<PAGE>
As filed with the Securities and Exchange Commission on January 28, 2000
File No. 333-45431
File No. 811-08629
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. 5 / X /
-----
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / X /
-----
Amendment No. 5 / X /
-----
HARTFORD SERIES FUND, INC.
(Exact Name of Registrant as Specified in Charter)
P. O. Box 2999, Hartford, Connecticut 06104-2999
(Address of Principal Executive Offices)
Registrant's Telephone Number including Area Code: (203) 547-5000
Kevin J. Carr, Esquire
The Hartford Financial Services Group, Inc.
Investment Law Unit
55 Farmington Avenue
Hartford, Connecticut 06105
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering:
Upon this amendment to the Registration Statement being declared
effective.
<PAGE>
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b) of Rule 485
---
on __________ pursuant to paragraph (b) of Rule 485
---
60 days after filing pursuant to paragraph (a)(1) of Rule 485
---
on pursuant to paragraph (a)(1) of Rule 485
---
X 75 days after filing pursuant to paragraph (a)(2) of Rule 485
---
on __________ pursuant to paragraph (a)(2) of Rule 485
---
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has
previously elected to register an indefinite number of shares of its Common
Stock.
The Rule 24f-2 Notice for the Registrant's most recent fiscal year will be filed
on or before March 31, 2000.
Registrant has filed this post-effective amendment for the purpose of adding two
additional series to the Hartford Series Fund, Inc. (the "Company"). The Company
is currently comprised of three series each with Class IA and Class IB shares.
This filing consists of a combined prospectus for the Class IA shares of each of
the two new series - Hartford Global Technology HLS Fund and Hartford Global
Health HLS Fund (each, a "Fund" or together, the "Funds"), a combined prospectus
for the Class IB shares of the Funds, and a combined statement of additional
information for the two classes of shares of the Funds.
<PAGE>
HARTFORD HLS FUNDS
FOR USE WITH THE HARTFORD
VARIABLE INSURANCE PRODUCTS
PROSPECTUS
EFFECTIVE MAY 1, 2000
<PAGE>
HARTFORD HLS FUNDS
CLASS IA SHARES
PROSPECTUS
MAY 1, 2000
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
SECTOR FUNDS
GLOBAL HEALTH HLS FUND
GLOBAL TECHNOLOGY HLS FUND
STOCK FUNDS
CAPITAL APPRECIATION HLS FUND
DIVIDEND AND GROWTH HLS FUND
GLOBAL LEADERS HLS FUND
GROWTH AND INCOME HLS FUND
INDEX HLS FUND
INTERNATIONAL OPPORTUNITIES HLS FUND
MIDCAP HLS FUND
SMALL COMPANY HLS FUND
STOCK HLS FUND
ASSET ALLOCATION FUNDS
ADVISERS HLS FUND
INTERNATIONAL ADVISERS HLS FUND
BOND FUNDS
BOND HLS FUND
HIGH YIELD HLS FUND
MORTGAGE SECURITIES HLS FUND
MONEY MARKET FUND
MONEY MARKET FUND
<PAGE>
HARTFORD HLS C/O INDIVIDUAL ANNUITY SERVICES
MUTUAL FUNDS P.O. BOX 5085
HARTFORD, CT 06102-5085
<PAGE>
INTRODUCTION
- --------------------------------------------------------------------------------
The Hartford HLS Funds is a family of seventeen mutual funds (each a "fund" and
together the "funds") which serve as underlying investment options for certain
variable annuity and variable life insurance separate accounts of Hartford Life
Insurance Company and its affiliates ("Hartford Life") and certain qualified
retirement plans. Contractholders of variable annuity products and policyholders
of variable life insurance products may choose the funds permitted in the
accompanying variable insurance product prospectus. In addition, participants in
certain qualified retirement plans may choose the funds permitted in their
plans. Each fund offers two classes of shares: Class IA shares offered in this
prospectus and Class IB shares offered pursuant to another prospectus. Each
fund, except the Global Health HLS Fund and Global Technology HLS Fund, is a
diversified fund. The Global Health HLS Fund and Global Technology HLS Fund are
non-diversified concentrated funds, which are sometimes known as "sector funds."
Information on each fund, including risk factors for investing in diversified
versus non-diversified concentrated funds, can be found on the pages following
this summary. HARTFORD LIFE ALSO SPONSORS A FAMILY OF MUTUAL FUNDS KNOWN AS THE
HARTFORD MUTUAL FUNDS, INC. WHICH ARE OFFERED DIRECTLY TO THE PUBLIC (THE
"RETAIL FUNDS"). THE RETAIL FUNDS ARE SEPARATE FUNDS AND SHOULD NOT BE CONFUSED
WITH THE HARTFORD HLS FUND INVESTMENT OPTIONS OFFERED IN THIS PROSPECTUS.
Please note that mutual funds are not bank deposits and are not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Because you could lose money by investing in these funds, be sure to
read all risk disclosures carefully before investing.
<PAGE>
CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
A summary of each fund's goals,
strategies, risks Hartford Global Health HLS Fund
and performance.
Hartford Global Technology HLS Fund
Hartford Capital Appreciation HLS Fund
Hartford Dividend and Growth HLS Fund
Hartford Global Leaders HLS Fund
Hartford Growth and Income HLS Fund
Hartford Index HLS Fund
Hartford International Opportunities HLS Fund
Hartford MidCap HLS Fund
Hartford Small Company HLS Fund
Hartford Stock HLS Fund
Hartford Advisers HLS Fund
Hartford International Advisers HLS Fund
1
<PAGE>
Hartford Bond HLS Fund
Hartford High Yield HLS Fund
Hartford Mortgage Securities HLS Fund
Hartford Money Market HLS Fund
Description of additional Additional investment matters
investment strategies and
investment risks.
Investment manager and Management of the funds
management fee information.
Information on how to purchase Purchase of fund shares
and sell the fund's shares.
Sale and redemption of shares
Further information on the Determination of net asset value
funds.
Dividends
Exchange privileges
Federal income taxes
Brokerage commissions
Performance related information
General information Financial highlights
For more information back cover
</TABLE>
2
<PAGE>
HARTFORD GLOBAL HEALTH HLS FUND
- --------------------------------------------------------------------------------
INVESTMENT GOAL AND STYLE. The Hartford Global Health HLS Fund seeks long-term
capital appreciation by investing at least 80% of its total assets in the equity
securities of health care companies worldwide.
The focus of the fund's investment process is stock selection through
fundamental analysis. The fund's investment approach to health care sector
investing is based on in-depth understanding of medical science, regulatory
developments, reimbursement policy trends, and individual company business
franchises. The portfolio will exploit favorable macro trends for the health
care sector including demographics.
The portfolio will also seek to invest in health care companies that benefit
from the trend toward global consolidation, the biotechnology revolution and
advances in software, integrated circuits and biocompatible materials.
Fundamental research is focused on direct contact with company management,
suppliers and competitors.
Asset allocation within the portfolio will be diversified across sub-sectors of
the health care industry, but will at times be concentrated in sub-sectors that,
in the opinion of Wellington Management, provide the most compelling
opportunities based on fundamental research.
Stocks considered for purchase in the portfolio typically share the following
attributes:
- - The company's business franchise is temporarily mispriced
- - The company has under-appreciated new product pipelines
- - The company has opportunities due to changes in reimbursement policy (for
example, the privatization of health care services abroad)
- - The company is a target of opportunity due to industry consolidation
Stocks will be considered for sale from the portfolio when:
- - Target prices are achieved
- - Wellington Management's fundamental expectations prove to be wrong
- - A company's prospects become less appealing
Wellington Management seeks growth companies with attractive entry valuations,
defined as those stocks where the price is not already fully exploited by other
investors. Accordingly, Wellington Management seeks to be early, not late in
recognizing opportunity.
The portfolio will be relatively concentrated. Wellington Management expects to
hold approximately 50 to 70 positions, some with a maximum position size of 10%
of the fund's assets at time of purchase. The portfolio will be close to fully
invested; cash balances normally will not exceed 10% of total assets. Market
timing will not be a significant source of performance. Annual portfolio
turnover is expected to be 100% or less.
- --------------------------------------------------------------------------------
MAIN RISKS. As with most stock funds, the value of your investment may go down
in response to stock market movements. Because the fund concentrates on small,
medium and large companies, its performance may be more volatile than that
3
<PAGE>
of a fund that invests primarily in larger companies. Stocks of small or
mid-sized companies may be more risky than stocks of larger companies. These
companies may be young and have more limited operating or business history.
Because these businesses frequently rely on narrower product lines and niche
markets, they can suffer from isolated business setbacks.
The fund's investments are concentrated in one sector of the economy. This means
that the fund may have greater market fluctuation and price volatility than a
fund which invests in a more broadly diversified portfolio of securities across
sectors. Financial, business and economic factors may have a greater impact on a
concentrated fund than on a broadly diversified fund. Health care products and
services are generally subject to government regulation, and changes in laws or
regulations could adversely impact the market value of securities and the fund's
overall performance. Government regulation could have a significant, adverse
impact the price and availability of a company's products and services.
Lawsuits and regulatory proceedings which may be brought against the issuers of
securities could also adversely impact the market value of securities and the
fund's overall performance.
Foreign investments may be more risky than domestic investments. Investments in
foreign securities may be affected by fluctuations in currency exchange rates,
incomplete or inaccurate financial information on companies, social upheavals
and political actions ranging from tax code changes to governmental collapse.
The fund's management strategy will influence performance significantly. If the
managers' stock selection strategy doesn't perform as expected, the fund could
underperform its peers or lose money. The fund expects to trade securities very
actively, which will likely increase its transaction costs (thus lowering
performance) and increase your taxable distributions.
PAST PERFORMANCE. Because the fund has been in operation for less than one year
no performance history has been provided.
[Call Out]
SUB-ADVISER. The fund is managed by Wellington Management using a team of its
global industry analysts that specialize in the healthcare sector.
4
<PAGE>
HARTFORD GLOBAL TECHNOLOGY HLS FUND
- --------------------------------------------------------------------------------
INVESTMENT GOAL AND STYLE. The Hartford Global Technology HLS Fund seeks
long-term capital appreciation by investing at least 80% of its total assets in
the equity securities of technology companies worldwide.
The focus of the fund's investment process is stock selection through
fundamental analysis. The fund's investment approach to technology sector
investing is based on analyzing the competitive outlook for various sub-sectors
of the technology industry, identifying those sub-sectors likely to benefit from
the current and expected future environment, and identifying individual
opportunities. Wellington Management's evaluation of technology companies rests
on its solid knowledge of the overall competitive environment, including supply
and demand characteristics, secular trends, existing product evaluations, and
new product developments within the technology industry. Fundamental research is
focused on direct contact with company management, suppliers and competitors.
Asset allocation within the portfolio reflects Wellington Management's opinion
of the relative attractiveness of stocks within the sub-sectors of the
technology industry, near term macroeconomic events that may detract or enhance
the sub-sector's attractiveness, and the number of underdeveloped opportunities
in each sub-sector. Opportunities dictate the magnitude and frequency of changes
in asset allocation among sub-sectors, but some representation typically is
maintained in each major sub-sector.
Stocks considered for purchase in the portfolio typically share the following
attributes:
- - A positive change in operating results is anticipated
- - Unrecognized or undervalued capabilities are present
- - The quality of management indicates that factors mentioned above will be
converted to shareholder values
Stocks will be considered for sale from the portfolio when:
- - Target prices are achieved
- - Earnings and/or return expectations are marked down due to fundamental
changes in the company's operating outlook
- - More attractive value in a comparable company is available.
The portfolio will be relatively concentrated. Wellington Management expects to
hold approximately 30 to 50 positions, some with a maximum position size of 10%
of the fund's assets at time of purchase. The portfolio will be close to fully
invested; cash balances normally will not exceed 10% of total assets. Market
timing will not be asignificant source of performance. Annual portfolio turnover
is expected to be high and will exceed 100%.
- --------------------------------------------------------------------------------
MAIN RISKS. As with most stock funds, the value of your investment may go down
in response to stock market movements. Because the fund concentrates on small,
medium and large companies, its performance may be more volatile than that
5
<PAGE>
of a fund that invests primarily in larger companies. Stocks of small or
mid-sized companies may be more risky than stocks of larger companies.
These companies may be young and have more limited operating or business
history. Because these businesses frequently rely on narrower product lines and
niche markets, they can suffer from isolated business setbacks.
The fund's investments are concentrated in one sector of the economy. This means
that the fund may have greater market fluctuation and price volatility than a
fund which invests in a more broadly diversified portfolio of securities across
sectors. Financial, business and economic factors may have a greater impact on a
concentrated fund than on a broadly diversified fund. Competition in the
industry may cause technology companies to cut prices significantly, which can
adversely affect the profitability of companies that make up the fund's
portfolio. In addition, because of rapid technological developments, products or
services which are offered by technology companies may become obsolete or may be
produced for a relatively short time, which could adversely affect the price of
the issuers' securities. This means that the fund's returns may be more volatile
than the returns of a fund which is not subject to these risk factors.
Foreign investments may be more risky than domestic investments. Investments in
foreign securities may be affected by fluctuations in currency exchange rates,
incomplete or inaccurate financial information on companies, social upheavals
and political actions ranging from tax code changes to governmental collapse.
The fund's management strategy will influence performance significantly. If the
managers' stock selection strategy doesn't perform as expected, the fund could
underperform its peers or lose money.
The fund expects to trade securities very actively, which will likely increase
its transaction costs (thus lowering performance) and increase your taxable
distributions.
PAST PERFORMANCE. Because the fund has been in operation for less than one year
no performance history has been provided.
[CALL OUT]
SUB-ADVISER. The fund is managed by Wellington Management using a team of its
global industry analysts that specialize in the technology sector.
6
<PAGE>
7
<PAGE>
HARTFORD CAPITAL APPRECIATION HLS FUND, INC.
- --------------------------------------------------------------------------------
INVESTMENT GOAL AND STYLE. The Hartford Capital Appreciation HLS Fund seeks
growth of capital by investing primarily in stocks selected on the basis of
potential for capital appreciation.
The fund normally invests at least 65% of its total assets in common stocks of
small, medium and large companies. The fund may invest up to 20% of its total
assets in securities of non-U.S. issuers.
Through fundamental analysis, Wellington Management identifies companies that it
believes have substantial near-term capital appreciation potential regardless of
company size or industry sector. This strategy is sometimes referred to as a
"stock picking" approach. 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 of a significant event that
Wellington Management believes will trigger an increase in the stock price.
In analyzing a prospective investment Wellington Management looks at a number of
factors, such as business environment, management, balance sheet, income
statement, anticipated earnings, revenues, dividends and other related measures
of value.
- --------------------------------------------------------------------------------
MAIN RISKS. As with most stock funds, the value of your investment may go down
in response to stock market movements. Because the fund concentrates on small,
medium and large companies, its performance may be more volatile than that of a
fund that invests primarily in larger companies.
Stocks of small or mid-sized companies may be more risky than stocks of larger
companies. These companies may be young and have more limited operating or
business history. Because these businesses frequently rely on narrower product
lines and niche markets, they can suffer from isolated business setbacks.
Foreign investments may be more risky than domestic investments. Investments in
foreign securities may be affected by fluctuations in currency exchange rates,
incomplete or inaccurate financial information on companies, social upheavals
and political actions ranging from tax code changes to governmental collapse.
The fund's management strategy will influence performance significantly. If the
managers' stock selection strategy doesn't perform as expected, the fund could
underperform its peers or lose money.
The fund may trade securities actively, which could increase its transaction
costs (thus lowering performance) and increase your taxable distributions.
- --------------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows how the fund's total return has varied from
year to year, while the table shows the fund's performance over time (along with
that of a broad-based market index for comparison). These figures do not include
the effect of sales charges or other fees
8
<PAGE>
which may be applied at the variable life insurance or variable annuity product
level. All figures assume that all dividends and distributions were reinvested.
Keep in mind that past performance does not indicate future results.
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
[GRAPH]
<TABLE>
<CAPTION>
90 91 92 93 94 95 96 97 98 99
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-10.90% 53.99% 16.98% 20.80% 2.50% 30.25% 20.70% 22.34% 15.48%
</TABLE>
- ------------------------------------------------------
BEST QUARTER: up %, quarter
------- -------
WORST QUARTER: down %, quarter
------- -------
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS 10 YEARS INCEPTION
(APRIL 2,
1984)
<S> <C> <C> <C> <C>
CLASS IA
INDEX
INDEX: S&P 500 Index, an unmanaged index of equity securities.
</TABLE>
9
<PAGE>
[Call Out]
SUB-ADVISER
Wellington Management
PORTFOLIO MANAGER
Saul J. Pannell
- Senior Vice President
of Wellington Management
- Manager of the fund
since 1991
- Joined Wellington
Management in 1979
- Investment professional
since 1974
10
<PAGE>
HARTFORD DIVIDEND AND GROWTH HLS FUND
- --------------------------------------------------------------------------------
INVESTMENT GOAL AND STYLE. The Hartford Dividend and Growth HLS Fund seeks a
high level of current income consistent with growth of capital by investing
primarily in stocks.
The fund invests primarily in a diversified portfolio of common stocks that
typically have above average income yields and whose prospects for capital
appreciation are considered favorable by Wellington Management. Under normal
market and economic conditions at least 65% of the fund's total assets are
invested in dividend-paying equity securities. The fund may invest up to 20% of
its total assets in securities of non-U.S. issuers. The fund tends to focus on
securities of larger, well-established companies.
Wellington Management uses fundamental analysis to evaluate a security for
purchase or sale by the fund. Fundamental analysis of a company involves the
assessment of such factors as its business environment, management, balance
sheet, income statement, anticipated earnings, revenues and dividends.
As a key component of its fundamental analysis, Wellington Management evaluates
a company's ability to sustain and potentially increase its dividend payments.
The fund's portfolio is broadly diversified by industry and company.
- --------------------------------------------------------------------------------
MAIN RISKS. As with most stock funds, the value of your investment may go down
in response to stock market movements. Foreign investments may be more risky
than domestic investments. Investments in foreign securities may be affected by
fluctuations in currency exchange rates, incomplete or inaccurate financial
information on companies, social upheavals and political actions ranging from
tax code changes to governmental collapse.
The fund's management strategy will influence performance significantly. If the
fund's stock selection strategy doesn't perform as expected, the fund could
underperform its peers or lose money. The fund may trade securities actively,
which could increase its transaction costs (thus lowering performance) and
increase your taxable distributions.
- --------------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows how the fund's total return has varied from
year to year, while the table shows the fund's performance over time (along with
that of a broad-based market index for comparison). These figures do not include
the effect of sales charges or other fees which may be applied at the variable
life insurance or variable annuity product level. All figures assume that all
dividends and distributions were reinvested. Keep in mind that past performance
does not indicate future results.
11
<PAGE>
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
[GRAPH]
<TABLE>
<CAPTION>
95 96 97 98 99
<C> <C> <C> <C> <C>
36.37% 22.91% 31.89% 16.42%
</TABLE>
- ------------------------------------------------------
BEST QUARTER: up %, quarter
------- -------
WORST QUARTER: down %, quarter
------- -------
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR 5 YEARS (MARCH 9, 1994)
<S> <C> <C> <C>
CLASS IA
INDEX
INDEX: S&P 500 Index, an unmanaged index of equity securities.
</TABLE>
12
<PAGE>
[Call Out]
SUB-ADVISER
Wellington Management
PORTFOLIO MANAGER
Laurie A. Gabriel, CFA
- Senior Vice President
and Managing Director
of Wellington Management
- Manager of the fund
since 1994
- Joined Wellington
Management in 1976
- Investment professional
since 1976
13
<PAGE>
HARTFORD GLOBAL LEADERS HLS FUND
- --------------------------------------------------------------------------------
INVESTMENT GOAL AND STYLE. The Hartford Global Leaders HLS Fund seeks growth of
capital by investing primarily in stocks issued by U.S. companies and non-U.S.
companies. The fund invests primarily in a diversified portfolio of common
stocks covering a broad range of countries, industries and companies.
Securities in which the fund invests are denominated in both U.S. dollars and
non-U.S. currencies and may trade in both U.S. and non-U.S. markets. Under
normal market and economic conditions, the fund invests at least 65% of its
total assets in common stocks of high-quality growth companies worldwide. These
companies must, in the opinion of Wellington Management, be leaders in their
respective industries as indicated by an established market presence and strong
global, regional or country competitive positions.
Under normal market and economic conditions, the fund will diversify its
investments in securities of issuers among at least five countries, which may
include the United States. There are no limits on the amount of the fund's
assets that may be invested in each country.
The fund uses a two-tiered investment strategy:
- Using what is sometimes referred to as a "top down" approach,
Wellington Management analyzes the global macro-economic and
investment environments. This includes an evaluation of U.S. and
non-U.S. economic and political conditions, fiscal and monetary
policies, demographic trends and investor sentiment. Through top down
analysis, Wellington Management anticipates trends and changes in the
markets and economy to identify companies which offer the most
potential for capital appreciation given current and projected global
and local economic and market conditions.
- 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. Fundamental
analysis involves the assessment of a company through such factors as
its business environment, management, balance sheet, income
statements, anticipated earnings, revenues and other related measures
of value.
The fund emphasizes high-quality growth companies. The key characteristics of
high-quality growth companies include a strong balance sheet, a high return on
equity, a strong management team, and attractive relative value within the
context of the global marketplace or a security's primary trading market.
- --------------------------------------------------------------------------------
MAIN RISKS. As with most stock funds, the value of your investment may go down
in response to stock market movements.
Foreign investments may be more risky than domestic investments. Investments in
foreign securities may be affected by fluctuations in currency exchange rates,
incomplete or inaccurate financial information on companies, social upheavals
and political actions ranging from tax code changes to governmental collapse.
14
<PAGE>
The fund's management strategy will influence performance significantly. If the
fund invests in countries or regions that experience economic downturns,
performance could suffer. Similarly, if certain investments or industries don't
perform as expected, or if the managers' stock selection strategy doesn't
perform as expected, the fund could underperform its peers or lose money.
The fund may trade securities actively, which could increase its transaction
costs (thus lowering performance) and increase your taxable distributions.
- --------------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of
investing in the fund. The bar chart shows the fund's total return for the
first full calendar year of the fund's operation, while the table shows the
fund's performance over the same time period and since inception (along with
that of a broad-based market index for comparison). These figures do not
include the effect of sales charges or other fees which may be applied at the
variable life insurance or variable annuity product level. All figures assume
that all dividends and distributions were reinvested. Keep in mind that past
performance does not indicate future results.
CLASS IA TOTAL RETURNS FOR CALENDAR YEAR 1999
[GRAPH]
99
- ------------------------------------------------------
BEST QUARTER: up %, quarter
------- -------
WORST QUARTER: down %, quarter
------- -------
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR (SEPTEMBER 30, 1998)
<S> <C> <C>
CLASS IA
INDEX
INDEX: MSCI World Index, an unmanaged
index of international equity securities.
</TABLE>
15
<PAGE>
[Call Out]
SUB-ADVISER
Wellington Management
PORTFOLIO MANAGERS
Rand L. Alexander, CFA
- Senior Vice President
of Wellington Management
- Co-manager of the fund
since inception (1998)
- Joined Wellington
Management in 1990
- Investment professional
since 1976
Andrew S. Offit
- Vice President of
Wellington Management
- Co-manager of the fund
since inception (1998)
- Joined Wellington
Management in 1997
- Investment professional
since 1987
16
<PAGE>
HARTFORD GROWTH AND INCOME HLS FUND
- --------------------------------------------------------------------------------
INVESTMENT GOAL AND STYLE. The Hartford Growth and Income Fund seeks growth of
capital and current income by investing primarily in stocks with earnings growth
potential and steady or rising dividends.
The fund invests primarily in adiversified portfolio of common stocks that
typically have steady or rising dividends and whose prospects for capital
appreciation are considered favorable by Wellington Management. The fund may
invest up to 20% of its total assets in securities of non-U.S. issuers.
Wellington Management uses fundamental analysis to evaluate a security for
purchase or sale by the fund. Fundamental analysis of a company involves the
assessment of such factors as its business environment, management, balance
sheet, income statement, anticipated earnings, revenues, dividends and other
related measures of value.
Wellington Management then complements its fundamental research with an
internally-developed analytical approach. This analytical approach consists of
both valuation and timeliness measures. Valuation factors focus on future
dividend growth and cash flow to determine the relative attractiveness of
different stocks in different industries. Timeliness focuses on stocks with
favorable earnings and stock price momentum to assess the appropriate time for
purchase.
The fund's portfolio is broadly diversified by industry and company.
- --------------------------------------------------------------------------------
MAIN RISKS. As with most stock funds, the value of your investment may go down
in response to stock market movements.
Foreign investments may be more risky than domestic investments. Investments
in foreign securities may be affected by fluctuations in currency exchange
rates, incomplete or inaccurate financial information on companies, social
upheavals and political actions ranging from tax code changes to governmental
collapse.
The fund's management strategy will influence performance significantly. If
the fund's stock selection strategy doesn't perform as expected, the fund
could underperform its peers or lose money.
The fund may trade securities actively, which could increase its transaction
costs (thus lowering performance) and increase your taxable distributions.
- --------------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of
investing in the fund. The bar chart shows the fund's total return for the
first full calendar year of the fund's operation, while the table shows the
fund's performance over the same time period and since inception (along with
that of a broad-based market index for comparison). These figures do not
include the effect of sales charges or other fees which may be applied at the
variable life insurance or variable annuity product level. All figures assume
that all dividends and distributions were reinvested. Keep in mind that past
performance does not indicate future results.
17
<PAGE>
CLASS IA TOTAL RETURNS FOR CALENDAR YEAR 1999
[GRAPH]
99
- ------------------------------------------------------
BEST QUARTER: up %, quarter
------- -------
WORST QUARTER: down %, quarter
------- -------
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR (MAY 29, 1998)
<S> <C> <C>
CLASS IA
INDEX
INDEX: S&P 500 Index, an unmanaged index of equity securities that
are similar, but not identical, to those in the fund's portfolio.
</TABLE>
18
<PAGE>
[Call Out]
SUB-ADVISER
Wellington Management
PORTFOLIO MANAGER
James A. Rullo, CFA
- Senior Vice President
of Wellington Management
- Manager of the fund
since inception (1998)
- Joined Wellington
Management in 1994
- Investment professional
since 1987
19
<PAGE>
HARTFORD INDEX HLS FUND
- --------------------------------------------------------------------------------
INVESTMENT GOAL AND STYLE. The Hartford Index HLS Fund seeks to provide
investment results which approximate the price and yield performance of publicly
traded common stocks in the aggregate.
The fund uses the Standard & Poor's 500 Composite Stock Price Index (the
"Index") as its standard performance comparison because it represents a
significant proportion of the total market value of all common stocks, is well
known to investors and, in the opinion of the management of the fund, is
representative of the performance of publicly-traded common stocks. Therefore,
the fund attempts to approximate the capital performance and dividend income of
the Index.
The portfolio manager generally invests in no fewer than 495 stocks. HIMCO
selects stocks for the fund's portfolio after taking into account their
individual weights in the Index. Temporary cash balances may be invested in
short-term money market instruments.
The Index is comprised of 500 selected common stocks, most of which are listed
on the New York Stock Exchange. Standard & Poor's Corporation ("S&P") chooses
the stocks to be included in the Index on a proprietary basis.
"Standard & Poor's"-REGISTERED TRADEMARK, "S&P"-REGISTERED TRADEMARK, "S&P
500"-REGISTERED TRADEMARK, "Standard & Poor's 500", and "500" are trademarks of
The McGraw-Hill Companies, Inc. and have been licensed for use by Hartford Life
Insurance Company.
The weightings of stocks in the Index are based on each stock's relative
total market value, that is, its market price per share times the number of
shares outstanding. Because of this weighting, as of December 31, 1999,
approximately 50% percent of the Index was composed of the thirty-four
largest companies, the five largest being Microsoft Corporation, General
Electric Company, Cisco Systems, Inc., WalMart Stores, Inc. and Exxon Mobil
Corporation. HIMCO does not attempt to "manage" the fund's portfolio in the
traditional sense, using economic, financial and market analysis, nor does
the adverse financial situation of a company directly result in its
elimination from the fund's portfolio unless, of course, the company is
removed from the Index. From time to time administrative adjustments may be
made in the fund's portfolio because of mergers, changes in the composition
of the Index and similar reasons.
The fund's ability to approximate the performance of the Index will depend to
some extent on the size of cash flows into and out of the fund. Investment
changes to accommodate these cash flows will be made to maintain the similarity
of the fund's portfolio to the Index, to the maximum practicable extent.
The fund's portfolio is broadly diversified by industry and company.
- --------------------------------------------------------------------------------
MAIN RISKS. As with most stock funds, the value of your investment may go down
in response to stock market movements. Foreign investments may be more risky
than domestic investments. Investments in foreign securities may be affected by
fluctuations in currency exchange rates, incomplete or inaccurate financial
information on companies, social upheavals and political actions ranging from
tax code changes to governmental collapse.
The fund's management strategy will influence performance significantly.
Large-capitalization stocks as a group could fall out of favor with the market,
causing the fund to underperform funds that focus on small- or
medium-capitalization stocks. Similarly, if the managers' stock selection
strategy doesn't
20
<PAGE>
perform as expected, the fund could underperform its peers or lose money.
- --------------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows how the fund's total return has varied from
year to year, while the table shows the fund's performance over time (along with
that of a broad-based market index for comparison). These figures do not include
the effect of sales charges or other fees which may be applied at the variable
life insurance or variable annuity product level. All figures assume that all
dividends and distributions were reinvested. Keep in mind that past performance
does not indicate future results.
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
[GRAPH]
<TABLE>
<CAPTION>
90 91 92 93 94 95 96 97 98 99
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -3.99% 29.53% 6.82% 9.12% 0.94% 36.55% 22.09% 32.61% 28.06%
</TABLE>
- ------------------------------------------------------
BEST QUARTER: up %, quarter
------- -------
WORST QUARTER: down %, quarter
------- -------
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS 10 YEARS INCEPTION
(MAY 1,
1987)
<S> <C> <C> <C> <C>
CLASS IA
INDEX
INDEX: S&P 500 Composite Stock Price Index, an unmanaged index
of equity securities.
</TABLE>
21
<PAGE>
[Call Out]
SUB-ADVISER
HIMCO
PORTFOLIO MANAGER
Rodger K. Metzger
- Vice President of
HIMCO
- Manager of the fund
since 1987
- Joined HIMCO in 1987
- Investment professional
since 1987
22
<PAGE>
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND
- --------------------------------------------------------------------------------
INVESTMENT GOAL AND STYLE. The Hartford International Opportunities HLS Fund
seeks growth of capital by investing primarily in stocks issued by non-U.S.
companies.
The fund normally invests at least 65% of its assets in stocks issued by
non-U.S. companies which trade in foreign markets generally considered to be
well established. Under normal market conditions the fund diversifies its
investments among at least three countries other than the United States. The
securities in which the fund invests are denominated in both U.S. dollars and
non-U.S. currencies and generally are traded in non-U.S. markets.
Wellington Management uses a three-pronged investment strategy:
- Wellington Management determines the relative attractiveness of the
many countries in which the fund may invest based upon its analysis of
the economic and political environment of each country.
- Wellington Management also evaluates industries on a global basis to
determine which industries offer the most potential for capital
appreciation given current and projected global and local economic and
market conditions.
- Wellington Management conducts fundamental research on individual
companies to identify securities for purchase or sale. Fundamental
analysis of a company involves the assessment of 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 considers companies
for inclusion in the fund's portfolio that are typically larger, high- quality
companies that operate in established markets. Characteristics of high-quality
growth companies include a strong balance sheet, attractive industry trends,
strong competitive advantages and attractive relative value within the context
of a security's primary trading market.
- --------------------------------------------------------------------------------
MAIN RISKS. As with most stock funds, the value of your investment may go down
in response to stock market movements.
Foreign investments may be more risky than domestic investments. Investments in
foreign securities may be affected by fluctuations in currency exchange rates,
incomplete or inaccurate financial information on companies, social upheavals
and political actions ranging from tax code changes to governmental collapse.
The fund's management strategy will influence performance significantly. If the
fund invests in countries or regions that experience economic downturns,
performance could suffer. Similarly, if certain investments or industries don't
perform as expected, or if the managers' stock selection strategy doesn't
perform as expected, the fund could underperform its peers or lose money.
The fund may trade securities actively, which could increase its transaction
costs
23
<PAGE>
(thus lowering performance) and increase your taxable distributions.
- --------------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows how the fund's total return has varied from
year to year, while the table shows the fund's performance over time (along with
that of a broad-based market index for comparison). These figures do not include
the effect of sales charges or other fees which may be applied at the variable
life insurance or variable annuity product level. All figures assume that all
dividends and distributions were reinvested. Keep in mind that past performance
does not indicate future results.
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
[GRAPH]
<TABLE>
<CAPTION>
91 92 93 94 95 96 97 98 99
<C> <C> <C> <C> <C> <C> <C> <C> <C>
13.00% -4.43% 33.73% -1.94% 13.93% 12.91% 0.34% 13.16%
</TABLE>
- ------------------------------------------------------
BEST QUARTER: up %, quarter
------- -------
WORST QUARTER: down %, quarter
------- -------
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR 5 YEARS (JULY 2, 1990)
<S> <C> <C> <C>
CLASS IA
INDEX *
*Index inception
performance from
6/30/90
INDEX: Morgan Stanley Europe, Australia, Far East GDP ("EAFE
GDP") Index, an unmanaged index of equity securities.
</TABLE>
24
<PAGE>
[Call Out]
SUB-ADVISER
Wellington Management
PORTFOLIO MANAGERS
Trond Skramstad
- Senior Vice President
of Wellington
Management
- Manager of the fund
since 1994
- Joined Wellington
Management in 1993
- Investment
professional since
1990
Andrew S. Offit
- Vice President of
Wellington Management
- Associate Manager of
the fund since 1997
- Joined Wellington
Management in 1997
- Investment
professional since
1987
25
<PAGE>
HARTFORD MIDCAP HLS FUND
- --------------------------------------------------------------------------------
INVESTMENT GOAL AND STYLE. The Hartford MidCap HLS Fund seeks long-term growth
of capital by investing primarily in stocks selected on the basis of potential
for capital appreciation.
The fund normally invests at least 65% of its total
assets in common stocks of companies with market capitalizations within the
range represented by the Standard & Poor's MidCap 400 Index. As of December 31,
1999 this range was between approximately $_____ million and $_____ billion and
the average market capitalization was $_____ billion. The fund may invest up to
20% of its total assets in securities of non-U.S. issuers. The fund uses a
two-tiered investment strategy:
- Using what is sometimes referred to as a "top down" approach,
Wellington Management analyzes the general economic and investment
environment. This includes an evaluation of economic conditions, U.S.
fiscal and monetary policy, and demographic trends. Through top down
analysis, Wellington Management anticipates trends and changes in
markets and the economy overall and identifies industries and sectors
that are expected to outperform.
- 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. Fundamental
analysis involves the assessment of a company through such factors as
its business environment, management, balance sheet, income statement,
anticipated earnings, revenues, and other related measures of value.
The fund favors 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, and a strong management team.
- --------------------------------------------------------------------------------
MAIN RISKS. As with most stock funds, the value of your investment may go down
in response to stock market movements. Because the fund concentrates on
mid-sized companies, its performance may be more volatile than that of a fund
that invests primarily in larger companies.
Stocks of mid-sized companies may be more risky than stocks of larger companies.
These companies may be young and have more limited operating or business
history. Because these businesses frequently rely on narrower product lines and
niche markets, they can suffer from isolated business setbacks.
The fund's management strategy will influence performance significantly.
Mid-sized company stocks as a group could fall out of favor with the market,
causing the fund to underperform funds that focus on other types of stocks.
Similarly, if the managers' stock selection strategy doesn't perform as
expected, the fund could underperform its peers or lose money.
The fund may trade securities actively, which could increase its transaction
costs (thus lowering performance) and increase your taxable distributions.
26
<PAGE>
- --------------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows how the fund's total return has varied from
year to year, while the table shows the fund's performance over time (along with
that of a broad-based market index for comparison). These figures do not include
the effect of sales charges or other fees which may be applied at the variable
life insurance or variable annuity product level. All figures assume that all
dividends and distributions were reinvested. Keep in mind that past performance
does not indicate future results.
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
[GRAPH]
98 99
26.57% %
---
- ------------------------------------------------------
BEST QUARTER: up %, quarter
------- -------
WORST QUARTER: down %, quarter
------- -------
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR (JULY 14, 1997)
<S> <C> <C>
CLASS IA
INDEX
INDEX: Standard & Poor's MidCap 400 Index, an unmanaged index of equity
securities.
</TABLE>
27
<PAGE>
[Call Out]
SUB-ADVISER
Wellington Management
PORTFOLIO MANAGER
Phillip H. Perelmuter
- Vice President of
Wellington Management
- Manager of the fund
since inception (1997)
- Joined Wellington
Management in 1995
- Investment professional
since 1983
28
<PAGE>
HARTFORD SMALL COMPANY HLS FUND
- --------------------------------------------------------------------------------
INVESTMENT GOAL AND STYLE. The Hartford Small Company Fund seeks growth of
capital by investing primarily in stocks selected on the basis of potential for
capital appreciation.
The fund normally invests at least 65% of its total assets in common stocks
of companies with market capitalizations within the range represented by the
Russell 2000 Index. As of December 31, 1999 this range was between
approximately $_____ million and $_____ billion, and the average market
capitalization was $______ million. The fund may invest up to 20% of its
total assets in securities of non-U.S. issuers.
Through fundamental analysis Wellington Management identifies companies that
it believes have substantial potential for near-term capital appreciation.
Wellington Management selects securities of companies that, in its opinion:
- have potential for above-average earnings growth,
- are undervalued in relation to their investment potential,
- have positive business and/or fundamental financial characteristics
that are overlooked or misunderstood by investors, or
- are relatively obscure and undiscovered by the overall investment
community.
Fundamental analysis of a company involves the assessment of such factors as its
business environment, management, balance sheet, income statement, anticipated
earnings, revenues, dividends, and other related measures of value.
- --------------------------------------------------------------------------------
MAIN RISKS. As with most stock funds, the value of your investment may go down
in response to stock market movements. Because the fund concentrates on small
companies, its performance may be more volatile than that of a fund that invests
primarily in larger companies.
Stocks of smaller companies may be more risky than stocks of larger companies.
Many of these companies are young and have limited operating or business
history. Because these businesses frequently rely on narrow product lines and
niche markets, they can suffer severely from isolated business setbacks.
Foreign investments may be more risky than domestic investments. Investments in
foreign securities may be affected by fluctuations in currency exchange rates,
incomplete or inaccurate financial information on companies, social upheavals
and political actions ranging from tax code changes to governmental collapse.
The fund's management strategy will influence performance significantly. Small
company stocks as a group could fall out of favor with the market, causing the
fund to underperform funds that focus on other types of stocks. Similarly, if
the managers' stock selection strategy doesn't perform as expected, the fund
could underperform its peers or lose money.
The fund may trade securities actively, which could increase its transaction
costs (thus lowering performance) and increase your taxable distributions.
