwise applies to Class B shares
under the Class B Distribution and Service Plan, described below. The conversion
is based on the relative net asset value of the two classes, and no sales load
or other charge is imposed. When Class B shares convert, any other Class B
shares that were acquired by the reinvestment of dividends and distributions on
the converted shares will also convert to Class A shares. Under Section 1036 of
the Code, the automatic conversion of Class B shares will not result in a gain
or loss to the Fund or to affected shareholders. For purposes of this conversion
feature, any time during which an investor holds shares of the Money Market Fund
which were acquired by exchanging Class B shares, will not be counted towards
the 96 month holding period.
DISTRIBUTION AND SERVICE PLAN FOR CLASS B SHARES.
The Fund has adopted a Distribution and Service Plan for Class B shares to
compensate the Distributor for the distribution of Class B shares and servicing
accounts of Class B shareholders. Some or all of this fee may be reallowed to
broker-dealers for distribution and or shareholder account services. Under the
Plan, the Fund pays the Distributor 1.00% of the average daily net assets of
Class B shares that are outstanding for 8 years or less, 0.25% of which is
intended as a fee for services provided to existing shareholders with the
remainder used for distribution expenses.
- ---------------------------------------------------
SPECIAL INVESTMENT PROGRAMS AND PRIVILEGES
One easy way to pursue your financial goals is to invest money regularly.
The Company offers convenient services that let you transfer money into your
account, or between accounts, automatically. While regular investment plans do
not guarantee a profit and will not protect you against loss in a declining
market, they can be an excellent way to invest for retirement, a home,
educational expenses and other long-term financial goals. Certain restrictions
apply. These privileges may be selected at the time of your initial investment
or at a later date. Please call 1-888-843-7824 for more information and
application forms for any of the privileges described below.
ELECTRONIC TRANSFERS THROUGH AUTOMATED CLEARING HOUSE ("ACH") allow you to
initiate a purchase or redemption for as little as $100 or as much as $50,000
between your bank account and fund account using the ACH network. Sales charges
and initial purchase minimums apply.
AUTOMATIC INVESTMENT PLANS let you make regular monthly or quarterly
investments through an automatic withdrawal from your bank account ($50 minimum
per Fund) and you can enroll when you establish your account. Sales charges will
apply.
DOLLAR COST AVERAGING INVESTMENT PROGRAMS ("DCA") let you set up monthly or
quarterly exchanges in amounts of $100 or more from one Fund to the same class
of shares of any other Fund except for the Money Market Fund where investors may
dollar cost average into either Class A or Class B shares. Sales charges may
apply where a shareholder invests in the Money Market Fund and then seeks to
exchange into a Fund where sales charges are applicable. Use of DCA permits the
purchase of shares of a Fund on a scheduled basis which protects the investor
from the risk of making all or substantially all of an investment prior to a
significant market decline. All shareholder accounts involved in a DCA Program
must have identical registrations.
AUTOMATIC DIVIDEND DIVERSIFICATION ("ADD") lets you automatically reinvest
dividends and capital gain distributions paid by one Fund into shares of the
same class of another Fund. The number of shares purchased through ADD will be
determined by using the net asset value of the Fund in which dividends will be
reinvested next computed after the dividend payment is made. All shareholder
accounts involved in an ADD program must have identical registrations.
EXCHANGE PRIVILEGE. You may exchange your shares of a Fund for shares of
the same class of any other Fund or for shares of the Money Market. In the case
of exchanges from the Money Market Fund to Class A shares of another Fund, sales
charges will apply unless you paid an initial sales charge earlier. 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.
<PAGE>
22 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
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."
SYSTEMATIC WITHDRAWAL PLANS let you set up monthly, quarterly, semi-annual
or annual redemptions from any account with a value of $5,000 or more. You may
direct the Company to make regular payments in fixed dollar amounts of $50 or
more, or in an amount equal to the value of a fixed number of shares (5 shares
or more). Payments can be directed to the shareholder or to someone other than
the registered owners(s) of the account. If this privilege is requested when the
account is established, no signature guarantee is needed. If this privilege is
added to an existing account and payments are directed to someone other than the
registered owners(s) of the account, a signature guarantee is required on the
Systematic Withdrawal Plan application. The Company reserves the right to
institute a charge for this service. Systematic Withdrawal Plans for Class B
shares of a Fund and for Class A shares subject to a CDSC are permitted only for
payments that are no more than 10% of the account value annually (measured from
the date the Transfer Agent receives the request).
Maintaining a Systematic Withdrawal Plan at the same time regular additional
investments are being made into Class A shares of any Fund except the Money
Market Fund, is not recommended because a sales charge will be imposed on the
new shares at the same time shares are being redeemed to make the periodic
payments under the Systematic Withdrawal Plan.
REINVESTMENT PRIVILEGE. If you redeem some or all of your Fund shares, you
have up to 90 days to reinvest all or part of the redemption proceeds in Class A
shares of the Fund without paying a sales charge. This privilege applies only to
redemptions of Class A shares on which an initial or deferred sales charge was
paid or to redemptions of Class A and Class B shares of the Fund that you
purchased by reinvesting dividends or distributions. You must be sure to ask the
Transfer Agent for this privilege when you send your payment.
RETIREMENT PLANS. Fund shares are available as an investment for your
retirement plans. If you participate in a plan sponsored by your employer, the
plan trustee or administrator must make the purchase of shares for your
retirement plan account. A number of different retirement plans can be used by
individuals and employers including IRAs, 403(b) Custodial Plans, SEPs, SEPIRAs,
401(k) and 457 plans. Please call the Transfer Agent for the Company's plan
documents, which contain important information and applications.
- ---------------------------------------------------
HOW TO REDEEM SHARES
You can arrange to take money out of your account on any regular business
day by redeeming some or all of your shares. 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 using the Fund's Checkwriting privilege (for Money
Market Fund only), by telephone, by bank transfer (ACH) or by wire transfer. You
can also set up Systematic Withdrawal Plans to redeem shares on a regular basis,
as described above. IF YOU HAVE QUESTIONS ABOUT ANY OF THESE PROCEDURES, AND
ESPECIALLY IF YOU ARE REDEEMING SHARES IN A SPECIAL SITUATION, SUCH AS DUE TO
THE DEATH OF THE OWNER, OR FROM A RETIREMENT PLAN, PLEASE CALL THE TRANSFER
AGENT FIRST, AT 1-888-843-7824 FOR ASSISTANCE.
RETIREMENT ACCOUNTS.
If you hold Fund shares through a retirement account, call the Transfer
Agent in advance for additional information and any necessary forms. 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.
If your retirement plan account is held for you by your employer, you must
arrange for the distribution request to be sent by the plan administrator or
trustee.
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
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 23
- --------------------------------------------------------------------------------
- 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.
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.
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, if you have linked your Fund account to your bank
account, you may have the proceeds wired to that bank account.
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 BANK-LINKED ACCOUNTS. If you have selected
the option on your account application, you may link your Fund account to your
bank account. There are no dollar limits on telephone redemption proceeds sent
to a bank-linked account. Normally the ACH wire to your bank is initiated on the
business day after the redemption.
CHECKWRITING. (MONEY MARKET FUND ONLY) To be able to write checks against
your Fund account, you may request that privilege on your account Application or
you can contact the Transfer Agent for signature cards. Signature cards must be
signed by all owners of the account and returned to the Transfer Agent.
Shareholders with joint accounts can elect in writing to have checks paid over
the signature of one owner. Checks must be written for at least $100. Checks
cannot be paid if they are written for more than your account value. You may not
write a check that would require the Fund to redeem shares that were purchased
by check or through the Automatic Investment Plan payments within the prior 15
days. Checks should not be used if you have changed your Fund account number.
You cannot close your account by writing a check.
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 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 via
bank linked account 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
In most cases, shares of a Fund may be exchanged for shares of the same
class of other Funds and for shares of the Money Market Fund at net asset value
per share at the time of exchange. However, a sales charge may apply to an
exchange from the Money Market Fund (see below). 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 for shares of the same class of another Fund or for
shares of the Money Market Fund.
If you wish to make more than 12 exchanges in a 12-month period, an exchange
fee of $10 per exchange will be charged. Any exchange fees will be paid directly
to the
<PAGE>
24 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
Fund from which shares have been redeemed. Exchanges made pursuant to the Dollar
Cost Averaging Program are not subject to this fee or limitation. The minimum
amount you may exchange from one Fund into another is $500 or the entire balance
if less.
Exchanges of shares of the Money Market Fund for shares of any other Fund
which carry a front-end sales charge are subject to the sales charge applicable
to such other Fund. Shares of the Money Market Fund acquired by exchange of
shares of another Fund on which a front-end sales charge was previously paid or
which are subject to a CDSC are exchanged at net asset value. However, shares of
the Money Market Fund acquired through an exchange of shares which are subject
to a CDSC will continue to be subject to a CDSC upon redemption. The rate of
this charge will be the rate in effect for the original shares at the time of
exchange without counting the time such shares were held as Money Market Fund
shares. Investors who initially purchased Class A shares of the Bond Income
Strategy Fund, have held such shares for less than six months and exchange
shares of the Bond Income Strategy Fund for Class A shares of any other Fund
except the Money Market Fund, must pay the difference between the Bond Income
Strategy Fund sales charge and the sales charge of the Fund shares being
acquired.
In addition to exchanges into and out of the Money Market Fund, you may
exchange your shares of other Funds for shares of the same class of any other
Fund without the imposition of a sales charge. With respect to Class B shares,
if you exchange such shares for Class B shares of another Fund, the CDSC will be
calculated based on the date on which you acquired the original Class B shares.
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.
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 the
Company 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.
<PAGE>
Hartford Life Insurance Company 25
- --------------------------------------------------------------------------------
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 through the
bank-linked service (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 VIA BANK LINKED ACCOUNT 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.
INVOLUNTARY REDEMPTIONS OF SMALL ACCOUNTS may be made by the Fund if the
account value has fallen below $1,000 as a result of shareholder action such as
a redemption or transfer and at least 30 days notice has been given to the
shareholder.
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. Under the circumstances
described in "How To Buy Shares," you may be subject to a contingent deferred
sales charge when redeeming certain Class A or Class B shares.
- ---------------------------------------------------
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. As of September 30, 1996, HIMCO and its
affiliates held discretionary management authority with respect to approximately
$48.2 billion of client assets. 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
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.
<PAGE>
26 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
- ---------------------------------------------------
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 The Hartford and was organized under the laws of
Connecticut in 1981. The 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 The 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
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 27
- --------------------------------------------------------------------------------
the average of the calculated daily net asset value of each Fund that it
advises:
SMALL COMPANY FUND, CAPITAL APPRECIATION FUND AND INTERNATIONAL OPPORTUNITIES
FUND.
<TABLE>
<CAPTION>
ANNUAL
NET ASSET VALUE 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>
ANNUAL
NET ASSET VALUE 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 1928. As of September 30, 1996, Wellington Management held
discretionary management authority with respect to approximately $123 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 The 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 The Hartford, Ms. Granger was a corporate bond portfolio
manager at The Home Insurance Company and Axe-Houghton Management. Ms. Granger
holds a CFA and 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%.
- ---------------------------------------------------
BROKERAGE COMMISSIONS
Although the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. prohibit its members from seeking orders for the
execution of investment
<PAGE>
28 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
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 five 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.
REINVEST YOUR DISTRIBUTIONS IN ANOTHER ITT HARTFORD MUTUAL FUNDS
ACCOUNT. You can reinvest all distributions in another ITT Hartford Mutual
Funds account you have established.
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.
<PAGE>
HARTFORD LIFE INSURANCE COMPANY 29
- --------------------------------------------------------------------------------
- ---------------------------------------------------
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 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 Funds'
assets.
- ---------------------------------------------------
CLASS Y SHARES
The Company also offers Class Y Shares which are available only to the
following types of institutional investors: (i) Tax qualified retirement plans
which have (A) at least $10 million in plan assets, (B) 750 or more employees
eligible to participate at the time of purchase, or (C) which 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.
Class Y shares are available to eligible institutional investors at net
asset value without the imposition of an initial or deferred sales charge and
are not subject to ongoing distribution fees imposed under a plan adopted
pursuant to Rule 12b-1 under the 1940 Act. The minimum initial investment in
Class Y shares is $1,000,000, but this requirement may be waived at the
discretion of the Fund's officers.
The Systematic Withdrawal Plan, Dollar Cost Averaging Plan, Automatic
Dividend Diversification Plan and Automatic Investment Plan are not available
for Class Y shares.
If you are considering a purchase of Class Y shares of a Fund, please call
the Transfer Agent, at 1-888-843-7824 to obtain information about eligibility.
- ---------------------------------------------------
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.
<PAGE>
30 HARTFORD LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
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.
<PAGE>
This page intentionally left blank.
<PAGE>
This page intentionally left blank.
<PAGE>
ITT HARTFORD MUTUAL FUNDS, INC.
PROSPECTUS--JANUARY 22, 1997
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
- ------------------------------- ---------------------------- --------------------------------------------------------------------
<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>
- --------------------------------------------------------------------------------
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 JANUARY 22, 1997, ("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.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
<PAGE>
2 ITT Hartford Mutual Funds
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Investor Expenses..................................................... 3
Financial Highlights.................................................. 4
Introduction to the ITT Hartford Mutual Funds......................... 5
Investment Objectives and Investment Styles of the Funds.............. 5
Common Investment Policies and Risk Factors........................... 8
Performance of the Funds.............................................. 13
About Your Account.................................................... 15
How to Buy Shares................................................... 15
Special Investment Programs and Privileges.......................... 16
How to Redeem Shares................................................ 16
How to Exchange Shares.............................................. 17
Determination of Net Asset Value.................................... 17
Shareholder Account Rules and Policies.............................. 18
Investor Information Services....................................... 18
Management of the Funds............................................... 19
Dividends, Capital Gains and Taxes.................................... 21
Ownership and Capitalization of the Company........................... 22
General Information................................................... 22
</TABLE>
<PAGE>
ITT Hartford Mutual Funds 3
- --------------------------------------------------------------------------------
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
------- ------------- ------------- -------- ------------- -----------
<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>
- ------------------------------
(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. ("The 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. 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: Money Market Fund, 1.54%; Small Company
Fund, 2.25%; Capital Appreciation Fund, 2.12%; International Opportunities
Fund, 4.16%; Stock Fund, 2.23%; Dividend and Growth Fund, 2.24%; Advisers
Fund, 1.83%; and Bond Income Strategy Fund, 1.84%; respectively, and the
Total Opearting Expenses of such Funds would be: Money Market Fund, 2.04%;
Small Company Fund, 3.1%; Capital Appreciation Fund, 2.92%; International
Opportunities Fund, 5.01%; Stock Fund, 3.03%; Dividend and Growth Fund,
2.99%; Advisers Fund, 2.58%; and Bond Income Strategy Fund, 2.49%;
respectively.
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
------- -------
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>
<PAGE>
4 ITT HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
The following table sets forth certain unaudited financial information from
each Fund's inception (July 22, 1996) through November 30, 1996.
<TABLE>
<CAPTION>
SMALL CAPITAL INTERNATIONAL
COMPANY APPRECIATION OPPORTUNITIES STOCK DIVIDEND AND ADVISERS BOND INCOME
FUND FUND FUND FUND GROWTH FUND FUND STRATEGY FUND
------------ -------------- --------------- ---------- --------------- ---------- ---------------
CLASS Y CLASS Y CLASS Y CLASS Y CLASS Y CLASS Y CLASS Y
------------ -------------- --------------- ---------- --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value at
beginning of period..... $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00 $ 10.00
------------ ------- ------- ---------- ------- ---------- -------
Income from investment
operations.............. 0.00 (0.01) 0.09 0.05 0.10 0.10 0.22
Net realized and
unrealized
gain/(loss)............. 1.49 3.29 0.65 1.80 1.55 1.32 0.44
------------ ------- ------- ---------- ------- ---------- -------
Total from investment
operations.............. 1.49 3.28 0.74 1.85 1.86 1.42 0.66
------------ ------- ------- ---------- ------- ---------- -------
DISTRIBUTIONS:
Dividends from net
investment income....... 0.00 0.00 0.00 0.00 0.00 0.00 (0.21)
Distributions from net
realized gains.......... 0.00 0.00 0.00 0.00 0.00 0.00 0.00
------------ ------- ------- ---------- ------- ---------- -------
Total distributions...... 0.00 0.00 0.00 0.00 0.00 0.00 (0.21)
------------ ------- ------- ---------- ------- ---------- -------
Change in net asset
value................... 1.49 3.28 0.74 1.85 1.65 1.42 0.45
------------ ------- ------- ---------- ------- ---------- -------
Net asset value, end of
period.................. $ 11.49 $ 13.28 $ 10.74 $ 11.85 $ 11.65 $ 11.42 $ 10.45
------------ ------- ------- ---------- ------- ---------- -------
------------ ------- ------- ---------- ------- ---------- -------
Total Return**........... 14.90% 32.80% 7.40% 18.60% 16.50% 14.20% 6.60%
RATIOS AND SUPPLEMENTAL
DATA:
Net assets, end of period
(in thousands).......... $ 6 $ 6 $ 5 $ 6 $ 8 $ 5 $ 6
Ratio of expenses to
average net assets*..... 3.1% 2.92% 5.01% 3.03% 2.99% 2.58% 2.49%
Ratio of expenses to
average net assets net
of reimbursements*...... 1.00% 1.00% 1.40% 1.00% 1.00% 1.00% 1.00%
Ratio of net investment
income (loss) to average
net assets*............. -0.10% -0.29% 2.46% 1.22% 2.61% 2.65% 6.15%
Portfolio turnover
rate.................... 73.75% 144.5% 16.13% 10.91% 30.69% 19.61% 67.41%
Average brokerage
commission rate ($)..... 0.0313 0.0369 0.0176 0.0283 0.0316 0.0290 NA
<CAPTION>
MONEY
MARKET
FUND
----------
CLASS Y
----------
<S> <C>
Net asset value at
beginning of period..... $ 1.00
----------
Income from investment
operations.............. 0.02
Net realized and
unrealized
gain/(loss)............. 0.00
----------
Total from investment
operations.............. 0.02
----------
DISTRIBUTIONS:
Dividends from net
investment income....... (0.02)
Distributions from net
realized gains.......... 0.00
----------
Total distributions...... (0.02)
----------
Change in net asset
value................... 0.00
----------
Net asset value, end of
period.................. $ 1.00
----------
----------
Total Return**...........
RATIOS AND SUPPLEMENTAL
DATA:
Net assets, end of period
(in thousands).......... $ 0.3
Ratio of expenses to
average net assets*..... 2.04%
Ratio of expenses to
average net assets net
of reimbursements*...... 0.25%
Ratio of net investment
income (loss) to average
net assets*............. 4.72%
Portfolio turnover
rate.................... NA
Average brokerage
commission rate ($)..... NA
</TABLE>
- ----------------------------------
* Annualized.
** Does not include sales charges.
<PAGE>
ITT Hartford Mutual Funds 5
- --------------------------------------------------------------------------------
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, LLP ("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. ("The 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 1928. As of September 30, 1996, HIMCO and its affiliates and
Wellington Management had investment management authority with respect to
approximately $48.2 billion and $123 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 The 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".
<PAGE>
6 ITT HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
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.
<PAGE>
ITT HARTFORD MUTUAL FUNDS 7
- --------------------------------------------------------------------------------
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 securities rated 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")), or securities which, if unrated, are determined
by HIMCO to be of comparable quality. 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
<PAGE>
8 ITT HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
reasonable periods of time, common stocks acquired upon conversion of debt
securities or upon exercise of warrants 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,
<PAGE>
ITT HARTFORD MUTUAL FUNDS 9
- --------------------------------------------------------------------------------
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>
10 ITT HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
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>
ITT HARTFORD MUTUAL FUNDS 11
- --------------------------------------------------------------------------------
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>
12 ITT HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
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>
ITT HARTFORD MUTUAL FUNDS 13
- --------------------------------------------------------------------------------
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.
INVESTMENT LIMITATIONS
The Funds have adopted certain limitations in an attempt to reduce their
exposure to specific situations. Some of these limitations are that each Fund
will not:
(a) invest more than 25% of its assets in any one industry;
(b) borrow money, except from banks, and then only in amounts not exceeding
33 1/3% of the value of a Fund's total assets (although for purposes of this
restriction reverse repurchase agreements are not considered borrowings, as
a non-fundamental operating policy, each Fund will limit combined borrowings
and reverse repurchase transactions to 33 1/3% of the value of a Fund's
total assets);
(c) with respect to 75% of the value of each Fund's total assets, purchase the
securities of any issuer (other than cash, cash items or securities issued
or guaranteed by the U.S. Government, its agencies, instrumentalities or
authorities) if:
(1) such purchase would cause more than 5% of the Fund's total assets taken
at market value to be invested in the securities of such issuer; or
(2) such purchase would at the time result in more than 10% of the
outstanding voting securities of such issuer being held by the Fund.
These investment restrictions are considered at the time investment
securities are purchased. The limitations described above, except as noted under
(b), and those listed under Fundamental Restrictions of the Funds, in the SAI,
are considered fundamental and as such can only be changed with the approval of
a majority of each Fund's shareholders.
PERFORMANCE OF THE FUNDS
The figures set forth below reflect total return quotations for the Funds
for the period from July 22, 1996 (inception) to November 30, 1996. The Hartford
has voluntarily agreed to limit certain Fund expenses. Without this agreement
total return figures would have been lower. These figures are based on the
actual performance of the Funds. Past performance is not necessarily indicative
and is no guarantee of future performance of the Funds.
<TABLE>
<CAPTION>
CLASS Y
SHARES
---------
<S> <C>
Small Company Fund.................................... 14.90%
Capital Appreciation Fund............................. 32.80%
International Opportunities Fund...................... 7.40%
Stock Fund............................................ 18.50%
Dividend and Growth Fund.............................. 16.50%
Advisers Fund......................................... 14.20%
Bond Income Strategy Fund............................. 6.66%
Money Market Fund..................................... 1.90%
</TABLE>
PRIOR PERFORMANCE OF SIMILAR FUNDS
Because the Funds commenced operations in July, 1996 they have limited
operating history and 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 The Hartford affiliates.
Below you will find information about the performance of the Insurance
Funds. Although the six comparable Funds
<PAGE>
14 ITT HARTFORD MUTUAL 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. 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 may borrow
up to 20%, 15% and 5% of their respective assets.
The table below sets forth each Fund, and its corresponding Insurance Fund,
its inception date and asset size as of November 30, 1996:
<TABLE>
<CAPTION>
CORRESPONDING INSURANCE FUND
FUND (INCEPTION DATE AND ASSET SIZE)
----------------------------------------------------------------------------
<S> <C>
Capital Appreciation........... Hartford Capital Appreciation Fund, Inc.
(April 2, 1984)
$3,336,685,505
International Opportunities.... Hartford International Opportunities Fund,
Inc.
(July 2, 1990)
$974,700,504
Stock.......................... Hartford Stock Fund, Inc.
(August 31, 1977)
$3,025,849,553
Dividend and Growth............ Hartford Dividend and Growth Fund, Inc.
(March 8, 1994)
$845,785,858
Advisers....................... Hartford Advisers Fund, Inc.
(March 31, 1983)
$5,944,631,324
Money Market................... HVA Money Market Fund, Inc.
(June 30, 1980)
$453,490,794
</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 November 30, 1996. 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..................... 21.06% 17.86% 20.73% 16.42%
(April 2, 1984)
Hartford International Opportunities Fund, Inc.............. 14.93% 10.74% 10.91% 7.28%
(July 2, 1990)
Hartford Stock Fund, Inc.................................... 28.18% 18.76% 17.75% 14.19%
(August 31, 1977)
Hartford Dividend and Growth Fund, Inc...................... 27.74% N/A N/A 21.79%
(March 8, 1994)
Hartford Advisers Fund, Inc................................. 20.09% 14.14% 13.75% 12.21%
(March 31, 1983)
HVA Money Market Fund, Inc.................................. 5.05% 4.79% 4.22% 5.85%
(June 30, 1980)
</TABLE>
<PAGE>
ITT HARTFORD MUTUAL FUNDS 15
- --------------------------------------------------------------------------------
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.
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 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
<PAGE>
16 ITT Hartford Mutual Funds
- --------------------------------------------------------------------------------
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.
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
<PAGE>
ITT HARTFORD MUTUAL FUNDS 17
- --------------------------------------------------------------------------------
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 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
<PAGE>
18 ITT HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
(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.
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
<PAGE>
ITT HARTFORD MUTUAL FUNDS 19
- --------------------------------------------------------------------------------
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. As of September 30, 1996, HIMCO and its
affiliates held discretionary management authority with respect to approximately
$48.2 billion of client assets. 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
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 The Hartford and was organized under the laws of
Connecticut in 1981. The 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 The 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
<PAGE>
20 ITT HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
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:
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 1928. As of September 30, 1996, Wellington Management held
discretionary management authority with respect to approximately $123 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
<PAGE>
ITT HARTFORD MUTUAL FUNDS 21
- --------------------------------------------------------------------------------
Company, joined The 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 The Hartford, Ms. Granger was a corporate bond portfolio manager at The
Home Insurance Company and Axe-Houghton Management. Ms. Granger holds a CFA and
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%.
BROKERAGE COMMISSIONS
Although the Rules of Fair Practice of the National Association of
Securities Dealers, Inc. prohibit its members 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.
<PAGE>
22 ITT HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
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 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.
<PAGE>
ITT HARTFORD MUTUAL FUNDS 23
- --------------------------------------------------------------------------------
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.
<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
PART B
ITT HARTFORD MUTUAL FUNDS, INC. (the "Company")
ITT HARTFORD MONEY MARKET FUND
CLASS A AND CLASS Y SHARES ONLY
ITT HARTFORD SMALL COMPANY FUND
ITT HARTFORD CAPITAL APPRECIATION FUND
ITT HARTFORD INTERNATIONAL OPPORTUNITIES FUND
ITT HARTFORD STOCK FUND
ITT HARTFORD DIVIDEND AND GROWTH FUND
ITT HARTFORD ADVISERS FUND
ITT HARTFORD BOND INCOME STRATEGY FUND
CLASS A, CLASS B AND CLASS Y SHARES
P.O. Box 8416
Boston, MA 02266-8416
1-888-843-7824
This Statement of Additional Information ("SAI") is not a prospectus but
should be read in conjunction with the Company's Class A and Class B prospectus
and Class Y prospectus. To obtain a free copy of either prospectus send a
written request to: ITT Hartford Mutual Funds, Inc., P.O. Box 8416, Boston, MA
02266-8416 or call the number listed above.
Date of Prospectus: January 22, 1997
Date of Statement of Additional Information: January 22, 1997
<PAGE>
TABLE OF CONTENTS PAGE
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . -1-
INVESTMENT OBJECTIVES AND POLICIES. . . . . . . . . . . . . . . . . . . -1-
MANAGEMENT OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . .-17-
INVESTMENT ADVISORY ARRANGEMENTS. . . . . . . . . . . . . . . . . . . - 27-
FUND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 30-
DISTRIBUTION ARRANGEMENTS . . . . . . . . . . . . . . . . . . . . . . - 30-
DISTRIBUTION FINANCING PLANS. . . . . . . . . . . . . . . . . . . . . - 31-
PORTFOLIO TRANSACTIONS AND BROKERAGE. . . . . . . . . . . . . . . . . - 33-
DETERMINATION OF NET ASSET VALUE. . . . . . . . . . . . . . . . . . . - 35-
PURCHASE AND REDEMPTION OF SHARES . . . . . . . . . . . . . . . . . . - 36-
INVESTMENT PERFORMANCE. . . . . . . . . . . . . . . . . . . . . . . . - 38-
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 47-
CUSTODIAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 51-
TRANSFER AGENT SERVICES . . . . . . . . . . . . . . . . . . . . . . . - 51-
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS. . . . . . . . . . . . . . . - 51-
OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . - 51-
FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . - 51-
APPENDIX. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 52-
<PAGE>
GENERAL INFORMATION
ITT Hartford Mutual Funds, Inc. (the "Company") is an open-end management
investment company consisting of eight separate diversified portfolios (each a
"Fund" or together the "Funds"). This SAI relates to all eight Funds. The
Hartford Investment Management Company, Inc. ("HIMCO") is the investment adviser
to each Fund. HIMCO is an indirect wholly owned subsidiary of ITT Hartford
Group, Inc., ("ITT Hartford") an insurance holding company with approximately
$94 billion in assets. In addition, Wellington Management Company ("Wellington
Management") is a sub-adviser to several of the Funds.
INVESTMENT OBJECTIVES AND POLICIES
A. FUNDAMENTAL RESTRICTIONS OF THE FUNDS
Each Fund has adopted the following fundamental investment restrictions
which may not be changed without approval of a majority of the applicable Fund's
outstanding voting securities. Under the Investment Company Act of 1940 (the
"1940 Act"), and as used in the Prospectus and this SAI, a "majority of the
outstanding voting securities" means the approval of the lesser of (1) the
holders of 67% or more of the shares of a Fund represented at a meeting if the
holders of more than 50% of the outstanding shares of the Fund are present in
person or by proxy or (2) the holders of more than 50% of the outstanding shares
of the Fund.
The investment objective, investment style and certain investment policies
of each Fund are set forth in the Prospectus. Set forth below are the
fundamental investment policies applicable to each Fund followed by the non-
fundamental policies applicable to each Fund.
Each Fund may not:
1. Issue senior securities. For purposes of this restriction, the issuance
of shares of common stock in multiple classes or series, obtaining of short-term
credits as may be necessary for the clearance of purchases and sales of
portfolio securities, short sales against the box, the purchase or sale of
permissible options and futures transactions (and the use of initial and
maintenance margin arrangements with respect to futures contracts or related
options transactions), the purchase or sale of securities on a when issued or
delayed delivery basis, permissible borrowings entered into in accordance with a
Fund's investment policies, and reverse repurchase agreements and mortgage
dollar rolls for which a segregated account has been established to cover such
transactions or for which an offsetting position has been established by the
Fund, are not deemed to be issuances of senior securities.
2. Borrow money, except from banks and then only if immediately after each
such borrowing there is asset coverage of at least 300% as defined in the 1940
Act. For purposes of this restriction, reverse repurchase agreements, mortgage
dollar rolls, short
<PAGE>
sales against the box, futures contracts, options on futures contracts,
securities or indices, when issued and delayed delivery transactions and
securities lending shall not constitute borrowing.
3. Act as an underwriter, except to the extent that in connection with the
disposition of portfolio securities, a Fund may be deemed to be an underwriter
for purposes of the Securities Act of 1933 (the "1933 Act").
4. Purchase or sell real estate, except that a Fund may (i) acquire or
lease office space for its own use, (ii) invest in securities of issuers that
invest in real estate or interests therein, (e.g. real estate investment trusts)
(iii) invest in securities that are secured by real estate or interests therein,
(iv) purchase and sell mortgage-related securities, (v) hold and sell real
estate acquired by the Fund as a result of the ownership of securities and (vi)
invest in real estate limited partnerships.
5. Invest in commodities, except that a Fund may (i) invest in securities
of issuers that invest in commodities, and (ii) engage in permissible options
and futures transactions and forward foreign currency contracts, entered into in
accordance with the Fund's investment policies.
6. Make loans, except that a Fund (i) may lend portfolio securities in
accordance with the Fund's investment policies in amounts up to 33 1/3% of the
Fund's total assets taken at market value, (ii) enter into fully collateralized
repurchase agreements, and (iii) purchase debt obligations in which the Fund may
invest consistent with its investment policies.
7. Purchase the securities of issuers conducting their principal
activity in the same industry if, immediately after such purchase, the value of
its investments in such industry would exceed 25% of its total assets taken at
market value at the time of such investment. This limitation does not apply to
investments in obligations issued or guaranteed by the U.S. Government or any of
its agencies, instrumentalities or authorities.
In addition, each Fund will operate as a "diversified" fund within the
meaning of the 1940 Act. This means that with respect to 75% of a Fund's
total assets, a Fund will not purchase securities of an issuer (other than cash,
cash items or securities issued or guaranteed by the U.S. Government, its
agencies, instrumentalities or authorities), if
(a) such purchase would cause more than 5% of the Fund's total assets
taken at market value to be invested in the securities of such issuer;
or
(b) such purchase would at the time result in more than 10% of the
outstanding voting securities of such issuer being held by the Fund.
