<PAGE>
Hartford Life Insurance Companies
SEPARATE
ACCOUNTS
AND
MUTUAL FUNDS
ANNUAL REPORT
DECEMBER 31, 1996
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TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
Letter to Contractholders....................................................... 1
Performance Summary of Hartford Mutual Funds.................................... 2
Investment Review............................................................... 3
HARTFORD LIFE INSURANCE COMPANIES SEPARATE ACCOUNT FINANCIAL STATEMENTS AND
NOTES TO FINANCIAL STATEMENTS
Hartford Life Insurance Company DC Variable Account-I......................... 12
Hartford Life Insurance Company Separate Account One.......................... 20
Hartford Life Insurance Company Separate Account Two.......................... 28
Hartford Life Insurance Company Separate Account Variable Life One............ 46
Hartford Life Insurance Company Separate Account Variable Life Two............ 54
Hartford Life Insurance Company Separate Account Five......................... 62
ITT Hartford Life and Annuity Insurance Company Separate Account One.......... 70
ITT Hartford Life and Annuity Insurance Company Separate Account Variable Life
One.......................................................................... 78
ITT Hartford Life and Annuity Insurance Company Separate Account Variable Life
Two.......................................................................... 86
ITT Hartford Life and Annuity Insurance Company Separate Account Five......... 94
HARTFORD MUTUAL FUNDS
Statements of Net Assets as of December 31, 1996:
Hartford Bond Fund, Inc..................................................... 102
Hartford Stock Fund, Inc.................................................... 104
HVA Money Market Fund, Inc.................................................. 106
Hartford Advisers Fund, Inc................................................. 108
Hartford U.S. Government Money Market Fund, Inc............................. 111
Hartford Capital Appreciation Fund, Inc..................................... 112
Hartford Mortgage Securities Fund, Inc...................................... 115
Hartford Index Fund, Inc.................................................... 117
Hartford International Opportunities Fund, Inc.............................. 122
Hartford Dividend and Growth Fund, Inc...................................... 125
Hartford International Advisers Fund, Inc................................... 127
Hartford Small Company Fund, Inc............................................ 132
Statement of Operations for the Year Ended December 31, 1996:
Hartford Mutual Funds....................................................... 134
Statements of Changes in Net Assets for the Years Ended December 31, 1996 and
December 31, 1995:
Hartford Mutual Funds....................................................... 136
Notes to Financial Statements:
Hartford Mutual Funds....................................................... 140
Hartford Mutual Funds Financial Highlights...................................... 146
</TABLE>
Contract owners should refer to the prospectus provided to them at the time of
purchase of their contract for a description of investment alternatives
available in the Separate Accounts. This prospectus, along with the financial
information contained in this report, provides them with complete and
up-to-date financial information regarding the Separate Accounts.
This report is prepared for the general information of contract owners and is
not an offer of contracts. It should not be used in connection with any offer,
except in conjunction with the appropriate prospectus which contains all
pertinent information including the applicable sales, administrative and other
charges.
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LETTER TO CONTRACTHOLDERS
Dear Contractholders,
Although 1996 began and ended with the same "slow growth/low inflation"
forecast, perceptions about the rate of economic growth and how it would
affect the direction of Federal Reserve policy shifted rapidly during the
year. Over the first six months of the year, bonds bore the brunt of shifting
expectations. Prices tumbled as economic growth accelerated and inflation
fears intensified. Stock investors, anticipating that a stronger economy could
lead to stronger earnings, disregarded rising interest rates and pushed the
major stock indexes to a series of new all-time highs. But even stocks proved
vulnerable in July, giving up the bulk of their first half gains as interest
rates moved above 7% and earnings forecasts were reduced. Then sharply slower
third quarter growth reversed the downward trend in bonds and rekindled the
rally in stocks. For the full year, stocks as measured by the S&P 500,
returned just under 23% as cash flows into stock mutual funds shattered
previous records. Bonds, as measured by the Shearson Lehman Aggregate Bond
Index, more than made up for earlier losses, finishing the year with a
positive return of better than 3.5%. But progress was far from even among
market sectors. In general, high quality, large-cap stocks did the best. In
the bond markets, mortgage-backed and asset-backed securities outperformed
government and corporate issues. In contrast to stocks, lower quality issues
were the best performers within the corporate bond sector.
As noted above, the consensus outlook still calls for slow growth and low
inflation, which is precisely the background the financial markets want. But
forecasts range widely, from a reacceleration of growth and inflationary
pressures to additional slowing or even recession. As a result, we expect that
the markets will continue concentrating on each new release of economic data
looking for evidence of any shift from the central, slow growth forecast.
Given that economic progress rarely proceeds smoothly, but rather fluctuates
around a central trend, they are likely to find it. Fourth quarter growth
forecasts, which as recently as November were being revised down from about a
2.5% annual rate to 1.5% or less, are now being revised up to 3% or more.
Accordingly, we expect that the sharp changes in direction that characterized
the financial markets throughout 1996 will continue into 1997.
[SIG] [SIG]
Lowndes A. Smith Joseph H. Gareau
CHAIRMAN PRESIDENT
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PERFORMANCE SUMMARY OF HARTFORD MUTUAL FUNDS
<TABLE>
<CAPTION>
FUNDS
TOTAL RETURNS FOR THE YEARS ENDED DECEMBER 31,
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bond.................... 3.54% 18.49% (3.95)% 10.24% 5.53% 16.43% 8.39% 12.10% 7.60% (0.01)% 12.19% 20.62%
Stock................... 24.33 34.10 (1.89) 14.34 10.04 24.58 (3.87) 26.02 19.00 5.41 12.33 31.49
HVA Money Market........ 5.09 5.74 3.95 2.94 3.63 6.01 8.09 9.10 7.40 6.49 6.77 8.53
Advisers................ 16.62 28.34 (2.74) 12.25 8.30 20.33 1.26 21.72 14.24 6.08 12.70 26.85
Capital Appreciation.... 20.70 30.25 2.50 20.80 16.98 53.99 (10.90) 24.11 26.37 (4.31) 9.03 36.18
U.S. Government Money
Market................. 4.87 5.52 3.67 2.68 3.22 5.61 7.52 8.43 6.92 5.75 6.29 8.07
Mortgage Securities..... 4.99 16.17 (1.61) 6.31 4.64 14.71 9.70 13.13 8.38 2.64 11.13 20.61
Index................... 22.09 36.55 0.94 9.12 6.82 29.53 (3.99) 30.47 16.35 (12.91) -- --
International
Opportunities.......... 12.91 13.93 (1.94) 33.73 (4.43) 13.00 (11.76) -- -- -- -- --
Dividend and Growth..... 22.91 36.37 1.96 -- -- -- -- -- -- -- -- --
International
Advisers............... 12.25 15.84 -- -- -- -- -- -- -- -- -- --
Small Company........... 18.12* -- -- -- -- -- -- -- -- -- -- --
MARKET INDICES
Standard & Poor's 500
Stock Index............ 22.95% 37.52% 1.31% 10.06% 7.61% 30.39% (3.11)% 31.62% 16.60% 5.49% 18.66% 31.70%
Shearson Lehman
Gov't/Corp. Bond
Index.................. 2.90 19.24 (3.51) 11.03 7.58 16.13 8.28 14.24 7.58 2.29 15.62 21.30
90-Day Treasury Bills... 5.29 5.80 4.14 3.12 3.70 5.90 7.95 8.67 6.56 5.97 6.41 7.97
EAFEGDP................. 7.63 11.16 7.81 33.56 (9.65) 10.73 -- -- -- -- -- --
Frank Russell 2000
Index.................. 16.51 28.45 (1.82) 18.71 18.41 46.04 (19.48) 16.26 25.02 (8.80) 5.68 31.04
Frank Russell 2500
Index.................. 19.04 31.70 (1.07) 16.54 16.18 46.69 (14.88) 19.43 21.39 1.75 12.62 --
Shearson Lehman Brothers
Mortgage Backed Bond
Index.................. 5.35 16.80 (1.61) 6.84 8.96 15.72 10.72 15.35 8.55 2.81 -- --
</TABLE>
The inception dates of the Funds are as follows: Bond and Stock--August 31,
1977, HVA Money Market--June 30, 1980, Advisers and U.S. Government Money
Market--March 31, 1983, Capital Appreciation--April 2, 1984, Mortgage
Securities--January 1, 1985, Index--May 1, 1987, International
Opportunities--July 2, 1990, Dividend and Growth--March 8, 1994, International
Advisers--March 1, 1995, and Small Company--August 9, 1996.
*Annualized.
The performance figures for mutual funds do not include insurance charges that
are included in the unit values of individual plans.
Total return consists of any change in the market price of securities owned by
the various mutual funds, as well as income from dividends or interest.
Calculations assume reinvestment of all distributions. Performance figures
represent past results and are not a guarantee of future performance. An
investor's unit, when redeemed, may be worth more or less than the original
cost. Results do not take into account personal income taxes and capital gains
taxes where applicable. Market indices are included as a broad measure of
market performance and no direct comparison with the funds is intended.
2
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INVESTMENT REVIEW - HARTFORD BOND FUND, INC.
DECEMBER 31, 1996
For the twelve months ended December 31, 1996, Hartford Bond Fund returned 3.5%
(net of mutual fund expenses) outperforming the 2.9% return of the Shearson
Lehman Government/Corporate Bond Index. We began the year with duration neutral
to the index and significantly shorter than the average amount our peers,
believing that the bond market was overextended and vulnerable to a correction.
We maintained our neutral duration as interest rates moved up throughout the
first half. Keying off the strength in the equity market we overweighted
corporates. We also overweighted mortgage securities, finding particularly good
value in discount fifteen-year paper.
Expecting that the pace of economic growth would slow in the second half of the
year, we extended duration, maintaining it in a range of 5% to 12% above that
of the Index. Following a modification of the fund's investment policies
permitting investment of up to 20% of the fund's assets in BB rated securities
(the highest non-investment grade classification), we established a position in
BB securities. This was a benefit to performance both because the sector
outperformed the broad market and because of superior security selection with
the sector. At year-end, we were evenly weighted relative to our benchmark in
high yield issues.
At year-end, bonds remained within their trading range, but appeared fairly
priced without the excess optimism that characterized late 1995. Looking ahead,
we expect the market to remain volatile as investors continue to monitor the
economic data and speculate about potential changes in Federal Reserve policy.
Although rates may not yet have established a top to their recent trading
range, we expect that our overweighting in corporates and mortgages will
provide some offset to our longer duration if rates back up. Longer term, we
think the chances of weaker than expected economic growth may be greater than
the "Street" currently thinks. Accordingly, we expect to maintain duration
above that of the Index.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
BOND LGC
<S> <C> <C>
1/1/1986 10,000 10,000
1986 11,219 11,562
1987 11,218 11,827
1988 12,070 12,723
1989 13,531 14,535
1990 14,666 15,739
1991 17,076 18,277
1992 18,020 19,663
1993 19,865 21,831
1994 19,081 21,065
1995 22,609 25,118
12/31/1996 23,405 25,846
</TABLE>
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INVESTMENT REVIEW - HARTFORD STOCK FUND, INC.
DECEMBER 31, 1996
For the twelve months ended December 31, 1996, Hartford Stock Fund returned
24.4% (net of mutual fund expenses). The Fund outperformed its benchmark as the
S&P 500 Index returned 23.0%.
While the U.S. equity market in 1995 was helped by falling interest rates and
rising bond prices for most of the year, U.S. equities in 1996 were basically
on their own as interest rates actually rose during the first half of the year
and then fell during the second half as evidence of an economic slowdown
mounted. The ride in 1996 was not as smooth as the one in 1995 with a major
bump in the road during July from which many small cap growth companies never
recovered.
The major factors underlying good performance during 1996 were earnings growth
and size, with large cap stocks outdistancing small cap stocks by a wide
margin. Strong performers during the year included energy service, electronics,
banks, brokers, computers, cosmetics and household products and aerospace. Weak
groups included media and entertainment, electric and telephone utilities,
paper and forest products, metals and mining and restaurants.
In 1996, the Stock Fund was helped by an emphasis on large companies; an
overweight in technology, financial services, heath care and aerospace; strong
performance by a number of the top ten holdings like GENERAL ELECTRIC,
CITICORP, IBM, TRAVELERS and PROCTOR & GAMBLE; and pretty good stock selection.
We also were fortunate to have had three of our holdings become the target of
take-over bids during the year: U.S. Healthcare, Conrail, and MCI. We did have
a few disappointments. Wal-Mart, and McDonald's, two of our top ten names, both
lagged the market as their U.S. results were below expectations.
Going forward, we remain optimistic about the U.S. equity market. Inflation
remains under control, economic growth is moderate, corporate earnings growth
looks reasonable and valuations do not look overly exuberant except in certain
relatively isolated cases. We expect cash flows into the market to remain
strong and takeover activity to continue. We also expect companies to continue
to be aggressive buyers of their own stocks. While 1995 and 1996 have been
spectacular back to back years, we see no reason to back away from the market,
unless interest rates begin a sustained move upward as a result of very rapid
economic growth. Right now, we see nothing on the horizon that indicates such a
problem.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
STOCK S&P 500
<S> <C> <C>
1/1/1986 10,000 10,000
1986 11,233 11,866
1987 11,841 12,491
1988 14,090 14,565
1989 17,757 19,170
1990 17,070 18,574
1991 21,265 24,219
1992 23,400 26,062
1993 26,756 28,684
1994 26,250 29,059
1995 35,202 39,963
12/31/1996 43,780 49,134
</TABLE>
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INVESTMENT REVIEW - HARTFORD ADVISERS FUND, INC.
DECEMBER 31, 1996
For the twelve months ended December 31, 1996, Hartford Advisers Fund returned
16.6% (net of mutual fund expenses). The Fund outperformed its Composite
benchmark, which returned 13.9%. The Composite Index is a combination of three
indices with the following weightings: 55% S&P 500 Index, 35% Lehman Brothers
Government/Corporate Bond Index (LGC), and 10% 90-day Treasury Bill Index.
The most significant factor in the Fund's outperformance versus its benchmark
for the year was the high equity ratio in a year when stocks outperformed bonds
by a wide margin. The S&P 500 Index returned 23.0% for the year while the
Lehman Brothers Government Corporate Index returned 2.9%.
During 1996, the yield on the 30 Year Treasury Bond, which began the year at
5.9%, rose to 7.2% and ended the year at 6.7%. Although this level of
volatility is more subdued than the volatility of 1994, 1994, and 1995, it
still marks a level of unease in the fixed income markets which seems
remarkable in light of the low and stable level of inflation. In spite of the
market's discomfort with the general level of interest rates, 1996 was a year
during which investors were increasingly comfortable with other types of bond
market risk. Corporate bonds of all quality ratings performed well relative to
Treasury securities of similar duration as investors became increasingly
comfortable with credit risk. Mortgage securities outperformed their Treasury
equivalents as investors became less concerned with refinancing risk. In
summary, higher yielding alternatives to Treasury securities performed well as
investors sought higher yields.
Recognizing the strong equity performance during 1996, we reduced the equity
ratio in the fourth quarter by 5%. The equity ratio, which had risen to 70% of
portfolio value was reduced to 65%. This new commitment still reflects our view
that the equity market is likely to provide competitive performance during
1997, but does remove a few of the chips from the table. We expect bonds to
outperform cash during 1997 so we will keep the non-equity portion of the
portfolio invested to a large extent in fixed income securities rather than
permitting the cash portion allocation to rise.
(Please refer to the Investment Review for the Stock Fund for a review of the
Advisers Fund's equity component and a review of the overall equity market.)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ADVISERS S&P 500 LGC
<S> <C> <C> <C>
1/1/1986 10,000 10,000 10,000
1986 11,270 11,866 11,562
1987 11,955 12,491 11,827
1988 13,658 14,565 12,723
1989 16,624 19,170 14,535
1990 16,834 18,574 15,739
1991 20,256 24,219 18,277
1992 21,937 26,062 19,663
1993 24,624 28,684 21,831
1994 23,950 29,059 21,065
1995 30,737 39,963 25,118
12/31/1996 35,836 49,134 25,846
</TABLE>
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INVESTMENT REVIEW - HARTFORD CAPITAL APPRECIATION FUND, INC.
DECEMBER 31, 1996
For the twelve months ended December 3, 1996, Hartford Capital Appreciation
Fund returned 20.7% (net of mutual fund expenses), matching its composite
benchmark. The Composite Index is comprised of 40% S&P 500 Index and 60%
Russell 2500 Index.
The market environment in 1996 was favorable for larger capitalization
companies and unforgiving toward smaller companies where any glitch in earnings
progress, virtually regardless of degree, was generally rewarded with an
immediate negative judgment by the market. Fortunately, the Fund had fewer of
the latter ilk than many in our peer group, but by virtue of our barbell, off
the beaten path, smaller cap approach, we were significantly underrepresented
in the very large capitalization stocks that carried the day during the year,
and during 1995 as well. As to whether the concentration of investment flows to
this genre has been due to "MegaCap Mania" resulting from chasing of
performance-or to prudent recognition of investment value--only time will tell.
The truth probably lies somewhere in between these extremes.
The Fund's strategy remains dual-faceted. We maintain an emphasis on smaller
companies with dynamic earnings growth prospects, and couple that with an
opportunistic trading approach to larger cap stocks where we see a catalyst for
outperformance.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CAPITAL APPRECIATION S&P 500 RUSSELL 2500
<S> <C> <C> <C>
1/1/1986 10,000 10,000 10,000
1986 10,903 11,866 11,198
1987 10,433 12,491 10,674
1988 13,184 14,565 13,100
1989 16,363 19,170 15,645
1990 14,579 18,574 13,317
1991 22,451 24,219 19,538
1992 26,263 26,062 22,699
1993 31,726 28,684 26,454
1994 32,519 29,059 26,171
1995 42,356 39,963 34,467
12/31/1996 51,124 49,134 41,029
</TABLE>
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INVESTMENT REVIEW - HARTFORD MORTGAGE SECURITIES FUND, INC.
DECEMBER 31, 1996
For the twelve months ended December 31, 1996, Hartford Mortgage Securities
Fund returned 5.07% (net of mutual fund expenses) compared to 5.35% for its
benchmark the Lehman Mortgage Backed Securities Index (LEH MBS).
Mortgages outperformed other sectors of the bond market over the first six
months of the year when interest rates rose about 100 basis points as the
markets reacted to stronger than expected economic growth. Mortgage securities
continued to outperform in the third quarter, but gave back some of their
advantage in the fourth quarter as the market rallied and prepayment fears
increased.
During the year, fund performance benefited from holdings in non-Agency CMOs,
which did well as spreads tightened. Performance was also boosted by holdings
of seasoned paper and by our ongoing strategy of holding trading costs to a
minimum. As a result, fund performance was higher than that of the Index, but
not by enough to offset expenses.
As 1996 closed, bonds appeared to be fairly priced relative to expected
inflation. We expect that the market will continue to be volatile as investors
continue focusing on, and at times overreacting to, the monthly releases of
economic data. At year-end duration and yield curve sensitivity in the fund
were positioned about equal to those of the Index. The additional yield we
obtained from "up in coupon" trades made late in the year will benefit the fund
if rates move higher.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
MORTGAGE SECURITIES LEHMAN MBS
<S> <C> <C>
1/1/86 10,000 10,000
1986 11,113 11,343
1987 11,406 11,830
1988 12,362 12,861
1989 13,985 14,835
1990 15,342 16,426
1991 17,599 19,008
1992 18,415 20,333
1993 19,577 21,723
1994 19,262 21,374
1995 22,377 24,964
12/31/96 23,511 26,300
</TABLE>
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INVESTMENT REVIEW - HARTFORD INTERNATIONAL OPPORTUNITIES FUND, INC.
DECEMBER 31, 1996
For the twelve months ended December 31, 1996, Hartford International
Opportunities Fund returned 12.9% (net of mutual fund expenses). The Fund
outperformed its benchmark, the Morgan Stanley Capital International--Europe
Australia Far East--Gross Domestic Product Weighted Index (EAFE GDP Net), which
returned 7.6%.
In general, markets throughout the world were up during 1995, led by the U.S.
In the U.S., stocks (S&P 500 Index) returned 23.0% for the year. In Japan, (the
world's second largest equity market), by contrast, total returns were down
more than 11% in local currency and over 15% in U.S. dollars. Much of this
decline came late in the year as Japanese local investors became increasingly
pessimistic about the future economic growth about the deregulation of the
financial system. The portfolio's lower than index weighting in Japan boosted
relative performance.
The European markets, on the whole, posted strong returns, driven by falling
interest rates and expected economic and earnings acceleration in 1997. The
U.K. equity market (the world's third largest) provided a return in local
currency of almost 16% and a total return of more than 27% in U.S. dollars.
Latin American markets also ended the year on positive note. Brazil, in
particular, had a very strong showing, returning more than 50% in local
currency and almost 43% in U.S. dollars.
The Fund's largest country weightings are in Japan, the U.K. and Germany.
Relative to its benchmark, the Fund's underweighting in Japan was the strongest
positive contributor to relative outperformance, and stock selection in Japan
was so strong. The Fund's underweighting in the U.K. hurt relative performance,
but stock selection was positive there as well. Stock selection in Canada,
Germany and Brazil made positive contributions to performance.
Although the market has become very pessimistic on the outlook for Japan, much
of the data about the current state of the economy shows continued moderate
growth and low inflation. Moreover, results for Japan's fiscal semi-annual
period ended September 30, which were finished being reported in December,
produced earnings exceeding, on average, the companies' and analysts'
forecasts. Our overall view on Japan remains relatively cautious given the
structural challenges ahead and the relatively soft economic picture, but at
the moment excessive pessimism seems to rule and we have been buying on market
weakness.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INTERNATIONAL
OPPORTUNITIES EAFEGDP
<S> <C> <C>
7/2/90 10,000 10,000
1990 8,824 8,469
1991 9,971 9,376
1992 9,529 8,471
1993 12,744 11,314
1994 12,496 12,198
1995 14,237 13,559
12/31/96 16,078 14,594
</TABLE>
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INVESTMENT REVIEW - HARTFORD DIVIDEND AND GROWTH FUND, INC.
DECEMBER 31, 1996
Hartford Dividend and Growth Fund's return was 22.9% (net of mutual fund
expenses) for the twelve months ended December 31, 1996, essentially matching
the S&P 500 Index's return of 23.0%.
Sector allocation in 1996 was extremely important, as returns varied widely
across groups. Overall, the Fund's sector allocation was a negative contributor
to performance versus the S&P 500 of the year, but strong stock selection in
many areas made up for this deficit.
The top three performing sectors for the year were information technology,
finance, and industrial & commercial. The Fund's overweighting in finance and
strong stock selection in the group were important contributors to its return
for the year. The finance sector offered companies with attractive dividend
yields and growth opportunities which are consistent with the Fund's
conservative approach. In contrast, the Fund was underweighted in both the
soaring technology sector and the industrial & commercial names and
overweighted in the lagging utility group. An overweighted position in
utilities and an underweighted position in technology are also consistent with
the Fund's bias toward conservative high yielding companies. Stock selection in
health care was particularly strong.
Large cap stocks once again outperformed small caps in the period, a positive
for the Fund.
The U.S. economic expansion is now almost six years old, and still shows few
signs of excess. Growth is moderate, inflation is well under control, leading
to a relatively stable interest rate environment. Corporate profits, driven by
a continuing focus on cost control and productivity gains, should show moderate
gains again in 1997. In short, the backdrop is constructive for equities. The
primary concern is the enthusiasm already built into the market, i.e., recent
returns. Looking ahead, it is difficult to make a case for equity returns in
line with 1995 and 1996, but there also does not seem to be anything looming to
create a sustained downdraft. We expect that the Fund's conservative approach
and stock selection focus can continue to provide attractive results to
investors.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
DIVIDEND AND GROWTH S&P 500
<S> <C> <C>
3/8/94 10,000 10,000
3/31/94 9,707 9,554
6/30/94 9,935 9,594
9/30/94 10,419 10,062
12/31/94 10,196 10,060
3/31/95 11,034 11,039
6/30/95 11,831 12,091
9/30/95 12,945 13,051
12/31/95 13,903 13,837
3/31/96 14,793 14,580
6/30/96 16,379 16,051
9/30/96 18,691 18,216
12/31/96 22,974 22,397
</TABLE>
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INVESTMENT REVIEW - HARTFORD INTERNATIONAL ADVISERS FUND, INC.
DECEMBER 31, 1996
Hartford International Advisers Fund returned 11.8% for the year ended December
31, 1996 (net of mutual fund expenses). The Fund outperformed its Composite
benchmark, which returned 8.9%. The Composite Index is a combination of three
indices with the following weightings: 55% Morgan Stanley Capital
International--Europe Australia Far East--Gross Domestic Product--Weighted
Index (EAFE GDP Net), 35% Salomon Brothers non-U.S. World Government Bond
Hedged Index, and 10% 90-day Treasury Bill Index (55/35/10).
1996 was a great year for the global bond markets that gained 11.8%, fueled by
spectacular interest rate declines in Italy (3.3.%), Spain (2.9%), and Sweden
(2.6%). Interestingly, interest rates in the U.S. actually increased 0.85%--
the only OECD country to experience rising interest rates.
For the year, the dollar appreciated 10% on average against the Yen and Mark.
At the present levels, we believe the U.S. dollar is fairly valued against
these major global competitors.
We expect the moderate global economic growth and low inflation macroeconomic
environment to continue into the first quarter of 1997. We anticipate that the
U.S. economy should continue its late 1996 trend of moderate real GDP growth
and inflation. After years of slow economic growth, the European economy should
accelerate in 1997. Low interest rates, competitive currencies, rising capital
investment and confident consumers will propel real GDP, on average, higher
than 1996. Inflation is near record low levels across the continent. In Japan,
a modest economic recovery continues to unfold within a structural deflation
cycle. After growing above 3% over 1996, the economy will decelerate towards 2%
in 1997. Moderate private consumption and strong investment will offset the
anticipated contraction in fiscal policy.
As in 1996, we are still positive on the global economic cycle and believe
equities and fixed income securities will outperform cash in the first quarter.
Accordingly, the Fund begins 1997 with an asset allocation mix of 57% equities,
38% bonds, and 5% cash.
(Please refer to the Investment Review for International Opportunities Fund for
a review of International Advisers Fund's equity component and a review of the
overall international equity market.)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
55% EAFEGDP,
<S> <C> <C>
35% Salomon World Government
International
Advisers Bond Index, 10% 90-Day T-Bills
3/1/95 10,000 10,000
3/31/95 10,296 10,331
6/30/95 10,703 10,649
9/30/95 11,040 10,997
12/31/95 11,584 11,374
3/31/96 11,943 11,626
6/30/96 12,630 12,212
9/30/96 13,455 12,827
12/31/96 14,120 14,610
</TABLE>
10
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT REVIEW - HARTFORD SMALL COMPANY FUND, INC.
DECEMBER 31, 1996
The Hartford Small Company Fund returned 4.7% for the four month period ended
December 31, 1996 (net of mutual fund expenses). (The Fund began operations on
August 9, 1996.) The Fund underperformed its benchmark, the Russell 2000 Index,
which returned 9.3% for the same period.
Small cap stocks lagged the broader market during the period since inception of
the Fund, and indeed during all of 1996. For the four months ending December
31, 1996, small stocks, as represented by the Russell 2000 Index, returned
9.3%, while large stocks, as represented by the S&P 500 Index, returned 14.4%.
Similarly, for the year, the small cap universe, as represented by the Russell
2000 Index, lagged the S&P 500 Index by 6.5%.
In addition, 1996 was characterized by exceptional volatility among sectors of
small company stocks. Technology stocks did exceedingly well in the first half
but were decimated in July and August. Retail stocks did well in the summer but
were crushed in the fourth quarter as the holiday selling season did not live
up to early promise. Health care was weak all year, while the financial and oil
service sectors were strong all year. The favored list grew smaller and smaller
as the year progressed and the market favored the very biggest of the NASDAQ
stocks. Indeed, the ten largest stocks in the NASDAQ Composite, measured by
market capitalization, provided over 50% of NASDAQ's total return for the year.
Sector performance will remain critical for the Fund, as the nature of the
small cap market will lead, at least to some degree, to sector concentration.
Excellent small companies congregate in certain industries that do not demand
scale economies. Focused product lines, closeness to the customer, rapid
innovation and response times are all areas where small companies excel.
Consequently, the portfolio will generally have significant weightings in the
technology, health care, specialty finance, and retail sectors. These are areas
of the market where the best entrepreneurs gather, and where the Fund will
continue to be well represented.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SMALL COMPANY FUND
<S> <C>
Value on 12/31/96:
Small Company Fund $11,598
Russell 2000 $12,050
Small Company Fund
8/9/1996 10,000
9/30/1996 10,824
12/31/1996 11,598
$10,000 Initial Investment made 8/9/96
AVERAGE ANNUAL TOTAL RETURNS
SMALL COMPANY FUND
S.I. 8/9/96 18.12%
Past performance is not predictive of future performance.
Performance is net of mutual fund expenses and does not reflect charges and expenses of the insurance
contract.
<CAPTION>
SMALL COMPANY FUND
<S> <C>
Value on 12/31/96:
Small Company Fund
Russell 2000
Russell 2000
8/9/1996 10,000
9/30/1996 10,331
12/31/1996 12,050
$10,000 Initial Investment made 8/9/96
AVERAGE ANNUAL TOTAL RETURNS
RUSSELL 2000
S.I. 8/9/96 12.94%
Past performance is not predictive of future performance.
Performance is net of mutual fund expenses and does not reflect charges and expenses of the insurance
contract.
</TABLE>
11
<PAGE>
- --------------------------------------------------------------------------------
DC Variable Account-I
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares 36,630,491
Cost $ 35,842,725
Market Value......... $36,600,822 -- -- --
Hartford Stock Fund,
Inc.
Shares 112,771,720
Cost $358,055,173
Market Value......... -- $467,180,532 -- --
HVA Money Market Fund,
Inc.
Shares 26,308,693
Cost $ 26,308,693
Market Value......... -- -- $26,308,693 --
Hartford Advisers Fund,
Inc.
Shares 264,552,549
Cost $460,796,557
Market Value......... -- -- -- $573,954,692
Hartford U.S.
Government Money
Market Fund, Inc.
Shares 10,138,003
Cost $ 10,138,003
Market Value......... -- -- -- --
Hartford Capital
Appreciation Fund,
Inc.
Shares 99,224,493
Cost $298,009,606
Market Value......... -- -- -- --
Hartford Mortgage
Securities Fund, Inc.
Shares 24,393,672
Cost $ 25,728,715
Market Value......... -- -- -- --
Hartford Index Fund,
Inc.
Shares 31,899,273
Cost $ 57,483,905
Market Value......... -- -- -- --
Hartford International
Opportunities Fund,
Inc.
Shares 46,063,637
Cost $ 55,897,887
Market Value......... -- -- -- --
Hartford Dividend and
Growth Fund, Inc.
Shares 20,115,213
Cost $ 27,291,576
Market Value......... -- -- -- --
Calvert Responsibly
Invested Balanced
Portfolio
Shares 12,321,200
Cost $ 20,030,965
Market Value......... -- -- -- --
Due from Hartford Life
Insurance Company..... 3,075 -- 142,386 --
Receivable from fund
shares sold........... -- 52,104 -- 147,989
----------- ------------ ----------- -------------
Total Assets........... 36,603,897 467,232,636 26,451,079 574,102,681
----------- ------------ ----------- -------------
LIABILITIES:
Due to Hartford Life
Insurance Company..... -- 52,556 -- 147,843
Payable for fund shares
purchased............. 3,016 -- 142,822 --
----------- ------------ ----------- -------------
Total Liabilities...... 3,016 52,556 142,822 147,843
----------- ------------ ----------- -------------
Net Assets (variable
annuity contract
liabilities).......... $36,600,881 $467,180,080 $26,308,257 $573,954,838
----------- ------------ ----------- -------------
----------- ------------ ----------- -------------
DEFERRED ANNUITY
CONTRACTS IN THE
ACCUMULATION PERIOD:
GROUP SUB-ACCOUNTS:
Units Owned by
Participants.......... 8,711,395 42,244,480 9,608,844 136,231,813
Unit Values*........... 4.201495 11.058962 2.737922 4.213075
Contract Liability..... $36,600,881 $467,180,080 $26,308,257 $573,954,838
</TABLE>
* Unit value amounts represent an average of individual unit values, which
differ within each sub-account.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
12
<PAGE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND
MONEY MARKET FUND APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------- ----------------- --------------- ----------- ------------------ -------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares 36,630,491
Cost $ 35,842,725
Market Value......... -- -- -- -- -- --
Hartford Stock Fund,
Inc.
Shares 112,771,720
Cost $358,055,173
Market Value......... -- -- -- -- -- --
HVA Money Market Fund,
Inc.
Shares 26,308,693
Cost $ 26,308,693
Market Value......... -- -- -- -- -- --
Hartford Advisers Fund,
Inc.
Shares 264,552,549
Cost $460,796,557
Market Value......... -- -- -- -- -- --
Hartford U.S.
Government Money
Market Fund, Inc.
Shares 10,138,003
Cost $ 10,138,003
Market Value......... $10,138,003 -- -- -- -- --
Hartford Capital
Appreciation Fund,
Inc.
Shares 99,224,493
Cost $298,009,606
Market Value......... -- $388,397,409 -- -- -- --
Hartford Mortgage
Securities Fund, Inc.
Shares 24,393,672
Cost $ 25,728,715
Market Value......... -- -- $25,754,107 -- -- --
Hartford Index Fund,
Inc.
Shares 31,899,273
Cost $ 57,483,905
Market Value......... -- -- -- $75,976,731 -- --
Hartford International
Opportunities Fund,
Inc.
Shares 46,063,637
Cost $ 55,897,887
Market Value......... -- -- -- -- $64,806,010 --
Hartford Dividend and
Growth Fund, Inc.
Shares 20,115,213
Cost $ 27,291,576
Market Value......... -- -- -- -- -- $31,126,682
Calvert Responsibly
Invested Balanced
Portfolio
Shares 12,321,200
Cost $ 20,030,965
Market Value......... -- -- -- -- -- --
Due from Hartford Life
Insurance Company..... 17,763 238,588 9,131 57,690 111,593 126,649
Receivable from fund
shares sold........... -- -- -- -- -- --
------------------- ----------------- --------------- ----------- ------------------ -------------
Total Assets........... 10,155,766 388,635,997 25,763,238 76,034,421 64,917,603 31,253,331
------------------- ----------------- --------------- ----------- ------------------ -------------
LIABILITIES:
Due to Hartford Life
Insurance Company..... -- -- -- -- -- --
Payable for fund shares
purchased............. 15,658 238,602 9,494 57,682 111,606 126,646
------------------- ----------------- --------------- ----------- ------------------ -------------
Total Liabilities...... 15,658 238,602 9,494 57,682 111,606 126,646
------------------- ----------------- --------------- ----------- ------------------ -------------
Net Assets (variable
annuity contract
liabilities).......... $10,140,108 $388,397,395 $25,753,744 $75,976,739 $64,805,997 $31,126,685
------------------- ----------------- --------------- ----------- ------------------ -------------
------------------- ----------------- --------------- ----------- ------------------ -------------
DEFERRED ANNUITY
CONTRACTS IN THE
ACCUMULATION PERIOD:
GROUP SUB-ACCOUNTS:
Units Owned by
Participants.......... 5,320,771 59,278,959 10,596,940 49,989,096 43,557,985 20,897,317
Unit Values*........... 1.905760 6.552028 2.430300 1.519867 1.487810 1.489507
Contract Liability..... $10,140,108 $388,397,395 $25,753,744 $75,976,739 $64,805,997 $31,126,685
<CAPTION>
CALVERT
RESPONSIBLY INVESTED
BALANCED PORTFOLIO
SUB-ACCOUNT
--------------------
<S> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford Stock Fund,
Inc.
Shares
Cost
Market Value......... --
HVA Money Market Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford Advisers Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford U.S.
Government Money
Market Fund, Inc.
Shares
Cost
Market Value......... --
Hartford Capital
Appreciation Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford Mortgage
Securities Fund, Inc.
Shares
Cost
Market Value......... --
Hartford Index Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford International
Opportunities Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford Dividend and
Growth Fund, Inc.