- --------------------------------------------------------------------------------
29
<PAGE>
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows how the fund's total return has varied from
year to year, while the table shows the fund's performance over time (along with
that of a broad-based market index for comparison). These figures do not include
the effect of sales charges or other fees which may be applied at the variable
life insurance or variable annuity product level. All figures assume that all
dividends and distributions were reinvested. Keep in mind that past performance
does not indicate future results.
CLASS 1A YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
[GRAPH]
<TABLE>
<CAPTION>
97 98 99
<C> <C> <C>
18.38% 11.62%
</TABLE>
- ------------------------------------------------------
BEST QUARTER: up %, quarter
---- ------- -------
WORST QUARTER: down %, quarter
---- ------- -------
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE
1 YEAR INCEPTION
(AUGUST 9,
1996)
<S> <C> <C>
CLASS IA
INDEX
INDEX: Russell 2000 Index, an unmanaged index of small company equity
securities.
</TABLE>
30
<PAGE>
[CALLOUT]
SUB-ADVISER
Wellington Management
PORTFOLIO MANAGER
Steven C. Angeli
- Vice President of
Wellington Management
- Manager of the fund
since January 1, 2000
- Joined Wellington
Management in 1994
- Investment professional
since 1990
31
<PAGE>
HARTFORD STOCK HLS FUND
- --------------------------------------------------------------------------------
INVESTMENT GOAL AND STYLE. The Hartford Stock Fund seeks long-term growth of
capital, with income as a secondary consideration, by investing primarily in
stocks.
The fund normally invests at least 65% of the fund's total assets in the common
stocks of high-quality growth companies. Many of the companies in which the fund
invests have a history of paying dividends and are expected to continue paying
dividends in the future. The fund may invest up to 20% of its total assets in
securities of non-U.S. issuers. The fund invests in a diversified portfolio of
primarily equity securities using a two-tiered investment strategy:
- Using what is sometimes referred to as a "top down" approach,
Wellington Management analyzes the general 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 trends and changes in markets in the economy overall and
identifies industries and sectors that are expected to outperform.
- 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. Fundamental
analysis of a company involves the assessment of such factors as its
business environment, management, balance sheet, income statement,
anticipated earnings, revenues, dividends, and other related measures
of value.
The key characteristics of high-quality growth companies favored by the fund
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.
- --------------------------------------------------------------------------------
MAIN RISKS. As with most stock funds, the value of your investment may go down
in response to stock market movements.
Foreign investments may be more risky than domestic investments. Investments
in foreign securities may be affected by fluctuations in currency exchange
rates, incomplete or inaccurate financial information on companies, social
upheavals and political actions ranging from tax code changes to governmental
collapse.
The fund's management strategy will influence performance significantly.
Large-capitalization stocks as a group could fall out of favor with the market,
causing the fund to underperform funds that focus on small- or
medium-capitalization stocks. Similarly, if the managers' stock selection
strategy doesn't perform as expected, the fund could underperform its peers or
lose money.
The fund may trade securities actively, which could increase its transaction
costs (thus lowering performance) and increase your taxable distributions.
- --------------------------------------------------------------------------------
32
<PAGE>
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows how the fund's total return has varied from
year to year, while the table shows the fund's performance over time (along with
that of a broad-based market index for comparison). These figures do not include
the effect of sales charges or other fees which may be applied at the variable
life insurance or variable annuity product level. All figures assume that all
dividends and distributions were reinvested. Keep in mind that past performance
does not indicate future results.
CLASS 1A YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
[GRAPH]
<TABLE>
<CAPTION>
90 91 92 93 94 95 96 97 98 99
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
-3.87% 24.58% 10.04% 14.34% -1.89% 34.10% 24.33% 31.38% 33.47%
</TABLE>
- ------------------------------------------------------
BEST QUARTER: up %, quarter
---- ------- -------
WORST QUARTER: down %, quarter
---- ------- -------
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS 10 YEARS INCEPTION
(AUGUST
31, 1977)
<S> <C> <C> <C> <C>
CLASS IA
INDEX
INDEX: S&P 500 Index, an unmanaged index of equity securities.
</TABLE>
33
<PAGE>
[Call Out]
SUB-ADVISER
Wellington Management
PORTFOLIO MANAGERS
Rand L. Alexander
- Senior Vice President
of Wellington
Management
- Manager of the fund
since 1992
- Joined Wellington
Management in 1990
- Investment
professional since
1976
Philip H. Perelmuter
- Vice President of
Wellington Management
- Associate Manager of
the fund since 1995
- Joined Wellington
Management in 1995
- Investment
professional since
1983
34
<PAGE>
HARTFORD ADVISERS HLS FUND
- --------------------------------------------------------------------------------
INVESTMENT GOAL AND STYLE. The Hartford Advisers HLS Fund seeks maximum
long-term total return. The fund allocates its assets among three categories:
- stocks,
- debt securities, and
- money market instruments.
The fund favors stocks issued by 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.
The debt securities in which the fund primarily invests include securities
issued or guaranteed by the U.S. Government and its agencies or
instrumentalities and securities rated investment grade (rated at least BBB by
Standard & Poor's Corporation or Baa by Moody's Investors Service, Inc., or if
unrated, securities deemed by Wellington Management to be of comparable
quality). The fund is not restricted to any specific maturity term.
Asset allocation decisions are based on Wellington Management's judgment of the
projected investment environment for financial assets, relative fundamental
values, the attractiveness of each asset category, and expected future returns
of each asset category. Wellington Management does not attempt to engage in
short-term market timing among asset categories. As a result, shifts in asset
allocation are expected to be gradual and continuous and the fund will normally
have some portion of its assets invested in each asset category. There is no
limit on the amount of fund assets that may be allocated to each asset category
and the allocation is in Wellington Management's discretion.
The fund may invest up to 20% of its total assets in securities of non-U.S.
issuers.
- --------------------------------------------------------------------------------
MAIN RISKS. This fund has stock market risk, interest rate risk, manager
allocation risk, credit risk and prepayment risk. You could lose money as a
result of your investment.
Stock market risk means the stocks held by the fund may decline in value due to
the activities and financial prospects of individual companies or to general
market and economic conditions.
Interest rate risk refers to the possibility that your investment may go down in
value when interest rates rise.
Manager allocation risk refers to the possibility that the portfolio managers
could incorrectly allocate assets so that the fund underperforms its peers.
Credit risk refers to the possibility that the issuing company may not be able
to pay interest and principal when due.
Prepayment risk refers to the possibility that any mortgage securities held by
the fund may be adversely affected by changes in prepayment rates on the
underlying mortgages. If prepayments increase as a result of lower interest
rates the fund may have to invest a portion of its assets at lower rates.
Foreign investments may be more risky than domestic investments. Investments in
foreign securities may be affected by fluctuations in currency exchange rates,
incomplete or inaccurate financial information on companies, social upheavals
and political actions ranging from tax code changes to governmental collapse.
35
<PAGE>
The fund may trade securities actively, which could increase its transaction
costs (thus lowering performance) and increase your taxable distributions.
- --------------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows how the fund's total return has varied from
year to year, while the table shows the fund's performance over time (along with
that of a broad-based market index for comparison). These figures do not include
the effect of sales charges or other fees which may be applied at the variable
life insurance or variable annuity product level. All figures assume that all
dividends and distributions were reinvested. Keep in mind that past performance
does not indicate future results.
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
[GRAPH]
<TABLE>
<CAPTION>
90 91 92 93 94 95 96 97 98 99
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1.26% 20.33% 8.30% 12.25% -2.74% 28.34% 16.62% 24.51% 24.66%
</TABLE>
- ------------------------------------------------------
BEST QUARTER: up %, quarter
---- ------- -------
WORST QUARTER: down %, quarter
---- ------- -------
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS 10 YEARS INCEPTION
(MARCH 31,
1983)
<S> <C> <C> <C> <C>
CLASS IA
S&P INDEX
LGCB INDEX
INDICES: S&P 500 Index and the Lehman Government
Corporate Bond Index, unmanaged indices of stocks
and bonds, respectively.
</TABLE>
36
<PAGE>
[Call Out]
SUB-ADVISER
Wellington Management
PORTFOLIO MANAGERS
Paul D. Kaplan
- Senior Vice President
of Wellington Management
- Co-manager of the fund
since 1992
- Joined Wellington
Management in 1982
- Investment professional
since 1974
Rand L. Alexander
- Senior Vice President
of Wellington Management
- Co-manager of the fund
since 1992
- Joined Wellington
Management in 1990
- Investment professional
since 1976
37
<PAGE>
HARTFORD INTERNATIONAL ADVISERS HLS FUND
- --------------------------------------------------------------------------------
INVESTMENT GOAL AND STYLE. The Hartford International Advisers HLS Fund seeks
maximum long-term total rate of return. The fund actively allocates its assets
among three categories:
- equity securities
- debt securities and
- money market instruments.
Securities in which the fund invests primarily will be denominated in non-U.S.
currencies and will be traded in non-U.S. markets.
The fund consists of a diversified portfolio of securities covering a broad
range of countries, industries, and companies. The fund anticipates that,
under normal market conditions, it will diversify its investments in at least
three countries other than the United States.
The fund's investments in equity securities are substantially similar to the
equity securities investments permitted for the Hartford International
Opportunities HLS Fund.
Debt securities in which the fund may invest include investment grade securities
assigned within the four highest bond rating categories by Moody's Investors
Service, Inc. ("Moody's") or S&P, or, if unrated, which are determined by
Wellington Management to be of comparable quality. In addition, the fund may
invest up to 15% of its total assets in high yield-high risk securities,
commonly known as "junk bonds." Such securities may be rated as low as "C" by
Moody's and by S&P, or, if unrated, are of comparable quality as determined by
Wellington Management.
Asset allocation decisions are based upon Wellington Management's judgment of
the projected investment environment for financial assets, relative fundamental
values and attractiveness of each asset category. Wellington Management does not
attempt to make short-term market timing decisions among asset categories and
asset allocation is in Wellington Management's discretion. As a result, shifts
in asset allocation are expected to be gradual and continuous and the fund will
normally have some portion of its assets invested in each asset category. There
is no limit on the amount of fund assets that may be allocated to each asset
category.
- --------------------------------------------------------------------------------
MAIN RISKS. This fund has stock market risk, interest rate risk, manager
allocation risk, credit risk and prepayment risk. You could lose money as a
result of your investment.
Stock market risk means the stocks held by the fund may decline in value due to
the activities and financial prospects of individual companies or to general
market and economic conditions.
Interest rate risk refers to the possibility that your investment may go down in
value when interest rates rise.
Manager allocation risk refers to the possibility that the portfolio managers
could incorrectly allocate assets so that the fund underperforms its peers.
Credit risk refers to the possibility that the issuing company may not be able
to pay interest and principal when due.
Prepayment risk refers to the possibility that any mortgage securities held by
the fund may be adversely affected by changes in prepayment rates on the
underlying mortgages. If prepayments increase as a result of lower interest
rates the fund may have to invest a portion of its assets at lower rates.
Foreign investments may be more risky than domestic investments. Investments in
foreign securities may be affected by fluctuations in currency exchange rates,
incomplete or inaccurate financial information on companies,
38
<PAGE>
social upheavals and political actions ranging from tax code changes to
governmental collapse.
The fund may trade securities actively, which could increase its transaction
costs (thus lowering performance) and increase your taxable distributions.
- --------------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows how the fund's total return has varied from
year to year, while the table shows the fund's performance over time (along with
that of a broad-based market index for comparison). These figures do not include
the effect of sales charges or other fees which may be applied at the variable
life insurance or variable annuity product level. All figures assume that all
dividends and distributions were reinvested. Keep in mind that past performance
does not indicate future results.
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
[GRAPH]
<TABLE>
<CAPTION>
96 97 98 99
<S> <C> <C> <C>
12.25% 5.52% 13.35%
</TABLE>
- ------------------------------------------------------
BEST QUARTER: up %, quarter
---- ------- -------
WORST QUARTER: down %, quarter
---- ------- -------
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR (MARCH 1, 1995)
<S> <C> <C>
CLASS IA
EAFE GDP INDEX
SALOMON INDEX *
*Index inception
performance is
from 2/28/95
</TABLE>
INDICES: Morgan Stanley Europe, Australia, Far East GDP ("EAFE GDP") Index and
the Salomon World Government Bond ex-US Index, unmanaged indices of
international securities that are similar, but not identical, to those in the
fund's portfolio.
[Call Out]
SUB-ADVISER
Wellington Management
PORTFOLIO MANAGERS
Trond Skramstad
- Senior Vice President
39
<PAGE>
of Wellington Management
- Manager of the equity
component of the fund
since 1995
- Joined Wellington
Management in 1993
- Investment
professional since 1990
Andrew S. Offit
- Vice President of
Wellington Management
- Associate Manager of
the equity component of
the fund since 1997
- Joined Wellington
Management in 1997
- Investment
professional since 1987
Robert L. Evans
- Senior Vice President
of Wellington Management
- Manager of the debt
component of the fund
since 1995
- Joined Wellington
Management in 1995
- Investment
professional since 1985
40
<PAGE>
HARTFORD BOND HLS FUND
- --------------------------------------------------------------------------------
INVESTMENT GOAL AND STYLE. The Hartford Bond HLS 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. Debt securities in which the fund invests include (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 and mortgage-related
securities; 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. The fund normally invests
at least 80% of its portfolio in investment grade debt securities.
The fund may invest up to 20% of its total assets in securities rated in the
highest category of below investment grade bonds ("Ba1", "Ba2" or "Ba3" by
Moody's Investors Service, Inc. or "BB+", "BB" or "BB-" by Standard & Poor's
Corporation), or securities which, if unrated, are determined by HIMCO to be
of comparable quality. Securities rated below investment grade are commonly
referred to as "junk bonds".
The fund invests at least 65% of its total assets in debt securities with a
maturity of at least one year. Although the fund does not have a maximum
maturity term restriction, the fund tends to have an average maturity within the
intermediate-term range. The fund may invest up to 15% of its total assets in
preferred stocks, convertible securities, and securities accompanied by warrants
to purchase equity securities. The 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. The fund may invest up to 30% of its total assets in debt
securities of non-U.S. issuers and up to 10% of its total assets in securities
denominated in foreign currencies.
The fund uses what is sometimes referred to as a top-down analysis to determine
which industries may benefit from current and future changes in the economy. The
fund then selects individual securities from selected industries that, from a
yield perspective, appear to be attractive. The portfolio manager assesses such
factors as a company's business environment, balance sheet, income statement,
anticipated earnings and management team.
- --------------------------------------------------------------------------------
MAIN RISKS. The major factors affecting this fund's performance are interest
rates and credit risk. When interest rates rise, bond prices fall; generally the
longer the fund's maturity, the more sensitive it is to this risk.
The fund could lose money if any bonds it owns are downgraded in credit rating
or go into default. In general, lower-rated bonds have higher credit risks. If
certain sectors or investments don't perform as the manager expects, the fund
could underperform its peers or lose money.
Junk bonds and foreign securities may make the fund more sensitive to market or
economic shifts in the U.S. and abroad.
Foreign investments may be more risky than domestic investments. Investments in
foreign securities may be affected by fluctuations in currency exchange rates,
incomplete or inaccurate financial information on companies, social upheavals
and political actions ranging from tax code changes to governmental collapse.
41
<PAGE>
Any U.S. government guarantees on portfolio securities do not apply to the
market value or current yield of the portfolio's securities or to the value of
the fund's shares.
The fund may trade securities actively, which could increase its transaction
costs (thus lowering performance) and increase your taxable distributions.
- --------------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows how the fund's total return has varied from
year to year, while the table shows the fund's performance over time (along with
that of a broad-based market index for comparison). These figures do not include
the effect of sales charges or other fees which may be applied at the variable
life insurance or variable annuity product level. All figures assume that all
dividends and distributions were reinvested. Keep in mind that past performance
does not indicate future results.
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
[GRAPH]
<TABLE>
<CAPTION>
90 91 92 93 94 95 96 97 98 99
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
8.39% 16.43% 5.53% 10.24% -3.95% 18.49% 3.54% 11.35% 8.15%
</TABLE>
- ------------------------------------------------------
BEST QUARTER: up %, quarter
---- ------- -------
WORST QUARTER: down %, quarter
---- ------- -------
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS 10 YEARS INCEPTION
(AUGUST
31, 1977)
<S> <C> <C> <C> <C>
CLASS IA
INDEX
INDEX: Lehman Government Corporate Bond Index, an unmanaged index of
fixed-income securities.
</TABLE>
42
<PAGE>
[Call Out]
SUB-ADVISER
HIMCO
PORTFOLIO MANAGER
Alison D. Granger, CFA
- Senior Vice President
of HIMCO
- Manager of the fund
since 1996
- Joined HIMCO in 1993
- Investment professional
since 1981
43
<PAGE>
HARTFORD HIGH YIELD HLS FUND
- --------------------------------------------------------------------------------
INVESTMENT GOAL AND STYLE. The Hartford High Yield HLS Fund seeks high current
income by investing in non-investment grade debt securities. Growth of capital
is a secondary objective.
The fund normally invests at least 65%, and may invest up to 100%, of its
portfolio in non-investment grade debt securities (securities rated "Ba" or
lower by Moody's Investors Service, Inc. ("Moody's") or "BB" or lower by
Standard and Poor's Corporation ("S&P"), or securities which, if unrated, are
determined by HIMCO to be of comparable quality). Below investment grade
securities are commonly referred to as "high yield-high risk securities" or
"junk bonds". The fund will invest no more than 10% of total assets in
securities rated below B3 by Moody's or B- by S&P, or, if unrated, determined to
be of comparable quality by HIMCO. The fund may invest in bonds of any maturity
although the fund tends to have an average maturity within the intermediate-term
range.
The fund may invest up to 15% of its total assets in preferred stocks,
convertible securities, and securities carrying warrants to purchase equity
securities. The 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. The fund
may invest up to 30% of its total assets in securities of non-U.S. issuers
and up to 10% of its total assets in securities denominated in foreign
currencies.
To achieve its goal of high current income, the fund uses what is sometimes
referred to as a top-down analysis to determine which industries may benefit
from current and future changes in the economy. The fund then selects individual
securities within selected industries that appear from a yield perspective to be
attractive. The fund assesses such factors as the company's business
environment, balance sheet, income statement, anticipated earnings and
management team.
The fund seeks its secondary goal of capital growth, when consistent with its
primary objective of high current income, by investing in securities that the
portfolio manager expects to appreciate in value as a result of declines in
long-term interest rates or favorable developments affecting the business or
prospects of the issuer which may improve the issuer's financial condition and
credit rating.
- --------------------------------------------------------------------------------
MAIN RISKS. The major factors affecting this fund's performance are interest
rates and credit risk. When interest rates rise, bond prices fall; generally the
longer a bond's maturity, the more sensitive it is to this risk.
Credit risk depends largely on the perceived financial health of bond issuers.
In general, lower-rated bonds have higher credit risks. Junk bond prices can
fall on bad news about the economy, an industry or a company. Share price, yield
and total return may fluctuate more than with less aggressive bond funds.
The fund could lose money if any bonds it owns are downgraded in credit rating
or go into default. If certain industries or investments don't perform as the
fund expects, it could underperform its peers or lose money.
44
<PAGE>
Foreign investments may be more risky than domestic investments. Investments in
foreign securities may be affected by fluctuations in currency exchange rates,
incomplete or inaccurate financial information on companies, social upheavals
and political actions ranging from tax code changes to governmental collapse.
Junk bonds and foreign securities may make the fund more sensitive to market or
economic shifts in the U.S. and abroad.
In a down market some of the fund's investments could become harder to value.
Any U.S. government guarantees on portfolio securities do not apply to the
market value or current yield of the portfolio's securities or to the value of
the fund's shares.
The fund may trade securities actively, which could increase its transaction
costs (thus lowering performance) and increase your taxable distributions.
- --------------------------------------------------------------------------------
45
<PAGE>
PAST PERFORMANCE. The bar chart and table below indicate the risks of
investing in the fund. The bar chart shows the fund's total return for the
first full calendar year of the fund's operation, while the table shows the
fund's performance over the same time period and since inception (along with
that of a broad-based market index for comparison). These figures do not
include the effect of sales charges or other fees which may be applied at the
variable life insurance or variable annuity product level. All figures assume
that all dividends and distributions were reinvested. Keep in mind that past
performance does not indicate future results.
CLASS IA TOTAL RETURNS FOR CALENDAR YEAR 1999
[GRAPH]
99
- ------------------------------------------------------
BEST QUARTER: up %, quarter
---- ------- -------
WORST QUARTER: down %, quarter
---- ------- -------
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE
1 YEAR INCEPTION
(SEPTEMBER 30,
1998)
<S> <C> <C>
CLASS IA
INDEX
INDEX: Lehman High Yield Corporate Index, an unmanaged index of high yield fixed
income securities that are similar, but not identical, to those in the fund's
portfolio.
</TABLE>
46
<PAGE>
[Call Out]
SUB-ADVISER
HIMCO
PORTFOLIO MANAGER
Alison D. Granger, CFA
- Senior Vice President
of HIMCO
- Manager of the fund
since inception (1998)
- Joined HIMCO in 1993
- Investment professional
since 1981
47
<PAGE>
HARTFORD MORTGAGE SECURITIES HLS FUND
- --------------------------------------------------------------------------------
INVESTMENT GOAL AND STYLE. The Hartford Mortgage Securities HLS Fund seeks
maximum current income consistent with safety of principal and maintenance of
liquidity by investing primarily in mortgage-related securities.
The fund normally invests at least 65% of its total assets in high quality
mortgage-related securities either (i) issued by U.S. Government agencies,
instrumentalities or sponsored corporations or (ii) rated A or better by Moody's
or S&P or, if not rated, which are of equivalent investment quality as
determined by HIMCO. At times the fund may invest in mortgage-related securities
not meeting the foregoing investment quality standards when HIMCO deems such
investments to be consistent with the fund's investment objective; however, no
such investments will be made in excess of 20% of the value of the fund's total
assets. Such investments will be considered mortgage-related securities for
purposes of the policy that the fund invest at least 65% of the value of its
total assets in mortgage-related securities, including securities issued by the
GNMA.
- --------------------------------------------------------------------------------
MAIN RISKS. The primary risks of this fund are interest rate risk, credit risk,
prepayment risk, and manager risk. You could lose money as a result of your
investment.
Interest rate risk refers to the possibility that your investment may go down in
value when interest rates rise.
Credit risk refers to the possibility that the issuing company may not be able
to pay interest and principal when due.
Prepayment risk refers to the possibility that any mortgage securities held by
the fund may be adversely affected by changes in prepayment rates on the
underlying mortgages. If prepayments increase as a result of lower interest
rates the fund may have to invest a portion of its assets at lower rates.
The fund may trade securities actively, which could increase its transaction
costs (thus lowering performance) and increase your taxable distributions.
The fund's management strategy will influence performance significantly.
Mortgage securities as a group could fall out of favor with the market, causing
the fund to underperform funds that focus on other categories. Similarly, if the
managers' selection strategy doesn't perform as expected, the fund could
underperform its peers or lose money.
- --------------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows how the fund's total return has varied from
year to year, while the table shows the fund's performance over time (along with
that of a broad-based market index for comparison). The bar chart figures do not
include the effect of sales charges, while the average annual total return
figures do. If sales charges were reflected in the bar chart, returns would have
been lower. All figures assume that all dividends and distributions were
reinvested. Keep in mind that past performance does not indicate future results.
48
<PAGE>
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
[GRAPH]
<TABLE>
<CAPTION>
90 91 92 93 94 95 96 97 98 99
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9.70% 14.71% 4.64% 6.31% -1.61% 16.17% 4.99% 9.01% 6.72%
</TABLE>
- ------------------------------------------------------
BEST QUARTER: up %, quarter
------- -------
WORST QUARTER: down %, quarter
------- -------
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS 10 YEARS INCEPTION
(JANUARY
1, 1985)
<S> <C> <C> <C> <C>
CLASS IA
INDEX
INDEX: Lehman Mortgage Backed Securities, an unmanaged index of mortgage
backed securities.
</TABLE>
[Call Out]
SUB-ADVISER
HIMCO
PORTFOLIO MANAGER
Peter P. Perrotti
- Senior Vice President
of HIMCO
- Manager of the fund
since May 1, 1999
- Joined HIMCO in 1990
- Investment professional
since 1989
49
<PAGE>
HARTFORD MONEY MARKET HLS FUND
- --------------------------------------------------------------------------------
INVESTMENT GOAL AND STYLE. The Hartford Money Market HLS Fund seeks maximum
current income consistent with liquidity and preservation of capital.
The fund seeks to maintain a stable share price of $1.00. The fund focuses on
specific short-term U.S. denominated money market instruments which are rated in
the first two investment tiers by at least one nationally recognized statistical
rating organization, or if unrated, determined to be of comparable quality by
HIMCO. 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.
The fund purchases securities which it believes offer attractive returns
relative to the risks undertaken. In addition, the portfolio manager adjusts the
average maturity of the portfolio in anticipation of interest rate changes.
- --------------------------------------------------------------------------------
MAIN RISKS. The primary risks of this fund are interest rate risk, credit risk
and manager risk. A rise in interest rates could cause a fall in the values of
the fund's securities. Credit risk refers to the risk that a security's credit
rating could be downgraded affecting the value and, potentially the likelihood
of repayment, of the fund's securities. Manager risk refers to the risk that if
the manager does not effectively implement the fund's investment goal and style,
the fund could underperform its peers.
An investment in the fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the fund seeks to
preserve the value of your investment at $1.00 per share, there is a risk that
the fund's share price could fall below $1.00, which would reduce the value of
your account.
50
<PAGE>
- --------------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows how the fund's total return has varied from
year to year, while the table shows the fund's performance over time (along with
that of a broad-based market index for comparison). These figures do not include
the effect of sales charges or other fees which may be applied at the variable
life insurance or variable annuity product level. All figures assume that all
dividends and distributions were reinvested. Keep in mind that past performance
does not indicate future results.
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
[GRAPH]
<TABLE>
<CAPTION>
90 91 92 93 94 95 96 97 98 99
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
8.09% 6.01% 3.63% 2.94% 3.95% 5.74% 5.09% 5.31% 5.25%
</TABLE>
- ------------------------------------------------------
BEST QUARTER: up %, quarter
------- -------
WORST QUARTER: down %, quarter
------- -------
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS 10 YEARS INCEPTION
(JUNE 30,
1980)
<S> <C> <C> <C> <C>
CLASS IA
INDEX N/A
</TABLE>
INDEX: 60-Day Treasury Bill Index, an unmanaged index of short-term treasury
bills.
Current 7-day yield as of December 31, 1999: ______%
Effective 7-day yield (which indicates the effect of daily compounding) as of
December 31, 1999: _____% Please call 1-800-862-6668 for the most recent current
and effective yield information.
51
<PAGE>
[Call Out]
SUB-ADVISER
HIMCO
PORTFOLIO MANAGER
William H. Davison, Jr.
- Senior Vice President
of HIMCO
- Manager of the fund
since 1992
- Joined HIMCO in 1990
- Investment
professional since
1981
52
<PAGE>
ADDITIONAL INVESTMENT MATTERS
- --------------------------------------------------------------------------------
USE OF OPTIONS AND FUTURES
Each fund (other than the Money Market fund) may purchase and sell options and
enter into futures contracts. Depending on the investment style of the fund
these options and futures contracts may involve stocks, bonds, groups of
securities (such as financial indices) or foreign currencies. These techniques
permit a fund to gain exposure to a particular security or group of securities,
and thereby earn returns similar to those which would be earned by direct
investments in those securities. These techniques are also used to manage risk
by hedging a fund's portfolio investments. Use of these techniques may result in
losses to a fund or increase volatility.
USE OF MONEY MARKET INVESTMENTS FOR TEMPORARY DEFENSIVE PURPOSES
From time to time each fund (other than the Money Market fund) may invest some
or all of its assets in high quality money market securities for temporary
defensive purposes in response to adverse market, economic or political
conditions. To the extent a fund is in a defensive position, the fund may lose
the benefit of upswings and limit its ability to meet its investment objective.
ABOUT EACH FUND'S INVESTMENT GOAL
Each fund's investment goal may be changed only with approval of the
shareholders of the fund. A fund may not be able to achieve its goal.
TAX CONSEQUENCES OF PORTFOLIO TRADING PRACTICES
At times each fund (other than the Money Market Fund) may engage in short-term
trading, which could produce higher brokerage expenses for a fund and higher
taxable distributions to the fund's shareholders. The funds are not managed to
achieve a particular tax result for shareholders. Shareholders should consult
their own tax adviser for individual tax advice.
ADDITIONAL INVESTMENT STRATEGIES AND RISKS
Each fund may invest in various securities and engage in various investment
techniques which are not the principal focus of the fund and therefore are not
described in this prospectus. These securities and techniques, together with
their risks are discussed in the fund's Statement of Additional Information
which may be obtained by contacting the fund (see back cover for address and
phone number).
53
<PAGE>
MANAGEMENT OF THE FUNDS
- --------------------------------------------------------------------------------
THE INVESTMENT ADVISER
HL Investment Advisors, LLC ("HL Advisors") is the investment adviser to each
fund. As investment adviser, HL Advisors is responsible for supervising the
activities of the investment sub-advisers described below. In addition, Hartford
Life serves as the administrator of each fund. HL Advisors and Hartford Life are
majority-owned indirect subsidiaries of The Hartford Financial Services Group,
Inc. ("The Hartford"), a Connecticut financial services company with over $130
billion in assets. As of December 31, 1999 HL Advisors had over $40 billion in
assets under management. HL Advisors is principally located at 200 Hopmeadow
Street, Simsbury, Connecticut 06070.
THE INVESTMENT SUB-ADVISERS
Wellington Management Company, LLP ("Wellington Management") is the investment
sub-adviser to the Global Health HLS Fund, Global Technology HLS Fund, Advisers
HLS Fund, Capital Appreciation HLS Fund, Dividend and Growth HLS Fund, Global
Leaders HLS Fund, Growth and Income HLS Fund, International Advisers HLS Fund,
International Opportunities HLS Fund, MidCap HLS Fund, Small Company HLS Fund
and Stock HLS Fund. Wellington Management, a Massachusetts limited liability
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
December 31, 1999 Wellington Management had investment management authority over
approximately $_____ billion in assets. Wellington Management is principally
located at 75 State Street, Boston, Massachusetts 02109. The Hartford Investment
Management Company ("HIMCO-REGISTERED TRADEMARK-") is the investment sub-adviser
to the High Yield HLS Fund, Index HLS Fund, Bond HLS Fund, Mortgage Securities
HLS Fund and Money Market HLS Fund. HIMCO is a professional money management
firm that provides services to investment companies, employee benefit plans and
insurance companies. HIMCO is a wholly-owned subsidiary of The Hartford. As of
December 31, 1999 HIMCO and its wholly-owned subsidiary had investment
management authority over approximately $_____ billion in assets. HIMCO is
principally located at 55 Farmington Avenue, Hartford, Connecticut 06105.
MANAGEMENT FEES
Each Fund pays a monthly advisory fee and administration fee to HL Advisors and
Hartford Life based on a stated percentage of the fund's average daily net asset
value as follows:
<TABLE>
<CAPTION>
INDEX FUND
Net Asset Value Annual Rate
- --------------- -----------
<S> <C>
All Assets 0.400%
<CAPTION>
MONEY MARKET FUND AND MORTGAGE SECURITIES FUND
Net Asset Value Annual Rate
- --------------- -----------
<S> <C>
All Assets 0.450%
54
<PAGE>
<CAPTION>
BOND FUND AND STOCK FUND
Net Asset Value Annual Rate
- --------------- -----------
<S> <C>
First $250,000,000 0.525%
Next $250,000,000 0.500%
Next $500,000,000 0.475%
Amount Over $1 Billion 0.450%
<CAPTION>
ADVISERS FUND, CAPITAL APPRECIATION FUND, DIVIDEND AND GROWTH FUND, GLOBAL
LEADERS FUND, GROWTH AND INCOME FUND, HIGH YIELD FUND, INTERNATIONAL ADVISERS
FUND, INTERNATIONAL OPPORTUNITIES FUND, MIDCAP FUND AND SMALL COMPANY FUND
Net Asset Value Annual Rate
- --------------- -----------
<S> <C>
First $250,000,000 0.775%
Next $250,000,000 0.725%
Next $500,000,000 0.675%
Amount Over $1 Billion 0.625%
<CAPTION>
GLOBAL HEALTH FUND AND GLOBAL TECHNOLOGY FUND
Net Asset Value Annual Rate
- --------------- -----------
<S> <C>
First $250,000,000 0.950%
Next $250,000,000 0.900%
Next $500,000,000 0.850%
Amount Over $1 Billion 0.750%
</TABLE>
For the year ended December 31, 1999, the investment advisory fees and
administrative fees paid to HL Advisors and Hartford Life, expressed as a
percentage of net assets, were as follows:
<TABLE>
<CAPTION>
FUND NAME ANNUAL RATE
- --------- -----------
<S> <C>
Hartford Global Health HLS Fund (1) --
Hartford Global Technology HLS Fund (1) --
Hartford Advisers HLS Fund
Hartford Bond HLS Fund
Hartford Capital Appreciation HLS Fund
Hartford Dividend and Growth HLS Fund
Hartford Global Leaders HLS Fund
Hartford Growth and Income HLS Fund
Hartford High Yield HLS Fund
Hartford Index HLS Fund
Hartford International Advisers HLS Fund
Hartford International Opportunities HLS Fund
Hartford MidCap HLS Fund
Hartford Money Market HLS Fund
Hartford Mortgage Securities HLS Fund
Hartford Small Company HLS Fund
Hartford Stock HLS Fund
(1)Fund commenced operations in 2000.
</TABLE>
55
<PAGE>
PURCHASE AND SALE OF FUND SHARES
- --------------------------------------------------------------------------------
PURCHASE OF FUND SHARES
Fund shares are made available to serve as the underlying investment options for
variable annuity and variable life insurance separate accounts of Hartford Life
and for certain qualified retirement plans. Shares of the funds are sold by
Hartford Securities Distribution Company, Inc. (the "Distributor") at their net
asset value as defined under Determination of Net Asset Value.
The funds offer two different classes of shares - Class IA and Class IB. Class
IA shares are offered by this prospectus. Class IB shares are offered by a
separate prospectus in connection with certain variable annuity products. The
different classes of shares represent investments in the same portfolio of
securities but are subject to different expenses and will have different share
prices and performance.
It is conceivable that in the future it may be disadvantageous for variable
annuity separate accounts and variable life insurance separate accounts to
invest in the funds simultaneously. Although Hartford Life and the funds do not
currently foresee any such disadvantages either to variable annuity contract
owners or variable life insurance policy owners, each fund's Board of Directors
intends to monitor events in order to identify any material conflicts between
such contract owners and policy owners and to determine what action, if any,
should be taken in response thereto. If the Board of Directors of a fund were to
conclude that separate funds should be established for variable life and
variable annuity separate accounts, the variable life and variable annuity
contract holders would not bear any expenses attendant to the establishment of
such separate funds.
SALE AND REDEMPTION OF SHARES
The Class IA shares of each fund are sold and redeemed by the fund at their net
asset value next determined after receipt of a purchase or redemption order in
good order in writing at its home office, P.O. Box 5085, Hartford, CT
06102-5085. The value of shares redeemed may be more or less than original cost,
depending upon the market value of the portfolio securities at the time of
redemption. Payment for shares redeemed will be made within seven days after the
redemption request is received in proper form by the funds. However, the right
to redeem fund shares may be suspended or payment therefor postponed for any
period during which: (1) trading on the NYSE is closed for other than weekends
and holidays; (2) an emergency exists, as determined by the SEC, as a result of
which (a) disposal by a fund of securities owned by it is not reasonably
practicable, or (b) it is not reasonably practicable for a fund to determine
fairly the value of its net assets; or (3) the SEC by order so permits for the
protection of stockholders of the funds.
56
<PAGE>
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share is determined for each fund as of the close of the
New York Stock Exchange ("NYSE") (normally 4:00 p.m. Eastern Time) on each
business day that the NYSE is open. The net asset value is determined by
dividing the value of the fund's net assets attributable to a class of shares by
the number of shares outstanding for that class. Except for the Money Market
Fund, the funds use market prices in valuing portfolio securities, but may use
fair value estimates, as determined by HL Advisors under the direction of the
Board of Directors, if reliable market prices are not available. Fair value
pricing may be used by the fund when current market values are unavailable or
when an event occurs after the close of the exchange on which the fund's
portfolio securities are principally traded that is likely to have changed the
value of the securities. The use of fair value pricing by the fund may cause the
net asset value of its shares to differ significantly from the net asset value
that would be calculated using current market values. The Money Market Fund's
assets are valued at amortized cost.
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.
Trading on many foreign securities markets is completed at various times before
the close of the NYSE or on days the NYSE is not open for business.
Consequently, the calculation of a fund's net asset value may take place at a
time that is different than when prices are determined for certain foreign
funds. As a result, events affecting the values of foreign portfolio securities
that occur after the close of the NYSE will not be reflected in a fund's
calculation of net asset value.
DIVIDENDS
The shareholders of each fund are entitled to receive such dividends as may be
declared by each fund's Board of Directors, from time to time based upon the
investment performance of the assets making up that fund's portfolio. The
current policy for each fund, except the Money Market Fund, is to pay dividends
from net investment income and to make distributions of realized capital gains,
if any, at least once each year. The Money Market Fund declares dividends on a
daily basis and pays them monthly.
Such dividends and distributions will be automatically invested in additional
full or fractional shares monthly on the last business day of each month at the
per share net asset value on that date. Provision is also made to pay such
dividends and distributions in cash if requested. Such dividends and
distributions will be in cash or in full or fractional shares of the fund at net
asset value.
EXCHANGE PRIVILEGES
Contractholders and policyholders may exchange shares in each fund as indicated
by the accompanying insurance product prospectus. The funds are intended to be
long-term investment vehicles and are not designed to provide investors with a
means
57
<PAGE>
of speculating on short-term market movements. Investors who engage in excessive
account activity generate additional costs which are borne by all of the funds'
shareholders. In order to minimize such costs, the funds reserve the right to
reject any purchase request that is reasonably deemed to be disruptive to
efficient portfolio management, either because of the timing of the investment
or previous excessive trading by the contractholder/policyholder.
FEDERAL INCOME TAXES
Each fund has elected and intends to continue qualifying under Subchapter M of
the Internal Revenue Code of 1986, as amended. Each fund intends to distribute
all of its net income and gains to shareholders. Because the shares are
purchased only through products that defer taxes, these distributions generally
will not be considered taxable income to you at the time of distribution. When
appropriate each fund will inform contractholders or policyholders of the amount
and nature of such income and gains.
Each fund may be subject to a 4% nondeductible excise tax as well as an income
tax measured with respect to certain undistributed amounts of income and capital
gain. Each fund expects to make such additional distributions of net investment
income as are necessary to avoid the application of these taxes. For a
discussion of the tax implications of a purchase or sale of the funds' shares by
the insurer, reference should be made to the section entitled "Federal Tax
Considerations" in the appropriate insurance product prospectus.
If eligible, each fund may make an election to pass through to its shareholder,
Hartford Life, a credit for any foreign taxes paid during the year. If such an
election is made, the pass-through of the foreign tax credit will result in
additional taxable income and income tax to Hartford Life. The amount of
additional tax may be more than offset by the foreign tax credits which are
passed through. These foreign tax credits may provide a benefit to Hartford
Life.