If a percentage restriction on investment or utilization of assets as set
forth above is adhered to at the time an investment is made, a later change in
percentage resulting from changes in the values of a Fund's assets will not be
considered a violation of the
<PAGE>
restriction; provided, however, that the asset coverage requirement applicable
to borrowings under Section 18(f)(1) of the 1940 Act shall be maintained in the
manner contemplated by that Section.
In order to permit the sale of shares of the Funds in certain states, the
Board of Directors may, in its sole discretion, adopt restrictions on investment
policy more restrictive than those described above. Should the Board of
Directors determine that any such more restrictive policy is no longer in the
best interest of a Fund and its shareholders, the Fund may cease offering shares
in the state involved and the Board of Directors may revoke such restrictive
policy. Moreover, if the states involved shall no longer require any such
restrictive policy, the Board of Directors may, in its sole discretion, revoke
such policy.
B. NON-FUNDAMENTAL INVESTMENT RESTRICTIONS OF THE FUNDS.
The following restrictions are designated as non-fundamental and may be
changed by the Board of Directors without the approval of shareholders.
Each Fund may not:
1. Pledge, mortgage or hypothecate its assets, except to the extent
required to secure permitted borrowings. This investment restriction shall not
apply to any required segregated account or securities lending arrangements.
The deposit of underlying securities and other assets in escrow and collateral
arrangements with respect to margin for futures contracts and related options is
not deemed to be a pledge or other encumbrance.
2. Purchase any securities on margin (except that a Fund may obtain such
short-term credits as may be necessary for the clearance of purchases and sales
of portfolio securities) or make short sales of securities (except short sales
against the box) or maintain a short position. The deposit or payment by a
Fund of initial or maintenance margin in connection with futures contracts or
related options transactions is not considered the purchase of a security on
margin.
3. Purchase securities which are illiquid if, as a result of any such
purchase, more than 15% of its net assets (10% for the Money Market Fund) would
consist of such securities.
4. Purchase securities while outstanding borrowings exceed 5% of a Fund's
total assets.
5. Purchase interests in oil, gas, or other mineral exploration programs
or mineral leases; however, this policy will not prohibit the acquisition of
securities of companies engaged in the production or transmission of oil, gas,
or other minerals.
6. Invest for the purpose of exercising control over or management of any
company.
<PAGE>
7. To the Company's knowledge, purchase or retain securities of an issuer
if one or more of the directors or officers of the Company or directors or
officers of HIMCO or Wellington Management or any investment management
subsidiary of HIMCO or Wellington Management individually owns beneficially
more than 0.5% and together own beneficially more than 5% of the securities of
such issuer.
8. Invest more than 5% of total assets in securities of any issuer which,
together with its predecessors, has been in operation for less than three years.
9. Invest in real estate limited partnership interests except interests in
Real Estate Investment Trusts.
10. Purchase warrants of any issuer, if, as a result of such purchase,
more than 2% of the value of the Fund's total assets would be invested in
warrants which are not listed on an exchange or more than 5% of the value of the
total assets of the Fund would be invested in warrants generally, whether or
not so listed. For purposes of this restriction, warrants are to be valued at
the lesser of cost or market, but warrants acquired by the Fund in units with or
attached to debt securities shall be deemed to be without value.
11. Write covered call options with respect to more than 25% of the value
of its total assets; invest more than 25% of its total assets in protective put
options; or invest more than 5% of its total assets in options other than
protective put or covered call options. The aggregate value of premiums paid on
all options held by the Fund at any time will not exceed 20% of the Fund's
total assets.
If a percentage restriction on investment or utilization of assets as set
forth above is adhered to at the time an investment is made, a later change in
percentage resulting from changes in the values of a Fund's assets will not be
considered a violation of the restriction.
MISCELLANEOUS INVESTMENT PRACTICES
A further description of certain of the policies described in the Prospectus is
set forth below.
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
<PAGE>
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. The Company's Board of Directors has established standards for
evaluation of the creditworthiness of the banks and securities dealers with
which the Funds will engage in repurchase agreements and monitors on a
quarterly basis HIMCO and Wellington Management's compliance with such
standards. Presently, each Fund may enter into repurchase agreements only with
commercial banks with at least $1 billion in assets or with recognized
government securities dealers with a minimum net capital of $100 million.
HIMCO or Wellington Management will monitor such transactions to ensure
that the value of underlying collateral will be at least equal at all times to
the total amount of the repurchase obligation, including the accrued interest.
If the seller defaults, the Fund could realize a loss on the sale of the
underlying security to the extent that the proceeds of sale including accrued
interest are less than the resale price provided in the agreement including
interest.
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.
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, U.S. government securities or other high quality debt
securities equal in value to a Fund's obligations in respect of reverse
repurchase agreements. 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
331/3% of the value the Fund's
<PAGE>
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) non-convertible 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")
(Advisers Fund and Bond Income Strategy Fund only); and (4) securities issued
or guaranteed as to principal or interest by a sovereign government or one of
its agencies or political subdivisions, supranational entities such as
development banks, non-U.S. corporations, banks or bank holding companies, or
other non-U.S. issuers.
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 to have 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 and such securities lack outstanding investment
characteristics and do have speculative characteristics.
HIGH YIELD-HIGH RISK SECURITIES
Each of the Capital Appreciation Fund, Dividend and Growth Fund,
International Opportunities Fund, Small Company Fund, Stock Fund, and Advisers
Fund is permitted to invest up to 5% of its assets in securities rated as low as
"C" by Moody's or "CC" by S&P or of comparable quality if not rated. The Bond
Income Strategy Fund is permitted to invest up to 30% of its assets in
securities rated in the highest level below investment grade (i.e., "Ba" for
Moody's or "BB" by S&P), or if unrated, securities 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. For
instance the "Ba" rating for Moody's includes "Ba3", "Ba2" and "Ba1". Likewise
the S&P rating category of "BB" includes "BB+", "BB" and "BB-". If a Fund is
authorized to invest in a
<PAGE>
certain rating category, the Fund is also permitted to invest in any of the sub-
categories or gradations within that rating category. Securities in the highest
category below investment grade are considered to be of poor standing
and predominantly speculative. Descriptions of the debt securities ratings
system, including their speculative characteristics attributable to each ratings
category, are set forth as an appendix to this SAI. These 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 a Fund's shares. 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.
MORTGAGE-RELATED SECURITIES
The mortgage-related securities in which the Advisers Fund and the Bond
Income Strategy Fund may invest include interests in pools of mortgage loans
made by lenders such as savings and loan institutions, mortgage bankers,
commercial banks and others. Pools of mortgage loans are assembled for sale
to investors (such as the Funds) by various governmental,
government-related and private organizations. These Funds may also invest in
similar mortgage-related securities which provide funds for multi-family
residences or commercial real estate properties.
The value of these securities may be significantly affected by interest
rates, the market's perception of the issuers and the creditworthiness of the
parties involved. These securities may also be subject to prepayment risk.
The yield characteristics of the mortgage securities differ from those of
traditional debt securities. Among the major differences are that interest and
principal payments are made more frequently on mortgage securities, usually
monthly, and that principal may be prepaid at any time because the underlying
mortgage loans or other assets generally permit prepayment at any time.
Evaluating the risks associated with prepayment and determining the rate at
which prepayment is influenced by a variety of economic, geographic,
demographic, social and other factors including interest rate levels, changes in
housing needs, net equity built by mortgagors in the mortgaged properties, job
transfers, and unemployment rates. If a Fund purchases these securities at a
premium, a prepayment rate that is faster than expected will reduce yield to
maturity, while a prepayment rate that is slower than expected will have the
opposite effect of increasing yield to maturity. Conversely, if a Fund purchases
these securities at a discount, faster than expected prepayments will increase,
while slower than expected prepayments will reduce, yield to maturity. Amounts
available for reinvestment are likely to be greater during a period of declining
interest rates and, as a result, are likely to be reinvested at lower interest
rates than during a period of declining interest rates and, as a result, are
likely to be reinvested at lower interest rates than during a period of rising
interest rates. Accelerated prepayments on securities purchased by a Fund at a
premium also impose a risk of loss of principal because the premium may not have
been fully amortized at the time the principal is repaid in full.
<PAGE>
The mortgage securities in which each Fund invests differ from
conventional bonds in that principal is paid back over the life of the mortgage
securities rather than at maturity. As a result, the holder of the mortgage
securities (i.e., a Fund) receives monthly scheduled payments of principal and
interest, and may receive unscheduled principal payments representing
prepayments on the underlying mortgages. When the holder reinvests the payments
and any unscheduled prepayments of principal it receives, it may receive a rate
of interest which is lower than the rate on the existing mortgage securities.
For this reason, mortgage securities are less effective than other types of U.S.
Government securities as a means of "locking in" long-term interest rates. See
"Illiquid Securities."
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. 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.
ASSET-BACKED SECURITIES
The Advisers Fund, the Bond Income Strategy Fund and the Money Market Fund
may invest in asset-backed securities. The securitization techniques used for
asset-backed securities are similar to those used for mortgage-related
securities. The collateral for these securities has included home equity loans,
automobile and credit card receivables, boat loans, computer leases, airplane
leases, mobile home loans, recreational vehicle loans and hospital
accounts receivables. These Funds may invest in these and other types of
asset-backed securities that may be developed in the future. These securities
may be subject to the risk of prepayment or default. The ability of an issuer
of asset-backed securities to enforce its security interest in the underlying
securities may be limited.
EQUITY SECURITIES
Each Fund except the Bond Income Strategy Fund and Money Market Fund may
invest all or a portion of their assets in equity securities which include
common stocks, preferred stocks (including 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
<PAGE>
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
Each Fund is permitted to invest a portion of its assets in non-U.S.
securities, including, in the case of permitted equity investments, 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 securities of a non-U.S. issuer deposited in a domestic bank or
non-U.S. branch of a U.S. bank. 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 securities of non-U.S. issuers, HIMCO or Wellington
Management will evaluate the economic and political climate and the
principal securities markets of the country in which an issuer is located.
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.
In restructuring its external debt under the Brady Plan framework, a debtor
nation negotiates with its existing bank lenders as well as multinational
institutions such as the World Bank and the International Monetary Fund
("IMF"). The Brady Plan framework, as it has developed, contemplates the
exchange of commercial bank debt for newly issued bonds ("Brady Bonds"). Brady
Bonds may also be issued in respect of new money being advanced by existing
lenders in connection with debt restructuring. Agreements implemented
under the Brady Plan to date are designed to achieve debt and debt-service
reduction through specific options negotiated by a debtor nation with its
creditors. As a result, the financial packages offered by each country differ.
Brady Bonds issued to date may be purchased and sold in the secondary markets
through U.S. securities dealers and other financial institutions and are
generally maintained through European securities depositories. See also "High
Yield-High Risk Securities."
<PAGE>
Investing in securities issued by non-U.S. companies involves
considerations and potential risks not typically associated with investing in
obligations 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 prohibition 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.
Investing in non-U.S. sovereign debt will expose a Fund to the direct
or indirect consequences of political, social or economic changes in the
developing and emerging countries that issue the securities. The ability and
willingness of sovereign obligers in developing and emerging countries or
the governmental authorities that control repayment of their external debt to
pay principal and interest on such debt when due may depend on general
economic and political conditions within the relevant country. Countries
such as those in which the Funds may invest have historically experienced, and
may continue to experience, high rates of inflation, high interest rates,
exchange rate trade difficulties and unemployment. Some of these countries are
also characterized by political uncertainty or instability. Additional factors
which may influence the ability or willingness to service debt include, but are
not limited to, a country's cash flow situation, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of its debt
service burden to the economy as a whole, and its government's policy towards
the IMF, the World Bank and other international agencies.
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.
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.
<PAGE>
Forward currency contracts involve a privately negotiated obligation to
purchase or sell a specific currency at a 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 deems 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 options and futures contracts related
thereto.
OPTIONS AND FUTURES CONTRACTS
In seeking to protect against the effect of changes in equity market
values, currency exchange rates or interest rates that are adverse to the
present or prospective position of the Funds, for cash flow management, and,
to a lesser extent, to enhance returns, each Fund, except the Money Market
Fund, may employ certain hedging, income enhancement and risk management
techniques, including the purchase and sale of options, futures and options on
futures involving equity and debt securities and foreign currencies, aggregates
of equity and debt securities, indices of prices of equity and debt securities
and other financial indices. A Fund's ability to engage in these practices may
be limited by tax considerations and certain other legal considerations.
A Fund may write covered options and purchase put and call options on
individual securities as a partial hedge against an adverse movement in the
security and in circumstances consistent with the objective and policies of
the Fund. This strategy limits potential capital appreciation in the
portfolio securities subject to the put or call option.
The Funds may also write covered put and call options and purchase put and
call options on foreign currencies to hedge against the risk of foreign exchange
fluctuations on foreign securities the particular Fund holds in its portfolio or
that it intends to purchase. For example, if a Fund enters into a contract to
purchase securities denominated in foreign currency, it could effectively
establish the maximum U.S. dollar cost of the securities by purchasing call
options on that foreign currency. Similarly, if a Fund held securities
denominated in a foreign currency and anticipated a decline in the value of that
currency against the U.S. dollar, the Fund could hedge against such a decline by
purchasing a put option on the foreign currency involved.
<PAGE>
In addition, a Fund may purchase put and call options and write covered put
and call options on aggregates of equity and debt securities, and may 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, all for the purpose of protecting against potential
changes in the market value of portfolio securities or in interest rates.
Aggregates are composites of equity or debt securities that are not tied to a
commonly known index. An index is a measure of the value of a group of
securities or other interests. An index assigns relative values to the
securities included in that index, and the index fluctuates with changes in the
market value of those securities.
A Fund may write covered options only. "Covered" means that, so long as a
Fund is obligated as the writer of a call option on particular securities or
currency, it will own either the underlying securities or currency or an option
to purchase 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 will cover
any put option it writes on particular securities or currency by maintaining
a segregated account with its custodian as described above.
To hedge against fluctuations in currency exchange rates, a Fund may
purchase or sell foreign currency futures contracts, and write put and
call options and purchase put and call options on such futures contracts.
For example, a Fund may use foreign currency futures contracts when it
anticipates a general weakening of the foreign currency exchange rate that
could adversely affect the market values of the Fund's foreign securities
holdings. In this case, the sale of futures contracts on the underlying
currency may reduce the risk of a reduction in market value caused by
foreign currency variations and, by so doing, provide an alternative to
the liquidation of securities positions in the Fund and resulting transaction
costs. When the Fund anticipates a significant foreign exchange rate
increase while intending to invest in a non-U.S. security, the Fund may
purchase a foreign currency futures contract to hedge against a rise in foreign
exchange rates pending completion of the anticipated transaction. Such a
purchase of a futures contract would serve as a temporary measure to protect
the Fund against any rise in the foreign exchange rate that may add
additional costs to acquiring the non-U.S. security position. The Fund
similarly may use futures contracts on equity and debt securities to hedge
against fluctuations in the value of securities it owns or expects to acquire.
The Funds also may purchase call or put options on foreign currency
futures contracts to obtain a fixed foreign exchange rate at limited risk. A
Fund may purchase a call option on a foreign currency futures contract to hedge
against a rise in the foreign exchange rate while intending to invest in a
non-U.S. security of the same currency. A Fund may purchase put options on
foreign currency futures contracts to hedge against
<PAGE>
a decline in the foreign exchange rate or the value of its non-U.S.
securities. A Fund may write a call option on a foreign currency futures
contract as a partial hedge against the effects of declining foreign
exchange rates on the value of non-U.S. securities and in circumstances
consistent with a Fund's investment objectives and policies.
Options on indexes are settled in cash, not in delivery of securities. The
exercising holder of an index option receives, instead of a security, cash equal
to the difference between the closing price of the securities index and the
exercise price of the option. When a Fund writes a covered option on an index,
a Fund will be required to deposit and maintain with a custodian cash or high-
grade, liquid short-term debt securities equal in value to the aggregate
exercise price of a put or call option pursuant to the requirements and the
rules of the applicable exchange. If, at the close of business on any day, the
market value of the deposited securities falls below the contract price, the
Fund will deposit with the custodian cash or high-grade, liquid short-term debt
securities equal in value to the deficiency.
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
regulations of the CFTC), the aggregate initial margin and premiums required to
establish those positions may not exceed 5% of the liquidation value of the
Fund's portfolio, after taking into account the unrealized profits and
unrealized losses on any such contracts the Fund has entered into. However, the
"in-the-money" amount of such options may be excluded in computing the 5% limit.
Adoption of this guideline will not limit the percentage of a Fund's assets at
risk to 5%.
Although any one Fund may not employ all or any of the foregoing
strategies, its 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
<PAGE>
Code. In the event that the anticipated change in the price of the securities or
currencies that are the subject of such a strategy does not occur, it may be
that a Fund would have been in a better position had it not used such a strategy
at all.
SWAP AGREEMENTS
Each Fund, except the Money Market Fund, may enter into interest rate
swaps, currency 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.
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.
The Funds will usually enter into interest rate swaps on a net basis, i.e.,
where the two parties make net payments with a Fund receiving or paying, as the
case may be, only the net amount of the two payments. The net amount of the
excess, if any, of a Fund's obligations over its entitlement with respect to
each interest rate swap will be U.S. Government Securities or other liquid high
grade debt obligations having an aggregate net asset value at least equal to the
accrued excess will be maintained by the Company's custodian in a segregated
account. If a Fund enters into a swap on other than a net basis, the Fund will
maintain in the segregated account the full amount of the Fund's obligations
under each such swap. The Fund may enter into swaps, caps, collars and floors
with member banks of the Federal Reserve System, members of the New York Stock
Exchange or other entities determined by HIMCO or Wellington Management,
pursuant to procedures adopted and reviewed on an ongoing basis by the Board of
Directors, to be creditworthy. If a default occurs by the other party to such
transaction, a Fund will have contractual remedies pursuant to the agreements
related to the transaction but such remedies may be subject to bankruptcy and
insolvency laws
<PAGE>
which could affect such Fund's rights as a creditor.
The swap market has grown substantially in recent years with a large number
of banks and financial services firms acting both as principals and as agents
utilizing standardized swap documentation. As a result, the swap market has
become relatively liquid. Caps, collars and floors are more recent innovations
and they are less liquid than swaps. There can be no assurance, however, that a
Fund will be able to enter into interest rate swaps or to purchase interest rate
caps, collars or floors at prices or on terms HIMCO or Wellington Management, as
appropriate, believes are advantageous to such Fund. In addition, although the
terms of interest rate swaps, caps, collars and floors may provide for
termination, there can be no assurance that a Fund will be able to terminate an
interest rate swap or to sell or offset interest rate caps, collars or floors
that it has purchased. Interest rate swaps, caps, collars and floors are
considered by the SEC to be illiquid 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 movements in interest rates.
Although the Funds believe that 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. For example, if a Fund had purchased an
interest rate swap or an interest rate floor to hedge against its expectation
that interest rates would decline but instead interest rates rose, such Fund
would lose part or all of the benefit of the increased payments it would receive
as a result of the rising interest rates because it would have to pay amounts to
its counterparties under the swap agreement or would have paid the purchase
price of the interest rate floor. These activities are commonly used when
managing derivative investments.
ILLIQUID SECURITIES
Each Fund is permitted to invest in illiquid securities. No illiquid
securities will be acquired if upon the purchase more than 10% of Money Market
Fund's net assets or 15% of each other Fund's net assets would consist of
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. A Fund
may not be able to sell illiquid securities when HIMCO or Wellington Management
considers it desirable to do so or may have to sell such securities at a price
that is lower than the price that could be obtained if the securities were more
liquid. A sale of illiquid securities may require more time and may result in
higher dealer discounts and other selling expenses than does the sale of
securities that are not illiquid. Illiquid securities also may be more
difficult to value due to the unavailability of reliable market quotations for
such securities, and investment in illiquid securities may
<PAGE>
have an adverse impact on net asset value.
Under current interpretations of the SEC Staff, the following types of
securities in which a Fund may invest will 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 the net asset value of the Fund. At
the time of delivery of the securities, the value may be more or less than
the purchase price. A Fund will maintain, in a segregated account, cash, U.S.
Government securities or other liquid, high-grade debt obligations having a
value equal to or greater than the Fund's purchase commitments; likewise a
Fund will segregate securities sold on a delayed-delivery basis.
OTHER INVESTMENT COMPANIES
Each Fund is permitted to invest in other investment companies. The
investment companies in which a Fund would invest may or may not be registered
under the 1940 Act. 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. Under the 1940 Act, a Fund will not purchase a security
of an investment company 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 of the Funds may lend its portfolio securities to broker/dealers and
other institutions as a means of earning interest income. The borrower will be
required to
<PAGE>
deposit as collateral, cash, cash equivalents, U.S. government securities or
other high quality liquid debt securities that at all times will be at least
equal to 100% of the market value of the loaned securities and such amount will
be maintained in a segregated account of the respective Fund. While the
securities are on loan the borrower will pay the respective Fund any income
accruing thereon.
Delays or losses could result if a borrower of portfolio securities becomes
bankrupt or defaults on its obligation to return the loaned securities. The
Funds may lend securities only if: (1) the loan is fully secured by appropriate
collateral at all times; and (2) the value of all loaned securities of any Fund
is not more than 33 1/3% of the Fund's total assets taken at the time of the
loan.
MANAGEMENT OF THE COMPANY
The directors and officers of the Fund and their principal business
occupations for the last five years are set forth below. Those directors who
are deemed to be "interested persons" of the Company, as that term is defined in
the 1940 Act are indicated by an asterisk next to their respective names.
Name, Address, Age and Position with the Company
- ------------------------------------------------
JOSEPH ANTHONY BIERNAT (age 69)
Director
30 Hurdle Fence Drive
Avon, CT 06001
Mr. Biernat served as Senior Vice President and Treasurer of United Technologies
Corporation from 1984 until March, 1987, when he retired. He subsequently
served as Executive Vice President of Boston Security Counselors, Inc.,
Hartford, Connecticut (1988-1989), and served as Vice President-Client Services
of Wright Investors' Service, Bridgeport, Connecticut (1989-1990). Mr. Biernat
presently is consulting to organizations on financial matters, with the majority
of time spent with T.O. Richardson & Co., Farmington, Connecticut.
WINIFRED ELLEN COLEMAN (age 64)
Director
27 Buckingham Lane
West Hartford, CT 06117
Ms. Coleman has served as President of Saint Joseph College since 1991.
Director of Lemoyne College and St. Francis Hospital.
JOSEPH HARRY GAREAU* (age 50)
Director and President
P.O. Box 2999
Hartford, CT 06104-2999
<PAGE>
Mr. Gareau has served as Executive Vice President and Chief Investment Officer
of ITT Hartford Insurance Group since April, 1993. Formerly, he served as
Senior Vice President and Chief Investment Officer/Property-Casualty Division
(September, 1992 - April, 1993) and Vice President (October, 1987 - September,
1992). Director and the President of HIMCO. Director of Hartford Fire
Insurance Company since April, 1993.
WILLIAM ATCHISON O'NEILL (age 66)
Director
Box 360
East Hampton, CT 06424
The Honorable William A. O'Neill served as Governor of the State of Connecticut
from 1980 until 1991. He is presently retired.
MILLARD HANDLEY PRYOR, JR. (age 64)
Director
90 State House Square
Hartford, CT 06103
Mr. Pryor has served as Managing Director of Pryor & Clark Company, Hartford,
Connecticut, since June, 1992. He served as Chairman Chief Executive Officer of
Corcap, Inc. from 1988-1992. Director of Pryor & Clark Company, Corcap, Inc.,
The Wiremold Company, Hoosier Magnetics, Inc., Infodata Systems, Inc., Pacific
Scientific Corporation and Fibralock, Inc.
LOWNDES ANDREW SMITH* (age 57)
Director and Chairman
P.O. Box 2999
Hartford, CT 06104-2999
Mr. Smith has served as President of the Hartford Life Insurance Companies since
January, 1989. He was formerly Senior Vice President and Group Comptroller of
the Hartford Insurance Group from 1987-1989. Director of Connecticut
Children's Medical Center since 1993 and Director of American Counsel of Life
Insurance since 1990.
JOHN KELLEY SPRINGER (age 65)
Director
55 Farmington Avenue
Hartford, CT 06105
Mr. Springer has served as Chief Executive Officer of Connecticut Health System,
Inc. since September, 1989. Formerly, he served as the Chief Executive Officer
of Hartford Hospital, Hartford, Connecticut (June, 1971 - August, 1989).
Director of Hartford Hospital, Connecticut Health System, Inc., Medspan
(Chairman), Hospital Research
<PAGE>
Development Institute, and CHS Insurance Ltd. (Chairman).
PETER CUMMINS (age 58)
Vice President
Hartford Plaza
Hartford, CT 06115
Mr. Cummins has been Vice President of sales and marketing of the Individual
Life and Annuity Division of ITT Hartford Insurance Group-Life Companies since
1989.
JAMES RICHARD GARRETT (age 52)
Vice President and Treasurer
Hartford Plaza
Hartford, CT 06115
Mr. Garrett has served as a Vice President of ITT Hartford Insurance Group since
1989 and as Treasurer since 1983. Mr. Garrett is also the Treasurer of HIMCO.
JOHN PHILLIP GINNETTI (age 51)
Vice President
P.O. Box 2999
Hartford, CT 06104-2999
Mr. Ginnetti has served as Executive Vice President and Director of Asset
Management Services, a division of ITT Hartford Insurance Group-Life Companies,
since 1994. From 1988 to 1994 he served as Senior Vice President and Director
of the Individual Life and Annuities Division, also a division of ITT Hartford
Insurance Group-Life Companies.
ANDREW WILLIAM KOHNKE (age 38)
Vice President
P.O. Box 2999
Hartford, CT 06104-2999
Mr. Kohnke has served as a Vice President since 1992, and as an Investment
Manager since 1983, of the ITT Hartford Insurance Group-Life Companies. Mr.
Kohnke is also a Director and Managing Director of HIMCO.
THOMAS MICHAEL MARRA (age 38)
Vice President
P.O. Box 2999
Hartford, CT 06104-2999
<PAGE>
Mr. Marra has served as a Executive Vice President since 1996, as Senior Vice
President since 1994, and as Director of the Individual Life and Annuity
Division of ITT Hartford Insurance Group-Life Companies, since 1980.
CHARLES MINER O'HALLORAN (age 50)
Vice President, Secretary and General Counsel
Hartford Plaza
Hartford, CT 06115
Mr. O'Halloran has served as a Vice President since December, 1994, and as
Senior Associate General Counsel since 1988 and Corporate Secretary since 1996
of ITT Hartford Insurance Group. Mr. O'Halloran is also a Director, Secretary
and General Counsel of HIMCO.
GEORGE RICHARD JAY (age 45)
Controller
P.O. Box 2999
Hartford, CT 06104-2999
Mr. Jay has served as Secretary and Director, Life and Equity Accounting and
Financial Control, of ITT Hartford Insurance Group-Life Companies since 1987.
KEVIN J. CARR (age 42)
Assistant Secretary
Hartford Plaza
Hartford, CT 06115
Mr. Carr has served as Counsel since November 1996 and Associate Counsel since
November 1995, of ITT Hartford Group, Inc. Formerly he served as Counsel of
Connecticut Mutual Life Insurance Company from March 1995 to November 1995,
Associate Counsel of 440 Financial Group of Worcester from 1994 to 1995 and
Corporate Counsel-General Manager of Parker Media, a Hartford-based publishing
company, from 1990-1994.
JAMES CUBANSKI (age 36)
Assistant Secretary
Hartford Plaza
Hartford, CT 06115
Mr. Cubanski has served as Director of Tax Administration of ITT Hartford
Insurance Group since July, 1995. Formerly he served as Director of Federal Tax
Administration (July, 1993 - July, 1995) and Manager of Federal Taxes (February,
1991 - July, 1993).
An Audit Committee and Nominating Committee have been appointed for the
Company. Each Committee is made up of those directors who are not "interested
persons" of the Company.
<PAGE>
All Board members and officers of the Fund are also board members and
officers of the following registered investment companies: Hartford Capital
Appreciation Fund, Inc., Hartford Dividend and Growth Fund, Inc., Hartford Stock
Fund, Inc., Hartford Index Fund, Inc., Hartford Advisers Fund, Inc., Hartford
Mortgage Securities Fund, Inc., Hartford Bond Income Strategy Fund, Inc.,
Hartford International Opportunities Fund, Inc., Hartford International Advisers
Fund, Inc., Hartford U.S. Government Money Market Fund, Inc., HVA Money Market
Fund, Inc. and the Hartford Small Company Fund, Inc. Shares of each of these
investment companies are offered to and may only be purchased by holders of
variable annuity and variable life insurance contracts issued by ITT Hartford
and its affiliates. In addition, each Board member and officer serves in a
similar capacity for the Hartford Money Market Fund, Inc. a money market fund
sold directly to the public although its shareholders are predominantly
representatives of ITT Hartford (or its affiliates) who use that Fund as a sweep
account. Each of the Directors and principal officers affiliated with the Fund
who is also an affiliated person of HIMCO or Wellington Management is named
above, together with the capacity in which such person is affiliated with the
Fund, HIMCO or Wellington Management.
COMPENSATION OF OFFICERS AND DIRECTORS. The Company pays no salaries or
compensation to any of its officers or directors affiliated with ITT Hartford.
The chart below sets forth the fees paid or expected to be paid by the Company
to the non-interested Directors and certain other information:
JOSEPH A. WINIFRED E. WILLIAM A. MILLARD H. JOHN K.
BIERNAT COLEMAN O'NEILL PRYOR SPRINGER
COMPENSATION
RECEIVED FROM
COMPANY $6,100 $6,100 $6,100 $6,100 $6,100
PENSION OR
RETIREMENT
BENEFITS ACCRUED
AS FUND EXPENSE $0 $0 $0 $0 $0
TOTAL
COMPENSATION
FROM COMPANY
AND COMPLEX
PAID TO
DIRECTORS* $23,250 $20,250 $23,250 $23,250 $23,250
-----------------
* As of December 31, 1996, there were twenty-one funds in the Complex
(including the Funds). The total compensation paid per Complex is
comprised of the amount paid to each Director during the 1996 fiscal
year.
OTHER INFORMATION ABOUT THE COMPANY. The Company was incorporated in Maryland
on March 21, 1996. The authorized capital stock of the Company consists of 3
billion
<PAGE>
shares of common stock, par value $0.001 per share (Common Stock). The shares
of Common Stock are divided into eight series: Small Company Fund (300,000,000
shares); Capital Appreciation Fund (300,000,000 shares); International
Opportunities Fund (300,000,000 shares); Stock Fund (300,000,000 shares);
Dividend and Growth Fund (300,000,000 shares); Advisers Fund (400,000,000
shares); Bond Income Strategy Fund (300,000,000) and Money Market Fund
(800,000,000 shares). The Board of Directors may reclassify authorized shares
to increase or decrease the allocation of shares among the series described
above or to add any new series to the Fund. The Board of Directors is also
authorized, from time to time and without further shareholder approval, to
authorize additional shares and to classify and reclassify existing and new
series into one or more classes. Accordingly, the Directors have authorized
the issuance of three classes of shares of each of the Funds, except for the
Money Market Fund, designated in each instance as Class A, Class B and Class
Y shares. The Directors have authorized only two classes of shares for the
Money Market Fund - Class A and Class Y shares.
As of December 31, 1996, the following persons held an interest in the
following funds equal to 5% or more of such Fund's outstanding shares:
CLASS A CLASS B CLASS Y
-------- ------- -------
Small Company Fund
- ------------------
Hartford Investment Management 73.70% 7.51%
Company
Hartford, CT
Wellington Management Company, 92.27%
LLP
Boston, MA
Barbara A. Long and Stephen D. 11.74%
Long
Damascus, PA
Frank Downes Construction Co. 10.30%
New Britain, CT
Karel Prochazka and Stasha 8.28%
Prochazka
Berthoud, CO
NFSC FEBO #0C8-773468 7.57%
NFSC/FMTC IRA Rollover
FBO Charles C. O'Keefe
Middleton, MA
State Street Bank & Trust 7.17%
Cust for the IRA of Martha O.