Shares
Cost
Market Value......... --
Calvert Responsibly
Invested Balanced
Portfolio
Shares
Cost
Market Value......... $21,857,810
Due from Hartford Life
Insurance Company..... 15,228
Receivable from fund
shares sold........... --
--------------------
Total Assets........... 21,873,038
--------------------
LIABILITIES:
Due to Hartford Life
Insurance Company..... --
Payable for fund shares
purchased............. 12,561
--------------------
Total Liabilities...... 12,561
--------------------
Net Assets (variable
annuity contract
liabilities).......... $21,860,477
--------------------
--------------------
DEFERRED ANNUITY
CONTRACTS IN THE
ACCUMULATION PERIOD:
GROUP SUB-ACCOUNTS:
Units Owned by
Participants.......... 10,159,826
Unit Values*........... 2.151659
Contract Liability..... $21,860,477
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
13
<PAGE>
- --------------------------------------------------------------------------------
DC VARIABLE ACCOUNT-I
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 2,238,559 $ 6,422,402 $1,124,158 $14,926,754
EXPENSES:
Mortality and expense
undertakings.......... (359,682) (4,158,806) (225,683) (5,268,073)
----------- ----------- ----------- -------------
Net investment income
(loss).............. 1,878,877 2,263,596 898,475 9,658,681
----------- ----------- ----------- -------------
CAPITAL GAINS INCOME..... -- 14,883,740 -- 10,564,590
----------- ----------- ----------- -------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 166,958 66,841,431 -- 58,999,565
Net unrealized
appreciation
(depreciation) of
investments during the
period................ (1,199,667) 1,283,218 -- (4,260,635)
----------- ----------- ----------- -------------
Net realized and
unrealized gain
(loss) on
investments......... (1,032,709) 68,124,649 -- 54,738,930
----------- ----------- ----------- -------------
Net increase
(decrease) in net
assets resulting
from operations..... $ 846,168 $85,271,985 $ 898,475 $74,962,201
----------- ----------- ----------- -------------
----------- ----------- ----------- -------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
14
<PAGE>
<TABLE>
<CAPTION>
MORTGAGE
U.S. GOVERNMENT CAPITAL SECURITIES INTERNATIONAL DIVIDEND AND
MONEY MARKET FUND APPRECIATION FUND FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
-------------------- ----------------- ------------- ----------- ------------------ ------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $435,060 $ 2,299,307 $1,611,566 $ 1,247,638 $1,123,831 $ 488,044
EXPENSES:
Mortality and expense
undertakings.......... (91,624) (3,391,411) (256,552) (519,448) (586,368) (189,015)
-------- ----------------- ------------- ----------- ------------------ ------------
Net investment income
(loss).............. 343,436 (1,092,104) 1,355,014 728,190 537,463 299,029
-------- ----------------- ------------- ----------- ------------------ ------------
CAPITAL GAINS INCOME..... -- 18,716,143 -- 935,734 1,423,334 208,419
-------- ----------------- ------------- ----------- ------------------ ------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... -- 29,382,290 (18,537) 5,514,280 2,372,529 289,777
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- 12,195,355 (351,685) 4,693,033 2,008,357 3,206,970
-------- ----------------- ------------- ----------- ------------------ ------------
Net realized and
unrealized gain
(loss) on
investments......... -- 41,577,645 (370,222) 10,207,313 4,380,886 3,496,747
-------- ----------------- ------------- ----------- ------------------ ------------
Net increase
(decrease) in net
assets resulting
from operations..... $343,436 $59,201,684 $ 984,792 $11,871,237 $6,341,683 $4,004,195
-------- ----------------- ------------- ----------- ------------------ ------------
-------- ----------------- ------------- ----------- ------------------ ------------
<CAPTION>
CALVERT
RESPONSIBLY INVESTED
BALANCED PORTFOLIO
SUB-ACCOUNT
--------------------
<S> <C>
INVESTMENT INCOME:
Dividends.............. $ 473,813
EXPENSES:
Mortality and expense
undertakings.......... (194,334)
-----------
Net investment income
(loss).............. 279,479
-----------
CAPITAL GAINS INCOME..... 1,166,308
-----------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 1,416,934
Net unrealized
appreciation
(depreciation) of
investments during the
period................ (711,714)
-----------
Net realized and
unrealized gain
(loss) on
investments......... 705,220
-----------
Net increase
(decrease) in net
assets resulting
from operations..... $2,151,007
-----------
-----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
15
<PAGE>
- --------------------------------------------------------------------------------
DC Variable Account-I
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 1,878,877 $ 2,263,596 $ 898,475 $ 9,658,681
Capital gains income... -- 14,883,740 -- 10,564,590
Net realized gain
(loss) on security
transactions.......... 166,958 66,841,431 -- 58,999,565
Net unrealized
appreciation
(depreciation) of
investments during the
period................ (1,199,667) 1,283,218 -- (4,260,635)
----------- ------------ ------------ -------------
Net increase (decrease)
in net assets
resulting from
operations............ 846,168 85,271,985 898,475 74,962,201
----------- ------------ ------------ -------------
UNIT TRANSACTIONS:
Purchases.............. 3,515,268 37,974,254 2,412,011 55,548,282
Net transfers.......... (2,237,323) 448,728 3,187,090 (13,204,076)
Surrenders............. (892,123) (9,114,856) (918,482) (11,940,914)
----------- ------------ ------------ -------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 385,822 29,308,126 4,680,619 30,403,292
----------- ------------ ------------ -------------
Total increase
(decrease) in net
assets................ 1,231,990 114,580,111 5,579,094 105,365,493
NET ASSETS:
Beginning of period.... 35,368,891 352,599,969 20,729,163 468,589,345
----------- ------------ ------------ -------------
End of period.......... $36,600,881 $467,180,080 $ 26,308,257 $ 573,954,838
----------- ------------ ------------ -------------
----------- ------------ ------------ -------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1995
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ------------ -------------
OPERATIONS:
Net investment income
(loss)................ $ 1,720,508 $ 3,267,676 $ 941,736 $ 10,021,212
Capital gains income... -- 10,831,040 -- 4,358,491
Net realized gain
(loss) on security
transactions.......... (339,180) (54,314) -- 75,118
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 3,665,224 69,832,568 -- 81,907,322
----------- ------------ ------------ -------------
Net increase (decrease)
in net assets
resulting from
operations............ 5,046,552 83,876,970 941,736 96,362,143
----------- ------------ ------------ -------------
UNIT TRANSACTIONS:
Purchases.............. 3,288,728 34,201,304 2,505,970 52,514,435
Net transfers.......... (610,025) (13,265,561) (1,811,345) (26,837,016)
Surrenders............. (4,164,050) (20,089,201) (4,919,611) (17,046,664)
----------- ------------ ------------ -------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... (1,485,347) 846,542 (4,224,986) 8,630,755
----------- ------------ ------------ -------------
Total increase
(decrease) in net
assets................ 3,561,205 84,723,512 (3,283,250) 104,992,898
NET ASSETS:
Beginning of period.... 31,807,686 267,876,457 24,012,413 363,596,447
----------- ------------ ------------ -------------
End of period.......... $35,368,891 $352,599,969 $ 20,729,163 $ 468,589,345
----------- ------------ ------------ -------------
----------- ------------ ------------ -------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
16
<PAGE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT CAPITAL MORTGAGE INTERNATIONAL
MONEY MARKET FUND APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------- ----------------- --------------- ----------- ------------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 343,436 $ (1,092,104) $ 1,355,014 $ 728,190 $ 537,463
Capital gains income... -- 18,716,143 -- 935,734 1,423,334
Net realized gain
(loss) on security
transactions.......... -- 29,382,290 (18,537) 5,514,280 2,372,529
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- 12,195,355 (351,685) 4,693,033 2,008,357
------------------- ----------------- --------------- ----------- ------------------
Net increase (decrease)
in net assets
resulting from
operations............ 343,436 59,201,684 984,792 11,871,237 6,341,683
------------------- ----------------- --------------- ----------- ------------------
UNIT TRANSACTIONS:
Purchases.............. 1,337,245 53,044,599 2,661,238 10,324,537 10,623,622
Net transfers.......... 259,211 (3,808,589) (3,090,374) 8,456,897 1,472,637
Surrenders............. (330,706) (6,625,610) (648,434) (1,299,479) (1,089,816)
------------------- ----------------- --------------- ----------- ------------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 1,265,750 42,610,400 (1,077,570) 17,481,955 11,006,443
------------------- ----------------- --------------- ----------- ------------------
Total increase
(decrease) in net
assets................ 1,609,186 101,812,084 (92,778) 29,353,192 17,348,126
NET ASSETS:
Beginning of period.... 8,530,922 286,585,311 25,846,522 46,623,547 47,457,871
------------------- ----------------- --------------- ----------- ------------------
End of period.......... $10,140,108 $388,397,395 $25,753,744 $75,976,739 $64,805,997
------------------- ----------------- --------------- ----------- ------------------
------------------- ----------------- --------------- ----------- ------------------
U.S. GOVERNMENT CAPITAL MORTGAGE INTERNATIONAL
MONEY MARKET FUND APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------- ----------------- --------------- ----------- ------------------
OPERATIONS:
Net investment income
(loss)................ $ 353,894 $ (437,656) $ 1,308,123 $ 572,511 $ 203,987
Capital gains income... -- 10,643,508 -- 11,084 398,201
Net realized gain
(loss) on security
transactions.......... -- 7,253 12,159 8,314 (24)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- 47,212,298 1,978,276 9,882,350 4,748,990
------------------- ----------------- --------------- ----------- ------------------
Net increase (decrease)
in net assets
resulting from
operations............ 353,894 57,425,403 3,298,558 10,474,259 5,351,154
------------------- ----------------- --------------- ----------- ------------------
UNIT TRANSACTIONS:
Purchases.............. 1,272,247 45,563,679 2,927,551 6,364,336 10,718,211
Net transfers.......... (452,592) 1,352,403 (1,600,604) 3,808,836 (12,867,024)
Surrenders............. (1,052,797) (13,938,589) (706,307) (710,423) (952,636)
------------------- ----------------- --------------- ----------- ------------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... (233,142) 32,977,493 620,640 9,462,749 (3,101,449)
------------------- ----------------- --------------- ----------- ------------------
Total increase
(decrease) in net
assets................ 120,752 90,402,896 3,919,198 19,937,008 2,249,705
NET ASSETS:
Beginning of period.... 8,410,170 196,182,415 21,927,324 26,686,539 45,208,166
------------------- ----------------- --------------- ----------- ------------------
End of period.......... $ 8,530,922 $286,585,311 $25,846,522 $46,623,547 $47,457,871
------------------- ----------------- --------------- ----------- ------------------
------------------- ----------------- --------------- ----------- ------------------
<CAPTION>
CALVERT
DIVIDEND AND RESPONSIBLY INVESTED
GROWTH FUND BALANCED PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
-------------------- --------------------
<S> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 299,029 $ 279,479
Capital gains income... 208,419 1,166,308
Net realized gain
(loss) on security
transactions.......... 289,777 1,416,934
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 3,206,970 (711,714)
-------------------- --------------------
Net increase (decrease)
in net assets
resulting from
operations............ 4,004,195 2,151,007
-------------------- --------------------
UNIT TRANSACTIONS:
Purchases.............. 4,720,731 3,423,700
Net transfers.......... 15,166,440 (640,735)
Surrenders............. (496,007) (453,414)
-------------------- --------------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 19,391,164 2,329,551
-------------------- --------------------
Total increase
(decrease) in net
assets................ 23,395,359 4,480,558
NET ASSETS:
Beginning of period.... 7,731,326 17,379,919
-------------------- --------------------
End of period.......... $31,126,685 $21,860,477
-------------------- --------------------
-------------------- --------------------
CALVERT
DIVIDEND AND RESPONSIBLY INVESTED
GROWTH FUND BALANCED PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
-------------------- --------------------
OPERATIONS:
Net investment income
(loss)................ $ 39,056 $ 879,579
Capital gains income... -- 505,861
Net realized gain
(loss) on security
transactions.......... (1,256) 6,838
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 628,136 2,139,789
-------------------- --------------------
Net increase (decrease)
in net assets
resulting from
operations............ 665,936 3,532,067
-------------------- --------------------
UNIT TRANSACTIONS:
Purchases.............. 558,780 3,167,984
Net transfers.......... 6,590,369 (811,408)
Surrenders............. (83,759) (385,880)
-------------------- --------------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 7,065,390 1,970,696
-------------------- --------------------
Total increase
(decrease) in net
assets................ 7,731,326 5,502,763
NET ASSETS:
Beginning of period.... -- 11,877,156
-------------------- --------------------
End of period.......... $ 7,731,326 $17,379,919
-------------------- --------------------
-------------------- --------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
17
<PAGE>
- --------------------------------------------------------------------------------
DC VARIABLE ACCOUNT-I
HARTFORD LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. ORGANIZATION:
DC Variable Account-I (the Account) is a separate investment account within
Hartford Life Insurance Company (the Company) and is registered with the
Securities and Exchange Commission (SEC) as a unit investment trust under
the Investment Company Act of 1940, as amended. Both the Company and the
Account are subject to supervision and regulation by the Department of
Insurance of the State of Connecticut and the SEC. The Account invests
deposits by variable annuity contractholders of the Company in various
mutual funds (the Funds) as directed by the contractholders.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting
principles in the investment company industry:
a) SECURITY TRANSACTIONS--Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Cost of investments
sold is determined on the basis of identified cost. Dividends and
capital gains income are accrued as of the ex-dividend date. Capital
gains income represents dividends from the Funds which are characterized
as capital gains under tax regulations.
b) SECURITY VALUATION--The investment in shares of the Hartford and Calvert
Responsibly Invested Series mutual funds are valued at the closing net
asset value per share as determined by the appropriate Fund as of
December 31, 1996.
c) FEDERAL INCOME TAXES--For Federal income tax purposes, the Account
intends to qualify as a regulated investment company under Subchapter M
of the Internal Revenue Code by distributing substantially all of its
taxable income to variable annuity contractholders and otherwise
complying with the requirements for regulated investment companies.
Accordingly, no provision for Federal income taxes has been made. For
purposes of determining net realized taxable gains to be distributed,
the capital gains and losses of each Sub-Account within the Account are
combined. Distribution of any net realized capital gains so determined
will be made to the contract owners of the Sub-Account having net
realized capital gains. The cumulative realized losses used to offset
realized capital gains in each Sub-Account will be considered in the
determination of future distributions of realized capital gains to each
Sub-Account.
d) USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities as of the date of the financial statements and
the reported amounts of income and expenses during the period. Operating
results in the future could vary from the amounts derived from
management's estimates.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
a) MORTALITY AND EXPENSE UNDERTAKINGS--The Company, as issuer of variable
annuity contracts, provides the mortality and expense undertakings and,
with respect to the Account, receives a maximum annual fee of up to
1.25% of the Account's average daily net assets.
b) DEDUCTION OF ANNUAL MAINTENANCE FEE--Annual maintenance fees are
deducted through termination of units of interest from applicable
contractholders' accounts, in accordance with the terms of the
contracts.
18
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO HARTFORD LIFE INSURANCE COMPANY
DC VARIABLE ACCOUNT-I AND TO THE
OWNERS OF UNITS OF INTEREST THEREIN:
We have audited the accompanying statement of assets and liabilities of
Hartford Life Insurance Company DC Variable Account-I (the Account) as of
December 31, 1996, and the related statement of operations for the year then
ended and statements of changes in net assets for each of the two years in the
period then ended. These financial statements are the responsibility of the
Accounts' management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial posi-
tion of Hartford Life Insurance Company DC Variable
Account-I as of December 31, 1996, the results of its operations for the year
then ended and the changes in its net assets for each of the two years in the
period then ended in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 14, 1997
19
<PAGE>
- --------------------------------------------------------------------------------
Separate Account One
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
BOND FUND STOCK FUND
SUB-ACCOUNT SUB-ACCOUNT
----------- -----------
<S> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares 1,632,984
Cost $1,625,317
Market Value......... $ 1,631,661 --
Hartford Stock Fund,
Inc.
Shares 1,279,592
Cost $3,041,582
Market Value......... -- $ 5,300,977
HVA Money Market Fund,
Inc.
Shares 2,455,737
Cost $2,455,737
Market Value......... -- --
Hartford Advisers Fund,
Inc.
Shares 7,564,701
Cost $9,714,171
Market Value......... -- --
Hartford Capital
Appreciation Fund,
Inc.
Shares 1,999,247
Cost $3,915,777
Market Value......... -- --
Hartford Mortgage
Securities Fund, Inc.
Shares 3,197,957
Cost $3,461,367
Market Value......... -- --
Hartford Index Fund,
Inc.
Shares 97,519
Cost $137,206
Market Value......... -- --
Due from Hartford Life
Insurance Company...... 86,183 653
Receivable from fund
shares sold............ -- --
----------- -----------
Total Assets............. 1,717,844 5,301,630
----------- -----------
LIABILITIES:
Due to Hartford Life
Insurance Company..... -- --
Payable for fund shares
purchased............. 86,183 653
----------- -----------
Total Liabilities...... 86,183 653
----------- -----------
Net Assets (variable
life insurance
contract
liabilities).......... $ 1,631,661 $ 5,300,977
----------- -----------
----------- -----------
Units Owned by
Participants.......... 769,016 1,328,031
Unit Price............. $ 2.121752 $ 3.991606
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
20
<PAGE>
<TABLE>
<CAPTION>
MONEY CAPITAL MORTGAGE
MARKET FUND ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------- ----------------- --------------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares 1,632,984
Cost $1,625,317
Market Value......... -- -- -- -- --
Hartford Stock Fund,
Inc.
Shares 1,279,592
Cost $3,041,582
Market Value......... -- -- -- -- --
HVA Money Market Fund,
Inc.
Shares 2,455,737
Cost $2,455,737
Market Value......... $2,455,737 -- -- -- --
Hartford Advisers Fund,
Inc.
Shares 7,564,701
Cost $9,714,171
Market Value......... -- $16,411,846 -- -- --
Hartford Capital
Appreciation Fund,
Inc.
Shares 1,999,247
Cost $3,915,777
Market Value......... -- -- $7,825,711 -- --
Hartford Mortgage
Securities Fund, Inc.
Shares 3,197,957
Cost $3,461,367
Market Value......... -- -- -- $ 3,376,307 --
Hartford Index Fund,
Inc.
Shares 97,519
Cost $137,206
Market Value......... -- -- -- -- $ 232,267
Due from Hartford Life
Insurance Company...... 9,237 254 1,134 51 --
Receivable from fund
shares sold............ -- -- -- -- 24,640
----------- ------------- ----------------- --------------- -----------
Total Assets............. 2,464,974 16,412,100 7,826,845 3,376,358 256,907
----------- ------------- ----------------- --------------- -----------
LIABILITIES:
Due to Hartford Life
Insurance Company..... -- -- -- -- 24,640
Payable for fund shares
purchased............. 11,928 256 1,225 3,080 --
----------- ------------- ----------------- --------------- -----------
Total Liabilities...... 11,928 256 1,225 3,080 24,640
----------- ------------- ----------------- --------------- -----------
Net Assets (variable
life insurance
contract
liabilities).......... $2,453,046 $16,411,844 $7,825,620 $ 3,373,278 $ 232,267
----------- ------------- ----------------- --------------- -----------
----------- ------------- ----------------- --------------- -----------
Units Owned by
Participants.......... 1,437,302 5,049,031 1,694,958 1,580,608 78,862
Unit Price............. $ 1.706702 $ 3.250494 $ 4.617000 $ 2.134165 $ 2.945248
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
21
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT ONE
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
BOND FUND STOCK FUND
SUB-ACCOUNT SUB-ACCOUNT
----------- -----------
<S> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 99,959 $ 77,218
EXPENSES:
Mortality and expense
undertakings.......... (14,082) (43,979)
----------- -----------
Net investment income
(loss).............. 85,877 33,239
----------- -----------
CAPITAL GAINS INCOME..... -- 195,246
----------- -----------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... (3,746) 23,047
Net unrealized
appreciation
(depreciation) of
investments during the
period................ (43,706) 761,366
----------- -----------
Net realized and
unrealized gain
(loss) on
investments......... (47,452) 784,413
----------- -----------
Net increase
(decrease) in net
assets resulting
from operations..... $ 38,425 $ 1,012,898
----------- -----------
----------- -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
22
<PAGE>
<TABLE>
<CAPTION>
MONEY CAPITAL MORTGAGE
MARKET FUND ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------- ----------------- --------------- -----------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $130,958 $ 462,515 $ 50,251 $217,320 $ 4,372
EXPENSES:
Mortality and expense
undertakings.......... (23,315) (143,705) (65,799) (30,588) (2,055)
----------- ------------- ----------------- --------------- -----------
Net investment income
(loss).............. 107,643 318,810 (15,548) 186,732 2,317
----------- ------------- ----------------- --------------- -----------
CAPITAL GAINS INCOME..... -- 359,796 443,649 -- 2,992
----------- ------------- ----------------- --------------- -----------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... -- 431,574 42,830 687 3,779
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- 1,204,135 856,429 (50,978) 28,647
----------- ------------- ----------------- --------------- -----------
Net realized and
unrealized gain
(loss) on
investments......... -- 1,635,709 899,259 (50,291) 32,426
----------- ------------- ----------------- --------------- -----------
Net increase
(decrease) in net
assets resulting
from operations..... $107,643 $2,314,315 $1,327,360 $136,441 $37,735
----------- ------------- ----------------- --------------- -----------
----------- ------------- ----------------- --------------- -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
23
<PAGE>
- --------------------------------------------------------------------------------
Separate Account One
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
BOND FUND STOCK FUND
SUB-ACCOUNT SUB-ACCOUNT
------------- -----------
<S> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 85,877 $ 33,239
Capital gains income... -- 195,246
Net realized gain
(loss) on security
transactions.......... (3,746) 23,047
Net unrealized
appreciation
(depreciation) of
investments during the
period................ (43,706) 761,366
------------- -----------
Net increase (decrease)
in net assets
resulting from
operations............ 38,425 1,012,898
------------- -----------
UNIT TRANSACTIONS:
Net transfers.......... (173,115) 102,684
Surrenders............. (7,288) (132,660)
Net loan withdrawals... (21,258) (86,390)
Cost of insurance and
other fees............ (18,325) (36,723)
------------- -----------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... (219,986) (153,089)
------------- -----------
Total increase
(decrease) in net
assets................ (181,561) 859,809
NET ASSETS:
Beginning of period.... 1,813,222 4,441,168
------------- -----------
End of period.......... $ 1,631,661 $ 5,300,977
------------- -----------
------------- -----------
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1995
BOND FUND STOCK FUND
SUB-ACCOUNT SUB-ACCOUNT
------------- -----------
OPERATIONS:
Net investment income
(loss)................ $ 84,715 $ 55,694
Capital gains income... -- 153,099
Net realized gain
(loss) on security
transactions.......... 4,292 56,375
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 154,611 921,139
------------- -----------
Net increase (decrease)
in net assets
resulting from
operations............ 243,618 1,186,307
------------- -----------
UNIT TRANSACTIONS:
Net transfers.......... 316,804 (164,722)
Surrenders............. (145,617) (201,816)
Net loan withdrawals... (70,051) (70,797)
Cost of insurance and
other fees............ (21,923) (40,596)
------------- -----------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 79,213 (477,931)
------------- -----------
Total increase
(decrease) in net
assets................ 322,831 708,376
NET ASSETS:
Beginning of period.... 1,490,391 3,732,792
------------- -----------
End of period.......... $ 1,813,222 $ 4,441,168
------------- -----------
------------- -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
24
<PAGE>
<TABLE>
<CAPTION>
MONEY CAPITAL MORTGAGE
MARKET FUND ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------- ----------------- --------------- -----------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 107,643 $ 318,810 $ (15,548) $ 186,732 $ 2,317
Capital gains income... -- 359,796 443,649 -- 2,992
Net realized gain
(loss) on security
transactions.......... -- 431,574 42,830 687 3,779
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- 1,204,135 856,429 (50,978) 28,647
----------- ------------- ----------------- --------------- -----------
Net increase (decrease)
in net assets
resulting from
operations............ 107,643 2,314,315 1,327,360 136,441 37,735
----------- ------------- ----------------- --------------- -----------
UNIT TRANSACTIONS:
Net transfers.......... 641,843 (504,209) (235,710) (48,159) 69,128
Surrenders............. (1,102,403) (1,032,859) 114,483 (111,600) (29,698)
Net loan withdrawals... (114,450) (229,470) (137,347) (65,890) --
Cost of insurance and
other fees............ (40,348) (159,464) (44,885) (37,139) (1,839)
----------- ------------- ----------------- --------------- -----------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... (615,358) (1,926,002) (303,459) (262,788) 37,591
----------- ------------- ----------------- --------------- -----------
Total increase
(decrease) in net
assets................ (507,715) 388,313 1,023,901 (126,347) 75,326
NET ASSETS:
Beginning of period.... 2,960,761 16,023,531 6,801,719 3,499,625 156,941
----------- ------------- ----------------- --------------- -----------
End of period.......... $2,453,046 $16,411,844 $7,825,620 $3,373,278 $232,267
----------- ------------- ----------------- --------------- -----------
----------- ------------- ----------------- --------------- -----------
MONEY CAPITAL MORTGAGE
MARKET FUND ADVISERS FUND APPRECIATION FUND SECURITIES FUND INDEX FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------- ----------------- --------------- -----------
OPERATIONS:
Net investment income
(loss)................ $ 140,260 $ 401,575 $ 3,059 $ 194,131 $ 2,323
Capital gains income... -- 167,329 302,062 -- 72
Net realized gain
(loss) on security
transactions.......... -- 254,170 86,124 1,992 34,111
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- 2,787,295 1,196,865 288,183 25,314
----------- ------------- ----------------- --------------- -----------
Net increase (decrease)
in net assets
resulting from
operations............ 140,260 3,610,369 1,588,110 484,306 61,820
----------- ------------- ----------------- --------------- -----------
UNIT TRANSACTIONS:
Net transfers.......... 403,260 (352,659) 28,785 (64,736) (77,047)
Surrenders............. (318,000) (699,062) (127,746) (136,108) (791)
Net loan withdrawals... (198,045) (343,038) (231,488) (69,099) --
Cost of insurance and
other fees............ (141,010) (187,787) (48,115) (44,918) (2,377)
----------- ------------- ----------------- --------------- -----------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... (253,795) (1,582,546) (378,564) (314,861) (80,215)
----------- ------------- ----------------- --------------- -----------
Total increase
(decrease) in net
assets................ (113,535) 2,027,823 1,209,546 169,445 (18,395)
NET ASSETS:
Beginning of period.... 3,074,296 13,995,708 5,592,173 3,330,180 175,336
----------- ------------- ----------------- --------------- -----------
End of period.......... $2,960,761 $16,023,531 $6,801,719 $3,499,625 $156,941
----------- ------------- ----------------- --------------- -----------
----------- ------------- ----------------- --------------- -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
25
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT ONE
HARTFORD LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. ORGANIZATION:
Separate Account One (the Account) is a separate investment account within
Hartford Life Insurance Company (the Company) and is registered with the
Securities and Exchange Commission (SEC) as a unit investment trust under
the Investment Company Act of 1940, as amended. Both the Company and the
Account are subject to supervision and regulation by the Department of
Insurance of the State of Connecticut and the SEC. The Account invests
deposits by variable life contractholders of the Company in various mutual
funds (the Funds) as directed by the contractholders.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting
principles in the investment company industry:
a) SECURITY TRANSACTIONS--Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Cost of investments
sold is determined on the basis of identified cost. Dividends and
capital gains income are accrued as of the ex-dividend date. Capital
gains income represents dividends from the Funds which are characterized
as capital gains under tax regulations.
b) SECURITY VALUATION--The investment in shares of the Funds are valued at
the closing net asset value per share as determined by the appropriate
Fund as of December 31, 1996.
c) FEDERAL INCOME TAXES--The operations of the Account form a part of, and
are taxed with, the total operations of the Company, which is taxed as
an insurance company under the Internal Revenue Code. Under current law,
no federal income taxes are payable with respect to the operations of
the Account.
d) USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities as of the date of the financial statements and
the reported amounts of income and expenses during the period. Operating
results in the future could vary from the amounts derived from
management's estimates.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
a) MORTALITY AND EXPENSE UNDERTAKINGS--The Company, as issuer of variable
life insurance contracts, provides the mortality and expense
undertakings and, with respect to the Account, receives an annual fee of
0.90% of the Account's average daily net assets.
b) DEDUCTION OF OTHER FEES--In accordance with the terms of the contracts,
the Company makes deductions for the cost of insurance, administrative
fees, and state premium taxes. These charges are deducted through
termination of units of interest from applicable contractholders'
accounts in accordance with the terms of the contract.
26
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO HARTFORD LIFE INSURANCE COMPANY
SEPARATE ACCOUNT ONE AND TO THE
OWNERS OF UNITS OF INTEREST THEREIN:
We have audited the accompanying statement of assets and liabilities of
Hartford Life Insurance Company Separate Account One (the Account) as of
December 31, 1996, and the related statement of operations for the year then
ended and statements of changes in net assets for each of the two years in the
period then ended. These financial statements are the responsibility of the
Accounts' management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Hartford Life Insurance
Company Separate Account One as of December 31, 1996, the results of its
operations for the year then ended and the changes in its net assets for each
of the two years in the period then ended in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 14, 1997
27
<PAGE>
- --------------------------------------------------------------------------------
Separate Account Two
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ -------------- ------------
<S> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares 209,901,213
Cost $213,818,503
Market Value......... $209,731,192 -- --
Hartford Stock Fund,
Inc.
Shares 325,077,171
Cost $942,043,980
Market Value......... -- $1,346,700,441 --
HVA Money Market Fund,
Inc.
Shares 282,828,485
Cost $282,828,485
Market Value......... -- -- $282,828,485
Hartford Advisers Fund,
Inc.
Shares 1,337,021,547
Cost $2,233,276,156
Market Value......... -- -- --
Hartford U.S.
Government Money
Market Fund, Inc.
Shares 1,592,137
Cost $1,592,137
Market Value......... -- -- --
Hartford Capital
Appreciation Fund,
Inc.
Shares 366,806,192
Cost $1,062,106,327
Market Value......... -- -- --
Hartford Mortgage
Securities Fund, Inc.
Shares 189,233,708
Cost $203,956,416
Market Value......... -- -- --
Hartford Index Fund,
Inc.
Shares 111,179,449
Cost $184,665,755
Market Value......... -- -- --
Hartford International
Opportunities Fund,
Inc.
Shares 291,990,802
Cost $336,561,408
Market Value......... -- -- --
Hartford Dividend and
Growth Fund, Inc.
Shares 209,596,491
Cost $268,301,179
Market Value......... -- -- --
Due from Hartford Life
Insurance Company..... 389,971 -- 1,275,023
Receivable from fund
shares sold........... -- 1,214,364 --
------------ -------------- ------------
Total Assets........... 210,121,163 1,347,914,805 284,103,508
------------ -------------- ------------
LIABILITIES:
Due to Hartford Life
Insurance Company..... -- 1,203,942 --
Payable for fund shares
purchased............. 391,131 -- 1,269,939
------------ -------------- ------------
Total Liabilities...... 391,131 1,203,942 1,269,939
------------ -------------- ------------
Net Assets (variable
annuity contract
liabilities).......... $209,730,032 $1,346,710,863 $282,833,569
------------ -------------- ------------
------------ -------------- ------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
28
<PAGE>
<TABLE>
<CAPTION>
MORTGAGE INTERNATIONAL
U.S. GOVERNMENT CAPITAL SECURITIES OPPORTUNITIES
ADVISERS FUND MONEY MARKET FUND APPRECIATION FUND FUND INDEX FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- ------------------- ----------------- ------------- ------------ -----------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares 209,901,213
Cost $213,818,503
Market Value......... -- -- -- -- -- --
Hartford Stock Fund,
Inc.
Shares 325,077,171
Cost $942,043,980
Market Value......... -- -- -- -- -- --
HVA Money Market Fund,
Inc.
Shares 282,828,485
Cost $282,828,485
Market Value......... -- -- -- -- -- --
Hartford Advisers Fund,
Inc.
Shares 1,337,021,547
Cost $2,233,276,156
Market Value......... $2,900,708,354 -- -- -- -- --
Hartford U.S.
Government Money
Market Fund, Inc.
Shares 1,592,137
Cost $1,592,137
Market Value......... -- $1,592,137 -- -- -- --
Hartford Capital
Appreciation Fund,
Inc.
Shares 366,806,192
Cost $1,062,106,327
Market Value......... -- -- $1,435,800,482 -- -- --
Hartford Mortgage
Securities Fund, Inc.
Shares 189,233,708
Cost $203,956,416
Market Value......... -- -- -- $199,787,272 -- --
Hartford Index Fund,
Inc.
Shares 111,179,449
Cost $184,665,755
Market Value......... -- -- -- -- $264,803,879 --
Hartford International
Opportunities Fund,
Inc.
Shares 291,990,802
Cost $336,561,408
Market Value......... -- -- -- -- -- $410,796,017
Hartford Dividend and
Growth Fund, Inc.
Shares 209,596,491
Cost $268,301,179
Market Value......... -- -- -- -- -- --
Due from Hartford Life
Insurance Company..... -- -- -- -- -- --
Receivable from fund
shares sold........... 7,791 3,686 505,615 6,461 195,459 294,275
--------------- ------------------- ----------------- ------------- ------------ -----------------
Total Assets........... 2,900,716,145 1,595,823 1,436,306,097 199,793,733 264,999,338 411,090,292
--------------- ------------------- ----------------- ------------- ------------ -----------------
LIABILITIES:
Due to Hartford Life
Insurance Company..... 9,064 3,303 505,676 2,327 196,318 294,299
Payable for fund shares
purchased............. -- -- -- -- -- --
--------------- ------------------- ----------------- ------------- ------------ -----------------
Total Liabilities...... 9,064 3,303 505,676 2,327 196,318 294,299
--------------- ------------------- ----------------- ------------- ------------ -----------------
Net Assets (variable
annuity contract
liabilities).......... $2,900,707,081 $1,592,520 $1,435,800,421 $199,791,406 $264,803,020 $410,795,993
--------------- ------------------- ----------------- ------------- ------------ -----------------
--------------- ------------------- ----------------- ------------- ------------ -----------------
<CAPTION>
DIVIDEND AND
GROWTH FUND
SUB-ACCOUNT
------------
<S> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford Stock Fund,
Inc.
Shares
Cost
Market Value......... --
HVA Money Market Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford Advisers Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford U.S.
Government Money
Market Fund, Inc.
Shares
Cost
Market Value......... --
Hartford Capital
Appreciation Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford Mortgage
Securities Fund, Inc.
Shares
Cost
Market Value......... --
Hartford Index Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford International
Opportunities Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford Dividend and
Growth Fund, Inc.
Shares
Cost
Market Value......... $324,333,800
Due from Hartford Life
Insurance Company..... 278,410
Receivable from fund
shares sold........... --
------------
Total Assets........... 324,612,210
------------
LIABILITIES:
Due to Hartford Life
Insurance Company..... --
Payable for fund shares
purchased............. 278,289
------------
Total Liabilities...... 278,289
------------
Net Assets (variable
annuity contract
liabilities).......... $324,333,921
------------
------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
29
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT TWO
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES -- (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
CALVERT
RESPONSIBLY
INVESTED
BALANCED INTERNATIONAL SMALL SMITH BARNEY
PORTFOLIO ADVISERS FUND COMPANY FUND CASH PORTFOLIO CLASS A
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- ------------- ------------- ----------------------
<S> <C> <C> <C> <C>
ASSETS:
Investments:
Calvert Responsibly
Invested Balanced
Portfolio
Shares 1,499,952
Cost $ 2,391,011
Market Value......... $2,660,914 -- -- --
Hartford International
Advisers Fund, Inc.
Shares 25,549,431
Cost $28,919,492
Market Value......... -- $29,805,457 -- --
Hartford Small Company
Fund, Inc.
Shares 12,669,842
Cost $13,471,629
Market Value......... -- -- $13,546,087 --
Smith Barney Cash
Portfolio Class A
Shares 580,242
Cost $ 580,242
Market Value......... -- -- -- $580,243
Smith Barney
Appreciation Fund,
Inc.