BROKERAGE COMMISSIONS
Although the rules 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 funds.
PERFORMANCE RELATED INFORMATION
The funds may advertise performance related information. Performance information
about a fund is based on the fund's past performance only and is no indication
of future performance.
Each fund may include its total return in advertisements or other sales
material. When a fund advertises its total return, it will usually be calculated
for one year, five years, and ten years or some other relevant period if the
fund has not been in existence for at least ten years. Total return is measured
by comparing the value of an investment in the fund at the beginning of the
relevant period to the value of the investment at the end of the period
(assuming immediate reinvestment of any dividends or capital gains
distributions).
58
<PAGE>
The Money Market Fund may advertise yield and effective yield. The yield of each
of those funds is based upon the income earned by the fund over a seven-day
period and then annualized, i.e. the income earned in the period is assumed to
be earned every seven days over a 52-week period and stated as a percentage of
the investment. Effective yield is calculated similarly but when annualized, the
income earned by the investment is assumed to be reinvested in fund shares and
thus compounded in the course of a 52-week period.
The funds are offered exclusively through variable insurance products and to
certain qualified retirement plans. Performance information presented for the
funds should not be compared directly with performance information of other
insurance products without taking into account insurance-related charges and
expenses payable with respect to these insurance products. Insurance related
charges and expenses are not reflected in the funds' performance information
and will reduce an investor's return under the insurance product.
59
<PAGE>
GENERAL INFORMATION
- --------------------------------------------------------------------------------
Hartford Securities Distribution Company, Inc., 200 Hopmeadow Street, Simsbury,
CT 06089, serves as distributor to the funds.
State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts
02110, serves as custodian of each fund's assets.
Hartford Life Insurance Company, 200 Hopmeadow Street, Simsbury, CT 06089,
serves as Transfer and Dividend Disbursing Agent for the funds.
60
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD CAPITAL APPRECIATION HLS FUND, INC. FINANCIAL HIGHLIGHTS
These tables are intended to help you understand each fund's financial
performance for the past five years. The total returns in the table represent
the rate that an investor would have earned on an investment in each fund
(assuming reinvestment of all dividends and distributions). This information has
been audited by Arthur Andersen, LLP, whose report, along with each fund's
financial statements, are included in the annual report which is available upon
request.
<TABLE>
<CAPTION>
CLASS IA - PERIOD ENDED: 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
PER SHARE OPERATING PERFORMANCE
- ---------------------------------------------- -------------- ---------------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $4.759 $4.410 $3.914 $3.490 $2.860
Net investment income (loss) 0.025 0.020 0.022 0.030
Net realized and unrealized gain (loss) on
investments 0.525 0.794 0.655 0.785
----- ----- ----- -----
Total from investment operations 0.550 0.814 0.677 0.815
Less distributions:
Dividends from net investment income (0.026) (0.022) (0.025) (0.030)
Distributions from net realized gain on
investments (0.175) (0.296) (0.228) (0.155)
Return of capital 0.000 0.000 0.000 0.000 0.000
----- ----- ----- ----- -----
Total from distributions (0.201) (0.318) (0.253) (0.185)
------- ------- ------- -------
Net increase (decrease) in net asset value 0.349 0.496 0.424 0.630
Net asset value, end of period $4.759 $4.410 $3.914 $3.490
------- ------- ------- -------
------- ------- ------- -------
TOTAL RETURN 15.48% 22.34% 20.70% 30.25%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $5,807,480 $4,802,992 $3,386,670 $2,157,892
Ratio of expenses to average net assets 0.64% 0.64% 0.65% 0.68%
Ratio of net investment income (loss) to
average net assets 0.59% 0.44% 0.60% 0.95%
Portfolio turnover rate 51.20% 57.60% 85.40% 78.60%
</TABLE>
61
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD DIVIDEND AND GROWTH HLS FUND, INC. FINANCIAL HIGHLIGHTS
These tables are intended to help you understand each fund's financial
performance for the past five years. The total returns in the table represent
the rate that an investor would have earned on an investment in each fund
(assuming reinvestment of all dividends and distributions). This information
has been audited by Arthur Andersen, LLP, whose report, along with each
fund's financial statements, are included in the annual report which is
available upon request.
<TABLE>
<CAPTION>
CLASS IA - PERIOD ENDED: 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
PER SHARE OPERATING PERFORMANCE
- ---------------------------------------------- --------------- ---------------- ----------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $2.160 $1.952 $1.547 $1.317 $0.994
Net investment income (loss) 0.033 0.035 0.034 0.033
Net realized and unrealized gain (loss) on
investments 0.280 0.445 0.258 0.323
----- ----- ----- -----
Total from investment operations 0.313 0.480 0.292 0.356
Less distributions:
Dividends from net investment income (0.035) (0.031) (0.034) (0.033)
Distributions from net realized gain on
investments (0.070) (0.044) (0.028) 0.000
Return of capital 0.000 0.000 0.000 0.000 0.000
----- ----- ----- ----- -----
Total from distributions (0.105) (0.075) (0.062) (0.033)
------- ------- ------- -------
Net increase (decrease) in net asset value 0.208 0.405 0.230 0.323
Net asset value, end of period $2.160 $1.952 $1.601 $1.317
------- ------- ------- -------
------- ------- ------- -------
TOTAL RETURN 16.42% 31.89% 22.91% 36.37%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $3,031,293 $1,994,653 $879,980 $265,070
Ratio of expenses to average net assets 0.66% 0.68% 0.73% 0.77%
Ratio of net investment income (loss) to
average net assets 1.81% 2.21% 2.52% 2.91%
Portfolio turnover rate 48.20% 34.20% 56.90% 41.40%
</TABLE>
62
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD GLOBAL LEADERS HLS FUND FINANCIAL HIGHLIGHTS
These tables are intended to help you understand each fund's financial
performance since inception. The total returns in the table represent the rate
that an investor would have earned on an investment in each fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Arthur Andersen, LLP, whose report, along with each fund's financial
statements, are included in the annual report which is available upon request.
<TABLE>
<CAPTION>
CLASS IA - PERIOD ENDED: 12/31/99(a) 9/30/98-12/31/98(a)
PER SHARE OPERATING PERFORMANCE
- ------------------------------------------------------ ----------------- ---------------------
<S> <C> <C>
Net asset value, beginning of period $1.285 $1.00
Net investment income (loss) 0.001
Net realized and unrealized gain (loss) on
investments 0.318
Total from investment operations 0.319
Less distributions:
Dividends from net investment income (0.002)
Distributions from net realized gain on
investments (0.032)
Return of capital 0.000
-----
Total from distributions (0.034)
-------
Net increase (decrease) in net asset value 0.285
Net asset value, end of period $1.285
-------
-------
TOTAL RETURN 31.88%(b)(d)
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $5,761
Ratio of expenses to average net assets 0.89%(c)
Ratio of net investment income (loss) to average net
assets 1.46%(c)(d)
Portfolio turnover rate 47.9%
</TABLE>
(a) The fund was declared effective by the Securities and Exchange Commission on
September 30, 1998.
(b) Not annualized.
(c) Annualized.
(d) Management fees were waived until assets (excluding assets contributed by
companies affiliated with HL Advisors) reached $20 million. The total return
and ratio of net investment income to average net assets would have been
lower if management fees were not waived.
63
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD GROWTH AND INCOME HLS FUND FINANCIAL HIGHLIGHTS
These tables are intended to help you understand each fund's financial
performance since inception. The total returns in the table represent the rate
that an investor would have earned on an investment in each fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Arthur Andersen, LLP, whose report, along with each fund's financial
statements, are included in the annual report which is available upon request.
<TABLE>
<CAPTION>
CLASS IA - PERIOD ENDED: 12/31/99(a) 5/29/98-12/31/98(a)
PER SHARE OPERATING PERFORMANCE
- ------------------------------------------------------ ----------------- -------------------
<S> <C> <C>
Net asset value, beginning of period $1.186 $1.000
Net investment income (loss) 0.005
Net realized and unrealized gain (loss) on
investments 0.185
-------
Total from investment operations 0.190
Less distributions:
Dividends from net investment income (0.004)
Distributions from net realized gain on
investments 0.000
Return of capital 0.000
-------
Total from distributions (0.004)
-------
Net increase (decrease) in net asset value 0.186
Net asset value, end of period $1.186
-------
-------
TOTAL RETURN 19.05%(b)(d)
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $25,312
Ratio of expenses to average net assets 0.28%(c)
Ratio of net investment income (loss) to average net
assets 1.42%(c)(d)
Portfolio turnover rate 29.6%
</TABLE>
(a) The fund was declared effective by the Securities and Exchange Commission on
May 29, 1998.
(b) Not annualized.
(c) Annualized.
(d) Management fees were waived until assets (excluding assets contributed by
companies affiliated with HL Advisors) reached $20 million. The total return
and ratio of net investment income to average net assets would have been
lower if management fees were not waived.
64
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD INDEX HLS FUND, INC. FINANCIAL HIGHLIGHTS
These tables are intended to help you understand each fund's financial
performance for the past five years. The total returns in the table represent
the rate that an investor would have earned on an investment in each fund
(assuming reinvestment of all dividends and distributions). This information has
been audited by Arthur Andersen, LLP, whose report, along with each fund's
financial statements, are included in the annual report which is available upon
request.
<TABLE>
<CAPTION>
CLASS IA - PERIOD ENDED: 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
PER SHARE OPERATING PERFORMANCE
- --------------------------------------------- ----------------- ---------------- ----------------- ---------------- --------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $3.570 $2.878 $2.382 $2.028 $1.522
Net investment income (loss) 0.032 0.035 0.044 0.044
Net realized and unrealized gain (loss) on
investments 0.759 0.692 0.393 0.507
----- ----- ----- -----
Total from investment operations 0.791 0.727 0.437 0.551
Less distributions:
Dividends from net investment income (0.027) (0.035) (0.044) (0.044)
Distributions from net realized gain on
investments (0.072) (0.196) (0.039) (0.001)
Return of capital 0.000 0.000 0.000 0.000
----- ----- ----- -----
Total from distributions (0.099) (0.231) (0.083) (0.045)
----- ----- ----- -----
Net increase (decrease) in net asset value 0.692 0.496 0.354 0.506
Net asset value, end of period $3.570 $2.878 $2.382 $2.028
----- ----- ----- -----
----- ----- ----- -----
TOTAL RETURN 28.06% 32.61% 22.09% 36.55%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $1,846,117 $1,123,455 $621,065 $318,253
Ratio of expenses to average net assets 0.40% 0.39% 0.39% 0.39%
Ratio of net investment income (loss) to
average net assets 1.21% 1.52% 2.07% 2.46%
Portfolio turnover rate 4.50% 5.70% 19.30% 1.50%
</TABLE>
65
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND, INC. FINANCIAL HIGHLIGHTS
These tables are intended to help you understand each fund's financial
performance for the past five years. The total returns in the table represent
the rate that an investor would have earned on an investment in each fund
(assuming reinvestment of all dividends and distributions). This information has
been audited by Arthur Andersen, LLP, whose report, along with each fund's
financial statements, are included in the annual report which is available upon
request.
<TABLE>
<CAPTION>
CLASS IA - PERIOD ENDED: 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
PER SHARE OPERATING PERFORMANCE
- --------------------------------------------- ----------------- ---------------- ----------------- ---------------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.355 $1.294 $1.407 $1.306 $1.176
Net investment income (loss) 0.021 0.022 0.023 0.020
Net realized and unrealized gain (loss) on
investments 0.147 (0.019) 0.140 0.141
----- ------- ----- -----
Total from investment operations 0.168 0.003 0.163 0.161
Less distributions:
Dividends from net investment income (0.019) (0.012) (0.025) (0.020)
Distributions from net realized gain on
investments (0.088) (0.104) (0.037) (0.011)
Return of capital 0.000 0.000 0.000 0.000
----- ----- ----- -----
Total from distributions (0.107) (0.116) (0.062) (0.031)
----- ----- ----- -----
Net increase (decrease) in net asset value 0.061 (0.113) 0.101 0.130
Net asset value, end of period $1.355 $1.294 $1.407 $1.306
----- ----- ----- -----
----- ----- ----- -----
TOTAL RETURN 13.16% 0.34% 12.91% 13.93%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $1,196,694 $1,092,946 $996,543 $686,475
Ratio of expenses to average net assets 0.77% 0.77% 0.86% 0.85%
Ratio of net investment income (loss) to
average net assets 1.51% 1.48% 1.74% 1.60%
Portfolio turnover rate 157.40% 72.70% 70.00% 55.60%
</TABLE>
66
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD MIDCAP HLS FUND, INC. FINANCIAL HIGHLIGHTS
These tables are intended to help you understand each fund's financial
performance since inception. The total returns in the table represent the rate
that an investor would have earned on an investment in each fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Arthur Andersen, LLP, whose report, along with each fund's financial
statements, are included in the annual report which is available upon request.
<TABLE>
<CAPTION>
CLASS IA - PERIOD ENDED: 12/31/99 12/31/98 7/15/97-12/31/97(a)
PER SHARE OPERATING PERFORMANCE
- ------------------------------------------------------ ----------------- ---------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period $1.439 $1.137 $1.000
Net investment income (loss) (0.001) 0.001
Net realized and unrealized gain (loss) on
investments 0.303 0.137
----- -----
Total from investment operations 0.302 0.138
Less distributions:
Dividends from net investment income (0.000) (0.001)
Distributions from net realized gain on
investments 0.000 0.000
Return of capital 0.000 0.000
----- -----
Total from distributions (0.000) (0.001)
----- -----
Net increase (decrease) in net asset value 0.302 0.137
Net asset value, end of period $1.439 $1.137
----- -----
----- -----
TOTAL RETURN 26.57% 13.81%(b)(c)
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $143,494 $27,589
Ratio of expenses to average net assets 0.79% 0.46%(c)
Ratio of net investment income (loss) to average net
assets (0.15%) 0.45%(c)
Portfolio turnover rate 134.10% 46.10%
</TABLE>
(a) The Fund was declared effective by the Securities and Exchange Commission on
July 15, 1997.
(b) Not annualized.
(c) Annualized. Management fees were waived until assets (excluding assets
contributed by companies affiliated with HL Advisors) reached $20 million.
The ratio of operating expenses to average net assets would have been higher
if management fees were not waived. The total return and ratio of net
investment income to average net assets would have been lower if management
fees were not waived.
67
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD SMALL COMPANY HLS FUND, INC. FINANCIAL HIGHLIGHTS
These tables are intended to help you understand each fund's financial
performance since inception. The total returns in the table represent the rate
that an investor would have earned on an investment in each fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Arthur Andersen, LLP, whose report, along with each fund's financial
statements, are included in the annual report which is available upon request.
<TABLE>
<CAPTION>
CLASS IA - PERIOD ENDED: 12/31/99(a) 12/31/98 12/31/97 8/9/96-12/31/96(a)
PER SHARE OPERATING PERFORMANCE
- ------------------------------------------------------ ----------------- ---------------- ----------------- ------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $1.321 $1.202 $1.069 $1.000
Net investment income (loss) (0.002) 0.001 0.002
Net realized and unrealized gain (loss) on
investments 0.141 0.195 0.069
----- ----- -----
Total from investment operations 0.139 0.196 0.071
Less distributions:
Dividends from net investment income 0.000 (0.001) (0.002)
Distributions from net realized gain on
investments (0.020) (0.062) 0.000
Return of capital 0.000 0.000 0.000
----- ----- -----
Total from distributions (0.020) (0.063) (0.002)
----- ----- -----
Net increase (decrease) in net asset value 0.119 0.133 0.069
Net asset value, end of period $1.321 $1.202 $1.069
----- ----- -----
----- ----- -----
TOTAL RETURN 11.62%(b) 18.38% 7.15%(b)(c)
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $350,734 $210,769 $42,812
Ratio of expenses to average net assets 0.77% 0.77% 0.72%(c)
Ratio of net investment income (loss) to average net
assets (0.24%) 0.08% 0.31%(c)
Portfolio turnover rate 235.7% 222.2% 31.8%
</TABLE>
(a) The Fund was declared effective by the Securities and Exchange Commission on
August 9, 1996.
(b) Not annualized.
(c) Annualized. Management fees were waived until assets (excluding assets
contributed by companies affiliated with HL Advisors) reached $20 million.
The ratio of operating expenses to average net assets would have been higher
if management fees were not waived. The total return and ratio of net
investment income to average net assets would have been lower if management
fees were not waived.
68
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD STOCK HLS FUND, INC. FINANCIAL HIGHLIGHTS
These tables are intended to help you understand each fund's financial
performance for the past five years. The total returns in the table represent
the rate that an investor would have earned on an investment in each fund
(assuming reinvestment of all dividends and distributions). This information has
been audited by Arthur Andersen, LLP, whose report, along with each fund's
financial statements, are included in the annual report which is available upon
request.
<TABLE>
<CAPTION>
CLASS IA - PERIOD ENDED: 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
PER SHARE OPERATING PERFORMANCE
- ---------------------------------------------- --------------- ---------------- ----------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $6.562 $5.123 $4.143 $3.527 $2.801
Net investment income (loss) 0.051 0.050 0.060 0.070
Net realized and unrealized gain (loss) on
investments 1.622 1.196 0.763 0.840
----- ----- ----- -----
Total from investment operations 1.673 1.246 0.823 0.910
Less distributions:
Dividends from net investment income (0.050) (0.049) (0.059) (0.070)
Distributions from net realized gain on
investments (0.184) (0.217) (0.148) (0.114)
Return of capital 0.000 0.000 0.000 0.000
----- ----- ----- -----
Total from distributions (0.234) (0.266) (0.207) (0.184)
----- ----- ----- -----
Net increase (decrease) in net asset value 1.439 0.980 0.616 0.726
Net asset value, end of period $6.562 $5.123 $4.143 $3.527
----- ----- ----- -----
----- ----- ----- -----
TOTAL RETURN 33.47% 31.38% 24.33% 34.10%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $7,183,046 $4,713,322 $2,994,209 $1,876,884
Ratio of expenses to average net assets 0.46% 0.45% 0.46% 0.48%
Ratio of net investment income (loss) to
average net assets 0.95% 1.11% 1.59% 2.23%
Portfolio turnover rate 27.1% 31.60% 42.30% 52.90%
</TABLE>
69
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD ADVISERS HLS FUND, INC. FINANCIAL HIGHLIGHTS
These tables are intended to help you understand each fund's financial
performance for the past five years. The total returns in the table represent
the rate that an investor would have earned on an investment in each fund
(assuming reinvestment of all dividends and distributions). This information has
been audited by Arthur Andersen, LLP, whose report, along with each fund's
financial statements, are included in the annual report which is available upon
request.
<TABLE>
<CAPTION>
CLASS IA - PERIOD ENDED: 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
PER SHARE OPERATING PERFORMANCE
- --------------------------------------------- -------------- ---------------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $2.985 $2.527 $2.169 $1.958 $1.600
Net investment income (loss) 0.061 0.056 0.059 0.064
Net realized and unrealized gain (loss) on
investments 0.546 0.455 0.255 0.377
----- ----- ----- -----
Total from investment operations 0.607 0.511 0.314 0.441
Less distributions:
Dividends from net investment income (0.060) (0.055) (0.059) (0.064)
Distributions from net realized gain on
investments (0.089) (0.098) (0.044) (0.019)
Return of capital 0.000 0.000 0.000 0.000
----- ----- ----- -----
Total from distributions (0.149) (0.153) (0.103) (0.083)
----- ----- ----- -----
Net increase (decrease) in net asset value 0.458 0.358 0.211 0.358
Net asset value, end of period $2.985 $2.527 $2.169 $1.958
----- ----- ----- -----
----- ----- ----- -----
TOTAL RETURN 24.66% 24.51% 16.62% 28.34%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $11,805,411 $8,283,912 $5,879,529 $4,262,769
Ratio of expenses to average net assets 0.63% 0.63% 0.63% 0.65%
Ratio of net investment income (loss) to
average net assets 2.40% 2.44% 2.92% 3.57%
Portfolio turnover rate 36.7% 36.10% 53.80% 63.50%
</TABLE>
70
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD INTERNATIONAL ADVISERS HLS FUND, INC. FINANCIAL HIGHLIGHTS
These tables are intended to help you understand each fund's financial
performance since inception. The total returns in the table represent the rate
that an investor would have earned on an investment in each fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Arthur Andersen, LLP, whose report, along with each fund's financial
statements, are included in the annual report which is available upon request.
<TABLE>
<CAPTION>
CLASS IA - PERIOD ENDED: 12/31/99(a) 12/31/98 12/31/97 12/31/96 3/1/95-12/31/95
PER SHARE OPERATING PERFORMANCE
- ---------------------------------------------- --------------- ---------------- ----------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.155 $1.175 $1.167 $1.109 $1.000
Net investment income (loss) 0.064 0.056 0.040 0.030
Net realized and unrealized gain (loss) on
investments 0.082 0.006 0.093 0.126
----- ----- ----- -----
Total from investment operations 0.146 0.062 0.133 0.156
Less distributions:
Dividends from net investment income (0.039) (0.050) (0.051) (0.030)
Distributions from net realized gain on
investments (0.032) (0.004) (0.024) (0.017)
Return of capital (0.089) 0.000 0.000 0.000
----- ----- ----- -----
Total from distributions (0.166) (0.054) (0.075) (0.047)
----- ----- ----- -----
Net increase (decrease) in net asset value (0.020) 0.008 0.058 0.109
Net asset value, end of period $1.155 $1.175 $1.167 $1.109
----- ----- ----- -----
----- ----- ----- -----
TOTAL RETURN 13.35% 5.52% 12.25% 13.24%(b)(c)
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $285,853 $207,582 $104,486 $31,264
Ratio of expenses to average net assets 0.86% 0.87% 0.96% 0.65%(c)
Ratio of net investment income (loss) to
average net assets 2.77% 3.08% 3.24% 3.36%(c)
Portfolio turnover rate 161.1% 162.50% 95.20% 47.20%
</TABLE>
(a) The Fund was declared effective by the Securities and Exchange Commission on
March 1, 1995.
(b) Not annualized.
(c) Annualized. Management fees were waived until assets (excluding assets
contributed by companies affiliated with HL Advisors)reached $20 million.
The ratio of operating expenses to average net assets would have been higher
if management fees were not waived. The total return and ratio of net
investment income to average net assets would have been lower if management
fees were not waived.
71
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD BOND HLS FUND, INC. FINANCIAL HIGHLIGHTS
These tables are intended to help you understand each fund's financial
performance for the past five years. The total returns in the table represent
the rate that an investor would have earned on an investment in each fund
(assuming reinvestment of all dividends and distributions). This information has
been audited by Arthur Andersen, LLP, whose report, along with each fund's
financial statements, are included in the annual report which is available upon
request.
<TABLE>
<CAPTION>
CLASS IA - PERIOD ENDED: 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
PER SHARE OPERATING PERFORMANCE
- -------------------------------------------- ----------------- ---------------- ----------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.081 $1.050 $1.000 $1.028 $0.926
Net investment income (loss) 0.053 0.063 0.064 0.064
Net realized and unrealized gain (loss) on
investments 0.032 0.047 (0.029) 0.102
----- ----- ------- -----
Total from investment operations 0.085 0.110 0.035 0.166
Less distributions:
Dividends from net investment income (0.054) (0.060) (0.063) (0.064)
Distributions from net realized gain on
investments 0.000 0.000 0.000 0.000
Return of capital 0.000 0.000 0.000 0.000
----- ----- ----- -----
Total from distributions (0.054) (0.060) (0.063) (0.064)
----- ----- ------- -----
Net increase (decrease) in net asset value 0.031 0.050 (0.028) 0.102
Net asset value, end of period $1.081 $1.050 $1.000 $1.028
----- ----- ------- -----
----- ----- ------- -----
TOTAL RETURN 8.15% 11.35% 3.54% 18.49%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $902,480 $552,870 $402,548 $342,495
Ratio of expenses to average net assets 0.50% 0.51% 0.52% 0.53%
Ratio of net investment income (loss) to
average net assets 5.86% 6.58% 6.37% 6.51%
Portfolio turnover rate 122.3% 112.90%a 212.00% 215.00%
Current Yield(b) 5.92% 6.34% 6.25% 6.46%
</TABLE>
(a) Excluding mortgage dollar rolls
(b) The yield information will fluctuate and publication of yield may not
provide a basis for comparison with bank deposits, other investments which
are insured and/or pay a fixed yield for a stated period of time, or other
investment companies. In addition, information may be of limited use for
comparative purposes because it does not reflect charges imposed at the
Separate Account level which, if included, would decrease the yield. This
figure has not been audited.
72
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD HIGH YIELD HLS FUND, INC. FINANCIAL HIGHLIGHTS
These tables are intended to help you understand each fund's financial
performance since inception. The total returns in the table represent the rate
that an investor would have earned on an investment in each fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Arthur Andersen, LLP, whose report, along with each fund's financial
statements, are included in the annual report which is available upon request.
<TABLE>
<CAPTION>
CLASS IA - PERIOD ENDED: 12/31/99(a) 9/30/98-12/31/98(a)
PER SHARE OPERATING PERFORMANCE
- ------------------------------------------------------ ----------------- --------------------
<S> <C> <C>
Net asset value, beginning of period $1.017 $1.00
Net investment income (loss) 0.019
Net realized and unrealized gain (loss) on
investments 0.017
Total from investment operations 0.036
Less distributions:
Dividends from net investment income (0.019)
Distributions from net realized gain on
investments 0.000
Return of capital 0.000
-----
Total from distributions (0.019)
-----
Net increase (decrease) in net asset value 0.017
Net asset value, end of period $1.017
-----
-----
TOTAL RETURN 3.59%(b)(d)
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $14,482
Ratio of expenses to average net assets 0.35%c
Ratio of net investment income (loss) to average net
assets 8.04%(c)(d)
Portfolio turnover rate 15.4%
Current Yielde 8.90%
</TABLE>
(a) The fund was declared effective by the Securities and Exchange Commission on
September 30, 1998.
(b) Not annualized.
(c) Annualized.
(d) Management fees were waived until assets (excluding assets contributed by
companies affiliated with HL Advisors) reached $20 million. The total
return and ratio of net investment income to average net assets would have
been lower if management fees were not waived. eThe yield information will
fluctuate and publication of yield may not provide a basis for comparison
with bank deposits, other investments which are insured and/or pay a fixed
yield for a stated period of time, or other investment companies. In
addition, information may be of limited use for comparative purposes
because it does not reflect charges imposed at the Separate Account level
which, if included, would decrease the yield. This figure has not been
audited.
73
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD MORTGAGE SECURITIES HLS FUND, INC. FINANCIAL HIGHLIGHTS
These tables are intended to help you understand each fund's financial
performance for the past five years. The total returns in the table represent
the rate that an investor would have earned on an investment in each fund
(assuming reinvestment of all dividends and distributions). This information has
been audited by Arthur Andersen, LLP, whose report, along with each fund's
financial statements, are included in the annual report which is available upon
request.
<TABLE>
<CAPTION>
CLASS IA - PERIOD ENDED: 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
PER SHARE OPERATING PERFORMANCE
- -------------------------------------------- ----------------- ---------------- ----------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.085 $1.084 $1.056 $1.071 $0.984
Net investment income (loss) 0.067 0.071 0.069 0.068
Net realized and unrealized gain (loss) on
investments 0.006 0.022 (0.018) 0.087
----- ----- ------- -----
Total from investment operations 0.073 0.093 0.051 0.155
Less distributions:
Dividends from net investment income (0.067) (0.065) (0.066) (0.068)
Distributions from net realized gain on
investments (0.003) 0.000 0.000 0.000
Return of capital (0.002) 0.000 0.000 0.000
----- ----- ------- -----
Total from distributions (0.072) (0.065) (0.066) (0.068)
----- ----- ------- -----
Net increase (decrease) in net asset value 0.001 0.028 (0.015) 0.087
Net asset value, end of period $1.085 $1.084 $1.056 $1.071
----- ----- ------- -----
----- ----- ------- -----
TOTAL RETURN 6.72% 9.01% 4.99% 16.17%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) 356,834 325,702 325,495 327,565
Ratio of expenses to average net assets 0.46% 0.45% 0.45% 0.47%
Ratio of net investment income (loss) to
average net assets 6.18% 6.60% 6.67% 6.50%
Portfolio turnover rate 207.8% 46.50%a 201.00% 489.40%
Current Yield(b) 6.15% 6.66% 6.67% 6.90%
</TABLE>
(a) Excluding mortgage dollar rolls
(b) The yield information will fluctuate and publication of yield may not
provide a basis for comparison with bank deposits, other investments which
are insured and/or pay a fixed yield for a stated period of time, or other
investment companies. In addition, information may be of limited use for
comparative purposes because it does not reflect charges imposed at the
Separate Account level which, if included, would decrease the yield. This
figure has not been audited.
74
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD MONEY MARKET HLS FUND, INC. FINANCIAL HIGHLIGHTS
These tables are intended to help you understand each fund's financial
performance for the past five years. The total returns in the table represent
the rate that an investor would have earned on an investment in each fund
(assuming reinvestment of all dividends and distributions). This information has
been audited by Arthur Andersen, LLP, whose report, along with each fund's
financial statements, are included in the annual report which is available upon
request.
<TABLE>
<CAPTION>
CLASS IA - PERIOD ENDED: 12/31/99 12/31/98 12/31/97 12/31/96 12/31/95
PER SHARE OPERATING PERFORMANCE
- -------------------------------------------- ----------------- ---------------- ----------------- ---------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.000 $1.000 $1.000 $1.000 $1.000
Net investment income (loss) 0.051 0.049 0.050 0.056
Net realized and unrealized gain (loss) on
investments 0.000 0.000 0.000 0.000
----- ----- ----- -----
Total from investment operations 0.051 0.049 0.050 0.056
Less distributions:
Dividends from net investment income (0.051) (0.049) (0.050) (0.056)
Distributions from net realized gain on
investments 0.000 0.000 0.000 0.000
Return of capital 0.000 0.000 0.000 0.000
----- ----- ----- -----
Total from distributions (0.051) (0.049) (0.050) (0.056)
----- ----- ----- -----
Net increase (decrease) in net asset value 0.000 0.000 0.000 0.000
Net asset value, end of period $1.000 $1.000 $1.000 $1.000
----- ----- ----- -----
----- ----- ----- -----
TOTAL RETURN 5.25% 5.31% 5.09% 5.74%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) 872,486 612,480 542,586 339,709
Ratio of expenses to average net assets 0.45% 0.44% 0.44% 0.45%
Ratio of net investment income (loss) to
average net assets 5.12% 5.21% 5.04% 5.57%
Portfolio turnover rate
Current Yield(a) 4.79% 5.36% 5.10% 5.40%
Effective Yield(a) 4.90% 5.50% 5.23% 5.54%
</TABLE>
(a) The yield information will fluctuate and publication of yield may not
provide a basis for comparison with bank deposits, other investments which
are insured and/or pay a fixed yield for a stated period of time, or other
investment companies. In addition, information may be of limited use for
comparative purposes because it does not reflect charges imposed at the
Separate Account level which, if included, would decrease the yield. This
figure has not been audited.
75
<PAGE>
FOR MORE INFORMATION
- --------------------------------------------------------------------------------
Two documents are available that offer further information on the Hartford HLS
Funds:
ANNUAL/SEMIANNUAL REPORT TO SHAREHOLDERS
Additional information on the funds is contained in the financial statements and
portfolio holdings of the funds' annual and semiannual report. In the fund's
annual report you will find a discussion of the market conditions and investment
strategies that significantly affected performance during the last fiscal year,
and the auditor's report.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI contains more detailed information on all aspects of the funds.
A current SAI and annual report have been filed with the Securities and Exchange
Commission and are incorporated by reference into (are legally a part of) this
prospectus.
To request a free copy of the current annual/semiannual report or the SAI,
please contact the funds at:
BY MAIL:
Hartford HLS Funds
c/o Individual Annuity Services
P.O. Box 5085
Hartford, CT 06102-5085
BY PHONE:
1-800-862-6668
Or you may view or obtain these documents from the SEC:
IN PERSON:
at the SEC's Public Reference Room in Washington, DC
BY MAIL:
Public Reference Section
Securities and Exchange Commission
Washington, DC 20549-6009
(duplicating fee required)
ON THE INTERNET:
www.sec.gov
SEC FILE NUMBERS:
Global Health 811-08629
Global Technology 811-08629
Capital Appreciation 811-04005
Dividend and Growth 811-08186
Global Leaders 811-08629
Growth and Income 811-08629
Index 811-05045
Int'l Opportunities 811-06059
MidCap 811-08185
Small Company 811-07557
Stock 811-02630
Advisers 811-03659
Int'l Advisers 811-08804
Bond 811-03660
High Yield 811-08629
Mortgage Securities 811-04201
Money Market 811-03662
Information on the operation of the SEC's public reference room may be obtained
by calling 1-800-SEC-0330.
76
<PAGE>
HARTFORD HLS FUNDS
FOR USE WITH THE HARTFORD
VARIABLE INSURANCE PRODUCTS
PROSPECTUS
EFFECTIVE MAY 1, 2000
<PAGE>
HARTFORD HLS FUNDS
CLASS IB SHARES
PROSPECTUS
MAY 1, 2000
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or passed upon the adequacy of this
prospectus. Any representation to the contrary is a criminal offense.
SECTOR FUNDS
GLOBAL HEALTH HLS FUND
GLOBAL TECHNOLOGY HLS FUND
STOCK FUNDS
CAPITAL APPRECIATION HLS FUND
DIVIDEND AND GROWTH HLS FUND
GLOBAL LEADERS HLS FUND
GROWTH AND INCOME HLS FUND
INDEX HLS FUND
INTERNATIONAL OPPORTUNITIES HLS FUND
MIDCAP HLS FUND
SMALL COMPANY HLS FUND
STOCK HLS FUND
ASSET ALLOCATION FUNDS
ADVISERS HLS FUND
INTERNATIONAL ADVISERS HLS FUND
BOND FUNDS
BOND HLS FUND
HIGH YIELD HLS FUND
MORTGAGE SECURITIES HLS FUND
MONEY MARKET FUND
MONEY MARKET FUND
<PAGE>
HARTFORD HLS C/O INDIVIDUAL ANNUITY SERVICES
MUTUAL FUNDS P.O. BOX 5085
HARTFORD, CT 06102-5085
<PAGE>
INTRODUCTION
- --------------------------------------------------------------------------------
The Hartford HLS Funds is a family of seventeen mutual funds (each a "fund" and
together the "funds") which serve as underlying investment options for certain
variable annuity and variable life insurance separate accounts of Hartford Life
Insurance Company and its affiliates ("Hartford Life") and certain qualified
retirement plans. Contractholders of variable annuity products and policyholders
of variable life insurance products may choose the funds permitted in the
accompanying variable insurance product prospectus. In addition, participants in
certain qualified retirement plans may choose the funds permitted in their
plans. Each fund offers two classes of shares: Class IB shares offered in this
prospectus and Class IA shares offered pursuant to another prospectus. The Class
IB shares were first offered in April 1998. Class IA shares are subject to the
same expenses as the Class IB shares, but unlike the Class IB shares, they are
not subject to distribution fees imposed pursuant to a distribution plan
("Distribution Plan") adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940 (the "1940 Act"). Each fund, except the Global Health HLS
Fund and Global Technology HLS Fund, is a diversified fund. The Global Health
HLS Fund and Global Technology HLS Fund are non-diversified concentrated funds,
which are sometimes known as "sector funds." Information on each fund, including
risk factors for investing in diversified versus non-diversified concentrated
funds, can be found on the pages following this summary. HARTFORD LIFE ALSO
SPONSORS A FAMILY OF MUTUAL FUNDS KNOWN AS THE HARTFORD MUTUAL FUNDS, INC. WHICH
ARE OFFERED DIRECTLY TO THE PUBLIC (THE "RETAIL FUNDS"). THE RETAIL FUNDS ARE
SEPARATE FUNDS AND SHOULD NOT BE CONFUSED WITH THE HARTFORD HLS FUND INVESTMENT
OPTIONS OFFERED IN THIS PROSPECTUS.
Please note that mutual funds are not bank deposits and are not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Because you could lose money by investing in these funds, be sure to
read all risk disclosures carefully before investing.
1
<PAGE>
CONTENTS PAGE
- --------------------------------------------------------------------------------
A summary of each fund's goals, Hartford Global Health HLS Fund
strategies, risks and
performance. Hartford Global Technology HLS Fund
Hartford Capital Appreciation HLS Fund
Hartford Dividend and Growth HLS Fund
Hartford Global Leaders HLS Fund
Hartford Growth and Income HLS Fund
Hartford Index HLS Fund
Hartford International Opportunities HLS Fund
Hartford MidCap HLS Fund
Hartford Small Company HLS Fund
Hartford Stock HLS Fund
Hartford Advisers HLS Fund
Hartford International Advisers HLS Fund
Hartford Bond HLS Fund
Hartford High Yield HLS Fund
Hartford Mortgage Securities HLS Fund
Hartford Money Market HLS Fund
Description of additional Additional investment matters
investment strategies and
investment risks.
Investment manager and management Management of the funds
fee information.
Information on how to purchase Purchase of fund shares
and sell the fund's shares.
Sale and redemption of shares
Further information on the funds. Determination of net asset value
Dividends
Exchange privileges
Federal income taxes
Brokerage commissions
Performance related information
General information Financial highlights
For more information back cover
2
<PAGE>
HARTFORD GLOBAL HEALTH HLS FUND
- --------------------------------------------------------------------------------
INVESTMENT GOAL AND STYLE. The Hartford Global Health HLS Fund seeks long-term
capital appreciation by investing at least 80% of its total assets in the equity
securities of health care companies worldwide.
The focus of the fund's investment process is stock selection through
fundamental analysis. The fund's investment approach to health care sector
investing is based on in-depth understanding of medical science, regulatory
developments, reimbursement policy trends, and individual company business
franchises. The portfolio will exploit favorable macro trends for the health
care sector including demographics.
The portfolio will also seek to invest in health care companies that benefit
from the trend toward global consolidation, the biotechnology revolution and
advances in software, integrated circuits and biocompatible materials.
Fundamental research is focused on direct contact with company management,
suppliers and competitors.
Asset allocation within the portfolio will be diversified across sub-sectors of
the health care industry, but will at times be concentrated in sub-sectors that,
in the opinion of Wellington Management, provide the most compelling
opportunities based on fundamental research.
Stocks considered for purchase in the portfolio typically share the following
attributes:
- - The company's business franchise is temporarily mispriced
- - The company has under-appreciated new product pipelines
- - The company has opportunities due to changes in reimbursement policy (for
example, the privatization of health care services abroad)
- - The company is a target of opportunity due to industry consolidation
Stocks will be considered for sale from the portfolio when:
- - Target prices are achieved
- - Wellington Management's fundamental expectations prove to be wrong
- - A company's prospects become less appealing
Wellington Management seeks growth companies with attractive entry valuations,
defined as those stocks where the price is not already fully exploited by other
investors. Accordingly, Wellington Management seeks to be early, not late in
recognizing opportunity.
The portfolio will be relatively concentrated. Wellington Management expects to
hold approximately 50 to 70 positions, some with a maximum position size of 10%
of the fund's assets at time of purchase. The portfolio will be close to fully
invested; cash balances normally will not exceed 10% of total assets. Market
timing will not be a significant source of performance. Annual portfolio
turnover is expected to be 100% or less.