Tant
Wilson, NC
Lucy A. Tardette 5.16%
Hartford, CT
Capital Appreciation Fund
- -------------------------
<PAGE>
Hartford Investment Management 46.47% 6.11%
Company
Hartford, CT
Wellington Management Company, 93.72%
LLP
Boston, MA
Richard A. Stermer Charitable 5.91%
Remainder Unitrust DTD 8-16-96
Richard A. Stermer, Trustee
Omaha, NE
Ace Supply Co., Inc. 14.83%
Profit Sharing Plural Trust U/A
DTD 2/21/79
Minneapolis, MN
William F. Roberts 6.67%
Bloomington, MN
Martha B. Rider 6.17%
Maryville, TN
International Opportunities Fund
- ---------------------------------
Hartford Investment Management 75.77% 8.09%
Company
Hartford, CT
Wellington Management Company, 91.66%
LLP
Boston, MA
Karel Prochazka and Stasha 25.21%
Prochazka
Berthoud, CO
Edward D. Jones & Co. F/A/O 15.89%
Rayne Dessayer
Maryland Heights, MO
NFSC FEBO #0C8-773468 11.47%
NFSC/FMTC IRA Rollover
FBO Charles C. O'Keefe
Middleton, MA
Edward D. Jones & Co. F/A/O 7.00%
Edward D. Jones & Co. Custodian
FBO Frank Westenkirchner IRA
Maryland Heights, MO
Tri-City Electronics 6.12%
Conover, NC
Stock Fund
- ----------
Hartford Investment Management 56.59% 12.37%
Company
Hartford, CT
Wellington Management Company, 87.25%
LLP
Boston, MA
<PAGE>
Edward D. Jones & Co. F/A/O 7.99%
Bluff Equipment
Maryland Heights, MO
PJH Prime Account 7.81%
Freeway Properties Inc.
Bloomington, MN
PJH Prime Account 7.35%
A/W/R/S Hollinbeck TTEE
Adeline Hollinbeck Trustee
Edina, MN
Dividend and Growth Fund
Hartford Investment Management 57.35% 15.23%
Company
Hartford, CT
Wellington Management Company, 84.31%
LLP
Boston, MA
Edward D. Jones & Co. F/A/O 14.45%
Bluff Equipment
Maryland Heights, MO
J.C. Bradford & Co. Cust FBO 7.30%
Margaret C. Kosmanski, TTEE
Nashville, TN
Edward D. Jones & Co. F/A/O 5.37%
Edward D. Jones & Co. Custodian
FBO Timothy W. Beacham IRA
Maryland Heights, MO
NFSC FEBO #0C8-773468 5.29%
NFSC/FMTC IRA Rollover
FBO Charles C. O'Keefe
Middleton, MA
Advisers Fund
- -------------
Hartford Investment Management 78.16% 15.63%
Company
Hartford, CT
Wellington Management Company, 83.89%
LLP
Boston, MA
Bond Income Strategy Fund
- -------------------------
Hartford Investment Management 97.90% 96.99%
Company
Hartford, CT
Edward D. Jones & Co. F/A/O 38.54%
Edward D. Jones & Co. Custodian
FBO Mark R. Sackfield IRA
Maryland Heights, MO
<PAGE>
Edward D. Jones & Co. F/A/O 28.51%
Edward D. Jones & Co. Custodian
FBO Clifton E. Ange, Jr. IRA
Maryland Heights, MO
Edward D. Jones & Co. F/A/O 21.80%
Barbara V. French
Maryland Heights, MO
Money Market Fund
- -----------------
Hartford Investment Management 95.31% N/A 45.69%
Company
Hartford, CT
Boston Financial Data Services 54.31%
Audit Account
Quincy, MA
The shares of the Funds are entitled to vote separately to approve
investment advisory agreements or changes in investment restrictions, but
shareholders of all series vote together in the election and selection of
Directors and accountants. Shares of a Fund vote together as a class on matters
that affect the Fund in substantially the same manner. Matters pertaining only
to one or more Funds will be voted upon only by those Funds. As to matters
affecting a single class, shares of such class will vote separately. Shares of
the Funds do not have cumulative voting rights. The Company and the Funds do
not intend to hold annual meetings of shareholders unless required to do so by
the 1940 Act or the Maryland statutes under which the Company is organized.
Although Directors are not elected annually by the shareholders, shareholders
have under certain circumstances the right to remove one or more Directors. If
required by applicable law, a meeting will be held to vote on the removal of a
Director or Directors of the Company if requested in writing by the holders of
not less than 10% of the Company's outstanding shares. Each Fund's shares are
fully paid, and nonassessable and, when issued, have no preference, preemptive,
conversion or similar rights and are freely transferable.
The Company's Articles of Incorporation provide that the Directors,
officers and employees of the Company may be indemnified by the Company to the
fullest extent permitted by Maryland law and the federal securities laws. The
Company's Bylaws provide that the Fund shall indemnify each of its Directors,
officers and employees against liabilities and expenses reasonably incurred by
them, in connection with, or resulting from, any claim, action, suit or
proceeding, threatened against or otherwise involving such Director, officer or
employee, directly or indirectly, by reason of being or having been a Director,
officer or employee of the Company. Neither the Articles of Incorporation nor
the Bylaws authorize the Company to indemnify any Director or officer against
any liability to which he or she would otherwise be subject by reason of or for
willful misfeasance, bad faith, gross negligence or reckless disregard of such
person's duties.
<PAGE>
INVESTMENT ADVISORY ARRANGEMENTS
The Company, on behalf of each Fund, has entered into an investment
advisory agreement with the Hartford Investment Management Company, Inc.
("HIMCO"). The investment advisory agreement provides that HIMCO, subject to
the supervision and approval of the Company's Board of Directors, is responsible
for the management of each Fund. HIMCO is responsible for the day-to-day
investment and reinvestment of the assets of the Bond Income Strategy Fund and
Money Market Fund. In connection with its management of the Bond Income
Strategy Fund and Money Market Fund, HIMCO provides investment research and
supervision of the investments held by a Fund and conducts a continuous program
of investment and reinvestment of the Funds' assets, in accordance with the
investment objectives and policies of a Fund. HIMCO also furnishes the Funds
such statistical information, with respect to the investments which the Funds
may hold or contemplate purchasing, as the Fund may reasonably request. HIMCO
will apprise the Fund of important developments materially affecting any of the
Funds and furnish the Funds from time to time with such information as HIMCO may
believe appropriate for this purpose. In addition, HIMCO will provide
administrative personnel, services, equipment and facilities and office space
for proper operation of the Company. Although HIMCO has agreed to arrange for
the provision of additional services necessary for the proper operation of the
Company, each Fund pays for these services directly.
With respect to the Small Company Fund, Capital Appreciation Fund,
International Opportunities Fund, Stock Fund, Dividend and Growth Fund and
Advisers Fund, HIMCO has entered into a subadvisory investment management
agreement with Wellington Management Company ("Wellington Management"). Under
the sub-advisory agreement, Wellington Management, subject to the general
supervision of the Board of Directors and HIMCO, is responsible for (among other
things) the day-to-day investment and reinvestment of the assets of such Funds
and furnishing each such Fund with advice and recommendations with respect to
investments and the purchase and sale of appropriate securities for each Fund.
As provided by the investment advisory agreement, each Fund pays HIMCO an
investment management fee, which is accrued daily and paid monthly, equal on an
annual basis to a stated percentage of the respective Fund's average daily net
asset value. HIMCO, not any Fund, pays the subadvisory fees of Wellington
Management as set forth in the Prospectus. With respect to each Fund,
Wellington Management will waive 100% of its fees until the assets of the Fund
reach $100 million, and, thereafter, 50% of its fees until the assets of the
Fund reach $500 million, and, thereafter, 25% of its fees until the assets of
the Fund reach $1 billion.
No person other than HIMCO or Wellington Management and their directors and
employees regularly furnishes advice to the Funds with respect to the
desirability of the Funds investing in, purchasing or selling securities. HIMCO
and Wellington Management may from time to time receive statistical or other
information regarding general economic factors and trends, from ITT Hartford
and its affiliates.
<PAGE>
Securities held by any Fund may also be held by other funds and other
clients for which HIMCO, Wellington Management or their respective affiliates
provide investment advice. Because of different investment objectives or other
factors, a particular security may be bought by HIMCO or Wellington Management
for one or more clients when one or more clients are selling the same security.
If purchases or sales of securities arise for consideration at or about the same
time for any Fund or client accounts (including other funds) for which HIMCO or
Wellington Management act as an investment adviser, (including the Funds
described herein) transactions in such securities will be made, insofar as
feasible, for the respective funds and other client accounts in a manner deemed
equitable to all. To the extent that transactions on behalf of more than one
client of HIMCO, Wellington Management or their respective affiliates during the
same period may increase the demand for securities being purchased or the supply
of securities being sold, there may be an adverse effect on price.
From Inception Date (July 22, 1996) through November 30, 1996 each Fund
has paid the following advisory fees:
Fund Name Advisory Fees as of
--------- 11/30/96
--------
Small Company Fund $11,506
Capital Appreciation Fund $12,671
International Opportunities Fund $10,067
Stock Fund $10,887
Dividend and Growth Fund $10,018
Advisers Fund $29,787
Bond Income Strategy Fund $24,272
Money Market Fund $18,499
Until at least July 1, 1997 HIMCO or an affiliate of ITT Hartford has
voluntarily and temporarily agreed to limit the expenses of each of the Funds by
reimbursing each Fund after a certain level of total expenses has been incurred.
The reimbursement details are disclosed in the fee table under Investor Expenses
in the Prospectuses.
Pursuant to the investment advisory agreement and the subadvisory
investment agreement neither HIMCO nor Wellington Management is liable to the
Funds or their shareholders for any error of judgment or mistake of law or for
any loss suffered by the Funds in connection with the matters to which their
respective agreements relate, except a loss resulting from willful misfeasance,
bad faith or gross negligence on the part of HIMCO or Wellington Management in
the performance of their duties or from their reckless disregard of the
obligations and duties under the applicable agreement. Wellington Management
has agreed to indemnify HIMCO to the fullest extent permitted by law against any
and all loss, damage, judgment, fines, amounts paid in settlement and attorneys'
fees incurred by HIMCO to the extent resulting in whole or in part from
<PAGE>
any of Wellington Management's acts or omissions related to the performance of
its duties as set forth specifically in the respective subadvisory investment
agreement or otherwise from Wellington Management's willful misfeasance, bad
faith or gross negligence.
HIMCO, whose principal business address is at 690 Asylum Avenue, Hartford,
Connecticut and whose mailing address is P.O. Box 2999, Hartford, Connecticut
06104, was organized in 1981. As of September 30, 1996, HIMCO and its
affiliates had over $48.2 billion in assets under management. HIMCO is a
wholly owned indirect subsidiary of ITT Hartford Group, Inc.
Wellington Management Company, 75 State Street, Boston, MA 02109, 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 1928. As of
September 30, 1996, Wellington Management had investment management authority
with respect to approximately $123 billion in assets. Wellington Management is
a Massachusetts General Partnership. The three managing general partners of
Wellington are Robert W. Doran, Duncan M. McFarland and John R. Ryan.
The investment management agreement and subadvisory investment agreement
continue in effect for two years from initial approval and from year to year
thereafter if approved annually by a vote of a majority of the Directors of the
Company including a majority of the Directors who are not parties to an
agreement or interested persons of any party to the contract, cast in person at
a meeting called for the purpose of voting on such approval, or by holders of a
majority of the applicable Fund's outstanding voting securities. The contract
automatically terminates upon assignment. The investment advisory agreement may
be terminated without penalty on 60 days' notice at the option of either party
to the respective contract or by vote of the holders of a majority of the
outstanding voting securities of the applicable Fund. The subadvisory
investment agreement may be terminated at any time without the payment of any
penalty by the Board of Directors or by vote of a majority of the outstanding
voting securities of the respective Fund upon 60 days' notice to HIMCO and
Wellington Management, by HIMCO upon written notice to Wellington Management
and by Wellington Management upon 90 days' written notice to HIMCO (with
respect to that Fund only). The subadvisory investment agreement terminates
automatically upon the termination of the corresponding investment advisory
agreement.
HIMCO may make payments from time to time from its own resources, which may
include the management fees paid by the Company to compensate broker dealers,
depository institutions, or other persons for providing distribution assistance
and administrative services and to otherwise promote the sale of shares of the
Funds including paying for the preparation, printing and distribution of
prospectuses and sales literature or other promotional activities.
FUND EXPENSES
<PAGE>
EXPENSES OF THE FUNDS. Each Fund pays its own expenses including, without
limitation: (i) expenses of maintaining the Fund and continuing its existence,
(ii) registration of the Fund under the Investment Company Act, (iii) auditing,
accounting and legal expenses, (iv) taxes and interest, (v) governmental fees,
(vi) expenses of issue, sale, repurchase and redemption of Fund shares, (vii)
expenses of registering and qualifying the Fund and its shares under federal and
state securities laws and of preparing and printing prospectuses for such
purposes and for distributing the same to shareholders and investors, and fees
and expenses of registering and maintaining registrations of the Fund and of the
Fund's principal underwriter, if any, as broker-dealer or agent under state
securities laws, (viii) expenses of reports and notices to shareholders and of
meetings of shareholders and proxy solicitations therefor, (ix) expenses of
reports to governmental officers and commissions, (x) insurance expenses, (xi)
association membership dues, (xii) fees, expenses and disbursements of
custodians for all services to the Fund, (xiii) fees, expenses and disbursements
of transfer agents, dividend disbursing agents, shareholder servicing agents and
registrars for all services to the Fund, (xiv) expenses for servicing
shareholder accounts, (xv) any direct charges to shareholders approved by the
Directors of the Fund, (xvi) compensation and expenses of Directors of the Fund
who are not "interested persons" of the Fund, and (xvii) such nonrecurring items
as may arise, including expenses incurred in connection with litigation,
proceedings and claims and the obligation of the Fund to indemnify its Directors
and officers with respect thereto.
DISTRIBUTION ARRANGEMENTS
Hartford Securities Distribution Company, Inc. ("HSD") serves as the
principal underwriter for each Fund pursuant to an Underwriting Agreement
initially approved by the Board of Directors of the Company. HSD is a
registered broker-dealer and member of the National Association of Securities
Dealers, Inc. (NASD). Shares of each Fund will be continuously offered and will
be sold by selected broker-dealers who have executed selling agreements with
HSD. HSD bears all the expenses of providing services pursuant to the
Underwriting Agreement including the payment of the expenses relating to the
distribution of Prospectuses for sales purposes as well as any advertising or
sales literature. The Fund bears the expenses of registering its shares with
the SEC and qualifying them with state regulatory authorities. The
Underwriting Agreement continues in effect for two years from initial approval
and for successive one-year periods thereafter, provided that each such
continuance is specifically approved (i) by the vote of a majority of the
Directors of the Company, including a majority of the Directors who are not
parties to the Underwriting Agreement or interested persons of any such party,
(as the term interested person is defined in the 1940 Act); or (ii) by the vote
of a majority of the outstanding voting securities of a Fund. HSD is not
obligated to sell any specific amount of shares of any Fund.
HSD's principal business address is at Hartford Plaza, Hartford,
Connecticut
<PAGE>
06104 and its mailing address is at P.O. Box 2999, Hartford, Connecticut 06104.
HSD was organized as a Connecticut Corporation on August 24, 1994, and is an
indirect wholly-owned subsidiary of ITT Hartford.
DISTRIBUTION FINANCING PLANS
The Company has adopted separate distribution plans (the "Plans") for Class
A and Class B shares of each Fund pursuant to appropriate resolutions of the
Company's Board of Directors in accordance with the requirements of Rule 12b-1
under the 1940 Act and the requirements of the applicable rule of the NASD
regarding asset based sales charges.
CLASS A PLAN
Pursuant to the Class A Plan, a Fund may compensate HSD for its
expenditures in financing any activity primarily intended to result in the sale
of Fund shares and for maintenance and personal service provided to existing
Class A shareholders. The expenses of a Fund pursuant to the Class A Plan are
accrued on a fiscal year basis and may not exceed, with respect to the Class A
shares of each Fund, the annual rate of 0.35% of the Fund's average daily net
assets attributable to Class A shares. Up to .25% of the fee may be used for
shareholder servicing expenses with the remainder used for distribution
expenses. All or any portion of this fee may be remitted to brokers who
provide distribution or shareholder account services.
CLASS B PLAN
Pursuant to the Class B Plan, a Fund may pay HSD a fee of up to 1.00% of
the average daily net assets attributable to Class B shares, .75% of which is a
fee for distribution financing activities and .25% of which is for shareholder
account services. All or any portion of such fees may be remitted to brokers
who assist in the distribution of Class B shares or provide maintenance and
personal services to existing Class B shareholders. HSD will advance to dealers
the first- year service fee at a rate equal to 0.25% of the amount invested. As
compensation for such advance, HSD may retain the service fee paid by a Fund
with respect to such shares for the first year after purchase. Dealers will
become eligible for additional service fees with respect to such shares
commencing in the thirteenth month following purchase. Brokers may from time to
time be required to meet certain other criteria in order to receive service
fees. HSD or its affiliates are entitled to retain all service fees payable
under the Class B Plan for which there is no dealer of record or for which
qualification standards have not been met as partial consideration for personal
services and/or account maintenance services performed by HSD or its affiliates
for shareholder accounts.
The purpose of the 0.75% fee representing distribution payments to HSD
under the Class B Plan is to compensate HSD for its distribution services to the
Fund. HSD pays commissions to brokers as well as expenses of printing
prospectuses and reports used for sales purposes, expenses with respect to the
preparation and printing of sales
<PAGE>
literature and other distribution related expenses, including without
limitation, the cost necessary to provide distribution-related services, or
personnel, travel, office expenses and equipment. The Class B Plan also
provides that HSD will receive all contingent deferred sales charges
attributable to Class B shares.
GENERAL
In accordance with the terms of the Plans, HSD provides to each Fund, for
review by the Company's Board of Directors, a quarterly written report of the
amounts expended under the respective Plans and the purpose for which such
expenditures were made. In the Board of Directors' quarterly review of the
Plans, they will review the level of compensation the Plans provide in
considering the continued appropriateness of the Plans.
The Plans were adopted by a majority vote of the Board of Directors,
including at least a majority of Directors who are not, and were not at the
time they voted, interested persons of the Fund as defined in the 1940 Act and
do not and did not have any direct or indirect financial interest in the
operation of the Plans, cast in person at a meeting called for the purpose of
voting on the Plans. In approving the Plans, the Directors identified and
considered a number of potential benefits which the Plans may provide. The
Board of Directors believes that there is a reasonable likelihood that the Plans
will benefit each Fund and its current and future shareholders. Under their
terms, the Plans remain in effect from year to year provided such continuance is
approved annually by vote of the Directors in the manner described above. The
Plans may not be amended to increase materially the amount to be spent for
distribution without approval of the shareholders of the Fund affected thereby,
and material amendments to the Plans must also be approved by the Board of
Directors in the manner described above. A Plan may be terminated at any time,
without payment of any penalty, by vote of the majority of the Directors who are
not interested persons of the Fund and have no direct or indirect financial
interest in the operations of the Plan, or by a vote of a "majority of the
outstanding voting securities" (as defined in the 1940 Act) of the Fund affected
thereby. A Plan will automatically terminate in the event of its assignment (as
defined in the 1940 Act).
From Inception Date of the funds, July 22, 1996 through November 30, 1996,
the following 12b-1 fees were paid to the Funds:
FUND NAME 12B-1 FEES (7/23/96 - 11/30/96)
--------- -------------------------------
CLASS A SHARES CLASS B SHARES
Small Company Fund $4,019.38 $119.46
Capital Appreciation Fund $4,642.78 $342.64
International Opportunities Fund $3,529.13 $61.18
Stock Fund $3,954.33 $408.35
Dividend and Growth Fund $3,965.68 $119.98
Advisers Fund $11,779.46 $432.61
Bond Income Strategy Fund $11,159.82 $124.72
<PAGE>
Money Market Fund $11,099.26 N/A
PORTFOLIO TRANSACTIONS AND BROKERage
The Company has no obligation to deal with any dealer or group of dealers
in the execution of transactions in portfolio securities. Subject to any policy
established by the Board of Directors, HIMCO and Wellington Management are
primarily responsible for the investment decisions of each Fund and the placing
of its portfolio transactions. In placing orders, it is the policy of each Fund
to obtain the most favorable net results, taking into account various factors,
including price, dealer spread or commission, if any, size of the transaction
and difficulty of execution. While HIMCO and Wellington Management generally
seek reasonably competitive spreads or commissions, the Funds will not
necessarily be paying the lowest possible spread or commission. HIMCO and
Wellington Management may direct brokerage transactions to broker/dealers who
also sell shares of the Funds and the sale of shares of a Fund may be taken into
account by HIMCO and Wellington Management when allocating brokerage
transactions.
HIMCO and Wellington Management will generally deal directly with the
dealers who make a market in the securities involved (unless better prices and
execution are available elsewhere) if the securities are traded primarily in the
over-the-counter market. Such dealers usually act as principals for their own
account. On occasion, securities may be purchased directly from the issuer.
Bonds and money market securities are generally traded on a net basis and do not
normally involve either brokerage commissions or transfer taxes. Portfolio
securities in the Money Market Fund normally are purchased directly from, or
sold directly to, the issuer, an underwriter or market maker for the securities.
There usually will be no brokerage commissions paid by the Money Market Fund for
such purchases or sales.
From Inception Date of the Funds, July 22, 1996, through November 30, 1996,
the brokerage commissions paid were as follows:
FUND NAME BROKERAGE COMMISSIONS
--------- ---------------------
Small Company Fund $7,641.28
Capital Appreciation Fund $17,008.17
International Opportunities Fund $57,348.08
Stock Fund $3,284.50
Dividend and Growth Fund $4,370.14
Advisers Fund $5,763.00
Bond Income Strategy Fund N/A
Money Market Fund N/A
While HIMCO and Wellington Management (as applicable) seek to obtain the
<PAGE>
most favorable net results in effecting transactions in a Fund's portfolio
securities, dealers who provide supplemental investment research to HIMCO or
Wellington Management may receive orders for transactions from HIMCO or
Wellington Management. Such supplemental research services ordinarily consist
of assessments and analyses of the business or prospects of a company, industry,
or economic sector. If, in the judgment of HIMCO or Wellington Management, a
Fund will be benefited by such supplemental research services, HIMCO and
Wellington Management are authorized to pay spreads or commissions to brokers or
dealers furnishing such services which are in excess of spreads or commissions
which another broker or dealer may charge for the same transaction. Information
so received will be in addition to and not in lieu of the services required to
be performed by HIMCO and Wellington Management under the investment advisory
agreement or the sub-investment advisory agreement. The expenses of HIMCO and
Wellington Management will not necessarily be reduced as a result of the receipt
of such supplemental information. HIMCO and Wellington Management may use such
supplemental research in providing investment advice to portfolios other than
those for which the transactions are made. Similarly, the Funds may benefit
from such research obtained by HIMCO and Wellington Management for portfolio
transactions for other clients.
Investment decisions for the Funds will be made independently from those of
any other clients that may be (or in the future may be) managed by HIMCO,
Wellington Management or their affiliates. If, however, accounts managed by
HIMCO or Wellington Management are simultaneously engaged in the purchase of the
same security, then, pursuant to general authorization of the Company's Board
of Directors, available securities may be allocated to each Fund or other client
account and may be averaged as to price in whatever manner HIMCO or Wellington
Management deems to be fair. Such allocation and pricing may affect the amount
of brokerage commissions paid by each Fund. In some cases, this system might
adversely affect the price paid by a Fund (for example, during periods of
rapidly rising or falling interest rates) or limit the size of the position
obtainable for a Fund (for example, in the case of a small issue).
DETERMINATION OF NET ASSET VALUE
The net asset value of the shares of each Fund is determined by Hartford
Life Insurance Company, ("Hartford Life") an affiliate of ITT Hartford, in the
manner described in the Funds' Prospectus. The Funds will be closed for
business and will not price their shares on the following business holidays: New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. Securities held by each Fund other
than the Money Market Fund will be valued as follows: Debt securities (other
than short-term obligations) are valued on the basis of valuations furnished by
an unaffiliated pricing service which determines valuations for normal
institutional size trading units of debt securities. Short-term securities held
in the Money Market Fund are valued at amortized cost or original cost plus
<PAGE>
accrued interest receivable, both of which approximate market value. All other
Funds' short-term investments with a maturity of 60 days or less when purchased
are valued at amortized cost, which approximates market value. Short-term
investments with a maturity of more than 60 days when purchased are valued based
on market quotations until the remaining days to maturity become less than 61
days. From such time until maturity, the investments are valued at amortized
cost.
Equity securities are valued at the last sales price reported on principal
securities exchanges (domestic or foreign). If no sale took place on such day
and in the case of certain equity securities traded over-the-counter, then such
securities are valued at the mean between the bid and asked prices . Securities
quoted in foreign currencies are translated into U.S. dollars at the exchange
rate at the end of the reporting period. Options are valued at the last sales
price; if no sale took place on such day, then options are valued at the mean
between the bid and asked prices. Securities for which market quotations are
not readily available and all other assets are valued in good faith at fair
value by, or under guidelines established by, the Funds' Board of Directors.
The net asset value per share of the Money Market Fund is determined by
using the amortized cost method of valuing its portfolio instruments. Under the
amortized cost method of valuation, an instrument is valued at cost and the
interest payable at maturity upon the instrument is accrued as income, on a
daily basis, over the remaining life of the instrument. Neither the amount of
daily income nor the net asset value is affected by unrealized appreciation or
depreciation of the portfolio's investments assuming the instrument's obligation
is paid in full on maturity. In periods of declining interest rates, the
indicated daily yield on shares of the portfolio computed using amortized cost
may tend to be higher than a similar computation made using a method of
valuation based upon market prices and estimates. In periods of rising interest
rates, the indicated daily yield on shares of the portfolio computed using
amortized cost may tend to be lower than a similar computation made using a
method of valuation based upon market prices and estimates. For all Funds,
securities with remaining maturities of less than 60 days are valued at
amortized cost, which approximates market value.
The amortized cost method of valuation permits the Money Market Fund to
maintain a stable $1.00 net asset value per share. The Company's Board of
Directors periodically reviews the extent of any deviation from the $1.00 per
share value that would occur if a method of valuation based on market prices and
estimates were used. In the event such a deviation would exceed one-half of one
percent, the Board of Directors will promptly consider any action that
reasonably should be initiated to eliminate or reduce material dilution or other
unfair results to shareholders. Such action may include selling portfolio
securities prior to maturity, not declaring earned income dividends, valuing
portfolio securities on the basis of current market prices, if available, or, if
not available, at fair market value as
<PAGE>
determined in good faith by the Board of Directors, and (considered highly
unlikely by management of the Company) redemption of shares in kind (i.e.,
portfolio securities).
A Fund's maximum offering price per Class A share is determined by adding
the maximum sales charge to the net asset value per share. Class B, Class Y
shares and Money Market Fund shares are offered at net asset value without the
imposition of an initial sales charge.
PURCHASE AND REDEMPTION OF SHARES
For information regarding the purchase of Fund shares, see "About Your
Account--How to Buy Shares" in the Funds' Prospectus.
For a description of how a shareholder may have a Fund redeem his/her
shares, or how he/she may sell shares, see "About Your Account-- How to Redeem
Shares" in the Funds' Prospectus.
RIGHTS OF ACCUMULATION. Each Fund offers to all qualifying investors
Rights of Accumulation under which investors are permitted to purchase Class A
shares of any Funds of the Company at the price applicable to the total of (a)
the dollar amount then being purchased plus (b) an amount equal to the then
current net asset value of the purchaser's holdings of all shares of any Funds
of the Company and the current cash value of the Director variable annuity or
variable life contracts issued by affiliates of ITT Hartford. Acceptance of the
purchase order is subject to confirmation of qualification. The rights of
accumulation may be amended or terminated at any time as to subsequent
purchases.
LETTER OF INTENT. Any person may qualify for a reduced sales charge on
purchases of Class A shares made within a thirteen-month period pursuant to a
Letter of Intent (LOI). Class A shares acquired through the reinvestment of
distributions do not constitute purchases for purposes of the LOI. A Class A
shareholder may include, as an accumulation credit towards the completion of
such LOI, the value of all shares of all Funds of the Company owned by the
shareholder. Such value is determined based on the public offering price on the
date of the LOI. During the term of an LOI, Boston Financial Data Services,
Inc. ("BFDS"), the Company's transfer agent will hold shares in escrow to
secure payment of the higher sales charge applicable for shares actually
purchased if the indicated amount on the LOI is not purchased. Dividends and
capital gains will be paid on all escrowed shares and these shares will be
released when the amount indicated on the LOI has been purchased. An LOI does
not obligate the investor to buy or the Fund to sell the indicated amount of the
LOI. If a Class A shareholder exceeds the specified amount of the LOI and
reaches an amount which would qualify for a further quantity discount, a
retroactive price adjustment will be made at the time of the expiration of the
LOI. The resulting difference in offering price will purchase additional Class
A shares for the shareholder's account at the applicable offering
<PAGE>
price. If the specified amount of the LOI is not purchased, the shareholder
shall remit to BFDS an amount equal to the difference between the sales charge
paid and the sales charge that would have been paid had the aggregate purchases
been made at a single time. If the Class A shareholder does not within twenty
days after a written request by BFDS pay such difference in sales charge, BFDS
will redeem an appropriate number of escrowed shares in order to realize such
difference. Additional information about the terms of the Letter of Intent are
available from your registered representative or from BFDS at 1-888-843-7824.
SYSTEMATIC WITHDRAWAL PLAN. The Systematic Withdrawal Plan ("SWP") is
designed to provide a convenient method of receiving fixed payments at regular
intervals only from Class A shares and Money Market Fund shares not subject to a
CDSC (except as noted below) of a Fund deposited by the applicant under this
SWP. The applicant must deposit or purchase for deposit shares of the Fund
having a total value of not less than $5,000. Periodic checks of $50 or more
will be sent to the applicant, or any person designated by him, monthly or
quarterly. SWP's for Class B shares of a Fund and Money Market Fund shares
subject to a CDSC are permitted only for redemptions limited to no more than 10%
of the original value of the account per year.
Any income dividends or capital gains distributions on shares under the SWP
will be credited to the SWP account on the payment date in full and fractional
shares at the net asset value per share in effect on the record date.
SWP payments are made from the proceeds of the redemption of shares
deposited in a SWP account. Redemptions are potentially taxable transactions to
shareholders. To the extent that such redemptions for periodic withdrawals
exceed dividend income reinvested in the SWP account, such redemptions will
reduce and may ultimately exhaust the number of shares deposited in the SWP
account. In addition, the amounts received by a shareholder cannot be
considered as an actual yield or income on his or her investment because part of
such payments may be a return of his or her capital.
The SWP may be terminated at any time (1) by written notice to the Fund or
from the Fund to the shareholder; (2) upon receipt by the Fund of appropriate
evidence of the shareholder's death; or (3) when all shares under the SWP have
been redeemed. The fees of the Fund for maintaining SWPs are paid by the Fund.
Special Redemptions. Although it would not normally do so, each Fund has
the right to pay the redemption price of shares of the Fund in whole or in part
in portfolio securities as prescribed by the Directors. When the shareholder
sells portfolio securities received in this fashion, he would incur a brokerage
charge. Any such securities would be valued for the purposes of making such
payment at the same value as used in determining net asset value. The Funds
have elected to be governed by Rule 18f-1 under the 1940 Act, pursuant to which
each Fund is obligated to redeem shares solely in cash up to the lesser of
$250,000 of 1% of the net asset value of the applicable Fund during any 90 day
period for any one account.
<PAGE>
SUSPENSION OF REDEMPTIONS
A Fund may not suspend a shareholder's right of redemption, or postpone
payment for a redemption for more than seven days, unless the New York Stock
Exchange (NYSE) is closed for other than customary weekends or holidays, or
trading on the NYSE is restricted, or for any period during which an emergency
exists as a result of which (1) disposal by a Fund of securities owned by it is
not reasonably practicable, or (2) it is not reasonably practicable for a Fund
to fairly determine the value of its assets, or for such other periods as the
Securities and Exchange Commission may permit for the protection of investors.