Shares 13,454
Cost $ 98,474
Market Value......... -- -- -- --
Smith Barney Government
Portfolio Class A
Shares 39,801
Cost $ 39,801
Market Value......... -- -- -- --
TCI Advantage Fund
Shares 27,440
Cost $ 166,872
Market Value......... -- -- -- --
TCI Growth Fund
Shares 111,230
Cost $ 1,287,905
Market Value......... -- -- -- --
Fidelity VIP Overseas
Portfolio
Shares 56,298
Cost $ 979,269
Market Value......... -- -- -- --
Fidelity VIP II Asset
Manager Portfolio
Shares 108,305
Cost $ 1,688,636
Market Value......... -- -- -- --
Fidelity VIP II
Contrafund Portfolio
Shares 402,873
Cost $ 5,743,454
Market Value......... -- -- -- --
Fidelity VIP Growth
Portfolio
Shares 225,301
Cost $ 6,630,047
Market Value......... -- -- -- --
Dividends receivable... -- -- -- 689
Due from Hartford Life
Insurance Company..... 20,342 233,723 306,594 --
Receivable from fund
shares sold........... -- -- -- 1,097
--------------- ------------- ------------- --------
Total Assets........... 2,681,256 30,039,180 13,852,681 582,029
--------------- ------------- ------------- --------
LIABILITIES:
Due to Hartford Life
Insurance Company..... -- -- -- 1,098
Payable for fund shares
purchased............. 20,027 230,006 306,589 --
--------------- ------------- ------------- --------
Total Liabilities...... 20,027 230,006 306,589 1,098
--------------- ------------- ------------- --------
Net Assets (variable
annuity contract
liabilities).......... $2,661,229 $29,809,174 $13,546,092 $580,931
--------------- ------------- ------------- --------
--------------- ------------- ------------- --------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
30
<PAGE>
<TABLE>
<CAPTION>
SMITH BARNEY SMITH BARNEY FIDELITY VIP
APPRECIATION GOVERNMENT PORTFOLIO TCI TCI OVERSEAS
FUND CLASS A ADVANTAGE FUND GROWTH FUND PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- -------------------- ------------------ --------------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Calvert Responsibly
Invested Balanced
Portfolio
Shares 1,499,952
Cost $ 2,391,011
Market Value......... -- -- -- -- --
Hartford International
Advisers Fund, Inc.
Shares 25,549,431
Cost $28,919,492
Market Value......... -- -- -- -- --
Hartford Small Company
Fund, Inc.
Shares 12,669,842
Cost $13,471,629
Market Value......... -- -- -- -- --
Smith Barney Cash
Portfolio Class A
Shares 580,242
Cost $ 580,242
Market Value......... -- -- -- -- --
Smith Barney
Appreciation Fund,
Inc.
Shares 13,454
Cost $ 98,474
Market Value......... $ 172,850 -- -- -- --
Smith Barney Government
Portfolio Class A
Shares 39,801
Cost $ 39,801
Market Value......... -- $ 39,801 -- -- --
TCI Advantage Fund
Shares 27,440
Cost $ 166,872
Market Value......... -- -- $ 172,596 -- --
TCI Growth Fund
Shares 111,230
Cost $ 1,287,905
Market Value......... -- -- -- $ 1,138,990 --
Fidelity VIP Overseas
Portfolio
Shares 56,298
Cost $ 979,269
Market Value......... -- -- -- -- $1,060,645
Fidelity VIP II Asset
Manager Portfolio
Shares 108,305
Cost $ 1,688,636
Market Value......... -- -- -- -- --
Fidelity VIP II
Contrafund Portfolio
Shares 402,873
Cost $ 5,743,454
Market Value......... -- -- -- -- --
Fidelity VIP Growth
Portfolio
Shares 225,301
Cost $ 6,630,047
Market Value......... -- -- -- -- --
Dividends receivable... -- 56 -- -- --
Due from Hartford Life
Insurance Company..... -- -- 113 1,084 318
Receivable from fund
shares sold........... 123 17 -- -- --
--------------- ------- -------- --------------- ------------
Total Assets........... 172,973 39,874 172,709 1,140,074 1,060,963
--------------- ------- -------- --------------- ------------
LIABILITIES:
Due to Hartford Life
Insurance Company..... 112 32 -- -- --
Payable for fund shares
purchased............. -- -- 114 1,084 374
--------------- ------- -------- --------------- ------------
Total Liabilities...... 112 32 114 1,084 374
--------------- ------- -------- --------------- ------------
Net Assets (variable
annuity contract
liabilities).......... $ 172,861 $ 39,842 $ 172,595 $ 1,138,990 $1,060,589
--------------- ------- -------- --------------- ------------
--------------- ------- -------- --------------- ------------
<CAPTION>
FIDELITY VIP
FIDELITY VIP II II FIDELITY VIP
ASSET MANAGER CONTRAFUND GROWTH
PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- ------------- -------------
<S> <C> <C> <C>
ASSETS:
Investments:
Calvert Responsibly
Invested Balanced
Portfolio
Shares
Cost
Market Value......... -- -- --
Hartford International
Advisers Fund, Inc.
Shares
Cost
Market Value......... -- -- --
Hartford Small Company
Fund, Inc.
Shares
Cost
Market Value......... -- -- --
Smith Barney Cash
Portfolio Class A
Shares
Cost
Market Value......... -- -- --
Smith Barney
Appreciation Fund,
Inc.
Shares
Cost
Market Value......... -- -- --
Smith Barney Government
Portfolio Class A
Shares
Cost
Market Value......... -- -- --
TCI Advantage Fund
Shares
Cost
Market Value......... -- -- --
TCI Growth Fund
Shares
Cost
Market Value......... -- -- --
Fidelity VIP Overseas
Portfolio
Shares
Cost
Market Value......... -- -- --
Fidelity VIP II Asset
Manager Portfolio
Shares
Cost
Market Value......... $ 1,833,607 -- --
Fidelity VIP II
Contrafund Portfolio
Shares
Cost
Market Value......... -- $ 6,671,576 --
Fidelity VIP Growth
Portfolio
Shares
Cost
Market Value......... -- -- $ 7,015,865
Dividends receivable... -- -- --
Due from Hartford Life
Insurance Company..... 1,331 7,363 5,867
Receivable from fund
shares sold........... -- -- --
----------------- ------------- -------------
Total Assets........... 1,834,938 6,678,939 7,021,732
----------------- ------------- -------------
LIABILITIES:
Due to Hartford Life
Insurance Company..... -- -- --
Payable for fund shares
purchased............. 923 7,344 5,867
----------------- ------------- -------------
Total Liabilities...... 923 7,344 5,867
----------------- ------------- -------------
Net Assets (variable
annuity contract
liabilities).......... $ 1,834,015 $ 6,671,595 $ 7,015,865
----------------- ------------- -------------
----------------- ------------- -------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
31
<PAGE>
- --------------------------------------------------------------------------------
Separate Account Two
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES -- (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
UNITS
OWNED BY UNIT CONTRACT
PARTICIPANTS PRICE LIABILITY
------------ --------- --------------
DEFERRED ANNUITY CONTRACTS IN THE ACCUMULATION
PERIOD:
<S> <C> <C> <C>
INDIVIDUAL SUB-ACCOUNTS:
Bond Fund Qualified 1.00%....................... 286,137 $3.705223 $ 1,060,201
Bond Fund Non-Qualified 1.00%................... 2,004,675 3.648889 7,314,837
Bond Fund 1.25%................................. 96,857,176 1.922173 186,176,248
Bond Fund .25%.................................. 58,462 1.279841 74,822
Stock Fund Qualified 1.00%...................... 829,845 6.828860 5,666,897
Stock Fund Non-Qualified 1.00%.................. 3,406,617 6.529899 22,244,866
Stock Fund 1.25%................................ 333,175,709 3.546656 1,181,659,627
Stock Fund .25%................................. 1,094,565 1.863616 2,039,847
Money Market Fund Qualified 1.00%............... 1,361,999 2.465145 3,357,527
Money Market Fund Non-Qualified 1.00%........... 13,210,943 2.466312 32,582,307
Money Market Fund 1.25%......................... 151,978,017 1.586516 241,115,556
Money Market Fund .25%.......................... 107,272 1.177980 126,364
Advisers Fund Qualified 1.00%................... 3,530,743 4.341094 15,327,287
Advisers Fund Non-Qualified 1.00%............... 12,468,636 4.341094 54,127,522
Advisers Fund 1.25%............................. 953,997,531 2.905301 2,771,649,980
Advisers Fund .25%.............................. 1,035,316 1.620437 1,677,664
U.S. Government Money Market Fund Qualified
1.00%.......................................... 13,096 1.964748 25,730
U.S. Government Money Market Fund 1.25%......... 46,108 1.520714 70,117
Capital Appreciation Fund Qualified 1.00%....... 887,736 6.732095 5,976,324
Capital Appreciation Fund Non-Qualified 1.00%... 2,634,097 6.728893 17,724,557
Capital Appreciation Fund 1.25%................. 330,579,796 4.010163 1,325,678,867
Capital Appreciation Growth Fund .25%........... 2,393,968 1.929665 4,619,555
Mortgage Securities Fund Qualified 1.00%........ 754,527 2.494635 1,882,270
Mortgage Securities Fund Non-Qualified 1.00%.... 8,165,242 2.494635 20,369,299
Mortgage Securities Fund 1.25%.................. 89,097,727 1.948580 173,614,049
Mortgage Securities Fund .25%................... 16,088 1.259955 20,270
Index Fund 1.00%................................ 38,885 1.121353 43,604
Index Fund Non-Qualified 1.00%.................. 105,698 1.121353 118,525
Index Fund 1.25%................................ 87,611,122 2.845170 249,268,537
Index Fund .25%................................. 208,930 1.823336 380,949
International Opportunities Fund Qualified
1.00%.......................................... 374,127 1.506694 563,694
International Opportunities Fund Non-Qualified
1.00%.......................................... 1,951,162 1.506641 2,939,701
International Opportunities Fund 1.25%.......... 266,961,904 1.482397 395,743,525
International Opportunities Fund .25%........... 796,396 1.658799 1,321,061
Dividend and Growth Fund Qualified 1.00%........ 291,489 1.661695 484,366
Dividend and Growth Fund Non-Qualified 1.00%.... 1,241,381 1.661695 2,062,797
Dividend and Growth Fund 1.25%.................. 190,957,704 1.650056 315,090,906
Dividend and Growth Fund .25%................... 278,866 1.697062 473,253
International Advisers Fund 1.00%............... 18,539 1.271482 23,572
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
32
<PAGE>
<TABLE>
<CAPTION>
UNITS
OWNED BY UNIT CONTRACT
PARTICIPANTS PRICE LIABILITY
------------ --------- --------------
INDIVIDUAL SUB-ACCOUNTS -- (CONTINUED)
<S> <C> <C> <C>
International Advisers Fund Non-Qualified
1.00%.......................................... 347,573 $1.271482 $ 441,933
International Advisers Fund 1.25%............... 23,174,203 1.265665 29,330,778
International Advisers Fund .25%................ 10,000 1.289112 12,891
Hartford Small Company Fund 1.00%............... 10,000 1.067381 10,674
Hartford Small Company Fund Non-Qualified
1.00%.......................................... 109,746 1.067381 117,140
Hartford Small Company Fund 1.25%............... 12,562,718 1.066345 13,396,192
Hartford Small Company Fund .25%................ 20,632 1.070487 22,086
Smith Barney Cash Portfolio Class A Qualified
1.00%.......................................... 78,105 2.668734 208,440
Smith Barney Cash Portfolio Class A
Non-Qualified 1.00%............................ 134,883 2.761578 372,491
Smith Barney Appreciation Fund, Inc. Qualified
1.00%.......................................... 23,313 7.414916 172,861
Smith Barney Government Portfolio Class A
Qualified 1.00%................................ 16,556 2.406571 39,842
--------------
Sub-total Individual Sub-Accounts............... 7,088,822,408
--------------
GROUP SUB-ACCOUNTS:
Bond Fund Qualified 1.00% QP.................... 1,156,525 4.339730 5,019,007
Bond Fund 1.25% DCII............................ 1,655,052 4.186875 6,929,497
Bond Fund .15% DCII............................. 305,789 3.988350 1,219,594
Stock Fund Qualified 1.00% QP................... 3,371,997 11.419696 38,507,182
Stock Fund Qualified .825% QP................... 1,236,665 9.187655 11,362,056
Stock Fund Non-Qualified 1.00% NQ............... 84,854 8.960086 760,298
Stock Fund Non-Qualified .825% NQ............... 789,689 9.203794 7,268,133
Stock Fund 1.25% DCII........................... 4,885,027 11.016763 53,817,180
Stock Fund .15% DCII............................ 873,948 8.647926 7,557,838
Money Market Fund Qualified .375% QP............ 2,493 3.094168 7,714
Money Market Fund 1.25% DCII.................... 1,332,772 2.724852 3,631,605
Money Market Fund .15% DCII..................... 321,329 2.679247 860,920
Advisers Fund 1.25% DCII........................ 10,504,581 4.201072 44,130,500
Advisers Fund .15% DCII......................... 603,382 4.875465 2,941,770
U.S. Government Money Market Fund 1.25% DCII.... 586,557 1.898594 1,113,633
U.S. Government Money Market Fund .15% DCII..... 54,540 2.211389 120,609
Capital Appreciation Fund 1.25% DCII............ 10,979,149 6.532522 71,721,533
Capital Appreciation Fund .15% DCII............. 783,105 7.500897 5,873,989
Mortgage Securities Fund 1.25% DCII............. 1,140,765 2.421049 2,761,848
Mortgage Securities Fund .15% DCII.............. 143,045 2.761199 394,976
Index Fund 1.25% DCII........................... 4,377,886 2.848016 12,468,289
Index Fund .15% DCII............................ 354,223 3.118020 1,104,474
International Opportunities Fund 1.25% DCII..... 5,995,783 1.482607 8,889,390
International Opportunities Fund .15% DCII...... 437,734 1.592168 696,947
Dividend and Growth Fund........................ 3,874,337 1.484086 5,749,849
Calvert Responsibly Invested Balanced Portfolio
1.25% DCII..................................... 1,192,706 2.020652 2,410,043
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
33
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT TWO
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES -- (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
UNITS
OWNED BY UNIT CONTRACT
PARTICIPANTS PRICE LIABILITY
------------ --------- --------------
GROUP SUB-ACCOUNTS -- (CONTINUED)
<S> <C> <C> <C>
TCI Advantage Portfolio......................... 144,148 $1.134354 $ 163,515
TCI Growth Fund Portfolio....................... 1,107,888 1.021217 1,131,394
Fidelity VIP Overseas Portfolio................. 920,778 1.151840 1,060,589
Fidelity VIP II Asset Manager Portfolio......... 1,491,046 1.230019 1,834,015
Fidelity VIP II Contrafund Portfolio............ 5,069,393 1.316054 6,671,595
Fidelity VIP II Growth Portfolio................ 5,773,053 1.215278 7,015,865
--------------
Sub-total Group Sub-Accounts.................... 315,195,847
--------------
TOTAL ACCUMULATION PERIOD......................... 7,404,018,255
--------------
ANNUITY CONTRACTS IN THE ANNUITY PERIOD:
INDIVIDUAL SUB-ACCOUNTS:
Bond Fund Non-Qualified 1.00%................... 27 3.648889 99
Bond Fund 1.25%................................. 183,085 1.922173 351,921
Stock Fund Non-Qualified 1.00%.................. 9,504 6.529899 62,059
Stock Fund 1.25%................................ 305,133 3.546656 1,082,200
Money Market Fund Qualified 1.00%............... 12,037 2.465145 29,672
Money Market Fund Non-Qualified 1.00%........... 90,874 2.466312 224,124
Money Market Fund 1.25%......................... 293,556 1.586516 465,731
Advisers Fund Qualified 1.00%................... 4,038 4.341094 17,529
Advisers Fund Non-Qualified 1.00%............... 61,575 4.341094 267,305
Advisers Fund 1.25%............................. 863,489 2.905301 2,508,695
U.S. Government Money Market Fund Qualified
1.00%.......................................... 10,951 1.964748 21,515
Capital Appreciation Fund Non-Qualified 1.00%... 3,442 6.728893 23,158
Capital Appreciation Fund 1.25%................. 150,348 4.010163 602,921
Mortgage Securities Fund Non-Qualified 1.00%.... 80,072 2.494635 199,751
Mortgage Securities Fund 1.25%.................. 81,728 1.948580 159,253
Index Fund 1.25%................................ 53,288 2.845170 151,614
International Opportunities Fund 1.25%.......... 184,639 1.482397 273,708
Dividend and Growth Fund 1.25%.................. 120,079 1.650056 198,136
--------------
Sub-total Individual Sub-Accounts............... 6,639,391
--------------
GROUP SUB-ACCOUNTS:
Bond Fund Qualified 1.00% QP.................... 68,667 4.339730 297,996
Bond Fund 1.25% DCII............................ 290,717 4.186875 1,217,195
Bond Fund 1.00% DCII............................ 11,681 4.322597 50,493
Bond Fund .15% DCII............................. 4,544 3.988350 18,122
Stock Fund Qualified 1.00% QP................... 228,666 11.419696 2,611,302
Stock Fund Qualified .825% QP................... 50,529 9.187655 464,243
Stock Fund Non-Qualified 1.00% NQ............... 569 8.960086 5,099
Stock Fund Non-Qualified .825% NQ............... 50,740 9.203794 467,004
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
34
<PAGE>
<TABLE>
<CAPTION>
UNITS
OWNED BY UNIT CONTRACT
PARTICIPANTS PRICE LIABILITY
------------ --------- --------------
GROUP SUB-ACCOUNTS -- (CONTINUED)
<S> <C> <C> <C>
Stock Fund 1.25% DCII........................... 997,034 $11.016763 $ 10,984,089
Stock Fund 1.00% DCII........................... 3,994 11.383947 45,472
Stock Fund .15% DCII............................ 12,196 8.647926 105,471
Money Market Fund 1.25% DCII.................... 158,559 2.724852 432,049
Advisers Fund 1.25% DCII........................ 1,889,915 4.201072 7,939,668
Advisers Fund .15% DCII......................... 24,441 4.875465 119,161
U.S. Government Money Market Fund 1.25% DCII.... 126,892 1.898594 240,916
Capital Appreciation Fund 1.25% DCII............ 537,157 6.532522 3,508,989
Capital Appreciation Fund .15% DCII............. 9,403 7.500897 70,528
Mortgage Securities Fund 1.25% DCII............. 160,959 2.421049 389,689
Index Fund 1.25% DCII........................... 440,396 2.848016 1,254,255
Index Fund .15% DCII............................ 4,097 3.118020 12,773
International Opportunities Fund 1.25% DCII..... 227,628 1.482607 337,483
International Opportunities Fund .15% DCII...... 19,146 1.592168 30,484
Dividend and Growth Fund........................ 185,039 1.484086 274,614
Calvert Responsibly Invested Balanced Portfolio
1.25% DCII..................................... 124,309 2.020652 251,186
TCI Advantage Fund.............................. 8,005 1.134354 9,080
TCI Growth Fund................................. 7,438 1.021217 7,596
--------------
Sub-total Group Sub-Accounts.................... 31,144,957
--------------
TOTAL ANNUITY PERIOD.............................. 37,784,348
--------------
GRAND TOTAL....................................... $7,441,802,603
--------------
--------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
35
<PAGE>
- --------------------------------------------------------------------------------
Separate Account Two
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ------------ -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 12,893,843 $ 18,086,005 $12,430,899
EXPENSES:
Mortality and expense
undertakings.......... (2,481,229) (13,978,363) (2,990,459)
------------ ------------ -----------
Net investment income
(loss).............. 10,412,614 4,107,642 9,440,440
------------ ------------ -----------
CAPITAL GAINS INCOME..... -- 41,100,004 --
------------ ------------ -----------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... (262,277) 3,161,056 --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ (5,517,884) 189,613,138 --
------------ ------------ -----------
Net realized and
unrealized gain
(loss) on
investments......... (5,780,161) 192,774,194 --
------------ ------------ -----------
Net increase
(decrease) in net
assets resulting
from operations..... $ 4,632,453 $237,981,840 $ 9,440,440
------------ ------------ -----------
------------ ------------ -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
36
<PAGE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT CAPITAL MORTGAGE
ADVISERS FUND MONEY MARKET FUND APPRECIATION FUND SECURITIES FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- -------------------- ----------------- ---------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 75,797,664 $ 73,159 $ 8,578,529 $13,309,238
EXPENSES:
Mortality and expense
undertakings.......... (32,375,755) (17,750) (15,329,687) (2,542,139)
------------- -------- ----------------- ---------------
Net investment income
(loss).............. 43,421,909 55,409 (6,751,158) 10,767,099
------------- -------- ----------------- ---------------
CAPITAL GAINS INCOME..... 53,115,059 -- 70,324,118 --
------------- -------- ----------------- ---------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 1,874,522 -- 2,065,427 (435,741)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 276,364,776 -- 154,074,827 (2,844,443)
------------- -------- ----------------- ---------------
Net realized and
unrealized gain
(loss) on
investments......... 278,239,298 -- 156,140,254 (3,280,184)
------------- -------- ----------------- ---------------
Net increase
(decrease) in net
assets resulting
from operations..... $ 374,776,266 $ 55,409 $219,713,214 $ 7,486,915
------------- -------- ----------------- ---------------
------------- -------- ----------------- ---------------
<CAPTION>
INTERNATIONAL DIVIDEND AND
INDEX FUND OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ------------------ ------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 4,491,244 $ 7,252,292 $ 5,391,238
EXPENSES:
Mortality and expense
undertakings.......... (2,695,725) (4,681,021) (2,723,447)
------------ ------------------ ------------
Net investment income
(loss).............. 1,795,519 2,571,271 2,667,791
------------ ------------------ ------------
CAPITAL GAINS INCOME..... 3,292,866 9,589,596 2,810,352
------------ ------------------ ------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 140,503 91,466 (3,931)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 36,167,970 28,439,913 38,471,770
------------ ------------------ ------------
Net realized and
unrealized gain
(loss) on
investments......... 36,308,473 28,531,379 38,467,839
------------ ------------------ ------------
Net increase
(decrease) in net
assets resulting
from operations..... $ 41,396,858 $40,692,246 $ 43,945,982
------------ ------------------ ------------
------------ ------------------ ------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
37
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT TWO
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
CALVERT SMITH BARNEY
RESPONSIBLY INVESTED INTERNATIONAL SMALL CASH PORTFOLIO
BALANCED PORTFOLIO ADVISERS FUND COMPANY FUND CLASS A
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT
-------------------- ------------- ------------------ -------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 57,279 $ 879,182 $ 9,954 $27,809
EXPENSES:
Mortality and expense
undertakings.......... (27,872) (234,636) (27,632) (5,756)
-------- ------------- ------- -------
Net investment income
(loss).............. 29,407 644,546 (17,678) 22,053
-------- ------------- ------- -------
CAPITAL GAINS INCOME..... 140,994 595,787 -- --
-------- ------------- ------- -------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 6,518 (3,562) 922 --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 78,661 708,119 74,459 --
-------- ------------- ------- -------
Net realized and
unrealized gain
(loss) on
investments......... 85,179 704,557 75,381 --
-------- ------------- ------- -------
Net increase
(decrease) in net
assets resulting
from operations..... $255,580 $1,944,890 $57,703 $22,053
-------- ------------- ------- -------
-------- ------------- ------- -------
</TABLE>
* From inception, August 9, 1996, to December 31, 1996.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
38
<PAGE>
<TABLE>
<CAPTION>
SMITH BARNEY
GOVERNMENT FIDELITY VIP FIDELITY VIP II
SMITH BARNEY PORTFOLIO TCI TCI OVERSEAS ASSET MANAGER
APPRECIATION FUND CLASS A ADVANTAGE FUND GROWTH FUND PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- -------------- -------------- ----------- ------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $16,634 $2,077 $6,903 $ 100,570 $ 3,709 $ 27,849
EXPENSES:
Mortality and expense
undertakings.......... (1,599) (431) (1,529) (13,692) (8,486) (13,608)
------- ------ ------ ----------- ------------- --------
Net investment income
(loss).............. 15,035 1,646 5,374 86,878 (4,777) 14,241
------- ------ ------ ----------- ------------- --------
CAPITAL GAINS INCOME..... -- -- -- -- 4,080 --
------- ------ ------ ----------- ------------- --------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 174 -- (110) 527 985 (71)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 11,776 -- 4,528 (155,560) 77,918 126,112
------- ------ ------ ----------- ------------- --------
Net realized and
unrealized gain
(loss) on
investments......... 11,950 -- 4,418 (155,033) 78,903 126,041
------- ------ ------ ----------- ------------- --------
Net increase
(decrease) in net
assets resulting
from operations..... $26,985 $1,646 $9,792 $ (68,155) $78,206 $140,282
------- ------ ------ ----------- ------------- --------
------- ------ ------ ----------- ------------- --------
<CAPTION>
FIDELITY
FIDELITY VIP II VIP
CONTRAFUND GROWTH
PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
--------------- -----------
<S> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 21,249 $ 73,883
EXPENSES:
Mortality and expense
undertakings.......... (56,903) (63,705)
--------------- -----------
Net investment income
(loss).............. (35,654) 10,178
--------------- -----------
CAPITAL GAINS INCOME..... -- 115,329
--------------- -----------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... (377) (6,795)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 910,896 420,263
--------------- -----------
Net realized and
unrealized gain
(loss) on
investments......... 910,519 413,468
--------------- -----------
Net increase
(decrease) in net
assets resulting
from operations..... $874,865 $538,975
--------------- -----------
--------------- -----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
39
<PAGE>
- --------------------------------------------------------------------------------
Separate Account Two
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ -------------- -------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 10,412,614 $ 4,107,642 $ 9,440,440
Capital gains income... -- 41,100,004 --
Net realized gain
(loss) on security
transactions.......... (262,277) 3,161,056 --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ (5,517,884) 189,613,138 --
------------ -------------- -------------
Net increase (decrease)
in net assets
resulting from
operations............ 4,632,453 237,981,840 9,440,440
------------ -------------- -------------
UNIT TRANSACTIONS:
Purchases.............. 27,446,873 174,128,189 70,557,174
Net transfers.......... (16,819,459) 27,816,288 67,229,895
Surrenders............. (16,860,465) (57,921,128) (52,794,253)
Net annuity
transactions.......... (32,192) (176,096) (239,109)
------------ -------------- -------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... (6,265,243) 143,847,253 84,753,707
------------ -------------- -------------
Total increase
(decrease) in net
assets................ (1,632,790) 381,829,093 94,194,147
NET ASSETS:
Beginning of period.... 211,362,822 964,881,770 188,639,422
------------ -------------- -------------
End of period.......... $209,730,032 $1,346,710,863 $282,833,569
------------ -------------- -------------
------------ -------------- -------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1995
MONEY
BOND FUND STOCK FUND MARKET FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ -------------- -------------
OPERATIONS:
Net investment income
(loss)................ $ 9,356,706 $ 8,102,133 $ 9,540,693
Capital gains income... -- 26,305,598 --
Net realized gain
(loss) on security
transactions.......... 117,877 2,168,121 --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 18,122,724 184,154,644 --
------------ -------------- -------------
Net increase (decrease)
in net assets
resulting from
operations............ 27,597,307 220,730,496 9,540,693
------------ -------------- -------------
UNIT TRANSACTIONS:
Purchases.............. 18,860,293 101,236,958 48,515,026
Net transfers.......... 17,461,966 34,337,542 (83,703,644)
Surrenders............. (12,010,919) (38,089,217) (27,263,647)
Net annuity
transactions.......... (33,972) 563,526 (138,249)
------------ -------------- -------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 24,277,368 98,048,809 (62,590,514)
------------ -------------- -------------
Total increase
(decrease) in net
assets................ 51,874,675 318,779,305 (53,049,821)
NET ASSETS:
Beginning of period.... 159,488,147 646,102,465 241,689,243
------------ -------------- -------------
End of period.......... $211,362,822 $ 964,881,770 $188,639,422
------------ -------------- -------------
------------ -------------- -------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
40
<PAGE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT CAPITAL MORTGAGE INTERNATIONAL
ADVISERS FUND MONEY MARKET FUND APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- -------------------- ----------------- --------------- ------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 43,421,909 $ 55,409 $ (6,751,158) $ 10,767,099 $ 1,795,519 $ 2,571,271
Capital gains income... 53,115,059 -- 70,324,118 -- 3,292,866 9,589,596
Net realized gain
(loss) on security
transactions.......... 1,874,522 -- 2,065,427 (435,741) 140,503 91,466
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 276,364,776 -- 154,074,827 (2,844,443) 36,167,970 28,439,913
--------------- ----------- ----------------- --------------- ------------- ------------------
Net increase (decrease)
in net assets
resulting from
operations............ 374,776,266 55,409 219,713,214 7,486,915 41,396,858 40,692,246
--------------- ----------- ----------------- --------------- ------------- ------------------
UNIT TRANSACTIONS:
Purchases.............. 322,583,889 216,658 200,411,434 9,051,920 47,675,352 43,044,896
Net transfers.......... (3,947,049) (124,960) 495,679 (19,016,015) 21,152,822 20,223,935
Surrenders............. (150,653,853) (77,729) (60,449,676) (19,091,976) (10,892,469) (21,614,763)
Net annuity
transactions.......... 730,038 (18,734) 658,118 (55,176) 75,085 141,714
--------------- ----------- ----------------- --------------- ------------- ------------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 168,713,025 (4,765) 141,115,555 (29,111,247) 58,010,790 41,795,782
--------------- ----------- ----------------- --------------- ------------- ------------------
Total increase
(decrease) in net
assets................ 543,489,291 50,644 360,828,769 (21,624,332) 99,407,648 82,488,028
NET ASSETS:
Beginning of period.... 2,357,217,790 1,541,876 1,074,971,652 221,415,738 165,395,372 328,307,965
--------------- ----------- ----------------- --------------- ------------- ------------------
End of period.......... $2,900,707,081 $1,592,520 $1,435,800,421 $199,791,406 $ 264,803,020 $410,795,993
--------------- ----------- ----------------- --------------- ------------- ------------------
--------------- ----------- ----------------- --------------- ------------- ------------------
U.S. GOVERNMENT CAPITAL MORTGAGE INTERNATIONAL
ADVISERS FUND MONEY MARKET FUND APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- -------------------- ----------------- --------------- ------------- ------------------
OPERATIONS:
Net investment income
(loss)................ $ 47,996,996 $ 56,945 $ (2,372,963) $ 11,548,045 $ 1,542,554 $ 1,106,594
Capital gains income... 21,614,744 -- 34,687,769 -- 38,706 2,695,768
Net realized gain
(loss) on security
transactions.......... 1,643,658 -- 2,276,572 (490,628) 969,630 (488,089)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 410,209,012 -- 168,562,628 18,815,991 34,721,169 32,521,726
--------------- ----------- ----------------- --------------- ------------- ------------------
Net increase (decrease)
in net assets
resulting from
operations............ 481,464,410 56,945 203,154,006 29,873,408 37,272,059 35,835,999
--------------- ----------- ----------------- --------------- ------------- ------------------
UNIT TRANSACTIONS:
Purchases.............. 189,985,618 247,760 164,142,420 9,787,879 22,856,837 27,669,493
Net transfers.......... (5,608,414) 17,612 104,275,366 (15,085,789) 14,885,934 (24,115,834)
Surrenders............. (110,192,361) (76,250) (29,551,158) (16,689,694) (4,088,509) (12,086,298)
Net annuity
transactions.......... 487,625 84,208 482,089 13,331 84,999 124,982
--------------- ----------- ----------------- --------------- ------------- ------------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 74,672,468 273,330 239,348,717 (21,974,273) 33,739,261 (8,407,657)
--------------- ----------- ----------------- --------------- ------------- ------------------
Total increase
(decrease) in net
assets................ 556,136,878 330,275 442,502,723 7,899,135 71,011,320 27,428,342
NET ASSETS:
Beginning of period.... 1,801,080,912 1,211,601 632,468,929 213,516,603 94,384,052 300,879,623
--------------- ----------- ----------------- --------------- ------------- ------------------
End of period.......... $2,357,217,790 $1,541,876 $1,074,971,652 $221,415,738 $ 165,395,372 $328,307,965
--------------- ----------- ----------------- --------------- ------------- ------------------
--------------- ----------- ----------------- --------------- ------------- ------------------
<CAPTION>
DIVIDEND AND
GROWTH FUND
SUB-ACCOUNT
-------------
<S> <C>
OPERATIONS:
Net investment income
(loss)................ $ 2,667,791
Capital gains income... 2,810,352
Net realized gain
(loss) on security
transactions.......... (3,931)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 38,471,770
-------------
Net increase (decrease)
in net assets
resulting from
operations............ 43,945,982
-------------
UNIT TRANSACTIONS:
Purchases.............. 99,649,393
Net transfers.......... 73,409,821
Surrenders............. (8,580,693)
Net annuity
transactions.......... 330,214
-------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 164,808,735
-------------
Total increase
(decrease) in net
assets................ 208,754,717
NET ASSETS:
Beginning of period.... 115,579,204
-------------
End of period.......... $324,333,921
-------------
-------------
DIVIDEND AND
GROWTH FUND
SUB-ACCOUNT
-------------
OPERATIONS:
Net investment income
(loss)................ $ 1,044,698
Capital gains income... --
Net realized gain
(loss) on security
transactions.......... 4,933
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 18,047,295
-------------
Net increase (decrease)
in net assets
resulting from
operations............ 19,096,926
-------------
UNIT TRANSACTIONS:
Purchases.............. 37,005,986
Net transfers.......... 31,702,670
Surrenders............. (2,159,189)
Net annuity
transactions.......... 77,507
-------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 66,626,974
-------------
Total increase
(decrease) in net
assets................ 85,723,900
NET ASSETS:
Beginning of period.... 29,855,304
-------------
End of period.......... $115,579,204
-------------
-------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
41
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT TWO
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
CALVERT
RESPONSIBLY
INVESTED
BALANCED INTERNATIONAL SMALL SMITH BARNEY
PORTFOLIO ADVISERS FUND COMPANY FUND DAILY DIVIDEND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT*** SUB-ACCOUNT
--------------- ------------- ------------------ -------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 29,407 $ 644,546 $ (17,678) $ 22,053
Capital gains income... 140,994 595,787 -- --
Net realized gain
(loss) on security
transactions.......... 6,518 (3,562) 922 --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 78,661 708,119 74,459 --
--------------- ------------- ------------------ --------
Net increase (decrease)
in net assets
resulting from
operations............ 255,580 1,944,890 57,703 22,053
--------------- ------------- ------------------ --------
UNIT TRANSACTIONS:
Purchases.............. 501,957 10,618,419 4,333,960 25
Net transfers.......... 86,346 10,257,798 9,203,248 --
Surrenders............. (81,242) (609,471) (48,819) (10,494)
Net annuity
transactions.......... 135,085 -- -- --
--------------- ------------- ------------------ --------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 642,146 20,266,746 13,488,389 (10,469)
--------------- ------------- ------------------ --------
Total increase
(decrease) in net
assets................ 897,726 22,211,636 13,546,092 11,584
NET ASSETS:
Beginning of period.... 1,763,503 7,597,538 -- 569,347
--------------- ------------- ------------------ --------
End of period.......... $ 2,661,229 $ 29,809,174 $13,546,092 $580,931
--------------- ------------- ------------------ --------
--------------- ------------- ------------------ --------
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1995
CALVERT
RESPONSIBLY
INVESTED SMITH BARNEY
BALANCED INTERNATIONAL CASH PORTFOLIO SMITH BARNEY
PORTFOLIO ADVISERS FUND CLASS A APPRECIATION FUND
SUB-ACCOUNT SUB-ACCOUNT* SUB-ACCOUNT SUB-ACCOUNT
--------------- ------------- ------------------ -------------------
OPERATIONS:
Net investment income
(loss)................ $ 87,446 $ 164,074 $ 26,340 $ 1,041
Capital gains income... 50,438 -- -- 11,468
Net realized gain
(loss) on security
transactions.......... 1,044 6,279 -- 148
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 184,034 177,844 -- 20,104
--------------- ------------- ------------------ --------
Net increase (decrease)
in net assets
resulting from
operations............ 322,962 348,197 26,340 32,761
--------------- ------------- ------------------ --------
UNIT TRANSACTIONS:
Purchases.............. 394,157 2,632,312 -- 50
Net transfers.......... 19,199 4,663,681 (10,709) --
Surrenders............. (28,010) (46,652) (92,200) (1,598)
Net annuity
transactions.......... 30,857 -- -- --
--------------- ------------- ------------------ --------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 416,203 7,249,341 (102,909) (1,548)
--------------- ------------- ------------------ --------
Total increase
(decrease) in net
assets................ 739,165 7,597,538 (76,569) 31,213
NET ASSETS:
Beginning of period.... 1,024,338 -- 645,916 117,221
--------------- ------------- ------------------ --------
End of period.......... $ 1,763,503 $ 7,597,538 $ 569,347 $148,434
--------------- ------------- ------------------ --------
--------------- ------------- ------------------ --------
</TABLE>
* From inception, March 31, 1995, to December 31, 1995.