- --------------------------------------------------------------------------------
MAIN RISKS. As with most stock funds, the value of your investment may go down
in response to stock market movements. Because the fund concentrates on small,
medium and large companies, its performance may be more volatile than that
3
<PAGE>
of a fund that invests primarily in larger companies.
Stocks of small or mid-sized companies may be more risky than stocks of larger
companies. These companies may be young and have more limited operating or
business history. Because these businesses frequently rely on narrower product
lines and niche markets, they can suffer from isolated business setbacks.
The fund's investments are concentrated in one sector of the economy. This means
that the fund may have greater market fluctuation and price volatility than a
fund which invests in a more broadly diversified portfolio of securities across
sectors. Financial, business and economic factors may have a greater impact on a
concentrated fund than on a broadly diversified fund.
Health care products and services are generally subject to government
regulation, and changes in laws or regulations could adversely impact the market
value of securities and the fund's overall performance. Government regulation
could have a significant, adverse impact the price and availability of a
company's products and services.
Lawsuits and regulatory proceedings which may be brought against the issuers of
securities could also adversely impact the market value of securities and the
fund's overall performance.
Foreign investments may be more risky than domestic investments. Investments in
foreign securities may be affected by fluctuations in currency exchange rates,
incomplete or inaccurate financial information on companies, social upheavals
and political actions ranging from tax code changes to governmental collapse.
The fund's management strategy will influence performance significantly. If the
managers' stock selection strategy doesn't perform as expected, the fund could
underperform its peers or lose money.
The fund expects to trade securities very actively, which will likely increase
its transaction costs (thus lowering performance) and increase your taxable
distributions.
PAST PERFORMANCE. Because the fund has been in operation for less than one year
no performance history has been provided.
[CALL OUT] SUB-ADVISER. The fund is managed by Wellington Management using a
team of its global industry analysts that specialize in the healthcare sector.
4
<PAGE>
HARTFORD GLOBAL TECHNOLOGY HLS FUND
- --------------------------------------------------------------------------------
INVESTMENT GOAL AND STYLE. The Hartford Global Technology HLS Fund seeks
long-term capital appreciation by investing at least 80% of its total assets in
the equity securities of technology companies worldwide.
The focus of the fund's investment process is stock selection through
fundamental analysis. The fund's investment approach to technology sector
investing is based on analyzing the competitive outlook for various sub-sectors
of the technology industry, identifying those sub-sectors likely to benefit from
the current and expected future environment, and identifying individual
opportunities. Wellington Management's evaluation of technology companies rests
on its solid knowledge of the overall competitive environment, including supply
and demand characteristics, secular trends, existing product evaluations, and
new product developments within the technology industry. Fundamental research is
focused on direct contact with company management, suppliers and competitors.
Asset allocation within the portfolio reflects Wellington Management's opinion
of the relative attractiveness of stocks within the sub-sectors of the
technology industry, near term macroeconomic events that may detract or enhance
the sub-sector's attractiveness, and the number of underdeveloped opportunities
in each sub-sector. Opportunities dictate the magnitude and frequency of changes
in asset allocation among sub-sectors, but some representation typically is
maintained in each major sub-sector.
Stocks considered for purchase in the portfolio typically share the following
attributes:
- - A positive change in operating results is anticipated
- - Unrecognized or undervalued capabilities are present
- - The quality of management indicates that factors mentioned above will be
converted to shareholder values
Stocks will be considered for sale from the portfolio when:
- - Target prices are achieved
- - Earnings and/or return expectations are marked down due to fundamental
changes in the company's operating outlook
- - More attractive value in a comparable company is available.
The portfolio will be relatively concentrated. Wellington Management expects to
hold approximately 30 to 50 positions, some with a maximum position size of 10%
of the fund's assets at time of purchase. The portfolio will be close to fully
invested; cash balances normally will not exceed 10% of total assets. Market
timing will not be a significant source of performance. Annual portfolio
turnover is expected to be high and will exceed 100%.
- --------------------------------------------------------------------------------
MAIN RISKS. As with most stock funds, the value of your investment may go down
in response to stock market movements. Because the fund concentrates on small,
medium and large companies, its performance may be more volatile than that
5
<PAGE>
of a fund that invests primarily in larger companies.
Stocks of small or mid-sized companies may be more risky than stocks of larger
companies. These companies may be young and have more limited operating or
business history. Because these businesses frequently rely on narrower product
lines and niche markets, they can suffer from isolated business setbacks.
The fund's investments are concentrated in one sector of the economy. This means
that the fund may have greater market fluctuation and price volatility than a
fund which invests in a more broadly diversified portfolio of securities across
sectors. Financial, business and economic factors may have a greater impact on a
concentrated fund than on a broadly diversified fund. Competition in the
industry may cause technology companies to cut prices significantly, which can
adversely affect the profitability of companies that make up the fund's
portfolio. In addition, because of rapid technological developments, products or
services which are offered by technology companies may become obsolete or may be
produced for a relatively short time, which could adversely affect the price of
the issuers' securities. This means that the fund's returns may be more volatile
than the returns of a fund which is not subject to these risk factors.
Foreign investments may be more risky than domestic investments. Investments in
foreign securities may be affected by fluctuations in currency exchange rates,
incomplete or inaccurate financial information on companies, social upheavals
and political actions ranging from tax code changes to governmental collapse.
The fund's management strategy will influence performance significantly. If the
managers' stock selection strategy doesn't perform as expected, the fund could
underperform its peers or lose money.
The fund expects to trade securities very actively, which will likely increase
its transaction costs (thus lowering performance) and increase your taxable
distributions.
PAST PERFORMANCE. Because the fund has been in operation for less than one year
no performance history has been
provided.
[CALL OUT] SUB-ADVISER. The fund is managed by Wellington Management using a
team of its global industry analysts that specialize in the technology sector.
6
<PAGE>
HARTFORD CAPITAL APPRECIATION HLS FUND, INC.
- --------------------------------------------------------------------------------
INVESTMENT GOAL AND STYLE. The Hartford Capital Appreciation HLS Fund seeks
growth of capital by investing primarily in stocks selected on the basis of
potential for capital appreciation.
The fund normally invests at least 65% of its total assets in common stocks of
small, medium and large companies. The fund may invest up to 20% of its total
assets in securities of non-U.S. issuers.
Through fundamental analysis, Wellington Management identifies companies that it
believes have substantial near-term capital appreciation potential regardless of
company size or industry sector. This strategy is sometimes referred to as a
"stock picking" approach. 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 of a significant event that
Wellington Management believes will trigger an increase in the stock price.
In analyzing a prospective investment Wellington Management looks at a number of
factors, such as business environment, management, balance sheet, income
statement, anticipated earnings, revenues, dividends and other related measures
of value.
- --------------------------------------------------------------------------------
MAIN RISKS. As with most stock funds, the value of your investment may go down
in response to stock market movements. Because the fund concentrates on small,
medium and large companies, its performance may be more volatile than that of a
fund that invests primarily in larger companies.
Stocks of small or mid-sized companies may be more risky than stocks of larger
companies. These companies may be young and have more limited operating or
business history. Because these businesses frequently rely on narrower product
lines and niche markets, they can suffer from isolated business setbacks.
Foreign investments may be more risky than domestic investments. Investments in
foreign securities may be affected by fluctuations in currency exchange rates,
incomplete or inaccurate financial information on companies, social upheavals
and political actions ranging from tax code changes to governmental collapse.
The fund's management strategy will influence performance significantly. If the
managers' stock selection strategy doesn't perform as expected, the fund could
underperform its peers or lose money.
The fund may trade securities actively, which could increase its transaction
costs (thus lowering performance) and increase your taxable distributions.
- --------------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows the fund's Class IB shares' total return for
the first full calendar year of operation, while the table shows the fund's
Class IB shares' performance over the same period and since inception (along
with that of a broad-based market index for comparison). These figures do not
include the effect of sales charges or other fees which may be applied at the
variable life insurance or
7
<PAGE>
variable annuity product level. All figures assume that all dividends and
distributions were reinvested. Keep in mind that past performance does not
indicate future results.
Although Class IB shares are being offered by this prospectus, because the Class
IB shares have limited performance history, the performance history of Class IA
shares is also shown below. Class IB share performance would, however, be lower
due to the 0.18% 12b-1 fee applied to Class IB shares.
CLASS IB TOTAL RETURN FOR CALENDAR YEAR 1999
[GRAPH]
99
- ------------------------------------------------------
BEST QUARTER: up %, _______ quarter _____
WORST QUARTER: down %, _______ quarter _____
- ------------------------------------------------------
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
[GRAPH]
<TABLE>
<CAPTION>
90 91 92 93 94 95 96 97 98 99
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -10.90% 53.99% 16.98% 20.80% 2.50% 30.25% 20.70% 22.34% 15.48%
</TABLE>
- ------------------------------------------------------
BEST QUARTER: up %, _______ quarter _____
WORST QUARTER: down %, _______ quarter _____
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIOD ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR (APRIL 1, 1998)
<S> <C> <C>
CLASS IB
INDEX
INDEX: S&P 500 Index, an unmanaged index of equity securities.
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS 10 YEARS INCEPTION
(APRIL 2,
1984)
<S> <C> <C> <C> <C>
CLASS IA
INDEX
INDEX: S&P 500 Index, an unmanaged index of equity securities.
</TABLE>
8
<PAGE>
[CALL OUT]
SUB-ADVISER
Wellington Management
PORTFOLIO MANAGER
Saul J. Pannell
- Senior Vice President
of Wellington Management
- Manager of the fund
since 1991
- Joined Wellington
Management in 1979
- Investment professional
since 1974
9
<PAGE>
HARTFORD DIVIDEND AND GROWTH HLS FUND
- --------------------------------------------------------------------------------
INVESTMENT GOAL AND STYLE. The Hartford Dividend and Growth HLS Fund seeks a
high level of current income consistent with growth of capital by investing
primarily in stocks.
The fund invests primarily in a diversified portfolio of common stocks that
typically have above average income yields and whose prospects for capital
appreciation are considered favorable by Wellington Management. Under normal
market and economic conditions at least 65% of the fund's total assets are
invested in dividend-paying equity securities. The fund may invest up to 20% of
its total assets in securities of non-U.S. issuers. The fund tends to focus on
securities of larger, well-established companies.
Wellington Management uses fundamental analysis to evaluate a security for
purchase or sale by the fund. Fundamental analysis of a company involves the
assessment of such factors as its business environment, management, balance
sheet, income statement, anticipated earnings, revenues and dividends.
As a key component of its fundamental analysis, Wellington Management evaluates
a company's ability to sustain and potentially increase its dividend payments.
The fund's portfolio is broadly diversified by industry and company.
- --------------------------------------------------------------------------------
MAIN RISKS. As with most stock funds, the value of your investment may go down
in response to stock market movements. Foreign investments may be more risky
than domestic investments. Investments in foreign securities may be affected by
fluctuations in currency exchange rates, incomplete or inaccurate financial
information on companies, social upheavals and political actions ranging from
tax code changes to governmental collapse.
The fund's management strategy will influence performance significantly. If the
fund's stock selection strategy doesn't perform as expected, the fund could
underperform its peers or lose money. The fund may trade securities actively,
which could increase its transaction costs (thus lowering performance) and
increase your taxable distributions.
- --------------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows the fund's Class IB shares' total return for
the first full calendar year of operation, while the table shows the fund's
Class IB shares' performance over the same period and since inception (along
with that of a broad-based market index for comparison). These figures do not
include the effect of sales charges or other fees which may be applied at the
variable life insurance or variable annuity product level. All figures assume
that all dividends and distributions were reinvested. Keep in mind that past
performance does not indicate future results.
Although Class IB shares are being offered by this prospectus, because the Class
IB shares have limited performance history, the performance history of Class IA
shares is also shown below. Class IB share performance would, however, be lower
due to the 0.18% 12b-1 fee applied to Class IB shares.
10
<PAGE>
CLASS IB TOTAL RETURN FOR CALENDAR YEAR 1999
[GRAPH]
99
- ------------------------------------------------------
BEST QUARTER: up %, _______ quarter _____
WORST QUARTER: down %, _______ quarter _____
- ------------------------------------------------------
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
[GRAPH]
<TABLE>
<CAPTION>
95 96 97 98 99
<C> <C> <C> <C> <C>
36.37% 22.91% 31.89% 16.42%
</TABLE>
- ------------------------------------------------------
BEST QUARTER: up %, _______ quarter _____
WORST QUARTER: down %, _______ quarter _____
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIOD ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR (APRIL 1, 1998)
<S> <C> <C>
CLASS IB
INDEX
INDEX: S&P 500 Index, an unmanaged index of equity securities.
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR 5 YEARS (MARCH 9, 1994)
<S> <C> <C> <C>
CLASS IA
INDEX
INDEX: S&P 500 Index, an unmanaged index of equity securities.
</TABLE>
11
<PAGE>
[CALL OUT]
SUB-ADVISER
Wellington Management
PORTFOLIO MANAGER
Laurie A. Gabriel, CFA
- Senior Vice President
and Managing Director
of Wellington Management
- Manager of the fund
since 1994
- Joined Wellington
Management in 1976
- Investment professional
since 1976
12
<PAGE>
HARTFORD GLOBAL LEADERS HLS FUND
- --------------------------------------------------------------------------------
INVESTMENT GOAL AND STYLE. The Hartford Global Leaders HLS Fund seeks growth of
capital by investing primarily in stocks issued by U.S. companies and non-U.S.
companies.
The fund invests primarily in a diversified portfolio of common stocks covering
a broad range of countries, industries and companies. Securities in which the
fund invests are denominated in both U.S. dollars and non-U.S. currencies and
may trade in both U.S. and non-U.S. markets.
Under normal market and economic conditions, the fund invests at least 65% of
its total assets in common stocks of high-quality growth companies worldwide.
These companies must, in the opinion of Wellington Management, be leaders in
their respective industries as indicated by an established market presence and
strong global, regional or country competitive positions. Under normal market
and economic conditions, the fund will diversify its investments in securities
of issuers among at least five countries, which may include the United States.
There are no limits on the amount of the fund's assets that may be invested in
each country.
The fund uses a two-tiered investment strategy:
- Using what is sometimes referred to as a "top down" approach,
Wellington Management analyzes the global macro-economic and
investment environments. This includes an evaluation of U.S. and
non-U.S. economic and political conditions, fiscal and monetary
policies, demographic trends and investor sentiment. Through top down
analysis, Wellington Management anticipates trends and changes in the
markets and economy to identify companies which offer the most
potential for capital appreciation given current and projected global
and local economic and market conditions.
- 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. Fundamental
analysis involves the assessment of a company through such factors as
its business environment, management, balance sheet, income
statements, anticipated earnings, revenues and other related measures
of value.
The fund emphasizes high-quality growth companies. The key characteristics of
high-quality growth companies include a strong balance sheet, a high return on
equity, a strong management team, and attractive relative value within the
context of the global marketplace or a security's primary trading market.
- --------------------------------------------------------------------------------
MAIN RISKS. As with most stock funds, the value of your investment may go down
in response to stock market movements. Foreign investments may be more risky
than domestic investments. Investments in foreign securities may be affected by
fluctuations in currency exchange rates, incomplete or inaccurate financial
information on companies, social upheavals and political actions ranging from
tax code changes to governmental collapse.
13
<PAGE>
The fund's management strategy will influence performance significantly. If the
fund invests in countries or regions that experience economic downturns,
performance could suffer. Similarly, if certain investments or industries don't
perform as expected, or if the managers' stock selection strategy doesn't
perform as expected, the fund could underperform its peers or lose money.
The fund may trade securities actively, which could increase its transaction
costs (thus lowering performance) and increase your taxable distributions.
- --------------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows the fund's Class IB shares' total return for
the first full calendar year of operation, while the table shows the fund's
Class IB shares' performance over the same period and since inception (along
with that of a broad-based market index for comparison). These figures do not
include the effect of sales charges or other fees which may be applied at the
variable life insurance or variable annuity product level. All figures assume
that all dividends and distributions were reinvested. Keep in mind that past
performance does not indicate future results.
CLASS IB TOTAL RETURN FOR CALENDAR YEAR 1999
[GRAPH]
99
- ------------------------------------------------------
BEST QUARTER: up %, _______ quarter _____
WORST QUARTER: down %, _______ quarter _____
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR (SEPTEMBER 30, 1998)
<S> <C> <C>
CLASS IB
INDEX
INDEX: MSCI World Index, an unmanaged index of international equity securities.
</TABLE>
14
<PAGE>
[CALL OUT]
SUB-ADVISER
Wellington Management
PORTFOLIO MANAGERS
Rand L. Alexander, CFA
- Senior Vice President
of Wellington Management
- Co-manager of the fund
since inception (1998)
- Joined Wellington
Management in 1990
- Investment professional
since 1976
Andrew S. Offit
- Vice President of
Wellington Management
- Co-manager of the fund
since inception (1998)
- Joined Wellington
Management in 1997
- Investment professional
since 1987
15
<PAGE>
HARTFORD GROWTH AND INCOME HLS FUND
- --------------------------------------------------------------------------------
INVESTMENT GOAL AND STYLE. The Hartford Growth and Income Fund seeks growth of
capital and current income by investing primarily in stocks with earnings growth
potential and steady or rising dividends.
The fund invests primarily in a diversified portfolio of common stocks that
typically have steady or rising dividends and whose prospects for capital
appreciation are considered favorable by Wellington Management. The fund may
invest up to 20% of its total assets in securities of non-U.S. issuers.
Wellington Management uses fundamental analysis to evaluate a security for
purchase or sale by the fund. Fundamental analysis of a company involves the
assessment of such factors as its business environment, management, balance
sheet, income statement, anticipated earnings, revenues, dividends and other
related measures of value.
Wellington Management then complements its fundamental research with an
internally-developed analytical approach. This analytical approach consists of
both valuation and timeliness measures. Valuation factors focus on future
dividend growth and cash flow to determine the relative attractiveness of
different stocks in different industries. Timeliness focuses on stocks with
favorable earnings and stock price momentum to assess the appropriate time for
purchase.
The fund's portfolio is broadly diversified by industry and company.
- --------------------------------------------------------------------------------
MAIN RISKS. As with most stock funds, the value of your investment may go down
in response to stock market movements.
Foreign investments may be more risky than domestic investments. Investments in
foreign securities may be affected by fluctuations in currency exchange rates,
incomplete or inaccurate financial information on companies, social upheavals
and political actions ranging from tax code changes to governmental collapse.
The fund's management strategy will influence performance significantly. If the
fund's stock selection strategy doesn't perform as expected, the fund could
underperform its peers or lose money.
The fund may trade securities actively, which could increase its transaction
costs (thus lowering performance) and increase your taxable distributions.
- --------------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows the fund's Class IB shares' total return for
the first full calendar year of operation, while the table shows the fund's
Class IB shares' performance over the same period and since inception (along
with that of a broad-based market index for comparison). These figures do not
include the effect of sales charges or other fees which may be applied at the
variable life insurance or variable annuity product level. All figures assume
that all dividends and distributions were reinvested. Keep in mind that past
performance does not indicate future results.
16
<PAGE>
CLASS IB TOTAL RETURN FOR CALENDAR YEAR 1999
[GRAPH]
99
- ------------------------------------------------------
BEST QUARTER: up %, _______ quarter _____
WORST QUARTER: down %, _______ quarter _____
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR (MAY 29, 1998)
<S> <C> <C>
CLASS IB
INDEX
INDEX: S&P 500 Index, an unmanaged index of equity securities.
</TABLE>
[CALL OUT]
SUB-ADVISER
Wellington Management
PORTFOLIO MANAGER
James A. Rullo, CFA
- Senior Vice President of
Wellington Management
- Manager of the fund since
inception (1998)
- Joined Wellington
Management in 1994
- Investment professional
since 1987
17
<PAGE>
HARTFORD INDEX HLS FUND
- --------------------------------------------------------------------------------
INVESTMENT GOAL AND STYLE. The Hartford Index HLS Fund seeks to provide
investment results which approximate the price and yield performance of publicly
traded common stocks in the aggregate.
The fund uses the Standard & Poor's 500 Composite Stock Price Index (the
"Index") as its standard performance comparison because it represents a
significant proportion of the total market value of all common stocks, is well
known to investors and, in the opinion of the management of the fund, is
representative of the performance of publicly-traded common stocks. Therefore,
the fund attempts to approximate the capital performance and dividend income of
the Index.
The portfolio manager generally invests in no fewer than 495 stocks. HIMCO
selects stocks for the fund's portfolio after taking into account their
individual weights in the Index. Temporary cash balances may be invested in
short-term money market instruments.
The Index is comprised of 500 selected common stocks, most of which are listed
on the New York Stock Exchange. Standard & Poor's Corporation ("S&P") chooses
the stocks to be included in the Index on a proprietary basis.
"Standard & Poor's"-Registered Trademark-, "S&P"-Registered Trademark-, "S&P
500"-Registered Trademark-, "Standard & Poor's 500", and "500" are trademarks of
The McGraw-Hill Companies, Inc. and have been licensed for use by Hartford Life
Insurance Company. The fund's portfolio is broadly diversified by industry and
company.
The weightings of stocks in the Index are based on each stock's relative
total market value, that is, its market price per share times the number of
shares outstanding. Because of this weighting, as of December 31, 1999,
approximately 50% percent of the Index was composed of the thirty-four
largest companies, the five largest being Microsoft Corporation, General
Electric Company, Cisco Systems, Inc., WalMart Stores, Inc. and Exxon Mobil
Corporation.
HIMCO does not attempt to "manage" the fund's portfolio in the traditional
sense, using economic, financial and market analysis, nor does the adverse
financial situation of a company directly result in its elimination from the
fund's portfolio unless, of course, the company is removed from the Index. From
time to time administrative adjustments may be made in the fund's portfolio
because of mergers, changes in the composition of the Index and similar reasons.
The fund's ability to approximate the performance of the Index will depend to
some extent on the size of cash flows into and out of the fund. Investment
changes to accommodate these cash flows will be made to maintain the similarity
of the fund's portfolio to the Index, to the maximum practicable extent.
The fund's portfolio is broadly diversified by industry and company.
- --------------------------------------------------------------------------------
MAIN RISKS. As with most stock funds, the value of your investment may go down
in response to stock market movements. Foreign investments may be more risky
than domestic investments. Investments in foreign securities may be affected by
fluctuations in currency exchange rates, incomplete or inaccurate financial
information on companies, social upheavals and political actions ranging from
tax code changes to governmental collapse.
The fund's management strategy will influence performance significantly.
Large-capitalization stocks as a group could fall out of favor with the market,
causing the fund to underperform funds that focus on small- or
medium-capitalization stocks. Similarly, if the managers' stock selection
strategy doesn't
18
<PAGE>
perform as expected, the fund could underperform its peers or lose money.
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows the fund's Class IB shares' total return for
the first full calendar year of operation, while the table shows the fund's
Class IB shares' performance over the same period and since inception (along
with that of a broad-based market index for comparison). These figures do not
include the effect of sales charges or other fees which may be applied at the
variable life insurance or variable annuity product level. All figures assume
that all dividends and distributions were reinvested. Keep in mind that past
performance does not indicate future results.
Although Class IB shares are being offered by this prospectus, because the Class
IB shares have limited performance history, the performance history of Class IA
shares is also shown below. Class IB share performance for the period shown
would, however, be lower due to the 0.18% 12b-1 fee applied to Class IB shares.
CLASS IB TOTAL RETURN FOR CALENDAR YEAR 1999
[GRAPH]
99
- ------------------------------------------------------
BEST QUARTER: up %, _______ quarter _____
WORST QUARTER: down %, _______ quarter _____
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR (APRIL 1, 1998)
<S> <C> <C>
CLASS IB
INDEX
INDEX: S&P 500 Composite Stock Price Index, an unmanaged index of equity
securities.
</TABLE>
19
<PAGE>
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
[GRAPH]
<TABLE>
<CAPTION>
90 91 92 93 94 95 96 97 98 99
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -3.99% 29.53% 6.82% 9.12% 0.94% 36.55% 22.09% 32.61% 28.06%
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS 10 YEARS INCEPTION
(MAY 1,
1987)
<S> <C> <C> <C> <C>
CLASS IA
INDEX
INDEX: S&P 500 Composite Stock Price Index, an unmanaged index of equity
securities.
</TABLE>
[CALL OUT]
SUB-ADVISER
HIMCO
PORTFOLIO MANAGER
Rodger K. Metzger
- Vice President of
HIMCO
- Manager of the fund
since 1987
- Joined HIMCO in 1987
- Investment
professional since
1987
20
<PAGE>
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND
- --------------------------------------------------------------------------------
INVESTMENT GOAL AND STYLE. The Hartford International Opportunities HLS Fund
seeks growth of capital by investing primarily in stocks issued by non-U.S.
companies.
The fund normally invests at least 65% of its assets in stocks issued by
non-U.S. companies which trade in foreign markets generally considered to be
well established. Under normal market conditions the fund diversifies its
investments among at least three countries OTHER THAN the United States. The
securities in which the fund invests are denominated in both U.S. dollars and
non-U.S. currencies and generally are traded in non-U.S. markets.
Wellington Management uses a three-pronged investment strategy:
- Wellington Management determines the relative attractiveness of the
many countries in which the fund may invest based upon its analysis of
the economic and political environment of each country.
- Wellington Management also evaluates industries on a global basis to
determine which industries offer the most potential for capital
appreciation given current and projected global and local economic and
market conditions.
- Wellington Management conducts fundamental research on individual
companies to identify securities for purchase or sale. Fundamental
analysis of a company involves the assessment of 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 considers companies
for inclusion in the fund's portfolio that are typically larger, high- quality
companies that operate in established markets. Characteristics of high-quality
growth companies include a strong balance sheet, attractive industry trends,
strong competitive advantages and attractive relative value within the context
of a security's primary trading market.
- --------------------------------------------------------------------------------
MAIN RISKS. As with most stock funds, the value of your investment may go down
in response to stock market movements.
Foreign investments may be more risky than domestic investments. Investments in
foreign securities may be affected by fluctuations in currency exchange rates,
incomplete or inaccurate financial information on companies, social upheavals
and political actions ranging from tax code changes to governmental collapse.
The fund's management strategy will influence performance significantly. If the
fund invests in countries or regions that experience economic downturns,
performance could suffer. Similarly, if certain investments or industries don't
perform as expected, or if the managers' stock selection strategy doesn't
perform as expected, the fund could underperform its peers or lose money.
The fund may trade securities actively, which could increase its transaction
costs
21
<PAGE>
(thus lowering performance) and increase your taxable distributions.
- --------------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows the fund's Class IB shares' total return for
the first full calendar year of operation, while the table shows the fund's
Class IB shares' performance over the same period and since inception (along
with that of a broad-based market index for comparison). These figures do not
include the effect of sales charges or other fees which may be applied at the
variable life insurance or variable annuity product level. All figures assume
that all dividends and distributions were reinvested. Keep in mind that past
performance does not indicate future results.
Although Class IB shares are being offered by this prospectus, because the Class
IB shares have limited performance history, the performance history of Class IA
shares is also shown below. Class IB share performance would, however, be lower
due to the 0.18% 12b-1 fee applied to Class IB shares.
CLASS IB TOTAL RETURN FOR CALENDAR YEAR 1999
[GRAPH]
99
- ------------------------------------------------------
BEST QUARTER: up %, _______ quarter _____
WORST QUARTER: down %, _______ quarter _____
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR (APRIL 1, 1998)
<S> <C> <C>
CLASS IB
INDEX
INDEX: Morgan Stanley Europe, Australia, Far East GDP ("EAFE GDP") Index, an
unmanaged index of equity securities.
</TABLE>
22
<PAGE>
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
[GRAPH]
<TABLE>
<CAPTION>
91 92 93 94 95 96 97 98 99
<S> <C> <C> <C> <C> <C> <C> <C> <C>
13.00% -4.43% 33.73% -1.94% 13.93% 12.91% 0.34% 13.16%
</TABLE>
- ------------------------------------------------------
BEST QUARTER: up %, _______ quarter _____
WORST QUARTER: down %, _______ quarter _____
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR 5 YEARS (JULY 2, 1990)
<S> <C> <C> <C>
CLASS IA
INDEX *
*Index inception
performance from
6/30/90
INDEX: Morgan Stanley Europe, Australia, Far East GDP ("EAFE GDP") Index, an
unmanaged index of equity securities.
</TABLE>
23
<PAGE>
[CALL OUT]
SUB-ADVISER
Wellington Management
PORTFOLIO MANAGERS
Trond Skramstad
- Senior Vice President
of Wellington Management
- Manager of the fund
since 1994
- Joined Wellington
Management in 1993
- Investment professional
since 1990
Andrew S. Offit
- Vice President of
Wellington Management
- Associate Manager of
the fund since 1997
- Joined Wellington
Management in 1997
- Investment professional
since 1987
24
<PAGE>
HARTFORD MIDCAP HLS FUND
- --------------------------------------------------------------------------------
INVESTMENT GOAL AND STYLE. The Hartford MidCap HLS Fund seeks long-term growth
of capital by investing primarily in stocks selected on the basis of potential
for capital appreciation.
The fund normally invests at least 65% of its total assets in common stocks of
companies with market capitalizations within the range represented by the
Standard & Poor's MidCap 400 Index. As of December 31, 1999 this range was
between approximately $_____ million and $_____ billion and the average market
capitalization was $_____ billion. The fund may invest up to 20% of its total
assets in securities of non-U.S. issuers.
The fund uses a two-tiered investment strategy:
- Using what is sometimes referred to as a "top down" approach,
Wellington Management analyzes the general economic and investment
environment. This includes an evaluation of economic conditions, U.S.
fiscal and monetary policy, and demographic trends. Through top down
analysis, Wellington Management anticipates trends and changes in
markets and the economy overall and identifies industries and sectors
that are expected to outperform.
- 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. Fundamental
analysis involves the assessment of a company through such factors as
its business environment, management, balance sheet, income statement,
anticipated earnings, revenues, and other related measures of value.
The fund favors 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, and a strong management team.
- --------------------------------------------------------------------------------
MAIN RISKS. As with most stock funds, the value of your investment may go down
in response to stock market movements. Because the fund concentrates on
mid-sized companies, its performance may be more volatile than that of a fund
that invests primarily in larger companies.
Stocks of mid-sized companies may be more risky than stocks of larger companies.
These companies may be young and have more limited operating or business
history. Because these businesses frequently rely on narrower product lines and
niche markets, they can suffer from isolated business setbacks.
The fund's management strategy will influence performance significantly.
Mid-sized company stocks as a group could fall out of favor with the market,
causing the fund to underperform funds that focus on other types of stocks.
Similarly, if the managers' stock selection strategy doesn't perform as
expected, the fund could underperform its peers or lose money. The fund may
trade securities actively, which could increase its transaction costs (thus
lowering performance) and increase your taxable distributions.
25
<PAGE>
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows the fund's Class IB shares' total return for
the first full calendar year of operation, while the table shows the fund's
Class IB shares' performance over the same period and since inception (along
with that of a broad-based market index for comparison). These figures do not
include the effect of sales charges or other fees which may be applied at the
variable life insurance or variable annuity product level. All figures assume
that all dividends and distributions were reinvested. Keep in mind that past
performance does not indicate future results.
Although Class IB shares are being offered by this prospectus, because the Class
IB shares have limited performance history, the performance history of Class IA
shares is also shown below. Class IB share performance would, however, be lower
due to the 0.18% 12b-1 fee applied to Class IB shares.
CLASS IB TOTAL RETURN FOR CALENDAR YEAR 1999
[GRAPH]
99
- ------------------------------------------------------
BEST QUARTER: up %, _______ quarter _____
WORST QUARTER: down %, _______ quarter _____
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR (APRIL 1, 1998)
<S> <C> <C>
CLASS IB
INDEX
INDEX: Standard & Poor's MidCap 400 Index, an unmanaged index of equity
securities.
</TABLE>
26
<PAGE>
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
[GRAPH]
<TABLE>
<CAPTION>
98 99
<S> <C>
26.57%
</TABLE>
- ------------------------------------------------------
BEST QUARTER: up %, _______ quarter _____
WORST QUARTER: down %, _______ quarter _____
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR (JULY 14, 1997)
<S> <C> <C>
CLASS IA
INDEX
INDEX: Standard & Poor's MidCap 400 Index, an unmanaged index of equity
securities.
</TABLE>
27
<PAGE>
[CALL OUT]
SUB-ADVISER
Wellington Management
PORTFOLIO MANAGER
Phillip H. Perelmuter
- Vice President of
Wellington Management
- Manager of the fund
since inception (1997)
- Joined Wellington
Management in 1995
- Investment professional
since 1983
28
<PAGE>
HARTFORD SMALL COMPANY HLS FUND
- --------------------------------------------------------------------------------
INVESTMENT GOAL AND STYLE. The Hartford Small Company Fund seeks growth of
capital by investing primarily in stocks selected on the basis of potential for
capital appreciation.
The fund normally invests at least 65% of its total assets
in common stocks of companies with market capitalizations within the range
represented by the Russell 2000 Index. As of December 31, 1999 this range was
between approximately $_____ million and $_____ billion, and the average market
capitalization was $______ million. The fund may invest up to 20% of its total
assets in securities of non-U.S. issuers.
Through fundamental analysis
Wellington Management identifies companies that it believes have substantial
potential for near-term capital appreciation. Wellington Management selects
securities of companies that, in its opinion:
- have potential for above-average earnings growth,
- are undervalued in relation to their investment potential,
- have positive business and/or fundamental financial characteristics
that are overlooked or misunderstood by investors, or
- are relatively obscure and undiscovered by the overall investment
community.
Fundamental analysis of a company involves the assessment of such factors as its
business environment, management, balance sheet, income statement, anticipated
earnings, revenues, dividends, and other related measures of value.
- --------------------------------------------------------------------------------
MAIN RISKS. As with most stock funds, the value of your investment may go down
in response to stock market movements. Because the fund concentrates on small
companies, its performance may be more volatile than that of a fund that invests
primarily in larger companies.
Stocks of smaller companies may be more risky than stocks of larger companies.
Many of these companies are young and have limited operating or business
history. Because these businesses frequently rely on narrow product lines and
niche markets, they can suffer severely from isolated business setbacks.
Foreign investments may be more risky than domestic investments. Investments in
foreign securities may be affected by fluctuations in currency exchange rates,
incomplete or inaccurate financial information on companies, social upheavals
and political actions ranging from tax code changes to governmental collapse.
The fund's management strategy will influence performance significantly. Small
company stocks as a group could fall out of favor with the market, causing the
fund to underperform funds that focus on other types of stocks. Similarly, if
the managers' stock selection strategy doesn't perform as expected, the fund
could underperform its peers or lose money.
The fund may trade securities actively, which could increase its transaction
costs (thus lowering performance) and increase your taxable distributions.
29
<PAGE>
- --------------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows the fund's Class IB shares' total return for
the first full calendar year of operation, while the table shows the fund's
Class IB shares' performance over the same period and since inception (along
with that of a broad-based market index for comparison). These figures do not
include the effect of sales charges or other fees which may be applied at the
variable life insurance or variable annuity product level. All figures assume
that all dividends and distributions were reinvested. Keep in mind that past
performance does not indicate future results.
Although Class IB shares are being offered by this prospectus, because the Class
IB shares have limited performance history, the performance history of Class IA
shares is also shown below. Class IB share performance would, however, be lower
due to the 0.18% 12b-1 fee applied to Class IB shares.
<PAGE>
CLASS IB TOTAL RETURN FOR CALENDAR YEAR 1999
[GRAPH]
<TABLE>
<CAPTION>
99
<S> <C>
</TABLE>
- ------------------------------------------------------
BEST QUARTER: up %, _______ quarter _____
WORST QUARTER: down %, _______ quarter _____
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR (APRIL 1, 1998)
<S> <C> <C>
CLASS IB
INDEX
INDEX: Russell 2000 Index, an unmanaged index of small company equity
securities.
</TABLE>
30
<PAGE>
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
<TABLE>
<CAPTION>
97 98 99
<C> <C> <C>
18.38% 11.62%
</TABLE>
- ------------------------------------------------------
BEST QUARTER: up %, _______ quarter _____
WORST QUARTER: down %, _______ quarter _____
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIOD ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE
1 YEAR INCEPTION
(AUGUST 9,
1996)
<S> <C> <C>
CLASS IA
INDEX
INDEX: Russell 2000 Index, an unmanaged index of small company equity
securities.
</TABLE>
31
<PAGE>
[CALL OUT]
SUB-ADVISER
Wellington Management
PORTFOLIO MANAGER
Steven C. Angeli
- Vice President of
Wellington Management
- Manager of the fund
since January 1, 2000
- Joined Wellington
Management in 1994
- Investment professional
since 1990
32
<PAGE>
HARTFORD STOCK HLS FUND
- --------------------------------------------------------------------------------
INVESTMENT GOAL AND STYLE. The Hartford Stock Fund seeks long-term growth of
capital, with income as a secondary consideration, by investing primarily in
stocks.
The fund normally invests at least 65% of the fund's total assets in the common
stocks of high-quality growth companies. Many of the companies in which the fund
invests have a history of paying dividends and are expected to continue paying
dividends in the future. The fund may invest up to 20% of its total assets in
securities of non-U.S. issuers. The fund invests in a diversified portfolio of
primarily equity securities using a two-tiered investment strategy:
- Using what is sometimes referred to as a "top down" approach,
Wellington Management analyzes the general 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 trends and changes in markets in the economy overall and
identifies industries and sectors that are expected to outperform.
- 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. Fundamental
analysis of a company involves the assessment of such factors as its
business environment, management, balance sheet, income statement,
anticipated earnings, revenues, dividends, and other related measures
of value.
The key characteristics of high-quality growth companies favored by the fund
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.
- --------------------------------------------------------------------------------
MAIN RISKS. As with most stock funds, the value of your investment may go down
in response to stock market movements.
Foreign investments may be more risky than domestic investments. Investments in
foreign securities may be affected by fluctuations in currency exchange rates,
incomplete or inaccurate financial information on companies, social upheavals
and political actions ranging from tax code changes to governmental collapse.
The fund's management strategy will influence performance significantly.
Large-capitalization stocks as a group could fall out of favor with the market,
causing the fund to underperform funds that focus on small- or
medium-capitalization stocks. Similarly, if the managers' stock selection
strategy doesn't perform as expected, the fund could underperform its peers or
lose money
The fund may trade securities actively, which could increase its transaction
costs (thus lowering performance) and increase your taxable distributions.
33
<PAGE>
- --------------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows the fund's Class IB shares' total return for
the first full calendar year of the fund's operation, while the table shows
Class IB shares' performance over the same period and since inception (along
with that of a broad-based market index for comparison). These figures do not
include the effect of sales charges or other fees which may be applied at the
variable life insurance or variable annuity product level. All figures assume
that all dividends and distributions were reinvested. Keep in mind that past
performance does not indicate future results.
Although Class IB shares are being offered by this prospectus, because the Class
IB shares have limited performance history, the performance history of Class IA
shares is also shown below. Class IB share performance would, however, be lower
due to the 0.18% 12b-1 fee applied to Class IB shares.
CLASS IB TOTAL RETURN FOR CALENDAR YEAR 1999
[GRAPH]
99
- ------------------------------------------------------
BEST QUARTER: up %, _______ quarter _____
WORST QUARTER: down %, _______ quarter _____
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR (APRIL 1, 1998)
<S> <C> <C>
CLASS IB
INDEX
INDEX: S&P 500 Composite Stock Price Index, an unmanaged index of equity
securities.