INVESTMENT PERFORMANCE
MONEY MARKET FUND
In accordance with regulations prescribed by the SEC, the Company is
required to compute the Money Market Fund's current annualized yield for a
seven-day period in a manner which does not take into consideration any realized
or unrealized gains or losses on its portfolio securities. This current
annualized yield is computed by determining the net change (exclusive of
realized gains and losses on the sale of securities and unrealized appreciation
and depreciation) in the value of a hypothetical account having a balance of one
share of the Money Market Fund at the beginning of such seven-day period,
dividing such net change in account value by the value of the account at the
beginning of the period to determine the base period return and annualizing this
quotient on a 365- day basis.
The SEC also permits the Company to disclose the effective yield of the
Money Market Fund for the same seven-day period, determined on a compounded
basis. The effective yield is calculated by compounding the unannualized base
period return by adding one to the base period return, raising the sum to a
power equal to 365 divided by 7, and subtracting one from the result.
For the seven-day period ending November 30, 1996, the Money Market Fund's
annualized yield for Class A and Class Y shares was 4.50% and 5.06%
respectively. For the same period, the effective yield for Class A and Class Y
shares was 4.60% and 5.19% respectively.
The yield on amounts held in the Money Market Fund normally will fluctuate
on a daily basis. Therefore, the disclosed yield for any given past period is
not an indication or representation of future yields or rates of return. The
Money Market Fund's actual yield is affected by changes in interest rates on
money market securities, average portfolio maturity of the Money Market Fund,
the types and quality of portfolio securities held by the Money Market Fund, and
its operating expenses.
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OTHER FUNDS
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN QUOTATIONS. Average annual total
return quotations for Class A, Class B and Class Y shares are computed by
finding the average annual compounded rates of return that would cause a
hypothetical investment made on the first day of a designated period to equal
the ending redeemable value of such hypothetical investment on the last day of
the designated period in accordance with the following formula:
P(1+T)n = ERV
Where: P = a hypothetical initial payment of $1,000, less the maximum
sales load applicable to a Fund
T = average annual total return
n = number of years
ERV = ending redeemable value of the hypothetical $1,000 initial
payment made at the beginning of the designated period (or
fractional portion thereof)
The computation above assumes that all dividends and distributions made by a
Fund are reinvested at net asset value during the designated period. The
average annual total return quotation is determined to the nearest 1/100 of 1%.
One of the primary methods used to measure performance is "total return."
"Total return" will normally represent the percentage change in value of a class
of a Fund, or of a hypothetical investment in a class of a Fund, over any period
up to the lifetime of the class. Unless otherwise indicated, total return
calculations will assume the deduction of the maximum sales charge and usually
assume the reinvestment of all dividends and capital gains distributions and
will be expressed as a percentage increase or decrease from an initial value,
for the entire period or for one or more specified periods within the entire
period. Total return calculations that do not reflect the reduction of sales
charges will be higher than those that do reflect such charges.
Total return percentages for periods longer than one year will usually be
accompanied by total return percentages for each year within the period and/or
by the average annual compounded total return for the period. The income and
capital components of a given return may be separated and portrayed in a variety
of ways in order to illustrate their relative significance. Performance may
also be portrayed in terms of cash or investment values, without percentages.
Past performance cannot guarantee any particular future result. In determining
the average annual total return (calculated as provided above), recurring fees,
if any, that are charged to all shareholder accounts are taken into
consideration. For any account fees that vary with the size of the account, the
account fee used for purposes of the above computation is assumed to be the fee
that would be charged to the mean account size of a class of the Fund.
Each Fund's average annual total return quotations and yield quotations as
<PAGE>
they may appear in the Prospectus, this SAI or in advertising are calculated by
standard methods prescribed by the SEC.
The charts below set forth certain performance information for the Class A,
Class B and Class Y shares of each Fund, adjusted to reflect the maximum sales
charge and the account fees of each class. Past performance is no guarantee and
is not necessarily indicative of future performance of the shares. The actual
annual returns for the shares may vary significantly from the past and future
performance. Investment returns and the value of the shares will fluctuate in
response to market and economic conditions as well as other factors and shares,
when redeemed, may be worth more or less than their original cost. Total
returns are based on capital changes plus reinvestment of all distributions for
the time periods noted in the charts below. Total return of the shares would
have been lower without the expense limitation effected by HIMCO.
Value of a $1,000 investment in the Class A, Class B and Class Y shares of the
Small Company Fund:
TOTAL TOTAL
RETURN RETURN
INVESTMENT INVESTMENT ANNUALIZED ANNUALIZED
PERIOD DATE (EXCLUDING (IncLUDING
SALES SALES
CHARGE) CHARGE)
Class A shares Life of Account 7/22/96* 14.70% 8.39%
To
11/30/96
Class B shares 14.50% 9.50%
Class Y shares 14.90% 14.90%
*Date of Inception
Value of a $1,000 investment in the Class A, Class B and Class Y shares of the
Capital Appreciation Fund:
TOTAL TOTAL
RETURN RETURN
INVESTMENT INVESTMENT ANNUALIZED ANNUALIZED
PERIOD DATE (EXCLUDING (IncLUDING
SALES SALES
CHARGE) CHARGE)
Class A shares Life of Account 7/22/96* 32.60% 25.31%
To
11/30/96
Class B shares 32.30% 27.30%
Class Y shares 32.80% 32.80%
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*Date of Inception
Value of a $1,000 investment in the Class A, Class B and Class Y shares of the
International Opportunities Fund:
TOTAL TOTAL
RETURN RETURN
INVESTMENT INVESTMENT ANNUALIZED ANNUALIZED
PERIOD DATE (EXCLUDING (IncLUDING
SALES SALES
CHARGE) CHARGE)
Class A shares Life of Account 7/22/96* 7.20% 1.30%
To
11/30/96
Class B shares 7.00% 2.00%
Class Y shares 7.40% 7.40%
*Date of Inception
Value of a $1,000 investment in the Class A, Class B and Class Y shares of the
Stock Fund:
TOTAL TOTAL
RETURN RETURN
INVESTMENT INVESTMENT ANNUALIZED ANNUALIZED
PERIOD DATE (EXCLUDING (IncLUDING
SALES SALES
CHARGE) CHARGE)
Class A shares Life of Account 7/22/96* 18.30% 11.79%
To
11/30/96
Class B shares 18.00% 13.00%
Class Y shares 18.50% 18.50%
*Date of Inception
Value of a $1,000 investment in the Class A, Class B and Class Y shares of the
Dividend and Growth Fund:
TOTAL TOTAL
RETURN RETURN
INVESTMENT INVESTMENT ANNUALIZED ANNUALIZED
PERIOD DATE (EXCLUDING (IncLUDING
SALES SALES
CHARGE) CHARGE)
<PAGE>
Class A shares Life of Account 7/22/96* 16.30% 9.90%
To
11/30/96
Class B shares 16.00% 11.00%
Class Y shares 16.50% 16.50%
*Date of Inception
Value of a $1,000 investment in the Class A, Class B and Class Y shares of the
Advisors Fund:
TOTAL TOTAL
RETURN RETURN
INVESTMENT INVESTMENT ANNUALIZED ANNUALIZED
PERIOD DATE (EXCLUDING (IncLUDING
SALES SALES
CHARGE) CHARGE)
Class A shares Life of Account 7/22/96* 14.00% 7.73%
To
11/30/96
Class B shares 13.80% 8.80%
Class Y shares 14.20% 14.20%
*Date of Inception
Value of a $1,000 investment in the Class A, Class B and Class Y shares of the
Bond Income Strategy Fund:
TOTAL TOTAL
RETURN RETURN
INVESTMENT INVESTMENT ANNUALIZED ANNUALIZED
PERIOD DATE (EXCLUDING (IncLUDING
SALES SALES
CHARGE) CHARGE)
Class A shares Life of Account 7/22/96* 6.46% 1.67%
To
11/30/96
Class B shares 6.17% 1.17%
Class Y shares 6.66% 6.66%
*Date of Inception
Value of a $1,000 investment in the Class A and Class Y shares of the Money
<PAGE>
Market Fund:
TOTAL TOTAL
RETURN RETURN
INVESTMENT INVESTMENT ANNUALIZED ANNUALIZED
PERIOD DATE (EXCLUDING (IncLUDING
SALES SALES
CHARGE) CHARGE)
Class A shares Life of Account 7/22/96* 1.62% 1.62%
To
11/30/96
Class B shares N/A N/A
Class Y shares 1.90% 1.90%
*Date of Inception
Each Fund may also publish its distribution rate and/or its effective
distribution rate. A Fund's distribution rate is computed by dividing the most
recent monthly distribution per share annualized, by the current net asset value
per share. A Fund's effective distribution rate is computed by dividing the
distribution rate by the ratio used to annualize the most recent monthly
distribution and reinvesting the resulting amount for a full year on the basis
of such ratio. The effective distribution rate will be higher than the
distribution rate because of the compounding effect of the assumed reinvestment.
A Fund's yield is calculated using a standardized formula, the income component
of which is computed from the yields to maturity of all debt obligations held by
the Fund based on prescribed methods (with all purchases and sales of securities
during such period included in the income calculation on a settlement date
basis), whereas the distribution rate is based on a Fund's last monthly
distribution. A Fund's monthly distribution tends to be relatively stable and
may be more or less than the amount of net investment income and short- term
capital gain actually earned by the Fund during the month (see "Dividends,
Capital Gains and Taxes" in the Funds' Prospectus).
Other data that may be advertised or published about each Fund include the
average portfolio quality, the average portfolio maturity and the average
portfolio duration.
STANDARDIZED YIELD QUOTATIONS. The yield of a class is computed by
dividing the class's net investment income per share during a base period of 30
days, or one month, by the maximum offering price per share of the class on the
last day of such base period in accordance with the following formula:
2 { { ((a-b) / cd) + 1}6 - 1 }
Where: a = net investment income earned during the period attributable
to the subject class
<PAGE>
b = net expenses accrued for the period attributable to the
subject class
c = the average daily number of shares of the subject class
outstanding during the period that were entitled to receive dividends
d = the maximum offering price per share of the subject
Net investment income will be determined in accordance with rules established by
the SEC. The price per share of Class A shares will include the maximum sales
charge imposed on purchases of Class A shares which decreases with the amount of
shares purchased.
For the thirty-day period ended November 30, 1996, the Bond Income Strategy
Fund's 30-day yield for Class A, Class B and Class Y was 5.27%, 4.83% and 5.96,
respectively.
NON-STANDARDIZED PERFORMANCE. In addition, in order to more completely
represent a Fund's performance or more accurately compare such performance to
other measures of investment return, a Fund also may include in advertisements,
sales literature and shareholder reports other total return performance data
("Non-Standardized Return"). Non-Standardized Return may be quoted for the same
or different periods as those for which Standardized Return is quoted; it may
consist of an aggregate or average annual percentage rate of return, actual
year-by-year rates or any combination thereof. Non-Standardized Return may or
may not take sales charges into account; performance data calculated without
taking the effect of sales charges into account will be higher than data
including the effect of such charges. All non-standardized performance will be
advertised only if the standard performance data for the same period, as well as
for the required periods, is also presented.
GENERAL INFORMATION. From time to time, the Funds may advertise their
performance compared to similar funds using certain unmanaged indices, reporting
services and publications. Descriptions of some of the indices which may be
used are listed below.
The Standard & Poor's 500 Composite Stock Price Index is a well diversified
list of 500 companies representing the U.S. Stock Market.
The Standard and Poor's Small Cap 600 index is designed to represent price
movements in the small cap U.S. equity market. It contains companies chosen by
the Standard & Poors Index Committee for their size, industry characteristics,
and liquidity. None of the companies in the S&P 600 overlap with the S&P 500 or
the S&P 400 (MidCap Index). The S&P 600 is weighted by market capitalization.
REITs are not eligible for inclusion.
The NASDAQ Composite OTC Price Index is a market value-weighted and unmanaged
index showing the changes in the aggregate market value of approximately 3,500
stocks.
<PAGE>
The Lehman Government Bond Index is a measure of the market value of all public
obligations of the U.S. Treasury; all publicly issued debt of all agencies of
the U.S. Government and all quasi-federal corporations; and all corporate debt
guaranteed by the U.S. Government. Mortgage backed securities, bonds and foreign
targeted issues are not included in the Lehman Government Index.
The Lehman Government/Corporate Bond Index is a measure of the market value of
approximately 5,300 bonds with a face value currently in excess of $1.3
trillion. To be included in the Lehman Government/Corporate Index, an issue
must have amounts outstanding in excess of $1 million, have at least one year to
maturity and be rated "Baa" or higher ("investment grade") by a nationally
recognized rating agency.
The Russell 2000 Index represents the bottom two thirds of the largest 3000
publicly traded companies domiciled in the U.S. Russell uses total market
capitalization to sort its universe to determine the companies that are included
in the Index. Only common stocks are included in the Index. REITs are eligible
for inclusion.
The Russell 2500 Index is a market value-weighted, unmanaged index showing total
return (i.e., principal changes with income) in the aggregate market value of
2,500 stocks of publicly traded companies domiciled in the United States. The
Index includes stocks traded on the New York Stock Exchange and the American
Stock Exchange as well as in the over-the-counter market.
The Morgan Stanley Capital International EAFE Index (the "EAFE Index") is an
unmanaged index, which includes over 1,000 companies representing the stock
markets of Europe, Australia, New Zealand and the Far East. The EAFE Index is
typically shown weighted by the market capitalization. However, EAFE is also
available weighted by Gross Domestic Product (GDP). These weights are modified
on July 1st of each year to reflect the prior year's GDP. Indices with
dividends reinvested constitute an estimate of total return arrived at by
reinvesting one twelfth of the month end yield at every month end. The series
with net dividends reinvested take into account those dividends net of
withholding taxes retained at the source of payment.
The Lehman Brothers High Yield BB Index is a measure of the market value of
public debt issues with a minimum par value of $100 million and rated Ba1-Ba3 by
Moody's. All bonds within the index are U.S. dollar denominated, non-
convertible and have at least one year remaining to maturity.
In addition, from time to time in reports and promotions: (1) a Fund's
performance may be compared to other groups of mutual funds tracked by: (a)
Lipper Analytical Services, a widely used independent research firm which ranks
mutual funds by overall performance, investment objectives, and assets; (b)
Morningstar, Inc., another widely used independent research firm which ranks
mutual funds by overall performance, investment objectives, and assets; or (c)
other
<PAGE>
financial or business publications, such as Business Week, Money Magazine,
Forbes and Barron's which provide similar information; (2) the Consumer Price
Index (measure for inflation) may be used to assess the real rate of return from
an investment in the Fund; (3) other statistics such as GNP, and net import and
export figures derived form governmental publications, e.g., The Survey of
Current Business or other independent parties, e.g.,the Investment Company
Institute, may be used to illustrate investment attributes to the Fund or the
general economic, business, investment, or financial environment in which the
Fund operates; (4) various financial, economic and market statistics developed
by brokers, dealers and other persons may be used to illustrate aspects of the
Fund's performance; (5) the effect of tax-deferred compounding on the Fund's
investment returns, or on returns in general, may be illustrated by graphs,
charts, etc. where such graphs or charts would compare, at various points in
time, the return from an investment in the Fund (or returns in general) on a
tax-deferred basis (assuming reinvestment of capital gains and dividends and
assuming one or more tax rates) with the return on a taxable basis; and (6) the
sectors or industries in which the Fund invests may be compared to relevant
indices or surveys (e.g., S&P Industry Surveys) in order to evaluate the Fund's
historical performance or current or potential value with respect to the
particular industry or sector.
Each Fund's investment performance may be advertised in various financial
publications, newspapers, magazines including the following:
Across the Board
Advertising age
Adviser's Magazine
Adweek
agent
American Banker
American agent and Broker
Associated Press
Barron's
Best's Review
Bloomberg
Broker World
Business Week
Business Wire
Business News Features
Business Month
Business Marketing
Business Daily
Business Insurance
California Broker
Changing Times
Consumer Reports
Consumer Digest
Crain's
<PAGE>
Dow Jones News Service
Economist
Entrepreneur
Entrepreneurial Woman
Financial Services Week
Financial World
Financial Planning
Financial Times
Forbes
Fortune
Hartford Courant
Inc
Independent Business
Institutional Investor
Insurance Forum
Insurance Advocate Independent
Insurance Review Investor's
Insurance Times
Insurance Week
Insurance Product News
Insurance Sales
Investment Dealers Digest
Investment Advisor
Journal of Commerce
Journal of Accountancy
Journal of the American Society
of CLU & ChFC
Kiplinger's Personal Finance
Knight-Ridder
Life Association News
Life Insurance Selling
Life Times
LIMrA's MarketFacts
Lipper Analytical Services, Inc.
MarketFacts
Medical Economics
Money
Morningstar, Inc.
Nation's Business
National Underwriter
New Choices (formerly 50 Plus)
New England Business
New York Times
Pension World
Pensions & Investments
Professional Insurance agents
Professional agent
<PAGE>
Registered Representative
Reuter's
Rough Notes
Round the Table
Service
Success
The Standard
The Boston Globe
The Washington Post
Tillinghast
Time
U.S. News & World Report
U.S. Banker
United Press International
USA Today
Value Line
Wall Street Journal
Wiesenberger Investment
Working Woman
<PAGE>
From time to time the Company may publish the sales of shares of one or
more of the Funds on a gross or net basis and for various periods of time, and
compare such sales with sales similarly reported by other investment companies.
TAXES
Each Fund is treated as a separate entity for accounting and tax purposes.
Each Fund has qualified and elected or intends to qualify and elect to be
treated as a "regulated investment company" under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), and intends to continue to so
qualify in the future. As such and by complying with the applicable provisions
of the Code regarding the sources of its income, the timing of its
distributions, and the diversification of its assets, each Fund will not be
subject to federal income tax on taxable income (including net short-term and
long-term capital gains) which is distributed to shareholders at least annually
in accordance with the timing requirements of the Code.
Each Fund will be subject to a 4% non-deductible federal excise tax on
certain amounts not distributed (and not treated as having been distributed) on
a timely basis in accordance with annual minimum distribution requirements.
Each Fund intends under normal circumstances to avoid liability for such tax by
satisfying such distribution requirements.
If a Fund acquires stock in certain non-U.S. corporations that receive at
least 75% of their annual gross income from passive sources (such as interest,
dividends, rents, royalties or capital gain) or hold at least 50% of their
assets in investments producing such passive income ("passive foreign investment
companies"), that Fund could be subject to federal income tax and additional
interest charges on "excess distributions" received from such companies or gain
from the sale of stock in such companies, even if all income or gain actually
received by the Fund is timely distributed to its shareholders. The Fund would
not be able to pass through to its shareholders any credit or deduction for such
a tax. Certain elections may, if available, ameliorate these adverse tax
consequences, but any such election would require the applicable Fund to
recognize taxable income or gain without the concurrent receipt of cash. Any
Fund that is permitted to acquire stock in foreign corporations may limit and/or
manage its holdings in passive foreign investment companies to minimize its tax
liability or maximize its return from these investments.
Foreign exchange gains and losses realized by a Fund in connection with
certain transactions involving foreign currency-denominated debt securities,
certain foreign currency futures and options, foreign currency forward
contracts, foreign currencies, or payables or receivables denominated in a
foreign currency are subject to Section 988 of the Code, which generally causes
such gains and losses to be treated as ordinary income and losses and may affect
the amount, timing and character of distributions to shareholders. Any such
transactions that are not directly related to a Fund's investment in stock or
securities, possibly including speculative currency positions or currency
derivatives not used for hedging purposes, may
<PAGE>
increase the amount of gain it is deemed to recognize from the sale of certain
investments held for less than three months, which gain is limited under the
Code to less than 30% of its annual gross income, and could under future
Treasury regulations produce income not among the types of "qualifying income"
from which the Fund must derive at least 90% of its annual gross income.
Some Funds may be subject to withholding and other taxes imposed by foreign
countries with respect to their investments in foreign securities. Tax
conventions between certain countries and the U.S. may reduce or eliminate such
taxes. The Funds anticipate that they generally will not qualify to pass such
foreign taxes and any associated tax deductions or credits through to their
shareholders, who therefore generally will not report such amounts on their own
tax returns.
For Federal income tax purposes, each Fund is permitted to carry forward a
net capital loss in any year to offset its own capital gains, if any, during the
eight years following the year of the loss. To the extent subsequent capital
gains are offset by such losses, they would not result in federal income tax
liability to the applicable Fund and would not be distributed as such to
shareholders.
Each Fund that invests in certain PIKs, zero coupon securities or certain
deferred interest securities (and, in general, any other securities with
original issue discount or with market discount if the Fund elects to include
market discount in income currently) must accrue income on such investments
prior to the receipt of the corresponding cash payments. However, each Fund
must distribute, at least annually, all or substantially all of its net income,
including such accrued income, to shareholders to qualify as a regulated
investment company under the Code and avoid federal income and excise taxes.
Therefore, a Fund may have to dispose of its portfolio securities under
disadvantageous circumstances to generate cash, or may have to leverage itself
by borrowing the cash, to satisfy distribution requirements.
Investment in debt obligations that are at risk of or in default presents
special tax issues for any Fund that may hold such obligations. Tax rules are
not entirely clear about issues such as when the Fund may cease to accrue
interest, original issue discount, or market discount, when and to what extent
deductions may be taken for bad debts or worthless securities, how payments
received on obligations in default should be allocated between principal and
income, and whether exchanges of debt obligations in a workout context are
taxable. These and other issues will be addressed by any Fund that may hold
such obligations in order to reduce the risk of distributing insufficient income
to preserve its status as a regulated investment company and seek to avoid
becoming subject to federal income or excise tax.
Limitations imposed by the Code on regulated investment companies like the
Funds may restrict a Fund's ability to enter into futures, options, and forward
transactions.
Certain options, futures and forward foreign currency transactions
undertaken
<PAGE>
by a Fund may cause the Fund to recognize gains or losses from marking to market
even though its positions have not been sold or terminated and affect the
character as long-term or short-term (or, in the case of certain currency
forwards, options and futures, as ordinary income or loss) and timing of some
capital gains and losses realized by the Fund. Also, certain of a Fund's losses
on its transactions involving options, futures or forward contracts and/or
offsetting portfolio positions may be deferred rather than being taken into
account currently in calculating the Fund's taxable income. Certain of the
applicable tax rules may be modified if a Fund is eligible and chooses to make
one or more of certain tax elections that may be available. These transactions
may therefore affect the amount, timing and character of a Fund's distributions
to shareholders. The Funds will take into account the special tax rules
(including consideration of available elections) applicable to options, futures
or forward contracts in order to minimize any potential adverse tax
consequences.
The federal income tax rules applicable to interest rate swaps, caps and
floors are unclear in certain respects, and a Fund may be required to account
for these transactions in a manner that, in certain circumstances, may limit the
degree to which it may utilize these transactions.
Distributions from a Fund's current or accumulated earnings and profits
("E&P"), as computed for federal income tax purposes, will be taxable as
described in the Funds' prospectus whether taken in shares or in cash.
Distributions, if any, in excess of E&P will constitute a return of capital,
which will first reduce an investor's tax basis in a Fund's shares and
thereafter (after such basis is reduced to zero) will generally give rise to
capital gains. Shareholders electing to receive distributions in the form of
additional shares will have a cost basis for federal income tax purposes in each
share so received equal to the amount of cash they would have received had they
elected to receive the distributions in cash, divided by the number of shares
received.
At the time of an investor's purchase of shares of a Fund (other than Money
Market Fund), a portion of the purchase price is often attributable to realized
or unrealized appreciation in the Fund's portfolio or undistributed taxable
income of the Fund. Consequently, subsequent distributions from such
appreciation or income may be taxable to such investor even if the net asset
value of the investor's shares is, as a result of the distributions, reduced
below the investor's cost for such shares, and the distributions in reality
represent a return of a portion of the purchase price.
Upon a redemption of shares of a Fund, other than Money Market Fund,
(including by exercise of the exchange privilege) a shareholder may realize a
taxable gain or loss depending upon his basis in his shares. Such gain or loss
will be treated as capital gain or loss if the shares are capital assets in the
shareholder's hands and will be long-term or short-term, depending upon the
shareholder's tax holding period for the shares. A sales charge paid in
purchasing shares of a Fund cannot be taken into account for purposes of
determining gain or loss on the redemption or exchange of such shares within 90
days after their purchase to the
<PAGE>
extent shares of the Fund are subsequently acquired without payment of a sales
charge pursuant to the reinvestment or exchange privilege. Such disregarded
load will result in an increase in the shareholder's tax basis in the shares
subsequently acquired. Also, any loss realized on a redemption or exchange will
be disallowed to the extent the shares disposed of are replaced with shares of
the same Fund within a period of 61 days beginning 30 days before and ending 30
days after the shares are disposed of, such as pursuant to an election to
reinvest dividends or capital gain distributions automatically. In such a case,
the basis of the shares acquired will be adjusted to reflect the disallowed
loss. Any loss realized upon the redemption of shares with a tax holding period
of six months or less will be treated as a long-term capital loss to the extent
of any amounts treated as distributions of long-term capital gain with respect
to such shares.
For purposes of the dividends received deduction available to corporations,
dividends received by a Fund, if any, from U.S. domestic corporations in respect
of the stock of such corporations held by the Fund, for federal income tax
purposes, for at least 46 days (91 days in the case of certain preferred stock)
and distributed and designated by the Fund may be treated as qualifying
dividends. Corporate shareholders must meet the minimum holding period
requirement stated above (46 or 91 days) with respect to their shares of the
applicable Fund in order to qualify for the deduction and, if they borrow to
acquire such shares, may be denied a portion of the dividends received
deduction. The entire qualifying dividend, including the otherwise deductible
amount, will be included in determining the excess (if any) of a corporate
shareholder's adjusted current earnings over its alternative minimum taxable
income, which may increase its alternative minimum tax liability. Additionally,
any corporate shareholder should consult its tax adviser regarding the
possibility that its basis in its shares may be reduced, for federal income tax
purposes, by reason of "extraordinary dividends" received with respect to the
shares, for the purpose of computing its gain or loss on redemption or other
disposition of the shares.
Different tax treatment, including penalties on certain excess
contributions and deferrals, certain pre-retirement and post-retirement
distributions and certain prohibited transactions, is accorded to shareholder
accounts maintained as qualified retirement plans. Shareholders should consult
their tax advisers for more information.
The foregoing discussion relates solely to U.S. Federal income tax law as
applicable to U.S. persons (i.e., U.S. citizens or residents and U.S. domestic
corporations, partnerships, trusts or estates) subject to tax under such law.
The discussion does not address special tax rules applicable to certain classes
of investors, such as tax-exempt entities, insurance companies, and financial
institutions. Dividends, capital gain distributions, and ownership of or gains
realized on the redemption (including an exchange) of the shares of a Fund may
also be subject to state and local taxes. Shareholders should consult their own
tax advisers as to the federal, state or local tax consequences of ownership of
shares of, and receipt of distributions from, the Funds in their particular
circumstances.
<PAGE>
Non-U.S. investors not engaged in a U.S. trade or business with which their
investment in a Fund is effectively connected will be subject to U.S. Federal
income tax treatment that is different from that described above. These
investors may be subject to non-resident alien withholding tax at the rate of
30% (or a lower rate under an applicable tax treaty) on amounts treated as
ordinary dividends from a Fund and, unless an effective IRS Form W-8 or
authorized substitute is on file, to 31% backup withholding on certain other
payments from the Fund. Non-U.S. investors should consult their tax advisers
regarding such treatment and the application of foreign taxes to an investment
in any Fund.
STATE AND LOCAL. Each Fund may be subject to state or local taxes in
jurisdictions in which such Fund may be deemed to be doing business. In
addition, in those states or localities which have income tax laws, the
treatment of such Fund and its shareholders under such laws may differ from
their treatment under federal income tax laws, and investment in such Fund may
have different tax consequences for shareholders than would direct investment in
such Fund's portfolio securities. Shareholders should consult their own tax
advisers concerning these matters.
CUSTODIAN
Portfolio securities of each Fund are held pursuant to a Custodian
Agreement between the Company and State Street Bank and Trust Company.
TRANSFER AGENT SERVICES
Boston Financial Data Services, Two Heritage Drive, Quincy, MA 0217, is
the transfer agent for each Fund.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Arthur Andersen LLP, has been selected as the independent certified
public accountants of each of the funds to provide audit services and assistance
and consultation with respect to the preparation of filings with the SEC.
OTHER INFORMATION
ITT Hartford has granted the Company the right to use the name, "ITT
Hartford" or "Hartford", and has reserved the right to withdraw its consent to
the use of such name by the Company and the Funds at any time, or to grant the
use of such name to any other company.
<PAGE>
FINANCIAL STATEMENTS
The Company's and each Fund's unaudited financial statements as of
November 30, 1996, together with the notes thereto, are included in this SAI.
<PAGE>
APPENDIX
The rating information which follows describes how the rating
services mentioned presently rate the described securities. No reliance is made
upon the rating firms as "experts" as that term is defined for securities
purposes. Rather, reliance on this information is on the basis that such
ratings have become generally accepted in the investment business.
RATING OF BONDS
MOODY'S INVESTORS SERVICE, Inc. (" MOODY'S")
Aaa - Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred
to as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa - Bonds which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long term risks appear somewhat larger than in
Aaa securities.
A - Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa - Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as well.
Ba - Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty
of position characterizes bonds in this class.
B - Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
<PAGE>
Caa - Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to principal
or interest.
Ca - Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other
marked shortcomings.
C - Bonds which are rated C are the lowest rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of ever
earning any real investment standing.
STANDARD AND POOR'S CORPORATION ("STANDARD & POOR'S")
AAA - Bonds rated AAA are the highest grade obligations. Capacity to
pay interest and repay principal is extremely strong.
AA - Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from AAA issues only in small degree.
A - Bonds rated A have a very strong capacity to pay interest and
repay principal although they are somewhat more susceptible to the
considerable investment strength but are not entirely free from adverse effects
of changes in circumstances and economic conditions than debt in the highest
rated categories.
BBB - Bonds rated BBB and regarded as having an adequate capacity to
pay interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for debt in this category then in higher rated categories.
BB, B, CCC, CC, C - Debt rated BB, B, CCC, CC, and C is regarded,
on balance, as predominantly speculative with respect to the issuer's capacity
to pay interest and repay principal in accordance with the terms of the
obligation. While such debt will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.
RATING OF COMMERCIAL PAPER
Purchases of corporate debt securities used for short-term
investment, generally called commercial paper, will be limited to the top
two grades of Moody's, Standard & Poor's, Duff & Phelps, Fitch Investor
Services and Thomson Bank Watch or other NRSROs (nationally recognized
statistical rating organizations) rating services and will be an eligible
security under Rule 2a-7.
MOODY'S
<PAGE>
Issuers rated Prime-1 (or related supporting institutions) have a
superior capacity for repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the following characteristics:
= Leading market positions in well-established industries.
= High rates of return on funds employed.
= Conservative capitalization structures with moderate reliance on
debt and ample asset protection.
= Broad margins in earnings coverage of fixed financial charges and
high internal cash generation.
= Well-established access to a range of financial markets and
assured sources of alternate liquidity.
Issuers rated Prime-2 (or related supporting institutions) have a
strong capacity for repayment of short-term promissory obligations. This will
normally be evidenced by many of the characteristics cited above but to a
lesser degree. Earnings trends and coverage ratios, while sound, will be
more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
Issuers rated Prime-3 (or related supporting institutions) have an
acceptable capacity for repayment of short-term promissory obligations. The
effect of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in changes in
the level of debt protection measurements and the requirement for relatively
high financial leverage. Adequate alternate liquidity is maintained.
Issuers rated Not Prime do not fall within any of the Prime
rating categories.
STANDARD & POOR'S
The relative strength or weakness of the following factors
determines whether the issuer's commercial paper is rated A-1 or A-2.
= Liquidity ratios are adequate to meet cash requirements.
Liquidity ratios are basically as follows, broken down by the type
of issuer:
Industrial Company: acid test ratio, cash flow as a percent of
current
<PAGE>
liabilities, short-term debt as a percent of current liabilities,
short-term debt as a percent of current assets.