** From inception, July 1, 1995, to December 31, 1995.
*** From inception, August 9, 1996, to December 31, 1996.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
42
<PAGE>
<TABLE>
<CAPTION>
SMITH BARNEY
GOVERNMENT TCI FIDELITY VIP FIDELITY VIP II
SMITH BARNEY PORTFOLIO ADVANTAGE TCI OVERSEAS ASSET MANAGER
APPRECIATION FUND CLASS A FUND GROWTH FUND PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- -------------- -------------- ----------- ------------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 15,035 $ 1,646 $ 5,374 $ 86,878 $ (4,777) $ 14,241
Capital gains income... -- -- -- -- 4,080 --
Net realized gain
(loss) on security
transactions.......... 174 -- (110) 527 985 (71)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 11,776 -- 4,528 (155,560) 77,918 126,112
-------- ------- -------------- ----------- ------------------ ------------------
Net increase (decrease)
in net assets
resulting from
operations............ 26,985 1,646 9,792 (68,155) 78,206 140,282
-------- ------- -------------- ----------- ------------------ ------------------
UNIT TRANSACTIONS:
Purchases.............. -- -- 52,991 278,606 196,292 268,755
Net transfers.......... -- -- 63,519 248,714 626,400 1,181,511
Surrenders............. (2,558) (4,273) (218) (13,223) (27,202) (95,811)
Net annuity
transactions.......... -- -- (410) (374) -- --
-------- ------- -------------- ----------- ------------------ ------------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... (2,558) (4,273) 115,882 513,723 795,490 1,354,455
-------- ------- -------------- ----------- ------------------ ------------------
Total increase
(decrease) in net
assets................ 24,427 (2,627) 125,674 445,568 873,696 1,494,737
NET ASSETS:
Beginning of period.... 148,434 42,469 46,921 693,422 186,893 339,278
-------- ------- -------------- ----------- ------------------ ------------------
End of period.......... $172,861 $39,842 $172,595 $1,138,990 $1,060,589 $1,834,015
-------- ------- -------------- ----------- ------------------ ------------------
-------- ------- -------------- ----------- ------------------ ------------------
SMITH BARNEY FIDELITY
GOVERNMENT VIP FIDELITY VIP II FIDELITY VIP II
PORTFOLIO TCI TCI OVERSEAS ASSET MANAGER CONTRAFUND
CLASS A ADVANTAGE FUND GROWTH FUND PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT** SUB-ACCOUNT** SUB-ACCOUNT** SUB-ACCOUNT**
----------------- -------------- -------------- ----------- ------------------ ------------------
OPERATIONS:
Net investment income
(loss)................ $ 1,938 $ 549 $ (2,133) $ (491) $ (1,491) $ 19,233
Capital gains income... -- -- -- -- -- --
Net realized gain
(loss) on security
transactions.......... -- (90) 938 (240) 456 (577)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- 1,195 6,645 3,459 18,860 17,225
-------- ------- -------------- ----------- ------------------ ------------------
Net increase (decrease)
in net assets
resulting from
operations............ 1,938 1,654 5,450 2,728 17,825 35,881
-------- ------- -------------- ----------- ------------------ ------------------
UNIT TRANSACTIONS:
Purchases.............. -- 15,135 30,024 21,829 32,160 89,641
Net transfers.......... -- 40,646 669,352 172,761 300,031 1,871,915
Surrenders............. (7,562) (19,236) (20,127) (10,425) (10,738) (11,744)
Net annuity
transactions.......... -- 8,722 8,723 -- -- --
-------- ------- -------------- ----------- ------------------ ------------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... (7,562) 45,267 687,972 184,165 321,453 1,949,812
-------- ------- -------------- ----------- ------------------ ------------------
Total increase
(decrease) in net
assets................ (5,624) 46,921 693,422 186,893 339,278 1,985,693
NET ASSETS:
Beginning of period.... 48,093 -- -- -- -- --
-------- ------- -------------- ----------- ------------------ ------------------
End of period.......... $ 42,469 $46,921 $693,422 $ 186,893 $ 339,278 $1,985,693
-------- ------- -------------- ----------- ------------------ ------------------
-------- ------- -------------- ----------- ------------------ ------------------
<CAPTION>
FIDELITY
FIDELITY VIP II VIP
CONTRAFUND GROWTH
PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
--------------- -----------
<S> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ (35,654) $ 10,178
Capital gains income... -- 115,329
Net realized gain
(loss) on security
transactions.......... (377) (6,795)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 910,896 420,263
--------------- -----------
Net increase (decrease)
in net assets
resulting from
operations............ 874,865 538,975
--------------- -----------
UNIT TRANSACTIONS:
Purchases.............. 928,554 1,249,738
Net transfers.......... 3,162,455 3,357,091
Surrenders............. (279,972) (334,425)
Net annuity
transactions.......... -- --
--------------- -----------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 3,811,037 4,272,404
--------------- -----------
Total increase
(decrease) in net
assets................ 4,685,902 4,811,379
NET ASSETS:
Beginning of period.... 1,985,693 2,204,486
--------------- -----------
End of period.......... $6,671,595 $7,015,865
--------------- -----------
--------------- -----------
FIDELITY VIP
GROWTH
PORTFOLIO
SUB-ACCOUNT**
---------------
OPERATIONS:
Net investment income
(loss)................ $ (6,603)
Capital gains income... --
Net realized gain
(loss) on security
transactions.......... (2,056)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ (34,445)
---------------
Net increase (decrease)
in net assets
resulting from
operations............ (43,104)
---------------
UNIT TRANSACTIONS:
Purchases.............. 120,267
Net transfers.......... 2,148,417
Surrenders............. (21,094)
Net annuity
transactions.......... --
---------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 2,247,590
---------------
Total increase
(decrease) in net
assets................ 2,204,486
NET ASSETS:
Beginning of period.... --
---------------
End of period.......... $2,204,486
---------------
---------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
43
<PAGE>
- --------------------------------------------------------------------------------
Separate Account Two
HARTFORD LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. ORGANIZATION:
Separate Account Two (the Account) is a separate investment account within
Hartford Life Insurance Company (the Company) and is registered with the
Securities and Exchange Commission (SEC) as a unit investment trust under
the Investment Company Act of 1940, as amended. Both the Company and the
Account are subject to supervision and regulation by the Department of
Insurance of the State of Connecticut and the SEC. The Account invests
deposits by variable annuity contractholders of the Company in various
mutual funds (the Funds) as directed by the contractholders.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting
principles in the investment company industry:
a) SECURITY TRANSACTIONS--Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Cost of investments
sold is determined on the basis of identified cost. Dividends and
capital gains income are accrued as of the ex-dividend date. Capital
gains income represents dividends from the Funds which are characterized
as capital gains under tax regulations.
b) SECURITY VALUATION--The investment in shares of the Hartford, Smith
Barney, TCI, Fidelity and Calvert Responsibily Invested Series mutual
funds are valued at the closing net asset value per share as determined
by the appropriate Fund as of December 31, 1996.
c) FEDERAL INCOME TAXES--The operations of the Account form a part of, and
are taxed with, the total operations of the Company, which is taxed as
an insurance company under the Internal Revenue Code. Under current law,
no federal income taxes are payable with respect to the operations of
the Account.
d) USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities as of the date of the financial statements and
the reported amounts of income and expenses during the period. Operating
results in the future could vary from the amounts derived from
management's estimates.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
a) MORTALITY AND EXPENSE UNDERTAKINGS--The Company, as issuer of variable
annuity contracts, provides the mortality and expense undertakings and,
with respect to the Account, receives a maximum annual fee of up to
1.25% of the Account's average daily net assets.
b) DEDUCTION OF ANNUAL MAINTENANCE FEE--Annual maintenance fees are
deducted through termination of units of interest from applicable
contract owners' accounts, in accordance with the terms of the
contracts.
44
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO HARTFORD LIFE INSURANCE COMPANY
SEPARATE ACCOUNT TWO AND TO THE
OWNERS OF UNITS OF INTEREST THEREIN:
We have audited the accompanying statement of assets and liabilities of
Hartford Life Insurance Company Separate Account Two (the Account) as of
December 31, 1996, and the related statement of operations for the year then
ended and statements of changes in net assets for each of the two years in the
period then ended. These financial statements are the responsibility of the
Account's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Hartford Life Insurance
Company Separate Account Two as of December 31, 1996, the results of its
operations for the year then ended and the changes in its net assets for each
of the two years in the period then ended in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 14, 1997
45
<PAGE>
- --------------------------------------------------------------------------------
Separate Account Variable Life One
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares 2,687,282
Cost $ 2,631,020
Market Value......... $2,685,106 -- -- --
Hartford Stock Fund,
Inc.
Shares 3,505,678
Cost $11,740,314
Market Value......... -- $14,523,007 -- --
HVA Money Market Fund,
Inc.
Shares 21,462,703
Cost $21,462,703
Market Value......... -- -- $21,462,703 --
Hartford Advisers Fund,
Inc.
Shares 4,560,663
Cost $ 8,504,445
Market Value......... -- -- -- $9,894,495
Hartford Capital
Appreciation Fund,
Inc.
Shares 5,157,901
Cost $17,295,440
Market Value......... -- -- -- --
Hartford Mortgage
Securities Fund, Inc.
Shares 1,303,872
Cost $ 1,346,063
Market Value......... -- -- -- --
Hartford Index Fund,
Inc.
Shares 2,546,926
Cost $ 5,238,540
Market Value......... -- -- -- --
Hartford International
Opportunities Fund,
Inc.
Shares 6,198,604
Cost $ 7,856,691
Market Value......... -- -- -- --
Hartford Dividend and
Growth Fund, Inc.
Shares 2,089,543
Cost $ 2,922,702
Market Value......... -- -- -- --
Fidelity VIP Equity
Income Fund
Shares 228,727
Cost $ 4,438,947
Market Value......... -- -- -- --
Fidelity VIP Overseas
Fund
Shares 52,389
Cost $ 912,742
Market Value......... -- -- -- --
Fidelity VIP II Asset
Manager Fund
Shares 38,692
Cost $ 619,842
Market Value......... -- -- -- --
Due from Hartford Life
Insurance Company..... 126 13,544 1,547,822 76,303
Receivable from fund
shares sold........... -- -- -- --
----------- ------------ ------------ -------------
Total Assets........... 2,685,232 14,536,551 23,010,525 9,970,798
----------- ------------ ------------ -------------
LIABILITIES:
Due to Hartford Life
Insurance Company..... -- -- -- --
Payable for fund shares
purchased............. 122 13,659 1,547,471 76,799
----------- ------------ ------------ -------------
Total Liabilities...... 122 13,659 1,547,471 76,799
----------- ------------ ------------ -------------
Net Assets (variable
life contract
liabilities).......... $2,685,110 $14,522,892 $21,463,054 $9,893,999
----------- ------------ ------------ -------------
----------- ------------ ------------ -------------
Units Outstanding........ 2,176,786 8,115,365 18,251,689 6,326,595
Accumulation Unit Value
at end of year......... $ 1.233518 $ 1.789555 $ 1.175949 $ 1.563874
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
46
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ----------- ------------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares 2,687,282
Cost $ 2,631,020
Market Value......... -- -- -- -- --
Hartford Stock Fund,
Inc.
Shares 3,505,678
Cost $11,740,314
Market Value......... -- -- -- -- --
HVA Money Market Fund,
Inc.
Shares 21,462,703
Cost $21,462,703
Market Value......... -- -- -- -- --
Hartford Advisers Fund,
Inc.
Shares 4,560,663
Cost $ 8,504,445
Market Value......... -- -- -- -- --
Hartford Capital
Appreciation Fund,
Inc.
Shares 5,157,901
Cost $17,295,440
Market Value......... $20,189,726 -- -- -- --
Hartford Mortgage
Securities Fund, Inc.
Shares 1,303,872
Cost $ 1,346,063
Market Value......... -- $1,376,588 -- -- --
Hartford Index Fund,
Inc.
Shares 2,546,926
Cost $ 5,238,540
Market Value......... -- -- $6,066,192 -- --
Hartford International
Opportunities Fund,
Inc.
Shares 6,198,604
Cost $ 7,856,691
Market Value......... -- -- -- $8,720,692 --
Hartford Dividend and
Growth Fund, Inc.
Shares 2,089,543
Cost $ 2,922,702
Market Value......... -- -- -- -- $3,233,400
Fidelity VIP Equity
Income Fund
Shares 228,727
Cost $ 4,438,947
Market Value......... -- -- -- -- --
Fidelity VIP Overseas
Fund
Shares 52,389
Cost $ 912,742
Market Value......... -- -- -- -- --
Fidelity VIP II Asset
Manager Fund
Shares 38,692
Cost $ 619,842
Market Value......... -- -- -- -- --
Due from Hartford Life
Insurance Company..... 56,080 138 11,236 3,856 6,837
Receivable from fund
shares sold........... -- -- -- -- --
----------------- --------------- ----------- ------------------ ------------
Total Assets........... 20,245,806 1,376,726 6,077,428 8,724,548 3,240,237
----------------- --------------- ----------- ------------------ ------------
LIABILITIES:
Due to Hartford Life
Insurance Company..... -- -- -- -- --
Payable for fund shares
purchased............. 56,023 137 11,392 3,909 6,885
----------------- --------------- ----------- ------------------ ------------
Total Liabilities...... 56,023 137 11,392 3,909 6,885
----------------- --------------- ----------- ------------------ ------------
Net Assets (variable
life contract
liabilities).......... $20,189,783 $1,376,589 $6,066,036 $8,720,639 $3,233,352
----------------- --------------- ----------- ------------------ ------------
----------------- --------------- ----------- ------------------ ------------
Units Outstanding........ 11,564,044 1,112,101 3,461,603 5,827,532 2,133,538
Accumulation Unit Value
at end of year......... $ 1.745910 $ 1.237827 $ 1.752378 $ 1.496455 $ 1.515489
<CAPTION>
FIDELITY VIP FIDELITY VIP FIDELITY VIP II
EQUITY INCOME OVERSEAS ASSET MANAGER
PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------- ------------------
<S> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares
Cost
Market Value......... -- -- --
Hartford Stock Fund,
Inc.
Shares
Cost
Market Value......... -- -- --
HVA Money Market Fund,
Inc.
Shares
Cost
Market Value......... -- -- --
Hartford Advisers Fund,
Inc.
Shares
Cost
Market Value......... -- -- --
Hartford Capital
Appreciation Fund,
Inc.
Shares
Cost
Market Value......... -- -- --
Hartford Mortgage
Securities Fund, Inc.
Shares
Cost
Market Value......... -- -- --
Hartford Index Fund,
Inc.
Shares
Cost
Market Value......... -- -- --
Hartford International
Opportunities Fund,
Inc.
Shares
Cost
Market Value......... -- -- --
Hartford Dividend and
Growth Fund, Inc.
Shares
Cost
Market Value......... -- -- --
Fidelity VIP Equity
Income Fund
Shares
Cost
Market Value......... $4,810,134 -- --
Fidelity VIP Overseas
Fund
Shares
Cost
Market Value......... -- $ 987,009 --
Fidelity VIP II Asset
Manager Fund
Shares
Cost
Market Value......... -- -- $ 655,053
Due from Hartford Life
Insurance Company..... 65,465 -- 24,687
Receivable from fund
shares sold........... -- 5,676 --
------------------ ------------- ----------
Total Assets........... 4,875,599 992,685 679,740
------------------ ------------- ----------
LIABILITIES:
Due to Hartford Life
Insurance Company..... -- 5,788 --
Payable for fund shares
purchased............. 64,505 -- 24,921
------------------ ------------- ----------
Total Liabilities...... 64,505 5,788 24,921
------------------ ------------- ----------
Net Assets (variable
life contract
liabilities).......... $4,811,094 $ 986,897 $ 654,819
------------------ ------------- ----------
------------------ ------------- ----------
Units Outstanding........ 3,511,186 811,791 518,972
Accumulation Unit Value
at end of year......... $ 1.370219 $1.215706 $1.261761
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
47
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VARIABLE LIFE ONE
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $130,339 $ 166,505 $617,137 $ 203,460
----------- ----------- ----------- -------------
Net investment income
(loss).............. 130,339 166,505 617,137 203,460
----------- ----------- ----------- -------------
CAPITAL GAINS INCOME..... -- 309,113 -- 107,033
----------- ----------- ----------- -------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... (2,539) (10,306) -- 1,174
Net unrealized
appreciation
(depreciation) of
investments during the
period................ (35,847) 1,824,641 -- 815,705
----------- ----------- ----------- -------------
Net realized and
unrealized gain
(loss) on
investments......... (38,386) 1,814,335 -- 816,879
----------- ----------- ----------- -------------
Net increase
(decrease) in net
assets resulting
from operations..... $ 91,953 $ 2,289,953 $617,137 $1,127,372
----------- ----------- ----------- -------------
----------- ----------- ----------- -------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
48
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ----------- ------------------ ------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 94,066 $61,146 $ 80,193 $120,669 $ 41,572
----------------- ------- ----------- -------- ------------
Net investment income
(loss).............. 94,066 61,146 80,193 120,669 41,572
----------------- ------- ----------- -------- ------------
CAPITAL GAINS INCOME..... 567,054 -- 33,058 118,054 2,804
----------------- ------- ----------- -------- ------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... (15,665) 21 2,355 (1,547) 678
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 1,913,546 195 656,725 544,630 305,389
----------------- ------- ----------- -------- ------------
Net realized and
unrealized gain
(loss) on
investments......... 1,897,881 216 659,080 543,083 306,067
----------------- ------- ----------- -------- ------------
Net increase
(decrease) in net
assets resulting
from operations..... $2,559,001 $61,362 $772,331 $781,806 $350,443
----------------- ------- ----------- -------- ------------
----------------- ------- ----------- -------- ------------
<CAPTION>
FIDELITY VIP FIDELITY VIP FIDELITY VIP II
EQUITY INCOME OVERSEAS ASSET MANAGER
PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------- ----------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 28,598 $ 2,647 $ 4,226
-------- ------------- -------
Net investment income
(loss).............. 28,598 2,647 4,226
-------- ------------- -------
CAPITAL GAINS INCOME..... 11,171 2,911 --
-------- ------------- -------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... (3,448) 1,350 884
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 333,297 71,916 32,712
-------- ------------- -------
Net realized and
unrealized gain
(loss) on
investments......... 329,849 73,266 33,596
-------- ------------- -------
Net increase
(decrease) in net
assets resulting
from operations..... $369,618 $78,824 $37,822
-------- ------------- -------
-------- ------------- -------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
49
<PAGE>
- --------------------------------------------------------------------------------
Separate Account Variable Life One
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 130,339 $ 166,505 $ 617,137 $ 203,460
Capital gains income... -- 309,113 -- 107,033
Net realized gain
(loss) on security
transactions.......... (2,539) (10,306) -- 1,174
Net unrealized
appreciation
(depreciation) of
investments during the
period................ (35,847) 1,824,641 -- 815,705
----------- ------------ ------------- -------------
Net increase (decrease)
in net assets
resulting from
operations............ 91,953 2,289,953 617,137 1,127,372
----------- ------------ ------------- -------------
UNIT TRANSACTIONS:
Purchases.............. 177,130 1,770,443 78,140,461 1,889,169
Net transfers.......... 932,335 4,457,656 (62,761,807) 2,840,668
Surrenders............. (69,207) (362,933) (814,963) (264,048)
Net loan withdrawals... (22,111) (179,201) (2,187,733) (50,031)
Cost of insurance...... (76,606) (391,509) (1,139,390) (289,178)
----------- ------------ ------------- -------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 941,541 5,294,456 11,236,568 4,126,580
----------- ------------ ------------- -------------
Total increase
(decrease) in net
assets................ 1,033,494 7,584,409 11,853,705 5,253,952
NET ASSETS:
Beginning of period.... 1,651,616 6,938,483 9,609,349 4,640,047
----------- ------------ ------------- -------------
End of period.......... $2,685,110 $ 14,522,892 $ 21,463,054 $9,893,999
----------- ------------ ------------- -------------
----------- ------------ ------------- -------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1995
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ------------- -------------
OPERATIONS:
Net investment income
(loss)................ $ 72,383 $ 97,045 $ 305,022 $ 121,941
Capital gains income... -- 85,946 -- 30,081
Net realized gain
(loss) on security
transactions.......... 7,394 5,809 -- 2,907
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 97,007 1,009,567 -- 667,925
----------- ------------ ------------- -------------
Net increase (decrease)
in net assets
resulting from
operations............ 176,784 1,198,367 305,022 822,854
----------- ------------ ------------- -------------
UNIT TRANSACTIONS:
Purchases.............. 80,111 891,394 30,911,497 599,791
Net transfers.......... 1,202,083 3,494,521 (22,537,618) 1,102,448
Surrenders............. (16,941) (130,094) (212,380) (101,194)
Net loan withdrawals... (73,159) (82,429) (5,589,429) (26,807)
Cost of insurance and
other fees............ (33,808) (192,045) (484,560) (126,639)
----------- ------------ ------------- -------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 1,158,286 3,981,347 2,087,510 1,447,599
----------- ------------ ------------- -------------
Total increase
(decrease) in net
assets................ 1,335,070 5,179,714 2,392,532 2,270,453
NET ASSETS:
Beginning of period.... 316,546 1,758,769 7,216,817 2,369,594
----------- ------------ ------------- -------------
End of period.......... $1,651,616 $ 6,938,483 $ 9,609,349 $4,640,047
----------- ------------ ------------- -------------
----------- ------------ ------------- -------------
</TABLE>
* From inception, May 1, 1995, to December 31, 1995.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
50
<PAGE>
<TABLE>
<CAPTION>
CAPTIAL MORTGAGE INTERNATIONAL DIVIDEND AND
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ------------ ------------------ ------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 94,066 $ 61,146 $ 80,193 $ 120,669 $ 41,572
Capital gains income... 567,054 -- 33,058 118,054 2,804
Net realized gain
(loss) on security
transactions.......... (15,665) 21 2,355 (1,547) 678
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 1,913,546 195 656,725 544,630 305,389
----------------- --------------- ------------ ------------------ ------------
Net increase (decrease)
in net assets
resulting from
operations............ 2,559,001 61,362 772,331 781,806 350,443
----------------- --------------- ------------ ------------------ ------------
UNIT TRANSACTIONS:
Purchases.............. 3,679,346 125,959 2,296,903 1,694,971 278,275
Net transfers.......... 7,290,692 552,359 3,171,094 2,966,744 2,674,253
Surrenders............. (485,609) (13,643) (96,179) (285,131) (20,374)
Net loan withdrawals... (245,321) (8,001) (1,375,343) (69,836) (67,575)
Cost of insurance...... (644,012) (28,469) (200,560) (306,356) (42,548)
----------------- --------------- ------------ ------------------ ------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 9,595,096 628,205 3,795,915 4,000,392 2,822,031
----------------- --------------- ------------ ------------------ ------------
Total increase
(decrease) in net
assets................ 12,154,097 689,567 4,568,246 4,782,198 3,172,474
NET ASSETS:
Beginning of period.... 8,035,686 687,022 1,497,790 3,938,441 60,878
----------------- --------------- ------------ ------------------ ------------
End of period.......... $20,189,783 $1,376,589 $ 6,066,036 $8,720,639 $3,233,352
----------------- --------------- ------------ ------------------ ------------
----------------- --------------- ------------ ------------------ ------------
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ------------ ------------------ ------------
OPERATIONS:
Net investment income
(loss)................ $ 48,724 $ 39,041 $ 16,866 $ 46,972 $ 536
Capital gains income... 159,934 -- 117 19,345 --
Net realized gain
(loss) on security
transactions.......... (91) 66 232 1,947 67
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 998,680 47,911 170,588 351,014 5,309
----------------- --------------- ------------ ------------------ ------------
Net increase (decrease)
in net assets
resulting from
operations............ 1,207,247 87,018 187,803 419,278 5,912
----------------- --------------- ------------ ------------------ ------------
UNIT TRANSACTIONS:
Purchases.............. 1,865,000 9,664 258,782 968,432 30,236
Net transfers.......... 2,860,807 112,099 942,414 909,391 37,813
Surrenders............. (209,729) (6,610) (20,596) (161,497) (12,610)
Net loan withdrawals... (53,870) -- (30,128) (39,629) --
Cost of insurance and
other fees............ (276,771) (9,804) (42,284) (150,874) (473)
----------------- --------------- ------------ ------------------ ------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 4,185,437 105,349 1,108,188 1,525,823 54,966
----------------- --------------- ------------ ------------------ ------------
Total increase
(decrease) in net
assets................ 5,392,684 192,367 1,295,991 1,945,101 60,878
NET ASSETS:
Beginning of period.... 2,643,002 494,655 201,799 1,993,340 --
----------------- --------------- ------------ ------------------ ------------
End of period.......... $ 8,035,686 $ 687,022 $ 1,497,790 $3,938,441 $ 60,878
----------------- --------------- ------------ ------------------ ------------
----------------- --------------- ------------ ------------------ ------------
<CAPTION>
FIDELITY VIP FIDELITY VIP FIDELITY VIP II
EQUITY INCOME FUND OVERSEAS FUND ASSET MANAGER FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------- ------------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 28,598 $ 2,647 $ 4,226
Capital gains income... 11,171 2,911 --
Net realized gain
(loss) on security
transactions.......... (3,448) 1,350 884
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 333,297 71,916 32,712
------------------ ------------- --------
Net increase (decrease)
in net assets
resulting from
operations............ 369,618 78,824 37,822
------------------ ------------- --------
UNIT TRANSACTIONS:
Purchases.............. 889,845 203,728 94,706
Net transfers.......... 3,109,762 760,222 513,253
Surrenders............. (64,856) (18,172) (14,935)
Net loan withdrawals... (111,464) (91,281) (1,047)
Cost of insurance...... (97,433) (22,781) (11,950)
------------------ ------------- --------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 3,725,854 831,716 580,027
------------------ ------------- --------
Total increase
(decrease) in net
assets................ 4,095,472 910,540 617,849
NET ASSETS:
Beginning of period.... 715,622 76,357 36,970
------------------ ------------- --------
End of period.......... $4,811,094 $986,897 $654,819
------------------ ------------- --------
------------------ ------------- --------
FIDELITY VIP FIDELITY VIP FIDELITY VIP II
EQUITY INCOME FUND OVERSEAS FUND ASSET MANAGER FUND
SUB-ACCOUNT* SUB-ACCOUNT* SUB-ACCOUNT*
------------------ ------------- ------------------
OPERATIONS:
Net investment income
(loss)................ $ 5,067 $ -- $--
Capital gains income... -- -- --
Net realized gain
(loss) on security
transactions.......... (7) 140 229
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 37,890 2,351 2,499
------------------ ------------- --------
Net increase (decrease)
in net assets
resulting from
operations............ 42,950 2,491 2,728
------------------ ------------- --------
UNIT TRANSACTIONS:
Purchases.............. 206,082 18,683 12,310
Net transfers.......... 474,024 67,416 34,943
Surrenders............. (7,434) (12,233) (13,011)
Net loan withdrawals... -- -- --
Cost of insurance and
other fees............ -- -- --
------------------ ------------- --------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 672,672 73,866 34,242
------------------ ------------- --------
Total increase
(decrease) in net
assets................ 715,622 76,357 36,970
NET ASSETS:
Beginning of period.... -- -- --
------------------ ------------- --------
End of period.......... $ 715,622 $ 76,357 $ 36,970
------------------ ------------- --------
------------------ ------------- --------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
51
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VARIABLE LIFE ONE
HARTFORD LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. ORGANIZATION:
Separate Account Variable Life One (the Account) is a separate investment
account within Hartford Life Insurance Company (the Company) and is
registered with the Securities and Exchange Commission (SEC) as a unit
investment trust under the Investment Company Act of 1940, as amended. The
Account consists of twenty two sub-accounts. These financial statements
include twelve sub-accounts which invest solely in Hartford Mutual Funds and
Fidelity Mutual Funds (the Funds). The other ten sub-accounts, which invest
in Putnam Variable Trust Funds, are presented in separate financial
statements. Both the Company and the Account are subject to supervision and
regulation by the Department of Insurance of the State of Connecticut and
the SEC. The Account invests deposits by variable life contractholders of
the Company in the Funds as directed by the contractholders.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting
principles in the investment company industry:
a) SECURITY TRANSACTIONS--Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Cost of investments
sold is determined on the basis of identified cost. Dividend and capital
gains income are accrued as of the ex-dividend date. Capital gains
income represents dividends from the Funds which are characterized as
capital gains under tax regulations.
b) SECURITY VALUATION--The investment in shares of the Funds are valued at
the closing net asset value per share as determined by the appropriate
Fund as of December 31, 1996.
c) FEDERAL INCOME TAXES--The operations of the Account form a part of, and
are taxed with, the total operations of the Company, which is taxed as
an insurance company under the Internal Revenue Code. Under current law,
no federal income taxes are payable with respect to the operations of
the Account.
d) USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities as of the date of the financial statements and
the reported amounts of income and expenses during the period. Operating
results in the future could vary from the amounts derived from
management's estimates.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
In accordance with the terms of the contracts, the Company makes deductions
for mortality and expense undertakings, cost of insurance, administrative
fees, and state premium taxes. These charges are deducted through
termination of units of interest from applicable contractholders' accounts
in accordance with the terms of the contracts.
52
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO HARTFORD LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VARIABLE LIFE ONE AND TO THE
OWNERS OF UNITS OF INTEREST THEREIN:
We have audited the accompanying statement of assets and liabilities of the
Bond Fund Sub-Account, Stock Fund Sub-Account, Money Market Fund Sub-Account,
Advisers Fund Sub-Account, Capital Appreciation Fund Sub-Account, Mortgage
Securities Fund Sub-Account, Index Fund Sub-Account, International
Opportunities Fund Sub-Account, Dividend and Growth Fund Sub-Account, Fidelity
VIP Equity Income Portfolio Sub-Account, Fidelity VIP Overseas Portfolio
Sub-Account and Fidelity VIP II Asset Manager Portfolio Sub-Account
(constituting Hartford Life Insurance Company Separate Account Variable Life
One) (the Accounts) as of December 31, 1996, and the related statement of
operations for the year then ended and statements of changes in net assets for
each of the two years in the period then ended (except for Fidelity VIP Equity
Income Portfolio Sub-Account, Fidelity VIP Overseas Portfolio Sub-Account and
Fidelity VIP II Asset Manager Portfolio Sub-Account which reflect the year
ended December 31, 1996 and the period from inception, May 1, 1995, to December
31, 1995). These financial statements are the responsibility of the Accounts'
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Bond Fund Sub-Account,
Stock Fund Sub-Account, Money Market Fund Sub-Account, Advisers Fund
Sub-Account, Capital Appreciation Fund Sub-Account, Mortgage Securities Fund
Sub-Account, Index Fund Sub-Account, International Opportunities Fund
Sub-Account, Dividend and Growth Fund Sub-Account, Fidelity VIP Equity Income
Portfolio Sub-Account, Fidelity VIP Overseas Portfolio Sub-Account and Fidelity
VIP II Asset Manager portfolio Sub-Account (constituting Hartford Life
Insurance Company Separate Account Variable Life One) as of December 31, 1996,
the results of its operations for the year then ended and the changes in its
net assets for each of the two years in the period then ended (except for
Fidelity VIP Equity Income Portfolio Sub-Account, Fidelity VIP Overseas
Portfolio Sub-Account and Fidelity VIP II Asset Manager Portfolio Sub-Account
which reflect the year ended December 31, 1996 and the period from inception,
May 1, 1995, to December 31, 1995) in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 14, 1997
53
<PAGE>
- --------------------------------------------------------------------------------
Separate Account Variable Life Two
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares 210,016
Cost $ 207,615
Market Value......... $ 209,845 -- -- --
Hartford Stock Fund,
Inc.
Shares 418,860
Cost $1,591,017
Market Value......... -- $1,735,215 -- --
HVA Money Market Fund,
Inc.
Shares 4,011,957
Cost $4,011,957
Market Value......... -- -- $4,011,957 --
Hartford Advisers Fund,
Inc.
Shares 650,907
Cost $1,318,380
Market Value......... -- -- -- $1,412,163
Hartford Capital
Appreciation Fund,
Inc.
Shares 592,785
Cost $2,144,337
Market Value......... -- -- -- --
Hartford Mortgage
Securities Fund, Inc.
Shares 41,659
Cost $ 43,453
Market Value......... -- -- -- --
Hartford Index Fund,
Inc.
Shares 503,923
Cost $1,088,477
Market Value......... -- -- -- --
Hartford International
Opportunities Fund,
Inc.
Shares 915,353
Cost $1,230,395
Market Value......... -- -- -- --
Hartford Dividend and
Growth Fund, Inc.
Shares 354,764
Cost $ 510,504
Market Value......... -- -- -- --
Fidelity VIP Equity
Income Fund
Shares 74,513
Cost $1,446,293
Market Value......... -- -- -- --
Fidelity VIP Overseas
Fund
Shares 8,870
Cost $ 158,416
Market Value......... -- -- -- --
Fidelity VIP II Asset
Manager Fund
Shares 18,740
Cost $ 296,387
Market Value......... -- -- -- --
Due from Hartford Life
Insurance Company..... 5 602 349,108 49
Receivable from fund
shares sold........... -- -- -- --
----------- ----------- ----------- -------------
Total Assets........... 209,850 1,735,817 4,361,065 1,412,212
----------- ----------- ----------- -------------
LIABILITIES:
Due to Hartford Life
Insurance Company..... -- -- -- --
Payable for fund shares
purchased............. -- 500 349,072 --
----------- ----------- ----------- -------------
Total Liabilities...... -- 500 349,072 --
----------- ----------- ----------- -------------
Net Assets (variable
annuity contract
liabilities).......... $ 209,850 $1,735,317 $4,011,993 $1,412,212
----------- ----------- ----------- -------------
----------- ----------- ----------- -------------
DEFERRED ANNUITY
CONTRACTS IN THE
ACCUMULATION PERIOD:
GROUP SUB-ACCOUNTS:
Units Owned by
Participants.......... 170,124 969,692 3,411,705 903,022
Unit Price............. $ 1.233518 $ 1.789555 $ 1.175949 $ 1.563874
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
54
<PAGE>
<TABLE>
<CAPTION>
FIDELITY VIP
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND EQUITY
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND INCOME FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ----------- ------------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares 210,016
Cost $ 207,615
Market Value......... -- -- -- -- -- --
Hartford Stock Fund,
Inc.
Shares 418,860
Cost $1,591,017
Market Value......... -- -- -- -- -- --
HVA Money Market Fund,
Inc.
Shares 4,011,957
Cost $4,011,957
Market Value......... -- -- -- -- -- --
Hartford Advisers Fund,
Inc.
Shares 650,907
Cost $1,318,380
Market Value......... -- -- -- -- -- --
Hartford Capital
Appreciation Fund,
Inc.
Shares 592,785
Cost $2,144,337
Market Value......... $2,320,358 -- -- -- -- --
Hartford Mortgage
Securities Fund, Inc.
Shares 41,659
Cost $ 43,453
Market Value......... -- $ 43,983 -- -- -- --
Hartford Index Fund,
Inc.
Shares 503,923
Cost $1,088,477
Market Value......... -- -- $1,200,230 -- -- --
Hartford International
Opportunities Fund,
Inc.
Shares 915,353
Cost $1,230,395
Market Value......... -- -- -- $1,287,791 -- --
Hartford Dividend and
Growth Fund, Inc.