</TABLE>
34
<PAGE>
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
[GRAPH]
<TABLE>
<CAPTION>
90 91 92 93 94 95 96 97 98 99
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -3.87% 24.58% 10.04% 14.34% -1.89% 34.10% 24.33% 31.38% 33.47%
</TABLE>
- ------------------------------------------------------
BEST QUARTER: up %, _______ quarter _____
WORST QUARTER: down %, _______ quarter _____
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS 10 YEARS INCEPTION
(AUGUST
31, 1977)
<S> <C> <C> <C> <C>
CLASS IA
INDEX
INDEX: S&P 500 Index, an unmanaged index of equity securities.
</TABLE>
35
<PAGE>
[CALL OUT]
SUB-ADVISER
Wellington Management
PORTFOLIO MANAGERS
Rand L. Alexander
- Senior Vice President
of Wellington
Management
- Manager of the fund
since 1992
- Joined Wellington
Management in 1990
- Investment
professional since
1976
Philip H. Perelmuter
- Vice President of
Wellington Management
- Associate Manager of
the fund since 1995
- Joined Wellington
Management in 1995
- Investment professional
since 1983
36
<PAGE>
HARTFORD ADVISERS HLS FUND
- --------------------------------------------------------------------------------
INVESTMENT GOAL AND STYLE. The Hartford Advisers HLS Fund seeks maximum
long-term total return. The fund allocates its assets among three categories:
- stocks,
- debt securities, and
- money market instruments.
The fund favors stocks issued by 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.
The debt securities in which the fund primarily invests include securities
issued or guaranteed by the U.S. Government and its agencies or
instrumentalities and securities rated investment grade (rated at least BBB by
Standard & Poor's Corporation or Baa by Moody's Investors Service, Inc., or if
unrated, securities deemed by Wellington Management to be of comparable
quality). The fund is not restricted to any specific maturity term.
Asset allocation decisions are based on Wellington Management's judgment of the
projected investment environment for financial assets, relative fundamental
values, the attractiveness of each asset category, and expected future returns
of each asset category. Wellington Management does not attempt to engage in
short-term market timing among asset categories. As a result, shifts in asset
allocation are expected to be gradual and continuous and the fund will normally
have some portion of its assets invested in each asset category. There is no
limit on the amount of fund assets that may be allocated to each asset category
and the allocation is in Wellington Management's discretion.
The fund may invest up to 20% of its total assets in securities of non-U.S.
issuers.
- --------------------------------------------------------------------------------
MAIN RISKS. This fund has stock market risk, interest rate risk, manager
allocation risk, credit risk and prepayment risk. You could lose money as a
result of your investment.
Stock market risk means the stocks held by the fund may decline in value due to
the activities and financial prospects of individual companies or to general
market and economic conditions.
Interest rate risk refers to the possibility that your investment may go down in
value when interest rates rise.
Manager allocation risk refers to the possibility that the portfolio managers
could incorrectly allocate assets so that the fund underperforms its peers.
Credit risk refers to the possibility that the issuing company may not be able
to pay interest and principal when due.
Prepayment risk refers to the possibility that any mortgage securities held by
the fund may be adversely affected by changes in prepayment rates on the
underlying mortgages. If prepayments increase as a result of lower interest
rates the fund may have to invest a portion of its assets at lower rates.
Foreign investments may be more risky than domestic investments. Investments in
foreign securities may be affected by fluctuations in currency exchange rates,
incomplete or inaccurate financial information on companies, social upheavals
and political actions ranging from tax code changes to governmental collapse.
37
<PAGE>
The fund may trade securities actively, which could increase its transaction
costs (thus lowering performance) and increase your taxable distributions.
- --------------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows the fund's Class IB shares' total return for
the first full calendar year of operation, while the table shows the fund's
Class IB shares' performance over the same period and since inception (along
with that of a broad-based market index for comparison). These figures do not
include the effect of sales charges or other fees which may be applied at the
variable life insurance or variable annuity product level. All figures assume
that all dividends and distributions were reinvested. Keep in mind that past
performance does not indicate future results.
Although Class IB shares are being offered by this prospectus, because the Class
IB shares have limited performance history, the performance history of Class IA
shares is also shown below. Class IB share performance would, however, be lower
due to the 0.18% 12b-1 fee applied to Class IB shares.
CLASS IB TOTAL RETURN FOR CALENDAR YEAR 1999
[GRAPH]
99
- ------------------------------------------------------
BEST QUARTER: up %, _______ quarter _____
WORST QUARTER: down %, _______ quarter _____
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR (APRIL 1, 1998)
<S> <C> <C>
CLASS IB
INDEX
INDEX: S&P 500 Index and the Lehman Government Corporate Bond Index, an
unmanaged indices of stocks and bonds, respectively.
</TABLE>
38
<PAGE>
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
[GRAPH]
<TABLE>
<CAPTION>
90 91 92 93 94 95 96 97 98 99
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1.26% 20.33% 8.30% 12.25% -2.74% 28.34% 16.62% 24.51% 24.66%
</TABLE>
- ------------------------------------------------------
BEST QUARTER: up %, _______ quarter _____
WORST QUARTER: down %, _______ quarter _____
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS 10 YEARS INCEPTION
(MARCH 31,
1983)
<S> <C> <C> <C> <C>
CLASS IA
S&P INDEX
LGCB INDEX
INDICES: S&P 500 Index and the Lehman Government Corporate Bond Index, unmanaged
indices of stocks and bonds, respectively.
</TABLE>
39
<PAGE>
[CALL OUT]
SUB-ADVISER
Wellington Management
PORTFOLIO MANAGERS
Paul D. Kaplan
- Senior Vice President
of Wellington Management
- Co-manager of the fund
since 1992
- Joined Wellington
Management in 1982
- Investment professional
since 1974
Rand L. Alexander
- Senior Vice President
of Wellington Management
- Co-manager of the fund
since 1992
- Joined Wellington
Management in 1990
- Investment professional
since 1976
40
<PAGE>
HARTFORD INTERNATIONAL ADVISERS HLS FUND
- --------------------------------------------------------------------------------
INVESTMENT GOAL AND STYLE. The Hartford International Advisers HLS Fund seeks
maximum long-term total rate of return. The fund actively allocates its assets
among three categories:
- equity securities
- debt securities and
- money market instruments.
Securities in which the fund invests primarily will be denominated in non-U.S.
currencies and will be traded in non-U.S. markets.
The fund consists of a diversified portfolio of securities covering a broad
range of countries, industries, and companies. The fund anticipates that, under
normal market conditions, it will diversify its investments in at least three
countries other than the United States.
The fund's investments in equity securities are substantially similar to the
equity securities investments permitted for the Hartford International
Opportunities HLS Fund.
Debt securities in which the fund may invest include investment grade securities
assigned within the four highest bond rating categories by Moody's Investors
Service, Inc.
("Moody's") or S&P, or, if unrated, which are determined by Wellington
Management to be of comparable quality. In addition, the fund may invest up to
15% of its total assets in high yield-high risk securities, commonly known as
"junk bonds." Such securities may be rated as low as "C" by Moody's and by S&P,
or, if unrated, are of comparable quality as determined by Wellington
Management.
Asset allocation decisions are based upon Wellington Management's judgment of
the projected investment environment for financial assets, relative fundamental
values and attractiveness of each asset category. Wellington Management does not
attempt to make short-term market timing decisions among asset categories and
asset allocation is in Wellington Management's discretion. As a result, shifts
in asset allocation are expected to be gradual and continuous and the fund will
normally have some portion of its assets invested in each asset category. There
is no limit on the amount of fund assets that may be allocated to each asset
category.
- --------------------------------------------------------------------------------
MAIN RISKS. This fund has stock market risk, interest rate risk, manager
allocation risk, credit risk and prepayment risk. You could lose money as a
result of your investment.
Stock market risk means the stocks held by the fund may decline in value due to
the activities and financial prospects of individual companies or to general
market and economic conditions.
Interest rate risk refers to the possibility that your investment may go down in
value when interest rates rise.
Manager allocation risk refers to the possibility that the portfolio managers
could incorrectly allocate assets so that the fund underperforms its peers.
Credit risk refers to the possibility that the issuing company may not be able
to pay interest and principal when due.
Prepayment risk refers to the possibility that any mortgage securities held by
the fund may be adversely affected by changes in prepayment rates on the
underlying mortgages. If prepayments increase as a result of lower interest
rates the fund may have to invest a portion of its assets at lower rates.
Foreign investments may be more risky than domestic investments. Investments in
foreign securities may be affected by fluctuations in currency exchange rates,
incomplete or inaccurate financial information on companies,
41
<PAGE>
social upheavals and political actions ranging from tax code changes to
governmental collapse. The fund may trade securities actively, which could
increase its transaction costs (thus lowering performance) and increase your
taxable distributions.
- --------------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows the fund's Class IB shares' total return for
the first full calendar year of operation, while the table shows the fund's
Class IB shares' performance over the same period and since inception (along
with that of a broad-based market index for comparison). These figures do not
include the effect of sales charges or other fees which may be applied at the
variable life insurance or variable annuity product level. All figures assume
that all dividends and distributions were reinvested. Keep in mind that past
performance does not indicate future results.
Although Class IB shares are being offered by this prospectus, because the Class
IB shares have limited performance history, the performance history of Class IA
shares is also shown below. Class IB share performance would, however, be lower
due to the 0.18% 12b-1 fee applied to Class IB shares.
CLASS IB TOTAL RETURN FOR CALENDAR YEAR 1999
[GRAPH]
99
- ------------------------------------------------------
BEST QUARTER: up %, _______ quarter _____
WORST QUARTER: down %, _______ quarter _____
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR (APRIL 1, 1998)
<S> <C> <C>
CLASS IB
INDEX
INDICES: Morgan Stanley Europe, Australia, Far East GDP ("EAFE GDP") Index and
the Salomon World Government Bond ex-US Index, unmanaged indices of
international securities.
</TABLE>
42
<PAGE>
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
[GRAPH]
<TABLE>
<CAPTION>
96 97 98 99
<S> <C> <C> <C>
12.25% 5.52% 13.35%
</TABLE>
- ------------------------------------------------------
BEST QUARTER: up %, _______ quarter _____
WORST QUARTER: down %, _______ quarter _____
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR (MARCH 1, 1995)
<S> <C> <C>
CLASS IA
EAFE GDP INDEX
SALOMON INDEX *
*Index inception
performance is from
2/28/95
INDICES: Morgan Stanley Europe, Australia, Far East GDP ("EAFE GDP") Index and
the Salomon World Government Bond ex-US Index, unmanaged indices of
international securities.
</TABLE>
43
<PAGE>
[CALL OUT]
SUB-ADVISER
Wellington Management
PORTFOLIO MANAGERS
Trond Skramstad
- Senior Vice President
of Wellington Management
- Manager of the equity
component of the fund
since 1995
- Joined Wellington
Management in 1993
- Investment professional
since 1990
Andrew S. Offit
- Vice President of
Wellington Management
- Associate Manager of
the equity component of
the fund since 1997
- Joined Wellington
Management in 1997
- Investment professional
since 1987
Robert L. Evans
- Senior Vice President
of Wellington Management
- Manager of the debt
component of the fund
since 1995
- Joined Wellington
Management in 1995
- Investment professional
since 1985
44
<PAGE>
HARTFORD BOND HLS FUND
- --------------------------------------------------------------------------------
INVESTMENT GOAL AND STYLE. The Hartford Bond HLS 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. Debt securities in which the fund invests include (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 and mortgage-related
securities; 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. The fund normally invests
at least 80% of its portfolio in investment grade debt securities.
The fund may invest up to 20% of its total assets in securities rated in the
highest category of below investment grade bonds ("Ba1", "Ba2" or "Ba3" by
Moody's Investors Service, Inc. or "BB+", "BB" or "BB-" by Standard & Poor's
Corporation), or securities which, if unrated, are determined by HIMCO to be
of comparable quality. Securities rated below investment grade are commonly
referred to as "junk bonds".
The fund invests at least 65% of its total assets in debt securities with a
maturity of at least one year. Although the fund does not have a maximum
maturity term restriction, the fund tends to have an average maturity within the
intermediate-term range. The fund may invest up to 15% of its total assets in
preferred stocks, convertible securities, and securities accompanied by warrants
to purchase equity securities. The 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. The fund may invest up to 30% of its total assets in debt
securities of non-U.S. issuers and up to 10% of its total assets in
securities denominated in foreign currencies.
The fund uses what is sometimes referred to as a top-down analysis to determine
which industries may benefit from current and future changes in the economy. The
fund then selects individual securities from selected industries that, from a
yield perspective, appear to be attractive. The portfolio manager assesses such
factors as a company's business environment, balance sheet, income statement,
anticipated earnings and management team.
- --------------------------------------------------------------------------------
MAIN RISKS. The major factors affecting this fund's performance are interest
rates and credit risk. When interest rates rise, bond prices fall; generally the
longer the fund's maturity, the more sensitive it is to this risk.
The fund could lose money if any bonds it owns are downgraded in credit rating
or go into default. In general, lower-rated bonds have higher credit risks. If
certain sectors or investments don't perform as the manager expects, the fund
could underperform its peers or lose money.
Junk bonds and foreign securities may make the fund more sensitive to market or
economic shifts in the U.S. and abroad.
Foreign investments may be more risky than domestic investments. Investments in
foreign securities may be affected by fluctuations in currency exchange rates,
incomplete or inaccurate financial information on companies, social upheavals
and political actions ranging from tax code changes to governmental collapse.
45
<PAGE>
Any U.S. government guarantees on portfolio securities do not apply to the
market value or current yield of the portfolio's securities or to the value of
the fund's shares. The fund may trade securities actively, which could increase
its transaction costs (thus lowering performance) and increase your taxable
distributions.
- --------------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows the fund's Class IB shares' total return for
the first full calendar year of operation, while the table shows the fund's
Class IB shares' performance over the same period and since inception (along
with that of a broad-based market index for comparison). These figures do not
include the effect of sales charges or other fees which may be applied at the
variable life insurance or variable annuity product level. All figures assume
that all dividends and distributions were reinvested. Keep in mind that past
performance does not indicate future results.
Although Class IB shares are being offered by this prospectus, because the Class
IB shares have limited performance history, the performance history of Class IA
shares is also shown below. Class IB share performance would, however, be lower
due to the 0.18% 12b-1 fee applied to Class IB shares.
CLASS IB TOTAL RETURN FOR CALENDAR YEAR 1999
[GRAPH]
99
- ------------------------------------------------------
BEST QUARTER: up %, _______ quarter _____
WORST QUARTER: down %, _______ quarter _____
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR (APRIL 1, 1998)
<S> <C> <C>
CLASS IB
INDEX
INDEX: Lehman Government Corporate Bond Index, an unmanaged index of
fixed-income securities.
</TABLE>
46
<PAGE>
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
[GRAPH]
<TABLE>
<CAPTION>
90 91 92 93 94 95 96 97 98 99
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
8.39% 16.43% 5.53% 10.24% -3.95% 18.49% 3.54% 11.35% 8.15%
</TABLE>
- ------------------------------------------------------
BEST QUARTER: up %, _______ quarter _____
WORST QUARTER: down %, _______ quarter _____
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS 10 YEARS INCEPTION
(AUGUST
31, 1977)
<S> <C> <C> <C> <C>
CLASS IA
INDEX
INDEX: Lehman Government Corporate Bond Index, an unmanaged index of
fixed-income securities.
</TABLE>
[CALL OUT]
SUB-ADVISER
HIMCO
PORTFOLIO MANAGER
Alison D. Granger, CFA
- Senior Vice President
of HIMCO
- Manager of the fund
since 1996
- Joined HIMCO in 1993
- Investment professional
since 1981
47
<PAGE>
HARTFORD HIGH YIELD HLS FUND
- --------------------------------------------------------------------------------
INVESTMENT GOAL AND STYLE. The Hartford High Yield HLS Fund seeks high current
income by investing in non-investment grade debt securities. Growth of capital
is a secondary objective.
The fund normally invests at least 65%, and may invest up to 100%, of its
portfolio in non-investment grade debt securities (securities rated "Ba" or
lower by Moody's Investors Service, Inc. ("Moody's") or "BB" or lower by
Standard and Poor's Corporation ("S&P"), or securities which, if unrated, are
determined by HIMCO to be of comparable quality). Below investment grade
securities are commonly referred to as "high yield-high risk securities" or
"junk bonds". The fund will invest no more than 10% of total assets in
securities rated below B3 by Moody's or B- by S&P, or, if unrated, determined to
be of comparable quality by HIMCO. The fund may invest in bonds of any maturity
although the fund tends to have an average maturity within the intermediate-term
range.
The fund may invest up to 15% of its total assets in preferred stocks,
convertible securities, and securities carrying warrants to purchase equity
securities. The 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. The fund may invest up to 30% of its total assets in securities
of non-U.S. issuers and up to 10% of its total assets in securities
denominated in foreign currencies.
To achieve its goal of high current income, the fund uses what is sometimes
referred to as a top-down analysis to determine which industries may benefit
from current and future changes in the economy. The fund then selects individual
securities within selected industries that appear from a yield perspective to be
attractive. The fund assesses such factors as the company's business
environment, balance sheet, income statement, anticipated earnings and
management team.
The fund seeks its secondary goal of capital growth, when consistent with its
primary objective of high current income, by investing in securities that the
portfolio manager expects to appreciate in value as a result of declines in
long-term interest rates or favorable developments affecting the business or
prospects of the issuer which may improve the issuer's financial condition and
credit rating.
- --------------------------------------------------------------------------------
MAIN RISKS. The major factors affecting this fund's performance are interest
rates and credit risk. When interest rates rise, bond prices fall; generally the
longer a bond's maturity, the more sensitive it is to this risk.
Credit risk depends largely on the perceived financial health of bond issuers.
In general, lower-rated bonds have higher credit risks. Junk bond prices can
fall on bad news about the economy, an industry or a company. Share price, yield
and total return may fluctuate more than with less aggressive bond funds.
The fund could lose money if any bonds it owns are downgraded in credit rating
or go into default. If certain industries or investments don't perform as the
fund expects, it could underperform its peers or lose money.
48
<PAGE>
Foreign investments may be more risky than domestic investments. Investments in
foreign securities may be affected by fluctuations in currency exchange rates,
incomplete or inaccurate financial information on companies, social upheavals
and political actions ranging from tax code changes to governmental collapse.
Junk bonds and foreign securities may make the fund more sensitive to market or
economic shifts in the U.S. and abroad.
In a down market some of the fund's investments could become harder to value.
Any U.S. government guarantees on portfolio securities do not apply to the
market value or current yield of the portfolio's securities or to the value of
the fund's shares.
The fund may trade securities actively, which could increase its transaction
costs (thus lowering performance) and increase your taxable distributions.
49
<PAGE>
- --------------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows the fund's Class IB shares' total return for
the first full calendar year of operation, while the table shows the fund's
Class IB shares' performance over the same period and since inception (along
with that of a broad-based market index for comparison). These figures do not
include the effect of sales charges or other fees which may be applied at the
variable life insurance or variable annuity product level. All figures assume
that all dividends and distributions were reinvested. Keep in mind that past
performance does not indicate future results. The bar chart and table below
indicate the risks of investing in the fund.
CLASS IB TOTAL RETURN FOR CALENDAR YEAR 1999
[GRAPH]
99
- ------------------------------------------------------
BEST QUARTER: up %, _______ quarter _____
WORST QUARTER: down %, _______ quarter _____
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR (SEPTEMBER 30, 1998)
<S> <C> <C>
CLASS IB
INDEX
INDEX: Lehman High Yield Corporate Index, an unmanaged index of high yield fixed
income securities.
</TABLE>
50
<PAGE>
[CALL OUT]
SUB-ADVISER
HIMCO
PORTFOLIO MANAGER
Alison D. Granger, CFA
- Senior Vice President
of HIMCO
- Manager of the fund
since inception (1998)
- Joined HIMCO in 1993
- Investment professional
since 1981
51
<PAGE>
HARTFORD MORTGAGE SECURITIES HLS FUND
- --------------------------------------------------------------------------------
INVESTMENT GOAL AND STYLE. The Hartford Mortgage Securities HLS Fund seeks
maximum current income consistent with safety of principal and maintenance of
liquidity by investing primarily in mortgage-related securities.
The fund normally invests at least 65% of its total assets in high quality
mortgage-related securities either (i) issued by U.S. Government agencies,
instrumentalities or sponsored corporations or (ii) rated A or better by Moody's
or S&P or, if not rated, which are of equivalent investment quality as
determined by HIMCO. At times the fund may invest in mortgage-related securities
not meeting the foregoing investment quality standards when HIMCO deems such
investments to be consistent with the fund's investment objective; however, no
such investments will be made in excess of 20% of the value of the fund's total
assets. Such investments will be considered mortgage-related securities for
purposes of the policy that the fund invest at least 65% of the value of its
total assets in mortgage-related securities, including securities issued by the
GNMA.
- --------------------------------------------------------------------------------
MAIN RISKS. The primary risks of this fund are interest rate risk, credit risk,
prepayment risk, and manager risk. You could lose money as a result of your
investment.
Interest rate risk refers to the possibility that your investment may go down in
value when interest rates rise.
Credit risk refers to the possibility that the issuing company may not be able
to pay interest and principal when due.
Prepayment risk refers to the possibility that any mortgage securities held by
the fund may be adversely affected by changes in prepayment rates on the
underlying mortgages. If prepayments increase as a result of lower interest
rates the fund may have to invest a portion of its assets at lower rates.
The fund may trade securities actively, which could increase its transaction
costs (thus lowering performance) and increase your taxable distributions.
The fund's management strategy will influence performance significantly.
Mortgage securities as a group could fall out of favor with the market, causing
the fund to underperform funds that focus on other categories. Similarly, if the
managers' selection strategy doesn't perform as expected, the fund could
underperform its peers or lose money.
- --------------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows the fund's Class IB shares' total return for
the first full calendar year of operation, while the table shows the fund's
Class IB shares' performance over the same period and since inception (along
with that of a broad-based market index for comparison). These figures do not
include the effect of sales charges or other fees which may be applied at the
variable life insurance or variable annuity product level. All figures assume
that all dividends and distributions were reinvested. Keep in mind that past
performance does not indicate future results.
Although Class IB shares are being offered by this prospectus, because the Class
IB shares have limited performance history, the performance history of Class IA
shares is also shown below. Class IB share performance would be lower, however,
due to the 0.18% 12b-1 fee applied to Class IB shares.
52
<PAGE>
CLASS IB TOTAL RETURN FOR CALENDAR YEAR 1999
[GRAPH]
99
- ------------------------------------------------------
BEST QUARTER: up %, _______ quarter _____
WORST QUARTER: down %, _______ quarter _____
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR (APRIL 1, 1998)
<S> <C> <C>
CLASS IB
INDEX
INDEX: Lehman Mortgage-Backed Securities, an unmanaged index of mortgage-backed
securities.
</TABLE>
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
[GRAPH]
<TABLE>
<CAPTION>
90 91 92 93 94 95 96 97 98 99
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
9.70% 14.71% 4.64% 6.31% -1.61% 16.17% 4.99% 9.01% 6.72%
</TABLE>
- ------------------------------------------------------
BEST QUARTER: up %, _______ quarter _____
WORST QUARTER: down %, _______ quarter _____
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS 10 YEARS INCEPTION
(JANUARY
1, 1985)
<S> <C> <C> <C> <C>
CLASS IA
INDEX
INDEX: Lehman Mortgage Backed Securities, an unmanaged index of mortgage backed
securities.
</TABLE>
53
<PAGE>
[CALL OUT]
SUB-ADVISER
HIMCO
PORTFOLIO MANAGER
Peter P. Perrotti
- Senior Vice President
of HIMCO
- Manager of the fund
since May 1, 1999
- Joined HIMCO in 1990
- Investment professional
since 1989
54
<PAGE>
HARTFORD MONEY MARKET HLS FUND
- --------------------------------------------------------------------------------
INVESTMENT GOAL AND STYLE. The Hartford Money Market HLS Fund seeks maximum
current income consistent with liquidity and preservation of capital.
The fund seeks to maintain a stable share price of $1.00. The fund focuses on
specific short-term U.S. denominated money market instruments which are rated in
the first two investment tiers by at least one nationally recognized statistical
rating organization, or if unrated, determined to be of comparable quality by
HIMCO. 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.
The fund purchases securities which it believes offer attractive returns
relative to the risks undertaken. In addition, the portfolio manager adjusts the
average maturity of the portfolio in anticipation of interest rate changes.
- --------------------------------------------------------------------------------
MAIN RISKS. The primary risks of this fund are interest rate risk, credit risk
and manager risk. A rise in interest rates could cause a fall in the values of
the fund's securities. Credit risk refers to the risk that a security's credit
rating could be downgraded affecting the value and, potentially the likelihood
of repayment, of the fund's securities. Manager risk refers to the risk that if
the manager does not effectively implement the fund's investment goal and style,
the fund could underperform its peers.
An investment in the fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the fund seeks to
preserve the value of your investment at $1.00 per share, there is a risk that
the fund's share price could fall below $1.00, which would reduce the value of
your account.
55
<PAGE>
- --------------------------------------------------------------------------------
PAST PERFORMANCE.
The bar chart and table below indicate the risks of investing in the fund. The
bar chart shows the fund's Class IB shares' total return for the first full
calendar year of operation, while the table shows the fund's Class IB shares'
performance over the same period and since inception (along with that of a
broad-based market index for comparison). These figures do not include the
effect of sales charges or other fees which may be applied at the variable life
insurance or variable annuity product level. All figures assume that all
dividends and distributions were reinvested. Keep in mind that past performance
does not indicate future results.
Although Class IB shares are being offered by this prospectus, because the Class
IB shares have limited performance history, the performance history of Class IA
shares is also shown below. Class IB share performance would, however, be lower
due to the 0.18% 12b-1 fee applied to Class IB shares.
CLASS IB TOTAL RETURN FOR CALENDAR YEAR 1999
[GRAPH]
99
- ------------------------------------------------------
BEST QUARTER: up %, _______ quarter _____
WORST QUARTER: down %, _______ quarter _____
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE INCEPTION
1 YEAR (APRIL 1, 1998)
<S> <C> <C>
CLASS IB
INDEX
INDEX: 60-Day Treasury Bill Index, an unmanaged index of short-term Treasury
bills.
Current 7-day yield as of December 31, 1999: ____%
Effective 7-day yield (which indicates the effect of daily compounding) as of
December 31, 1999: ____%
Please call 1-800-862-6668 for the most recent current and effective yield
information.
</TABLE>
56
<PAGE>
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
[GRAPH]
<TABLE>
<CAPTION>
90 91 92 93 94 95 96 97 98 99
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
8.09% 6.01% 3.63% 2.94% 3.95% 5.74% 5.09% 5.31% 5.25%
</TABLE>
- ------------------------------------------------------
BEST QUARTER: up %, _______ quarter _____
WORST QUARTER: down %, _______ quarter _____
- ------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/99
<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS 10 YEARS INCEPTION
(JUNE 30,
1980)
<S> <C> <C> <C> <C>
CLASS IA
INDEX N/A
INDEX: 60-Day Treasury Bill Index, an unmanaged
index of short-term treasury bills
.
Current 7-day yield as of December 31, 1999: _______%
Effective 7-day yield (which indicates the effect of daily compounding) as of
December 31, 1999: _____%
Please call 1-800-862-6668 for the most recent current and effective yield
information.
</TABLE>
[CALL OUT]
SUB-ADVISER
HIMCO
PORTFOLIO MANAGER
William H. Davison, Jr.
- Senior Vice President
of HIMCO
- Manager of the fund
since 1992
- Joined HIMCO in 1990
- Investment professional
since 1981
57
<PAGE>
ADDITIONAL INVESTMENT MATTERS
- --------------------------------------------------------------------------------
USE OF OPTIONS AND FUTURES
Each fund (other than the Money Market fund) may purchase and sell options and
enter into futures contracts. Depending on the investment style of the fund
these options and futures contracts may involve stocks, bonds, groups of
securities (such as financial indices) or foreign currencies. These techniques
permit a fund to gain exposure to a particular security or group of securities,
and thereby earn returns similar to those which would be earned by direct
investments in those securities. These techniques are also used to manage risk
by hedging a fund's portfolio investments. Use of these techniques may result in
losses to a fund or increase volatility.
USE OF MONEY MARKET INVESTMENTS FOR TEMPORARY DEFENSIVE PURPOSES
From time to time each fund (other than the Money Market fund) may invest some
or all of its assets in high quality money market securities for temporary
defensive purposes in response to adverse market, economic or political
conditions. To the extent a fund is in a defensive position, the fund may lose
the benefit of upswings and limit its ability to meet its investment objective.
ABOUT EACH FUND'S INVESTMENT GOAL
Each fund's investment goal may be changed only with approval of the
shareholders of the fund. A fund may not be able to achieve its goal.
TAX CONSEQUENCES OF PORTFOLIO TRADING PRACTICES
At times each fund (other than the Money Market Fund) may engage in short-term
trading, which could produce higher brokerage expenses for a fund and higher
taxable distributions to the fund's shareholders. The funds are not managed to
achieve a particular tax result for shareholders. Shareholders should consult
their own tax adviser for individual tax advice.
ADDITIONAL INVESTMENT STRATEGIES AND RISKS
Each fund may invest in various securities and engage in various investment
techniques which are not the principal focus of the fund and therefore are not
described in this prospectus. These securities and techniques, together with
their risks are discussed in the fund's Statement of Additional Information
which may be obtained by contacting the fund (see back cover for address and
phone number).
58
<PAGE>
MANAGEMENT OF THE FUNDS
- --------------------------------------------------------------------------------
THE INVESTMENT ADVISER
HL Investment Advisors, LLC ("HL Advisors") is the investment adviser to each
fund. As investment adviser, HL Advisors is responsible for supervising the
activities of the investment sub-advisers described below. In addition, Hartford
Life serves as the administrator of each fund. HL Advisors and Hartford Life are
majority-owned indirect subsidiaries of The Hartford Financial Services Group,
Inc. ("The Hartford"), a Connecticut financial services company with over $130
billion in assets. As of December 31, 1999 HL Advisors had over $40 billion in
assets under management. HL Advisors is principally located at 200 Hopmeadow
Street, Simsbury, Connecticut 06070.
THE INVESTMENT SUB-ADVISERS
Wellington Management Company, LLP ("Wellington Management") is the investment
sub-adviser to the Global Health HLS Fund, Global Technology HLS Fund, Advisers
HLS Fund, Capital Appreciation HLS Fund, Dividend and Growth HLS Fund, Global
Leaders HLS Fund, Growth and Income HLS Fund, International Advisers HLS Fund,
International Opportunities HLS Fund, MidCap HLS Fund, Small Company HLS Fund
and Stock HLS Fund. Wellington Management, a Massachusetts limited liability
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
December 31, 1999 Wellington Management had investment management authority over
approximately $_____ billion in assets. Wellington Management is principally
located at 75 State Street, Boston, Massachusetts 02109. The Hartford Investment
Management Company ("HIMCO-Registered Trademark-") is the investment sub-adviser
to the High Yield HLS Fund, Index HLS Fund, Bond HLS Fund, Mortgage Securities
HLS Fund and Money Market HLS Fund. HIMCO is a professional money management
firm that provides services to investment companies, employee benefit plans and
insurance companies. HIMCO is a wholly-owned subsidiary of The Hartford. As of
December 31, 1999 HIMCO and its wholly-owned subsidiary had investment
management authority over approximately $_____ billion in assets. HIMCO is
principally located at 55 Farmington Avenue, Hartford, Connecticut 06105.
MANAGEMENT FEES
Each Fund pays a monthly advisory fee and administration fee to HL Advisors and
Hartford Life based on a stated percentage of the fund's average daily net asset
value as follows:
INDEX FUND
<TABLE>
<CAPTION>
Net Asset Value Annual Rate
- --------------- -----------
<S> <C>
All Assets 0.400
<CAPTION>
MONEY MARKET FUND AND MORTGAGE SECURITIES FUND
Net Asset Value Annual Rate
- --------------- -----------
<S> <C>
All Assets 0.450%
</TABLE>
59
<PAGE>
<TABLE>
<CAPTION>
BOND FUND AND STOCK FUND
Net Asset Value Annual Rate
- --------------- -----------
<S> <C>
First $250,000,000 0.525%
Next $250,000,000 0.500%
Next $500,000,000 0.475%
Amount Over $1 Billion 0.450%
<CAPTION>
ADVISERS FUND, CAPITAL APPRECIATION FUND, DIVIDEND AND GROWTH FUND, GLOBAL
LEADERS FUND, GROWTH AND INCOME FUND, HIGH YIELD FUND, INTERNATIONAL ADVISERS
FUND, INTERNATIONAL OPPORTUNITIES FUND, MIDCAP FUND AND SMALL COMPANY FUND
Net Asset Value Annual Rate
- --------------- -----------
<S> <C>
First $250,000,000 0.775%
Next $250,000,000 0.725%
Next $500,000,000 0.675%
Amount Over $1 Billion 0.625%
<CAPTION>
GLOBAL HEALTH FUND AND GLOBAL TECHNOLOGY FUND
Net Asset Value Annual Rate
- --------------- -----------
<S> <C>
First $250,000,000 0.950%
Next $250,000,000 0.900%
Next $500,000,000 0.850%
Amount Over $1 Billion 0.750%
</TABLE>
For the year ended December 31, 1999, the investment advisory fees and
administrative fees paid to HL Advisors and Hartford Life, expressed as a
percentage of net assets, were as follows:
FUND NAME ANNUAL RATE
- --------- -----------
Hartford Global Health HLS Fund(1) --
Hartford Global Technology HLS Fund(1) --
Hartford Advisers HLS Fund
Hartford Bond HLS Fund
Hartford Capital Appreciation HLS Fund
Hartford Dividend and Growth HLS Fund
Hartford Global Leaders HLS Fund
Hartford Growth and Income HLS Fund
Hartford High Yield HLS Fund
Hartford Index HLS Fund
Hartford International Advisers HLS Fund
Hartford International Opportunities HLS Fund
Hartford MidCap HLS Fund
Hartford Money Market HLS Fund
Hartford Mortgage Securities HLS Fund
Hartford Small Company HLS Fund
Hartford Stock HLS Fund
(1)Fund commenced operations in 2000.
60
<PAGE>
PURCHASE AND SALE OF FUND SHARES
- --------------------------------------------------------------------------------
PURCHASE OF FUND SHARES
Fund shares are made available to serve as the underlying investment options for
variable annuity and variable life insurance separate accounts of Hartford Life
and for certain qualified retirement plans. Shares of the funds are sold by
Hartford Securities Distribution Company, Inc. (the "Distributor") at their net
asset value as defined under Determination of Net Asset Value.
The funds offer two different classes of shares - Class IA and Class IB.
Class IB shares are offered by this prospectus. Class IA shares are offered by a
separate prospectus in connection with certain variable annuity products. The
different classes of shares represent investments in the same portfolio of
securities but are subject to different expenses and will have different share
prices and performance. The Class IB shares may pay for certain distribution
related expenses in connection with activities primarily intended to result in
the sale of Class IB shares.
It is conceivable that in the future it may be disadvantageous for variable
annuity separate accounts and variable life insurance separate accounts to
invest in the funds simultaneously. Although Hartford Life and the funds do not
currently foresee any such disadvantages either to variable annuity contract
owners or variable life insurance policy owners, each fund's Board of Directors
intends to monitor events in order to identify any material conflicts between
such contract owners and policy owners and to determine what action, if any,
should be taken in response thereto. If the Board of Directors of a fund were to
conclude that separate funds should be established for variable life and
variable annuity separate accounts, the variable life and variable annuity
contract holders would not bear any expenses attendant to the establishment of
such separate funds.
SALE AND REDEMPTION OF SHARES
The Class IB shares of each fund are sold and redeemed by the fund at their net
asset value next determined after receipt of a purchase or redemption order in
good order in writing at its home office, P.O. Box 5085, Hartford, CT
06102-5085. The value of shares redeemed may be more or less than original cost,
depending upon the market value of the portfolio securities at the time of
redemption. Payment for shares redeemed will be made within seven days after the
redemption request is received in proper form by the funds. However, the right
to redeem fund shares may be suspended or payment therefor postponed for any
period during which: (1) trading on the NYSE is closed for other than weekends
and holidays; (2) an emergency exists, as determined by the SEC, as a result of
which (a) disposal by a fund of securities owned by it is not reasonably
practicable, or (b) it is not reasonably practicable for a fund to determine
fairly the value of its net assets; or (3) the SEC by order so permits for the
protection of stockholders of the funds.
Each fund has adopted a Distribution Plan pursuant to Rule 12b-1 under the 1940
Act for the Class IB shares. Pursuant to the Distribution Plan, each fund
compensates the Distributor from assets attributable to the Class IB shares for
services rendered and expenses borne in connection with activities primarily
intended to result in the sale of the Class IB shares. It is anticipated that a
portion of the amounts received by the Distributor will be used to defray
various costs incurred or paid by the Distributor in
61
<PAGE>
connection with the printing and mailing of fund prospectuses, statements of
additional information, any supplements to these documents and shareholder
reports and holding seminars and sales meetings with wholesale and retail sales
personnel designed to promote the distribution of Class IB shares. The
Distributor may also use the amounts received to provide compensation to
financial intermediaries and third-party broker-dealers for their services in
connection with the distribution of Class IB shares.
Although the Distribution Plan provides that each fund may pay annually up to
0.25% of the average daily net assets of a fund attributable to its Class IB
shares for activities primarily intended to result in the sale of Class IB
shares, the Distributor has voluntarily agreed to waive .07% of the fee. This
waiver may be withdrawn at any time after notice to shareholders. Under the
terms of the Distribution Plan and the principal underwriting agreement, each
fund is authorized to make payments monthly to the Distributor which may be used
to pay or reimburse entities providing distribution and shareholder servicing
with respect to the Class IB shares for such entities' fees or expenses incurred
or paid in that regard.
The Distribution Plan is of a type known as a "compensation" plan because
payments are made for services rendered to the fund with respect to Class IB
shares regardless of the level of expenditures by the Distributor.
The Directors will, however, take into account such expenditures for purposes of
reviewing operations under the Distribution Plan and in connection with their
annual consideration of the Plan's renewal. The Distributor has indicated that
it expects its expenditures to include, without limitation: (a) the printing and
mailing of fund prospectuses, statements of additional information, any
supplements to those documents and shareholder reports for prospective contract
owners of variable insurance products with respect to the Class IB shares of a
fund; (b) those relating to the development, preparation, printing and mailing
of advertisements, sales literature and other promotional materials describing
and/or relating to the Class IB shares of a fund; (c) holding seminars and sales
meetings designed to promote the distribution of fund Class IB shares; (d)
obtaining information and providing explanations to wholesale and retail
distributors of contracts regarding fund investment objectives and policies and
other information about a fund, including the performance of the funds; (e)
training sales personnel regarding the Class IB shares of a fund; (f)
compensation to financial intermediaries and third-party broker-dealers; and (g)
financing any other activity that the Distributor determines is primarily
intended to result in the sale of Class IB shares. Rule 12b-1 fees have the
effect of increasing operating expenses of the funds.