Utility: current liabilities as a percent of revenues, cash flow as
a percent of current liabilities, short-term debt as a
percent of capitalization.
Finance Company: current ratio, current liabilities as a percent of
net receivables, current liabilities as a percent of total
liabilities.
= The long-term senior debt rating is "A" or better; in some
instances "BBB" credits may be allowed if other factors
outweigh the "BBB".
= The issuer has access to at least two additional channels of
borrowing.
- Basic earnings and cash flow have an upward trend with
allowances made for unusual circumstances.
- Typically, the issuer's industry is well established and the
issuer has a strong position within its industry.
= The reliability and quality of management are unquestioned.
<PAGE>
ITT HARTFORD SMALL COMPANY FUND NOVEMBER 30, 1996
Shares or Market Value
Principal Amount
COMMON STOCKS 93.66%
AEROSPACE AND DEFENSE 1.03%
1,800 Gulfstream Aerospace Corp. $43,200
200 Rohr Inc. $3,500
$46,700
BUSINESS SERVICES 4.81%
4,500 Borg-Warner Security $47,250
1,100 Ingram Micro Inc.-Cl A $27,088
10,000 Intelligent Electrs. $76,250
400 Lason Inc. $7,800
2,200 Tetra Technologies $56,031
100 Xlconnect Solutions Inc. $2,825
$217,244
COMMUNICATION EQUIPMENT 7.09%
1,700 Fore Systems Inc. $66,725
2,300 Gilat Satellite Ntwk $59,225
1,100 Kronos Inc. $31,350
2,400 Natural Microsystems Corp. $61,800
1,500 Oak Industries Inc. $34,875
1,200 Videoserver Inc. $58,800
300 West Teleservices Corp. $7,463
$320,238
COMPUTER AND OFFICE EQUIPMENT 1.45%
1,600 Affiliated Computer Svcs-a $46,400
2,200 Caere Corp. $18,975
$65,375
CONSUMER NON-DURABLES 2.89%
2,200 Ethan Allen Inc. $73,150
2,000 First Brands Corp. $57,250
$130,400
CONSUMER SERVICES 6.18%
1,000 Amc Enternmt 1.75 Pfd $33,875
400 Brinker International Inc. $7,400
2,600 Golden Bear Golf Inc. $35,425
6,100 IWERKS Entertainment $39,650
400 Pj America Inc. $7,500
1,100 Planet Hollywood
International Inc. $25,300
2,800 Prime Hospitality Corp. $46,550
1,200 Rally's Hamburgers Inc. $4,800
6,700 Tyco Toys Inc. $78,725
$279,225
1
<PAGE>
ITT HARTFORD SMALL COMPANY FUND NOVEMBER 30, 1996
Shares or Market Value
Principal Amount
ELECTRONICS 3.05%
2,300 Actel Corp. $50,600
2,800 Cinductus Inc. $21,700
2,200 Dallas Semiconductor $47,850
600 Etec Systems Inc. $17,625
$137,775
ENERGY AND SERVICES 1.59%
1,800 Falcon Drilling Company $72,000
$72,000
FINANCIAL SERVICES 11.41%
900 American Travellers Corp. $31,781
1,100 Bancorp Hawaii Inc. $47,988
1,300 Frontier Insurance Group $49,725
2,200 Imperial Bancorp $49,500
3,100 Imperial Credit Industries $65,875
1,300 Legg Mason Inc. $50,538
1,100 Mmi Companies Inc. $33,963
2,000 Prepaid Legal Services $27,750
1,100 Reinsurance Group Of America $51,700
2,200 Resource Bancshares $33,275
3,100 Westcorp Del $73,238
$515,331
FOOD, BEVERAGE AND TOBACCO 1.21%
1,500 Robert Mondavi Corp. Class B $54,750
$54,750
HEALTH CARE 16.96%
1,800 Alliance Pharm Corp. $22,500
3,000 Amylin Pharm Inc. $36,000
1,900 Apria Healthcare $34,200
1,700 Fhp International $60,988
2,000 Genesis Health Ventures Inc. $55,750
1,700 Idx Systems Corp. $42,075
1,800 Isomedix Inc. $24,750
3,500 Kinetic Concepts Inc. $43,313
2,000 Ligand Pharmaceuticals Class B $24,125
2,700 Magainin Pharmaceuticals Inc. $22,613
2,800 Magellan Health Services Inc. $58,450
2,000 McKesson $112,500
2,200 Medpartners $50,050
5,000 Nabi Inc. $45,625
2,800 Physio-control Intl. Corp. $51,800
2,500 Vencor Inc. $80,938
$765,675
2
<PAGE>
ITT HARTFORD SMALL COMPANY FUND NOVEMBER 30, 1996
Shares or Market Value
Principal Amount
INDUSTRIAL MATERIALS 0.92%
1,100 UCAR International Inc. $41,663
$41,663
MANUFACTURING 2.20%
1,700 Memtec Ltd. Adr $56,950
3,200 Nn Ball & Roller Inc. $42,400
$99,350
MEDIA AND SERVICES 7.73%
4,800 American Telecasting $37,800
5,600 Home Shopping Network $63,000
1,800 Intl. Cabletel Inc. $45,000
100 Metro Networks Inc. $2,425
3,900 Pegasus Communications Corp. $49,725
2,700 Peoples Choice TV Co. $17,213
4,500 Playboy Enterprises $53,438
6,700 Valuevision Intl. Inc. $36,850
3,100 Western Wireless Corp.-Cl A $43,400
$348,850
REAL ESTATE 0.87%
2,500 Castle & Cooke Inc. $39,375
$39,375
RETAIL 7.07%
1,900 Bed & Bath Beyond Inc. $49,756
2,300 Gymboree Corp. $64,975
1,100 Mercantile Stores Inc. $55,275
1,300 Saks Holding Inc. $42,250
7,300 Sports And Recreation $62,963
3,000 Urban Outfitters Inc. $43,875
$319,094
SOFTWARE & SERVICES 9.30%
1,500 Bisys Group Inc. $55,875
1,900 Boole & Babbage Inc. $54,625
1,900 Dst Systems Inc. $61,513
2,900 Ikos Systems Inc. $55,825
400 Information Mgmt. Resources $6,600
2,700 Macromedia Inc. $48,938
2,200 Mercury Interactive Corp. $22,000
1,100 Premenos Technology Corp. $11,413
1,374 Sterling Commerce $43,281
1,800 Sterling Software Inc. $59,625
$419,694
TRANSPORTATION 2.81%
2,600 Air Express International $84,988
2,200 M.S. Carriers $41,800
$126,788
3
<PAGE>
ITT HARTFORD SMALL COMPANY FUND NOVEMBER 30, 1996
Shares or Market Value
Principal Amount
TRANSPORTATION AND SERVICES 1.12%
2,100 Swift Transportation $50,531
$50,531
UTILITIES 3.96%
2,000 McLeod Inc. Class A $57,000
15,600 Peoples Telephone Co. Inc. $58,500
6,100 Trescom International Inc. $63,288
$178,788
TOTAL COMMON STOCKS $4,228,852
(COST $4,063,778)
REPURCHASE AGREEMENT 4.41%
S/T SECURITY 4.41%
199,000 U.S. Govt Repo $199,000
5.60 12/2/96
$199,000
TOTAL REPURCHASE AGREEMENT $199,000
(COST $199,000)
TOTAL INVESTMENTS 98.07% $4,427,852
1.93%
$87,348
TOTAL LIABILITIES, LESS CASH
AND OTHER LIABILITIES 1.93% $87,348
NET ASSETS 100.00% $4,515,200
4
<PAGE>
SCHEDULE OF INVESTMENTS
ITT HARTFORD CAPITAL APPRECIATION NOVEMBER 30, 1996
Shares or Market Value
Principal Amount
COMMON STOCKS 96.26%
AEROSPACE AND DEFENSE 4.71%
3,200 Precision Castparts Corp $150,000
9,500 Wyman-gordon Company $203,063
$353,063
BUSINESS SERVICES 5.27%
6,400 Allegiance Corporation $144,800
20,000 National Media Corp. $160,000
3,200 Xlconnect Solutions Inc. $90,400
$395,200
COMMUNICATION EQUIPMENT 6.10%
5,000 Geotel Communications Corp $66,250
6,100 Gilat Satellite Ntwk $157,075
2,700 Oak Industries Inc $62,775
9,000 Proxim Inc $171,000
$457,100
COMPUTER AND OFFICE EQUIPMENT 2.48%
5,000 Adaptec Inc $186,250
$186,250
CONSUMER NON-DURABLES 1.58%
4,200 Fort Howard Corp $118,650
$118,650
ELECTRONICS 9.39%
9,000 Augat Inc $254,250
2,900 Solectron Corp $169,650
4,400 Texas Instruments $280,500
$704,400
ENERGY AND SERVICES 5.09%
12,000 Forasol-foramer N.v. $216,000
6,700 J Ray McDermott SA $165,825
$381,825
FINANCIAL SERVICES 9.68%
2,000 Ace Ltd $115,750
4,200 First Usa Inc $138,075
15,000 Matrix Capital Corp $221,250
1,300 MBIA Inc $131,463
4,000 United Cos Financial Corp. $119,500
$726,038
HEALTH CARE 11.31%
5,500 Genzyme Corp. $125,125
1,000 Healthsouth Corp $37,625
5,900 Idx Systems Corp $146,025
1
<PAGE>
SCHEDULE OF INVESTMENTS
ITT HARTFORD CAPITAL APPRECIATION NOVEMBER 30, 1996
Shares or Market Value
Principal Amount
27,300 Novacare Inc $232,050
8,200 Superior Consultant Hldgs $196,800
3,400 Vencor Inc. $110,075
$847,700
INDUSTRIAL MATERIALS 7.06%
40,000 Repap Enterprises $155,000
7,000 Titanium Metals Corp $234,500
3,700 UCAR International $140,138
$529,638
MANUFACTURING 2.96%
2,300 Cognex Corp $45,425
10,000 Wabash National Corp $176,250
$221,675
MEDIA AND SERVICES 8.69%
10,000 Home Shopping Network $112,500
15,000 National Education Corp $211,875
5,000 Tci Satellite Entertainment Cl A $82,188
16,400 Tele-communications, Inc.-cl A $221,400
600 Univision Communication $23,850
$651,813
RETAIL 1.93%
9,900 Urban Outfitters Inc $144,788
$144,788
SOFTWARE AND SERVICES 16.00%
5,000 Bbn Corp $115,000
4,700 Cadence Design System $187,413
3,300 Dst Systems Inc. $106,838
10,500 Forrester Research Inc $224,438
8,500 Ikos Systems Inc $163,625
5,000 Macromedia Inc $90,625
1,800 Parametric Tech Corp $97,875
11,500 Peerless Systems Corp $149,500
5,000 Rogue Wave Software $64,375
$1,199,688
TRANSPORTATION 1.10%
900 Amr $82,125
$82,125
UTILITIES 2.90%
5,000 Calpine Corp $90,000
5,500 Worldcom Inc $127,188
$217,188
TOTAL COMMON STOCKS $7,217,142
(COST $6,553,578)
2
<PAGE>
SCHEDULE OF INVESTMENTS
ITT HARTFORD CAPITAL APPRECIATION NOVEMBER 30, 1996
Shares or Market Value
Principal Amount
REPURCHASE AGREEMENT 5.95%
U.S. GOVT REPO 5.95%
446,000 U.s. Govt Repo $446,000
5.60 12/2/96
$446,000
TOTAL REPURCHASE AGREEMENT $446,000
(COST $446,000)
TOTAL INVESTMENTS 102.21% $7,663,142
-2.21%
($165,527)
TOTAL LIABILITIES, LESS CASH AND OTH -2.21% ($165,527)
NET ASSETS 100.00% $7,497,615
3
<PAGE>
SCHEDULE OF INVESTMENTS
ITT HARTFORD INTERNATIONAL OPPORTUNITIES NOVEMBER 30, 1996
Shares or Market Value
Principal Amount
COMMON STOCKS 87.89%
ARGENTINA 1.05%
2,500 Perezcompanc S.a B $17,007
1,000 Telefonica De Argentina-ADR $25,500
$42,507
AUSTRALIA 3.38%
3,500 Amcor Ltd $21,578
10,235 Boral Limited $26,757
2,750 Broken Hill Proprietary $40,358
15,559 Goodman Fielder Limited $19,768
10,000 Pioneer Int'l $27,690
$136,151
AUSTRIA 0.56%
200 Omv Ag $22,508
$22,508
BELGIUM 0.70%
300 Credit Communal Hldg Dex $28,360
$28,360
BRAZIL 0.85%
20,000 Cervejaria Brahma-pfd $11,791
90,000 Petroleo Brasileiro Pfd $12,285
160,000 Telecomunic Brasileiras $10,315
$34,391
CANADA 1.96%
1,500 Canadian Pacific Ltd $41,250
900 Canwest Global Comm Corp. $9,000
3,000 Nova Corp $28,605
$78,855
CHILE 1.12%
1,000 Banco Santander Chile-sp ADR $14,250
100 Compania De Telef Chile-ADR $9,513
750 Enersis S.a.-ADR $21,188
$44,950
DENMARK 1.98%
1,000 Tele Danmark $25,000
1,100 Unidanmark A Regd $54,912
$79,912
FINLAND 1.34%
5,000 Merita Ltd-a $15,945
2,000 Metsa-serla Oy B $13,450
1,300 Rauma Oy $24,620
$54,015
1
<PAGE>
SCHEDULE OF INVESTMENTS
ITT HARTFORD INTERNATIONAL OPPORTUNITIES NOVEMBER 30, 1996
Shares or Market Value
Principal Amount
FRANCE 7.95%
270 Accor $34,638
1,150 Assurance Gen France $37,653
900 Bk Natl Paris 144a $35,844
300 Credit Commer France $14,533
525 Havas $37,194
100 Peugeot Sa $12,293
450 Remy Cointreau $11,847
1,500 Rhone-poulenc $48,596
170 Saint Gobain $24,446
200 Societe Generale $21,866
200 Societe Nationale Elf Aq $17,466
300 Total Sa $23,994
$320,370
GERMANY 5.11%
750 Daimler-benz Ag $48,695
105 Degussa $43,753
270 Hornbach Holding Ag-prfd $17,741
70 Karstadt Ag $24,205
40 Mannesmann Ag $16,655
2,800 Metallgesellschaft Ag $54,739
$205,788
HONG KONG 3.38%
3,000 Citic Pacific Ltd $15,636
5,000 Hutchison Whampoa Ltd $38,638
6,000 Lai Sun Development $9,118
1,000 New World Devel $6,758
2,000 Sun Hung Kai $24,832
3,000 Swire Pacific Ltd $28,421
50,000 Tingyi Holding Company $12,739
$136,142
INDIA 0.32%
800 State Bank of India $12,800
$12,800
INDONESIA 0.79%
17,000 Bank Bni Fgn $8,518
20,000 Kalbe Farma-for Reg $23,454
$31,972
ITALY 2.51%
2,500 Arnoldo Mondadori Editor $20,999
14,000 Banca Comml Italiana $25,691
5,000 Fiat Spa $14,621
6,600 Stet $28,057
5,000 Telecom Italia Spa $11,783
2
<PAGE>
SCHEDULE OF INVESTMENTS
ITT HARTFORD INTERNATIONAL OPPORTUNITIES NOVEMBER 30, 1996
Shares or Market Value
Principal Amount
$101,152
JAPAN 20.83%
1,000 Canon Sales $25,132
1,000 Chudenko Corp $30,316
2,000 Chugai Pharmaceutical $17,504
3,000 Dai Nippon Printing $54,833
1,000 Danto Corporation $11,424
1,000 Fuji Machine Mfg Co $27,153
2,000 Jgc Corp $18,453
1,000 Kyudenko Corp $10,721
1,000 Mabuchi Motor $50,264
1,000 Maruichi Steel Tube $16,344
3,000 Matsushita Electric Co $51,933
3,000 Mitsubishi Heavy Industr $24,517
1,000 Murata Manufacturing Co $34,183
2,000 Ngk Spark Plug $21,968
2,000 Nippon Express $15,255
120 Nippon Television $36,063
1,000 Nomura Securities $16,872
3,000 Onward Kashiyama Co Ltd $41,916
2,000 Sakura Bank $18,278
1,000 Sankyo $26,801
2,000 Sanwa Bank Ltd $33,040
2,000 Seventy-seven Bank $17,487
4,000 Sumitomo Rlty $27,768
3,000 Toda Construction Co. $22,935
2,000 Tokio Marine & Fire Insr $22,144
5,000 Toyo Ink Mfg. $23,374
1,000 Toyota Motor Corp $27,329
1,000 World Company $43,849
4,000 Yamato Kogyo Co. Ltd $39,719
2,000 Yamazaki Baking Co. Ltd $31,986
$839,560
LUXEMBOURG 0.45%
1,750 Quilmes Industrial Adr $18,156
$18,156
MALAYSIA 1.65%
9,000 Land & General Holdings $21,899
10,000 MBF Capital Berhad $15,668
2,000 Resort World $10,049
5,000 Sime Darby Berhad $18,694
$66,310
MEXICO 1.66%
3
<PAGE>
SCHEDULE OF INVESTMENTS
ITT HARTFORD INTERNATIONAL OPPORTUNITIES NOVEMBER 30, 1996
Shares or Market Value
Principal Amount
2,600 Cemex S.a. De C.v. $8,601
1,900 Cemex Sa-cpo $6,297
4,500 Femsa Sa B $15,341
3,000 Grupo Carso Sa Ser A1 $15,284
39,000 Grupo Financiero Bancome $15,659
1,000 Transportation-Marine $5,875
$67,057
NETHERLANDS 3.33%
250 Akzo Nobel Nv $33,182
1,200 Ing Groep N. V. $42,028
717 Klm-konin Luchvaart Mij $18,501
840 Polygram Nv $40,476
$134,187
NEW ZEALAND 1.00%
4,964 Air New Zealand B $13,073
5,000 Carter Holt $11,530
1,000 Qantas Air Adr 144a $15,703
$40,306
NORWAY 2.23%
4,060 Fokus Bank $25,315
2,000 Nycomed Asa- A $29,305
300 Orkla As A $20,015
950 Saga Petro A Free $15,401
$90,035
PHILIPPINES 0.30%
150 Philippine Long Dist- Sp ADR $8,625
4,000 Pilipino Telephone $3,601
$12,226
SINGAPORE 2.67%
3,000 Devel Bank Of Singapore $38,719
5,000 Far East Levingston Ship $26,561
3,000 Keppel Corp $23,317
6,000 Straits Steamship Land $19,167
$107,763
SOUTH KOREA 0.58%
750 Korea Electric Power Corp.-ADR $13,219
500 Pohang Iron $ Steel -spon ADR $10,063
$23,281
SPAIN 3.18%
200 Acerinox Sa $25,483
1,000 Electrobras On ADR $16,013
400 Empresa Nac De Elec $27,027
4
<PAGE>
SCHEDULE OF INVESTMENTS
ITT HARTFORD INTERNATIONAL OPPORTUNITIES NOVEMBER 30, 1996
Shares or Market Value
Principal Amount
500 Empresa Nacional De Electricidad $33,313
1,200 Telefonica De Espana $26,317
$128,151
SWEDEN 1.82%
1,000 Bt Industries 144a $18,622
1,060 Pharmacia & Upjohn Dep $40,821
1,000 Stora Koppabergs A $13,706
$73,148
SWITZERLAND 2.29%
5 Ciba Geigy Ag $6,193
10 Cie Financ Richemont-uts $14,781
25 Nestle Sa $27,163
55 Sulzer Ag-part Cert $28,887
20 Swissair Registered $15,204
$92,227
THAILAND 0.77%
19,900 Bangkok Metro Bank $10,324
400 Land & House Co Ltd-reg $3,164
1,300 Siam City Ceme Fgn Shrs $8,653
1,000 Siam Commercial $8,692
$30,832
UNITED KINGDOM 11.88%
1,550 Allied Irish Banks PLC $10,223
500 Amersham Int'l PLC $9,212
5,850 Associated Brit Food $43,398
200 Bank Of Ireland $1,739
7,000 Bank Of Scotland $34,463
100 Boc Group PLC $1,490
3,000 Boots Company PLC $32,010
10,000 British Gas PLC $36,715
3,000 British Telecom Co PLC $19,080
2,000 BTR $7,981
4,320 Cn De La Rue PLC $42,283
5,000 Cookson Group PLC $18,987
5,000 National Grid Group PLC $16,425
7,000 Northern Foods PLC $23,348
3,800 Powergen PLC $37,066
4,000 Rank Group PLC $29,237
2,900 Reckitt & Colman $34,159
2,500 Royal & Sun Alliance Ins $18,840
2,000 Royal Bank Of Scotland $17,610
7,050 Sainsbury J PLC $44,482
$478,749
5
<PAGE>
SCHEDULE OF INVESTMENTS
ITT HARTFORD INTERNATIONAL OPPORTUNITIES NOVEMBER 30, 1996
Shares or Market Value
Principal Amount
VENEZUELA 0.25%
400 Cia Anonima Telef De Venezuela $10,150
$10,150
TOTAL COMMON STOCKS $3,542,019
(COST $3,361,903)
PREFERRED STOCKS 0.70%
FINLAND 0.70%
500 Nokia Pfd ADS $28,063
$28,063
TOTAL PREFERRED STOCKS $28,063
(COST $16,765)
REPURCHASE AGREEMENT 10.27%
S/T SECURITY 10.27%
414,000 U.S. Govt Repo $414,000
5.60 12/2/96
$414,000
TOTAL REPURCHASE AGREEMENT $414,000
(COST $414,000)
U.S. TREASURY BILL 0.25%
S/T SECURITY 0.25%
10,000 U.S. Treasury Bill $9,968
4.88 12/26/96
$9,968
TOTAL U.S. TREASURY BILL $9,968
(COST $9,968)
TOTAL INVESTMENTS 99.11% $3,994,050
0.89%
$35,781
TOTAL LIABILITIES,
LESS CASH AND OTH 0.89% $35,781
NET ASSETS 100.00% $4,029,831
6
<PAGE>
ITT HARTFORD STOCK FUND NOVEMBER 30, 1996
Shares or Market Value
Principal Amount
COMMON STOCKS 89.70%
AEROSPACE AND DEFENSE 3.04%
1,200 Boeing Company $119,250
500 United Technologies Corp. $70,125
$189,375
BUSINESS SERVICES 0.66%
600 Fluor Corp. $40,800
$40,800
COMMUNICATION EQUIPMENT 0.76%
400 Cisco Systems Inc. $27,150
388 Lucent Technologies $19,885
$47,035
COMPUTER & OFFICE EQUIPMENT 4.07%
1,600 Adaptec Inc. $59,600
600 IBM $95,625
2,000 Xerox $98,250
$253,475
CONSUMER DURABLES 1.65%
1,000 General Motors Cl H $54,500
1,000 Goodyear Tire & Rubber $48,500
$103,000
CONSUMER NON-DURABLES 5.10%
700 Colgate Palmolive Co. $64,838
400 Gillette Co. $29,500
700 Kimberly Clark Corp. $68,425
1,000 Nike, Inc. Class B $56,875
900 Proctor and Gamble $97,875
$317,513
CONSUMER SERVICES 3.10%
3,000 McDonalds Corp. $140,250
2,200 Mirage Resorts $53,075
$193,325
ELECTRONICS 5.23%
2,400 General Electric $249,600
600 Intel Corp. $76,125
$325,725
ENERGY AND SERVICES 8.56%
1,000 Amoco Corporation $77,625
1,200 Chevron Corp. $80,400
1,100 Exxon $104,088
700 Royal Dutch Petroleum $118,913
600 Schlumberger Ltd. $62,400
1
<PAGE>
ITT HARTFORD STOCK FUND NOVEMBER 30, 1996
Shares or Market Value
Principal Amount
1,508 Union Pacific Resources Grp. $45,052
1,100 Unocal Corp. $44,825
$533,302
FINANCIAL SERVICES 14.12%
1,000 Ace Ltd. $57,875
1,300 Allstate Corp. $78,325
1,500 American Express Co. $78,375
500 American International Group $57,500
1,000 Associates First Capital Corp. $48,375
1,100 Citicorp $120,175
1,000 First Bank System Inc. $72,875
500 Marsh and Mclennan Co. $56,688
1,000 Merrill Lynch & Co. Inc. $80,250
700 Nationsbank Corp. $72,538
800 State Street Boston Corp. $54,100
2,267 Travelers Group Inc. $102,000
$879,075
FOOD, BERVERAGE AND TOBACCO 2.60%
1,000 Kellogg Co. $67,875
2,400 Sara Lee Corp. $94,200
$162,075
HEALTH CARE 13.84%
1,400 Abbott Laboratories $78,050
1,500 American Home Products Corp. $96,375
600 Bristol-Myers Squibb Company $68,250
2,000 Columbia/hca Healthcare Corp. $80,000
1,300 Johnson & Johnson $69,063
1,200 Merck & Co., Inc. $99,600
900 Pfizer, Inc. $80,663
1,600 Pharmacia & Upjohn $61,800
1,000 Smithkline Beecham Plc Adr $68,875
1,400 Tenet Healthcare Corporation $31,325
1,300 Vencor Inc. $42,088
1,200 Warner-Lambert Company $85,800
$861,888
INDUSTRIAL MATERIALS 4.92%
700 Aluminum Company Of America $44,538
1,000 Crown Cork & Seal $53,000
900 Dow Chemical $75,375
500 Dupont Ei De Nemours $47,125
500 International Paper Co. $21,250
900 Phelps Dodge Corp. $65,363
$306,650
2
<PAGE>
ITT HARTFORD STOCK FUND NOVEMBER 30, 1996
Shares or Market Value
Principal Amount
MANUFACTURING 2.62%
1,000 Caterpillar, Inc. $79,125
1,000 Minnesota Mining &
Manufacturing Company $83,750
$162,875
MEDIA AND SERVICES 3.88%
1,700 Gannett Co., Inc. $133,450
2,400 Gaylord Entertainment Cl A $51,300
1,500 Viacom Inc.-Cl B $56,625
$241,375
RETAIL 6.13%
1,100 Home Depot Inc. $57,338
1,700 Saks Holding Inc. $55,250
1,400 Sears Roebuck $69,650
1,800 Toys R Us $62,100
5,400 Wal-Mart $137,700
$382,038
SOFTWARE & SERVICES 4.75%
700 Computer Sciences Co. $55,038
1,600 Electronic Data Systems Corp. $77,400
1,400 First Data Corp. $55,825
500 Microsoft Corp. $78,438
600 Oracle Corp. $29,400
$296,100
TRANSPORTATION 2.62%
459 Consolidated Rail Corporation $44,638
2,900 Southwest Airlines $71,775
800 Union Pacific Corp. $46,600
$163,013
UTILITIES 2.05%
1,800 Pacific Gas & Electric Company $43,425
1,600 Sbc Communications Inc. $84,200
$127,625
TOTAL COMMON STOCKS $5,586,269
(COST $4,928,969)
REPURCHASE AGREEMENT 4.67%
S/T SECURITY 4.67%
291,000 U.S. Govt Repo $291,000
5.60 12/2/96
$291,000
TOTAL REPURCHASE AGREEMENT $291,000
(COST $291,000)
TOTAL INVESTMENTS 94.37% $5,877,269
5.63%
$350,372
3
<PAGE>
ITT HARTFORD STOCK FUND NOVEMBER 30, 1996
Shares or Market Value
Principal Amount
TOTAL LIABILITIES, LESS
CASH AND OTHER LIABILITIES 5.63% $350,372
NET ASSETS 100.00% $6,227,641
(r) Restricted Securities
4
<PAGE>
SCHEDULE OF INVESTMENTS
ITT HARTFORD DIVIDEND AND GROWTH NOVEMBER 30, 1996
Shares or Market Value
Principal Amount
COMMON STOCKS 89.96%
AEROSPACE AND DEFENSE 3.72%
1,000 Loral Space & Comm 144a $56,250
1,200 Northrop Grumman Corp $99,750
1,300 Sundstrand Corp $50,700
$206,700
BUSINESS SERVICES 0.19%
400 Browning Ferris Industries Inc. $10,750
$10,750
COMPUTER AND OFFICE EQUIPMENT 0.97%
1,100 Xerox $54,038
$54,038
CONSUMER DURABLES 2.73%
2,200 Ford Motor Co Del $72,050
900 Goodyear Tire & Rubber Comp $43,650
900 Itt Industries $21,038
500 Smith (a.0.) Corp $14,813
$151,550
CONSUMER NON-DURABLES 3.67%
1,100 Avon Products $61,325
800 Colgate Palmolive Co. $74,100
700 Kimberly Clark Corp $68,425
$203,850
CONSUMER SERVICES 0.29%
200 Eastman Kodak $16,200
$16,200
ELECTRONICS 2.44%
1,300 General Electric $135,200
$135,200
ENERGY AND SERVICES 12.10%
1,600 Ashland Inc $76,800
1,900 Chevron Corp. $127,300
400 Equitable Resources $12,200
1,200 Exxon $113,550
1,500 Pennzoil Co $84,375
1,800 Phillips Petroleum $81,225
2,400 Sun Company, Inc. $60,000
423 Union Pacific Resources $12,637
1,300 Unocal Corp $52,975
2,200 Usx-marathon Group $50,325
$671,387
FINANCIAL SERVICES 16.31%
1
<PAGE>
SCHEDULE OF INVESTMENTS
ITT HARTFORD DIVIDEND AND GROWTH NOVEMBER 30, 1996
Shares or Market Value
Principal Amount
1,300 Allstate Corp $78,325
1,300 American Express Co. $67,925
2,600 Bancorp Hawaii Inc $113,425
1,300 Bank of Boston $90,838
400 Cigna Corporation $56,550
2,000 Citicorp $218,500
1,500 First Bank System Inc $109,313
1,600 First Union Corp $122,200
800 Wachovia Corp. $48,000
$905,075
FOOD, BEVERAGE AND TOBACCO 8.51%
3,500 Flowers Industries, Inc. $82,688
2,800 General Mills Comp $177,800
900 Interstate Bakeries $40,613
700 Kellogg Co $47,513
1,200 Philip Morris $123,750
$472,363
HEALTH CARE 10.89%
1,400 American Home Products Corp. $89,950
1,500 Bard C R Inc $42,000
1,000 Bristol-myers Squibb Company $113,750
1,600 Merck & Co.,inc. $132,800
2,700 Pharmacia & Upjohn $104,288
1,700 Warner-lambert Company $121,550
$604,338
INDUSTRIAL MATERIALS 4.38%
700 Calgon Carbon Corp $8,138
300 Crompton & Knowles Corp. $5,513
200 Dow Chemical $16,750
400 Dupont Ei De Nemours $37,700
500 Eastman Chemical Co $28,563
200 Georgia Gulf Corp $5,475
100 Grace (w.r.) Company $5,288
1,500 International Paper Co. $63,750
400 Lubrizol Corp $12,300
200 Nalco Chemical Co $7,625
800 Weyerhaeuser Company $36,800
500 Witco Chemical Corp $15,188
$243,088
MANUFACTURING 1.21%
800 Minnesota Mining &
Manufacturing C $67,000
$67,000
MEDIA AND SERVICES 2.99%
2
<PAGE>
SCHEDULE OF INVESTMENTS
ITT HARTFORD DIVIDEND AND GROWTH NOVEMBER 30, 1996
Shares or Market Value
Principal Amount
100 Acnielson Corp $1,738
2,000 American Radio 144a $92,000
300 Cognizant Corp $10,350
300 Dun & Bradstreet Corp. $6,788
700 Gannett Co., Inc $54,950
$165,825
REAL ESTATE 1.06%
1,300 Patriot American Hospitality $49,238
200 Starwood Lodging Trust $9,550
$58,788
RETAIL 2.34%
1,500 Mercantile Stores Inc $75,375
1,100 Sears Roebuck $54,725
$130,100
TRANSPORTATION 1.05%
1,000 Union Pacific Corp $58,250
$58,250
UTILITIES 15.09%
1,400 Ameritech Corp. $82,425
1,700 Bell South Corp. $68,638
500 Carolina Power and Light $18,313
600 Cinergy Corp $20,100
200 Comsat Corp $5,250
1,700 Dpl Inc. $41,438
1,400 Dqe Inc $41,300
1,900 Edison International $37,763
800 Frontier Corp $21,000
1,600 Gte Corp $71,800
300 Illinova Corp $7,950
700 N E Electric System $23,975
700 NIPSCO Industry $27,125
1,100 Nynex Corporation $51,013
1,500 Pacific Enterprises $45,938
2,400 Pacific Gas & Electric Company $57,900
1,600 Pinnacle West Cap $49,800
500 Public Service Co Of Colorado $19,500
1,300 Sbc Communications Inc. $68,413
700 Scana Corporation $19,075
700 Texas Utilities $27,650
1,400 The Southern Co. $31,150
$837,513
TOTAL COMMON STOCKS $4,992,024
(COST $4,461,341)
REPURCHASE AGREEMENT 5.95%
3
<PAGE>
SCHEDULE OF INVESTMENTS
ITT HARTFORD DIVIDEND AND GROWTH NOVEMBER 30, 1996
Shares or Market Value
Principal Amount
U.S. GOVT REPO 5.95%
330,000 U.s. Govt Repo $330,000
5.60 12/2/96
$330,000
TOTAL REPURCHASE AGREEMENT $330,000
(COST $330,000)
TOTAL INVESTMENTS 95.91% $5,322,024
4.09%
$227,122
TOTAL LIABILITIES, LESS CASH AND OTH 4.09% $227,122
NET ASSETS 100.00% $5,549,146
4
<PAGE>
SCHEDULE OF INVESTMENTS
ITT HARTFORD ADVISERS FUND NOVEMBER 30, 1996
Shares or Market Value
Principal Amount
COMMON STOCKS 65.81%
AEROSPACE AND DEFENSE 2.44%
2,000 Boeing Company $198,750
1,000 United Technologies Corp $140,250
$339,000
BUSINESS SERVICES 0.59%
1,200 Fluor Corp $81,600
$81,600
COMMUNICATION EQUIPMENT 0.68%
800 Cisco Systems Inc $54,300
777 Lucent Technologies $39,821
$94,121
COMPUTER AND OFFICE EQUIPMENT 3.29%
3,200 Adaptec Inc $119,200
1,200 IBM $191,250
3,000 Xerox $147,375
$457,825
CONSUMER DURABLES 1.09%
1,000 General Motors Cl H $54,500
2,000 Goodyear Tire & Rubber Comp $97,000
$151,500
CONSUMER NON-DURABLES 2.91%
800 Colgate Palmolive Co. $74,100
600 Gillette Co $44,250
1,600 Nike, Inc. Class B $91,000
1,800 Proctor and Gamble $195,750
$405,100
CONSUMER SERVICES 2.17%
4,400 Mc Donalds Corp $205,700
4,000 Mirage Resorts $96,500
$302,200
ELECTRONICS 3.71%
3,500 General Electric $364,000
1,200 Intel Corp. $152,250
$516,250
ENERGY AND SERVICES 6.67%
1,800 Amoco Corporation $139,725
1,500 Chevron Corp. $100,500
2,000 Exxon $189,250
1,200 Royal Dutch Petroleum $203,850
1,100 Schlumberger Ltd $114,400
3,016 Union Pacific Resources $90,103
1
<PAGE>
SCHEDULE OF INVESTMENTS
ITT HARTFORD ADVISERS FUND NOVEMBER 30, 1996
Shares or Market Value
Principal Amount
2,200 Unocal Corp $89,650
$927,478
FINANCIAL SERVICES 11.62%
2,000 Ace Ltd $115,750
2,400 Allstate Corp $144,600
2,800 American Express Co. $146,300
1,000 American International Grp $115,000
2,200 Associates First Capital $106,425
2,200 Citicorp $240,350
1,500 First Bank System Inc $109,313
800 Marsh and McLennan Co $90,700
1,900 Merrill Lynch & Co. Inc $152,475
1,200 Nationsbank Corp $124,350
1,600 State Street Boston Corp $108,200
3,600 Travelers Group Inc $162,000
$1,615,463
FOOD, BEVERAGE AND TABACOO 1.63%
1,600 Kellogg Co $108,600
3,000 Sara Lee Corp. $117,750
$226,350
HEALTH CARE 9.16%
2,400 Abbott Laboratories $133,800
2,100 American Home Products Corp. $134,925
600 Bristol-myers Squibb Company $68,250
2,000 Columbia/HCA Healthcare $80,000
2,300 Johnson & Johnson $122,188
2,000 Merck & Co.,inc. $166,000
1,000 Pfizer, Inc. $89,625
2,200 Pharmacia & Upjohn $84,975
1,600 Smithkline Beecham Plc Adr $110,200
2,000 Tenet Healthcare Corp $44,750
2,500 Vencor Inc. $80,938
2,200 Warner-lambert Company $157,300
$1,272,950
INDUSTRIAL MATERIALS 4.00%
1,400 Aluminum Company Of America $89,075
1,600 Crown Cork and Seal $84,800
1,600 Dow Chemical $134,000
800 Dupont Ei De Nemours $75,400
1,000 International Paper Co. $42,500
1,800 Phelps Dodge Corp $130,725
$556,500
MANUFACTURING 0.68%
2
<PAGE>
SCHEDULE OF INVESTMENTS
ITT HARTFORD ADVISERS FUND NOVEMBER 30, 1996
Shares or Market Value
Principal Amount
1,200 Caterpillar, Inc. $94,950
$94,950
MEDIA AND SERVICES 2.79%
2,400 Gannett Co., Inc $188,400
4,400 Gaylord Entertainment Cl A $94,050
2,800 Viacom Inc-cl B $105,700
$388,150