Shares 354,764
Cost $ 510,504
Market Value......... -- -- -- -- $ 548,968 --
Fidelity VIP Equity
Income Fund
Shares 74,513
Cost $1,446,293
Market Value......... -- -- -- -- -- $1,567,001
Fidelity VIP Overseas
Fund
Shares 8,870
Cost $ 158,416
Market Value......... -- -- -- -- -- --
Fidelity VIP II Asset
Manager Fund
Shares 18,740
Cost $ 296,387
Market Value......... -- -- -- -- -- --
Due from Hartford Life
Insurance Company..... 298 -- 16 1 540 1,039
Receivable from fund
shares sold........... -- -- -- -- -- --
----------------- --------------- ----------- ------------------ ------------ ------------
Total Assets........... 2,320,656 43,983 1,200,246 1,287,792 549,508 1,568,040
----------------- --------------- ----------- ------------------ ------------ ------------
LIABILITIES:
Due to Hartford Life
Insurance Company..... -- 1 -- -- -- --
Payable for fund shares
purchased............. -- -- -- -- 500 2,295
----------------- --------------- ----------- ------------------ ------------ ------------
Total Liabilities...... -- 1 -- -- 500 2,295
----------------- --------------- ----------- ------------------ ------------ ------------
Net Assets (variable
annuity contract
liabilities).......... $2,320,656 $ 43,982 $1,200,246 $1,287,792 $ 549,008 $1,565,745
----------------- --------------- ----------- ------------------ ------------ ------------
----------------- --------------- ----------- ------------------ ------------ ------------
DEFERRED ANNUITY
CONTRACTS IN THE
ACCUMULATION PERIOD:
GROUP SUB-ACCOUNTS:
Units Owned by
Participants.......... 1,329,195 35,531 684,924 860,563 362,266 1,142,697
Unit Price............. $ 1.745910 $ 1.237827 $ 1.752378 $ 1.496455 $ 1.515489 $ 1.370219
<CAPTION>
FIDELITY VIP
FIDELITY VIP II
OVERSEAS ASSET
FUND MANAGER FUND
SUB-ACCOUNT SUB-ACCOUNT
------------ ------------
<S> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares
Cost
Market Value......... -- --
Hartford Stock Fund,
Inc.
Shares
Cost
Market Value......... -- --
HVA Money Market Fund,
Inc.
Shares
Cost
Market Value......... -- --
Hartford Advisers Fund,
Inc.
Shares
Cost
Market Value......... -- --
Hartford Capital
Appreciation Fund,
Inc.
Shares
Cost
Market Value......... -- --
Hartford Mortgage
Securities Fund, Inc.
Shares
Cost
Market Value......... -- --
Hartford Index Fund,
Inc.
Shares
Cost
Market Value......... -- --
Hartford International
Opportunities Fund,
Inc.
Shares
Cost
Market Value......... -- --
Hartford Dividend and
Growth Fund, Inc.
Shares
Cost
Market Value......... -- --
Fidelity VIP Equity
Income Fund
Shares
Cost
Market Value......... -- --
Fidelity VIP Overseas
Fund
Shares
Cost
Market Value......... $ 167,116 --
Fidelity VIP II Asset
Manager Fund
Shares
Cost
Market Value......... -- $ 317,271
Due from Hartford Life
Insurance Company..... 4,898 --
Receivable from fund
shares sold........... -- 17
------------ ------------
Total Assets........... 172,014 317,288
------------ ------------
LIABILITIES:
Due to Hartford Life
Insurance Company..... -- 4,447
Payable for fund shares
purchased............. 4,954 --
------------ ------------
Total Liabilities...... 4,954 4,447
------------ ------------
Net Assets (variable
annuity contract
liabilities).......... $ 167,060 $ 312,841
------------ ------------
------------ ------------
DEFERRED ANNUITY
CONTRACTS IN THE
ACCUMULATION PERIOD:
GROUP SUB-ACCOUNTS:
Units Owned by
Participants.......... 137,419 247,940
Unit Price............. $ 1.215706 $ 1.261761
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
55
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VARIABLE LIFE TWO
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $4,617 $ 9,981 $ 56,534 $ 16,365
----------- ----------- ----------- -------------
Net investment income
(loss).............. 4,617 9,981 56,534 16,365
----------- ----------- ----------- -------------
Capital gains income... -- -- -- --
----------- ----------- ----------- -------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 9 (88) -- 975
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 2,231 144,184 -- 93,783
----------- ----------- ----------- -------------
Net realized and
unrealized gain
(loss) on
investments......... 2,240 144,096 -- 94,758
----------- ----------- ----------- -------------
Net increase
(decrease) in net
assets resulting
from operations..... $6,857 $154,077 $ 56,534 $111,123
----------- ----------- ----------- -------------
----------- ----------- ----------- -------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
56
<PAGE>
<TABLE>
<CAPTION>
FIDELITY
VIP
EQUITY
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND INCOME
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ----------- ------------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 5,970 $ 1,084 $ 9,179 $ 9,122 $4,704 $ --
-------- ------ ----------- ------- ------------ ----------
Net investment income
(loss).............. 5,970 1,084 9,179 9,122 4,704 --
-------- ------ ----------- ------- ------------ ----------
Capital gains income... -- -- -- -- -- --
-------- ------ ----------- ------- ------------ ----------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 512 -- 2,901 296 938 77
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 176,020 530 111,747 57,397 38,465 120,671
-------- ------ ----------- ------- ------------ ----------
Net realized and
unrealized gain
(loss) on
investments......... 176,532 530 114,648 57,693 39,403 120,748
-------- ------ ----------- ------- ------------ ----------
Net increase
(decrease) in net
assets resulting
from operations..... $182,502 $ 1,614 $123,827 $ 66,815 $44,107 $120,748
-------- ------ ----------- ------- ------------ ----------
-------- ------ ----------- ------- ------------ ----------
<CAPTION>
FIDELITY
VIP FIDELITY VIP II
OVERSEAS ASSET MANAGER
PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT
-------- ------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends.............. $-- $--
-------- -------
Net investment income
(loss).............. -- --
-------- -------
Capital gains income... -- --
-------- -------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 7 (450)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 8,702 20,884
-------- -------
Net realized and
unrealized gain
(loss) on
investments......... 8,709 20,434
-------- -------
Net increase
(decrease) in net
assets resulting
from operations..... $8,709 $20,434
-------- -------
-------- -------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
57
<PAGE>
- --------------------------------------------------------------------------------
Separate Account Variable Life Two
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 4,617 $ 9,981 $ 56,534 $ 16,365
Net realized gain
(loss) on security
transactions.......... 9 (88) -- 975
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 2,231 144,184 -- 93,783
----------- ----------- ----------------- -------------
Net increase (decrease)
in net assets
resulting from
operations............ 6,857 154,077 56,534 111,123
----------- ----------- ----------------- -------------
UNIT TRANSACTIONS:
Purchases.............. 24,540 128,400 21,595,898 163,384
Net transfers.......... 184,962 1,479,101 (17,911,483) 1,195,723
Surrenders............. (2,166) (4,782) (350,401) (21,798)
Loan withdrawals....... -- (22,053) (23,407) (21,530)
Cost of insurance...... (4,343) (21,092) (286,663) (14,690)
----------- ----------- ----------------- -------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 202,993 1,559,574 3,023,944 1,301,089
----------- ----------- ----------------- -------------
Total increase
(decrease) in net
assets................ 209,850 1,713,651 3,080,478 1,412,212
NET ASSETS:
Beginning of period.... -- 21,666 931,515 --
----------- ----------- ----------------- -------------
End of period.......... $209,850 $1,735,317 $4,011,993 $1,412,212
----------- ----------- ----------------- -------------
----------- ----------- ----------------- -------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM INCEPTION, AUGUST 14, 1995, TO DECEMBER 31, 1995
MONEY CAPTIAL
STOCK FUND MARKET FUND APPRECIATION FUND INDEX FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------------- -------------
OPERATIONS:
Net investment income
(loss)................ $ 7 $ 7,711 $ -- $ 7
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 14 -- -- 6
----------- ----------- ----------------- -------------
Net increase (decrease)
in net assets
resulting from
operations............ 21 7,711 -- 13
----------- ----------- ----------------- -------------
UNIT TRANSACTIONS:
Purchases.............. -- 1,795,344 -- --
Net transfers.......... 21,645 (824,475) 122,583 47,913
Surrenders............. -- (47,065) -- --
Cost of insurance and
other fees............ -- -- -- --
----------- ----------- ----------------- -------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 21,645 923,804 122,583 47,913
----------- ----------- ----------------- -------------
Total increase
(decrease) in net
assets................ 21,666 931,515 122,583 47,926
NET ASSETS:
Beginning of period.... -- -- -- --
----------- ----------- ----------------- -------------
End of period.......... $ 21,666 $ 931,515 $ 122,583 $ 47,926
----------- ----------- ----------------- -------------
----------- ----------- ----------------- -------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
58
<PAGE>
<TABLE>
<CAPTION>
CAPTIAL MORTGAGE INTERNATIONAL DIVIDEND AND
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------- ------------------ ----------- ------------------- ------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 5,970 $ 1,084 $ 9,179 $ 9,122 $ 4,704
Net realized gain
(loss) on security
transactions.......... 512 -- 2,901 296 938
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 176,020 530 111,747 57,397 38,465
------------------- ------- ----------- ------------------- ------------
Net increase (decrease)
in net assets
resulting from
operations............ 182,502 1,614 123,827 66,815 44,107
------------------- ------- ----------- ------------------- ------------
UNIT TRANSACTIONS:
Purchases.............. 341,337 6,471 50,114 95,211 13,008
Net transfers.......... 1,756,480 37,915 1,092,579 1,031,056 560,046
Surrenders............. (21,886) (1,050) (92,837) (3,592) (47,416)
Loan withdrawals....... (21,502) -- -- (8,130) (12,999)
Cost of insurance...... (38,858) (968) (21,363) (33,663) (7,738)
------------------- ------- ----------- ------------------- ------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 2,015,571 42,368 1,028,493 1,080,882 504,901
------------------- ------- ----------- ------------------- ------------
Total increase
(decrease) in net
assets................ 2,198,073 43,982 1,152,320 1,147,697 549,008
NET ASSETS:
Beginning of period.... 122,583 -- 47,926 140,095 --
------------------- ------- ----------- ------------------- ------------
End of period.......... $2,320,656 $43,982 $1,200,246 $1,287,792 $549,008
------------------- ------- ----------- ------------------- ------------
------------------- ------- ----------- ------------------- ------------
INTERNATIONAL FIDELITY VIP
OPPORTUNITIES FUND EQUITY INCOME FUND
SUB-ACCOUNT SUB-ACCOUNT
------------------- ------------------
OPERATIONS:
Net investment income
(loss)................ $ -- $--
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- 37
------------------- -------
Net increase (decrease)
in net assets
resulting from
operations............ -- 37
------------------- -------
UNIT TRANSACTIONS:
Purchases.............. -- --
Net transfers.......... 140,095 4,133
Surrenders............. -- --
Cost of insurance and
other fees............ -- --
------------------- -------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 140,095 4,133
------------------- -------
Total increase
(decrease) in net
assets................ 140,095 4,170
NET ASSETS:
Beginning of period.... -- --
------------------- -------
End of period.......... $ 140,095 $ 4,170
------------------- -------
------------------- -------
<CAPTION>
FIDELITY VIP FIDELITY VIP FIDELITY VIP II
EQUITY INCOME FUND OVERSEAS FUND ASSET MANAGER FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------- ------------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ -- $ -- $--
Net realized gain
(loss) on security
transactions.......... 77 7 (450)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 120,671 8,702 20,884
------------------ ------------- --------
Net increase (decrease)
in net assets
resulting from
operations............ 120,748 8,709 20,434
------------------ ------------- --------
UNIT TRANSACTIONS:
Purchases.............. 116,685 12,350 1,532
Net transfers.......... 1,369,018 146,928 299,311
Surrenders............. (27,120) 361 (5,819)
Loan withdrawals....... (4) -- --
Cost of insurance...... (17,752) (1,288) (2,617)
------------------ ------------- --------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 1,440,827 158,351 292,407
------------------ ------------- --------
Total increase
(decrease) in net
assets................ 1,561,575 167,060 312,841
NET ASSETS:
Beginning of period.... 4,170 -- --
------------------ ------------- --------
End of period.......... $1,565,745 $167,060 $312,841
------------------ ------------- --------
------------------ ------------- --------
OPERATIONS:
Net investment income
(loss)................
Net unrealized
appreciation
(depreciation) of
investments during the
period................
Net increase (decrease)
in net assets
resulting from
operations............
UNIT TRANSACTIONS:
Purchases..............
Net transfers..........
Surrenders.............
Cost of insurance and
other fees............
Net increase (decrease)
in net assets
resulting from unit
transactions..........
Total increase
(decrease) in net
assets................
NET ASSETS:
Beginning of period....
End of period..........
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
59
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VARIABLE LIFE TWO
HARTFORD LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. ORGANIZATION:
Separate Account Variable Life Two (the Account) is a separate investment
account within Hartford Life Insurance Company (the Company) and is
registered with the Securities and Exchange Commission (SEC) as a unit
investment trust under the Investment Company Act of 1940, as amended. The
Account consists of twenty-two sub-accounts. These financial statements
include twelve sub-accounts which invest solely in Hartford Mutual Funds and
Fidelity Mutual Funds (the Funds). The other ten sub-accounts, which invest
in Putnam Variable Trust Funds, are presented in separate financial
statements. Both the Company and the Account are subject to supervision and
regulation by the Department of Insurance of the State of Connecticut and
the SEC. The Account invests deposits by variable life contractholders of
the Company in the Funds as directed by the contractholders.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting
principles in the investment company industry:
a) SECURITY TRANSACTIONS--Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Cost of investments
sold is determined on the basis of identified cost. Dividends and
capital gains income are accrued as of the ex-dividend date. Capital
gains income represents dividends from the Funds which are characterized
as capital gains under tax regulations.
b) SECURITY VALUATION--The investment in shares of the Hartford, and
Fidelity mutual funds are valued at the closing net asset value per
share as determined by the appropriate Fund as of December 31, 1996.
c) FEDERAL INCOME TAXES--The operations of the Account form a part of, and
are taxed with, the total operations of the Company, which is taxed as
an insurance company under the Internal Revenue Code. Under current law,
no federal income taxes are payable with respect to the operations of
the Account.
d) USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities as of the date of the financial statements and
the reported amounts of income and expenses during the period. Operating
results in the future could vary from the amounts derived from
management's estimates.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
In accordance with the terms of the contracts, the Company makes deductions
for mortality and expense undertakings, cost of insurance, administrative
fees, and state premium taxes. These charges are deducted through
termination of units of interest from applicable contractholders' accounts
in accordance with the terms of the contracts.
60
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO HARTFORD LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VARIABLE LIFE TWO AND TO THE
OWNERS OF UNITS OF INTEREST THEREIN:
We have audited the accompanying statement of assets and liabilities of the
Bond Fund Sub-Account, Stock Fund Sub-Account, Money Market Fund Sub-Account,
Advisers Fund Sub-Account, Capital Appreciation Fund Sub-Account, Mortgage
Securities Fund Sub-Account, Index Fund Sub-Account, International
Opportunities Fund Sub-Account, Dividend and Growth Fund Sub-Account, Fidelity
VIP Equity Income Portfolio Sub-Account, Fidelity VIP Overseas Portfolio
Sub-Account and Fidelity VIP II Asset Manager Portfolio Sub-Account
(constituting Hartford Life Insurance Company Separate Account Variable Life
Two) (the Accounts) as of December 31, 1996, and the related statement of
operations for the year then ended and statements of changes in net assets for
the year ended December 31, 1996 and the period from inception, August 14,
1995, to December 31, 1995. These financial statements are the responsibility
of the Accounts' management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Bond Fund Sub-Account,
Stock Fund Sub-Account, Money Market Fund Sub-Account, Advisers Fund Sub-
Account, Capital Appreciation Fund Sub-Account, Mortgage Securities Fund
Sub-Account, Index Fund Sub-Account, International Opportunities Fund
Sub-Account, Dividend and Growth Fund Sub-Account, Fidelity VIP Equity Income
Portfolio Sub-Account, Fidelity VIP Overseas Portfolio Sub-Account and Fidelity
VIP II Asset Manager Portfolio Sub-Account (constituting Hartford Life
Insurance Company Separate Account Variable Life Two) as of December 31, 1996,
the results of its operations for the year then ended and the changes in its
net assets for the year ended December 31, 1996 and the period from inception,
August 14, 1995, to December 31, 1995, in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 14, 1997
61
<PAGE>
- --------------------------------------------------------------------------------
Separate Account Five
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares 3,204,154
Cost $ 3,201,875
Market Value......... $3,201,557 -- -- --
Hartford Stock Fund,
Inc.
Shares 4,046,255
Cost $14,445,997
Market Value......... -- $16,762,464 -- --
HVA Money Market Fund,
Inc.
Shares 18,194,558
Cost $18,194,558
Market Value......... -- -- $18,194,558 --
Hartford Advisers Fund,
Inc.
Shares 15,863,012
Cost $31,226,954
Market Value......... -- -- -- $34,415,277
Hartford Capital
Appreciation Fund,
Inc.
Shares 7,552,475
Cost $26,324,937
Market Value......... -- -- -- --
Hartford Mortgage
Securities Fund, Inc.
Shares 1,379,266
Cost $ 1,451,666
Market Value......... -- -- -- --
Hartford Index Fund,
Inc.
Shares 3,815,813
Cost $ 7,914,027
Market Value......... -- -- -- --
Hartford International
Opportunities Fund,
Inc.
Shares 5,868,103
Cost $ 7,704,778
Market Value......... -- -- -- --
Hartford Dividend and
Growth Fund, Inc.
Shares 7,537,339
Cost $10,244,388
Market Value......... -- -- -- --
Hartford International
Advisers Fund, Inc.
Shares 1,221,409
Cost $ 1,394,539
Market Value......... -- -- -- --
Hartford Small Company
Fund, Inc.
Shares 920
Cost $ 1,000
Market Value......... -- -- -- --
Due from Hartford Life
Insurance Company..... -- -- 479,254 15,617
Receivable from fund
shares sold........... -- -- -- --
----------- ----------- ------------- -------------
Total Assets........... 3,201,557 16,762,464 18,673,812 34,430,894
----------- ----------- ------------- -------------
LIABILITIES:
Due to Hartford Life
Insurance Company..... 1 2 -- --
Payable for fund shares
purchased............. -- -- 478,486 14,540
----------- ----------- ------------- -------------
Total Liabilities...... 1 2 478,486 14,540
----------- ----------- ------------- -------------
Net Assets (variable
life contract
liabilities).......... $3,201,556 $16,762,462 $18,195,326 $34,416,354
----------- ----------- ------------- -------------
----------- ----------- ------------- -------------
Units Outstanding...... 2,612,019 10,156,716 16,382,399 23,148,107
Accumulation Unit Value
at end of period...... $ 1.225702 $ 1.650382 $ 1.110663 $ 1.486795
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
62
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND INTERNATIONAL
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ----------- ------------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares 3,204,154
Cost $ 3,201,875
Market Value......... -- -- -- -- -- --
Hartford Stock Fund,
Inc.
Shares 4,046,255
Cost $14,445,997
Market Value......... -- -- -- -- -- --
HVA Money Market Fund,
Inc.
Shares 18,194,558
Cost $18,194,558
Market Value......... -- -- -- -- -- --
Hartford Advisers Fund,
Inc.
Shares 15,863,012
Cost $31,226,954
Market Value......... -- -- -- -- -- --
Hartford Capital
Appreciation Fund,
Inc.
Shares 7,552,475
Cost $26,324,937
Market Value......... $29,562,879 -- -- -- -- --
Hartford Mortgage
Securities Fund, Inc.
Shares 1,379,266
Cost $ 1,451,666
Market Value......... -- $1,456,188 -- -- -- --
Hartford Index Fund,
Inc.
Shares 3,815,813
Cost $ 7,914,027
Market Value......... -- -- $9,088,388 -- -- --
Hartford International
Opportunities Fund,
Inc.
Shares 5,868,103
Cost $ 7,704,778
Market Value......... -- -- -- $8,255,715 -- --
Hartford Dividend and
Growth Fund, Inc.
Shares 7,537,339
Cost $10,244,388
Market Value......... -- -- -- -- $11,663,429 --
Hartford International
Advisers Fund, Inc.
Shares 1,221,409
Cost $ 1,394,539
Market Value......... -- -- -- -- -- $1,424,872
Hartford Small Company
Fund, Inc.
Shares 920
Cost $ 1,000
Market Value......... -- -- -- -- -- --
Due from Hartford Life
Insurance Company..... 31,237 -- -- 2 15,985 --
Receivable from fund
shares sold........... -- -- 8 -- -- --
----------------- --------------- ----------- ------------------ ------------ -------------
Total Assets........... 29,594,116 1,456,188 9,088,396 8,255,717 11,679,414 1,424,872
----------------- --------------- ----------- ------------------ ------------ -------------
LIABILITIES:
Due to Hartford Life
Insurance Company..... -- -- 10 -- -- --
Payable for fund shares
purchased............. 29,080 -- -- -- 14,678 --
----------------- --------------- ----------- ------------------ ------------ -------------
Total Liabilities...... 29,080 -- 10 -- 14,678 --
----------------- --------------- ----------- ------------------ ------------ -------------
Net Assets (variable
life contract
liabilities).......... $29,565,036 $1,456,188 $9,088,386 $8,255,717 $11,664,736 $1,424,872
----------------- --------------- ----------- ------------------ ------------ -------------
----------------- --------------- ----------- ------------------ ------------ -------------
Units Outstanding...... 18,871,644 1,192,377 5,473,068 6,298,911 6,997,635 1,100,267
Accumulation Unit Value
at end of period...... $ 1.566638 $ 1.221248 $ 1.660565 $ 1.310658 $ 1.666954 $ 1.295024
<CAPTION>
SMALL
COMPANY FUND
SUB-ACCOUNT
------------
<S> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford Stock Fund,
Inc.
Shares
Cost
Market Value......... --
HVA Money Market Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford Advisers Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford Capital
Appreciation Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford Mortgage
Securities Fund, Inc.
Shares
Cost
Market Value......... --
Hartford Index Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford International
Opportunities Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford Dividend and
Growth Fund, Inc.
Shares
Cost
Market Value......... --
Hartford International
Advisers Fund, Inc.
Shares
Cost
Market Value......... --
Hartford Small Company
Fund, Inc.
Shares
Cost
Market Value......... $983
Due from Hartford Life
Insurance Company..... --
Receivable from fund
shares sold........... --
-----
Total Assets........... 983
-----
LIABILITIES:
Due to Hartford Life
Insurance Company..... --
Payable for fund shares
purchased............. --
-----
Total Liabilities...... --
-----
Net Assets (variable
life contract
liabilities).......... $983
-----
-----
Units Outstanding...... --
Accumulation Unit Value
at end of period...... -$-
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
63
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT FIVE
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $154,157 $ 173,109 $711,690 $ 654,458
----------- ----------- ----------- -------------
Net investment income
(loss).............. 154,157 173,109 711,690 654,458
----------- ----------- ----------- -------------
CAPITAL GAINS INCOME..... -- 247,892 -- 263,891
----------- ----------- ----------- -------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... (352) (96) -- (3,790)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ (26,709) 2,003,388 -- 2,721,905
----------- ----------- ----------- -------------
Net realized and
unrealized gain
(loss) on
investments......... (27,061) 2,003,292 -- 2,718,115
----------- ----------- ----------- -------------
Net increase (decrease)
in net assets
resulting from
operations............ $127,096 $ 2,424,293 $711,690 $3,636,464
----------- ----------- ----------- -------------
----------- ----------- ----------- -------------
</TABLE>
* From inception, August 9, 1996, to December 31, 1996.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
64
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND INTERNATIONAL
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ----------- ------------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 141,479 $74,538 $ 121,461 $104,616 $ 166,958 $39,973
----------------- ------- ----------- -------- ------------ -------------
Net investment income
(loss).............. 141,479 74,538 121,461 104,616 166,958 39,973
----------------- ------- ----------- -------- ------------ -------------
CAPITAL GAINS INCOME..... 852,649 -- 55,597 71,613 66,764 28,703
----------------- ------- ----------- -------- ------------ -------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 3,905 (264) 3,624 (826) 582 (2,872)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 2,844,514 (3,548) 1,040,510 450,264 1,210,967 25,925
----------------- ------- ----------- -------- ------------ -------------
Net realized and
unrealized gain
(loss) on
investments......... 2,848,419 (3,812) 1,044,134 449,438 1,211,549 23,053
----------------- ------- ----------- -------- ------------ -------------
Net increase (decrease)
in net assets
resulting from
operations............ $3,842,547 $70,726 $ 1,221,192 $625,667 $1,445,271 $91,729
----------------- ------- ----------- -------- ------------ -------------
----------------- ------- ----------- -------- ------------ -------------
<CAPTION>
SMALL
COMPANY FUND
SUB-ACCOUNT*
------------
<S> <C>
INVESTMENT INCOME:
Dividends.............. $ --
---
Net investment income
(loss).............. --
---
CAPITAL GAINS INCOME..... --
---
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... (17)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ --
---
Net realized and
unrealized gain
(loss) on
investments......... (17)
---
Net increase (decrease)
in net assets
resulting from
operations............ $(17)
---
---
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
65
<PAGE>
- --------------------------------------------------------------------------------
Separate Account Five
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ------------ -----------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 154,157 $ 173,109 $ 711,690 $ 654,458
Capital gains income... -- 247,892 -- 263,891
Net realized gain
(loss) on security
transactions.......... (352) (96) -- (3,790)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ (26,709) 2,003,388 -- 2,721,905
----------- ------------ ------------ -----------------
Net increase (decrease)
in net assets
resulting from
operations............ 127,096 2,424,293 711,690 3,636,464
----------- ------------ ------------ -----------------
UNIT TRANSACTIONS:
Purchases.............. -- -- 82,517,329 --
Net transfers.......... 2,030,523 10,080,041 (71,001,713) 21,840,419
Surrenders............. (39,577) (209,688) (280,151) (444,541)
Net loan withdrawals... 12,868 (96,267) (5,090,962) (483,514)
Cost of insurance and
other fees............ (15,332) (75,894) (144,970) (155,225)
----------- ------------ ------------ -----------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 1,988,482 9,698,192 5,999,533 20,757,139
----------- ------------ ------------ -----------------
Total increase in net
assets................ 2,115,578 12,122,485 6,711,223 24,393,603
NET ASSETS:
Beginning of period.... 1,085,978 4,639,977 11,484,103 10,022,751
----------- ------------ ------------ -----------------
End of period.......... $3,201,556 $16,762,462 $18,195,326 $34,416,354
----------- ------------ ------------ -----------------
----------- ------------ ------------ -----------------
HARTFORD LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FROM INCEPTION, JANUARY 10, 1995, TO DECEMBER 31, 1995
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ------------ -----------------
OPERATIONS:
Net investment income
(loss)................ $ 20,875 $ 32,551 $ 194,388 $ 99,305
Capital gains income... -- 403 -- 120
Net realized gain
(loss) on security
transactions.......... 1,207 9 -- (866)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 26,392 313,078 -- 466,421
----------- ------------ ------------ -----------------
Net increase (decrease)
in net assets
resulting from
operations............ 48,474 346,041 194,388 564,980
----------- ------------ ------------ -----------------
UNIT TRANSACTIONS:
Purchases.............. -- -- 46,855,863 --
Net transfers.......... 1,057,360 4,397,905 (32,905,541) 9,588,547
Surrenders............. (17,899) (36,191) (186,484) (46,331)
Net loan withdrawal.... (127) (58,548) (2,423,958) (67,424)
Cost of insurance and
other fees............ (1,830) (9,230) (50,165) (17,021)
----------- ------------ ------------ -----------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 1,037,504 4,293,936 11,289,715 9,457,771
----------- ------------ ------------ -----------------
Total increase in net
assets................ 1,085,978 4,639,977 11,484,103 10,022,751
NET ASSETS:
Beginning of period.... -- -- -- --
----------- ------------ ------------ -----------------
End of period.......... $1,085,978 $ 4,639,977 $11,484,103 $10,022,751
----------- ------------ ------------ -----------------
----------- ------------ ------------ -----------------
</TABLE>
* From inception, August 9, 1996, to December 31, 1996.
** From inception, March 1,1995, to December 31, 1995.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
66
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND INTERNATIONAL
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ----------- ------------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 141,479 $ 74,538 $ 121,461 $ 104,616 $ 166,958 $ 39,973
Capital gains income... 852,649 -- 55,597 71,613 66,764 28,703
Net realized gain
(loss) on security
transactions.......... 3,905 (264) 3,624 (826) 582 (2,872)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 2,844,514 (3,548) 1,040,510 450,264 1,210,967 25,925
----------------- --------------- ----------- ------------------ ------------ -------------
Net increase (decrease)
in net assets
resulting from
operations............ 3,842,547 70,726 1,221,192 625,667 1,445,271 91,729
----------------- --------------- ----------- ------------------ ------------ -------------
UNIT TRANSACTIONS:
Purchases.............. -- -- -- -- -- --
Net transfers.......... 15,368,388 847,165 6,030,465 5,773,754 7,935,692 1,218,628
Surrenders............. (398,849) (36,769) (173,115) (98,814) (137,508) (13,045)
Net loan withdrawals... (232,211) (1,547) (142,073) (48,108) (65,640) (4)
Cost of insurance and
other fees............ (142,060) (7,811) (38,685) (34,733) (46,158) (5,555)
----------------- --------------- ----------- ------------------ ------------ -------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 14,595,268 801,038 5,676,592 5,592,099 7,686,386 1,200,024
----------------- --------------- ----------- ------------------ ------------ -------------
Total increase in net
assets................ 18,437,815 871,764 6,897,784 6,217,766 9,131,657 1,291,753
NET ASSETS:
Beginning of period.... 11,127,221 584,424 2,190,602 2,037,951 2,533,079 133,119
----------------- --------------- ----------- ------------------ ------------ -------------
End of period.......... $29,565,036 $1,456,188 $9,088,386 $8,255,717 $11,664,736 $1,424,872
----------------- --------------- ----------- ------------------ ------------ -------------
----------------- --------------- ----------- ------------------ ------------ -------------
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND INTERNATIONAL
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT**
----------------- --------------- ----------- ------------------ ------------ -------------
OPERATIONS:
Net investment income
(loss)................ $ 30,005 $ 12,566 $ 15,754 $ 8,088 $ 20,358 $ 3,677
Capital gains income... 541 -- 4 92 -- --
Net realized gain
(loss) on security
transactions.......... 997 843 333 (114) (289) 196
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 393,427 8,070 133,851 100,674 208,074 4,408
----------------- --------------- ----------- ------------------ ------------ -------------
Net increase (decrease)
in net assets
resulting from
operations............ 424,970 21,479 149,942 108,740 228,143 8,281
----------------- --------------- ----------- ------------------ ------------ -------------
UNIT TRANSACTIONS:
Purchases.............. -- -- -- -- -- --
Net transfers.......... 10,836,491 579,334 2,068,160 1,981,409 2,362,955 137,448
Surrenders............. (62,476) (15,266) (23,814) (19,876) (23,348) (12,345)
Net loan withdrawal.... (51,314) -- -- (28,680) (30,134) --
Cost of insurance and
other fees............ (20,450) (1,123) (3,686) (3,642) (4,537) (265)
----------------- --------------- ----------- ------------------ ------------ -------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 10,702,251 562,945 2,040,660 1,929,211 2,304,936 124,838
----------------- --------------- ----------- ------------------ ------------ -------------
Total increase in net
assets................ 11,127,221 584,424 2,190,602 2,037,951 2,533,079 133,119
NET ASSETS:
Beginning of period.... -- -- -- -- -- --
----------------- --------------- ----------- ------------------ ------------ -------------
End of period.......... $11,127,221 $ 584,424 $2,190,602 $2,037,951 $ 2,533,079 $ 133,119
----------------- --------------- ----------- ------------------ ------------ -------------
----------------- --------------- ----------- ------------------ ------------ -------------
<CAPTION>
SMALL
COMPANY FUND
SUB-ACCOUNT*
-------------
<S> <C>
OPERATIONS:
Net investment income
(loss)................ $ --
Capital gains income... --
Net realized gain
(loss) on security
transactions.......... --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ (17)
-------------
Net increase (decrease)
in net assets
resulting from
operations............ (17)
-------------
UNIT TRANSACTIONS:
Purchases.............. 1,000
Net transfers.......... --
Surrenders............. --
Net loan withdrawals... --
Cost of insurance and
other fees............ --
-------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 1,000
-------------
Total increase in net
assets................ 983
NET ASSETS:
Beginning of period.... --
-------------
End of period.......... $ 983
-------------
-------------
OPERATIONS:
Net investment income
(loss)................
Capital gains income...
Net realized gain
(loss) on security
transactions..........
Net unrealized
appreciation
(depreciation) of
investments during the
period................
Net increase (decrease)
in net assets
resulting from
operations............
UNIT TRANSACTIONS:
Purchases..............
Net transfers..........
Surrenders.............
Net loan withdrawal....
Cost of insurance and
other fees............
Net increase (decrease)
in net assets
resulting from unit
transactions..........
Total increase in net
assets................
NET ASSETS:
Beginning of period....
End of period..........
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
67
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT FIVE
HARTFORD LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. ORGANIZATION:
Separate Account Five (the Account) is a separate investment account within
Hartford Life Insurance Company (the Company) and is registered with the
Securities and Exchange Commission (SEC) as a unit investment trust under
the Investment Company Act of 1940, as amended. Both the Company and the
Account are subject to supervision and regulation by the Department of
Insurance of the State of Connecticut and the SEC. The Account invests
deposits by variable life contractholders of the Company in various mutual
funds (the Funds) as directed by the contractholders.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting
principles in the investment company industry:
a) SECURITY TRANSACTIONS--Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Cost of investments
sold is determined on the basis of identified cost. Dividends and
capital gains income are accrued as of the ex-dividend date. Capital
gains income represents dividends from the Funds which are characterized
as capital gains under tax regulations.
b) SECURITY VALUATION--The investment in shares of the Funds are valued at
the closing net asset value per share as determined by the appropriate
Fund as of December 31, 1996.
c) FEDERAL INCOME TAXES--The operations of the Account form a part of, and
are taxed with, the total operations of the Company, which is taxed as
an insurance company under the Internal Revenue Code. Under current law,
no federal income taxes are payable with respect to the operations of
the Account.
d) USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities as of the date of the financial statements and
the reported amounts of income and expenses during the period. Operating
results in the future could vary from the amounts derived from
management's estimates.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
In accordance with the terms of the contracts, the Company makes deductions
for mortality and expense undertakings, cost of insurance, administrative
fees, and state premium taxes. These charges are deducted through
termination of units of interest from applicable contractholders' accounts
in accordance with the terms of the contracts.
68
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO HARTFORD LIFE INSURANCE COMPANY
SEPARATE ACCOUNT FIVE AND TO THE
OWNERS OF UNITS OF INTEREST THEREIN:
We have audited the accompanying statement of assets and liabilities of
Hartford Life Insurance Company Separate Account Five (the Account) as of
December 31, 1996, and the related statement of operations for the year then
ended and statements of changes in net assets for the year ended December 31,
1996 and the period from inception, January 10, 1995, to December 31, 1995.
These financial statements are the responsibility of the Account's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Hartford Life Insurance
Company Separate Account Five as of December 31, 1996, the results of its
operations for the year then ended and the changes in its net assets for the
year ended December 31, 1996 and the period from inception, January 10, 1995,
to December 31, 1995, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 14, 1997
69
<PAGE>
- --------------------------------------------------------------------------------
Separate Account One
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ -------------- ------------- --------------
<S> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares 146,680,858
Cost $ 148,239,686
Market Value......... $146,562,046 -- -- --
Hartford Stock Fund,
Inc.
Shares 271,887,690
Cost $ 913,615,438
Market Value......... -- $1,126,351,852 -- --
HVA Money Market Fund,
Inc.
Shares 175,190,619
Cost $ 175,190,619
Market Value......... -- -- $175,190,619 --
Hartford Advisers Fund,
Inc.
Shares 1,051,147,592
Cost $1,923,124,930
Market Value......... -- -- -- $2,280,496,234
Hartford Capital
Appreciation Fund,
Inc.
Shares 362,247,751
Cost $1,189,356,294
Market Value......... -- -- -- --
Hartford Mortgage
Securities Fund, Inc.
Shares 70,696,564
Cost $ 75,908,313
Market Value......... -- -- -- --
Hartford Index Fund,
Inc.
Shares 92,073,741
Cost $ 183,476,281
Market Value......... -- -- -- --
Hartford International
Opportunities Fund,
Inc.
Shares 344,709,798
Cost $ 426,801,178
Market Value......... -- -- -- --
Hartford Dividend and
Growth Fund, Inc.
Shares 321,883,841
Cost $ 426,809,084
Market Value......... -- -- -- --
Hartford International
Advisers Fund, Inc.