62
<PAGE>
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share is determined for each fund as of the close of the
New York Stock Exchange ("NYSE") (normally 4:00 p.m. Eastern Time) on each
business day that the NYSE is open. The net asset value is determined by
dividing the value of the fund's net assets attributable to a class of shares by
the number of shares outstanding for that class. Except for the Money Market
Fund, the funds use market prices in valuing portfolio securities, but may use
fair value estimates, as determined by HL Advisors under the direction of the
Board of Directors, if reliable market prices are not available. Fair value
pricing may be used by the fund when current market values are unavailable or
when an event occurs after the close of the exchange on which the fund's
portfolio securities are principally traded that is likely to have changed the
value of the securities. The use of fair value pricing by the fund may cause the
net asset value of its shares to differ significantly from the net asset value
that would be calculated using current market values. The Money Market Fund's
assets are valued at amortized cost.
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.
Trading on many foreign securities markets is completed at various times before
the close of the NYSE or on days the NYSE is not open for business.
Consequently, the calculation of a fund's net asset value may take place at a
time that is different than when prices are determined for certain foreign
funds. As a result, events affecting the values of foreign portfolio securities
that occur after the close of the NYSE will not be reflected in a fund's
calculation of net asset value.
DIVIDENDS
The shareholders of each fund are entitled to receive such dividends as may be
declared by each fund's Board of Directors, from time to time based upon the
investment performance of the assets making up that fund's portfolio. The
current policy for each fund, except the Money Market Fund, is to pay dividends
from net investment income and to make distributions of realized capital gains,
if any, at least once each year. The Money Market Fund declares dividends on a
daily basis and pays them monthly.
Such dividends and distributions will be automatically invested in additional
full or fractional shares monthly on the last business day of each month at the
per share net asset value on that date. Provision is also made to pay such
dividends and distributions in cash if requested. Such dividends and
distributions will be in cash or in full or fractional shares of the fund at net
asset value.
EXCHANGE PRIVILEGES
Contractholders and policyholders may exchange shares in each fund as indicated
by the accompanying insurance product prospectus. The funds are intended to be
long-term investment vehicles and are not designed to provide investors with a
means
63
<PAGE>
of speculating on short-term market movements. Investors who engage in excessive
account activity generate additional costs which are borne by all of the funds'
shareholders. In order to minimize such costs, the funds reserve the right to
reject any purchase request that is reasonably deemed to be disruptive to
efficient portfolio management, either because of the timing of the investment
or previous excessive trading by the contractholder/policyholder.
FEDERAL INCOME TAXES
Each fund has elected and intends to continue qualifying under Subchapter M of
the Internal Revenue Code of 1986, as amended. Each fund intends to distribute
all of its net income and gains to shareholders. Because the shares are
purchased only through products that defer taxes, these distributions generally
will not be considered taxable income to you at the time of distribution. When
appropriate each fund will inform contractholders or policyholders of the amount
and nature of such income and gains.
Each fund may be subject to a 4% nondeductible excise tax as well as an income
tax measured with respect to certain undistributed amounts of income and capital
gain. Each fund expects to make such additional distributions of net investment
income as are necessary to avoid the application of these taxes. For a
discussion of the tax implications of a purchase or sale of the funds' shares by
the insurer, reference should be made to the section entitled "Federal Tax
Considerations" in the appropriate insurance product prospectus.
If eligible, each fund may make an election to pass through to its shareholder,
Hartford Life, a credit for any foreign taxes paid during the year. If such an
election is made, the pass-through of the foreign tax credit will result in
additional taxable income and income tax to Hartford Life. The amount of
additional tax may be more than offset by the foreign tax credits which are
passed through. These foreign tax credits may provide a benefit to Hartford
Life.
BROKERAGE COMMISSIONS
Although the rules 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 funds.
PERFORMANCE RELATED INFORMATION
The funds may advertise performance related information. Performance information
about a fund is based on the fund's past performance only and is no indication
of future performance.
Each fund may include its total return in advertisements or other sales
material. When a fund advertises its total return, it will usually be calculated
for one year, five years, and ten years or some other relevant period if the
fund has not been in existence for at least ten years. Total return is measured
by comparing the value of an investment in the fund at the beginning of the
relevant period to the value of the investment at the end of the period
(assuming immediate reinvestment of any dividends or capital gains
distributions).
64
<PAGE>
The Money Market Fund may advertise yield and effective yield. The yield of each
of those funds is based upon the income earned by the fund over a seven-day
period and then annualized, i.e. the income earned in the period is assumed to
be earned every seven days over a 52-week period and stated as a percentage of
the investment. Effective yield is calculated similarly but when annualized, the
income earned by the investment is assumed to be reinvested in fund shares and
thus compounded in the course of a 52-week period.
The funds are offered exclusively through variable insurance products.
Performance information presented for the funds should not be compared directly
with performance information of other insurance products without taking into
account insurance-related charges and expenses payable with respect to these
insurance products. Insurance related charges and expenses are not reflected in
the funds' performance information and will reduce an investor's return under
the insurance product.
65
<PAGE>
GENERAL INFORMATION
- --------------------------------------------------------------------------------
Hartford Securities Distribution Company, Inc., 200 Hopmeadow Street, Simsbury,
CT 06089, serves as distributor to the funds.
State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts
02110, serves as custodian of each fund's assets.
Hartford Life Insurance Company, 200 Hopmeadow Street, Simsbury, CT 06089,
serves as Transfer and Dividend Disbursing Agent for the funds.
66
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD CAPITAL APPRECIATION HLS FUND, INC. FINANCIAL HIGHLIGHTS
These tables are intended to help you understand each fund's financial
performance of the Class IB shares since inception. The total returns in the
table represent the rate that an investor in Class IB shares would have earned
on an investment in each fund (assuming reinvestment of all dividends and
distributions). This information has been audited by Arthur Andersen, LLP, whose
report, along with each fund's financial statements, are included in the annual
report which is available upon request.
<TABLE>
<CAPTION>
CLASS IB - PERIOD ENDED: 12/31/99 4/1/98 -
12/31/98
PER SHARE OPERATING PERFORMANCE
- ------------------------------------------------------ ----------------- ----------------
<S> <C> <C>
Net asset value, beginning of period
Net investment income (loss)
Net realized and unrealized gain (loss) on
investments
Total from investment operations
Less distributions:
Dividends from net investment income
Distributions from net realized gain on
investments
Return of capital
Total from distributions
Net increase (decrease) in net asset value
Net asset value, end of period
TOTAL RETURN
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)
Ratio of expenses to average net assets
Ratio of net investment income (loss) to
average net assets
Portfolio turnover rate
</TABLE>
67
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD DIVIDEND AND GROWTH HLS FUND, INC. FINANCIAL HIGHLIGHTS
These tables are intended to help you understand each fund's financial
performance of the Class IB shares since inception. The total returns in the
table represent the rate that an investor in Class IB shares would have earned
on an investment in each fund (assuming reinvestment of all dividends and
distributions). This information has been audited by Arthur Andersen, LLP, whose
report, along with each fund's financial statements, are included in the annual
report which is available upon request.
<TABLE>
<CAPTION>
CLASS IB - PERIOD ENDED: 12/31/99 4/1/98 -
12/31/98
PER SHARE OPERATING PERFORMANCE
- ------------------------------------------------ ----------------- ----------------
<S> <C> <C>
Net asset value, beginning of period
Net investment income (loss)
Net realized and unrealized gain (loss) on
investments
Total from investment operations
Less distributions:
Dividends from net investment income
Distributions from net realized gain on
investments
Return of capital
Total from distributions
Net increase (decrease) in net asset value
Net asset value, end of period
TOTAL RETURN
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)
Ratio of expenses to average net assets
Ratio of net investment income (loss) to
average net assets
Portfolio turnover rate
</TABLE>
68
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD GLOBAL LEADERS HLS FUND FINANCIAL HIGHLIGHTS
These tables are intended to help you understand each fund's financial
performance of the Class IB shares since inception. The total returns in the
table represent the rate that an investor in Class IB shares would have earned
on an investment in each fund (assuming reinvestment of all dividends and
distributions). This information has been audited by Arthur Andersen, LLP, whose
report, along with each fund's financial statements, are included in the annual
report which is available upon request.
<TABLE>
<CAPTION>
CLASS IB - PERIOD ENDED: 9/30/98 -
12/31/99 12/31/98
PER SHARE OPERATING PERFORMANCE
- ----------------------------------------------- ----------------- ----------------
<S> <C> <C>
Net asset value, beginning of period
Net investment income (loss)
Net realized and unrealized gain (loss) on
investments
Total from investment operations
Less distributions:
Dividends from net investment income
Distributions from net realized gain on
investments
Return of capital
Total from distributions
Net increase (decrease) in net asset value
Net asset value, end of period
TOTAL RETURN
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)
Ratio of expenses to average net assets
Ratio of net investment income (loss) to
average net assets
Portfolio turnover rate
</TABLE>
69
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD GROWTH AND INCOME HLS FUND FINANCIAL HIGHLIGHTS
These tables are intended to help you understand each fund's financial
performance of the Class IB shares since inception. The total returns in the
table represent the rate that an investor in Class IB shares would have earned
on an investment in each fund (assuming reinvestment of all dividends and
distributions). This information has been audited by Arthur Andersen, LLP, whose
report, along with each fund's financial statements, are included in the annual
report which is available upon request.
<TABLE>
<CAPTION>
CLASS IB - PERIOD ENDED: 12/31/99 5/29/98-
12/31/98
PER SHARE OPERATING PERFORMANCE
- ------------------------------------------------------ ----------------- ----------------
<S> <C> <C>
Net asset value, beginning of period
Net investment income (loss)
Net realized and unrealized gain (loss) on
investments
Total from investment operations
Less distributions:
Dividends from net investment income
Distributions from net realized gain on
investments
Return of capital
Total from distributions
Net increase (decrease) in net asset value
Net asset value, end of period
TOTAL RETURN
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)
Ratio of expenses to average net assets
Ratio of net investment income (loss) to
average net assets
Portfolio turnover rate
</TABLE>
70
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD INDEX HLS FUND, INC. FINANCIAL HIGHLIGHTS
These tables are intended to help you understand each fund's financial
performance since inception. The total returns in the table represent the rate
that an investor in Class IB shares would have earned on an investment in each
fund (assuming reinvestment of all dividends and distributions). This
information has been audited by Arthur Andersen, LLP, whose report, along with
each fund's financial statements, are included in the annual report which is
available upon request.
<TABLE>
<CAPTION>
CLASS IB - PERIOD ENDED: 4/1/98 -
12/31/99 12/31/98
PER SHARE OPERATING PERFORMANCE
- ------------------------------------------------------ ----------------- ----------------
<S> <C> <C>
Net asset value, beginning of period
Net investment income (loss)
Net realized and unrealized gain (loss) on
investments
Total from investment operations
Less distributions:
Dividends from net investment income
Distributions from net realized gain on
investments
Return of capital
Total from distributions
Net increase (decrease) in net asset value
Net asset value, end of period
TOTAL RETURN
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)
Ratio of expenses to average net assets
Ratio of net investment income (loss) to
average net assets
Portfolio turnover rate
</TABLE>
71
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND, INC. FINANCIAL HIGHLIGHTS
These tables are intended to help you understand each fund's financial
performance of the Class IB shares since inception. The total returns in the
table represent the rate that an investor in Class IB shares would have earned
on an investment in each fund (assuming reinvestment of all dividends and
distributions). This information has been audited by Arthur Andersen, LLP, whose
report, along with each fund's financial statements, are included in the annual
report which is available upon request.
<TABLE>
<CAPTION>
CLASS IB - PERIOD ENDED: 4/ /98-
12/31/99 12/31/98
PER SHARE OPERATING PERFORMANCE
- ------------------------------------------------------ ----------------- ----------------
<S> <C> <C>
Net asset value, beginning of period
Net investment income (loss)
Net realized and unrealized gain (loss) on
investments
Total from investment operations
Less distributions:
Dividends from net investment income
Distributions from net realized gain on
investments
Return of capital
Total from distributions
Net increase (decrease) in net asset value
Net asset value, end of period
TOTAL RETURN
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)
Ratio of expenses to average net assets
Ratio of net investment income (loss) to
average net assets
Portfolio turnover rate
</TABLE>
72
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD MIDCAP HLS FUND, INC. FINANCIAL HIGHLIGHTS
These tables are intended to help you understand each fund's financial
performance of the Class IB shares since inception. The total returns in the
table represent the rate that an investor in Class IB shares would have earned
on an investment in each fund (assuming reinvestment of all dividends and
distributions). This information has been audited by Arthur Andersen, LLP, whose
report, along with each fund's financial statements, are included in the annual
report which is available upon request.
<TABLE>
<CAPTION>
CLASS IB - PERIOD ENDED: 4/1/98-
12/31/99 12/31/98
PER SHARE OPERATING PERFORMANCE
- ------------------------------------------------------ ----------------- ----------------
<S> <C> <C>
Net asset value, beginning of period
Net investment income (loss)
Net realized and unrealized gain (loss) on
investments
Total from investment operations
Less distributions:
Dividends from net investment income
Distributions from net realized gain on
investments
Return of capital
Total from distributions
Net increase (decrease) in net asset value
Net asset value, end of period
TOTAL RETURN
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)
Ratio of expenses to average net assets
Ratio of net investment income (loss) to
average net assets
Portfolio turnover rate
</TABLE>
73
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD SMALL COMPANY HLS FUND, INC. FINANCIAL HIGHLIGHTS
These tables are intended to help you understand each fund's financial
performance since inception. The total returns in the table represent the rate
that an investor in Class IB shares would have earned on an investment in each
fund (assuming reinvestment of all dividends and distributions). This
information has been audited by Arthur Andersen, LLP, whose report, along with
each fund's financial statements, are included in the annual report which is
available upon request.
<TABLE>
<CAPTION>
CLASS IB - PERIOD ENDED: 4/1/98-
12/31/99 12/31/98
PER SHARE OPERATING PERFORMANCE
- ------------------------------------------------------ ----------------- ----------------
<S> <C> <C>
Net asset value, beginning of period
Net investment income (loss)
Net realized and unrealized gain (loss) on
investments
Total from investment operations
Less distributions:
Dividends from net investment income
Distributions from net realized gain on
investments
Return of capital
Total from distributions
Net increase (decrease) in net asset value
Net asset value, end of period
TOTAL RETURN
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)
Ratio of expenses to average net assets
Ratio of net investment income (loss) to
average net assets
Portfolio turnover rate
</TABLE>
74
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD STOCK HLS FUND, INC. FINANCIAL HIGHLIGHTS
These tables are intended to help you understand each fund's financial
performance of the Class IB shares since inception. The total returns in the
table represent the rate that an investor in Class IB shares would have earned
on an investment in each fund (assuming reinvestment of all dividends and
distributions). This information has been audited by Arthur Andersen, LLP, whose
report, along with each fund's financial statements, are included in the annual
report which is available upon request.
<TABLE>
<CAPTION>
CLASS IB - PERIOD ENDED: 4/1/98 -
12/31/99 12/31/98
PER SHARE OPERATING PERFORMANCE
- ------------------------------------------------------ ----------------- ----------------
<S> <C> <C>
Net asset value, beginning of period
Net investment income (loss)
Net realized and unrealized gain (loss) on
investments
Total from investment operations
Less distributions:
Dividends from net investment income
Distributions from net realized gain on
investments
Return of capital
Total from distributions
Net increase (decrease) in net asset value
Net asset value, end of period
TOTAL RETURN
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)
Ratio of expenses to average net assets
Ratio of net investment income (loss) to
average net assets
Portfolio turnover rate
</TABLE>
75
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD ADVISERS HLS FUND, INC. FINANCIAL HIGHLIGHTS
These tables are intended to help you understand each fund's financial
performance of the Class IB shares since inception. The total returns in the
table represent the rate that an investor in Class IB shares would have earned
on an investment in each fund (assuming reinvestment of all dividends and
distributions). This information has been audited by Arthur Andersen, LLP, whose
report, along with each fund's financial statements, are included in the annual
report which is available upon request.
<TABLE>
<CAPTION>
CLASS IB - PERIOD ENDED: 4/1/98-
12/31/99 12/31/98
PER SHARE OPERATING PERFORMANCE
- ------------------------------------------------------ ----------------- ----------------
<S> <C> <C>
Net asset value, beginning of period
Net investment income (loss)
Net realized and unrealized gain (loss) on
investments
Total from investment operations
Less distributions:
Dividends from net investment income
Distributions from net realized gain on
investments
Return of capital
Total from distributions
Net increase (decrease) in net asset value
Net asset value, end of period
TOTAL RETURN
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)
Ratio of expenses to average net assets
Ratio of net investment income (loss) to
average net assets
Portfolio turnover rate
</TABLE>
76
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD INTERNATIONAL ADVISERS HLS FUND, INC. FINANCIAL HIGHLIGHTS
These tables are intended to help you understand each fund's financial
performance of the Class IB shares since inception. The total returns in the
table represent the rate that an investor in Class IB shares would have earned
on an investment in each fund (assuming reinvestment of all dividends and
distributions). This information has been audited by Arthur Andersen, LLP, whose
report, along with each fund's financial statements, are included in the annual
report which is available upon request.
<TABLE>
<CAPTION>
CLASS IB - PERIOD ENDED: 4/1/98-
12/31/99 12/31/98
PER SHARE OPERATING PERFORMANCE
- ------------------------------------------------------ ----------------- ----------------
<S> <C> <C>
Net asset value, beginning of period
Net investment income (loss)
Net realized and unrealized gain (loss) on
investments
Total from investment operations
Less distributions:
Dividends from net investment income
Distributions from net realized gain on
investments
Return of capital
Total from distributions
Net increase (decrease) in net asset value
Net asset value, end of period
TOTAL RETURN
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)
Ratio of expenses to average net assets
Ratio of net investment income (loss) to
average net assets
Portfolio turnover rate
</TABLE>
77
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD BOND HLS FUND, INC. FINANCIAL HIGHLIGHTS
These tables are intended to help you understand each fund's financial
performance of the Class IB shares since inception. The total returns in the
table represent the rate that an investor in Class IB shares would have earned
on an investment in each fund (assuming reinvestment of all dividends and
distributions). This information has been audited by Arthur Andersen, LLP, whose
report, along with each fund's financial statements, are included in the annual
report which is available upon request.
<TABLE>
<CAPTION>
CLASS IB - PERIOD ENDED: 4/1/98 -
12/31/99 12/31/98
PER SHARE OPERATING PERFORMANCE
- ------------------------------------------------------ ----------------- ----------------
<S> <C> <C>
Net asset value, beginning of period
Net investment income (loss)
Net realized and unrealized gain (loss) on
investments
Total from investment operations
Less distributions:
Dividends from net investment income
Distributions from net realized gain on
investments
Return of capital
Total from distributions
Net increase (decrease) in net asset value
Net asset value, end of period
TOTAL RETURN
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)
Ratio of expenses to average net assets
Ratio of net investment income (loss) to
average net assets
Portfolio turnover rate
Current Yield
</TABLE>
(a)Excluding mortgage dollar rolls
78
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD HIGH YIELD HLS FUND, INC. FINANCIAL HIGHLIGHTS
These tables are intended to help you understand each fund's financial
performance of the Class IB shares since inception. The total returns in the
table represent the rate that an investor in Class IB shares would have earned
on an investment in each fund (assuming reinvestment of all dividends and
distributions). This information has been audited by Arthur Andersen, LLP, whose
report, along with each fund's financial statements, are included in the annual
report which is available upon request.
<TABLE>
<CAPTION>
CLASS IB - PERIOD ENDED: 9/30/98-
12/31/99 12/31/98
PER SHARE OPERATING PERFORMANCE
- ------------------------------------------------------ ----------------- ----------------
<S> <C> <C>
Net asset value, beginning of period
Net investment income (loss)
Net realized and unrealized gain (loss) on
investments
Total from investment operations
Less distributions:
Dividends from net investment income
Distributions from net realized gain on
investments
Return of capital
Total from distributions
Net increase (decrease) in net asset value
Net asset value, end of period
TOTAL RETURN
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)
Ratio of expenses to average net assets
Ratio of net investment income (loss) to
average net assets
Portfolio turnover rate
Current Yield
</TABLE>
79
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD MORTGAGE SECURITIES HLS FUND, INC. FINANCIAL HIGHLIGHTS
These tables are intended to help you understand each fund's financial
performance of the Class IB shares since inception. The total returns in the
table represent the rate that an investor in Class IB shares would have earned
on an investment in each fund (assuming reinvestment of all dividends and
distributions). This information has been audited by Arthur Andersen, LLP, whose
report, along with each fund's financial statements, are included in the annual
report which is available upon request.
<TABLE>
<CAPTION>
CLASS IB - PERIOD ENDED: 4/1/98-
12/31/99 12/31/98
PER SHARE OPERATING PERFORMANCE
- ------------------------------------------------------ ----------------- ----------------
<S> <C> <C>
Net asset value, beginning of period
Net investment income (loss)
Net realized and unrealized gain (loss) on
investments
Total from investment operations
Less distributions:
Dividends from net investment income
Distributions from net realized gain on
investments
Return of capital
Total from distributions
Net increase (decrease) in net asset value
Net asset value, end of period
TOTAL RETURN
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)
Ratio of expenses to average net assets
Ratio of net investment income (loss) to
average net assets
Portfolio turnover rate
Current Yield
</TABLE>
(a)Excluding mortgage dollar rolls
80
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD MONEY MARKET HLS FUND, INC. FINANCIAL HIGHLIGHTS
These tables are intended to help you understand each fund's financial
performance of the Class IB shares since inception. The total returns in the
table represent the rate that an investor in Class IB shares would have earned
on an investment in each fund (assuming reinvestment of all dividends and
distributions). This information has been audited by Arthur Andersen, LLP, whose
report, along with each fund's financial statements, are included in the annual
report which is available upon request.
<TABLE>
<CAPTION>
CLASS IB - PERIOD ENDED: 4/1/98-
12/31/99 12/31/98
PER SHARE OPERATING PERFORMANCE
- ------------------------------------------------------ ----------------- ----------------
<S> <C> <C>
Net asset value, beginning of period
Net investment income (loss)
Net realized and unrealized gain (loss) on
investments
Total from investment operations
Less distributions:
Dividends from net investment income
Distributions from net realized gain on
investments
Return of capital
Total from distributions
Net increase (decrease) in net asset value
Net asset value, end of period
TOTAL RETURN
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)
Ratio of expenses to average net assets
Ratio of net investment income (loss) to
average net assets
Portfolio turnover rate
Current Yield(a)
Effective Yield(a)
</TABLE>
(a)The yield information will fluctuate and publication of yield may not
provide a basis for comparison with bank deposits, other investments which
are insured and/or pay a fixed yield for a stated period of time, or other
investment companies. In addition, information may be of limited use for
comparative purposes because it does not reflect charges imposed at the
Separate Account level which, if included, would decrease the yield. This
figure has not been audited.
81
<PAGE>
FOR MORE INFORMATION
- --------------------------------------------------------------------------------
Two documents are available that offer further information on the Hartford HLS
Funds:
ANNUAL/SEMIANNUAL REPORT TO SHAREHOLDERS
Additional information on the funds is contained in the financial statements and
portfolio holdings of the funds' annual and semiannual report. In the fund's
annual report you will find a discussion of the market conditions and investment
strategies that significantly affected performance during the last fiscal year,
and the auditor's report.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI contains more detailed information on all aspects of the funds.
A current SAI and annual report have been filed with the Securities and Exchange
Commission and are incorporated by reference into (are legally a part of) this
prospectus.
To request a free copy of the current annual/semiannual report or the SAI,
please contact the funds at:
BY MAIL:
Hartford HLS Funds
c/o Individual Annuity Services
P.O. Box 5085
Hartford, CT 06102-5085
BY PHONE:
1-800-862-6668
Or you may view or obtain these documents from the SEC:
IN PERSON:
at the SEC's Public Reference Room in Washington, DC
BY MAIL:
Public Reference Section
Securities and Exchange Commission
Washington, DC 20549-6009
(duplicating fee required)
ON THE INTERNET:
www.sec.gov
SEC FILE NUMBERS:
Global Health 811-08629
Global Technology 811-08629
Capital Appreciation 811-04005
Dividend and Growth 811-08186
Global Leaders 811-08629
Growth and Income 811-08629
Index 811-05045
Int'l Opportunities 811-06059
MidCap 811-08185
Small Company 811-07557
Stock 811-02630
Advisers 811-03659
Int'l Advisers 811-08804
Bond 811-03660
High Yield 811-08629
Mortgage Securities 811-04201
Money Market 811-03662
Information on the operation of the SEC's public reference room may be obtained
by calling 1-800-SEC-0330.
82
<PAGE>
PART B
STATEMENT OF ADDITIONAL INFORMATION
HARTFORD GLOBAL HEALTH HLS FUND
HARTFORD GLOBAL TECHNOLOGY HLS FUND
HARTFORD CAPITAL APPRECIATION HLS FUND, INC.
HARTFORD DIVIDEND AND GROWTH HLS FUND, INC.
HARTFORD GLOBAL LEADERS HLS FUND
HARTFORD GROWTH AND INCOME HLS FUND
HARTFORD INDEX HLS FUND, INC.
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND, INC.
HARTFORD MIDCAP HLS FUND, INC.
HARTFORD SMALL COMPANY HLS FUND, INC.
HARTFORD STOCK HLS FUND, INC.
HARTFORD ADVISERS HLS FUND, INC.
HARTFORD INTERNATIONAL ADVISERS HLS FUND, INC.
HARTFORD BOND HLS FUND, INC.
HARTFORD HIGH YIELD HLS FUND
HARTFORD MORTGAGE SECURITIES HLS FUND, INC.
HARTFORD MONEY MARKET HLS FUND, INC.
CLASS IA and CLASS IB SHARES
P.O. Box 5085
Hartford, CT 06102-5085
This Statement of Additional Information ("SAI") is not a prospectus but
should be read in conjunction with the prospectus. To obtain a free copy of the
prospectus send a written request to: Hartford HLS Funds, c/o Individual Annuity
Services, P.O. Box 5085, Hartford, CT 06102-5085 or call 1-800-862-6668.
Date of Prospectus: May 1, 2000
Date of Statement of Additional Information: May 1, 2000
<PAGE>
TABLE OF CONTENTS PAGE
GENERAL INFORMATION............................................................3
INVESTMENT OBJECTIVES AND POLICIES.............................................3
MANAGEMENT OF THE HLS FUNDS...................................................15
INVESTMENT MANAGEMENT ARRANGEMENTS............................................19
HLS FUND EXPENSES.............................................................22
DISTRIBUTION ARRANGEMENTS.....................................................23
PORTFOLIO TRANSACTIONS AND BROKERAGE..........................................24
DETERMINATION OF NET ASSET VALUE..............................................26
PURCHASE AND REDEMPTION OF SHARES.............................................27
OWNERSHIP AND CAPITALIZATION OF THE HLS FUNDS.................................27
INVESTMENT PERFORMANCE........................................................28
TAXES.........................................................................35
CUSTODIAN.....................................................................37
TRANSFER AGENT SERVICES.......................................................37
DISTRIBUTOR...................................................................37
INDEPENDENT PUBLIC ACCOUNTANTS................................................37
OTHER INFORMATION.............................................................37
FINANCIAL STATEMENTS..........................................................38
<PAGE>
GENERAL INFORMATION
This SAI relates to seventeen mutual funds (each a "HLS Fund" and together
the "HLS Funds") which serve as the underlying investment vehicles for variable
annuity and variable life insurance separate accounts of Hartford Life Insurance
Company and Hartford Life and Annuity Insurance Company (collectively, "Hartford
Life") and for certain qualified retirement plans. Each HLS Fund offers two
classes of shares: Class IA and Class IB. HL Investment Advisors, LLC ("HL
Advisors") is the investment adviser and Hartford Life Insurance Company
("Hartford Life") is the administrator of each HLS Fund. HL Advisors and
Hartford Life are indirect majority owned subsidiaries of The Hartford Financial
Services Group, Inc., ("The Hartford") an insurance holding company with over
$130 billion in assets. In addition, Wellington Management Company, LLP
("Wellington Management") and the Hartford Investment Management Company
("HIMCO(R)"), an affiliate of HL Advisors, are sub-advisers to certain of the
HLS Funds. The Hartford also sponsors a family of mutual funds that is offered
directly to the public. Hartford Investment Financial Services Company
("HIFSCO"), an affiliate of The Hartford, is the investment manager to that fund
family.
INVESTMENT OBJECTIVES AND POLICIES
A. FUNDAMENTAL RESTRICTIONS OF THE FUNDS
Each HLS Fund has adopted the following fundamental investment
restrictions which may not be changed without approval of a majority of the
applicable HLS 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 an HLS Fund
represented at a meeting if the holders of more than 50% of the outstanding
shares of the HLS Fund are present in person or by proxy or (2) the holders of
more than 50% of the outstanding shares of the HLS Fund.
The investment objective and principal investment strategies of each HLS
Fund are set forth in the Prospectus. Set forth below are the fundamental
investment policies applicable to each HLS Fund followed by the non-fundamental
policies applicable to each HLS Fund.
Each HLS 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, and the following
practices when a segregated account has been established to cover such
transactions or when an offsetting position has been established by the HLS Fund
are not deemed to be issuances of senior securities: 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
the HLS Fund's investment policies, and reverse repurchase agreements and
mortgage dollar rolls.
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. Although reverse repurchase agreements, mortgage dollar rolls, short
sales against the box, futures contracts, options on futures contracts,
securities or indices, when issued and delayed delivery transactions and
securities lending are not subject to this restriction, in most cases a
segregated account will be set up to cover such transactions.
-3-
<PAGE>
3. Act as an underwriter, except to the extent that in connection with
the disposition of portfolio securities, a HLS 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 an HLS 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 HLS Fund as a result of the ownership of
securities and (vi) invest in real estate limited partnerships.
5. Invest in commodities, except that an HLS 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 HLS Fund's investment policies.
6. Make loans, except that an HLS Fund (i) may lend portfolio
securities in accordance with the HLS Fund's investment policies in amounts up
to 33-1/3% of the HLS Fund's total assets taken at market value, (ii) enter into
fully collateralized repurchase agreements, and (iii) purchase debt obligations
in which the HLS Fund may invest consistent with its investment policies.
7. Except for the Global Health HLS Fund and Global Technology HLS Fund
as described below, 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 HLS Fund, except the Global Health HLS Fund and Global
Technology HLS Fund, will operate as a "diversified" fund within the meaning of
the 1940 Act. This means that with respect to 75% of an HLS 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 HLS 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
HLS Fund.
Each of the Global Health HLS Fund and Global Technology HLS Fund will
operate as a non-diversified "concentrated fund" within the interpretation of
the Securities and Exchange Commission of the 1940 Act. This means that each of
the Global Health HLS Fund and Global Technology HLS Fund is permitted to invest
more than 25% of each fund's net assets in a particular industry or group of
industries and, with respect to 50% of each fund's assets, invest more than 5%
of each fund's net assets in a particular issuer.
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 an HLS Fund's assets will not
be considered a violation of the 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 HLS 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 an HLS Fund
-4-
<PAGE>
and its shareholders, the HLS 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 HLS 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 an HLS 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 an HLS 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 HLS Fund)
would consist of such securities.
4. Purchase securities while outstanding borrowings exceed 5% of an HLS
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.
7. Borrow money, engage in reverse repurchase agreements or engage in
activities which are the economic equivalent of borrowing if the combination of
such activities exceeds 33-1/3% of an HLS 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 an HLS Fund's assets will not
be considered a violation of the restriction.
ALL FUNDS
U.S. TREASURY DEPARTMENT DIVERSIFICATION REGULATIONS. The U.S. Treasury
Department has issued diversification regulations under Section 817 of the
Internal Revenue Code. If a mutual fund underlying a variable contract, other
than a pension plan contract, is not adequately diversified within the terms of
these regulations, the contract owner will have adverse income tax consequences.
These regulations provide, among other things, that a mutual fund shall be
considered adequately diversified if (i) no more than 55% of the value of the
assets in the fund is represented by any one investment; (ii) no more than 70%
of the value of the assets in the fund is
-5-
<PAGE>
represented by any two investments; (iii) no more than 80% of the value of the
assets in the fund is represented by any three investments and (iv) no more than
90% of the value of the total assets of the fund is represented by any four
investments. In determining whether the diversification standards are met, each
United States Government Agency or instrumentality shall be treated as a
separate issuer.
MISCELLANEOUS INVESTMENT STRATEGIES AND RISKS The investment objective and
principal investment strategies for each HLS Fund are discussed in the HLS
Fund's prospectus. A further description of certain investment strategies of
each HLS Fund is set forth below. The percentage limits described in the
sections below are based on market value and are determined as of the time
securities are purchased.
MONEY MARKET INSTRUMENTS AND TEMPORARY INVESTMENT STRATEGIES In addition
to the Money Market HLS Fund which may hold cash and invest in money market
instruments at any time, all other HLS Funds may hold cash and invest in high
quality money market instruments under appropriate circumstances as determined
by HIMCO or Wellington Management. Such HLS Funds may invest up to 100% of their
assets in cash 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 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 an HLS Fund
to the seller. The resale price would be in excess of the purchase price,
reflecting an agreed upon market interest rate.
Each HLS Fund is permitted to enter into fully collateralized repurchase
agreements. The HLS Fund's Board of Directors has delegated to HIMCO and
Wellington Management the responsibility of evaluating the creditworthiness of
the banks and securities dealers with which the HLS Funds will engage in
repurchase agreements.
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 HLS 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.
REVERSE REPURCHASE AGREEMENTS Each HLS Fund may also enter into reverse
repurchase agreements. Reverse repurchase agreements involve sales by an HLS
Fund of portfolio assets concurrently with an agreement by an HLS 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 an HLS
Fund is obligated to repurchase may decline below the repurchase price. A
reverse repurchase agreement is viewed as a collateralized borrowing by an HLS
Fund. Borrowing magnifies the potential for gain or loss on the portfolio
securities of an HLS Fund and, therefore, increases the possibility of
fluctuation in an HLS Fund's net asset value. An HLS Fund will establish a
segregated account with the HLS Fund's custodian bank in which an HLS Fund will
maintain cash, cash equivalents, U.S. government securities or other high
quality debt securities equal in value to an HLS Fund's obligations in respect
of reverse repurchase agreements. An HLS 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 HLS Fund equals
more than 33-1/3% of the value the HLS Fund's total assets.
DEBT SECURITIES Each HLS 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
-6-
<PAGE>
debt securities issued or guaranteed by U.S. corporations or other issuers
(including foreign governments or corporations); (3) asset-backed securities
(Global Health HLS Fund, Global Technology HLS Fund, International Opportunities
HLS Fund, International Advisers HLS Fund, Advisers HLS Fund, Bond HLS Fund,
High Yield HLS Fund, Mortgage Securities HLS Fund and Money Market HLS Fund
only); (4) mortgage-related securities, including collateralized mortgage
obligations ("CMO's") (International Opportunities HLS Fund, International
Advisers HLS Fund, Advisers HLS Fund, Bond HLS Fund, High Yield HLS Fund and
Mortgage Securities HLS Fund only); and (5) 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 The Money Market HLS Fund is permitted to
invest only in high quality, short term instruments as determined by Rule 2a-7
under the 1940 Act. Each of the other HLS Funds 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 an HLS
Fund is authorized to invest in a certain rating category, the HLS 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 Global Health HLS Fund, Global
Technology HLS Fund, Capital Appreciation HLS Fund, Dividend and Growth HLS
Fund, Global Leaders HLS Fund, Growth and Income HLS Fund, MidCap HLS Fund,
Small Company HLS Fund, Stock HLS Fund, Advisers HLS Fund and International
Opportunities HLS Fund is permitted to invest up to 5%, and the International
Advisers HLS Fund is permitted to invest up to 15%, 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 HLS Fund is permitted to invest up to 20% 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. Although the High Yield HLS Fund is permitted to
invest up to 100% of its total assets in securities rated below investment
grade, no more than 10% of total assets will be invested in securities rated
below B3 by Moody's or B- 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. 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 an HLS Fund is authorized to
invest in a certain rating category, the HLS 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 an HLS Fund with a commensurate effect on the value
of an HLS 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
International Opportunities HLS Fund, International Advisers HLS Fund, Advisers
HLS Fund, Bond HLS Fund, High Yield HLS Fund and
-7-
<PAGE>
Mortgage Securities HLS 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 HLS Funds) by various governmental, government-related
and private organizations. These HLS 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 an HLS 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 an HLS 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 an
HLS 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.
The mortgage securities in which each HLS 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., an HLS 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.
ASSET-BACKED SECURITIES The Global Health HLS Fund, Global Technology HLS
Fund, International Opportunities HLS Fund, International Advisers HLS Fund,
Advisers HLS Fund, Bond HLS Fund, High Yield HLS Fund, Mortgage Securities HLS
Fund and the Money Market HLS 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 HLS 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.
-8-
<PAGE>
EQUITY SECURITIES Each HLS Fund except the Bond HLS Fund and High Yield
HLS Fund as described below and except the Mortgage Securities HLS Fund and
Money Market HLS 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 HLS
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
HLS Fund and High Yield HLS Fund may each invest up to 15% of its total assets
in preferred stocks, convertible securities, and securities carrying warrants to
purchase equity securities. The Bond HLS Fund and High Yield HLS 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 HLS Funds except the Mortgage
Securities HLS Fund and Money Market HLS Fund may invest in equity securities
(including securities issued in initial public offerings) of companies with
market capitalizations within the range represented by the Russell 2000 Index
("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, may have less
historical data with respect to operations and management and may be more
dependent on a limited number of key employees. 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. Small Capitalization Securities may be more likely to be offered in
initial public offerings. Because securities issued in initial public offerings
are being offered to the public for the first time, the market for such
securities may be inefficient and less liquid.
NON-U.S. ISSUERS Each HLS Fund is permitted to invest a portion of its
assets in securities of non-U.S. issuers, 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. Generally, a non-U.S. company is considered to be a company that is
domiciled in a country other than the United States. 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 Capital Appreciation HLS Fund, Dividend and Growth HLS Fund, Growth
and Income HLS Fund, Small Company HLS Fund, MidCap HLS Fund, Stock HLS Fund
and Advisers HLS Fund are permitted to invest up to 20% of their assets in
non-U.S. issuers. The Money Market HLS Fund may invest up to 25% of its
assets (provided such assets are U.S. dollar denominated), the High Yield HLS
Fund and Bond HLS Fund are permitted to invest up to 30% of their assets, and
each of the International Opportunities HLS Fund and International Advisers
HLS Fund may invest 100% of its assets in such issuers. Each of the High
Yield HLS Fund and Bond HLS Fund may also invest up to 10% of their total
assets in securities denominated in foreign currencies. The Global Leaders
HLS Fund invests in at least five countries, one of which is the United
States; however, the fund has no limit on the amount of assets that must be
invested in each country. The Global Health HLS Fund and Global Technology
HLS Fund each invest in at least three countries, one of which may be the
United States; however, the funds have no limit on the amount of assets that
must be invested in each country.
Investing in securities issued by non-U.S. issuers involves considerations
and potential risks not typically associated with investing in obligations
issued by U.S. issuers. Less information may be available about non-U.S. issuers
compared with U.S. issuers. For example, 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. In addition, 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,
-9-
<PAGE>
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 an HLS 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 HLS 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.