RETAIL 4.34%
1,900 Home Depot Inc. $99,038
2,600 Saks Holding Inc. $84,500
2,100 Sears Roebuck $104,475
2,700 Toys R Us $93,150
8,700 Wal-Mart $221,850
$603,013
SOFTWARE AND SERVICES 3.91%
1,400 Computer Sciences Co $110,075
2,200 Electronic Data Systems Corp $106,425
2,800 First Data Corp $111,650
1,000 Microsoft Corp $156,875
1,200 Oracle Corp $58,800
$543,825
TRANSPORTATION 2.35%
919 Consolidated Rail Corp $89,373
5,800 Southwest Airlines $143,550
1,600 Union Pacific Corp $93,200
$326,123
UTILITIES 1.76%
3,800 Pacific Gas & Electric Co $91,675
2,900 Sbc Communications Inc. $152,613
$244,288
TOTAL COMMON STOCKS $9,146,687
(COST $7,881,837)
REPURCHASE AGREEMENT 3.76%
S/T SECURITY 3.76%
522,000 U.s. Govt Repo $522,000
5.60 12/2/96
$522,000
TOTALREPURCHASE AGREEMENT $522,000
(COST $522,000)
U.S. TREASURIES & AGENCI 3.25%
FEDERAL HOME LOAN MORTGAGE ASSOCIAT 1.66%
236,912 FHLMC $230,396
6.50 5/1/26
$230,396
GOVERNMENT NATIONAL MORTGAGE ASSOCI 1.59%
227,042 GNMA $220,798
6.50 4/15/26
3
<PAGE>
SCHEDULE OF INVESTMENTS
ITT HARTFORD ADVISERS FUND NOVEMBER 30, 1996
Shares or Market Value
Principal Amount
$220,798
TOTAL U.S. TREASURIES & AGENCI $451,194
(COST $429,834)
U.S. TREASURY & AGENCIES 22.21%
U.S. GOVERNMENT AGENCIES 22.21%
540,000 U.S. Treasury Bond $589,613 7.25 5/15/16
300,000 U.S. Treasury Note $301,406 5.88 10/31/98
750,000 U.S. Treasury Note $761,485 6.25 5/31/00
500,000 U.S. Treasury Note $512,657 6.38 8/15/02
100,000 U.S. Treasury Note $103,313 6.50 10/15/06
475,000 U.S. Treasury Note $519,828 7.50 2/15/05
300,000 U.S. Treasury Note $298,406 5.13 4/30/98
$3,086,707
TOTAL U.S. TREASURY & AGENCIES $3,086,708
(COST $2,984,297)
TOTAL INVESTMENTS 95.03% $13,206,589
4.97% $691,393
TOTAL LIABILITIES, LESS CASH AND OTH 4.97% $691,393
NET ASSETS 100.00% $13,897,982
(r) Restricted Securites
4
<PAGE>
SCHEDULE OF INVESTMENTS
ITT HARTFORD BOND INCOME STRATEGY NOVEMBER 30, 1996
Shares or Market Value
Principal Amount
COLLAT MORTGAGE OBLIGATN 1.10%
TRANSPORTATION 1.10%
96,308 Norwest Airlines Corp Trust $120,385
11.30 6/21/14
$120,385
TOTAL COLLAT MORTGAGE OBLIGATN $120,385
(COST $118,786)
CORPORATE NOTES 51.30%
COMMUNICATION EQUIPMENT 0.88%
100,000 Lenfest Communication $96,250
8.38 11/1/05
$96,250
COMPUTER AND OFFICE EQUIPMENT 0.81%
100,000 Digital Equipment $89,115
7.75 4/1/23
$89,115
CONSUMER DURABLES 0.90%
100,000 Us Home Corp. $98,375
7.95 3/1/01
$98,375
CONSUMER SERVICES 1.78%
100,000 Grand Casinos $100,125
10.13 12/1/03
100,000 Trump Atlantic $94,000
11.25 5/1/06
$194,125
FINANCIAL SERVICES 24.24%
250,000 Abbey-Global $248,821
6.69 10/17/05
125,000 Banco Nacional Com Ext $109,688
7.25 2/2/04
250,000 Citicorp $256,788
7.13 5/15/06
100,000 First Nationwide $106,000
10.63 10/1/03
250,000 Ford Motor Credit $239,777
6.13 1/9/06
450,000 Interamer Dev Bk $493,119
8.50 5/1/01
250,000 Kfw International Finance Inc. $256,073
7.00 3/1/13
175,000 Lehman Bros. Step Up $180,372
7.36 12/15/03
250,000 Mass Mutual Life Ins 144a $258,155
7.63 11/15/23
250,000 Phoenix Home Life $250,875
6.95 12/1/06
250,000 Southern Investments UK PLC $251,436
6.80 12/1/06
$2,651,104
FOREIGN 3.58%
100,000 Quebec Province $98,510
7.13 2/9/24
250,000 Societe Generale $292,823
9.88 7/15/03
$391,333
INDUSTRIAL MATERIALS 2.77%
100,000 Buckeye Cellulos $98,250
8.50 12/15/05
100,000 Freeport-Mcmoran $103,564
8.75 2/15/04
100,000 Newport News 144A $101,500
8.63 12/1/06
$303,314
MANUFACTURING 1.01%
1
<PAGE>
SCHEDULE OF INVESTMENTS
ITT HARTFORD BOND INCOME STRATEGY NOVEMBER 30, 1996
Shares or Market Value
Principal Amount
100,000 Owens-Ill Inc $110,500
11.00 12/1/03
$110,500
MEDIA AND SERVICES 3.60%
100,000 Hollinger Intl $97,750
9.25 2/1/06
100,000 Tele-communications $98,080
9.25 1/15/23
100,000 Turner Broadcasting Sr Note $101,302
7.40 2/1/04
100,000 Viacom Inc $96,039
6.75 1/15/03
$393,171
RETAIL 2.49%
100,000 K Mart Corp $95,212
7.84 1/2/02
225,000 K Mart Corp. $177,469
7.95 2/1/23
$272,681
UTILITIES 8.30%
100,000 El Paso Electric $105,000
8.90 2/1/06
100,000 Long Island Ltg $102,256
9.00 11/1/22
250,000 Pacific Gas And Elec Co $247,813
7.25 3/1/26
250,000 Public Svc El-MBIA $242,395
6.75 1/1/16
100,000 Rogers Cablesystems $105,250
10.00 12/1/07
100,000 Rogers Cantel Inc. $105,000
9.38 6/1/08
$907,714
UTILITY 0.94%
100,000 Cal Energy Co. 144a $102,500
9.50 9/15/06
$102,500
TOTAL CORPORATE NOTES $5,610,182
(COST $5,434,930)
FNMA 15 YEAR 6% 17.47%
FEDERAL NATIONAL MORTGAGE ASSOCIATI 17.47%
219,304 Fnma #0250553 $213,546
6.00 5/1/11
774,993 Fnma #0250727 $754,646
6.00 7/1/11
723,739 Fnma #0340683 $704,738
6.00 7/1/11
244,411 Fnma #0342754 $237,994
6.00 5/1/11
$1,910,923
TOTAL FNMA 15 YEAR 6% $1,910,924
(COST $1,847,600)
REPURCHASE AGREEMENT 2.23%
S/T SECURITY 2.23%
244,000 U.S. Govt Repo $244,000
5.60 12/2/96
$244,000
TOTAL REPURCHASE AGREEMENT $244,000
(COST $244,000)
U.S. TREASURY & AGENCIES 26.29%
U.S. GOVERNMENT AGENCIES 26.29%
260,000 U.S. Treasury Bond $245,456
6.00 2/15/26
25,000 U.S. Treasury Bond $26,086
6.75 8/15/26
250,000 U.S. Treasury Bond $264,141
6.88 8/15/25
2
<PAGE>
SCHEDULE OF INVESTMENTS
ITT HARTFORD BOND INCOME STRATEGY NOVEMBER 30, 1996
Shares or Market Value
Principal Amount
50,000 U.S. Treasury Note $49,672
5.63 2/28/01
500,000 U.S. Treasury Note $497,188
5.00 1/31/98
250,000 U.S. Treasury Note $251,172
5.88 10/31/98
500,000 U.S. Treasury Note $505,313
6.25 6/30/98
200,000 U.S. Treasury Note $205,375
6.50 8/31/01
400,000 U.S. Treasury Note $411,875
6.88 8/31/99
400,000 U.S. Treasury Note $419,000
7.50 10/31/99
$2,875,277
TOTAL U.S. TREASURY & AGENCIES $2,875,278
(COST $2,805,799)
TOTAL INVESTMENTS 98.40% $10,760,769
1.60% $175,066
TOTAL LIABILITIES, LESS CASH AND OTH 1.60% $175,066
NET ASSETS 100.00% $10,935,835
(r) Restricted Securites
3
<PAGE>
ITT HARTFORD MONEY MARKET FUND NOVEMBER 30, 1996
Shares or Market Value
Principal Amount
COMMERCIAL PAPER 89.03%
COMMERCIAL PAPER 89.03%
300,000 Air Products & Chemicals $299,301
5.24 12/18/96
300,000 Allergan Inc. $299,956
5.26 12/3/96
300,000 Allied Signal Inc. $299,869
5.25 12/5/96
300,000 American Home Products $297,646
5.33 1/24/97
250,000 Avon Capital Corp. $249,666
5.34 12/11/9
300,000 Bankers Trust Corp. $292,109
5.29 5/30/97
300,000 Bass Finance C.I. Ltd. $299,644
5.34 12/10/9
300,000 BCFE US Finance Corp. $298,392
5.36 1/7/97
300,000 Bradford & Bingley $294,104
5.32 4/14/97
300,000 Chrysler Financial $299,069
5.32 12/23/9
300,000 Countrywide Home Loan $299,956
5.28 12/3/96
300,000 Deutsche Bank $299,300
5.25 12/18/9
300,000 Eksportfinans A/S $295,035
5.32 3/24/97
300,000 Finova Capital Corp. $296,996
5.38 2/7/97
300,000 Ford Motor Credit Corp. $296,536
5.33 2/18/97
300,000 General Electric Capital $297,957
5.33 1/17/97
300,000 General Signal Corp. $298,896
5.30 12/27/9
300,000 Johnson Controls, Inc. $297,673
5.37 1/23/97
300,000 MCI Communications $296,467
5.30 2/20/97
300,000 Merrill Lynch & Co. $297,733
5.44 1/21/97
300,000 National Fuel Gas $298,431
5.38 1/6/97
300,000 Nationwide Building Soc. $295,918
5.63 2/27/97
300,000 New York Times Co. $297,779
5.33 1/21/97
300,000 Pacific Dunlop Ltd. $298,533
5.50 1/3/97
300,000 Phh Corp. $299,692
5.28 12/9/96
300,000 Sanwa Business Credit $298,020
5.40 1/15/97
300,000 Sears Roebuck Accep. Corp. $295,256
5.32 3/19/97
300,000 Sharp Electronics Corp. $295,213
5.27 3/21/97
300,000 Svenska Handelsbanken Inc. $299,637
5.45 12/10/9
300,000 Tambrands Inc. $296,734
5.52 2/11/97
300,000 Transamerica Finance Corp. $299,083
5.24 12/23/9
300,000 Westpac Capital Corp. $296,360
5.60 2/18/97
$9,476,961
TOTAL COMMERCIAL PAPER $9,476,961
(COST $9,476,961)
CORPORATE NOTES 5.64%
CORPORATE NOTES 5.64%
300,000 GMAC Financial $300,216
6.44 4/11/97
300,000 Wells Fargo $300,177
5.63 9/5/97
$600,393
TOTAL CORPORATE NOTES $600,393
(COST $600,393)
1
<PAGE>
ITT HARTFORD MONEY MARKET FUND NOVEMBER 30, 1996
Shares or Market Value
Principal Amount
REPURCHASE AGREEMENT 5.71%
608,000 U.S. Govt Repo $608,000
5.60 12/2/96
$608,000
TOTAL REPURCHASE AGREEMENT $608,000
(COST $608,000)
TOTAL INVESTMENTS 100.39% $10,685,354
-0.39%
($41,025)
TOTAL LIABILITIES, LESS CASH
AND OTHER LIABILITIES -0.39% ($41,025)
NET ASSETS 100.00% $10,644,329
(r) Restricted Securities
2
<PAGE>
<TABLE>
<CAPTION>
ITT HARTFORD SMALL COMPANY FUND EP-4040
STATEMENT OF ASSETS, LIABILITIES, AND SHAREHOLDER'S EQUITY
(UNAUDITED)
As of
November 30, 1996
-----------------
<S> <C>
ASSETS
1 Preferred Stocks (Cost 36,447) 33,875
2 Common Stocks (Cost 4,027,331) 4,194,969
3 Convertible Corporate Bonds 0
4 Short-Term Securities @ Cost 199,000
5 Stock Options 0
6 Cash 890
7 Dividends & Interest Receivable 2,118
8 Receivable from Securities Sold 0
9 Receivable from Fund Shares Sold 105,409
10 Receivable from Hartford Fire 0
11 Other Receivables 0
-----------------
12 Total Assets 4,536,260
-----------------
LIABILITIES
13 Payable for Securities Purchased 15,850
14 Payable to HIMCO 0
15 Payable for Fund Shares Redeemed 0
16 Dividend Distribution Payable 0
17 Investement Suspense 0
18 Other Payable 5,210
-----------------
19 Total Liabilities 21,060
-----------------
20 Net Assets 4,515,200
-----------------
-----------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITT HARTFORD SMALL COMPANY FUND EP-4041
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
(UNAUDITED)
Y-T-D
As of
November 30, 1996
-----------------
<S> <C>
1 Net Assets Beginning of Period 0
INVESTMENT INCOME AND EXPENSES
2 Dividends 4,669
3 Interest 7,211
-----------------
4 Total Income 11,880
-----------------
5 Investment Advisory Fee (11,506)
6 12b-1 Fees (4,139)
7 Other Expenses (4,058)
-----------------
8 Total Expenses (19,703)
-----------------
9 Net Investment Income (Loss) (7,822)
-----------------
10 Dividends from Net Investment Income 0
-----------------
GAIN OR LOSS ON INVESTMENTS
11 Net Realized Gain (Loss) 327,976
12 Unrealized Appreciation (Deprec) 165,065
-----------------
13 Net Gain or (Loss) on Investments 493,041
-----------------
14 Distrib. from Realized Gains (Short and Long) 0
-----------------
15 Paid in Capital 389
16 Paid in Surplus 4,029,593
-----------------
17 Net Increase (Decrease) 4,029,981
-----------------
18 Net Assets End of Period 4,515,200
-----------------
-----------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITT HARTFORD SMALL COMPANY FUND EP-4042
ANALYSIS OF SHAREHOLDER'S EQUITY
(UNAUDITED)
As of
November 30, 1996
-----------------
<S> <C>
Amount
------
1 Undistributed Net Investment Income 0.00
(Beginning of Year)
2 Dividend Income During Year 4,669.25
3 Interest Income During Year 7,211.18
4 Expenses During Year (19,702.74)
-----------------
5 Net Investment Income During Year (7,822.31)
6 Dividend Distribution Current Year 0.00
7 Undistributed Net Investment Income (7,822.31)
Current Year (1+5+6)
8 Undistributed Real Gains/(Losses) Beg. 0.00
9 Long-Term Real. Gains/(Losses) During Year 0.00
10 Short-Term Real. Gains/(Losses) During Year 327,975.89
11 Distrib. Long-Term Cap. Gains Current Year 0.00
12 Distrib. Short-Term Cap. Gains Current Year 0.00
-----------------
13 Current Year (8+9+10-11-12) 327,975.89
14 Expired Realized Gains/(Losses) 0.00
15 Unrealized Appreciation/(Depreciation) 165,065.37
16 Paid-in Capital 388.61
17 Paid-in Surplus 4,029,592.74
-----------------
18 Net Assets/Net Asset Value (7+13+14+15+16+17) 4,515,200.30
-----------------
-----------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITT HARTFORD CAPITAL APPRECIATION FUND EP-4040
STATEMENT OF ASSETS, LIABILITIES, AND SHAREHOLDER'S EQUITY
(UNAUDITED)
As of
November 30, 1996
-----------------
<S> <C>
ASSETS
1 Preferred Stocks 0
2 Common Stocks (Cost 6,553,578) 7,217,138
3 Convertible Corporate Bonds 0
4 Short-Term Securities @ Cost 446,000
5 Stock Options 0
6 Cash 460
7 Dividends & Interest Receivable 208
8 Receivable from Securities Sold 202,200
9 Receivable from Fund Shares Sold 264,577
10 Receivable from Hartford Fire 0
11 Other Receivables 0
-----------------
12 Total Assets 8,130,582
-----------------
LIABILITIES
13 Payable for Securities Purchased 616,673
14 Payable to HIMCO 0
15 Payable for Fund Shares Redeemed 0
16 Dividend Distribution Payable 0
17 Investement Suspense 0
18 Other Payable 16,294
-----------------
19 Total Liabilities 632,967
-----------------
20 Net Assets 7,497,615
-----------------
-----------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITT HARTFORD CAPITAL FUND APPRECIATION FUND EP-4041
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
(UNAUDITED)
Y-T-D
As of
November 30, 1996
-----------------
<S> <C>
1 Net Assets Beginning of Period 0
INVESTMENT INCOME AND EXPENSES
2 Dividends 2,667
3 Interest 7,760
-----------------
4 Total Income 10,427
-----------------
5 Investment Advisory Fee (12,671)
6 12b-1 Fees (4,985)
7 Other Expenses (5,578)
-----------------
8 Total Expenses (23,235)
-----------------
9 Net Investment Income (Loss) (12,808)
-----------------
10 Dividends from Net Investment Income 0
-----------------
GAIN OR LOSS ON INVESTMENTS
11 Net Realized Gain (Loss) 574,207
12 Unrealized Appreciation (Deprec) 663,560
-----------------
13 Net Gain or (Loss) on Investments 1,237,767
-----------------
14 Distrib. from Realized Gains (Short and L 0
-----------------
15 Paid in Capital 564
16 Paid in Surplus 6,272,092
-----------------
17 Net Increase (Decrease) 6,272,656
-----------------
18 Net Assets End of Period 7,497,615
-----------------
-----------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITT HARTFORD CAPITAL APPRECIATION FUND EP-4042
ANALYSIS OF SHAREHOLDER'S EQUITY
(UNAUDITED)
As of
November 30, 1996
-----------------
<S> <C>
Amount
------
1 Undistributed Net Investment Income 0.00
(Beginning of Year)
2 Dividend Income During Year 2,667.00
3 Interest Income During Year 7,760.18
4 Expenses During Year (23,234.80)
-----------------
5 Net Investment Income During Year (12,807.62)
6 Dividend Distribution Current Year 0.00
7 Undistributed Net Investment Income (12,807.62)
Current Year (1+5+6)
8 Undistributed Real Gains/(Losses) Beg. 0.00
9 Long-Term Real. Gains/(Losses) During Year 0.00
10 Short-Term Real. Gains/(Losses) During Year 574,207.29
11 Distrib. Long-Term Cap. Gains Current Year 0.00
12 Distrib. Short-Term Cap. Gains Current Year 0.00
-----------------
13 Current Year (8+9+10-11-12) 574,207.29
14 Expired Realized Gains/(Losses) 0.00
15 Unrealized Appreciation/(Depreciation) 663,559.61
16 Paid-in Capital 563.70
17 Paid-in Surplus 6,272,092.32
-----------------
18 Net Assets/Net Asset Value (7+13+14+15+16+17) 7,497,615.30
-----------------
-----------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITT HARTFORD INTERNATIONAL OPPORTUNITIES FUND EP-4040
STATEMENT OF ASSETS, LIABILITIES, AND SHAREHOLDER'S EQUITY
(UNAUDITED)
As of
November 30, 1996
-----------------
<S> <C>
ASSETS
1 Preferred Stocks (Cost 16,765) 28,063
2 Common Stocks (Cost 3,361,903) 3,542,013
3 Convertible Corporate Bonds 0
4 Short-Term Securities @ Cost 423,968
5 Stock Options 0
6 Cash 229
7 Dividends & Interest Receivable 8,005
8 Receivable from Securities Sold 21,024
9 Receivable from Fund Shares Sold 114,329
10 Receivable from Hartford Fire 0
11 Other Receivables 16,931
-----------------
12 Total Assets 4,154,562
-----------------
LIABILITIES
13 Payable for Securities Purchased 133,873
14 Payable to HIMCO 0
15 Payable for Fund Shares Redeemed 0
16 Dividend Distribution Payable 0
17 Investement Suspense 0
18 Other Payable (9,142)
-----------------
19 Total Liabilities 124,731
-----------------
20 Net Assets 4,029,831
-----------------
-----------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITT HARTFORD INTERNATIONAL OPPORTUNITIES FUND EP-4041
STATEMENT OF ASSETS, LIABILITIES, AND SHAREHOLDER'S EQUITY
(UNAUDITED)
Y-T-D
As of
November 30, 1996
-----------------
<S> <C>
1 Net Assets Beginning of Period 00
INVESTMENT INCOME AND EXPENSES
2 Dividends 19,000
3 Interest 10,052
4 Other 16,290
-----------------
5 Total Income 45,342
-----------------
6 Investment Advisory Fee (10,067)
7 12b-1 Fees (3,590)
8 Other Expenses (8,164)
-----------------
9 Total Expenses (21,820)
-----------------
10 Net Investment Income (Loss) 23,521
-----------------
11 Dividends from Net Investment Income 0
-----------------
GAIN OR LOSS ON INVESTMENTS
12 Net Realized Gain (Loss) 25,479
13 Unrealized Appreciation (Deprec) 192,894
-----------------
14 Net Gain or (Loss) on Investments 218,373
-----------------
15 Distrib. from Realized Gains (Short and Long) 0
-----------------
16 Paid in Capital 375
17 Paid in Surplus 3,787,561
-----------------
18 Net Increase (Decrease) 3,787,937
-----------------
19 Net Assets End of Period 4,029,831
-----------------
-----------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITT HARTFORD INTERNATIONAL OPPORTUNITIES FUND EP-4042
STATEMENT OF ASSETS, LIABILITIES, AND SHAREHOLDER'S EQUITY
(UNAUDITED)
As of
November 30, 1996
-----------------
<S> <C>
Amount
------
1 Undistributed Net Investment Income 0.00
(Beginning of Year)
2 Dividend Income During Year 19,000.06
3 Interest Income During Year 10,051.61
4 Other 16,290.26
5 Expenses During Year (21,820.48)
-----------------
6 Net Investment Income During Year 23,521.45
7 Dividend Distribution Current Year 0.00
8 Undistributed Net Investment Income 23,521.45
Current Year (1+6+7)
9 Undistributed Real Gains/(Losses) Beg. 0.00
10 Long-Term Real. Gains/(Losses) During Year 0.00
11 Short-Term Real. Gains/(Losses) During Year 25,479.03
12 Distrib. Long-Term Cap. Gains Current Year 0.00
13 Distrib. Short-Term Cap. Gains Current Year 0.00
-----------------
14 Current Year (9+10+11-12-13) 25,479.03
15 Expired Realized Gains/(Losses) 0.00
16 Unrealized Appreciation/(Depreciation) 192,893.72
17 Paid-in Capital 375.35
18 Paid-in Surplus 3,787,561.49
-----------------
19 Net Assets/Net Asset Value (8+14+15+16+17+18) 4,029,831.04
-----------------
-----------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITT HARTFORD STOCK FUND EP-4040
STATEMENT OF ASSETS, LIABILITIES, AND SHAREHOLDER'S EQUITY
(UNAUDITED)
As of
November 30, 1996
-----------------
<S> <C>
ASSETS
1 Preferred Stocks 0
2 Common Stocks (Cost 4,928,969) 5,586,262
3 Convertible Corporate Bonds 0
4 Short-Term Securities @ Cost 291,000
5 Stock Options 0
6 Cash 527
7 Dividends & Interest Receivable 8,232
8 Receivable from Securities Sold 0
9 Receivable from Fund Shares Sold 346,458
10 Receivable from Hartford Fire 0
11 Other Receivables 0
-----------------
12 Total Assets 6,232,479
-----------------
LIABILITIES
13 Payable for Securities Purchased 0
14 Payable to HIMCO 0
15 Payable for Fund Shares Redeemed 0
16 Dividend Distribution Payable 0
17 Investement Suspense 0
18 Other Payable 4,838.51
-----------------
19 Total Liabilities 4,838.51
-----------------
20 Net Assets 6,227,641
-----------------
-----------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITT HARTFORD STOCK FUND EP-4041
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
(UNAUDITED)
Y-T-D
As of
November 30, 1996
-----------------
<S> <C>
1 Net Assets Beginning of Period 0
INVESTMENT INCOME AND EXPENSES
2 Dividends 24,651
3 Interest 5,853
-----------------
4 Total Income 30,505
-----------------
5 Investment Advisory Fee (10,887)
6 12b-1 Fees (4,363)
7 Other Expenses (4,927)
-----------------
8 Total Expenses (20,176)
-----------------
9 Net Investment Income (Loss) 10,329
-----------------
10 Dividends from Net Investment Income 0
-----------------
GAIN OR LOSS ON INVESTMENTS
11 Net Realized Gain (Loss) (4,414)
12 Unrealized Appreciation (Deprec) 657,293
-----------------
13 Net Gain or (Loss) on Investments 652,879
-----------------
14 Distrib. from Realized Gains (Short and Long) 0
-----------------
15 Paid in Capital 525
16 Paid in Surplus 5,563,908
-----------------
17 Net Increase (Decrease) 5,564,433
-----------------
18 Net Assets End of Period 6,227,641
-----------------
-----------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITT HARTFORD STOCK FUND EP-4042
ANALYSIS OF SHAREHOLDER'S EQUITY
(UNAUDITED)
As of
November 30, 1996
-----------------
<S> <C>
Amount
------
1 Undistributed Net Investment Income 0.00
(Beginning of Year)
2 Dividend Income During Year 24,651.32
3 Interest Income During Year 5,853.46
4 Expenses During Year (20,176.15)
-----------------
5 Net Investment Income During Year 10,328.63
6 Dividend Distribution Current Year 0.00
7 Undistributed Net Investment Income 10,328.63
Current Year (1+5+6)
8 Undistributed Real Gains/(Losses) Beg. 0.00
9 Long-Term Real. Gains/(Losses) During Year 0.00
10 Short-Term Real. Gains/(Losses) During Year (4,413.80)
11 Distrib. Long-Term Cap. Gains Current Year 0.00
12 Distrib. Short-Term Cap. Gains Current Year 0.00
-----------------
13 Current Year (8+9+10-11-12) (4,413.80)
14 Expired Realized Gains/(Losses) 0.00
15 Unrealized Appreciation/(Depreciation) 657,292.76
16 Paid-in Capital 525.20
17 Paid-in Surplus 5,563,907.72
-----------------
18 Net Assets/Net Asset Value (7+13+14+15+16+17) 6,227,640.51
-----------------
-----------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITT HARTFORD DIVIDEND AND GROWTH FUND EP-4040
STATEMENT OF ASSETS, LIABILITIES, AND SHAREHOLDER'S EQUITY
(UNAUDITED)
As of
November 30, 1996
-----------------
<S> <C>
ASSETS
1 Preferred Stocks (Cost 155,650) 148,250
2 Common Stocks (Cost 4,305,691) 4,843,762
3 Convertible Corporate Bonds 0
4 Short-Term Securities @ Cost 330,000
5 Stock Options 0
6 Cash 130
7 Dividends & Interest Receivable 13,391
8 Receivable from Securities Sold 17,589
9 Receivable from Fund Shares Sold 232,339
10 Receivable from Hartford Fire 0
11 Other Receivables 0
-----------------
12 Total Assets 5,585,461
-----------------
LIABILITIES
13 Payable for Securities Purchased 31,848
14 Payable to HIMCO 0
15 Payable for Fund Shares Redeemed 0
16 Dividend Distribution Payable 0
17 Investement Suspense 0
18 Other Payable 4,467
-----------------
19 Total Liabilities 36,315
-----------------
20 Net Assets 5,549,146
-----------------
-----------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITT HARTFORD DIVIDEND AND GROWTH FUND EP-4041
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
(UNAUDITED)
Y-T-D
As of
November 30, 1996
-----------------
<S> <C>
1 Net Assets Beginning of Period 0
INVESTMENT INCOME AND EXPENSES
2 Dividends 42,130
3 Interest 5,640
-----------------
4 Total Income 47,770
-----------------
5 Investment Advisory Fee (10,018)
6 12b-1 Fees (4,086)
7 Other Expenses (4,709)
-----------------
8 Total Expenses (18,813)
-----------------
9 Net Investment Income (Loss) 28,957
-----------------
10 Dividends from Net Investment Income 0
-----------------
GAIN OR LOSS ON INVESTMENTS
11 Net Realized Gain (Loss) 16,741
12 Unrealized Appreciation (Deprec) 530,671
-----------------
13 Net Gain or (Loss) on Investments 547,412
-----------------
14 Distrib. from Realized Gains (Short and Long) 0
-----------------
15 Paid in Capital 473
16 Paid in Surplus 4,972,304
-----------------
17 Net Increase (Decrease) 4,972,777
-----------------
18 Net Assets End of Period 5,549,146
-----------------
-----------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITT HARTFORD DIVIDEND AND GROWTH FUND EP-4042
ANALYSIS OF SHAREHOLDER'S EQUITY
(UNAUDITED)
As of
November 30, 1996
-----------------
<S> <C>
Amount
------
1 Undistributed Net Investment Income 0.00
(Beginning of Year)
2 Dividend Income During Year 42,130.44
3 Interest Income During Year 5,639.58
4 Expenses During Year (18,813.14)
-----------------
5 Net Investment Income During Year 28,956.88
6 Dividend Distribution Current Year 0.00
7 Undistributed Net Investment Income 28,956.88
Current Year (1+5+6)
8 Undistributed Real Gains/(Losses) Beg. 0.00
9 Long-Term Real. Gains/(Losses) During Year 0.00
10 Short-Term Real. Gains/(Losses) During Year 16,741.01
11 Distrib. Long-Term Cap. Gains Current Year 0.00
12 Distrib. Short-Term Cap. Gains Current Year 0.00
-----------------
13 Current Year (8+9+10-11-12) 16,741.01
14 Expired Realized Gains/(Losses) 0.00
15 Unrealized Appreciation/(Depreciation) 530,671.11
16 Paid-in Capital 472.98
17 Paid-in Surplus 4,972,304.06
-----------------
18 Net Assets/Net Asset Value (7+13+14+15+16+17) 5,549,146.04
-----------------
-----------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITT HARTFORD ADVISERS FUND EP-4040
STATEMENT OF ASSETS, LIABILITIES, AND SHAREHOLDER'S EQUITY
(UNAUDITED)
As of
November 30, 1996
-----------------
<S> <C>
ASSETS
1 Preferred Stocks 0
2 Common Stocks (Cost 7,881,837) 9,146,685
3 Convertible Corporate Bonds 0
4 Long Term Bonds (Cost 3,414,131) 3,537,901
5 Short-Term Securities @ Cost 522,000
6 Stock Options 0
7 Cash 248
8 Dividends & Interest Receivable 67,837
9 Receivable from Securities Sold 199,541
10 Receivable from Fund Shares Sold 438,577
11 Receivable from Hartford Fire 0
12 Other Receivables 0
-----------------
13 Total Assets 13,912,788
-----------------
LIABILITIES
14 Payable for Securities Purchased 0
16 Payable to HIMCO 0
18 Payable for Fund Shares Redeemed 0
19 Dividend Distribution Payable 0
20 Investement Suspense 0
21 Other Payable 14,806
-----------------
22 Total Liabilities 14,806
-----------------
23 Net Assets 13,897,982
-----------------
-----------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITT HARTFORD ADVISERS FUND EP-4041
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
(UNAUDITED)
Y-T-D
As of
November 30, 1996
-----------------
<S> <C>
1 Net Assets Beginning of Period 0
INVESTMENT INCOME AND EXPENSES
2 Dividends 47,616
3 Interest 96,044
-----------------
4 Total Income 143,660
-----------------
5 Investment Advisory Fee (29,787)
6 12b-1 Fees (12,212)
7 Other Expenses (14,231)
-----------------
8 Total Expenses (56,230)
-----------------
9 Net Investment Income (Loss) 87,430
-----------------
10 Dividends from Net Investment Income 0
-----------------
GAIN OR LOSS ON INVESTMENTS
11 Net Realized Gain (Loss) 8,604
12 Unrealized Appreciation (Deprec) 1,388,617
-----------------
13 Net Gain or (Loss) on Investments 1,397,221
-----------------
14 Distrib. from Realized Gains (Short and Long) 0
-----------------
15 Paid in Capital 1,214
16 Paid in Surplus 12,412,117
-----------------
17 Net Increase (Decrease) 12,413,331
-----------------
18 Net Assets End of Period 13,897,982
-----------------
-----------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITT HARTFORD ADVISERS FUND EP-4042
ANALYSIS OF SHAREHOLDER'S EQUITY
(UNAUDITED)
As of
November 30, 1996
-----------------
<S> <C>
Amount
------
1 Undistributed Net Investment Income 0.00
(Beginning of Year)
2 Dividend Income During Year 47,616.39
3 Interest Income During Year 96,043.75