Shares 61,562,041
Cost $ 70,125,043
Market Value......... -- -- -- --
Hartford Small Company
Fund, Inc.
Shares 24,332,525
Cost $ 25,804,555
Market Value......... -- -- -- --
Due from ITT Hartford
Life and Annuity
Insurance Company..... 231,542 1,132,655 2,178,434 1,927,732
Receivable from fund
shares sold........... -- -- -- --
------------ -------------- ------------- --------------
Total Assets........... 146,793,588 1,127,484,507 177,369,053 2,282,423,966
------------ -------------- ------------- --------------
LIABILITIES:
Due to ITT Hartford
Life and Annuity
Insurance Company..... -- -- -- --
Payable for fund shares
purchased............. 231,377 1,133,406 2,179,631 1,928,798
------------ -------------- ------------- --------------
Total Liabilities...... 231,377 1,133,406 2,179,631 1,928,798
------------ -------------- ------------- --------------
Net Assets (variable
annuity contract
liabilities).......... $146,562,211 $1,126,351,101 $175,189,422 $2,280,495,168
------------ -------------- ------------- --------------
------------ -------------- ------------- --------------
DEFERRED ANNUITY
CONTRACTS IN THE
ACCUMULATION PERIOD:
INDIVIDUAL SUB-ACCOUNTS:
Units Owned by
Participants.......... 76,247,196 317,415,842 110,350,169 784,325,850
Unit Price............. $ 1.922173 $ 3.546656 $ 1.586516 $ 2.905301
ANNUITY CONTRACTS IN THE
ANNUITY PERIOD:
INDIVIDUAL SUB-ACCOUNTS:
Units Owned by
Participants.......... 993 165,311 73,818 616,973
Unit Price............. $ 1.922173 $ 3.546656 $ 1.586516 $ 2.905301
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
70
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND INTERNATIONAL
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ------------- ------------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares 146,680,858
Cost $ 148,239,686
Market Value......... -- -- -- -- -- --
Hartford Stock Fund,
Inc.
Shares 271,887,690
Cost $ 913,615,438
Market Value......... -- -- -- -- -- --
HVA Money Market Fund,
Inc.
Shares 175,190,619
Cost $ 175,190,619
Market Value......... -- -- -- -- -- --
Hartford Advisers Fund,
Inc.
Shares 1,051,147,592
Cost $1,923,124,930
Market Value......... -- -- -- -- -- --
Hartford Capital
Appreciation Fund,
Inc.
Shares 362,247,751
Cost $1,189,356,294
Market Value......... $1,417,957,241 -- -- -- -- --
Hartford Mortgage
Securities Fund, Inc.
Shares 70,696,564
Cost $ 75,908,313
Market Value......... -- $74,639,312 -- -- -- --
Hartford Index Fund,
Inc.
Shares 92,073,741
Cost $ 183,476,281
Market Value......... -- -- $ 219,298,474 -- -- --
Hartford International
Opportunities Fund,
Inc.
Shares 344,709,798
Cost $ 426,801,178
Market Value......... -- -- -- $484,965,320 -- --
Hartford Dividend and
Growth Fund, Inc.
Shares 321,883,841
Cost $ 426,809,084
Market Value......... -- -- -- -- $498,089,494 --
Hartford International
Advisers Fund, Inc.
Shares 61,562,041
Cost $ 70,125,043
Market Value......... -- -- -- -- -- $71,817,046
Hartford Small Company
Fund, Inc.
Shares 24,332,525
Cost $ 25,804,555
Market Value......... -- -- -- -- -- --
Due from ITT Hartford
Life and Annuity
Insurance Company..... 1,472,703 -- 22,023 69,084 823,408 --
Receivable from fund
shares sold........... -- 211,277 -- -- -- 8,352
----------------- --------------- ------------- ------------------ ------------- -------------
Total Assets........... 1,419,429,944 74,850,589 219,320,497 485,034,404 498,912,902 71,825,398
----------------- --------------- ------------- ------------------ ------------- -------------
LIABILITIES:
Due to ITT Hartford
Life and Annuity
Insurance Company..... -- 211,658 -- -- -- 8,339
Payable for fund shares
purchased............. 1,352,793 -- 18,249 69,086 822,396 --
----------------- --------------- ------------- ------------------ ------------- -------------
Total Liabilities...... 1,352,793 211,658 18,249 69,086 822,396 8,339
----------------- --------------- ------------- ------------------ ------------- -------------
Net Assets (variable
annuity contract
liabilities).......... $1,418,077,151 $74,638,931 $ 219,302,248 $484,965,318 $498,090,506 $71,817,059
----------------- --------------- ------------- ------------------ ------------- -------------
----------------- --------------- ------------- ------------------ ------------- -------------
DEFERRED ANNUITY
CONTRACTS IN THE
ACCUMULATION PERIOD:
INDIVIDUAL SUB-ACCOUNTS:
Units Owned by
Participants.......... 353,465,926 38,304,268 77,074,176 326,953,712 301,766,912 56,742,550
Unit Price............. $ 4.010163 $ 1.948580 $ 2.845170 $ 1.482397 $ 1.650056 $ 1.265665
ANNUITY CONTRACTS IN THE
ANNUITY PERIOD:
INDIVIDUAL SUB-ACCOUNTS:
Units Owned by
Participants.......... 154,899 -- 4,609 195,708 95,876 --
Unit Price............. $ 4.010163 $ -- $ 2.845170 $ 1.482397 $ 1.650056 $ --
<CAPTION>
SMALL
COMPANY FUND
SUB-ACCOUNT
-------------
<S> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford Stock Fund,
Inc.
Shares
Cost
Market Value......... --
HVA Money Market Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford Advisers Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford Capital
Appreciation Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford Mortgage
Securities Fund, Inc.
Shares
Cost
Market Value......... --
Hartford Index Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford International
Opportunities Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford Dividend and
Growth Fund, Inc.
Shares
Cost
Market Value......... --
Hartford International
Advisers Fund, Inc.
Shares
Cost
Market Value......... --
Hartford Small Company
Fund, Inc.
Shares
Cost
Market Value......... $26,015,363
Due from ITT Hartford
Life and Annuity
Insurance Company..... 258,025
Receivable from fund
shares sold........... --
-------------
Total Assets........... 26,273,388
-------------
LIABILITIES:
Due to ITT Hartford
Life and Annuity
Insurance Company..... --
Payable for fund shares
purchased............. 257,859
-------------
Total Liabilities...... 257,859
-------------
Net Assets (variable
annuity contract
liabilities).......... $26,015,529
-------------
-------------
DEFERRED ANNUITY
CONTRACTS IN THE
ACCUMULATION PERIOD:
INDIVIDUAL SUB-ACCOUNTS:
Units Owned by
Participants.......... 24,396,916
Unit Price............. $ 1.066345
ANNUITY CONTRACTS IN THE
ANNUITY PERIOD:
INDIVIDUAL SUB-ACCOUNTS:
Units Owned by
Participants.......... --
Unit Price............. $ --
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
71
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT ONE
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
-------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 7,667,536 $ 12,967,705 $7,255,862 $ 53,001,953
EXPENSES:
Mortality and expense
undertakings.......... (1,488,067) (10,228,549) (1,796,887) (22,645,062)
-------------- ------------- ------------- -------------
Net investment income
(loss).............. 6,179,469 2,739,156 5,458,975 30,356,891
-------------- ------------- ------------- -------------
CAPITAL GAINS INCOME..... -- 23,889,792 -- 32,217,082
-------------- ------------- ------------- -------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... (12,579) 125,474 -- 5,867
Net unrealized
appreciation
(depreciation) of
investments during the
period................ (2,390,902) 143,331,264 -- 201,866,663
-------------- ------------- ------------- -------------
Net realized and
unrealized gain
(loss) on
investments......... (2,403,481) 143,456,738 -- 201,872,530
-------------- ------------- ------------- -------------
Net increase (decrease)
in net assets
resulting from
operations............ $ 3,775,988 $ 170,085,686 $5,458,975 $ 264,446,503
-------------- ------------- ------------- -------------
-------------- ------------- ------------- -------------
</TABLE>
* From inception, August 9, 1996, to December 31, 1996.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
72
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- --------------- --------------------- -----------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 7,386,029 $4,153,578 $ 3,067,328 $ 7,701,529 $ 7,499,405
EXPENSES:
Mortality and expense
undertakings.......... (13,299,773) (807,142) (1,842,489) (4,929,997) (3,769,755)
----------------- --------------- --------------- --------------------- -----------------
Net investment income
(loss).............. (5,913,744) 3,346,436 1,224,839 2,771,532 3,729,650
----------------- --------------- --------------- --------------------- -----------------
CAPITAL GAINS INCOME..... 50,334,274 -- 1,690,389 8,880,986 3,429,737
----------------- --------------- --------------- --------------------- -----------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... (93,060) 11,668 238,066 7,755 (2,773)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 142,164,193 (882,583) 25,487,376 31,201,375 53,771,055
----------------- --------------- --------------- --------------------- -----------------
Net realized and
unrealized gain
(loss) on
investments......... 142,071,133 (870,915) 25,725,442 31,209,130 53,768,282
----------------- --------------- --------------- --------------------- -----------------
Net increase (decrease)
in net assets
resulting from
operations............ $186,491,663 $2,475,521 $ 28,640,670 $42,861,648 $ 60,927,669
----------------- --------------- --------------- --------------------- -----------------
----------------- --------------- --------------- --------------------- -----------------
<CAPTION>
INTERNATIONAL SMALL
ADVISERS FUND COMPANY FUND
SUB-ACCOUNT SUB-ACCOUNT*
--------------- ------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends.............. $2,027,740 $ 19,636
EXPENSES:
Mortality and expense
undertakings.......... (527,485) (53,227)
--------------- ------------
Net investment income
(loss).............. 1,500,255 (33,591)
--------------- ------------
CAPITAL GAINS INCOME..... 1,446,895 --
--------------- ------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... (563) 1,014
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 1,479,032 210,808
--------------- ------------
Net realized and
unrealized gain
(loss) on
investments......... 1,478,469 211,822
--------------- ------------
Net increase (decrease)
in net assets
resulting from
operations............ $4,425,619 $178,231
--------------- ------------
--------------- ------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
73
<PAGE>
- --------------------------------------------------------------------------------
Separate Account One
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 6,179,469 $ 2,739,156 $ 5,458,975 $ 30,356,891
Capital gains income... -- 23,889,792 -- 32,217,082
Net realized gain
(loss) on security
transactions.......... (12,579) 125,474 -- 5,867
Net unrealized
appreciation
(depreciation) of
investments during the
period................ (2,390,902) 143,331,264 -- 201,866,663
------------- --------------- ------------- ---------------
Net increase (decrease)
in net assets
resulting from
operations............ 3,775,988 170,085,686 5,458,975 264,446,503
------------- --------------- ------------- ---------------
UNIT TRANSACTIONS:
Purchases.............. 50,521,787 328,658,597 170,409,309 548,125,217
Net transfers.......... 6,860,514 111,488,442 (87,853,221) 158,897,610
Surrenders............. (5,504,050) (23,567,485) (14,470,700) (70,519,197)
Net annuity
transactions.......... 1,807 394,242 8,095 766,829
------------- --------------- ------------- ---------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 51,880,058 416,973,796 68,093,483 637,270,459
------------- --------------- ------------- ---------------
Total increase
(decrease) in net
assets................ 55,656,046 587,059,482 73,552,458 901,716,962
NET ASSETS:
Beginning of period.... 90,906,165 539,291,619 101,636,964 1,378,778,206
------------- --------------- ------------- ---------------
End of period.......... $ 146,562,211 $ 1,126,351,101 $ 175,189,422 $ 2,280,495,168
------------- --------------- ------------- ---------------
------------- --------------- ------------- ---------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1995
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------- --------------- ------------- ---------------
OPERATIONS:
Net investment income
(loss)................ $ 3,623,445 $ 3,565,344 $ 2,459,135 $ 24,292,959
Capital gains income... -- 10,042,632 -- 10,002,290
Net realized gain
(loss) on security
transactions.......... (1,975) (399) -- (7,267)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 6,900,317 83,219,709 -- 206,272,399
------------- --------------- ------------- ---------------
Net increase (decrease)
in net assets
resulting from
operations............ 10,521,787 96,827,286 2,459,135 240,560,381
------------- --------------- ------------- ---------------
UNIT TRANSACTIONS:
Purchases.............. 25,372,374 158,137,004 80,712,314 270,288,399
Net transfers.......... 4,295,703 52,451,790 (20,394,095) 82,728,374
Surrenders............. (3,251,644) (10,089,748) (6,391,220) (40,365,223)
Net annuity
transactions.......... -- 21,071 103,096 437,471
------------- --------------- ------------- ---------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 26,416,433 200,520,117 54,030,095 313,089,021
------------- --------------- ------------- ---------------
Total increase
(decrease) in net
assets................ 36,938,220 297,347,403 56,489,230 553,649,402
NET ASSETS:
Beginning of period.... 53,967,945 241,944,216 45,147,734 825,128,804
------------- --------------- ------------- ---------------
End of period.......... $ 90,906,165 $ 539,291,619 $ 101,636,964 $ 1,378,778,206
------------- --------------- ------------- ---------------
------------- --------------- ------------- ---------------
</TABLE>
* From inception, August 9, 1996, to December 31, 1996.
** From inception, March 1, 1995, to December 31, 1995.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
74
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND INTERNATIONAL
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ------------- ------------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ (5,913,744) $ 3,346,436 $ 1,224,839 $ 2,771,532 $ 3,729,650 $ 1,500,255
Capital gains income... 50,334,274 -- 1,690,389 8,880,986 3,429,737 1,446,895
Net realized gain
(loss) on security
transactions.......... (93,060) 11,668 238,066 7,755 (2,773) (563)
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 142,164,193 (882,583) 25,487,376 31,201,375 53,771,055 1,479,032
----------------- --------------- ------------- ------------------ ------------- -------------
Net increase (decrease)
in net assets
resulting from
operations............ 186,491,663 2,475,521 28,640,670 42,861,648 60,927,669 4,425,619
----------------- --------------- ------------- ------------------ ------------- -------------
UNIT TRANSACTIONS:
Purchases.............. 403,482,054 13,476,913 83,760,185 110,673,155 205,512,019 37,280,366
Net transfers.......... 129,133,556 2,655,230 33,248,800 47,078,167 101,413,217 19,003,957
Surrenders............. (30,210,654) (2,722,173) (3,699,700) (11,782,890) (7,316,597) (1,178,598)
Net annuity
transactions.......... 288,203 -- 203 81,416 146,210 31
----------------- --------------- ------------- ------------------ ------------- -------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 502,693,159 13,409,970 113,309,488 146,049,848 299,754,849 55,105,756
----------------- --------------- ------------- ------------------ ------------- -------------
Total increase
(decrease) in net
assets................ 689,184,822 15,885,491 141,950,158 188,911,496 360,682,518 59,531,375
NET ASSETS:
Beginning of period.... 728,892,329 58,753,440 77,352,090 296,053,822 137,407,988 12,285,684
----------------- --------------- ------------- ------------------ ------------- -------------
End of period.......... $1,418,077,151 $74,638,931 $ 219,302,248 $484,965,318 $498,090,506 $71,817,059
----------------- --------------- ------------- ------------------ ------------- -------------
----------------- --------------- ------------- ------------------ ------------- -------------
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND INTERNATIONAL
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT**
----------------- --------------- ------------- ------------------ ------------- -------------
OPERATIONS:
Net investment income
(loss)................ $ (1,415,627) $ 2,738,167 $ 502,406 $ 860,408 $ 1,039,600 $ 242,325
Capital gains income... 17,026,540 -- 8,809 1,900,624 -- --
Net realized gain
(loss) on security
transactions.......... (36,921) 8,806 (2,982) 18,072 (3,380) 560
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 92,059,097 4,247,716 10,397,357 26,882,909 17,906,285 212,972
----------------- --------------- ------------- ------------------ ------------- -------------
Net increase (decrease)
in net assets
resulting from
operations............ 107,633,089 6,994,689 10,905,590 29,662,013 18,942,505 455,857
----------------- --------------- ------------- ------------------ ------------- -------------
UNIT TRANSACTIONS:
Purchases.............. 245,731,245 8,572,589 31,929,411 55,473,427 67,833,419 8,715,018
Net transfers.......... 82,630,293 (2,398,278) 14,672,676 9,777,060 30,210,279 3,144,229
Surrenders............. (12,124,223) (2,985,486) (1,214,487) (6,662,350) (1,756,293) (29,420)
Net annuity
transactions.......... 225,634 -- 9,937 147,629 -- --
----------------- --------------- ------------- ------------------ ------------- -------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 316,462,949 3,188,825 45,397,537 58,735,766 96,287,405 11,829,827
----------------- --------------- ------------- ------------------ ------------- -------------
Total increase
(decrease) in net
assets................ 424,096,038 10,183,514 56,303,127 88,397,779 115,229,910 12,285,684
NET ASSETS:
Beginning of period.... 304,796,291 48,569,926 21,048,963 207,656,043 22,178,078 --
----------------- --------------- ------------- ------------------ ------------- -------------
End of period.......... $ 728,892,329 $58,753,440 $ 77,352,090 $296,053,822 $137,407,988 $12,285,684
----------------- --------------- ------------- ------------------ ------------- -------------
----------------- --------------- ------------- ------------------ ------------- -------------
<CAPTION>
SMALL
COMPANY FUND
SUB-ACCOUNT*
-------------
<S> <C>
OPERATIONS:
Net investment income
(loss)................ $ (33,591)
Capital gains income... --
Net realized gain
(loss) on security
transactions.......... 1,014
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 210,808
-------------
Net increase (decrease)
in net assets
resulting from
operations............ 178,231
-------------
UNIT TRANSACTIONS:
Purchases.............. 14,704,067
Net transfers.......... 11,169,302
Surrenders............. (36,071)
Net annuity
transactions.......... --
-------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 25,837,298
-------------
Total increase
(decrease) in net
assets................ 26,015,529
NET ASSETS:
Beginning of period.... --
-------------
End of period.......... $26,015,529
-------------
-------------
OPERATIONS:
Net investment income
(loss)................
Capital gains income...
Net realized gain
(loss) on security
transactions..........
Net unrealized
appreciation
(depreciation) of
investments during the
period................
Net increase (decrease)
in net assets
resulting from
operations............
UNIT TRANSACTIONS:
Purchases..............
Net transfers..........
Surrenders.............
Net annuity
transactions..........
Net increase (decrease)
in net assets
resulting from unit
transactions..........
Total increase
(decrease) in net
assets................
NET ASSETS:
Beginning of period....
End of period..........
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
75
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT ONE
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. ORGANIZATION:
Separate Account One (the Account) is a separate investment account within
ITT Hartford Life and Annuity Insurance Company (the Company) and is
registered with the Securities and Exchange Commission (SEC) as a unit
investment trust under the Investment Company Act of 1940, as amended. Both
the Company and the Account are subject to supervision and regulation by the
Department of Insurance of the State of Connecticut and the SEC. The Account
invests deposits by variable annuity contractholders of the Company in
various mutual funds (the Funds) as directed by the contractholders.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting
principles in the investment company industry:
a) SECURITY TRANSACTIONS--Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Cost of investments
sold is determined on the basis of identified cost. Dividends and
capital gains income are accrued as of the ex-dividend date. Capital
gains income represents dividends from the Funds which are characterized
as capital gains under tax regulations.
b) SECURITY VALUATION--The investment in shares of the Funds are valued at
the closing net asset value per share as determined by the appropriate
Fund as of December 31, 1996.
c) FEDERAL INCOME TAXES--The operations of the Account form a part of, and
are taxed with, the total operations of the Company, which is taxed as
an insurance company under the Internal Revenue Code. Under current law,
no federal income taxes are payable with respect to the operations of
the Account.
d) USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities as of the date of the financial statements and
the reported amounts of income and expenses during the period. Operating
results in the future could vary from the amounts derived from
management's estimates.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
a) MORTALITY AND EXPENSE UNDERTAKINGS--The Company, as issuer of variable
annuity contracts, provides the mortality and expense undertakings and,
with respect to the Account, receives a maximum annual fee of 1.25% of
the Account's average daily net assets.
b) DEDUCTION OF ANNUAL MAINTENANCE FEE--Annual maintenance fees are
deducted through termination of units of interest from applicable
contractholders' accounts, in accordance with the terms of the
contracts.
76
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT ONE AND TO THE
OWNERS OF UNITS OF INTEREST THEREIN:
We have audited the accompanying statement of assets and liabilities of ITT
Hartford Life and Annuity Insurance Company Separate Account One (the Account)
as of December 31, 1996, and the related statement of operations for the year
then ended and statements of changes in net assets for each of the two years in
the period then ended. These financial statements are the responsibility of the
Account's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ITT Hartford Life and Annuity
Insurance Company Separate Account One as of December 31, 1996, the results of
its operations for the year then ended and the changes in its net assets for
each of the two years in the period then ended in conformity with generally
accepted accounting principles.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 14, 1997
77
<PAGE>
- --------------------------------------------------------------------------------
Separate Account Variable Life One
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
ASSETS
Investments:
Hartford Bond Fund,
Inc.
Shares 1,145
Cost $1,132
Market Value......... $ 1,144 -- -- --
Hartford Stock Fund,
Inc.
Shares 298
Cost $1,173
Market Value......... -- $ 1,234 -- --
HVA Money Market Fund,
Inc.
Shares 411,950
Cost $411,950
Market Value: -- -- $ 411,950 --
Hartford Advisers Fund,
Inc.
Shares 486
Cost $1,007
Market Value......... -- -- -- $ 1,055
Hartford Capital
Appreciation Fund,
Inc.
Shares 692
Cost $2,664
Market Value......... -- -- -- --
Hartford Mortgage
Securities Fund, Inc.
Shares 971
Cost $1,014
Market Value......... -- -- -- --
Hartford Index Fund,
Inc.
Shares 478
Cost $1,074
Market Value......... -- -- -- --
Hartford International
Opportunities Fund,
Inc.
Shares 3,027
Cost $4,190
Market Value......... -- -- -- --
Hartford Dividend and
Growth Fund, Inc.
Shares 2,863
Cost $4,419
Market Value......... -- -- -- --
Fidelity VIP Equity
Income Portfolio
Shares 85
Cost $1,730
Market Value......... -- -- -- --
Fidelity VIP Overseas
Portfolio
Shares 55
Cost $1,000
Market Value......... -- -- -- --
Fidelity VIP II Asset
Manager Portfolio
Shares 62
Cost $1,000
Market Value......... -- -- -- --
Due from ITT Hartford
Life and Annuity
Insurance Company..... -- -- 227,457 --
Receivable from shares
sold.................. -- -- -- --
----------- ----------- ----------- -------------
Total Assets........... 1,144 1,234 639,407 1,055
----------- ----------- ----------- -------------
LIABILITIES:
Due to ITT Hartford
Life and Annuity
Insurance Company..... -- -- -- --
Payable for fund shares
purchased -- -- 227,391 --
----------- ----------- ----------- -------------
Total Liabilities...... -- -- 227,391 --
----------- ----------- ----------- -------------
Net Assets (variable
annuity contract
liabilities).......... $ 1,144 $ 1,234 $ 412,016 $ 1,055
----------- ----------- ----------- -------------
----------- ----------- ----------- -------------
DEFERRED ANNUITY
CONTRACTS IN THE
ACCUMULATION PERIOD:
GROUP SUB-ACCOUNTS:
Units Owned by
Participants.......... 927 690 350,368 674
Unit Price............. $1.233518 $1.789555 $1.175949 $1.563874
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
78
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ----------- ------------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments:
Hartford Bond Fund,
Inc.
Shares 1,145
Cost $1,132
Market Value......... -- -- -- -- --
Hartford Stock Fund,
Inc.
Shares 298
Cost $1,173
Market Value......... -- -- -- -- --
HVA Money Market Fund,
Inc.
Shares 411,950
Cost $411,950
Market Value: -- -- -- -- --
Hartford Advisers Fund,
Inc.
Shares 486
Cost $1,007
Market Value......... -- -- -- -- --
Hartford Capital
Appreciation Fund,
Inc.
Shares 692
Cost $2,664
Market Value......... $ 2,710 -- -- -- --
Hartford Mortgage
Securities Fund, Inc.
Shares 971
Cost $1,014
Market Value......... -- $ 1,025 -- -- --
Hartford Index Fund,
Inc.
Shares 478
Cost $1,074
Market Value......... -- -- $ 1,139 -- --
Hartford International
Opportunities Fund,
Inc.
Shares 3,027
Cost $4,190
Market Value......... -- -- -- $ 4,258 --
Hartford Dividend and
Growth Fund, Inc.
Shares 2,863
Cost $4,419
Market Value......... -- -- -- -- $ 4,431
Fidelity VIP Equity
Income Portfolio
Shares 85
Cost $1,730
Market Value......... -- -- -- -- --
Fidelity VIP Overseas
Portfolio
Shares 55
Cost $1,000
Market Value......... -- -- -- -- --
Fidelity VIP II Asset
Manager Portfolio
Shares 62
Cost $1,000
Market Value......... -- -- -- -- --
Due from ITT Hartford
Life and Annuity
Insurance Company..... -- -- -- -- --
Receivable from shares
sold.................. -- -- -- -- --
----------------- --------------- ----------- ---------- ------------
Total Assets........... 2,710 1,025 1,139 4,258 4,431
----------------- --------------- ----------- ---------- ------------
LIABILITIES:
Due to ITT Hartford
Life and Annuity
Insurance Company..... -- -- -- -- --
Payable for fund shares
purchased -- -- -- -- --
----------------- --------------- ----------- ---------- ------------
Total Liabilities...... -- -- -- -- --
----------------- --------------- ----------- ---------- ------------
Net Assets (variable
annuity contract
liabilities).......... $ 2,710 $ 1,025 $ 1,139 $ 4,258 $ 4,431
----------------- --------------- ----------- ---------- ------------
----------------- --------------- ----------- ---------- ------------
DEFERRED ANNUITY
CONTRACTS IN THE
ACCUMULATION PERIOD:
GROUP SUB-ACCOUNTS:
Units Owned by
Participants.......... 1,552 828 650 2,846 2,924
Unit Price............. $ 1.745910 $ 1.237827 $1.752378 $1.496455 $1.515489
<CAPTION>
FIDELITY VIP FIDELITY VIP II
FIDELITY VIP OVERSEAS ASSET MANAGER
EQUITY INCOME PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------------- ------------- ------------------
<S> <C> <C> <C>
ASSETS
Investments:
Hartford Bond Fund,
Inc.
Shares
Cost
Market Value......... -- -- --
Hartford Stock Fund,
Inc.
Shares
Cost
Market Value......... -- -- --
HVA Money Market Fund,
Inc.
Shares
Cost
Market Value: -- -- --
Hartford Advisers Fund,
Inc.
Shares
Cost
Market Value......... -- -- --
Hartford Capital
Appreciation Fund,
Inc.
Shares
Cost
Market Value......... -- -- --
Hartford Mortgage
Securities Fund, Inc.
Shares
Cost
Market Value......... -- -- --
Hartford Index Fund,
Inc.
Shares
Cost
Market Value......... -- -- --
Hartford International
Opportunities Fund,
Inc.
Shares
Cost
Market Value......... -- -- --
Hartford Dividend and
Growth Fund, Inc.
Shares
Cost
Market Value......... -- -- --
Fidelity VIP Equity
Income Portfolio
Shares
Cost
Market Value......... $ 1,784 -- --
Fidelity VIP Overseas
Portfolio
Shares
Cost
Market Value......... -- $ 1,044 --
Fidelity VIP II Asset
Manager Portfolio
Shares
Cost
Market Value......... -- -- $ 1,050
Due from ITT Hartford
Life and Annuity
Insurance Company..... 12 -- --
Receivable from shares
sold.................. -- -- --
---------- ------------- ----------
Total Assets........... 1,796 1,044 1,050
---------- ------------- ----------
LIABILITIES:
Due to ITT Hartford
Life and Annuity
Insurance Company..... -- -- --
Payable for fund shares
purchased 12 -- --
---------- ------------- ----------
Total Liabilities...... 12 -- --
---------- ------------- ----------
Net Assets (variable
annuity contract
liabilities).......... $ 1,784 $ 1,044 $ 1,050
---------- ------------- ----------
---------- ------------- ----------
DEFERRED ANNUITY
CONTRACTS IN THE
ACCUMULATION PERIOD:
GROUP SUB-ACCOUNTS:
Units Owned by
Participants.......... 1,302 859 832
Unit Price............. $ 1.370219 $1.215706 $1.261761
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
79
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VARIABLE LIFE ONE
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM INCEPTION, OCTOBER 3, 1996, TO DECEMBER 31, 1996
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 17 $ 3 $ 137 $ 7
--- --- ----- ---
Net investment income
(loss).............. 17 3 137 7
--- --- ----- ---
CAPITAL GAINS INCOME..... -- -- -- --
--- --- ----- ---
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... -- -- -- --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 12 61 -- 48
--- --- ----- ---
Net realized and
unrealized gain
(loss) on
investments......... 12 61 -- 48
--- --- ----- ---
Net increase
(decrease) in net
assets resulting
from operations..... $ 29 $ 64 $ 137 $ 55
--- --- ----- ---
--- --- ----- ---
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
80
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ----------- ------------------ ------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 3 $ 14 $ 5 $ 8 $ 11
--- --- --- --- ---
Net investment income
(loss).............. 3 14 5 8 11
--- --- --- --- ---
CAPITAL GAINS INCOME..... -- -- -- -- --
--- --- --- --- ---
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... -- -- -- -- --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 46 11 65 68 12
--- --- --- --- ---
Net realized and
unrealized gain
(loss) on
investments......... 46 11 65 68 12
--- --- --- --- ---
Net increase
(decrease) in net
assets resulting
from operations..... $ 49 $ 25 $ 70 $ 76 $ 23
--- --- --- --- ---
--- --- --- --- ---
<CAPTION>
FIDELITY VIP FIDELITY VIP FIDELITY VIP II
EQUITY INCOME OVERSEAS ASSET MANAGER
PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------- ----------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ -- $ -- $ --
--- --- ---
Net investment income
(loss).............. -- -- --
--- --- ---
CAPITAL GAINS INCOME..... -- -- --
--- --- ---
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... -- -- --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 54 44 50
--- --- ---
Net realized and
unrealized gain
(loss) on
investments......... 54 44 50
--- --- ---
Net increase
(decrease) in net
assets resulting
from operations..... $ 54 $ 44 $ 50
--- --- ---
--- --- ---
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
81
<PAGE>
- --------------------------------------------------------------------------------
Separate Account Variable Life One
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM INCEPTION, OCTOBER 3, 1996, TO DECEMBER 31, 1996
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 17 $ 3 $ 137 $ 7
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 12 61 -- 48
----------- ----------- ----------- ------
Net increase (decrease)
in net assets
resulting from
operations............ 29 64 137 55
----------- ----------- ----------- ------
UNIT TRANSACTIONS:
Purchases.............. 1,000 1,000 436,756 1,000
Net transfers.......... 115 170 (18,268) --
Surrenders............. -- -- (2,162) --
Cost of insurance...... -- -- (4,447) --
----------- ----------- ----------- ------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 1,115 1,170 411,879 1,000
----------- ----------- ----------- ------
Total increase
(decrease) in net
assets................ 1,144 1,234 412,016 1,055
NET ASSETS:
Beginning of period.... -- -- -- --
----------- ----------- ----------- ------
End of period.......... $1,144 $1,234 $ 412,016 $1,055
----------- ----------- ----------- ------
----------- ----------- ----------- ------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
82
<PAGE>
<TABLE>
<CAPTION>
CAPTIAL MORTGAGE INTERNATIONAL DIVIDEND AND
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ----------- ------------------ ------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 3 $ 14 $ 5 $ 8 $ 11
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 46 11 65 68 12
------ ------ ----------- ------ ------
Net increase (decrease)
in net assets
resulting from
operations............ 49 25 70 76 23
------ ------ ----------- ------ ------
UNIT TRANSACTIONS:
Purchases.............. 1,000 1,000 1,000 1,000 1,000
Net transfers.......... 1,661 -- 69 3,182 3,436
Surrenders............. -- -- -- -- (11)
Cost of insurance...... -- -- -- -- (17)
------ ------ ----------- ------ ------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 2,661 1,000 1,069 4,182 4,408
------ ------ ----------- ------ ------
Total increase
(decrease) in net
assets................ 2,710 1,025 1,139 4,258 4,431
NET ASSETS:
Beginning of period.... -- -- -- -- --
------ ------ ----------- ------ ------
End of period.......... $2,710 $1,025 $1,139 $4,258 $4,431
------ ------ ----------- ------ ------
------ ------ ----------- ------ ------
<CAPTION>
FIDELITY VIP FIDELITY VIP FIDELITY VIP II
EQUITY INCOME PORTFOLIO OVERSEAS PORTFOLIO ASSET MANAGER PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------------- ------------------ -----------------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ --$ -$- --$
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 54 44 50
------ ------ ------
Net increase (decrease)
in net assets
resulting from
operations............ 54 44 50
------ ------ ------
UNIT TRANSACTIONS:
Purchases.............. 1,000 1,000 1,000
Net transfers.......... 760 -- --
Surrenders............. (13) -- --
Cost of insurance...... (17) -- --
------ ------ ------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 1,730 1,000 1,000
------ ------ ------
Total increase
(decrease) in net
assets................ 1,784 -- --
NET ASSETS:
Beginning of period.... -- -- --
------ ------ ------
End of period.......... $1,784 $1,044 $1,050
------ ------ ------
------ ------ ------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
83
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VARIABLE LIFE ONE
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. ORGANIZATION:
Separate Account Variable Life One (the Account) is a separate investment
account within ITT Hartford Life and Annuity Insurance Company (the Company)
and is registered with the Securities and Exchange Commission (SEC) as a
unit investment trust under the Investment Company Act of 1940, as amended.
The Account consists of twenty two sub-accounts. These financial statements
include twelve sub-accounts which invest solely in Hartford Mutual Funds and
Fidelity Mutual Funds (the Funds). The other ten sub-accounts, which invest
in the Putnam Variable Trust Funds, are presented in separate financial
statements. Both the Company and the Account are subject to supervision and
regulation by the Department of Insurance of the State of Connecticut and
the SEC. The Account invests deposits by variable life contractholders of
the Company in the Funds as directed by the contractholders.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting
principles in the investment company industry:
a) SECURITY TRANSACTIONS--Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Cost of investments
sold is determined on the basis of identified cost. Dividends and
capital gains income are accrued as of the ex-dividend date. Capital
gains income represents dividends from the Funds which are characterized
as capital gains under tax regulations.
b) SECURITY VALUATION--The investment in shares of the funds are valued at
the closing net asset value per share as determined by the appropriate
Fund as of December 31, 1996.
c) FEDERAL INCOME TAXES--The operations of the Account form a part of, and
are taxed with, the total operations of the Company, which is taxed as
an insurance company under the Internal Revenue Code. Under current law,
no federal income taxes are payable with respect to the operations of
the Account.
d) USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities as of the date of the financial statements and
the reported amounts of income and expenses during the period. Operating
results in the future could vary from the amounts derived from
management's estimates.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
In accordance with the terms of the contracts, the Company makes deductions
for mortality and expense undertakings, cost of insurance, administrative
fees, and state premium taxes. These charges are deducted through
termination of units of interest from applicable contractholders' accounts
in accordance with the terms of the contracts.
84
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT VARIABLE LIFE ONE AND TO THE
OWNERS OF UNITS OF INTEREST THEREIN:
We have audited the accompanying statement of assets and liabilities of the
Bond Fund Sub-Account, Stock Fund Sub-Account, Money Market Fund Sub-Account,
Advisers Fund Sub-Account, Capital Appreciation Fund Sub-Account, Mortgage
Securities Fund Sub-Account, Index Fund Sub-Account, International
Opportunities Fund Sub-Account, Dividend and Growth Fund Sub-Account, Fidelity
VIP Equity Income Portfolio Sub-Account, Fidelity VIP Overseas Portfolio
Sub-Account and Fidelity VIP II Asset Manager Portfolio Sub-Account
(constituting ITT Hartford Life and Annuity Insurance Company Separate Account
Variable Life One) (the Accounts) as of December 31, 1996, and the related
statements of operations and changes in net assets for the period from
inception, October 3, 1996, to December 31, 1996. These financial statements
are the responsibility of the Accounts' management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Bond Fund Sub-Account,
Stock Fund Sub-Account, Money Market Fund Sub-Account, Advisers Fund Sub-
Account, Capital Appreciation Fund Sub-Account, Mortgage Securities Fund
Sub-Account, Index Fund Sub-Account, International Opportunities Fund
Sub-Account, Dividend and Growth Fund Sub-Account, Fidelity VIP Equity Income
Portfolio Sub-Account, Fidelity VIP Overseas Portfolio Sub-Account and Fidelity
VIP II Asset Manager Portfolio Sub-Account (constituting ITT Hartford Life and
Annuity Insurance Company Separate Account Variable Life One) as of December
31, 1996, the results of its operations and the changes in its net assets for
the period from inception, October 3, 1996, to December 31, 1996, in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 14, 1997
85
<PAGE>
- --------------------------------------------------------------------------------
Separate Account Variable Life Two
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares 64,640
Cost $65,072
Market Value......... $ 64,588 -- -- --
Hartford Stock Fund,
Inc.