From time to time, each of the International Advisers HLS Fund, Bond
HLS Fund and High Yield HLS Fund may invest up to 15%, 20% and 30% of their
respective total assets, and the Global Health HLS Fund, Global Technology
HLS Fund, Global Leaders HLS Fund and International Opportunities HLS Fund
may invest up to 25% of their assets in securities of issuers 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. Although each of the High Yield HLS
Fund and Bond HLS Fund may invest up to 30% of its assets in assets of
non-U.S. issuers, only 1/3 of such amount (10% of total assets) may be
represented or exposed to non-U.S. currency risk.
CURRENCY TRANSACTIONS Each HLS Fund, except the Index HLS Fund, Mortgage
Securities HLS Fund and Money Market HLS 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 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 an HLS 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 HLS Fund's underlying
securities. Further, the HLS Funds may enter into currency transactions only
with counterparties that HIMCO or Wellington Management deems to be
creditworthy.
The HLS 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 HLS Funds, for cash
flow management, and, to a lesser extent, to enhance returns, each HLS Fund,
except the Money Market HLS Fund, may employ certain hedging, income enhancement
and risk management techniques, including
-10-
<PAGE>
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. An HLS Fund's ability to engage in these practices may be limited by
tax considerations and certain other legal considerations.
An HLS 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
HLS Fund. This strategy limits potential capital appreciation in the portfolio
securities subject to the put or call option.
The HLS 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 HLS Fund holds in its
portfolio or that it intends to purchase. For example, if an HLS 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 an HLS Fund held
securities denominated in a foreign currency and anticipated a decline in the
value of that currency against the U.S. dollar, the HLS Fund could hedge against
such a decline by purchasing a put option on the foreign currency involved.
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. An HLS 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.
An HLS Fund may write covered options only. "Covered" means that, so long
as an HLS 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. An HLS 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, an HLS 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, an HLS 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 HLS 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 HLS Fund and resulting transaction costs. When the
HLS Fund anticipates a significant foreign exchange rate increase while
intending to invest in a non-U.S. security, the HLS Fund may purchase a foreign
currency futures contract to hedge or partially 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
HLS Fund against any rise in the foreign exchange rate that may add additional
costs to acquiring the non-U.S. security position. The HLS 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.
-11-
<PAGE>
The HLS Funds also may purchase call or put options on foreign currency
futures contracts to obtain a fixed foreign exchange rate at limited risk. An
HLS 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. An HLS Fund may purchase put options on
foreign currency futures contracts to hedge against a decline in the foreign
exchange rate or the value of its non-U.S. securities. An HLS 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 an HLS 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 an HLS Fund writes a covered option on an
index, an HLS 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 HLS 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 an HLS 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 HLS
Fund's portfolio, after taking into account the unrealized profits and
unrealized losses on any such contracts the HLS Fund has entered into. However,
options which are currently exercisable may be excluded in computing the 5%
limit. Adoption of this guideline will not limit the percentage of an HLS Fund's
assets at risk to 5%.
Although any one HLS 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 an
HLS 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 an HLS 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 an HLS 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 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 an HLS Fund would have been in a better position had it
not used such a strategy at all.
-12-
<PAGE>
SWAP AGREEMENTS Each HLS Fund, except the Index HLS Fund and Money Market
HLS 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 an HLS Fund's investment exposure from
one type of investment to another. For example, if an HLS Fund agreed to
exchange floating rate payments for fixed rate payments, the swap agreement
would tend to decrease the HLS 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 an HLS Fund's investments and its share price and yield.
The HLS Funds will usually enter into interest rate swaps on a net basis,
i.e., where the two parties make net payments with an HLS 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 an HLS 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 HLS Fund's custodian
in a segregated account. If an HLS Fund enters into a swap on other than a net
basis, the HLS Fund will maintain in the segregated account the full amount of
the HLS Fund's obligations under each such swap. The HLS 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 to be creditworthy. If a default occurs by the other party
to such transaction, an HLS Fund will have contractual remedies pursuant to the
agreements related to the transaction but such remedies may be subject to
bankruptcy and insolvency laws which could affect such HLS 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 an HLS 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 HLS
Fund. In addition, although the terms of interest rate swaps, caps, collars and
floors may provide for termination, there can be no assurance that an HLS 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 an HLS 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 HLS Funds believe that use of the hedging and risk management
techniques described above will benefit the HLS Funds, if HIMCO's or Wellington
Management's judgment about the direction or extent of the movement in interest
rates is incorrect, an HLS Fund's overall performance would be worse than if it
had not entered into any such transactions. For example, if an HLS 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 HLS Fund would lose part or all of
-13-
<PAGE>
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 HLS Fund is permitted to invest in illiquid
securities. No illiquid securities will be acquired if upon the purchase more
than 10% of the Money Market HLS Fund's net assets or 15% of each other HLS
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 an HLS
Fund's net asset value. Each HLS 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. An HLS 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 have an adverse impact on net asset value.
Under current interpretations of the SEC Staff, the following types of
securities in which an HLS 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 an HLS Fund may invest that are not readily marketable.
WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES Each HLS 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 HLS Funds generally purchase securities on a
when-issued basis with the intention of acquiring the securities, the HLS Funds
may sell the securities before the settlement date if HIMCO or Wellington
Management deems it advisable. At the time an HLS Fund makes the commitment to
purchase securities on a when-issued basis, the HLS Fund will record the
transaction and thereafter reflect the value, each day, of such security in
determining the net asset value of the HLS Fund. At the time of delivery of the
securities, the value may be more or less than the purchase price. An HLS 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 HLS Fund's purchase commitments; likewise an HLS Fund will segregate
securities sold on a delayed-delivery basis.
OTHER INVESTMENT COMPANIES Each HLS Fund, except the Index HLS Fund and
Money Market HLS Fund, is permitted to invest in other investment companies. The
investment companies in which an HLS Fund would invest may or may not be
registered under the 1940 Act. Securities in certain countries are currently
accessible to the HLS 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. Generally, an HLS Fund will not
purchase a security of an investment company if, as a result, (1) more than 10%
of the HLS 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 HLS Fund; or (3) more than 5% of the HLS Fund's assets would be invested in
any one such investment company.
PORTFOLIO SECURITIES LENDING Each of the HLS 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 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
-14-
<PAGE>
segregated account of the respective HLS Fund. While the securities are on loan
the borrower will pay the respective HLS 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 HLS Funds may lend securities only if: (1) each loan is fully secured by
appropriate collateral at all times; and (2) the value of all loaned securities
of any HLS Fund is not more than 33-1/3% of the HLS Fund's total assets taken at
the time of the loan (including collateral received in connection with any
loans).
MANAGEMENT OF THE HLS FUNDS
The business of each HLS Fund is managed by a Board of Directors, who
elect officers who are responsible for the day-to-day operations of the HLS
Funds and who execute policies formulated by the directors. The directors and
officers of the HLS 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 HLS Fund, as that term is defined in the 1940 Act are indicated
by an asterisk next to their respective names.
<TABLE>
<CAPTION>
POSITION
NAME, ADDRESS, AGE HELD WITH PRINCIPAL OCCUPATIONS HELD
THE HLS DURING LAST 5 YEARS
FUNDS
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ROBERT J. CLARK (age 67) Director Mr. Clark, currently retired, served as President of
725 Mapleton Avenue American Nuclear Insurers from 1990 to 1997.
Suffield, CT 06078 Previously, Mr. Clark served in positions of increasing
responsibility with Aetna Life & Casualty Company
from 1955 to 1989 retiring as President of the
Commercial Insurance Division. Mr. Clark is also an
active director or trustee with Hartford Health Care
Corporation, Hartford Hospital, CHS Insurance, Ltd.
and St. Joseph's College.
WINIFRED ELLEN COLEMAN (age 67) Director Ms. Coleman has served as President of Saint Joseph
27 Buckingham Lane College since 1991. She is a Director of LeMoyne
West Hartford, CT 06117 College, St. Francis Hospital, Connecticut Higher
Education Student Loan Administration, and The
National Conference (Greater Hartford Board of
Directors).
-15-
<PAGE>
<CAPTION>
POSITION
NAME, ADDRESS, AGE HELD WITH PRINCIPAL OCCUPATIONS HELD
THE HLS DURING LAST 5 YEARS
FUNDS
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
WILLIAM ATCHISON O'NEILL (age 69) Director The Honorable William A. O'Neill served as Governor
Box 360 of the State of Connecticut from 1980 until 1991. He is
East Hampton, CT 06424 presently retired.
MILLARD HANDLEY PRYOR, JR. (age 66) Director Mr. Pryor has served as Managing Director of Pryor &
695 Bloomfield Avenue Clark Company, Hartford, Connecticut, since June,
Bloomfield, CT 06002 1992. He served as Chairman and Chief Executive
Officer of Corcap, Inc. from 1988-1992. In addition,
Mr. Pryor is a Director of Pryor & Clark Company,
Corcap, Inc., the Wiremold Company, Hoosier
Magnetics, Inc., Infodata Systems, Inc. and Pacific
Scientific Corporation.
LOWNDES ANDREW SMITH* (age 60) Director and Mr. Smith has served as Vice Chairman of Hartford
P.O. Box 2999 Chairman Financial Services Group, Inc. since February, 1997, as
Hartford, CT 06104-2999 President and Chief Executive Officer of Hartford Life,
Inc. since February, 1997, and as President and Chief
Operating Officer 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. He has
been a Director of Connecticut Children's Medical
Center since 1993, a Director of American Counsel of
Life Insurance from 1993-1996 and 1998-present, and a
Director of Insurance Marketplace Standards
Association from 1996 to present. Mr. Smith is also
President and a Director of HIFSCO and HL Advisors.
JOHN KELLEY SPRINGER (age 68) Director Mr. Springer currently serves as Chairman of Medspan,
225 Asylum Avenue Inc. From 1986 to 1997 he served as Chief Executive
Hartford, CT 06103 Officer of Connecticut Health System, Inc. Formerly,
he served as the Chief Executive Officer of Hartford
Hospital, Hartford, Connecticut (June, 1976 - August,
1989). He is also a Director of Hartford Hospital, and
CHS Insurance Ltd. (Chairman).
-16-
<PAGE>
<CAPTION>
POSITION
NAME, ADDRESS, AGE HELD WITH PRINCIPAL OCCUPATIONS HELD
THE HLS DURING LAST 5 YEARS
FUNDS
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
DAVID M. ZNAMIEROWSKI (age 39) President Mr. Znamierowski currently serves as Senior Vice
55 Farmington Avenue and Director President, Chief Investment Officer and Director of
Hartford, CT 06105 Investment Strategy for Hartford Life, Inc. Mr.
Znamierowski previously was Vice President,
Investment Strategy and Policy with Aetna Life &
Casualty Company from 1991 to 1996 and held several
positions including Vice President, Corporate Finance
with Solomon Brothers from 1986 to 1991. Mr.
Znamierowski is also a Director and Senior Vice
President of HIFSCO and a Director and Managing
Director with HL Advisors.
PETER CUMMINS (age 62) Vice Mr. Cummins has served as Senior Vice President since
P. O. Box 2999 President 1997 and Vice President since 1989 of sales and
Hartford, CT 06104-2999 marketing of the Investment Products Division of
Hartford Life Insurance Company. He is also a Director
and Senior Vice President of HIFSCO and a Director
and Managing Director of HL Advisors.
ANDREW WILLIAM KOHNKE (age 41) Vice Mr. Kohnke serves as Managing Director and a
55 Farmington Avenue President Director of HIMCO. Previously he served as Vice
Hartford, CT 06105 President of HIMCO (1986-1996) and Investment
Manager for HIMCO (1983-1986). Mr. Kohnke is also
a Director and Managing Director of HL Investment
Advisors, LLC ("HL Advisors") and a Director and
Senior Vice President of HIFSCO and a Director and
Managing Director of HL Advisors.
THOMAS MICHAEL MARRA (age 41) Vice Mr. Marra has served as an Executive Vice President
P.O. Box 2999 President since 1996, and as Senior Vice President and Director
Hartford, CT 06104-2999 since 1994 of the Investment Products Division of
Hartford Life Insurance Company. Mr. Marra is also a
Director and Executive Vice President of HIFSCO. Mr.
Marra joined Hartford Life Insurance Company in 1980
and a Director and Managing Director of HL Advisors.
CHARLES MINER O'HALLORAN (age 52) Vice Mr. O'Halloran has served as Senior Vice President
Hartford Plaza President since January, 1998, Corporate Secretary from 1996 to
Hartford, CT 06115 and Secretary 1998, Vice President since 1994 and Senior Associate
General Counsel since 1988 of The Hartford Financial
Services Group, Inc. Mr. O'Halloran is also a Director,
Secretary and General Counsel of HIMCO.
-17-
<PAGE>
<CAPTION>
POSITION
NAME, ADDRESS, AGE HELD WITH PRINCIPAL OCCUPATIONS HELD
THE HLS DURING LAST 5 YEARS
FUNDS
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
GEORGE RICHARD JAY (age 47) Controller Mr. Jay has served as Secretary and Director, Life and
P.O. Box 2999 and Equity Accounting and Financial Control, of Hartford
Hartford, CT 06104-2999 Treasurer Life Insurance Company since 1987.
KEVIN J. CARR (age 45) Assistant Mr. Carr has served as Assistant General Counsel since
55 Farmington Avenue Secretary 1999, Counsel since November 1996 and Associate
Hartford, CT 06105 and Counsel Counsel since November 1995, of The Hartford
Financial Services Group, Inc. Formerly he served as
Counsel of Connecticut Mutual Life Insurance
Company from March 1995 to November 1995 and
Associate Counsel of 440 Financial Group of Worcester
from 1994 to 1995. Mr. Carr is also Counsel and
Assistant Secretary of HL Advisors and HIFSCO and
Assistant Secretary of HIMCO.
CHRISTOPHER JAMES COSTA (age 35) Assistant Mr. Costa has served as the Tax Manager of The
P.O. Box 2999 Secretary Hartford-Sponsored Mutual Funds since July 1996.
Hartford, CT 06104-2999 Formerly he served as the Tax Manager and Assistant
Treasurer of The Phoenix Mutual Funds from June
1994 to June 1996 and as a Tax Consultant with Arthur
Andersen LLP from September 1990 to June 1994.
</TABLE>
An Audit Committee and Nominating Committee have been appointed for each
fund. Each Committee is made up of those directors who are not "interested
persons" of the HLS Fund.
All board members and officers of the HLS Funds are also board members and
officers of The Hartford Mutual Funds, Inc., a family of mutual funds with
fourteen portfolios.
COMPENSATION OF OFFICERS AND DIRECTORS The HLS Funds pay no salaries or
compensation to any officer or director affiliated with The Hartford. The chart
below sets forth the fees paid by the HLS Fund to the non-interested Directors
for the 1999 fiscal year and certain other information:
-18-
<PAGE>
<TABLE>
<CAPTION>
Pension Or Total Compensation
Aggregate Retirement Benefits Estimated Annual From the HLS Funds
Compensation From Accrued As Part Of Benefits Upon And Fund Complex
Name of Person, Position the HLS Funds HLS Fund Expenses Retirement Paid To Directors*
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Joseph Biernat, Director $0 $0
(Retired July 1999)
Robert J. Clark, Director $0 $0
Winifred E. Coleman,
Director $0 $0
William A. O'Neill, Director $0 $0
Millard H. Pryor, Director $0 $0
John K. Springer, Director $0 $0
</TABLE>
*As of December 31, 1999, there were twenty-seven funds in the Complex
(including the HLS Funds).
OTHER INFORMATION ABOUT THE HLS FUNDS Each HLS Fund, except for the Global
Health HLS Fund, Global Technology HLS Fund, Global Leaders HLS Fund, Growth and
Income HLS Fund and High Yield HLS Fund, is a separate Maryland corporation
registered with the Securities and Exchange Commission as an open-end management
investment company. The Global Health HLS Fund, Global Technology HLS Fund,
Global Leaders HLS Fund, Growth and Income HLS Fund and High Yield HLS Fund are
diversified series of Hartford Series HLS Fund, Inc., a Maryland corporation,
also registered with the Securities and Exchange Commission as an open-end
management investment company. The shares of each HLS Fund have been divided
into Class IA and Class IB. The Board of Directors may reclassify authorized
shares to increase or decrease the allocation of shares in each HLS Fund. The
Board of Directors is also authorized, from time to time and without further
shareholder approval, to authorize additional shares of each HLS Fund. The
organization dates of each HLS Fund are as follows: Global Health HLS Fund,
2000; Global Technology HLS Fund, 2000; Capital Appreciation HLS Fund, 1983;
Dividend and Growth HLS Fund, 1994; Global Leaders HLS Fund, 1998; Growth and
Income HLS Fund, 1998; Index HLS Fund, 1987; International Opportunities HLS
Fund, 1990; MidCap HLS Fund, 1997; Small Company HLS Fund, 1996; Stock HLS Fund,
1977; Advisers HLS Fund, 1983; International Advisers HLS Fund, 1995; Bond HLS
Fund, 1977; High Yield HLS Fund, 1998; Mortgage Securities HLS Fund, 1985, and
Money Market HLS Fund, 1980.
As of January 31, 2000, the officers and directors as a group beneficially
owned less than 1% of the outstanding shares of each HLS Fund.
INVESTMENT MANAGEMENT ARRANGEMENTS
Each HLS Fund has entered into an investment advisory agreement with HL
Investment Advisors, LLC ("HL Advisors"). The investment advisory agreement
provides that HL Advisors, subject to the supervision and approval of each HLS
Fund's Board of Directors, is responsible for the management of each HLS Fund.
HL Advisors is responsible for investment management supervision of all HLS
Funds. In addition, Hartford Life, a corporate affiliate of HL Advisors and
HIMCO, provides administrative services to the HLS Funds including
administrative personnel, services, equipment and facilities and office space
for proper operation of the HLS Funds. Although Hartford Life has agreed to
arrange for the provision of additional services necessary for the proper
operation of the HLS Fund, each HLS Fund pays for these services directly.
With respect to the Global Health HLS Fund, Global Technology HLS Fund,
Small Company HLS Fund, Capital Appreciation HLS Fund, International Advisers
HLS Fund, International Opportunities HLS Fund, MidCap
-19-
<PAGE>
HLS Fund, Stock HLS Fund, Dividend and Growth HLS Fund, Global Leaders HLS Fund,
Growth and Income HLS Fund and Advisers HLS Fund, HL Advisors has entered into
an investment sub-advisory 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 HL
Advisors, is responsible for (among other things) the day-to-day investment and
reinvestment of the assets of such HLS Funds and furnishing each such HLS Fund
with advice and recommendations with respect to investments and the purchase and
sale of appropriate securities for each HLS Fund. HL Advisors has entered into
an investment services agreement with HIMCO for services related to the
day-to-day investment and reinvestment of the assets of the Index HLS Fund,
Mortgage Securities HLS Fund, Bond HLS Fund, High Yield HLS Fund and Money
Market HLS Fund.
As provided by the investment advisory agreements, each HLS Fund pays HL
Advisors an investment advisory fee, which is accrued daily and paid monthly,
equal on an annual basis to a stated percentage of the respective HLS Fund's
average daily net asset value. HL Advisors, not any HLS Fund, pays the
subadvisory fees of Wellington Management as set forth in the Prospectus. HL
Advisors pays HIMCO the direct and indirect costs incurred in managing the
HIMCO-advised HLS Funds.
No person other than HL Advisors, HIMCO or Wellington Management and their
directors and employees regularly furnishes advice to the HLS Funds with respect
to the desirability of the HLS 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 The Hartford and its affiliates.
Securities held by any HLS 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 HLS Fund or client accounts (including other funds) for which HIMCO
or Wellington Management act as an investment adviser, (including the HLS 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.
For the last three fiscal years, each HLS Fund has paid the following
advisory fees to HL Advisors:
<TABLE>
<CAPTION>
HLS FUND NAME 1999 1998 1997
- ------------- ---- ---- ----
<S> <C> <C> <C>
Global Health HLS Fund(1) --- --- ---
Global Technology HLS Fund(1) --- --- ---
Capital Appreciation HLS Fund $23,148,831 $18,471,888
Dividend and Growth HLS Fund $11,746,871 $6,910,062
Global Leaders HLS Fund(2) ---
Growth and Income HLS Fund(2) ---
Index HLS Fund $2,931,531 $1,771,465
International Opportunities HLS Fund $5,838,942 $5,565,620
MidCap HLS Fund(3) $449,736 $28,186
Small Company HLS Fund $1,511,160 $657,507
Stock HLS Fund $15,103,808 $10,265,666
Advisers HLS Fund $43,114,112 $31,252,771
International Advisers HLS Fund $1,429,470 $926,609
Bond HLS Fund $2,165,188 $1,422,689
High Yield HLS Fund(2) ---
Mortgage Securities HLS Fund $838,841 $802,900
-20-
<PAGE>
<CAPTION>
<S> <C> <C> <C>
Money Market HLS Fund $1,756,465 $1,436,068
</TABLE>
(1) Fund commenced operations in 2000
(2) Portion of advisory fee waived for 1998
(3) Portion of advisory fee waived for 1997
Pursuant to the investment advisory agreement, investment sub-advisory and
investment services agreements neither HL Advisors, HIMCO nor Wellington
Management is liable to the HLS Funds or their shareholders for any error of
judgment or mistake of law or for any loss suffered by the HLS 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.
HL Advisors, whose principal business address is at 200 Hopmeadow Street,
Simsbury, Connecticut 06089, was organized in 1981. As of December 31, 1999, HL
Advisors had approximately $___________ billion in assets under management. HL
Advisors is a majority owned indirect subsidiary of The Hartford. HIMCO, whose
principal business addresses is 55 Farmington Avenue, Hartford, Connecticut
06105, was organized in 1996 and is a wholly-owned subsidiary of The Hartford.
HIMCO is a professional money management firm that provides services to
investment companies, employee benefit plans, its affiliated insurance companies
and other institutional accounts. As of December 31, 1999, HIMCO and its
wholly-owned subsidiary had approximately $__________ billion in assets under
management.
Wellington Management, 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
December 31, 1999, Wellington Management had investment management authority
with respect to approximately $______________ billion in assets. Wellington
Management is a Massachusetts Limited Liability Partnership. The three managing
partners of Wellington Management are Laurie A. Gabriel, Duncan M. McFarland and
John R. Ryan.
The investment advisory agreements, investment subadvisory agreements and
investment services agreements 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 HLS Fund 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 HLS Fund's outstanding
voting securities. The contract automatically terminates upon assignment as
defined under the 1940 Act. 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 HLS Fund. The investment subadvisory
agreements and investment services agreements may be terminated at any time
without the payment of any penalty by the Board of Directors, by vote of a
majority of the outstanding voting securities of the respective HLS Fund or by
HL Advisors, upon 60 days' notice to HIMCO and Wellington Management, and by
Wellington Management or HIMCO upon 90 days' written notice to HL Advisors (with
respect to that HLS Fund only). The investment subadvisory agreement and
investment services agreements terminate automatically upon the termination of
the corresponding investment advisory agreement.
HL Advisors may make payments from time to time from its own resources,
which may include the management fees paid by the HLS Fund 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 HLS Funds including paying for the preparation, printing and
distribution of prospectuses and sales literature or other promotional
activities.
-21-
<PAGE>
Each fund and each adviser, sub-adviser and principal underwriter to each
fund has adopted a Code of Ethics designed to protect the interests of each
fund's shareholders. Under each Code of Ethics investment personnel are
permitted to trade securities for their own account subject to a number of
restrictions. Each Code of Ethics has been filed with the SEC via the EDGAR
system and may be viewed by the public.
HLS FUND ADMINISTRATION
An Administrative Services Agreement between each HLS Fund and Hartford
Life provides that Hartford Life will manage the business affairs and provide
administrative services to each HLS Fund. Under the terms of these Agreements,
Hartford Life will provide the following: administrative personnel, services,
equipment and facilities and office space for proper operation of the HLS Funds.
Hartford Life has also agreed to arrange for the provision of additional
services necessary for the proper operation of the HLS Funds, although the HLS
Funds pay for these services directly. See "Expenses of the Funds." As
compensation for the services to be performed by Hartford Life, each HLS Fund
pays to Hartford Life, as promptly as possible after the last day of each month,
a monthly fee equal to the annual rate of .20% of the average daily net assets
of the HLS Fund. In addition to the administrative services fee Hartford Life is
compensated for fund accounting services at a competitive market rate.
For the last three fiscal years, each HLS Fund has paid the following
administrative fees to Hartford Life:
<TABLE>
<CAPTION>
HLS FUND NAME 1999 1998 1997
- ------------- ---- ---- ----
<S> <C> <C> <C>
Global Health HLS Fund(1) --- --- ---
Global Technology HLS Fund(1) --- --- ---
Capital Appreciation HLS Fund $9,497,866 $7,245,777
Dividend and Growth HLS Fund $4,656,224 $2,486,421
Global Leaders HLS Fund $2,027 ---
Growth and Income HLS Fund $12,712 ---
Index HLS Fund $2,669,517 $1,550,032
International Opportunities HLS Fund $2,115,423 $1,931,542
MidCap HLS Fund $144,116 $9,636
Small Company HLS Fund $481,386 $200,110
Stock HLS Fund $10,675,568 $6,879,714
Advisers HLS Fund $18,087,300 $12,508,493
International Advisers HLS Fund $453,310 $282,011
Bond HLS Fund $1,314,094 $794,107
High Yield HLS Fund $6,684 $794,107
Mortgage Securities HLS Fund $609,614 $562,030
Money Market HLS Fund $1,284,777 $1,005,248
</TABLE>
(1) Fund commenced operations in 2000.
HLS FUND EXPENSES
Each HLS Fund assumes and pays the following costs and expenses: interest;
taxes; brokerage charges (which may be to affiliated broker-dealers); costs of
preparing, printing and filing any amendments or supplements to the registration
forms of each HLS Fund and its securities; all federal and state registration,
qualification and filing costs and fees, (except the initial costs and fees,
which will be borne by Hartford Life), issuance and redemption expenses,
transfer agency and dividend and distribution disbursing agency costs and
expenses; custodian fees and expenses; accounting, auditing and legal expenses;
fidelity bond and other insurance premiums; fees and salaries of directors,
officers and employees of each HLS Fund other than those who are also officers
of Hartford Life; industry membership dues; all annual and semiannual reports
and prospectuses mailed to each HLS Fund's shareholders as well as all
quarterly, annual and any other periodic report required to be filed with the
SEC or with any state; any notices required by a federal or state regulatory
authority, and any proxy solicitation materials
-22-
<PAGE>
directed to each HLS Fund's shareholders as well as all printing, mailing and
tabulation costs incurred in connection therewith, and any expenses incurred in
connection with the holding of meetings of each HLS Fund's shareholders,
expenses related to distribution activities as provided under each HLS Fund's
Rule 12b-1 distribution plan for Class IB shares and other miscellaneous
expenses related directly to the HLS Funds' operations and interest.
DISTRIBUTION ARRANGEMENTS
Each fund's shares are sold by Hartford Securities Distribution Company
(the "distributor") on a continuous basis to separate accounts sponsored by The
Hartford and its affiliates and to certain qualified retirement plans.
Each fund has adopted separate distribution plans (the "Plans") for Class
IB shares pursuant to appropriate resolutions of each fund'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.
Pursuant to the Plan, each fund may compensate the distributor for its
expenditures in financing any activity primarily intended to result in the sale
of HLS Fund shares. The expenses of each HLS Fund pursuant to each Plan are
accrued on a fiscal year basis and may not exceed, the annual rate of 0.25% of
each HLS Fund's average daily net assets attributable to Class IB shares. All or
any portion of this fee may be remitted to brokers who provide distribution or
shareholder account services.
Distribution fees paid to the distributor may be spent on any activities
or expenses primarily intended to result in the sale of each fund's shares
including (a) compensation to and expenses, including overhead and telephone
expenses, of employees of the distributor engaged in the distribution of the
Class IB shares; (b) printing and mailing of prospectuses, statements of
additional information, and reports for prospective purchasers of variable
annuity or variable life insurance contracts ("Variable Contracts") investing
indirectly in Class IB shares; (c) compensation to financial intermediaries and
broker-dealers to pay or reimburse them for their services or expenses in
connection with the distribution of Variable Contracts investing indirectly in
Class IB shares; (d) expenses relating to the development, preparation,
printing, and mailing of fund advertisements, sales literature, and other
promotional materials describing and/or relating to the fund; (e) expenses of
holding seminars and sales meetings designed to promote the distribution of the
Class IB shares; (f) expenses of obtaining information and providing
explanations to Variable Contract owners regarding fund investment objectives
and policies and other information about the fund, including performance; (g)
expenses of training sales personnel regarding the fund; (h) expenses of
compensating sales personnel in connection with the allocation of cash values
and premiums of the Variable Contracts to the fund; and (i) expenses of personal
services and/or maintenance of Variable Contract accounts with respect to Class
IB shares attributable to such accounts. These plans are considered compensation
type plans which means the distributor is paid the agreed upon fee regardless of
the distributor's expenditures.
In accordance with the terms of the Plans, the distributor provides to
each HLS Fund, for review by each fund'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.
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 each 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 including the potential
to increase assets in order to benefit from economics of scale. The Board of
Directors believes that there is a reasonable likelihood that the Plans will
benefit the Class IB shareholders of each HLS Fund. 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
-23-
<PAGE>
approval of the shareholders of each 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 each 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 each fund affected thereby. A Plan
will automatically terminate in the event of its assignment (as defined in the
1940 Act).
For the fiscal year ended December 31, 1999, the following 12b-1 fees were
paid by the HLS Funds:
<TABLE>
<CAPTION>
HLS FUND NAME CLASS IB SHARES
------------- ---------------
<S> <C>
Global Health HLS Fund(1) ---
Global Technology HLS Fund(1) ---
Capital Appreciation HLS Fund
Dividend and Growth HLS Fund
Global Leaders HLS Fund
Growth and Income HLS Fund
Index HLS Fund
International Opportunities HLS Fund
MidCap HLS Fund
Small Company HLS Fund
Stock HLS Fund
Advisers HLS Fund
International Advisers HLS Fund
Bond HLS Fund
High Yield HLS Fund
Mortgage Securities HLS Fund ---
Money Market HLS Fund
</TABLE>
(1) Fund commenced operation in 2000.
The entire amount of 12b-1 fees listed above were paid to broker-dealers.
PORTFOLIO TRANSACTIONS AND BROKERAGE
The HLS Funds have 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 HLS Fund and the
placing of its portfolio transactions. In placing orders, it is the policy of
each HLS 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 HLS
Funds will not necessarily be paying the lowest possible spread or commission.
Upon instructions from the HLS Funds, HIMCO and Wellington Management may direct
brokerage transactions to broker/dealers who also sell shares of the HLS Funds.
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 HLS 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 HLS Fund
for such purchases or sales.
-24-
<PAGE>
While HIMCO and Wellington Management (as applicable) seek to obtain the
most favorable net results in effecting transactions in an HLS 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, an HLS
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 HLS Funds may benefit
from such research obtained by HIMCO and Wellington Management for portfolio
transactions for other clients.
Investment decisions for the HLS 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 each HLS Fund's
Board of Directors, available securities may be allocated to each HLS 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 HLS Fund. In some cases, this
system might adversely affect the price paid by an HLS Fund (for example, during
periods of rapidly rising or falling interest rates) or limit the size of the
position obtainable for an HLS Fund (for example, in the case of a small issue).
For the last three years, each HLS Fund has paid the following brokerage
commissions:
<TABLE>
<CAPTION>
FUND NAME 1999 1998 1997
- --------- ---- ---- ----
<S> <C> <C> <C>
Global Health HLS Fund(1) --- --- ---
Global Technology HLS Fund(1) --- --- ---
Capital Appreciation HLS Fund $6,278,243 $6,360,557
Dividend and Growth HLS Fund $3,315,868 $1,876,099
Global Leaders HLS Fund(4) $8,481 ---
Growth and Income HLS Fund(4) $13,302 ---
Index HLS Fund $163,000 $66,985
International Opportunities HLS Fund $8,353,895 $4,019,255
MidCap HLS Fund(2) $277,583 $18,881
Small Company HLS Fund $1,237,532 $563,124
Stock HLS Fund $3,533,875 $2,552,822
Advisers HLS Fund $3,712,596 $2,994,604
International Advisers HLS Fund $1,084,719 $436,813
Bond HLS Fund(2) N/A N/A N/A
High Yield HLS Fund(3) N/A N/A ---
Mortgage Securities HLS Fund(2) N/A N/A N/A
Money Market HLS Fund(2) N/A N/A N/A
</TABLE>
(1) Commenced operations in 2000.
(2) Commenced operations in 1997.
(3) No brokerage commissions were paid in 1997, 1998 or 1999 by the Bond
HLS Fund, Mortgage Securities HLS Fund or Money Market HLS Fund.
(4) Commenced operations in 1998.
-25-
<PAGE>
Changes in the amounts of brokerage commissions paid reflect changes in
portfolio turnover rates.
Although the rules 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 funds.
DETERMINATION OF NET ASSET VALUE
The net asset value of the shares of each HLS Fund is determined by
Hartford Life Insurance Company, ("Hartford Life") an affiliate of The Hartford,
in the manner described in the HLS Funds' Prospectus. The HLS Funds will be
closed for business and will not price their shares on the following business
holidays: New Year's Day, Martin Luther King Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Christmas Day and
other holidays observed by the New York Stock Exchange. Securities held by each
HLS Fund other than the Money Market HLS 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 HLS Fund are valued at amortized
cost or original cost plus accrued interest receivable, both of which
approximate market value. All other HLS 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 HLS Funds' Board of Directors.
The net asset value per share of the Money Market HLS 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 HLS 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 HLS 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
-26-
<PAGE>
dividends, valuing portfolio securities on the basis of current market prices,
if available, or, if not available, at fair market value as 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).
PURCHASE AND REDEMPTION OF SHARES
For information regarding the purchase of HLS Fund shares, see "Purchase
of Fund Shares" in the HLS Funds' Prospectus.
For a description of how a shareholder may have an HLS Fund redeem his/her
shares, or how he/she may sell shares, see "Sale and Redemption of Shares" in
the HLS Funds' Prospectus.
SUSPENSION OF REDEMPTIONS
An HLS 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 an HLS Fund of securities
owned by it is not reasonably practicable, or (2) it is not reasonably
practicable for an HLS 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.
OWNERSHIP AND CAPITALIZATION OF THE HLS FUNDS
CAPITAL STOCK The Board of Directors is authorized, without further
shareholder approval, to authorize additional shares and to classify and
reclassify the HLS Funds into one or more classes. Accordingly, the Directors
have authorized the issuance of two classes of shares of the HLS Funds
designated as Class IA and Class IB shares. The shares of each class represent
an interest in the same portfolio of investments of the HLS Funds and have equal
rights as to voting, redemption, and liquidation. However, each class bears
different expenses and therefore the net asset values of the two classes and any
dividends declared may differ between the two classes.
Pursuant to state insurance law, Hartford Life, or its affiliates, is the
owner of all HLS shares held in Hartford Life's separate accounts. The shares
are held for the benefit of Hartford Life's contractholders and policy owners.
In addition to Hartford Life, the following entity owns 5% or more of each class
of HLS shares.
As of December 31, 1999, HL Advisors owned shares in the following HLS
Funds:
<TABLE>
<CAPTION>
FUND PERCENTAGE OF OWNERSHIP
---- -----------------------
CLASS IA CLASS IB
-------- --------
<S> <C> <C>
Global Leaders HLS Fund % 0%
Growth and Income HLS Fund % 0%
High Yield HLS Fund % 0%
MidCap HLS Fund % 0%
</TABLE>
VOTING Under each HLS Fund's multi-class system, shares of each class of
an HLS Fund represent an equal pro rata interest in that HLS Fund and,
generally, shall have identical voting, dividend, liquidation, and other rights,
preferences, powers, restrictions, limitations, qualifications and terms and
conditions, except that: (a) each class shall have a different designation; (b)
each class of shares shall bear its "Class Expenses;" (c) each class shall have
exclusive voting rights on any matter submitted to shareholders that relates
solely to its distribution arrangements; (d) each class shall have separate
voting rights on any matter submitted to shareholders in which the interests of
one class differ from the interests of any other class; (e) each class may have
separate exchange privileges; and (f) each class may have different conversion
features, although a conversion feature is not currently
-27-
<PAGE>
contemplated. Expenses currently designated as "Class Expenses" by the HLS
Fund's Board of Directors are currently limited to payments made to the
Distributor for the Class IB shares, pursuant to the Distribution Plan for the
Class IB shares adopted pursuant to Rule 12b-1 under the 1940 Act. Each
shareholder is entitled to one vote for each share of the HLS Funds held upon
all matters submitted to the shareholders generally. Class specific issues, such
as a modification to a Rule 12b-1 plan for Class IB shares that could materially
increase fees, will be voted on only by the affected class. Hartford Life, or
its affiliates, is the shareholder of record for all HLS Funds. Hartford Life
will vote all HLS Fund shares, pro rata, according to the written instructions
of the contract owners of the variable annuity contracts and the policy holders
of the variable life contracts issued by it using the HLS Funds as investment
vehicles. This position is consistent with the policy of the SEC staff.
OTHER RIGHTS Each share of HLS Fund stock, when issued and paid for in
accordance with the terms of the offering, will be fully paid and
non-assessable. Shares of HLS Fund stock have no pre-emptive, subscription or
conversion rights and are redeemable as set forth under "Purchase and Redemption
of Shares." Upon liquidation of an HLS Fund, the shareholders of that HLS Fund
shall be entitled to share, pro rata, in any assets of the HLS Fund after
discharge of all liabilities and payment of the expenses of liquidation.
Each HLS Fund's Articles of Incorporation provides that the Directors,
officers and employees of the HLS Fund may be indemnified by the HLS Fund to the
fullest extent permitted by Maryland law and the federal securities laws. The
HLS Fund's Bylaws provide that the HLS 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 HLS Fund. Neither the Articles of
Incorporation nor the Bylaws authorize the HLS Fund 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.
INVESTMENT PERFORMANCE
MONEY MARKET HLS FUND
In accordance with regulations prescribed by the SEC, the HLS Fund is
required to compute the Money Market HLS 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 HLS 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 HLS Fund to disclose the effective yield of the
Money Market HLS 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.
The yield on amounts held in the Money Market HLS 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 HLS Fund's actual yield is affected by changes in
interest rates on money market securities, average portfolio maturity of the
Money Market HLS Fund, the types and quality of portfolio securities held by the
Money Market HLS Fund, and its operating expenses.
-28-
<PAGE>
For the seven-day period ending December 31, 1999 the Money Market HLS
Fund's annualized yield for Class IA and Class IB was _____% and _____%
respectively. For the same period the effective yield for Class IA and Class IB
was _____% and _____% respectively
Example:
Assumptions:
Value of a hypothetical pre-existing account with exactly one share at the
beginning of the period: $1.000000
Value of the same account* (excluding capital changes) at the end of the
seven day period: $1.__________
*This value would include the value of any additional shares purchased
with dividends from the original share, and all dividends declared on both the
original share and any such additional shares.