4 Expenses During Year (56,230.48)
-----------------
5 Net Investment Income During Year 87,429.66
6 Dividend Distribution Current Year 0.00
7 Undistributed Net Investment Income 87,429.66
Current Year (1+5+6)
8 Undistributed Real Gains/(Losses) Beg. 0.00
9 Long-Term Real. Gains/(Losses) During Year 0.00
10 Short-Term Real. Gains/(Losses) During Year 8,604.11
11 Distrib. Long-Term Cap. Gains Current Year 0.00
12 Distrib. Short-Term Cap. Gains Current Year 0.00
-----------------
13 Current Year (8+9+10-11-12) 8,604.11
14 Expired Realized Gains/(Losses) 0.00
15 Unrealized Appreciation/(Depreciation) 1,388,617.35
16 Paid-in Capital 1,213.77
17 Paid-in Surplus 12,412,116.87
-----------------
18 Net Assets/Net Asset Value (7+13+14+15+16+17) 13,897,981.76
-----------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITT HARTFORD BOND INCOME STRATEGY FUND EP-4040
STATEMENT OF ASSETS, LIABILITIES, AND SHAREHOLDER'S EQUITY
(UNAUDITED)
As of
November 30, 1996
-----------------
<S> <C>
ASSETS
1 Preferred Stocks 0
2 Common Stocks 0
3 Long-Term Bonds (Cost 10,207,115) 10,516,768
4 Short-Term Securities @ Cost 244,000
5 Stock Options 0
6 Cash 993
7 Dividends & Interest Receivable 176,475
8 Receivable from Securities Sold 105,393
9 Receivable from Fund Shares Sold 3,087
10 Receivable from Hartford Fire 0
11 Other Receivables 0
-----------------
12 Total Assets 11,046,715
-----------------
LIABILITIES
13 Payable for Securities Purchased 99,650
14 Payable to HIMCO 0
15 Payable for Fund Shares Redeemed 0
16 Dividend Distribution Payable 1
17 Investement Suspense 0
18 Other Payable 11,229
-----------------
19 Total Liabilities 110,881
-----------------
20 Net Assets 10,935,835
-----------------
-----------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITT HARTFORD BOND INCOME STRATEGY FUND EP-4041
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
(UNAUDITED)
Y-T-D
As of
November 30, 1996
-----------------
<S> <C>
1 Net Assets Beginning of Period 0
INVESTMENT INCOME AND EXPENSES
2 Dividends 0
3 Interest 259,017
-----------------
4 Total Income 259,017
-----------------
5 Investment Advisory Fee (24,272)
6 12b-1 Fees (11,285)
7 Other Expenses (11,200)
-----------------
8 Total Expenses (46,757)
-----------------
9 Net Investment Income (Loss) 212,260
-----------------
10 Dividends from Net Investment Income (203,517)
-----------------
GAIN OR LOSS ON INVESTMENTS
11 Net Realized Gain (Loss) 131,444
12 Unrealized Appreciation (Deprec) 309,653
-----------------
13 Net Gain or (Loss) on Investments 441,097
-----------------
14 Distrib. from Realized Gains (Short and Long) 0
-----------------
15 Paid in Capital 1,048
16 Paid in Surplus 10,484,947
-----------------
17 Net Increase (Decrease) 10,485,995
-----------------
18 Net Assets End of Period 10,935,835
-----------------
-----------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITT HARTFORD BOND INCOME STRATEGY FUND EP-4042
ANALYSIS OF SHAREHOLDER'S EQUITY
(UNAUDITED)
As of
November 30, 1996
-----------------
<S> <C>
Amount
------
1 Undistributed Net Investment Income 0.00
(Beginning of Year)
2 Dividend Income During Year 0.00
3 Interest Income During Year 259,016.57
4 Expenses During Year (46,756.84)
-----------------
5 Net Investment Income During Year 212,259.73
6 Dividend Distribution Current Year 203,517.23
7 Undistributed Net Investment Income 8,742.50
Current Year (1+5+6)
8 Undistributed Real Gains/(Losses) Beg. 0.00
9 Long-Term Real. Gains/(Losses) During Year 0.00
10 Short-Term Real. Gains/(Losses) During Year 131,444.47
11 Distrib. Long-Term Cap. Gains Current Year 0.00
12 Distrib. Short-Term Cap. Gains Current Year 0.00
-----------------
13 Current Year (8+9+10-11-12) 131,444.47
14 Expired Realized Gains/(Losses) 0.00
15 Unrealized Appreciation/(Depreciation) 309,653.02
16 Paid-in Capital 1,047.51
17 Paid-in Surplus 10,484,947.28
-----------------
18 Net Assets/Net Asset Value (7+13+14+15+16+17) 10,935,834.78
-----------------
-----------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITT HARTFORD MONEY MARKET FUND EP-4040
STATEMENT OF ASSETS, LIABILITIES, AND SHAREHOLDER'S EQUITY
(UNAUDITED)
As of
November 30, 1996
-----------------
<S> <C>
ASSETS
1 Preferred Stocks 0
2 Common Stocks 0
3 Long-Term Bonds 0
4 Short-Term Securities @ Cost 10,685,353
5 Stock Options 0
6 Cash 626
7 Dividends & Interest Receivable 6,235
8 Receivable from Securities Sold 0
9 Receivable from Fund Shares Sold 0
10 Receivable from Hartford Fire 0
11 Other Receivables 0
-----------------
12 Total Assets 10,692,214
-----------------
LIABILITIES
13 Payable for Securities Purchased 0
14 Payable to HIMCO 0
15 Payable for Fund Shares Redeemed 200
16 Dividend Distribution Payable 40,286
17 Investement Suspense 0
18 Other Payable 7,400
-----------------
19 Total Liabilities 47,886
-----------------
20 Net Assets 10,644,329
-----------------
-----------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITT HARTFORD MONEY MARKET FUND EP-4041
STATEMENT OF OPERATIONS AND CHANGES IN NET ASSETS
(UNAUDITED)
Y-T-D
As of
November 30, 1996
-----------------
<S> <C>
1 Net Assets Beginning of Period 0
INVESTMENT INCOME AND EXPENSES
2 Dividends 0
3 Interest 203,657
-----------------
4 Total Income 203,657
-----------------
5 Investment Advisory Fee (18,499)
6 12b-1 Fees (11,099)
7 Other Expenses (7,399)
-----------------
8 Total Expenses (36,998)
-----------------
9 Net Investment Income (Loss) 166,659
-----------------
10 Dividends from Net Investment Income (166,659)
-----------------
GAIN OR LOSS ON INVESTMENTS
11 Net Realized Gain (Loss) 0
12 Unrealized Appreciation (Deprec) 0
-----------------
13 Net Gain or (Loss) on Investments 0
-----------------
14 Distrib. from Realized Gains (Short and Long) 0
-----------------
15 Paid in Capital 10,645
16 Paid in Surplus 10,633,684
-----------------
17 Net Increase (Decrease) 10,644,329
-----------------
18 Net Assets End of Period 10,644,329
-----------------
-----------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ITT HARTFORD MONEY MARKET FUND EP-4042
ANALYSIS OF SHAREHOLDER'S EQUITY
(UNAUDITED)
As of
November 30, 1996
-----------------
<S> <C>
Amount
------
1 Undistributed Net Investment Income 0.00
(Beginning of Year)
2 Dividend Income During Year 0.00
3 Interest Income During Year 203,656.63
4 Expenses During Year (36,997.65)
-----------------
5 Net Investment Income During Year 166,658.98
6 Dividend Distribution Current Year 166,658.98
7 Undistributed Net Investment Income 0.00
Current Year (1+5+6)
8 Undistributed Real Gains/(Losses) Beg. 0.00
9 Long-Term Real. Gains/(Losses) During Year 0.00
10 Short-Term Real. Gains/(Losses) During Year 0.00
11 Distrib. Long-Term Cap. Gains Current Year 0.00
12 Distrib. Short-Term Cap. Gains Current Year 0.00
-----------------
13 Current Year (8+9+10-11-12) 0.00
14 Expired Realized Gains/(Losses) 0.00
15 Unrealized Appreciation/(Depreciation) 0.00
16 Paid-in Capital 10,644.52
17 Paid-in Surplus 10,633,684.31
-----------------
18 Net Assets/Net Asset Value (7+13+14+15+16+17) 10,644,328.83
-----------------
-----------------
</TABLE>
<PAGE>
Page 1
ITT HARTFORD MUTUAL FUNDS INC.
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996 (UNAUDITED)
1. ORGANIZATION:
ITT Hartford Mutual Funds, Inc. (the Company) is an open end management
investment company comprised of eight diversified portfolios (each a "Fund"
or together the "Funds"). The Funds are ITT Hartford Bond Income Strategy
Fund, ITT Hartford Stock Fund, ITT Money Market Fund, ITT Hartford Advisers
Fund, ITT Hartford Capital Appreciation Fund, ITT Hartford International
Opportunities Fund, ITT Hartford Dividend and Growth Fund, and ITT Hartford
Small Company Fund. The Company was organized under the laws of the State of
Maryland and was registered with the Securities and Exchange Commission (SEC)
under the Investment Company Act of 1940, as amended, as diversified open-
ended management investment company.
The Funds and their investment objectives are listed below:
ITT Hartford 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.
ITT Hartford Stock Fund Seeks long-term growth of capital with
income a secondary consideration by
investing primarily in equity securities.
ITT Money Market Fund Seeks maximum current income consistent
with liquidity and preservation of capital.
ITT Hartford 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.
ITT Hartford Capital Seeks growth of capital by investing
Appreciation Fund primarily in equity securities selected
on the basis of potential for capital
appreciation.
ITT Hartford Small Company Fund Seeks growth of capital by investing
primarily in equity securities selected
on the basis of potential for capital
appreciation.
ITT Hartford International Seeks growth of capital by investing
Opportunities Fund primarily in equity securities issued by
non-U.S. companies.
ITT Hartford Dividend Seeks a high level of current income
and Growth Fund consistent with growth of capital by
investing primarily in equity securities.
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.
<PAGE>
Page 2
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the Funds,
which are in accordance with generally accepted accounting principles in the
investment company industry:
a) SECURITY TRANSACTIONS - Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Security gains and losses
are determined on the basis of identified cost.
b) SECURITY VALUATION - Debt securities (other than short-term
obligations) are valued on the basis of valuations furnished by an
unaffiliated pricing service which determines valuations for normal
institutional size trading units of debt securities. Mortgage securities
are valued at the bid price. Short-term securities held in the ITT Money
Market Fund, are valued at amortized cost or original cost plus accrued
interest receivable, both of which approximate market value. In ITT
Hartford Advisers Fund, ITT Hartford Capital Appreciation Fund, ITT
Hartford Small Company Fund, ITT Hartford Stock Fund, ITT Hartford Bond
Income Strategy Fund, ITT Hartford International Opportunities Fund,and ITT
Hartford Dividend and Growth Fund, short-term investments with a maturity
of 60 days or less when purchased are valued at amortized cost, which
approximates market value. Short-term investments with a maturity of more
than 60 days when purchased are valued based on market quotations until the
remaining days to maturity become less than 61 days. From such time until
maturity, the investments are valued at amortized cost.
Equity securities are valued at the last sales price reported on the
principal securities markets on which such securities are traded (domestic or
foreign). If no sale took place on such day and in the case of certain
equity securities traded over-the-counter, then such securities are valued at
the mean between the bid and asked prices. Securities quoted in foreign
currencies are translated into U.S. dollars at the exchange rate at the end
of the reporting period. Options are valued at the last sales price; if no
sale took place on such day, then options are valued at the mean between the
bid and asked prices. Securities for which market quotations are not readily
available and all other assets are valued in good faith at fair value by a
person designated by the Funds' Board of Directors.
c) FOREIGN CURRENCY TRANSACTIONS - The accounting records of the Funds are
maintained in U.S. dollars. All assets and liabilities initially expressed
in foreign currencies are converted into U.S. dollars at prevailing exchange
rates. Purchases and sales of investment securities, dividend and interest
income, and certain expenses are translated at the rates of exchange
prevailing on the respective dates of such transactions.
The funds do not isolate that portion of the results of operations resulting
from changes in the foreign exchange rates on investments from the
fluctuations arising from changes in the market prices of securities held.
Such fluctuations are included with the net realized and unrealized gain or
loss on investments.
Net realized foreign exchange gains or losses arise from sales of portfolio
securities, sales of foreign currencies, and the difference between asset and
liability amounts initially stated in foreign currencies and the U.S. dollar
value of the amounts actually received or paid. Net unrealized foreign
exchange gains or losses arise from changes in the value of portfolio
securities and other assets and liabilities at the end of the reporting
period, resulting from changes in the exchange rates.
d) REPURCHASE TRANSACTIONS - 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. At the time the Funds enter into a repurchase
agreement, the value of the underlying collateral security(ies), including
accrued interest, will be equal to or exceed the value of the repurchase
agreement and, in the case of repurchase agreements exceeding one day, the
value of the underlying security(ies), including accrued interest, is
required during the term of the agreement to be equal to or exceed the value
of the repurchase agreement. Securities which serve to collateralize the
repurchase agreement
<PAGE>
Page 3
are held by each Fund's custodian in book entry or physical form in the
custodial account of the Fund. Repurchase agreements are valued at cost plus
accrued interest receivable.
e) JOINT TRADING ACCOUNT - Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Funds may transfer uninvested cash
balances into a joint trading account managed by Hartford Investment
Management Company (HIMCO) and Wellington Management Company. These balances
may be invested in one or more repurchase agreements and/or short-term money
market instruments.
f) FUTURES, OPTIONS ON FUTURES AND OPTIONS ACCOUNTING PRINCIPLES - The Funds
enter into futures contracts to retain their cash balance and yet be exposed
to the market thereby providing the liquidity necessary to accommodate
redemptions while at the same time providing shareholders the investment
return of a fully invested portfolio. A futures contract is an agreement
between two parties to buy and sell a security for a set price on a future
date. When the Funds enter into such contracts, they are required to deposit
with their custodian an amount of "initial margin" of cash or U.S. Treasury
bills. Subsequent payments, called maintenance margin, to and from the
broker, are made on a daily basis as the price of the underlying debt
security fluctuates, making the long and short positions in the futures
contract more or less valuable (i.e., mark-to-market), which results in an
unrealized gain or loss to the Funds. The market value of a traded futures
contract is the last sale price or, in the absence of a last sale price, the
last offering price or, in the absence of either of these prices, fair value
is determined according to procedures established by the Funds' Board of
Directors.
At any time prior to expiration of the futures contract, the Funds may close
the position by taking an opposite position which would operate to terminate
the position in the futures contract. A final determination of maintenance
margin is then made, additional cash is required to be paid by or released
to the Funds and the Funds realize a gain or loss.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's Statement of Net Assets as an investment and
subsequently "marked to market" to reflect the current market value of the
option purchased as of the end of the reporting period. If an option which
the Fund has purchased expires on its stipulated expiration date, the Fund
realizes a loss in the amount of the cost of the option. If the Fund enters
into a closing transaction, it realizes a gain or loss, depending on whether
the proceeds from the sale are greater or less than the cost of the option.
If the Fund exercises a put option, it realizes a gain or loss from the sale
of the underlying security and the proceeds from such sale will be decreased
by the premium originally paid. If the Fund exercises a call option, the
cost of the security which the Fund purchases upon exercise will be increased
by the premium originally paid.
g) FEDERAL INCOME TAXES - For Federal income tax purposes, the Funds intend
to continue to qualify as regulated investment companies under Subchapter M
of the Internal Revenue Code by distributing substantially all of their
taxable income to their shareholders or otherwise complying with the
requirements for regulated investment companies. Accordingly, no provision
for Federal income taxes has been made.
h) FUND SHARE VALUATION AND DIVIDEND DISTRIBUTIONS TO SHAREHOLDERS - Orders
for the Fund's shares are executed in accordance with the investment
instructions of the contract owners. Dividend income is accrued as of the
ex-dividend date. Interest income and expenses are accrued on a daily basis.
The net asset value of the Fund's shares is determined as of the close of
each business day of the New York Stock Exchange (the Exchange). Orders for
the purchase of the Funds' shares received prior to the close of the
Exchange on any day on which the fund is open for business are priced at the
per-share net asset value determined as of the close of the Exchange. Orders
received after the close of the Exchange, or on a day on which the Exchange
and/or the Fund is not open for business, are priced at the per-share net
asset value next determined.
<PAGE>
Page 4
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 ITT Hartford Small Company Fund,
ITT Hartford Capital Appreciation Fund, ITT Hartford International
Opportunities Fund, and ITT Hartford Stock Fund will be declared and paid
annually; dividends from net investment income of the ITT Hartford Dividend
and Growth Fund and ITT Hartford Advisers Fund will be declared and paid
semi-annually; dividends from the net investment income of the ITT Hartford
Bond Income Strategy Fund will be declared and paid monthly and dividends
from net investment income of the ITT Hartford Money Market Fund will be
declared daily and paid monthly. Dividends from the ITT Hartford 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.
i) FOREIGN CURRENCY CONTRACTS - As of November 30, 1996, ITT Hartford
International Opportunities Fund entered into forward foreign currency
exchange contracts that obligate the Fund to repurchase currencies at
specified future dates. The Fund enters into forward foreign currency
contracts to manage currency exchange rate risk.
Forward contracts involve elements of market risk in excess of the amount
reflected in the Statement of Net Assets. The Fund bears the risk of an
unfavorable change in the foreign exchange rate underlying the forward
contract.
j) USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and the reported
amounts of income and expenses during the period. Operating results in the
future could vary from the amounts derived from management's estimates.
3. EXPENSES:
a) INVESTMENT MANAGEMENT AND ADVISORY AGREEMENTS - HIMCO, a wholly-owned
subsidiary of Hartford Life Insurance Company (HL) 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 management services to
the Small Company Fund, Capital Appreciation Fund, International
Opportunities Fund, Stock Fund, Dividend and Growth Fund and 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.
<PAGE>
Page 5
The schedule below reflects the rates of compensation paid to HIMCO for
services rendered:
ITT HARTFORD MONEY MARKET FUND
AVERAGE DAILY NET ASSETS ANNUAL FEE
------------------------ ----------
On first $500 million .50%
On next $500 million .45%
Over $1 billion .40%
ITT HARTFORD BOND INCOME STRATEGY FUND
AVERAGE DAILY NET ASSETS ANNUAL FEE
------------------------ ----------
On first $500 million .65%
On next $500 million .55%
Over $1 billion .50%
ITT HARTFORD SMALL COMPANY FUND
ITT HARTFORD INTERNATIONAL OPPORTUNITIES FUND
AVERAGE DAILY NET ASSETS ANNUAL FEE
------------------------ ----------
On first $500 million .85%
On next $500 million .75%
Over $1 billion .70%
ITT HARTFORD CAPITAL APPRECIATION FUND
ITT HARTFORD STOCK FUND
AVERAGE DAILY NET ASSETS ANNUAL FEE
------------------------ ----------
On first $500 million .80%
On next $500 million .70%
Over $1 billion .65%
ITT HARTFORD ADVISERS FUND
ITT HARTFORD DIVIDEND AND GROWTH FUND
AVERAGE DAILY NET ASSETS ANNUAL FEE NET
------------------------ ----------
On first $500 million .80%
On next $500 million .70%
Over $1 billion .65%
b) DISTRIBUTION AND SERVICE PLAN FOR CLASS A AND B SHARES - The Fund has
adopted a Distribution and Service Plan to compensate the Distributor for the
distribution of Class A and Class B shares and servicing the accounts of
Class A and Class B shareholders. The Class A plan provides for periodic
<PAGE>
Page 6
payments to brokers who provide services to accounts that hold Class A shares
and for promotional and other sales related costs. The Distributor is
compensated at an annual rate that may not exceed 0.35% of the average daily
net asset value of Class A shares of the Fund some or all of which may be
remitted to brokers. Up to 0.25% of the fee may be used for shareholder
servicing expenses with the remainder used for distribution expenses. The
Rule 12b-1 fee for each fund has been voluntarily capped at 0.30% through
July 1, 1997. The cap may be removed at any time after such date. Some or
all of the 12b-1 fee for Class B shares may be reallowed to broker-dealers
for distribution and or shareholder account services. Under the Plan, the
Fund pays the Distributor 1.00% of the average daily net assets of Class B
shares that are outstanding for 8 years or less, 0.25% of which is intended
as a fee for service provided to existing shareholders with the remainder
used for distribution expenses.
c) OPERATING EXPENSES -.
CLASS A AND CLASS B SHARES: ITT Hartford Group, Inc. ("The Hartford"), the
ultimate parent company of the Hartford Investment Management Company
("HIMCO"), has voluntarily agreed to limit the Total Operating Expenses of
the Class A shares of the Money Market Fund and the Class A and Class B
shares of each other Fund, exclusive of taxes, interest, brokerage
commissions, certain distribution fees and extraordinary expenses, until
at least July 1, 1997. This policy may be discontinued at any time after
July 1, 1997. In the absence of such an agreement, the estimated Other
Expenses for the Class A shares of the Money Market Fund and the Class A
and Class B shares of the following Funds would be: Money Market Fund,
2.01%; Small Company Fund, 3.18% and 7.15%; Capital Appreciation Fund,
3.31% and 4.84%; International Opportunities Fund, 4.80% and 9.56%; Stock
Fund, 3.08% and 3.92%; Dividend and Growth Fund, 3.28% and 7.38%; Advisers
Fund, 2.11% and 3.26%; and Bond Income Strategy Fund, 1.97% and 3.10%;
respectively, and the Total Operating Expenses of such Funds would be
Money Market Fund, 2.81%; Small Company Fund, 4.33% and 9.00%; Capital
Appreciation Fund, 4.41% and 6.64%; International Opportunities Fund,
5.95% and 11.41%; Stock Fund, 4.18% and 5.72%; Dividend and Growth Fund,
4.33% and 9.13%; Advisers Fund, 3.16% and 5.01%; and Bond Income Strategy
Fund, 2.92% and 4.75%, respectively.
CLASS Y SHARES: ITT Hartford Group, Inc. ("The 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. 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: Money Market
Fund, 1.54%; Small Company Fund, 2.25%; Capital Appreciation Fund, 2.12%;
International Opportunities Fund, 4.16%; Stock Fund, 2.23%; Dividend and
Growth Fund. 2.24%; Advisers Fund, 1.83%; and Bond Income Strategy Fund,
1.84%; respectively, and the Total Operating Expenses of such Funds would
be: Money Market Fund, 2.04%; Small Company Fund, 3.1%; Capital
Appreciation Fund, 2.92%; International Opportunities Fund, 5.01%; Stock
Fund, 3.03%; Dividend and Growth Fund, 2.99%; Advisers Fund, 2.58%; and
Bond Income Strategy Fund, 2.49, respectively.
<PAGE>
ITT HARTFORD MUTUAL FUNDS, INC.
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits.
(a) Financial Statements.
In Part A: With respect to each Fund, financial highlights for the
period from July 22, 1996 (commencement of operations)
through November 30, 1996.
In Part B: With respect to each Fund: Statement of Net Assets as of
November 30, 1996, Statement of Operations for the period
from July 22, 1996 (commencement of operations) through
November 30, 1996; Statement of Changes in Net Assets for
the period from July 22, 1996 (commencement of operations)
through November 30, 1996.
(b) Exhibits
1. Articles of Incorporation(1)
2. By-Laws(1)
3. Not Applicable
5. Form of Investment Advisory Agreement(1)
5.1 Form of Subadvisory Agreement(1)
6. Form of Principal Underwriting Agreement(1)
6.1 Form of Dealer Agreement with the Distributor(2)
7. Not Applicable
8. Form of Custodian Agreement(2)
9. Form of Transfer Agency and Service Agreement(2)
10. Opinion and Consent of Counsel(3)
11. Consent of Independent Public Accountants(4)
12. Not Applicable
13. Not Applicable
14. Not Applicable
15. Form of Rule 12b-1 Distribution Plan for Class A Shares(1)
15.1 Form of Rule 12b-1 Distribution Plan for Class B Shares(1)
16. Schedule of Computation for Performance Calculations
17. Not Applicable
18. Form of Rule 18f-3 Plan(1)
19. Powers of Attorney(2)
27. Financial Data Schedules
_________________________
(1)Filed with Registrant's Initial Registration Statement on April 9, 1996.
(2)Filed with Registrant's Pre-Effective Amendment Number 1 on June 27, 1996.
(3)To be filed with Registrant's Rule 24f-2 Notice.
(4)Filed with Registrant's Pre-Effective Amendment Number 2 on July 18, 1996.
<PAGE>
Item 25. Persons Controlled by or Under Common Control with Registrant.
Inapplicable
Item 26. Number of Record Holders by Class of Securities as of November 30, 1996
Fund Name Class A Class B Class Y
ITT Hartford Small Company Fund 451 33 5
ITT Hartford Capital Appreciation Fund 740 59 4
ITT Hartford International Opportunities Fund 270 17 4
ITT Hartford Stock Fund 429 54 4
ITT Hartford Dividend and Growth Fund 546 34 4
ITT Hartford Advisors Fund 379 49 4
ITT Hartford Bond Income Strategy Fund 85 8 4
ITT Hartford Money Market Fund 170 N/A 4
Total Number of Record Holders by Class 3070 254 33
Item 27. Indemnification.
Reference is made to Article V of the Articles of Incorporation filed
herewith.
Item 28. Business and Other Connections of Investment Adviser.
All of the information required by this item is set forth in Schedule D of
Form ADV, as amended, of the Registrant's investment adviser, HIMCO (File No.
801-16814).
Item 29. Principal Underwriters.