Shares 258
Cost $1,003
Market Value......... -- $ 1,067 -- --
HVA Money Market Fund,
Inc.
Shares 47,513
Cost $47,513
Market Value......... -- -- $ 47,513 --
Hartford Advisers Fund,
Inc.
Shares 9,232
Cost $20,157
Market Value......... -- -- -- $ 20,029
Hartford Capital
Appreciation Fund,
Inc.
Shares 267
Cost $1,002
Market Value......... -- -- -- --
Hartford Mortgage
Securities Fund, Inc.
Shares 971
Cost $1,014
Market Value......... -- -- -- --
Hartford Index Fund,
Inc.
Shares 450
Cost $1,005
Market Value......... -- -- -- --
Hartford International
Opportunities Fund,
Inc.
Shares 14,515
Cost $20,130
Market Value......... -- -- -- --
Hartford Dividend and
Growth Fund, Inc.
Shares 690
Cost $1,006
Market Value......... -- -- -- --
Fidelity VIP Equity
Income Fund
Shares 50
Cost $1,000
Market Value......... -- -- -- --
Fidelity VIP Overseas
Fund
Shares 55
Cost $1,000
Market Value......... -- -- -- --
Fidelity VIP II Asset
Manager Fund
Shares 62
Cost $1,000
Market Value......... -- -- -- --
Due from ITT Hartford
Life and Annuity
Insurance Company..... -- -- 2,039 --
Receivable from fund
shares sold........... -- -- -- --
----------- ------------ ------------ -------------
Total Assets........... 64,588 1,067 49,552 20,029
----------- ------------ ------------ -------------
LIABILITIES:
Due to ITT Hartford
Life and Annuity
Insurance Company..... -- -- -- --
Payable for fund shares
purchased............. -- -- 2,038 --
----------- ------------ ------------ -------------
Total Liabilities...... -- -- 2,038 --
----------- ------------ ------------ -------------
Net Assets (variable
annuity contract
liabilities).......... $ 64,588 $ 1,067 $ 47,514 $ 20,029
----------- ------------ ------------ -------------
----------- ------------ ------------ -------------
DEFERRED ANNUITY
CONTRACTS IN THE
ACCUMULATION PERIOD:
GROUP SUB-ACCOUNTS:
Units Owned by
Participants.......... 52,360 596 40,404 12,807
Unit Price............. $ 1.233518 $ 1.789555 $ 1.175949 $ 1.563874
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
86
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ----------- ------------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares 64,640
Cost $65,072
Market Value......... -- -- -- -- --
Hartford Stock Fund,
Inc.
Shares 258
Cost $1,003
Market Value......... -- -- -- -- --
HVA Money Market Fund,
Inc.
Shares 47,513
Cost $47,513
Market Value......... -- -- -- -- --
Hartford Advisers Fund,
Inc.
Shares 9,232
Cost $20,157
Market Value......... -- -- -- -- --
Hartford Capital
Appreciation Fund,
Inc.
Shares 267
Cost $1,002
Market Value......... $ 1,044 -- -- -- --
Hartford Mortgage
Securities Fund, Inc.
Shares 971
Cost $1,014
Market Value......... -- $ 1,025 -- -- --
Hartford Index Fund,
Inc.
Shares 450
Cost $1,005
Market Value......... -- -- $ 1,071 -- --
Hartford International
Opportunities Fund,
Inc.
Shares 14,515
Cost $20,130
Market Value......... -- -- -- $ 20,421 --
Hartford Dividend and
Growth Fund, Inc.
Shares 690
Cost $1,006
Market Value......... -- -- -- -- $ 1,068
Fidelity VIP Equity
Income Fund
Shares 50
Cost $1,000
Market Value......... -- -- -- -- --
Fidelity VIP Overseas
Fund
Shares 55
Cost $1,000
Market Value......... -- -- -- -- --
Fidelity VIP II Asset
Manager Fund
Shares 62
Cost $1,000
Market Value......... -- -- -- -- --
Due from ITT Hartford
Life and Annuity
Insurance Company..... -- -- -- -- --
Receivable from fund
shares sold........... -- -- -- -- --
----------------- --------------- ----------- ---------- ------------
Total Assets........... 1,044 1,025 1,071 20,421 1,068
----------------- --------------- ----------- ---------- ------------
LIABILITIES:
Due to ITT Hartford
Life and Annuity
Insurance Company..... -- -- -- -- --
Payable for fund shares
purchased............. -- -- -- -- --
----------------- --------------- ----------- ---------- ------------
Total Liabilities...... -- -- -- -- --
----------------- --------------- ----------- ---------- ------------
Net Assets (variable
annuity contract
liabilities).......... $ 1,044 $ 1,025 $ 1,071 $ 20,421 $ 1,068
----------------- --------------- ----------- ---------- ------------
----------------- --------------- ----------- ---------- ------------
DEFERRED ANNUITY
CONTRACTS IN THE
ACCUMULATION PERIOD:
GROUP SUB-ACCOUNTS:
Units Owned by
Participants.......... 598 828 611 13,646 705
Unit Price............. $ 1.745910 $ 1.237827 $ 1.752378 $ 1.496455 $ 1.515489
<CAPTION>
FIDELITY VIP FIDELITY VIP FIDELITY VIP II
EQUITY INCOME OVERSEAS ASSET MANAGER
PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------- ------------------
<S> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares
Cost
Market Value......... -- -- --
Hartford Stock Fund,
Inc.
Shares
Cost
Market Value......... -- -- --
HVA Money Market Fund,
Inc.
Shares
Cost
Market Value......... -- -- --
Hartford Advisers Fund,
Inc.
Shares
Cost
Market Value......... -- -- --
Hartford Capital
Appreciation Fund,
Inc.
Shares
Cost
Market Value......... -- -- --
Hartford Mortgage
Securities Fund, Inc.
Shares
Cost
Market Value......... -- -- --
Hartford Index Fund,
Inc.
Shares
Cost
Market Value......... -- -- --
Hartford International
Opportunities Fund,
Inc.
Shares
Cost
Market Value......... -- -- --
Hartford Dividend and
Growth Fund, Inc.
Shares
Cost
Market Value......... -- -- --
Fidelity VIP Equity
Income Fund
Shares
Cost
Market Value......... $ 1,056 -- --
Fidelity VIP Overseas
Fund
Shares
Cost
Market Value......... -- $ 1,044 --
Fidelity VIP II Asset
Manager Fund
Shares
Cost
Market Value......... -- -- $ 1,050
Due from ITT Hartford
Life and Annuity
Insurance Company..... -- -- --
Receivable from fund
shares sold........... -- -- --
---------- ------------- ----------
Total Assets........... 1,056 1,044 1,050
---------- ------------- ----------
LIABILITIES:
Due to ITT Hartford
Life and Annuity
Insurance Company..... -- -- --
Payable for fund shares
purchased............. -- -- --
---------- ------------- ----------
Total Liabilities...... -- -- --
---------- ------------- ----------
Net Assets (variable
annuity contract
liabilities).......... $ 1,056 $ 1,044 $ 1,050
---------- ------------- ----------
---------- ------------- ----------
DEFERRED ANNUITY
CONTRACTS IN THE
ACCUMULATION PERIOD:
GROUP SUB-ACCOUNTS:
Units Owned by
Participants.......... 771 859 832
Unit Price............. $ 1.370219 $1.215706 $1.261761
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
87
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VARIABLE LIFE TWO
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM INCEPTION, OCTOBER 3, 1996, TO DECEMBER 31, 1996
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 389 $ 3 $ 286 $ 53
----- --- ----- -----
Net investment income
(loss).............. 389 3 286 53
----- --- ----- -----
CAPITAL GAINS INCOME..... -- -- -- --
----- --- ----- -----
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... -- -- -- --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ (484) 64 -- (129)
----- --- ----- -----
Net gain (loss) on
investments......... (484) 64 -- (129)
----- --- ----- -----
Net increase
(decrease) in net
assets resulting
from operations..... $ (95) $ 67 $ 286 $ (76)
----- --- ----- -----
----- --- ----- -----
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
88
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ----------- ------------------ ------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 2 $ 14 $ 5 $ 25 $ 6
--- --- --- ----- ---
Net investment income
(loss).............. 2 14 5 25 6
--- --- --- ----- ---
CAPITAL GAINS INCOME..... -- -- -- -- --
--- --- --- ----- ---
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... -- -- -- -- --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 42 11 66 291 62
--- --- --- ----- ---
Net gain (loss) on
investments......... 42 11 66 291 62
--- --- --- ----- ---
Net increase
(decrease) in net
assets resulting
from operations..... $ 44 $ 25 $ 71 $ 316 $ 68
--- --- --- ----- ---
--- --- --- ----- ---
<CAPTION>
FIDELITY VIP FIDELITY VIP FIDELITY VIP II
EQUITY INCOME OVERSEAS ASSET MANAGER
PORTFOLIO PORTFOLIO PORTFOLIO
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------------ ------------- ----------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ -- $ -- $ --
--- --- ---
Net investment income
(loss).............. -- -- --
--- --- ---
CAPITAL GAINS INCOME..... -- -- --
--- --- ---
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... -- -- --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 56 44 50
--- --- ---
Net gain (loss) on
investments......... 56 44 50
--- --- ---
Net increase
(decrease) in net
assets resulting
from operations..... $ 56 $ 44 $ 50
--- --- ---
--- --- ---
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
89
<PAGE>
- --------------------------------------------------------------------------------
Separate Account Variable Life Two
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM INCEPTION, OCTOBER 3, 1996, TO DECEMBER 31, 1996
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ---------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 389 $ 3 $ 286 $ 53
Net unrealized
appreciation
(depreciation) of
investments during the
period................ (484) 64 -- (129)
----------- ----------- ----------- -------
Net increase (decrease)
in net assets
resulting from
operations............ (95) 67 286 (76)
----------- ----------- ----------- -------
UNIT TRANSACTIONS:
Purchases.............. 1,000 1,000 176,110 1,000
Net transfers.......... 63,683 -- (127,365) 19,105
Surrenders............. -- -- (1,225) --
Cost of insurance...... -- -- (292) --
----------- ----------- ----------- -------
Total increase
(decrease) in net
assets resulting from
unit transactions..... 64,683 1,000 47,228 20,105
----------- ----------- ----------- -------
Total increase
(decrease) in net
assets................ 64,588 1,067 47,514 20,029
NET ASSETS:
Beginning of period.... -- -- -- --
----------- ----------- ----------- -------
End of period.......... $64,588 $1,067 $ 47,514 $20,029
----------- ----------- ----------- -------
----------- ----------- ----------- -------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
90
<PAGE>
<TABLE>
<CAPTION>
CAPTIAL MORTGAGE INTERNATIONAL DIVIDEND AND FIDELITY VIP
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND EQUITY INCOME FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ----------- ------------------ ------------ ------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 2 $ 14 $ 5 $ 25 $ 6 $ --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 42 11 66 291 62 56
------ ------ ----------- ------- ------ ------
Net increase (decrease)
in net assets
resulting from
operations............ 44 25 71 316 68 56
------ ------ ----------- ------- ------ ------
UNIT TRANSACTIONS:
Purchases.............. 1,000 1,000 1,000 1,000 1,000 1,000
Net transfers.......... -- -- -- 19,105 -- --
Surrenders............. -- -- -- -- -- --
Cost of insurance...... -- -- -- -- -- --
------ ------ ----------- ------- ------ ------
Total increase
(decrease) in net
assets resulting from
unit transactions..... 1,000 1,000 1,000 20,105 1,000 1,000
------ ------ ----------- ------- ------ ------
Total increase
(decrease) in net
assets................ 1,044 1,025 1,071 20,421 1,068 1,056
NET ASSETS:
Beginning of period.... -- -- -- -- -- --
------ ------ ----------- ------- ------ ------
End of period.......... $1,044 $1,025 $1,071 $20,421 $1,068 $1,056
------ ------ ----------- ------- ------ ------
------ ------ ----------- ------- ------ ------
<CAPTION>
FIDELITY VIP FIDELITY VIP II
OVERSEAS FUND ASSET MANAGER FUND
SUB-ACCOUNT SUB-ACCOUNT
------------- ------------------
<S> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ -- $ --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 44 50
------ ------
Net increase (decrease)
in net assets
resulting from
operations............ 44 50
------ ------
UNIT TRANSACTIONS:
Purchases.............. 1,000 1,000
Net transfers.......... -- --
Surrenders............. -- --
Cost of insurance...... -- --
------ ------
Total increase
(decrease) in net
assets resulting from
unit transactions..... 1,000 1,000
------ ------
Total increase
(decrease) in net
assets................ 1,044 1,050
NET ASSETS:
Beginning of period.... -- --
------ ------
End of period.......... $1,044 $1,050
------ ------
------ ------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
91
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VARIABLE LIFE TWO
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. ORGANIZATION:
Separate Account Variable Life Two (the Account) is a separate investment
account within ITT Hartford Life and Annuity Insurance Company (the Company)
and is registered with the Securities and Exchange Commission (SEC) as a
unit investment trust under the Investment Company Act of 1940, as amended.
The Account consists of twenty two sub-accounts. These financial statements
include twelve sub-accounts which invest solely in Hartford Mutual Funds and
Fidelity Mutual Funds (the Funds). The other ten sub-accounts, which invest
in Putnam Variable Trust Funds, are presented in separate financial
statements. Both the Company and the Account are subject to supervision and
regulation by the Department of Insurance of the State of Connecticut and
the SEC. The Account invests deposits by variable life contractholders of
the Company in the Funds as directed by the contractholders.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting
principles in the investment company industry:
a) SECURITY TRANSACTIONS--Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Cost of investments
sold is determined on the basis of identified cost. Dividends and
capital gains income are accrued as of the ex-dividend date. Capital
gains income represents dividends from the Funds which are characterized
as capital gains under tax regulations.
b) SECURITY VALUATION--The investment in shares of the Hartford, and
Fidelity mutual funds are valued at the closing net asset value per
share as determined by the appropriate Fund as of December 31, 1996.
c) FEDERAL INCOME TAXES--The operations of the Account form a part of, and
are taxed with, the total operations of the Company, which is taxed as
an insurance company under the Internal Revenue Code. Under current law,
no federal income taxes are payable with respect to the operations of
the Account.
d) USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities as of the date of the financial statements and
the reported amounts of income and expenses during the period. Operating
results in the future could vary from the amounts derived from
management's estimates.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
In accordance with the terms of the contracts, the Company makes deductions
for mortality and expense undertakings, cost of insurance, administrative
fees, and state premium taxes. These charges are deducted through
termination of units of interest from applicable contractholders' accounts
in accordance with the terms of the contracts.
92
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT VARIABLE LIFE TWO AND TO THE
OWNERS OF UNITS OF INTEREST THEREIN:
We have audited the accompanying statement of assets and liabilities of the
Bond Fund Sub-Account, Stock Fund Sub-Account, Money Market Fund Sub-Account,
Advisers Fund Sub-Account, Capital Appreciation Fund Sub-Account, Mortgage
Securities Fund Sub-Account, Index Fund Sub-Account, International
Opportunities Fund Sub-Account, Dividend and Growth Fund Sub-Account, Fidelity
VIP Equity Income Portfolio Sub-Account, Fidelity VIP Overseas Portfolio
Sub-Account and Fidelity VIP II Asset Manager Portfolio Sub-Account
(constituting ITT Hartford Life and Annuity Insurance Company Separate Account
Variable Life Two) (the Accounts) as of December 31, 1996, and the related
statements of operations and changes in net assets for the period from
inception, October 3, 1996, to December 31, 1996. These financial statements
are the responsibility of the Accounts' management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Bond Fund Sub-Account,
Stock Fund Sub-Account, Money Market Fund Sub-Account, Advisers Fund Sub-
Account, Capital Appreciation Fund Sub-Account, Mortgage Securities Fund
Sub-Account, Index Fund Sub-Account, International Opportunities Fund
Sub-Account, Dividend and Growth Fund Sub-Account, Fidelity VIP Equity Income
Portfolio Sub-Account, Fidelity VIP Overseas Portfolio Sub-Account and Fidelity
VIP II Asset Manager Portfolio Sub-Account (constituting ITT Hartford Life and
Annuity Insurance Company Separate Account Variable Life Two) as of December
31, 1996, the results of its operations and the changes in its net assets for
the period from inception, October 3, 1996, to December 31, 1996, in conformity
with generally accepted accounting principles.
Arthur Andersen LLP
Hartford, Connecticut
February 14, 1997
93
<PAGE>
- --------------------------------------------------------------------------------
Separate Account Five
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MONEY ADVISERS
BOND FUND STOCK FUND MARKET FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
------------ ----------- ----------- ----------
<S> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares 1,733,002
Cost $1,722,027
Market Value......... $1,731,599 -- -- --
Hartford Stock Fund,
Inc.
Shares 3,685,895
Cost $13,390,058
Market Value......... -- $15,269,591 -- --
HVA Money Market Fund,
Inc.
Shares 11,631,670
Cost $11,631,670
Market Value......... -- -- $11,631,670 --
Hartford Advisers Fund,
Inc.
Shares 9,927,031
Cost $19,803,664
Market Value......... -- -- -- $21,536,990
Hartford Capital
Appreciation Fund,
Inc.
Shares 6,094,455
Cost $21,579,746
Market Value......... -- -- -- --
Hartford Mortgage
Securities Fund, Inc.
Shares 645,107
Cost $677,597
Market Value......... -- -- -- --
Hartford Index Fund,
Inc.
Shares 2,206,702
Cost $4,694,671
Market Value......... -- -- -- --
Hartford International
Opportunities Fund,
Inc.
Shares 4,738,342
Cost $6,240,236
Market Value......... -- -- -- --
Hartford Dividend and
Growth Fund, Inc.
Shares 6,650,828
Cost $9,181,128
Market Value......... -- -- -- --
Hartford International
Advisers Fund, Inc.
Shares 1,205,995
Cost $1,379,739
Market Value......... -- -- -- --
Hartford Small Company
Fund, Inc.
Shares 10,665
Cost $11,338
Market Value......... -- -- -- --
Due from ITT Hartford
Life and Annuity
Insurance Company..... -- -- 440,244 --
Receivable from fund
shares sold........... 2 -- -- 7
------------ ----------- ----------- ----------
Total Assets........... 1,731,601 15,269,591 12,071,914 21,536,997
------------ ----------- ----------- ----------
LIABILITIES:
Due to ITT Hartford
Life and Annuity
Insurance Company..... -- 110 -- 132
Payable for fund shares
purchased............. -- -- 440,250 --
------------ ----------- ----------- ----------
Total Liabilities...... -- 110 440,250 132
------------ ----------- ----------- ----------
Net Assets (variable
life contract
liabilities).......... $1,731,601 $15,269,481 $11,631,664 $21,536,865
------------ ----------- ----------- ----------
------------ ----------- ----------- ----------
Units Outstanding...... 1,412,742 9,252,090 10,472,721 14,485,431
Accumulation Unit Value
at end of period...... $ 1.225702 $ 1.650382 $ 1.110663 $1.486795
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
94
<PAGE>
<TABLE>
<CAPTION>
CAPITAL INTERNATIONAL DIVIDEND
APPRECIATION MORTGAGE OPPORTUNITIES AND INTERNATIONAL
FUND SECURITIES FUND INDEX FUND FUND GROWTH FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- --------------- ---------- ---------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares 1,733,002
Cost $1,722,027
Market Value......... -- -- -- -- -- --
Hartford Stock Fund,
Inc.
Shares 3,685,895
Cost $13,390,058
Market Value......... -- -- -- -- -- --
HVA Money Market Fund,
Inc.
Shares 11,631,670
Cost $11,631,670
Market Value......... -- -- -- -- -- --
Hartford Advisers Fund,
Inc.
Shares 9,927,031
Cost $19,803,664
Market Value......... -- -- -- -- -- --
Hartford Capital
Appreciation Fund,
Inc.
Shares 6,094,455
Cost $21,579,746
Market Value......... $23,855,706 -- -- -- -- --
Hartford Mortgage
Securities Fund, Inc.
Shares 645,107
Cost $677,597
Market Value......... -- $ 681,088 -- -- -- --
Hartford Index Fund,
Inc.
Shares 2,206,702
Cost $4,694,671
Market Value......... -- -- $5,255,854 -- -- --
Hartford International
Opportunities Fund,
Inc.
Shares 4,738,342
Cost $6,240,236
Market Value......... -- -- -- $6,666,277 -- --
Hartford Dividend and
Growth Fund, Inc.
Shares 6,650,828
Cost $9,181,128
Market Value......... -- -- -- -- $10,291,624 --
Hartford International
Advisers Fund, Inc.
Shares 1,205,995
Cost $1,379,739
Market Value......... -- -- -- -- -- $1,406,891
Hartford Small Company
Fund, Inc.
Shares 10,665
Cost $11,338
Market Value......... -- -- -- -- -- --
Due from ITT Hartford
Life and Annuity
Insurance Company..... -- 1 4 -- 3 4
Receivable from fund
shares sold........... -- -- -- -- -- --
--------------- --------------- ---------- ---------------- ----------- -------------
Total Assets........... 23,855,706 681,089 5,255,858 6,666,277 10,291,627 1,406,895
--------------- --------------- ---------- ---------------- ----------- -------------
LIABILITIES:
Due to ITT Hartford
Life and Annuity
Insurance Company..... 493 -- -- 4 -- --
Payable for fund shares
purchased............. -- -- -- -- -- --
--------------- --------------- ---------- ---------------- ----------- -------------
Total Liabilities...... 493 -- -- 4 -- --
--------------- --------------- ---------- ---------------- ----------- -------------
Net Assets (variable
life contract
liabilities).......... $23,855,213 $ 681,089 $5,255,858 $6,666,273 $10,291,627 $1,406,895
--------------- --------------- ---------- ---------------- ----------- -------------
--------------- --------------- ---------- ---------------- ----------- -------------
Units Outstanding...... 15,227,011 557,697 3,165,103 5,086,205 6,173,912 1,086,383
Accumulation Unit Value
at end of period...... $ 1.566638 $1.221248 $1.660565 $ 1.310658 $ 1.666954 $ 1.295024
<CAPTION>
SMALL
COMPANY FUND
SUB-ACCOUNT
------------
<S> <C>
ASSETS:
Investments:
Hartford Bond Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford Stock Fund,
Inc.
Shares
Cost
Market Value......... --
HVA Money Market Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford Advisers Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford Capital
Appreciation Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford Mortgage
Securities Fund, Inc.
Shares
Cost
Market Value......... --
Hartford Index Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford International
Opportunities Fund,
Inc.
Shares
Cost
Market Value......... --
Hartford Dividend and
Growth Fund, Inc.
Shares
Cost
Market Value......... --
Hartford International
Advisers Fund, Inc.
Shares
Cost
Market Value......... --
Hartford Small Company
Fund, Inc.
Shares
Cost
Market Value......... $11,402
Due from ITT Hartford
Life and Annuity
Insurance Company..... --
Receivable from fund
shares sold........... --
------------
Total Assets........... 11,402
------------
LIABILITIES:
Due to ITT Hartford
Life and Annuity
Insurance Company..... --
Payable for fund shares
purchased............. --
------------
Total Liabilities...... --
------------
Net Assets (variable
life contract
liabilities).......... $11,402
------------
------------
Units Outstanding...... --
Accumulation Unit Value
at end of period...... --
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
95
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT FIVE
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
MONEY
MARKET ADVISERS
BOND FUND STOCK FUND FUND FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
---------- ----------- --------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $61,277 $ 140,710 $404,912 $ 357,873
---------- ----------- --------- -----------
Net investment income
(loss).............. 61,277 140,710 404,912 357,873
---------- ----------- --------- -----------
CAPITAL GAINS INCOME..... -- 185,013 -- 116,357
---------- ----------- --------- -----------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... (451) 524 -- 415
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 2,527 1,657,996 -- 1,542,513
---------- ----------- --------- -----------
Net realized and
unrealized gain
(loss) on
investments......... 2,076 1,658,520 -- 1,542,928
---------- ----------- --------- -----------
Net increase (decrease)
in net assets
resulting from
operations............ $63,353 $ 1,984,243 $404,912 $2,017,158
---------- ----------- --------- -----------
---------- ----------- --------- -----------
</TABLE>
* From inception, August 9, 1996, to December 31, 1996.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
96
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND INTERNATIONAL
APPRECIATION SECURITIES INDEX OPPORTUNITIES AND ADVISERS SMALL
FUND FUND FUND FUND GROWTH FUND FUND COMPANY FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT*
---------------- ----------- --------- -------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 100,190 $24,643 $ 56,990 $75,641 $ 128,284 $33,540 $ 1
---------------- ----------- --------- -------------- ----------- ------------ ---
Net investment income
(loss).............. 100,190 24,643 56,990 75,641 128,284 33,540 1
---------------- ----------- --------- -------------- ----------- ------------ ---
CAPITAL GAINS INCOME..... 542,857 -- 18,617 46,012 41,509 28,341 --
---------------- ----------- --------- -------------- ----------- ------------ ---
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... (2,788) (687) 3,838 (26) (280) 38 --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 2,060,719 577 523,283 366,466 967,296 22,219 64
---------------- ----------- --------- -------------- ----------- ------------ ---
Net realized and
unrealized gain
(loss) on
investments......... 2,057,931 (110) 527,121 366,440 967,016 22,257 64
---------------- ----------- --------- -------------- ----------- ------------ ---
Net increase (decrease)
in net assets
resulting from
operations............ $2,700,978 $24,533 $602,728 $488,093 $1,136,809 $84,138 $65
---------------- ----------- --------- -------------- ----------- ------------ ---
---------------- ----------- --------- -------------- ----------- ------------ ---
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
97
<PAGE>
- --------------------------------------------------------------------------------
Separate Account Five
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 61,277 $ 140,710 $ 404,912 $ 357,873
Capital gains income... -- 185,013 -- 116,357
Net realized gain
(loss) on security
transactions.......... (451) 524 -- 415
Net unrealized
appreciation
(depreciation) of
investments during
the period............ 2,527 1,657,996 -- 1,542,513
----------- ------------ ------------- -------------
Net increase (decrease)
in net assets
resulting from
operations............ 63,353 1,984,243 404,912 2,017,158
----------- ------------ ------------- -------------
UNIT TRANSACTIONS:
Purchases.............. -- 29 68,474,293 17,409
Net transfers.......... 1,407,699 9,799,913 (59,831,330) 15,943,206
Surrenders............. (40,106) (233,750) (203,050) (281,648)
Net loan withdrawals... -- (71,384) (1,787,588) (82,526)
Cost of insurance and
other fees............ (5,636) (53,381) (82,442) (79,595)
----------- ------------ ------------- -------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 1,361,957 9,441,427 6,569,883 15,516,846
----------- ------------ ------------- -------------
Total increase
(decrease) in net
assets................ 1,425,310 11,425,670 6,974,795 17,534,004
NET ASSETS:
Beginning of period.... 306,291 3,843,811 4,656,869 4,002,861
----------- ------------ ------------- -------------
End of period.......... $1,731,601 $ 15,269,481 $ 11,631,664 $21,536,865
----------- ------------ ------------- -------------
----------- ------------ ------------- -------------
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM INCEPTION, JANUARY 10, 1995, TO DECEMBER 31,
1995
MONEY
BOND FUND STOCK FUND MARKET FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ------------- -------------
OPERATIONS:
Net investment income
(loss)................ $ 5,592 $ 24,153 $ 74,755 $ 40,874
Capital gains income... -- 403 -- 120
Net realized gain
(loss) on security
transactions.......... 275 (94) -- (649)
Net unrealized
appreciation
(depreciation) of
investments during
the period............ 7,044 221,539 -- 190,815
----------- ------------ ------------- -------------
Net increase (decrease)
in net assets
resulting from
operations............ 12,911 246,001 74,755 231,160
----------- ------------ ------------- -------------
UNIT TRANSACTIONS:
Purchases.............. -- -- 23,888,562 --
Net transfers.......... 306,533 3,642,384 (18,864,634) 3,814,765
Surrenders............. (12,757) (33,294) (48,453) (36,276)
Net loan withdrawals... -- (5,495) (372,799) --
Cost of insurance and
other fees............ (396) (5,785) (20,562) (6,788)
----------- ------------ ------------- -------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 293,380 3,597,810 4,582,114 3,771,701
----------- ------------ ------------- -------------
Total increase
(decrease) in net
assets................ 306,291 3,843,811 4,656,869 4,002,861
NET ASSETS:
Beginning of period.... -- -- -- --
----------- ------------ ------------- -------------
End of period.......... $ 306,291 $ 3,843,811 $ 4,656,869 $ 4,002,861
----------- ------------ ------------- -------------
----------- ------------ ------------- -------------
</TABLE>
* From inception, August 1, 1996, to December 31, 1996.
** From inception, March 1, 1995, to December 31, 1995.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
98
<PAGE>
<TABLE>
<CAPTION>
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND INTERNATIONAL
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------------- --------------- ----------- ------------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income
(loss)................ $ 100,190 $ 24,643 $ 56,990 $ 75,641 $ 128,284 $ 33,540
Capital gains income... 542,857 -- 18,617 46,012 41,509 28,341
Net realized gain
(loss) on security
transactions.......... (2,788) (687) 3,838 (26) (280) 38
Net unrealized
appreciation
(depreciation) of
investments during
the period............ 2,060,719 577 523,283 366,466 967,296 22,219
----------------- --------------- ----------- ------------------ ------------ --------------
Net increase (decrease)
in net assets
resulting from
operations............ 2,700,978 24,533 602,728 488,093 1,136,809 84,138
----------------- --------------- ----------- ------------------ ------------ --------------
UNIT TRANSACTIONS:
Purchases.............. 29 -- -- -- -- --
Net transfers.......... 14,180,908 513,118 4,159,498 5,005,094 7,624,232 1,187,324
Surrenders............. (360,928) (14,119) (66,581) (107,782) (155,061) (10,618)
Net loan withdrawals... (88,831) (1) (65,105) (24,312) (39,663) (7,147)
Cost of insurance and
other fees............ (88,601) (2,230) (18,114) (23,891) (32,690) (4,435)
----------------- --------------- ----------- ------------------ ------------ --------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 13,642,577 496,768 4,009,698 4,849,109 7,396,818 1,165,124
----------------- --------------- ----------- ------------------ ------------ --------------
Total increase
(decrease) in net
assets................ 16,343,555 521,301 4,612,426 5,337,202 8,533,627 1,249,262
NET ASSETS:
Beginning of period.... 7,511,658 159,788 643,432 1,329,071 1,758,000 157,633
----------------- --------------- ----------- ------------------ ------------ --------------
End of period.......... $23,855,213 $681,089 $5,255,858 $6,666,273 $10,291,627 $1,406,895
----------------- --------------- ----------- ------------------ ------------ --------------
----------------- --------------- ----------- ------------------ ------------ --------------
CAPITAL MORTGAGE INTERNATIONAL DIVIDEND AND INTERNATIONAL
APPRECIATION FUND SECURITIES FUND INDEX FUND OPPORTUNITIES FUND GROWTH FUND ADVISERS FUND
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT**
----------------- --------------- ----------- ------------------ ------------ --------------
OPERATIONS:
Net investment income
(loss)................ $ 17,693 $ 4,015 $ 4,467 $ 4,790 $ 13,879 $ 3,923
Capital gains income... 541 -- 4 92 -- --
Net realized gain
(loss) on security
transactions.......... 1,253 105 (49) 20 425 301
Net unrealized
appreciation
(depreciation) of
investments during
the period............ 215,241 2,911 37,902 59,577 143,200 4,932
----------------- --------------- ----------- ------------------ ------------ --------------
Net increase (decrease)
in net assets
resulting from
operations............ 234,728 7,031 42,324 64,479 157,504 9,156
----------------- --------------- ----------- ------------------ ------------ --------------
UNIT TRANSACTIONS:
Purchases.............. -- -- -- -- -- --
Net transfers.......... 7,349,141 165,306 617,882 1,282,924 1,624,852 160,888
Surrenders............. (45,663) (12,284) (15,806) (16,386) (21,482) (12,083)
Net loan withdrawals... (16,773) -- (36) -- (36) (34)
Cost of insurance and
other fees............ (9,775) (265) (932) (1,946) (2,838) (294)
----------------- --------------- ----------- ------------------ ------------ --------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 7,276,930 152,757 601,108 1,264,592 1,600,496 148,477
----------------- --------------- ----------- ------------------ ------------ --------------
Total increase
(decrease) in net
assets................ 7,511,658 159,788 643,432 1,329,071 1,758,000 157,633
NET ASSETS:
Beginning of period.... -- -- -- -- -- --
----------------- --------------- ----------- ------------------ ------------ --------------
End of period.......... $ 7,511,658 $159,788 $ 643,432 $1,329,071 $ 1,758,000 $ 157,633
----------------- --------------- ----------- ------------------ ------------ --------------
----------------- --------------- ----------- ------------------ ------------ --------------
<CAPTION>
SMALL
COMPANY FUND
SUB-ACCOUNT*
------------
<S> <C>
OPERATIONS:
Net investment income
(loss)................ $ 1
Capital gains income... --
Net realized gain
(loss) on security
transactions.......... --
Net unrealized
appreciation
(depreciation) of
investments during
the period............ 64
------------
Net increase (decrease)
in net assets
resulting from
operations............ 65
------------
UNIT TRANSACTIONS:
Purchases.............. 1,000
Net transfers.......... 10,337
Surrenders............. --
Net loan withdrawals... --
Cost of insurance and
other fees............ --
------------
Net increase (decrease)
in net assets
resulting from unit
transactions.......... 11,337
------------
Total increase
(decrease) in net
assets................ 11,402
NET ASSETS:
Beginning of period.... --
------------
End of period.......... $11,402
------------
------------
OPERATIONS:
Net investment income
(loss)................
Capital gains income...
Net realized gain
(loss) on security
transactions..........
Net unrealized
appreciation
(depreciation) of
investments during
the period............
Net increase (decrease)
in net assets
resulting from
operations............
UNIT TRANSACTIONS:
Purchases..............
Net transfers..........
Surrenders.............
Net loan withdrawals...
Cost of insurance and
other fees............
Net increase (decrease)
in net assets
resulting from unit
transactions..........
Total increase
(decrease) in net
assets................
NET ASSETS:
Beginning of period....
End of period..........
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
99
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT FIVE
ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. ORGANIZATION:
Separate Account Five (the Account) is a separate investment account within
ITT Hartford Life and Annuity Insurance Company (the Company) and is
registered with the Securities and Exchange Commission (SEC) as a unit
investment trust under the Investment Company Act of 1940, as amended. Both
the Company and the Account are subject to supervision and regulation by the
Department of Insurance of the State of Connecticut and the SEC. The Account
invests deposits by variable life contractholders of the Company in various
mutual funds (the Funds) as directed by the contractholders.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the
Account, which are in accordance with generally accepted accounting
principles in the investment company industry:
a) SECURITY TRANSACTIONS--Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Cost of investments
sold is determined on the basis of identified cost. Dividends and
capital gains income are accrued as of the ex-dividend date. Capital
gains income represents dividends from the Funds which are characterized
as capital gains under tax regulations.
b) SECURITY VALUATION--The investment in shares of the Hartford mutual
funds are valued at the closing net asset value per share as determined
by the appropriate Fund as of December 31, 1996.
c) FEDERAL INCOME TAXES--The operations of the Account form a part of, and
are taxed with, the total operations of the Company, which is taxed as
an insurance company under the Internal Revenue Code. Under current law,
no federal income taxes are payable with respect to the operations of
the Account.
d) USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities as of the date of the financial statements and
the reported amounts of income and expenses during the period. Operating
results in the future could vary from the amounts derived from
management's estimates.