<TABLE>
<S><C>
Calculation:
Ending account value $1.__________
Less beginning account value 1.000000
Net change in account value $.__________
Base period return:
(adjusted change/beginning account value)
$.__________/$1.000000 = $.__________
Current yield = $.__________ X (365/7) =
__________%
Effective yield = (1 + .__________)^(365/7) - 1 =
__________%
</TABLE>
The current yield and effective yield information will fluctuate, and
publication of yield information may not provide a basis for comparison with
bank deposits, other investments which are insured and/or pay a fixed yield for
a stated period of time, or other investment companies. In addition, the current
yield and effective yield information may be of limited use for comparative
purposes because it does not reflect charges imposed at the Separate Account
level which, if included, would decrease the yield.
OTHER FUNDS
STANDARDIZED AVERAGE ANNUAL TOTAL RETURN QUOTATIONS Average annual total
return quotations for the HLS Funds 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) TO THE POWER OF n = ERV
Where:
P = a hypothetical initial payment of n = number of years
$1,000, less the maximum sales load
applicable to a Fund ERV = ending redeemable
value of the
T = average annual total return hypothetical
$1,000 initial
payment made at
the beginning of
the designated
period (or
fractional portion
thereof)
-29-
<PAGE>
The computation above assumes that all dividends and distributions made by
an HLS 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 an HLS Fund, or of a hypothetical investment in a class of an HLS 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 HLS Fund.
Each HLS Fund's average annual total return quotations and yield
quotations as they may appear in the Prospectus, this SAI or in advertising are
calculated by standard methods prescribed by the SEC.
In contrast to Class IA shares, the Class IB shares are new and charge
12b-1 fees to cover distribution expenses. Because the historical performance of
Class IA shares may be helpful to a prospective investor's decision, the HLS
Funds may advertise standard average annual total return for Class IA shares
and, when available, Class IB shares.
The chart below sets forth certain performance information as of December
31, 1999 for the Class IA and Class IB shares of each HLS Fund. 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.
The manner in which total return and yield are calculated is described
above. The following table sets forth the average annual total return, and yield
where applicable, for each HLS Fund, except Global Health HLS Fund and Global
Technology HLS Fund, through December 31, 1999. Each of Global Health HLS Fund
and Global Technology HLS Fund commenced operations in 2000.
<TABLE>
<CAPTION>
TOTAL RETURN YIELD
--------------------------------------------------------------
HLS FUND SINCE 5 10 SEC 30-
(INCEPTION DATE) INCEPTION 1 YEAR YEARS YEARS DAY YIELD
--------- ------ ----- ----- ---------
<S> <C> <C> <C> <C> <C>
Capital Appreciation HLS Fund
Class IA (April 2, 1984) % % % %
Class IB (April 1, 1998) % % N/A N/A
Dividend and Growth HLS Fund
Class IA (March 8, 1994) % % % N/A
-30-
<PAGE>
<CAPTION>
TOTAL RETURN YIELD
--------------------------------------------------------------
HLS FUND SINCE 5 10 SEC 30-
(INCEPTION DATE) INCEPTION 1 YEAR YEARS YEARS DAY YIELD
--------- ------ ----- ----- ---------
<S> <C> <C> <C> <C> <C>
Class IB (April 1, 1998) % % N/A N/A
Global Leaders HLS Fund
Class IA (September 30, 1998) % % N/A N/A
Class IB (September 30, 1998) % % N/A N/A
Growth and Income HLS Fund
Class IA (May 29, 1998) % % N/A N/A
Class IB (May 29, 1998) % % N/A N/A
Index HLS Fund
Class IA (May 1, 1987) % % % %
Class IB (April 1, 1998) % % N/A N/A
International Opportunities HLS Fund
Class IA (July 2, 1990) % % % N/A
Class IB (April 1, 1998) % % N/A N/A
MidCap HLS Fund
Class IA (July 15, 1997) % % N/A N/A
Class IB (April 1, 1998) % % N/A N/A
Small Company HLS Fund
Class IA (August 9, 1996) % % N/A N/A
Class IB (April 1, 1998) % % N/A N/A
Stock HLS Fund
Class IA (August 31, 1977) % % % %
Class IB (April 1, 1998) % % N/A N/A
Advisers HLS Fund
Class IA (March 31, 1983) % % % %
Class IB (April 1, 1998) % % N/A N/A
International Advisers HLS Fund
Class IA (March 1, 1995) % % N/A N/A
Class IB (April 1, 1998) % % N/A N/A
Bond HLS Fund
Class IA (August 31, 1977) % % % % %
Class IB (April 1, 1998) % % N/A N/A %
High Yield HLS Fund
Class IA (September 30, 1998) %* % N/A N/A %
Class IB (September 30, 1998) %* % N/A N/A %
Mortgage Securities HLS Fund
Class IA (January 1, 1985) % % % % %
Class IB (April 1, 1998) % % N/A N/A
Money Market HLS Fund
Class IA (June 30, 1980) % % % % %
Class IB (April 1, 1998) % % N/A N/A %
*Not Annualized
</TABLE>
Each HLS Fund may also publish its distribution rate and/or its effective
distribution rate. An HLS Fund's distribution rate is computed by dividing the
most recent monthly distribution per share annualized, by the current net asset
value per share. An HLS Fund's effective distribution rate is computed by
dividing the distribution rate by
-31-
<PAGE>
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. An HLS 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 HLS
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 an HLS Fund's last monthly
distribution. An HLS 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 HLS Fund during the month (see "Dividends,
Capital Gains and Taxes" in the HLS Funds' Prospectus).
Other data that may be advertised or published about each HLS 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:
- -
| a-b 6 |
2|(---) + 1) - 1|
| cd |
- -
Where:
a = net investment income c = the average daily number of
earned during the period shares of the subject class
attributable to the subject outstanding during the
class period that were entitled
b = net expenses accrued for the to receive dividends
period attributable to the d = the maximum offering price
subject class per share of the subject
Net investment income will be determined in accordance with rules
established by the SEC.
NON-STANDARDIZED PERFORMANCE In addition, in order to more completely
represent an HLS Fund's performance or more accurately compare such performance
to other measures of investment return, an HLS 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 HLS 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 MidCap 400 Index is designed to represent price
movements in the mid cap U.S. equity market. It contains companies chosen by the
Standard & Poors Index Committee for their size, liquidity and industry
representation. None of the companies in the S&P 400 overlap with those in the
S&P 500 Index or the S&P 600 Index. Decisions about stocks to be included and
deleted are made by the Committee which meets on a regular basis. S&P 400 stocks
are market cap weighted; each stock influences the Index in proportion to its
relative market cap. REITs are not eligible for inclusion.
-32-
<PAGE>
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.
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.
The Goldman Sachs Healthcare Index is a modified capitalization
weighted index of selected companies covering a broad range of healthcare and
related businesses. Individual holdings are capped at 7.5% at each semi
- -annual reconstitution date and must be listed on the New York Stock
Exchange, American Stock Exchange or National Association of Securities
Dealers Automated Quotation (NASDAQ) System. As of December 31, 1999 there
were 87 names in the Index.
The Goldman Sachs Technology Index is a modified capitalization weighted
index of selected companies covering the entire spectrum of the technology
industry. Individual holdings are capped at 8.5% at each semi-annual
reconstitution date and must be listed on the New York Stock Exchange, American
Stock Exchange or National
-33-
<PAGE>
Association of Securities Dealers Automated Quotation (NASDAQ) System. As of
December 31, 1999 there were 159 names in the Index.
In addition, from time to time in reports and promotions: (1) an HLS
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 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 HLS 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 HLS Fund or
the general economic, business, investment, or financial environment in which
the HLS Fund operates; (4) various financial, economic and market statistics
developed by brokers, dealers and other persons may be used to illustrate
aspects of the HLS Fund's performance; (5) the effect of tax-deferred
compounding on the HLS 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 HLS
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 HLS Fund
invests may be compared to relevant indices or surveys (e.g., S&P Industry
Surveys) in order to evaluate the HLS Fund's historical performance or current
or potential value with respect to the particular industry or sector.
Each HLS 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
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
Registered Representative
Reuter's
Rough Notes
Round the Table
Service
Success
-34-
<PAGE>
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
From time to time the HLS Fund may publish the sales of shares of one or
more of the HLS 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.
The HLS Funds are offered exclusively through variable insurance products
and to certain qualified retirement plans. Performance information presented for
the HLS Funds should not be compared directly with performance information of
other insurance products without taking into account insurance-related charges
and expenses payable with respect to these insurance products. Insurance related
charges and expenses are not reflected in the HLS Funds' performance information
and will reduce an investor's return under the insurance product.
TAXES
Each HLS Fund is treated as a separate entity for accounting and tax
purposes. Each HLS 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 HLS
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 HLS 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
HLS Fund intends under normal circumstances to avoid liability for such tax by
satisfying such distribution requirements.
If an HLS 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 HLS 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 HLS Fund is timely distributed to its
shareholders. The HLS 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 HLS Fund to recognize taxable income or gain without the
concurrent receipt of cash. Any HLS 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 an HLS 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 an HLS Fund's investment in
stock or securities, possibly including speculative currency positions or
currency derivatives not used for hedging purposes could, under future Treasury
regulations,
-35-
<PAGE>
produce income not among the types of "qualifying income" from which the HLS
Fund must derive at least 90% of its annual gross income.
Some HLS 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. If eligible, each fund may make an election to pass through to its
shareholder, Hartford Life, a credit for any foreign taxes paid during the year.
If such an election is made, the pass through of the foreign tax credit will
result in additional taxable income and income tax to Hartford Life. The amount
of additional tax may be more than offset by the foreign tax credits which are
passed through. These foreign tax credits may provide a benefit to Hartford
Life.
For Federal income tax purposes, each HLS 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 HLS Fund and would not be distributed as such to
shareholders.
Each HLS 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 HLS 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 HLS 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, an HLS 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 HLS Fund that may hold such obligations. Tax rules
are not entirely clear about issues such as when the HLS 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 HLS 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
HLS Funds may restrict an HLS Fund's ability to enter into futures, options, and
forward transactions.
Certain options, futures and forward foreign currency transactions
undertaken by an HLS Fund may cause the HLS 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 HLS Fund. Also,
certain of an HLS 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 HLS Fund's
taxable income. Certain of the applicable tax rules may be modified if an HLS
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 an HLS Fund's distributions to shareholders. The HLS 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.
-36-
<PAGE>
The federal income tax rules applicable to interest rate swaps, caps and
floors are unclear in certain respects, and an HLS 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.
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 an HLS 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 HLS Funds in their
particular circumstances.
STATE AND LOCAL Each HLS Fund may be subject to state or local taxes in
jurisdictions in which such HLS Fund may be deemed to be doing business. In
addition, in those states or localities which have income tax laws, the
treatment of such HLS Fund and its shareholders under such laws may differ from
their treatment under federal income tax laws, and investment in such HLS Fund
may have different tax consequences for shareholders than would direct
investment in such HLS Fund's portfolio securities. Shareholders should consult
their own tax advisers concerning these matters.
CUSTODIAN
Portfolio securities of each HLS Fund are held pursuant to Custodian
Agreements between each HLS Fund and State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110.
TRANSFER AGENT SERVICES
Hartford Life Insurance Company, 200 Hopmeadow Street, Simsbury, CT 06089,
serves as Transfer and Dividend Disbursing Agent for the HLS Funds. The Transfer
Agent issues and redeems shares of the HLS Funds and disburses any dividends
declared by the HLS Funds.
DISTRIBUTOR
Hartford Securities Distribution Company, 200 Hopmeadow Street, Simsbury,
Connecticut 06089, acts as the HLS Fund's Distributor.
INDEPENDENT PUBLIC ACCOUNTANTS
The audited financial statements and financial statement highlights have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said report. The
principal business address of Arthur Andersen LLP is One Financial Plaza,
Hartford, Connecticut 06103.
OTHER INFORMATION
The Hartford has granted the Company the right to use the name, "The
Hartford" or "Hartford", and has reserved the right to withdraw its consent to
the use of such name by the Company and the HLS Funds at any time, or to grant
the use of such name to any other company.
The Hartford Index HLS Fund uses the Standard & Poor's 500 Index as its
benchmark. "Standard & Poor's"(R), "S&P"(R), "S&P 500"(R), "Standard & Poor's
500", and "500" are trademarks of The McGraw-Hill Companies, Inc. and have been
licensed for use by Hartford Life Insurance Company. The fund is not sponsored,
-37-
<PAGE>
endorsed, sold or promoted by S&P. S&P makes no representation or warranty,
express or implied, to the shareholders of the fund regarding the advisability
of investing in securities generally or in the fund particularly or the ability
of the S&P 500 Index to track general stock market performance. S&P's only
relationship to Hartford Life Insurance Company is the licensing of certain
trademarks and trade names of S&P and of the S&P 500 Index which is determined,
composed and calculated by S&P without regard to the fund or Hartford Life
Insurance Company. S&P has no obligation to take the needs of the fund or its
shareholders, or Hartford Life Insurance Company, into consideration in
determining, composing or calculating the S&P 500 Index. S&P is not responsible
for and has not participated in the determination of the net asset value of the
fund or the timing of the issuance or sale of shares in the fund. S&P has no
obligation or liability in connection with the administration, marketing or
trading of the fund.
In addition, S&P does not guarantee the accuracy and/or the
completeness of the S&P 500 Index or any data included therein and S&P shall
have no liability for any errors, omissions, or interruptions therein. S&P
makes no warranty, express or implied, as to results to be obtained by the
fund, its shareholders or any other person or entity from the use of the S&P
500 Index or any data included therein. S&P makes no express or implied
warranties, and expressly disclaims all warranties of merchantability or
fitness for a particular purpose or use with respect to the S&P 500 Index or
any data included therein. Without limiting any of the foregoing, in no event
shall S&P have any liability for any special, punitive, indirect, or
consequential damages (including lost profits), even if notified of the
possibility of such damages.
FINANCIAL STATEMENTS
Each HLS Fund's audited financial statements as of and for the year ended
December 31, 1999, together with the notes thereto and report of Arthur Andersen
LLP, independent public accountants, contained in the HLS Funds' annual report
as filed with the Securities and Exchange Commission are incorporated by
reference into this Statement of Additional Information.
-38-
<PAGE>
APPENDIX A
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.
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.
<PAGE>
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
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.
-40-
<PAGE>
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 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.
part-<PAGE>
PART C
OTHER INFORMATION
Item 23. Exhibits
a. Articles of Incorporation(1)
b. By-Laws(1)
c. Not Applicable
d.(i) Form of Investment Management Agreement(1)
d.(ii) Form of Amendment Number 1 to Investment
Management Agreement(2)
d.(iii) Form of Amendment Number 2 to Investment
Management Agreement
d.(iv) Form of Amendment Number 3 to Investment
Management Agreement
d.(v) Form of Investment Sub-Advisory Agreement with
Wellington Management Company, LLP(1)
d.(vi) Form of Amendment Number 1 to Investment
Sub-Advisory Agreement with Wellington Management
Company, LLP(2)
d.(vii) Form of Amendment Number 2 to Investment Sub-Advisory
Agreement with Wellington Management Company, LLP
e.(i) Form of Principal Underwriting Agreement(1)
e.(ii) Form of Amendment Number 1 to Principal Underwriting
Agreement(2)
e.(iii) Form of Amendment Number 2 to Principal Underwriting
Agreement
f. Not Applicable
g.(i) Form of Custodian Agreement(1)
g.(ii) Form of Amendment Number 1 to Custodian Agreement(2)
g.(iii) Form of Amendment Number 2 to Custodian Agreement(3)
g.(iv) Form of Letter Amendment to Custodian Agreement
h.(i) Share Purchase Agreement(1)
h.(ii) Form of Amendment Number 1 to Share Purchase
Agreement - Hartford Life Insurance Company and
Hartford Life and Annuity Insurance Company(2)
h.(iii) Form of Amendment Number 2 to Share Purchase
Agreement - Hartford Life Insurance Company and
Hartford Life and Annuity Insurance Company(3)
h.(iv) Form of Amendment Number 3 to Share Purchase
Agreement - Hartford Life Insurance Company and
Hartford Life and Annuity Insurance Company
h.(v) Administrative Services Agreement(6)
h.(vi) Amended and Restated Administrative Services
Agreement(6)
- -------------------------
(1) Previously filed with Initial Registration Statement filed on February 2,
1998.
(2) Previously filed with Post-Effective Amendment #1 filed on July 10, 1998.
(3) Previously filed with Post-Effective Amendment #2 filed on July 16, 1998.
(4) Incorporated by reference to Registrant's filing pursuant to Rule 30d-1 of
the Investment Company Act of 1940.
(5) Incorporated by reference to Registrant's amended Form NSAR-B filed on April
12, 1999.
(6) Previously filed with Post-Effective Amendment #4 filed on April 23, 1999.
(7) To be provided by amendment.
<PAGE>
h.(vii) Form of Amendment Number 1 to Amended and Restated
Administrative Services Agreement
i. Opinion and Consent of Counsel(7)
j. Consent of Independent Public Accountants(6)
k. 1998 Annual Report to Shareholders' Financial
Statements(4)
l. Not Applicable
m.(i) Form of Rule 12b-1 Distribution Plan(1)
m.(ii) Form of Amendment Number 1 to Rule 12b-1 Plan(2)
m.(iii) Form of Amendment Number 2 to Rule 12b-1 Plan
n. Financial Data Schedules(5)
o.(i) Form of Multi-Class Plan Pursuant to Rule 18f-3(1)
o.(ii) Form of Amendment Number 1 to Multi-Class Plan
Pursuant to Rule 18f-3(2)
o.(iii) Form of Amendment Number 2 to Multi-Class Plan
Pursuant to Rule 18f-3(3)
o.(iv) Form of Amendment Number 3 to Multi-Class Plan
Pursuant to Rule 18f-3
p. Powers of Attorney
<PAGE>
Item 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Inapplicable
Item 25. INDEMNIFICATION
Article EIGHTH of the Articles of Incorporation provides:
EIGHTH: (a) The Corporation shall indemnify any person who was
or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation)
by reason of the fact that he is or was a Director, Officer,
employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a Director or Officer of
another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with
such action, suit or proceeding if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to
the best interests of the Corporation, and, with respect to
any criminal action or proceeding, has no reasonable cause to
believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its
equivalent, creates a rebuttable presumption that the person
did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interest of the
Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct
was unlawful.
(b) The Corporation shall indemnify any person who was or is
party or is threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the
Corporation to procure, a judgment in its favor by reason of
the fact that he is or was a Director, Officer, employee or
agent of the Corporation, or is or was serving at the request
of the Corporation as a Director, Officer, employee or agent
of another corporation, partnership, joint venture, trust or
other enterprise against expenses (including attorney's fees)
actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Corporation. No
indemnification shall be made in respect of any claim, issue
or matter as to which such person shall have been adjudged to
be liable for negligence or misconduct in the performance of
his duty to the Corporation.
(c) To the extent that a Director, Officer, employee or agent
of the Corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding
referred to in subsections (a) and (b), or in defense of any
claim, issue
<PAGE>
or matter therein, he shall be indemnified against expenses (including
attorney's fees) actually and reasonably incurred by him in connection
therewith.
(d) Any indemnification under subsections (a) and (b) (unless
ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that
indemnification of the Director, Officer, employee or agent is
proper in the circumstances because he has met the applicable
standard of conduct set forth in subsections (a) and (b). Such
determination shall be made (1) by the Board of Directors by a
majority vote of a quorum consisting of Directors who were
neither interested persons nor parties to such action suit or
proceeding, or (2) if such quorum is not obtainable, or even
if obtainable a quorum of disinterested Directors so directs,
by independent legal counsel in a written opinion.
(e) Expenses incurred in defending civil or criminal action,
suit or proceeding may be paid by the Corporation in advance
of the final disposition of such action, suit or proceeding as
authorized by the Board of Directors in the specific case upon
receipt of an undertaking by or on behalf of the Director,
Officer, employee or agent to repay such amount unless it
shall ultimately be determined that he is entitled to be
indemnified by the Corporation as authorized in this Article
and upon meeting one of the following conditions:
(i) the indemnitee shall provide a security for his
undertaking, (ii) the investment company shall be
insured against losses arising by reason of any
lawful advances, or (iii) a majority of a quorum of
the disinterested, non-party Directors of the
investment company, or an independent legal counsel
in a written opinion, shall determine, based on a
review of readily available facts (as opposed to a
full trial-type inquiry), that there is reason to
believe that the indemnitee ultimately will be found
entitled to indemnification.
(f) The corporation may purchase and maintain insurance on
behalf of any person who is or was a Director, Officer,
employee or agent of the Corporation, or is or was serving at
the request of the Corporation as a Director, Officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity,
or arising out of his status as such.
(g) Anything to the contrary in the foregoing clauses (a)
through (f) notwithstanding, no Director or Officer shall be
indemnified by the Corporation and no insurance policy
obtained by the Corporation will protect or attempt to protect
any such person against any liability to the Corporation or to
its security holders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of
his office, or in a manner inconsistent with Securities and
Exchange Commission Release 11330 under the Investment Company
Act of 1940.
<PAGE>
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such
liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or
controlling person in connection with the securities being
registered), the registrant undertakes that it will, unless in
the opinion of its counsel the matter has been settled by
controlling precedent submit to a court of appropriate
jurisdiction the questions whether such indemnification by it
is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
Item 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
HL Investment Advisors, LLC serves as investment adviser to each of the
investment companies included in this Registration Statement.
<TABLE>
<CAPTION>
Position with HL
Name Investment Advisors, LLC Other Business
- ---- ------------------------ --------------
<S> <C> <C>
Lowndes A. Smith Manager, President and President and Chief Executive Officer of
Chief Executive Officer Hartford Life, Inc. ("H. L. Inc.")
Thomas M. Marra Manager and Executive Vice President Executive Vice President of H. L. Inc.
David Znamierowski Manager and Senior Vice President Chief Investment Officer of H. L. Inc.
Peter W. Cummins Manager and Senior Vice President Senior Vice President of H. L. Inc.
Andrew W. Kohnke Manager and Senior Vice President Managing Director of Hartford Investment
Management Company ("HIMCO")1
Lynda Godkin Senior Vice President, General Counsel of H. L. Inc.
General Counsel and Secretary
David Foy Senior Vice President and Chief Financial Officer of H. L. Inc.
Treasurer
George R. Jay Controller Assistant Vice President of H. L. Inc.
- --------------------
(1) The principal business address for HIMCO is 55 Farmington Avenue, Hartford,
CT 06105.
<PAGE>
David A. Carlson Vice President and Director Vice President and Director of Taxes of
of Taxes H. L. Inc.
Mark E. Hunt Vice President Vice President of Hartford Life Insurance
Company ("HLIC")(2)
Thomas A. Klee Assistant Corporate Secretary Counsel of HLIC
Kevin J. Carr Assistant Secretary and Assistant General Counsel of The Hartford
Counsel Financial Services Group, Inc.(3) ("The
Hartford");
Dawn M. Cormier Assistant Secretary Assistant Secretary HLIC
Diane E. Tatelman Assistant Secretary Assistant Secretary HLIC
</TABLE>
Item 27. PRINCIPAL UNDERWRITERS
Hartford Securities Distribution Company, Inc. ("HSD") is an indirect
wholly owned subsidiary of The Hartford Financial Services Group, Inc. HSD is
the principal underwriter for the following registered investment companies:
Hartford Life Insurance Company DC Variable Account I
Separate Account Two (DC Variable
Account II)
Separate Account Two (Variable
Account "A")
Separate Account Two (QP Variable
Account)
Separate Account Two (NQ Variable
Account)
Putnam Capital Manager Trust
Separate Account
Separate Account One
Separate Account Two
Separate Account Three
Separate Account Five
Hartford Life and Annuity Insurance
Company Separate Account One
Separate Account Three
Separate Account Five
Separate Account Six
Putnam Capital Manager Trust
Separate Account Two
American Maturity Life Insurance
Company Separate Account American Maturity
Life Variable Annuity
The Directors and principal officers of HSD and their position with the
Registrant are as follows:
- -----------------------------
(2) The principal business address for Hartford Life is 200 Hopmeadow Street,
Simsbury, CT 06070.
(3) The principal business address for The Hartford is Hartford Plaza, Hartford,
CT 06115.
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION AND OFFICES
BUSINESS ADDRESS* POSITIONS AND OFFICES WITH UNDERWRITER WITH REGISTRANT
<S> <C> <C>
David A. Carlson Vice President None
Peter Cummins Senior Vice President Vice President
David T. Foy Treasurer None
Lynda Godkin Senior Vice President, General Counsel and None
Corporate Secretary
George Jay Controller & Financial Principal Controller & Treasurer
Robert A. Kerzner Executive Vice President None
Thomas A. Klee Assistant Corporate Secretary None
Stephen T. Joyce Assistant Secretary None
Glen J. Kvadus Assistant Secretary None
Thomas M. Marra Executive Vice President Vice President
Paul Eugene Olson Supervisory Registered Principal None
Edward M. Ryan, Jr. Assistant. Secretary None
Lowndes A. Smith President and Chief Executive Officer Chairman
</TABLE>
* Principal business address is P.O. Box 2999, Hartford, CT 06104-2999
Item 28. LOCATION OF ACCOUNTS AND RECORDS
Hartford Life Insurance Company
P.O. Box 2999
Hartford, CT 06104-2999
AND
State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110
Item 29. MANAGEMENT SERVICES
Not Applicable
Item 30. UNDERTAKINGS
The Registrant undertakes to furnish to each person to whom a
prospectus has been delivered a copy of the Registrant's
latest annual report to shareholders, upon request and without
charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 the Registrant 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 27th day of
January, 2000.
HARTFORD SERIES FUND, INC.
By: *
-----------------------------------
David M. Znamierowski
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.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
*
- -------------------------
David M. Znamierowski President January 27, 2000
(Chief Executive Officer
& Director)
*
- -------------------------
George R. Jay Controller & Treasurer January 27, 2000
(Chief Accounting Officer &
Chief Financial Officer)
*
- -------------------------
Robert J. Clark Director January 27, 2000
*
- -------------------------
Winifred E. Coleman Director January 27, 2000
*
- -------------------------
William A. O'Neill Director January 27, 2000
<PAGE>
*
- -------------------------
Millard H. Pryor, Jr. Director January 27, 2000
*
- -------------------------
Lowndes A. Smith Director January 27, 2000
*
- -------------------------
John K. Springer Director January 27, 2000
/s/ Kevin J. Carr January 27, 2000
- -------------------------
* By Kevin J. Carr
Attorney-in-fact
</TABLE>
<PAGE>
EXHIBIT INDEX
EXHIBIT NO.
d.(iii) Form of Amendment Number 2 to Investment Management Agreement
d.(vi) Form of Amendment Number 2 to Investment Sub-Advisory Agreement
with Wellington Management Company, LLP
e.(iii) Form of Amendment Number 2 to Principal Underwriting Agreement
g.(iv) Form of Letter Amendment to Custodian Agreement
h.(iv) Form of Amendment Number 3 to Share Purchase Agreement - Hartford
Life Insurance Company and Hartford Life and Annuity Insurance
Company
h.(vii) Form of Amendment Number 1 to Amended and Restated Administrative
Services Agreement
m.(iii) Form of Amendment Number 2 to Rule 12b-1 Plan for Class IB Shares
o.(iv) Form of Amendment Number 3 to Multi-Class Plan Pursuant to Rule
18f-3
p. Powers of Attorney
<PAGE>
EXHIBIT d.(iii)
Form of Amendment Number 2 to Investment Management Agreement
<PAGE>
AMENDMENT NUMBER 2 TO
INVESTMENT MANAGEMENT AGREEMENT
Pursuant to the Investment Management Agreement between HL Investment
Advisors, LLC ("HL Advisors"), formerly known as Hartford Investment Advisors,
Inc., and Hartford Series Fund, Inc. (the "Company") dated May 29, 1998, as
amended (the "Agreement"), Hartford Global Health HLS Fund and Hartford Global
Technology HLS Fund are hereby included in the definition of Portfolio on
Attachment A of said Agreement. All provisions in the Agreement shall also apply
to the management of Hartford Global Health HLS Fund and Hartford Global
Technology HLS Fund, except as stated below.
The advisory fee for the two new portfolios shall be accrued daily and
paid monthly, based upon the following annual rates and upon the calculated
daily net asset value of the Fund.
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
--------------- -----------
<S> <C>
First $250,000,000
Next $250,000,000
Next $500,000,000
Amount Over $1 Billion
</TABLE>
HL Advisors may waive all or a portion of these fees from time to time
as agreed between the parties.
This amended Agreement is effective for a period of two years from the
date hereof and shall continue in effect thereafter in accordance with the
provisions of Section 8 of the Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this amendment to be
executed on the ____ day of ___________, 2000.
HL INVESTMENT ADVISORS, LLC HARTFORD SERIES FUND, INC.
on behalf of:
Hartford Global Health HLS Fund
By: ______________________ Hartford Global Technology HLS Fund
By: _________________________
<PAGE>
EXHIBIT d.(vi)
Form of Amendment Number 2 to Investment Sub-Advisory Agreement
with Wellington Management Company, LLP
<PAGE>
AMENDMENT NUMBER 2 TO
INVESTMENT SUB-ADVISORY AGREEMENT
The Investment Sub-Advisory Agreement between HL Investment Advisors,
LLC ("HL Advisors"), formerly known as HL Investment Advisors, Inc., and
Wellington Management Company, LLP ("Wellington Management") dated May 29, 1998,
as amended (the "Agreement") is hereby amended to include Hartford Global Health
HLS Fund and Hartford Global Technology HLS Fund (the "Funds") as two new
Portfolios. All provisions in the Agreement shall also apply to the Funds except
as stated below.
The sub-advisory fee for the two new portfolios shall be accrued daily
and paid quarterly, based upon the following annual rates and upon the
calculated daily net asset value of the Funds
<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
--------------- -----------
<S> <C>
First $50,000,000
Next $100,000,000
Next $350,000,000
Amount Over $500,000,000
</TABLE>
Wellington Management may waive all or a portion of these fees from
time to time as agreed between the parties.
This amended Agreement is effective for a period of two years from the
date hereof and shall continue in effect thereafter in accordance with the
provisions of Section 9 of the Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this amendment to be
executed on the ____ day of __________, 2000.
HL INVESTMENT ADVISORS, LLC
By: ____________________________
WELLINGTON MANAGEMENT
COMPANY, LLP
By: ____________________________
<PAGE>
EXHIBIT e.(iii)
Form of Amendment Number 2 to Principal Underwriting Agreement
<PAGE>
AMENDMENT NUMBER 2 TO
PRINCIPAL UNDERWRITING AGREEMENT
Pursuant to the Principal Underwriting Agreement between Hartford
Securities Distribution Company, Inc. and Hartford Series Fund, Inc. dated
January 22, 1998, as amended (the "Agreement"), Hartford Global Health HLS Fund
and Hartford Global Technology HLS Fund are hereby included as additional Funds.
All provisions in the Principal Underwriting Plan shall also apply to Hartford
Global Health HLS Fund and Hartford Global Technology HLS Fund.
IN WITNESS WHEREOF, the parties hereto have caused this amendment to be
executed on the ____ day of ___________, 2000.
HARTFORD SECURITIES DISTRIBUTION
COMPANY, INC.
By: _______________________________
HARTFORD SERIES FUND, INC.
on behalf of:
Hartford Global Health HLS Fund
Hartford Global Technology HLS Fund
By: ________________________________
<PAGE>
EXHIBIT g.(iv)
Form of Letter Amendment to Custodian Agreement
<PAGE>
HARTFORD SERIES FUND, INC.
_______________, 2000
State Street Bank and Trust Company
801 Pennsylvania Ave.
Kansas City, MO 64105
Re: Hartford Series Fund, Inc.
--------------------------
Ladies and Gentlemen:
This is to advise you that Hartford Series Fund, Inc. (the "Fund") has
established two new series of shares to be known as Hartford Global Health HLS
Fund and Hartford Global Technology HLS Fund, respectively. In accordance with
the Additional Funds provision of Section 17 of the Custodian Contract dated as
of June 1, 1998 by and between the Fund and State Street Bank and Trust Company,
the Fund hereby requests that your bank act as Custodian for both aforementioned
series under the terms of the aforementioned contract.
Please indicate your acceptance of the foregoing by executing two copies of this
letter agreement, returning one to the Fund and retaining one for your records.
HARTFORD SERIES FUND, INC.
on behalf of:
Hartford Global Health HLS Fund
Hartford Global Technology HLS Fund
By:____________________________
Name:
Title:
Agreed and Accepted:
STATE STREET BANK AND TRUST COMPANY
By:
----------------------------
Name:
--------------------------
Title: ,Duly Authorized
-------------------------
Effective Date:
----------------
<PAGE>
EXHIBIT h.(iv)
Form of Amendment Number 3 to Share Purchase Agreement -
Hartford Life Insurance Company
and
Hartford Life and Annuity Insurance Company
<PAGE>
AMENDMENT NUMBER 3 TO
SHARE PURCHASE AGREEMENT
Pursuant to the Share Purchase Agreement between Hartford Life
Insurance Company and Hartford Series Fund, Inc. dated May 29, 1998 (the
"Agreement"), Hartford Global Health HLS Fund and Hartford Global Technology HLS
Fund are hereby included as additional Funds. All provisions in the Agreement
shall also apply to Hartford Global Health HLS Fund and Hartford Global
Technology HLS Fund.
IN WITNESS WHEREOF, the parties hereto have caused this amendment to be
executed on the __________ day of ________________, 2000.
HARTFORD LIFE INSURANCE COMPANY
By: _______________________________
HARTFORD SERIES FUND, INC.
on behalf of:
Hartford Global Health HLS Fund
Hartford Global Technology HLS Fund
By: _______________________________
<PAGE>
AMENDMENT NUMBER 3 TO
SHARE PURCHASE AGREEMENT
Pursuant to the Share Purchase Agreement between Hartford Life and
Annuity Insurance Company and Hartford Series Fund, Inc. dated May 29, 1998 (the
"Agreement"), Hartford Global Health HLS Fund and Hartford Global Technology HLS
Fund are hereby included as additional Funds. All provisions in the Agreement
shall also apply to Hartford Global Health HLS Fund and Hartford Global
Technology HLS Fund.
IN WITNESS WHEREOF, the parties hereto have caused this amendment to be
executed on the __________ day of ________________, 2000.
HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
By: _____________________________
HARTFORD SERIES FUND, INC.
on behalf of:
Hartford Global Health HLS Fund
Hartford Global Technology HLS Fund
By: _____________________________
<PAGE>
EXHIBIT h.(vii)
Form of Amendment Number 1 to
Amended and Restated Administrative Services Agreement
<PAGE>
AMENDMENT NUMBER 1 TO
AMENDED AND RESTATED
ADMINISTRATIVE SERVICES AGREEMENT
The Amended and Restated Administrative Services Agreement between
Hartford Life Insurance Company ("Company") and the Hartford HLS Funds dated
September 30, 1998 (the "Agreement") is hereby amended to include Hartford
Global Health HLS Fund and Hartford Global Technology HLS Fund as additional
Funds. All provisions in the Agreement shall also apply to these two additions.
IN WITNESS WHEREOF, the parties hereto have caused this amendment to be
executed on the ____ day of ___________, 2000.
HARTFORD SERIES FUND, INC.
on behalf of:
Hartford Global Health HLS Fund
Hartford Global Technology HLS Fund
By: _____________________________
Hartford Life Insurance Company
By: _____________________________
<PAGE>
EXHIBIT m.(iii)
Form of Amendment Number 2 to Rule 12b-1 Plan
<PAGE>
AMENDMENT NUMBER 2 TO
RULE 12b-1 DISTRIBUTION PLAN FOR CLASS IB SHARES
Pursuant to the Rule 12b-1 Distribution Plan for Class IB Shares
between Hartford Series Fund, Inc. and Hartford Securities Distribution Company,
Inc. dated January 22, 1998, as amended (the "Distribution Plan"), Hartford
Global Health HLS Fund and Hartford Global Technology HLS Fund are hereby
included as additional Funds. All provisions in the Distribution Plan shall also
apply to Hartford Global Health HLS Fund and Hartford Global Technology HLS
Fund.
IN WITNESS WHEREOF, the parties hereto have caused this amendment to be
executed on the ____ day of ___________, 2000.
HARTFORD SERIES FUND, INC.
on behalf of:
Hartford Global Health HLS Fund
Hartford Global Technology HLS Fund
By: _____________________________
Hartford Securities Distribution Company, Inc.
By: _____________________________
<PAGE>
EXHIBIT o.(iv)
Form of Amendment Number 3 to Multi-Class Plan Pursuant to Rule 18f-3
<PAGE>
AMENDMENT NUMBER 3 TO
RULE 18f-3 PLAN
Pursuant to the Rule 18f-3 Multiple Class Plan of the Hartford Series
Fund, Inc. adopted January 22, 1998, as amended (the "Plan"), Hartford Global
Health HLS Fund and Hartford Global Technology HLS Fund are hereby included as
additional Funds. All provisions in the Plan shall also apply to Hartford Global
Health HLS Fund and Hartford Global Technology HLS Fund.
<PAGE>
EXHIBIT p.
Powers of Attorney
<PAGE>
HARTFORD ADVISERS HLS FUND, INC., HARTFORD BOND HLS FUND, INC., HARTFORD CAPITAL
APPRECIATION HLS FUND, INC., HARTFORD DIVIDEND AND GROWTH HLS FUND, INC.,
HARTFORD INDEX HLS FUND, INC., HARTFORD INTERNATIONAL ADVISERS HLS FUND, INC.,
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND, INC., HARTFORD MIDCAP HLS FUND,
INC., HARTFORD MORTGAGE SECURITIES HLS FUND, INC., HARTFORD SERIES FUND, INC.,
HARTFORD SMALL COMPANY HLS FUND, INC., HARTFORD STOCK HLS FUND, INC., HARTFORD
MONEY MARKET HLS FUND, INC. AND THE HARTFORD MUTUAL FUNDS, INC.,
POWER OF ATTORNEY
Robert J. Clark Millard H. Pryor, Jr.
Winifred E. Coleman Lowndes A. Smith
George R. Jay John K. Springer
William A. O'Neill David M. Znamierowski
do hereby jointly and severally authorize Kevin J. Carr, Marilyn T. West, Lynda
Godkin or Marianne O'Doherty, to sign as their agent any Securities Act of 1933
and/or Investment Company Act of 1940 Registration Statement, pre-effective
amendment or post-effective amendment and any Application for Exemption Relief
or other filings with the Securities and Exchange Commission relating to each
above-described Fund.
IN WITNESS WHEREOF, the undersigned have executed this Power of Attorney for the
purpose herein set forth.
/s/ Robert J. Clark Dated: January 27, 2000
- -----------------------------------
Robert J. Clark
/s/ Winifred E. Coleman Dated: January 27, 2000
- -----------------------------------
Winifred E. Coleman
/s/ George R. Jay Dated: January 27, 2000
- -----------------------------------
George R. Jay
/s/ William A. O'Neill Dated: January 27, 2000
- -----------------------------------
William A. O'Neill
/s/ Millard H. Pryor, Jr. Dated: January 21, 2000
- -----------------------------------
Millard H. Pryor, Jr.
<PAGE>
/s/ Lowndes A. Smith Dated: January 27, 2000
- -----------------------------------
Lowndes A. Smith
/s/ John K. Springer Dated: January 27, 2000
- -----------------------------------
John K. Springer
/s/ David M. Znamierowski Dated: January 27, 2000
- -----------------------------------
David M. Znamierowski