Hartford Securities Distribution Company, Inc. ("HSD") is an indirect
wholly owned subsidiary of ITT Hartford Group, Inc. HSD is the principal
underwriter for the following registered investment companies: Hartford Life
Insurance Company - DC Variable Account I; Hartford Life Insurance Company -
Separate Account Two (DC Variable Account II); Hartford Life Insurance Company -
Separate Account Two (Variable Account "A"); Hartford Life Insurance Company -
Separate Account Two (QP Variable Account); Hartford Life Insurance Company -
Separate Account Two (NQ Variable Account); Hartford Life Insurance Company
- -Putnam Capital Manager Trust Separate Account; Hartford Life Insurance Company
- - Separate Account Two; Hartford Money Market Fund, Inc.; Hartford Life
Insurance Company - Separate Account Three; ITT Hartford Life and Annuity
Insurance Company - Separate Account Three; Hartford Life Insurance Company -
Separate Account Five; ITT Hartford Life and Annuity Insurance Company -
Separate Account One; ITT Hartford Life and Annuity Insurance Company - Putnam
Capital Manager Trust Separate Account Two.
<PAGE>
The Directors and principal officers of HSD and their position with the
Registrant are as follows:
Position or Office
Name* HSD with Registrant
- ----- --- -------------------
Peter Cummins Vice-President Vice President
Lynda Godkin Secretary None
John P. Ginnetti Executive Vice Vice President
President
George Jay Controller & Controller
Fin. Principal
Stephen T. Joyce Asst. Secretary None
Glen J. Kvadus Asst. Secretary None
Thomas M. Marra Exec. Vice-Pres. Vice President
Paul Eugene Olson Supv. Registered None
Principal
Edward M. Ryan, (Jr.) Asst. Secretary None
Lowndes A. Smith President President
Donald W. Waggaman, Jr. Treasurer None
* Principal business address is P.O. Box 2999, Hartford, CT 01604-2999
Item 30. Location of Accounts and Records.
Books or other documents required to be maintained by the Registrant by
Section 31(a) of the Investment Company Act of 1940 and the Rules promulgated
thereunder are maintained by the Registrant's custodian, State Street Bank and
Trust Company, 224 Franklin Street, Boston, MA 02110 and the Registrant's
transfer agent, Boston Financial Data Services, Inc., Two Heritage Drive,
Quincy, MA 02171. Registrant's financial ledgers and other corporate records
are maintained at its offices at The Hartford Life Insurance Company, 690 Asylum
Ave., Hartford Plaza, Hartford, CT 06115.
Item 31. Management Services.
Not Applicable
Item 32. Undertakings.
(a) Not applicable
(b) Not applicable
(c) The Company will furnish each person to whom a prospectus is delivered
with a copy of the Company's latest annual report to shareholders,
upon request and without charge.
(d) The Registrant undertakes to comply with Section 16(c) of the
Investment Company Act of 1940, as amended, as it relates to the
assistance to be rendered to shareholders with respect to the call of
a meeting to replace a director.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 the Registrant
certifies that it meets all of the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Hartford, State of
Connecticut, on the 21st day of January, 1997.
ITT HARTFORD MUTUAL FUNDS, INC.
By: *
------------------------------------
Joseph H. Gareau
Its: President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
____________*____________ President January 21, 1997
Joseph H. Gareau (Chief Executive Officer
& Director)
____________*____________ Controller January 21, 1997
George R. Jay (Chief Accounting Officer)
____________*____________ Vice President & Treasurer January 21, 1997
J. Richard Garrett (Chief Financial Officer)
____________*____________ Director January 21, 1997
Joseph A. Biernat
____________*____________ Director January 21, 1997
Winifred E. Coleman
____________*____________ Director January 21, 1997
William A. O'Neill
<PAGE>
____________*____________ Director January 21, 1997
Millard H. Pryor, Jr.
____________*____________ Director January 21, 1997
Lowndes A. Smith
____________*____________ Director January 21, 1997
John K. Springer
/s/ Kevin J. Carr January 21, 1997
- -------------------------
* By Kevin J. Carr
Attorney-in-fact
<PAGE>
EXHIBIT INDEX
Exhibit No. Page No.
16 Schedule of Computation for Performance Calculations
27 Financial Data Schedule
<PAGE>
EXHIBIT 16
Page 1
ITT HARTFORD SMALL COMPANY FUND - CLASS A SHARES
TOTAL RETURN CALCULATION
FROM INCEPTION THROUGH NOVEMBER 30, 1996
Formula P(1+T)n = ERV
Including Payment of the Sales Charge
Net Asset Value $11.47
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,083.90 = ERV
Inception through 11/30/96 8.39% = n
TOTAL RETURN FOR PERIOD 8.39% = T
Excluding Payment of the Sales Charge
Net Asset Value $11.47
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,147.00 = ERV
Inception through 11/30/96 14.70% = n
TOTAL RETURN FOR THE PERIOD 14.70% = T
ITT HARTFORD SMALL COMPANY FUND - CLASS B SHARES
TOTAL RETURN CALCULATION
FROM INCEPTION THROUGH NOVEMBER 30, 1996
Formula P(1+T)n = ERV
Including Payment of the CDSC
Net Asset Value $11.45
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,095.00 = ERV
Inception through 11/30/96 9.50% = n
TOTAL RETURN FOR PERIOD 9.50% = T
Excluding Payment of the CDSC
Net Asset Value $11.45
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,145.00 = ERV
Inception through 11/30/96 14.50% = n
TOTAL RETURN FOR THE PERIOD 14.50% = T
<PAGE>
Page 2
ITT HARTFORD SMALL COMPANY FUND - CLASS Y SHARES
TOTAL RETURN CALCULATION
FROM INCEPTION THROUGH NOVEMBER 30, 1996
Formula P(1+T)n = ERV
Including Payment of the CDSC
Net Asset Value $11.49
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,149.00 = ERV
Inception through 11/30/96 14.90% = n
TOTAL RETURN FOR PERIOD 14.90% = T
Excluding Payment of the CDSC
Net Asset Value $11.49
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,149.00 = ERV
Inception through 11/30/96 14.90% = n
TOTAL RETURN FOR THE PERIOD 14.90% = T
<PAGE>
Page 3
ITT HARTFORD SMALL COMPANY FUND
CALCULATION OF DISTRIBUTION RATE
PERIOD ENDED NOVEMBER 30, 1996
CURRENT ANNUAL INCOME PER SHARE
CURRENT OFFERING PRICE
Class A Shares 0 = 0%
Class B Shares 0 = 0%
Class Y Shares 0 = 0%
<PAGE>
Page 4
ITT HARTFORD CAPITAL APPRECIATION FUND - CLASS A SHARES
TOTAL RETURN CALCULATION
FROM INCEPTION THROUGH NOVEMBER 30, 1996
Formula P(1+T)n = ERV
Including Payment of the Sales Charge
Net Asset Value $13.26
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,253.10 = ERV
Inception through 11/30/96 25.31% = n
TOTAL RETURN FOR PERIOD 25.31% = T
Excluding Payment of the Sales Charge
Net Asset Value $13.26
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,326.00 = ERV
Inception through 11/30/96 32.60% = n
TOTAL RETURN FOR THE PERIOD 32.60% = T
ITT HARTFORD CAPITAL APPRECIATION FUND - CLASS B SHARES
TOTAL RETURN CALCULATION
FROM INCEPTION THROUGH NOVEMBER 30, 1996
Formula P(1+T)n = ERV
Including Payment of the CDSC
Net Asset Value $13.23
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,273.00 = ERV
Inception through 11/30/96 27.30% = n
TOTAL RETURN FOR PERIOD 27.30% = T
Excluding Payment of the CDSC
Net Asset Value $13.23
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,323.00 = ERV
Inception through 11/30/96 32.30% = n
TOTAL RETURN FOR THE PERIOD 32.30% = T
<PAGE>
Page 5
ITT HARTFORD CAPITAL APPRECIATION FUND - CLASS Y SHARES
TOTAL RETURN CALCULATION
FROM INCEPTION THROUGH NOVEMBER 30, 1996
Formula P(1+T)n = ERV
Including Payment of the CDSC
Net Asset Value $13.28
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,328.00 = ERV
Inception through 11/30/96 32.80% = n
TOTAL RETURN FOR PERIOD 32.80% = T
Excluding Payment of the CDSC
Net Asset Value $13.28
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,328.00 = ERV
Inception through 11/30/96 32.80% = n
TOTAL RETURN FOR THE PERIOD 32.80% = T
<PAGE>
Page 6
ITT HARTFORD CAPITAL APPRECIATION FUND
CALCULATION OF DISTRIBUTION RATE
PERIOD ENDED NOVEMBER 30, 1996
CURRENT ANNUAL INCOME PER SHARE
CURRENT OFFERING PRICE
Class A Shares 0 = 0%
Class B Shares 0 = 0%
Class Y Shares 0 = 0%
<PAGE>
Page 7
ITT HARTFORD INTERNATIONAL OPPORTUNITIES FUND - CLASS A SHARES
TOTAL RETURN CALCULATION
FROM INCEPTION THROUGH NOVEMBER 30, 1996
Formula P(1+T)n = ERV
Including Payment of the Sales Charge
Net Asset Value $10.72
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,013.00 = ERV
Inception through 11/30/96 1.30% = n
TOTAL RETURN FOR PERIOD 1.30% = T
Excluding Payment of the Sales Charge
Net Asset Value $10.72
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,072.00 = ERV
Inception through 11/30/96 7.20% = n
TOTAL RETURN FOR THE PERIOD 7.20% = T
ITT HARTFORD INTERNATIONAL OPPORTUNITIES FUND - CLASS B SHARES
TOTAL RETURN CALCULATION
FROM INCEPTION THROUGH NOVEMBER 30, 1996
Formula P(1+T)n = ERV
Including Payment of the CDSC
Net Asset Value $10.70
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,020.00 = ERV
Inception through 11/30/96 2.00% = n
TOTAL RETURN FOR PERIOD 2.00% = T
Excluding Payment of the CDSC
Net Asset Value $10.70
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,070.00 = ERV
Inception through 11/30/96 7.00% = n
TOTAL RETURN FOR THE PERIOD 7.00% = T
<PAGE>
Page 8
ITT HARTFORD INTERNATIONAL OPPORTUNITIES FUND - CLASS Y SHARES
TOTAL RETURN CALCULATION
FROM INCEPTION THROUGH NOVEMBER 30, 1996
Formula P(1+T)n = ERV
Including Payment of the CDSC
Net Asset Value $10.74
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,074.00 = ERV
Inception through 11/30/96 7.40% = n
TOTAL RETURN FOR PERIOD 7.40% = T
Excluding Payment of the CDSC
Net Asset Value $10.74
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,074.00 = ERV
Inception through 11/30/96 7.40% = n
TOTAL RETURN FOR THE PERIOD 7.40% = T
<PAGE>
Page 9
ITT HARTFORD INTERNATIONAL OPPORTUNITIES FUND
CALCULATION OF DISTRIBUTION RATE
PERIOD ENDED NOVEMBER 30, 1996
CURRENT ANNUAL INCOME PER SHARE
CURRENT OFFERING PRICE
Class A Shares 0 = 0%
Class B Shares 0 = 0%
Class Y Shares 0 = 0%
<PAGE>
Page 10
ITT HARTFORD STOCK FUND - CLASS A SHARES
TOTAL RETURN CALCULATION
FROM INCEPTION THROUGH NOVEMBER 30, 1996
Formula P(1+T)n = ERV
Including Payment of the Sales Charge
Net Asset Value $11.83
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,179.00 = ERV
Inception through 11/30/96 11.79% = n
TOTAL RETURN FOR PERIOD 11.79% = T
Excluding Payment of the Sales Charge
Net Asset Value $11.83
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,183.00 = ERV
Inception through 11/30/96 18.30% = n
TOTAL RETURN FOR THE PERIOD 18.30% = T
ITT HARTFORD STOCK FUND - CLASS B SHARES
TOTAL RETURN CALCULATION
FROM INCEPTION THROUGH NOVEMBER 30, 1996
Formula P(1+T)n = ERV
Including Payment of the CDSC
Net Asset Value $11.80
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,130.00 = ERV
Inception through 11/30/96 13.00% = n
TOTAL RETURN FOR PERIOD 13.00% = T
Excluding Payment of the CDSC
Net Asset Value $11.80
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,180.00 = ERV
Inception through 11/30/96 18.00% = n
TOTAL RETURN FOR THE PERIOD 18.00% = T
<PAGE>
Page 11
ITT HARTFORD STOCK FUND - CLASS Y SHARES
TOTAL RETURN CALCULATION
FROM INCEPTION THROUGH NOVEMBER 30, 1996
Formula P(1+T)n = ERV
Including Payment of the CDSC
Net Asset Value $11.85
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,185.00 = ERV
Inception through 11/30/96 18.50% = n
TOTAL RETURN FOR PERIOD 18.50% = T
Excluding Payment of the CDSC
Net Asset Value $11.85
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,185.00 = ERV
Inception through 11/30/96 18.50% = n
TOTAL RETURN FOR THE PERIOD 18.50% = T
<PAGE>
Page 12
ITT HARTFORD STOCK FUND
CALCULATION OF DISTRIBUTION RATE
PERIOD ENDED NOVEMBER 30, 1996
CURRENT ANNUAL INCOME PER SHARE
CURRENT OFFERING PRICE
Class A Shares 0 = 0%
Class B Shares 0 = 0%
Class Y Shares 0 = 0%
<PAGE>
Page 13
ITT HARTFORD DIVIDEND AND GROWTH FUND - CLASS A SHARES
TOTAL RETURN CALCULATION
FROM INCEPTION THROUGH NOVEMBER 30, 1996
Formula P(1+T)n = ERV
Including Payment of the Sales Charge
Net Asset Value $11.63
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,099.00 = ERV
Inception through 11/30/96 9.90% = n
TOTAL RETURN FOR PERIOD 9.90% = T
Excluding Payment of the Sales Charge
Net Asset Value $11.63
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,163.00 = ERV
Inception through 11/30/96 16.30% = n
TOTAL RETURN FOR THE PERIOD 16.30% = T
ITT HARTFORD DIVIDEND AND GROWTH FUND - CLASS B SHARES
TOTAL RETURN CALCULATION
FROM INCEPTION THROUGH NOVEMBER 30, 1996
Formula P(1+T)n = ERV
Including Payment of the CDSC
Net Asset Value $11.60
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,100.00 = ERV
Inception through 11/30/96 11.00% = n
TOTAL RETURN FOR PERIOD 11.00% = T
Excluding Payment of the CDSC
Net Asset Value $11.60
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,160.00 = ERV
Inception through 11/30/96 16.00% = n
TOTAL RETURN FOR THE PERIOD 16.00% = T
<PAGE>
Page 14
ITT HARTFORD DIVIDEND AND GROWTH FUND - CLASS Y SHARES
TOTAL RETURN CALCULATION
FROM INCEPTION THROUGH NOVEMBER 30, 1996
Formula P(1+T)n = ERV
Including Payment of the CDSC
Net Asset Value $11.65
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,165.00 = ERV
Inception through 11/30/96 16.50% = n
TOTAL RETURN FOR PERIOD 16.50% = T
Excluding Payment of the CDSC
Net Asset Value $11.65
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,165.00 = ERV
Inception through 11/30/96 16.50% = n
TOTAL RETURN FOR THE PERIOD 16.50% = T
<PAGE>
Page 15
ITT HARTFORD DIVIDEND AND GROWTH FUND
CALCULATION OF DISTRIBUTION RATE
PERIOD ENDED NOVEMBER 30, 1996
CURRENT ANNUAL INCOME PER SHARE
CURRENT OFFERING PRICE
Class A Shares 0 = 0%
Class B Shares 0 = 0%
Class Y Shares 0 = 0%
<PAGE>
Page 16
ITT HARTFORD ADVISORS FUND - CLASS A SHARES
TOTAL RETURN CALCULATION
FROM INCEPTION THROUGH NOVEMBER 30, 1996
Formula P(1+T)n = ERV
Including Payment of the Sales Charge
Net Asset Value $11.40
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,077.30 = ERV
Inception through 11/30/96 7.73% = n
TOTAL RETURN FOR PERIOD 7.73% = T
Excluding Payment of the Sales Charge
Net Asset Value $11.40
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,140.00 = ERV
Inception through 11/30/96 14.00% = n
TOTAL RETURN FOR THE PERIOD 14.00% = T
ITT HARTFORD ADVISORS FUND - CLASS B SHARES
TOTAL RETURN CALCULATION
FROM INCEPTION THROUGH NOVEMBER 30, 1996
Formula P(1+T)n = ERV
Including Payment of the CDSC
Net Asset Value $11.38
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,088.00 = ERV
Inception through 11/30/96 8.80% = n
TOTAL RETURN FOR PERIOD 8.80% = T
Excluding Payment of the CDSC
Net Asset Value $11.38
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,138.00 = ERV
Inception through 11/30/96 13.80% = n
TOTAL RETURN FOR THE PERIOD 13.80% = T
<PAGE>
Page 17
ITT HARTFORD ADVISORS FUND - CLASS Y SHARES
TOTAL RETURN CALCULATION
FROM INCEPTION THROUGH NOVEMBER 30, 1996
Formula P(1+T)n = ERV
Including Payment of the CDSC
Net Asset Value $11.42
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,142.00 = ERV
Inception through 11/30/96 14.20% = n
TOTAL RETURN FOR PERIOD 14.20% = T
Excluding Payment of the CDSC
Net Asset Value $11.42
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,142.00 = ERV
Inception through 11/30/96 14.20% = n
TOTAL RETURN FOR THE PERIOD 14.20% = T
<PAGE>
Page 18
ITT HARTFORD ADVISORS FUND
CALCULATION OF DISTRIBUTION RATE
PERIOD ENDED NOVEMBER 30, 1996
CURRENT ANNUAL INCOME PER SHARE
CURRENT OFFERING PRICE
Class A Shares 0 = 0%
Class B Shares 0 = 0%
Class Y Shares 0 = 0%
<PAGE>
Page 19
ITT HARTFORD BOND INCOME STRATEGY FUND - CLASS A SHARES
TOTAL RETURN CALCULATION
FROM INCEPTION THROUGH NOVEMBER 30, 1996
Formula P(1+T)n = ERV
Including Payment of the Sales Charge
Net Asset Value $10.44
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,016.70 = ERV
Inception through 11/30/96 1.67% = n
TOTAL RETURN FOR PERIOD 1.67% = T
Excluding Payment of the Sales Charge
Net Asset Value $10.44
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,064.60 = ERV
Inception through 11/30/96 6.46% = n
TOTAL RETURN FOR THE PERIOD 6.46% = T
ITT HARTFORD BOND INCOME STRATEGY FUND - CLASS B SHARES
TOTAL RETURN CALCULATION
FROM INCEPTION THROUGH NOVEMBER 30, 1996
Formula P(1+T)n = ERV
Including Payment of the CDSC
Net Asset Value $10.43
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,011.70 = ERV
Inception through 11/30/96 1.17% = n
TOTAL RETURN FOR PERIOD 1.17% = T
Excluding Payment of the CDSC
Net Asset Value $10.43
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,061.70 = ERV
Inception through 11/30/96 6.17% = n
TOTAL RETURN FOR THE PERIOD 6.17% = T
<PAGE>
Page 20
ITT HARTFORD BOND INCOME STRATEGY FUND - CLASS Y SHARES
TOTAL RETURN CALCULATION
FROM INCEPTION THROUGH NOVEMBER 30, 1996
Formula P(1+T)n = ERV
Including Payment of the CDSC
Net Asset Value $10.45
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,066.60 = ERV
Inception through 11/30/96 6.66% = n
TOTAL RETURN FOR PERIOD 6.66% = T
Excluding Payment of the CDSC
Net Asset Value $10.45
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,066.60 = ERV
Inception through 11/30/96 6.66% = n
TOTAL RETURN FOR THE PERIOD 6.66% = T
<PAGE>
Page 21
ITT HARTFORD BOND INCOME STRATEGY FUND
CALCULATION OF DISTRIBUTION RATE
PERIOD ENDED NOVEMBER 30, 1996
CURRENT ANNUAL INCOME PER SHARE
CURRENT OFFERING PRICE
Class A Shares $.201 = 2.01%*
-----
$9.98
Class B Shares $.182 = 1.74%*
-----
$10.45
Class Y Shares $.210 = 2.01%*
-----
$10.45
*Not Annualized
<PAGE>
Page 22
ITT HARTFORD MONEY MARKET FUND - CLASS A SHARES
TOTAL RETURN CALCULATION
FROM INCEPTION THROUGH NOVEMBER 30, 1996
Formula P(1+T)n = ERV
Including Payment of the Sales Charge
Net Asset Value $1.00
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,016.20 = ERV
Inception through 11/30/96 1.62% = n
TOTAL RETURN FOR PERIOD 1.62% = T
Excluding Payment of the Sales Charge
Net Asset Value $1.00
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,016.20 = ERV
Inception through 11/30/96 1.62% = n
TOTAL RETURN FOR THE PERIOD 1.62% = T
ITT HARTFORD MONEY MARKET FUND - CLASS Y SHARES
TOTAL RETURN CALCULATION
FROM INCEPTION THROUGH NOVEMBER 30, 1996
Formula P(1+T)n = ERV
Including Payment of the CDSC
Net Asset Value $1.00
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,019.00 = ERV
Inception through 11/30/96 1.90% = n
TOTAL RETURN FOR PERIOD 1.90% = T
Excluding Payment of the CDSC
Net Asset Value $1.00
Initial Investment $1,000.00 = P
Ending Redeemable Value $1,019.00 = ERV
Inception through 11/30/96 1.90% = n
TOTAL RETURN FOR THE PERIOD 1.90% = T
<PAGE>
Page 23
ITT HARTFORD MONEY MARKET FUND
CALCULATION OF DISTRIBUTION RATE
PERIOD ENDED NOVEMBER 30, 1996
CURRENT ANNUAL INCOME PER SHARE
CURRENT OFFERING PRICE
Class A Shares $.0162 = 1.62%
------
$1.00
Class Y Shares $.019 = 1.90%
-----
$1.00
<PAGE>
Page 24
ITT HARTFORD BOND INCOME STRATEGY FUND - CLASS A SHARES
SCHEDULE OF COMPUTATION OF YIELD COMPUTATION
11/30/96
WITH WAIVER
YIELD = 2{{((a-b)/cd)+1}6-1}
WHERE: a = Dividends and interest earned during the period
b = Expenses accrued for the period
c = The average daily number of shares outstanding during
the period that were entitled to receive dividends
d = The maximum offering price per share on the last day of
the period
YIELD = 2{{((61,385.90 - 10,910.01)/1,062,320.655 X 10.93)+1}6-1} = 5.27%
ITT HARTFORD BOND INCOME STRATEGY FUND - CLASS A SHARES
SCHEDULE OF COMPUTATION OF YIELD COMPUTATION
11/30/96
WITHOUT WAIVER
YIELD = 2{{((a-b)/cd)+1}6-1}
WHERE: a = Dividends and interest earned during the period
b = Expenses accrued for the period
c = The average daily number of shares outstanding during
the period that were entitled to receive dividends
d = The maximum offering price per share on the last day of
the period
YIELD = 2{{((61,385.90 - 83,988.00)/1,052,320.655 X 10.93)+1}6-1} = -2.32%
<PAGE>
Page 25
ITT HARTFORD BOND INCOME STRATEGY FUND - CLASS B SHARES
SCHEDULE OF COMPUTATION OF YIELD COMPUTATION
11/30/96
WITH WAIVER
YIELD = 2{{((a-b)/cd)+1}6-1}
WHERE: a = Dividends and interest earned during the period
b = Expenses accrued for the period
c = The average daily number of shares outstanding during
the period that were entitled to receive dividends
d = The maximum offering price per share on the last day of
the period
YIELD = 2{{((563.43 - 155.69)/9,818.59 X 10.43)+1}6-1} = 4.83%
ITT HARTFORD BOND INCOME STRATEGY FUND - CLASS B SHARES
SCHEDULE OF COMPUTATION OF YIELD COMPUTATION
11/30/96
WITHOUT WAIVER
YIELD = 2{{((a-b)/cd)+1}6-1}
WHERE: a = Dividends and interest earned during the period
b = Expenses accrued for the period
c = The average daily number of shares outstanding during
the period that were entitled to receive dividends
d = The maximum offering price per share on the last day of
the period
YIELD = 2{{((563.43 - 422)/9,818.59 X 10.43)+1}6-1} = 1.67%
<PAGE>
Page 26
ITT HARTFORD BOND INCOME STRATEGY FUND - CLASS Y SHARES
SCHEDULE OF COMPUTATION OF YIELD COMPUTATION
11/30/96
WITH WAIVER
YIELD = 2{{((a-b)/cd)+1}6-1}
WHERE: a = Dividends and interest earned during the period
b = Expenses accrued for the period
c = The average daily number of shares outstanding during
the period that were entitled to receive dividends
d = The maximum offering price per share on the last day of
the period
YIELD = 2{{((29.75 - 38)/514.627 X 10.45)+1}6-1} = 5.96%
ITT HARTFORD BOND INCOME STRATEGY FUND - CLASS Y SHARES
SCHEDULE OF COMPUTATION OF YIELD COMPUTATION
11/30/96
WITHOUT WAIVER
YIELD = 2{{((a-b)/cd)+1}6-1}
WHERE: a = Dividends and interest earned during the period
b = Expenses accrued for the period
c = The average daily number of shares outstanding during
the period that were entitled to receive dividends
d = The maximum offering price per share on the last day of
the period
YIELD = 2{{((29.75 - 38)/514.627 X 10.45)+1}6-1} = -1.83%
<PAGE>
Page 27
ITT HARTFORD MONEY MARKET FUND - CLASS A SHARES
EXHIBIT OF PERFORMANCE CALCULATIONS
1. Formula. The Fund's current yield quotation is based on a seven-day
period and is calculated as follows: The first calculation is net
investment income per share, which is accrued interest on portfolio
securities, plus or minus amortized discount or premium (excluding market
discount), less accrued expenses. This number is then divided by the
price per share (expected to remain constant at $1.00) at the beginning of
the period ("base period return"). The result is then divided by 7 and
multiplied by 365 and the resulting yield figure is carried to the nearest
one-hundredth of one percent. Realized capital gains or losses and
unrealized appreciation or depreciation of investments are not included in
the calculation.
The Fund's effective yield is determined by taking the base period return
(calculated as described above) and calculating the effect of assumed
compounding. The formula for the effective yield is:
(base period return + 1)365/7 - 1
2. Performance Reflected. The representative yield calculations reflected
herein are for the seven-day period ended November 30, 1996.
3. Yield. First, net investment income per share for the last day of the
seven-day period is calculated. The following figures are provided for
this purpose:
a. Accrued interest, including amortization of premium and discount, for
November 30, 1996 equals $1,607.11.
b. Accrued expenses for November 30, 1996 equal $290.63.
c. The number of outstanding shares of record for dividend purposes on
November 30, 1996 equals 10,644,250.60.
Net investment income per share for November 30, 1996 is then calculated as
follows:
Net Investment Income Per Share = Accrued Interest-Accrued Expenses Record Date
---------------------------------
Shares
$1,607.11 - $290.63 = $.000123680/Share10,644,250.60
-------------------
Net investment income for the other six days in the seven-day period is then
calculated in the same manner. The resulting figures for each of the seven
days in
<PAGE>
Page 28
the period are added together to obtain the net investment income per
share for the period as follows:
Date Net Investment
---- Income Per Share
------------------
November 30, 1996 $.000123680/Share
November 29, 1996 .000123680
November 28, 1996 .000123250
November 27, 1996 .000123250
November 26, 1996 .000123104
November 25, 1996 .000123045
November 24, 1996 .000122722
-----------------
TOTAL $.000862731/Share
Then, base period is calculated.
Base Period Return = Net Investment Income Per Share Price Per Share
-------------------------------
$.000862731/Share = $.000862731$1.00/Share
-----------------
Then, yield is calculated.
Yield = Base Period Return X 3657
------------------
.000862731 X 365 = .04507
----------
The decimal return is converted to a percentage by multiplying by 100.
.0450 X 100 = 4.50%
4. Effective Yield. The base period return for use in the formula for
effective yield set forth in Sub-section 1 above is the same as calculated
in Sub-section 3 above.
Effective Yield = (Base Period Return + 1)365/7 - 1
= (.000862731 + 1)365/7 - 1
= (1.000862731)365/7 - 1
= 1.0460 - 1
= .0460
The decimal return is converted to a percentage by multiplying by 100.
.0460 X 100 = 4.60%
<PAGE>
Page 29
ITT HARTFORD MONEY MARKET FUND - CLASS Y SHARES
EXHIBIT OF PERFORMANCE CALCULATIONS
1. Formula. The Fund's current yield quotation is based on a seven-day period
and is calculated as follows: The first calculation is net investment
income per share, which is accrued interest on portfolio securities, plus
or minus amortized discount or premium (excluding market discount), less
accrued expenses. This number is then divided by the price per share
(expected to remain constant at $1.00) at the beginning of the period
("base period return"). The result is then divided by 7 and multiplied by
365 and the resulting yield figure is carried to the nearest one-hundredth
of one percent. Realized capital gains or losses and unrealized
appreciation or depreciation of investments are not included in the
calculation.
The Fund's effective yield is determined by taking the base period return
(calculated as described above) and calculating the effect of assumed
compounding. The formula for the effective yield is:
(base period return + 1)365/7 - 1
2. Performance Reflected. The representative yield calculations reflected
herein are for the seven-day period ended November 30, 1996.
2. Yield. First, net investment income per share for the last day of the
seven-day period is calculated. The following figures are provided for
this purpose:
a. Accrued interest, including amortization of premium and discount,
for November 30, 1996 equals $.043.
b. Accrued expenses for November 30, 1996 equal $.003.
c. The number of outstanding shares of record for dividend purposes
on November 30, 1996 equals 278.01.
Net investment income per share for November 30, 1996 is then calculated as
follows:
Net Investment Income Per Share = Accrued Interest-Accrued Expenses Record Date
---------------------------------
Shares
$.043 - $.003 = $.000143880/Share 278.01
-------------
Net investment income for the other six days in the seven-day period is
then calculated in the same manner. The resulting figures for each of the
seven days in
<PAGE>
Page 30
the period are added together to obtain the net investment income per share
for the period as follows:
Date Net Investment
---- Income Per Share
----------------
November 30, 1996 $.000143880/Share
November 29, 1996 .000143880
November 28, 1996 .000125295
November 27, 1996 .000125895
November 26, 1996 .000143880
November 25, 1996 .000143880
November 24, 1996 .000143880
-----------------
TOTAL $.000971190/Share
Then, base period is calculated.
Base Period Return = Net Investment Income Per Share Price Per Share
-------------------------------
$.000971190/Share = $.000971190$1.00/Share
-----------------
Then, yield is calculated.
Yield = Base Period Return X 3657
------------------
.000971190 X 365 = .05067
----------
The decimal return is converted to a percentage by multiplying by 100.
.0506 X 100 = 5.06%
4. Effective Yield. The base period return for use in the formula for
effective yield set forth in Sub-section 1 above is the same as calculated
in Sub-section 3 above.
Effective Yield = (Base Period Return + 1)365/7 - 1
= (.000971190 + 1)365/7 - 1
= (1.000971190)365/7 - 1
= 1.0519 - 1
= .0519
The decimal return is converted to a percentage by multiplying by 100.
.0519 X 100 = 5.19%
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<PER-SHARE-NAV-BEGIN> 10.000
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0001006415
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<NUMBER> 7
<NAME> ITT HARTFORD INTERNATIONAL OPPORTUNITIES FUND A
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<TABLE> <S> <C>
<PAGE>
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<NAME> ITT HARTFORD BOND INCOME STRATEGY FUND
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<NAME> ITT HARTFORD BOND INCOME STRATEGY FUND CLASS A
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<NAME> ITT HARTFORD BOND INCOME STRATEGY FUND CLASS B
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<PAGE>
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<NAME> ITT HARTFORD MONEY MARKET FUND
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<NAME> ITT HARTFORD MONEY MARKET FUND CLASS A
<S> <C>
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<PAGE>
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<NAME> ITT HARTFORD MONEY MARKET FUND
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<NAME> ITT HARTFORD MONEY MARKET FUND CLASS Y
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