3. ADMINISTRATION OF THE ACCOUNT AND RELATED CHARGES:
In accordance with the terms of the contracts, the Company makes deductions
for mortality and expense undertakings, cost of insurance, administrative
fees, and state premium taxes. These charges are deducted through
termination of units of interest from applicable contractholders' accounts
in accordance with the terms of the contracts.
100
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO ITT HARTFORD LIFE AND ANNUITY INSURANCE COMPANY
SEPARATE ACCOUNT FIVE AND TO THE
OWNERS OF UNITS OF INTEREST THEREIN:
We have audited the accompanying statement of assets and liabilities of ITT
Hartford Life and Annuity Insurance Company Separate Account Five (the Account)
as of December 31, 1996, and the related statement of operations for the year
then ended and statements of changes in net assets for the year ended December
31, 1996 and the period from inception, January 10, 1995, to December 31, 1995.
These financial statements are the responsibility of the Account's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ITT Hartford Life and Annuity
Insurance Company Separate Account Five as of December 31, 1996, the results of
its operations for the year then ended and the changes in its net assets for
the year ended December 31, 1996 and the period from inception, January 10,
1995, to December 31, 1995, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 14, 1997
101
<PAGE>
- --------------------------------------------------------------------------------
HARTFORD BOND FUND, INC.
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- -------------
<C> <S> <C>
U.S. TREASURIES & FEDERAL AGENCIES -- 37.9%
U.S. TREASURY NOTES -- 17.1%
$ 5,100,000 5.00% due 02/15/99.......... $ 5,005,971
6,100,000 5.00% due 01/31/98.......... 6,039,000
2,000,000 5.88% due 08/15/98.......... 1,997,500
4,700,000 5.88% due 10/31/98.......... 4,694,125
3,000,000 5.88% due 02/15/04.......... 2,921,250
1,000,000 6.00% due 08/31/97.......... 1,000,938
4,000,000 6.00% due 05/31/98.......... 4,002,500
4,000,000 6.13% due 08/31/98.......... 4,011,252
750,000 6.25% due 05/31/00.......... 753,281
3,300,000 6.25% due 07/31/98.......... 3,315,470
1,000,000 6.75% due 05/31/99.......... 1,016,875
6,000,000 6.75% due 06/30/99.......... 6,105,000
2,450,000 6.88% due 07/31/99.......... 2,499,767
8,000,000 6.88% due 08/31/99.......... 8,165,000
5,900,000 6.88% due 05/15/06.......... 6,082,534
750,000 7.00% due 07/15/06.......... 779,297
4,900,000 7.25% due 02/15/98.......... 4,965,846
4,500,000 7.50% due 10/31/99.......... 4,667,346
600,000 7.88% due 11/15/04.......... 654,750
-------------
68,677,702
-------------
U.S. TREASURY BONDS -- 10.7%
5,800,000 6.50% due 11/15/26.......... 5,691,250
2,500,000 6.75% due 08/15/26.......... 2,517,188
6,000,000 6.88% due 08/15/25.......... 6,114,378
3,900,000 8.13% due 08/15/19.......... 4,506,938
17,350,000 8.75% due 05/15/17.......... 21,156,156
2,500,000 8.88% due 08/15/17.......... 3,085,938
-------------
43,071,848
-------------
U.S. TREASURY STRIPS -- 3.0%
9,900,000 10.75% due 02/15/03......... 12,118,224
-------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION -- 7.1%
Pass-Throughs
22,211,776 6.00% due 01/25/12 -
05/01/26.................... 21,292,988
4,574,991 6.50% due 09/01/10 -
01/11/11.................... 4,492,069
Multifamily Dus
2,971,991 6.48% due 12/01/05.......... 2,926,639
-------------
28,711,696
-------------
Total U.S. treasuries &
Federal agencies............ $ 152,579,470
-------------
-------------
CORPORATE BONDS AND NOTES -- 40.8%
CABLE -- 4.4%
Continental Cablevision, Inc.
1,000,000 9.50% due 08/01/13.......... $ 1,146,727
Lenfest Communications
1,000,000 8.38% due 11/01/05.......... 966,250
Rogers Cablesystems
4,000,000 9.63% due 08/01/02.......... 4,180,000
Rogers Cablesystems
1,000,000 10.00% due 12/01/07......... 1,055,000
TCI Communications, Inc.
5,000,000 7.88% due 02/15/26.......... 4,324,975
Tele-Communications, Inc.
5,000,000 6.58% due 02/15/05.......... 4,992,760
Tele-Communications, Inc.
1,000,000 8.65% due 09/15/04.......... 1,023,856
-------------
17,689,568
-------------
CONSUMER SERVICES -- 0.7%
ADT Operations
2,665,000 8.25% due 08/01/00.......... 2,781,676
-------------
ENERGY & SERVICES -- 2.5%
Tenneco, Inc.
6,850,000 8.20% due 11/15/99.......... 7,166,943
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- -------------
<C> <S> <C>
CORPORATE BONDS AND NOTES -- (CONTINUED)
ENERGY & SERVICES --
(CONTINUED)
Union Oil Co. of California
$ 2,500,000 9.38% due 02/15/11.......... $ 2,985,320
-------------
10,152,263
-------------
FINANCIAL SERVICES -- 16.4%
Ahmanson (H.F.) & Co.
5,500,000 6.35% due 09/01/98.......... 5,517,699
American Reinsurance
5,000,000 7.45% due 12/15/26.......... 4,979,963
Bank of New York Co, Inc.
3,000,000 7.63% due 07/15/02.......... 3,123,855
Capital Holding Corp.
4,800,000 0.00% due 02/07/97.......... 4,946,880
Charles Schwab Corp.
3,000,000 6.63% due 08/04/98.......... 3,018,387
Chase Manhattan Corp.
3,000,000 7.75% due 11/01/99.......... 3,103,386
Ford Motor Credit Co.
3,000,000 7.75% due 11/15/02.......... 3,131,031
General Motors Acceptance
Corp.
4,000,000 5.88% due 01/12/99.......... 3,976,500
Lehman Brothers Inc.
3,000,000 10.00% due 05/15/99......... 3,217,902
Lehman Brothers Inc.
10,125,000 7.36% due 12/15/03.......... 10,239,097
Massachusetts Mutual Life
Insurance Co.
11,750,000 7.63% due 11/15/23.......... 11,758,930
Mellon Financial Co.
4,000,000 6.30% due 06/01/00.......... 3,978,708
Phoenix Home Life
2,750,000 6.95% due 12/01/06*......... 2,708,442
Salomon Brothers Inc.
2,500,000 7.00% due 01/20/98.......... 2,519,213
-------------
66,219,993
-------------
GAMING -- 2.0%
Grand Casinos
5,000,000 10.13% due 12/01/03......... 5,050,000
Trump Atlantic
3,000,000 11.25% due 05/01/06......... 2,970,000
-------------
8,020,000
-------------
HOME BUILDING -- 0.5%
U.S. Home Corp.
2,000,000 7.95% due 03/01/01.......... 1,952,332
-------------
INDUSTRIAL MATERIALS -- 1.0%
Acetex Corp.
1,000,000 9.75% due 10/01/03.......... 987,500
Borden Chemical
1,000,000 9.50% due 05/01/05.......... 1,027,500
Newport News*
2,000,000 8.63% due 12/01/06.......... 2,045,000
-------------
4,060,000
-------------
MEDIA & SERVICES -- 2.2%
Paramount Communications
3,000,000 8.25% due 08/01/22.......... 2,814,204
Turner Broadcasting
5,900,000 7.40% due 02/01/04.......... 5,870,600
-------------
8,684,804
-------------
MINING & METALS -- 0.5%
Freeport-McMoran, Inc.
1,900,000 8.75% due 02/15/04.......... 1,974,149
-------------
PAPER & FOREST PRODUCTS --
1.3%
Buckeye Cellulos
3,000,000 9.25% due 09/15/08.......... 3,090,000
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
102
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- -------------
<C> <S> <C>
CORPORATE BONDS AND NOTES -- (CONTINUED)
PAPER & FOREST PRODUCTS --
(CONTINUED)
Georgia-Pacific Corp.
$ 2,000,000 9.85% due 06/15/97.......... $ 2,034,870
-------------
5,124,870
-------------
REAL ESTATE -- 1.9%
Duke Realty LP
5,000,000 7.25% due 09/22/02.......... 5,047,045
ERP Operating LP
2,500,000 6.25% due 12/22/97.......... 2,505,088
-------------
7,552,133
-------------
RETAIL -- 1.7%
K Mart Corp.
5,000,000 8.96% due 12/10/19.......... 4,312,500
Stop and Shop Companies, Inc.
2,150,000 9.75% due 02/01/02.......... 2,399,467
-------------
6,711,967
-------------
TECHNOLOGY -- 0.4%
Digital Equipment Corp.
2,000,000 7.75% due 04/01/23.......... 1,751,266
-------------
TRANSPORTATION -- 0.6%
Continental Airlines
2,500,000 9.50% due 12/15/01.......... 2,534,375
-------------
UTILITIES -- 4.7%
Bell Telephone Co. of
Pennsylvania
3,000,000 8.35% due 12/15/30.......... 3,580,797
Chesapeake & Potomac Telephone
Co.
1,500,000 8.30% due 08/01/31.......... 1,683,957
El Paso Electric Co.
2,000,000 9.40% due 05/01/11.......... 2,140,000
El Paso Electric Co.
1,000,000 8.90% due 02/01/06.......... 1,055,000
Long Island Lighting Co.
1,835,000 7.63% due 04/15/98.......... 1,851,632
Niagara Mohawk First Mortgage
2,000,000 7.75% due 05/15/06.......... 1,871,632
Public Service EI-MBIA
7,000,000 6.75% due 01/01/16.......... 6,593,769
-------------
18,776,787
-------------
Total corporate bonds and
notes....................... $ 163,986,183
-------------
-------------
FOREIGN/YANKEE BONDS AND NOTES -- 9.8%
FOREIGN CORPORATIONS -- 4.2%
Abbey National First
Capital-Yankee
7,575,000 8.20% due 10/15/04.......... $ 8,136,467
Societe Generale
3,490,000 9.88% due 07/15/03.......... 4,009,315
Southern Investments UK PLC
5,000,000 6.80% due 12/01/06.......... 4,894,140
-------------
17,039,922
-------------
FOREIGN GOVERNMENTS -- 5.6%
Banco Nacional Com Ext
5,000,000 7.25% due 02/02/04.......... 4,467,500
KFW International Finance Inc.
5,000,000 7.00% due 03/01/13.......... 4,994,570
Province of Manitoba Debenture
5,000,000 9.63% due 12/01/18.......... 6,296,300
Quebec Province
4,000,000 9.13% due 03/01/00.......... 4,314,448
Quebec Province
2,400,000 7.13% due 02/09/24.......... 2,292,096
-------------
22,364,914
-------------
Total foreign/yankee bonds and
notes....................... $ 39,404,836
-------------
-------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- -------------
<C> <S> <C>
ASSET-BACKED SECURITIES -- 3.5%
FOREIGN GOVERNMENTS --
(CONTINUED)
Chemical Master Credit Card
Trust
Series 96-1, Class A
$11,400,000 5.55% due 09/15/03.......... $ 11,077,380
Oakwood Mortgage Investors,
Inc.
Series 94-A, Class B1
3,023,857 8.40% due 02/15/15.......... 3,064,546
-------------
Total asset-backed
securities.................. $ 14,141,926
-------------
-------------
SUPRANATIONAL -- 2.0%
Interamer Development Bank
7,400,000 8.50% due 05/01/01.......... $ 7,992,881
-------------
-------------
ENHANCED EQUIPMENT TRUST CERTIFICATES -- 1.9%
Norwest Airlines Trust Series
2
2,472,000 11.30% due 06/21/14......... $ 3,009,257
U.S. Air Inc. Series Class A
4,870,190 6.76% due 04/15/08.......... 4,741,665
-------------
$ 7,750,922
-------------
-------------
SHORT-TERM SECURITIES -- 7.3%
COMMERCIAL PAPER -- 2.5%
Houston Industries Financial
5,000,000 6.15% due 01/02/97.......... $ 4,999,146
Houston Lighting & Power
5,000,000 6.00% due 01/03/97.......... 4,998,333
-------------
9,997,479
-------------
REPURCHASE AGREEMENT -- 4.8%
19,391,000 Interest in $108,163,000 joint
repurchase agreement dated
12/31/96 with State Street
Bank 6.70% due 01/02/97;
maturity amount $19,398,218;
(Collateralized by
$53,860,000 U.S. Treasury
Note 7.5% due 02/15/05 and
$54,303,000 U.S. Treasury
Note 8.875% due 08/15/17)... 19,391,000
-------------
Total short-term securities... $ 29,388,479
-------------
-------------
DIVERSIFICATION OF ASSETS:
Total U.S. treasuries & Federal agencies
(cost $151,466,093)........................ 37.9 % $152,579,470
Total corporate bonds and notes (cost
$171,455,212).............................. 40.8 163,986,183
Total foreign/yankee bonds and notes (cost
$30,232,722)............................... 9.8 39,404,836
Total asset-backed securities (cost
$13,836,082)............................... 3.5 14,141,926
Total supranational (cost $7,899,616)........ 2.0 7,992,881
Total enhanced equipment trust certificates
(cost $7,645,763).......................... 1.9 7,750,922
Total short-term securities (cost
$29,388,479)............................... 7.3 29,388,479
------ ------------
Total investment in securities
(Identified cost $411,923,967)............. 103.2 415,244,697
Excess of liabilities over cash and
receivables................................ (3.2 ) (12,696,897)
------ ------------
Net assets (applicable to $1.00 per share
based on 402,874,209 shares outstanding)... 100.0 % $402,547,800
------ ------------
------ ------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $.10 per share; authorized
800,000,000 shares; outstanding 402,874,209
shares............................................. $ 40,287,421
Capital surplus...................................... 367,142,717
Undistributed net investment income.................. 6,188
Undistributed net realized loss on investments....... (8,209,256)
Unrealized appreciation of investments............... 3,320,730
------------
Net assets, applicable to shares outstanding......... $402,547,800
------------
------------
</TABLE>
* Security exempt from registration under rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
103
<PAGE>
- --------------------------------------------------------------------------------
HARTFORD STOCK FUND, INC.
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
----------- ---------------
<C> <S> <C>
COMMON STOCKS -- 95.0%
AEROSPACE & DEFENSE -- 3.8%
700,000 Boeing Co..................... $ 74,462,500
587,000 United Technologies Corp...... 38,742,000
---------------
113,204,500
---------------
BUSINESS SERVICES -- 0.8%
400,000 Fluor Corp.................... 25,100,000
---------------
COMMUNICATIONS EQUIPMENT --
3.0%
*280,000 Cisco Systems, Inc............ 17,815,000
545,000 General Motors Corp. Class
H........................... 30,656,250
343,529 Lucent Technologies, Inc...... 15,888,216
430,000 Motorola, Inc................. 26,391,250
---------------
90,750,716
---------------
COMPUTERS & OFFICE
EQUIPMENT -- 3.9%
580,000 Adaptec, Inc.................. 23,200,000
300,000 International Business
Machines Corp............... 45,300,000
900,000 Xerox Corp.................... 47,362,500
---------------
115,862,500
---------------
CONSUMER DURABLES -- 0.7%
400,000 Goodyear Tire & Rubber Co..... 20,550,000
---------------
CONSUMER NON-DURABLES -- 4.9%
250,000 Colgate Palmolive Co.......... 23,062,500
205,000 Gillette Co................... 15,938,750
310,000 Kimberly-Clark Corp........... 29,527,500
300,000 NIKE, Inc. Class B............ 17,925,000
550,000 Proctor & Gamble Co........... 59,125,000
---------------
145,578,750
---------------
CONSUMER SERVICES -- 3.5%
374,548 Autotote (Unregistered
Shares)..................... 323,048
80,000 Circus Circus Enterprises..... 2,750,000
160,000 Hasbro, Inc................... 6,220,000
1,560,000 McDonalds Corp................ 70,590,000
1,207,600 Mirage Resorts................ 26,114,350
---------------
105,997,398
---------------
ELECTRONICS -- 5.3%
1,225,000 General Electric Co........... 121,121,875
285,000 Intel Corp.................... 37,317,188
---------------
158,439,063
---------------
ENERGY & SERVICES -- 10.3%
530,000 Amoco Corp.................... 42,665,000
500,000 Chevron Corp.................. 32,500,000
640,000 Exxon Corp.................... 62,720,000
400,000 Repsol S.A. ADR............... 15,250,000
370,000 Royal Dutch Petroleum Co...... 63,177,500
410,000 Schlumberger Ltd.............. 40,948,750
379,783 Total S.A. ADR................ 15,286,266
578,778 Union Pacific Resources Group,
Inc......................... 16,929,257
440,000 Unocal Corp................... 17,875,000
---------------
307,351,773
---------------
FINANCIAL SERVICES -- 15.5%
255,000 Ace Ltd....................... 15,331,875
790,000 Allstate Corp................. 45,721,250
890,000 American Express Co........... 50,285,000
300,000 American International Group,
Inc......................... 32,475,000
<CAPTION>
SHARES MARKET
----------- VALUE
---------------
<C> <S> <C>
FINANCIAL SERVICES --
(CONTINUED)
*350,000 Associates First Capital Co.
Class A..................... $ 15,443,750
171,200 Bank of Boston Corp........... 10,999,600
670,000 Citicorp...................... 69,010,000
185,000 First Bank System, Inc........ 12,626,250
310,000 Marsh & McLennan Co........... 32,240,000
570,000 Merrill Lynch & Co., Inc...... 46,455,000
380,000 NationsBank Corp.............. 37,145,000
500,000 State Street Boston Corp...... 32,250,000
1,420,000 Travelers Group, Inc. (The)... 64,432,500
---------------
464,415,225
---------------
FOOD, BEVERAGE & TOBACCO --
1.8%
260,000 Kellogg Co.................... 17,062,500
950,000 Sara Lee Corp................. 35,387,500
---------------
52,450,000
---------------
FOREIGN STOCKS - JAPAN -- 1.2%
315,000 Eisai Co. Ltd................. 6,187,645
250,000 Fuji Bank Ltd................. 3,640,045
300,000 Matsushita Electric Industrial
Co.......................... 4,884,983
300,000 Nomura Securities Co. Ltd..... 4,497,286
260,000 Sankyo Co. Ltd................ 7,347,290
250,000 Sanwa Bank Ltd................ 3,403,119
300,000 Takeda Chemical Industries
Ltd......................... 6,280,692
---------------
36,241,060
---------------
HEALTH CARE -- 14.0%
820,000 Abbott Laboratories........... 41,615,000
750,000 American Home Products
Corp........................ 43,968,750
310,000 Bristol-Myers Squibb Co....... 33,712,500
525,000 Columbia/HCA Healthcare
Corp........................ 21,393,750
835,000 Johnson & Johnson............. 41,541,250
660,000 Merck & Co., Inc.............. 52,305,000
450,000 Pfizer, Inc................... 37,293,750
605,000 Pharmacia & Upjohn, Inc....... 23,973,125
460,000 Rhone-Poulenc S.A. ADR........ 15,582,500
590,000 SmithKline Beecham PLC ADR.... 40,120,000
*630,000 Tenet Healthcare Corp......... 13,781,250
471,400 Vencor, Inc................... 14,908,025
500,000 Warner-Lambert Co............. 37,500,000
---------------
417,694,900
---------------
INDUSTRIAL MATERIALS -- 5.7%
185,000 Aluminum Company of America... 11,793,750
600,000 Crown Cork & Seal, Inc........ 32,625,000
530,000 Dow Chemical Co............... 41,538,750
290,000 du Pont (ei) de Nemours &
Co.......................... 27,368,750
335,000 International Paper Co........ 13,525,625
645,000 Phelps Dodge Corp............. 43,537,500
---------------
170,389,375
---------------
MANUFACTURING -- 2.2%
426,000 Caterpillar, Inc.............. 32,056,500
255,000 Ingersoll-Rand Co............. 11,347,500
280,000 Minnesota Mining &
Manufacturing Co............ 23,205,000
---------------
66,609,000
---------------
MEDIA & SERVICES -- 4.0%
810,000 Gannett Co., Inc.............. 60,648,750
764,437 Gaylord Entertainment Class
A........................... 17,486,496
*1,225,000 Viacom, Inc. Class B.......... 42,721,875
---------------
120,857,121
---------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
104
<PAGE>
<TABLE>
<CAPTION>
SHARES MARKET
----------- VALUE
---------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
RETAIL -- 5.6%
450,000 CVS Corp...................... $ 18,618,750
585,000 Home Depot, Inc. (The)........ 29,323,125
300,000 Saks Holding, Inc............. 8,100,000
660,000 Sears, Roebuck & Co........... 30,442,500
*650,000 Toys "R" Us, Inc.............. 19,500,000
2,720,000 Wal-Mart Stores, Inc.......... 62,220,000
---------------
168,204,375
---------------
SOFTWARE & SERVICES -- 5.1%
250,000 Automatic Data Processing
Inc......................... 10,718,750
*315,000 Computer Sciences Corp........ 25,869,375
*825,000 Electronic Data Systems
Corp........................ 35,681,250
840,000 First Data Corp............... 30,660,000
*450,000 Microsoft Corp................ 37,181,250
*300,000 Oracle Systems Corp........... 12,525,000
---------------
152,635,625
---------------
TRANSPORTATION -- 2.0%
1,300,000 Southwest Airlines Co......... 28,762,500
300,000 Toyota Motor Corp............. 8,606,875
400,000 Union Pacific Corp............ 24,050,000
---------------
61,419,375
---------------
UTILITIES -- 1.7%
900,000 SBC Communications, Inc....... 46,575,000
80,000 Texas Utilities Co............ 3,260,000
---------------
49,835,000
---------------
Total common stocks........... $ 2,843,585,756
---------------
---------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- ---------------
<C> <S> <C>
SHORT-TERM SECURITIES -- 4.9%
REPURCHASE AGREEMENT
$88,781,000 Interest in $399,594,000 joint
repurchase agreement dated
12/31/96 with State Street
Bank 6.7693% due 01/02/97;
maturity amount $88,814,388
(Collateralized by
$218,2121,000 U.S. Treasury
Note 6.25% due 06/30/98 and
$280,160,000 U.S. Treasury
Strip (principal) 0% due
05/15/19)................... $ 88,781,000
56,753,000 Interest in $300,000,000 joint
repurchase agreement dated
12/31/96 with First Boston
6.75% due 01/02/97; maturity
amount $56,774,282;
(Collaterlized by
$301,035,000 U.S. Treasury
Note 6.25% due 10/31/01).... 56,753,000
---------------
Total short-term securities... $ 145,534,000
---------------
---------------
</TABLE>
<TABLE>
<S> <C> <C>
DIVERSIFICATION OF ASSETS:
Total common stocks (cost $2,174,279,133).... 95.0 % $2,843,585,756
Total short-term securities (cost
$145,534,000).............................. 4.9 145,534,000
------ --------------
Total investment in securities
(Identified cost $2,319,813,134)........... 99.9 2,989,119,756
Excess of cash and receivables over
liabilities................................ 0.1 5,088,835
------ --------------
Net assets (applicable to $4.14271 per share
based on 722,765,582 shares outstanding)... 100.0% $2,994,208,591
------ --------------
------ --------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share; authorized
2,000,000,000 shares; outstanding 722,765,582
shares............................................. $ 72,276,558
Capital surplus...................................... 2,090,786,868
Undistributed net investment income.................. 197,231
Undistributed net realized gain on investments....... 161,641,312
Unrealized appreciation of investments............... 669,306,622
--------------
Net assets, applicable to shares outstanding......... $2,994,208,591
--------------
--------------
</TABLE>
* Non-income producing during period.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
105
<PAGE>
- --------------------------------------------------------------------------------
HVA MONEY MARKET FUND, INC.
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
AMORTIZED
PRINCIPAL COST AND
AMOUNT VALUE
----------- --------------
<C> <S> <C>
SHORT-TERM SECURITIES -- 86.7%
COMMERCIAL PAPER -- 73.6%
A T & T Corp.
$10,000,000 5.35% due 03/03/97............... $ 9,909,347
Abbey National North America
10,000,000 5.32% due 03/11/97............... 9,898,033
American Home Products Corp.
10,000,000 5.35% due 02/11/97............... 9,939,069
American Home Products Corp.
5,000,000 5.36% due 02/11/97............... 4,969,478
Aristar Inc.
5,000,000 5.37% due 02/19/97............... 4,963,454
Bankers Trust Corp.
10,000,000 5.29% due 05/30/97............... 9,781,053
Bankers Trust Corp.
5,000,000 5.34% due 06/04/97............... 4,885,783
BFCE U.S. Finance Corp.
10,000,000 5.36% due 01/07/97............... 9,991,067
Bradford & Bingley Building Society
10,000,000 5.32% due 04/14/97............... 9,847,789
Countrywide Home Loan
5,000,000 5.44% due 01/13/97............... 4,990,933
Countrywide Home Loan
10,000,000 5.35% due 01/08/97............... 9,989,597
Daimler Benz N.A. Corp.
5,000,000 5.62% due 02/19/97............... 4,961,753
Daimler Benz N.A. Corp.
10,000,000 5.62% due 02/19/97............... 9,923,506
Dean Witter, Discover Co.
10,000,000 5.38% due 01/02/97............... 9,998,506
Eksportfinans A/S
4,000,000 5.31% due 02/10/97............... 3,976,400
Electronic Data Systems Corp.
5,000,000 5.30% due 02/20/97............... 4,963,194
Electronic Data Systems Corp.
10,000,000 5.43% due 03/21/97............... 9,880,842
Finova Capital Corp.
10,000,000 5.39% due 01/29/97............... 9,958,078
General Electric Capital Corp.
5,000,000 5.61% due 02/03/97............... 4,974,288
General Electric Capital Corp.
5,000,000 5.55% due 01/15/97............... 4,989,208
General Motors Acceptance Corp.
5,000,000 5.62% due 01/21/97............... 4,984,389
Goldman Sachs Group LP
10,000,000 5.31% due 03/03/97............... 9,910,025
Johnson Controls, Inc.
5,000,000 5.39% due 01/24/97............... 4,982,782
Johnson Controls, Inc.
10,246,000 5.37% due 01/23/97............... 10,212,376
Merrill Lynch & Co., Inc.
5,000,000 5.33% due 03/10/97............... 4,949,661
Merrill Lynch & Co., Inc.
10,000,000 5.32% due 01/21/97............... 9,970,444
Monsanto Co.
10,100,000 5.31% due 01/10/97............... 10,086,592
National Fuel Gas Co.
9,700,000 5.38% due 01/06/97............... 9,692,752
National Fuel Gas Co.
5,000,000 5.35% due 02/12/97............... 4,968,792
Nationwide Building Society
5,000,000 5.63% due 02/27/97............... 4,955,429
Nationwide Building Society
10,000,000 5.36% due 01/24/97............... 9,965,756
<CAPTION>
AMORTIZED
PRINCIPAL COST AND
AMOUNT VALUE
----------- --------------
<C> <S> <C>
COMMERCIAL PAPER -- (CONTINUED)
Nordbanken North America
$ 5,000,000 5.40% due 03/07/97............... $ 4,951,250
Nordbanken North America
5,000,000 5.36% due 05/12/97............... 4,902,478
Nordbanken North America
7,402,000 5.38% due 02/28/97............... 7,337,841
NYNEX Corp.
14,200,000 5.43% due 03/18/97............... 14,037,221
Pacific Dunlop Asia Ltd.
5,000,000 5.36% due 05/06/97............... 4,906,944
Pacific Dunlop Asia Ltd.
5,000,000 5.38% due 02/04/97............... 4,974,594
Pacific Dunlop Ltd.
5,000,000 5.48% due 02/28/97............... 4,955,856
PHH Corp.
10,000,000 5.38% due 01/13/97............... 9,982,067
Rubbermaid Inc.
10,000,000 5.34% due 04/01/97............... 9,866,500
Sanwa Business Credit Corp.
5,000,000 5.40% due 01/15/97............... 4,989,500
Sanwa Business Credit Corp.
10,000,000 5.52% due 01/15/97............... 9,978,533
Sears Roebuck Acceptance Corp.
10,000,000 5.32% due 03/19/97............... 9,886,211
Sharp Electronics Corp.
10,000,000 5.41% due 03/14/97............... 9,891,800
Sharp Electronics Corp.
5,000,000 5.30% due 02/14/97............... 4,967,611
Sumitomo Bank, Ltd., NY Branch
5,000,000 5.58% due 01/30/97............... 4,977,545
Sumitomo Bank, Ltd., NY Branch
10,000,000 5.47% due 02/24/97............... 9,917,950
Svenska Handelsbanken Inc.
15,000,000 5.42% due 03/24/97............... 14,814,817
Tambrands, Inc.
6,000,000 5.45% due 04/23/97............... 5,898,267
Tambrands, Inc.
9,000,000 5.34% due 04/29/97............... 8,842,470
Transamerica Finance Group, Inc.
7,000,000 5.41% due 01/30/97............... 6,969,494
Westpac Capital Corp.
5,000,000 5.38% due 02/07/97............... 4,972,353
--------------
Total commercial paper............. 399,491,678
--------------
U.S. GOVERNMENT & AGENCY
OBLIGATIONS -- 1.9%
U.S. Treasury Notes
10,000,000 6.88% due 02/28/97............... 10,023,588
--------------
REPURCHASE AGREEMENT -- 11.2%
60,871,000 Interest in $108,163,000 joint
repurchase agreement dated
12/31/96 with State Street Bank
6.70% due 01/02/97; maturity
amount $60,893,658; (Collaterized
by $53,860,000 U.S. Treasury Note
7.5% due 02/15/05 and $54,303,000
U.S. Treasury Note 8.875% due
08/15/17)........................ 60,871,000
--------------
Total short-term securities........ $ 470,386,266
--------------
--------------
CORPORATE NOTES -- 11.9%
American Honda Finance Corp.
5,000,000 5.53% due 08/15/97............... 5,000,000
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
106
<PAGE>
<TABLE>
<CAPTION>
AMORTIZED
PRINCIPAL COST AND
AMOUNT VALUE
----------- --------------
<C> <S> <C>
CORPORATE NOTES -- (CONTINUED)
American Honda Corp.**
$10,000,000 5.53% due 02/07/97............... $ 9,999,464
Aristar, Inc.
10,000,000 7.38% due 02/15/97............... 10,016,764
Bear Stearns Companies, Inc.
5,000,000 5.81% due 04/08/97............... 5,002,345
Chrysler Financial Corp.
4,000,000 5.86% due 07/31/97............... 4,004,078
Commercial Credit Group, Inc.
5,000,000 6.75% due 01/15/97............... 5,002,028
General Motors Acceptance Corp.
5,200,000 5.72% due 04/11/97............... 5,202,877
General Motors Acceptance Corp.
5,000,000 7.88% due 02/28/97............... 5,020,290
Greyhound Financial Corp.
5,000,000 8.25% due 03/11/97............... 5,020,333
Wells Fargo
10,200,000 5.59% due 09/05/97............... 10,205,359
--------------
Total corporate notes.............. $ 64,473,538
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
AMORTIZED
COST AND
VALUE
--------------
<S> <C> <C>
DIVERSIFICATION OF ASSETS:
Total short-term securities (cost
$470,386,266).............................. 86.7% $ 470,386,266
Total corporate notes (cost $64,473,538)..... 11.9 64,473,538
------ --------------
Total investment in securities
(Identified cost $534,859,804)*............ 98.6% 534,859,804
Excess of cash and receivables over
liabilities................................ 1.4 7,725,772
------ --------------
Net assets (applicable to $1.00 per share
based on 542,585,576 shares outstanding)... 100.0% $ 542,585,576
------ --------------
------ --------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share; authorized
800,000,000 shares; outstanding 542,585,576
shares............................................. $ 54,258,558
Capital surplus...................................... 488,327,018
--------------
Net assets, applicable to shares outstanding......... $ 542,585,576
--------------
--------------
</TABLE>
* Aggregate cost for Federal income tax purposes.
** Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
107
<PAGE>
- --------------------------------------------------------------------------------
HARTFORD ADVISERS FUND, INC.
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
----------- ---------------
<C> <S> <C>
COMMON STOCKS -- 65.8%
AEROSPACE & DEFENSE -- 2.6%
940,000 Boeing Co..................... $ 99,992,500
833,000 United Technologies Corp...... 54,978,000
---------------
154,970,500
---------------
BUSINESS SERVICES -- 0.6%
570,000 Fluor Corp.................... 35,767,500
---------------
COMMUNICATIONS EQUIPMENT --
2.0%
*350,000 Cisco Systems, Inc............ 22,268,750
730,000 General Motors Class H........ 41,062,500
487,746 Lucent Technologies Corp...... 22,558,253
550,000 Motorola, Inc................. 33,756,250
---------------
119,645,753
---------------
COMPUTERS & OFFICE
EQUIPMENT -- 2.7%
810,000 Adaptec, Inc.................. 32,400,000
400,000 International Business
Machines Corp............... 60,400,000
1,260,000 Xerox Corp.................... 66,307,500
---------------
159,107,500
---------------
CONSUMER DURABLES -- 0.5%
550,000 Goodyear Tire & Rubber Co..... 28,256,250
---------------
CONSUMER NON-DURABLES -- 3.2%
350,000 Colgate Palmolive Co.......... 32,287,500
250,000 Gillette Co................... 19,437,500
420,000 Kimberly-Clark Corp........... 40,005,000
350,000 NIKE, Inc. Class B............ 20,912,500
700,000 Proctor & Gamble Co........... 75,250,000
---------------
187,892,500
---------------
CONSUMER SERVICES -- 2.5%
561,821 Autotote Unregistered
Shares...................... 484,571
120,000 Circus Circus Enterprises..... 4,125,000
240,000 Hasbro, Inc................... 9,330,000
2,110,000 McDonalds Corp................ 95,477,500
*1,641,600 Mirage Resorts................ 35,499,600
---------------
144,916,671
---------------
ELECTRONICS -- 3.8%
1,665,000 General Electric Corp......... 164,626,875
450,000 Intel Corp.................... 58,921,875
---------------
223,548,750
---------------
ENERGY & SERVICES -- 7.1%
750,000 Amoco Corp.................... 60,375,000
700,000 Chevron Corp.................. 45,500,000
885,000 Exxon Corp.................... 86,730,000
530,000 Repsol SA ADR................. 20,206,250
480,000 Royal Dutch Petroleum Co...... 81,960,000
570,000 Schlumberger Ltd.............. 56,928,750
500,000 Total S.A. ADR................ 20,125,000
830,000 Union Pacific Resources Group,
Inc......................... 24,277,500
570,000 Unocal Corp................... 23,156,250
---------------
419,258,750
---------------
FINANCIAL SERVICES -- 10.7%
370,000 Ace Ltd....................... 22,246,250
1,080,000 Allstate Corp................. 62,505,000
1,230,000 American Express Co........... 69,495,000
<CAPTION>
SHARES MARKET
----------- VALUE
---------------
<C> <S> <C>
FINANCIAL SERVICES --
(CONTINUED)
415,000 American International Group,
Inc......................... $ 44,923,750
*460,000 Associates First Capital Corp.
Class A..................... 20,297,500
251,300 Bank of Boston Corp........... 16,146,025
850,000 Citicorp...................... 87,550,000
265,000 First Bank System, Inc........ 18,086,250
400,000 Marsh & McLennan Co........... 41,600,000
800,000 Merrill Lynch & Co., Inc...... 65,200,000
550,000 NationsBank Corp.............. 53,762,500
600,000 State Street Boston Corp...... 38,700,000
1,900,000 Travelers Group, Inc. (The)... 86,212,500
---------------
626,724,775
---------------
FOOD, BEVERAGE & TOBACCO --
1.1%
240,000 Kellogg Co.................... 15,750,000
1,300,000 Sara Lee Corp................. 48,425,000
---------------
64,175,000
---------------
FOREIGN STOCKS - JAPAN -- 1.1%
472,000 Eisai Co. Ltd................. 9,271,646
375,000 Fuji Bank Ltd................. 5,460,067
450,000 Matsushita Electric Industrial
Co.......................... 7,327,474
450,000 Nomura Securities Co. Ltd..... 6,745,929
400,000 Sankyo Co. Ltd................ 11,303,523
375,000 Sanwa Bank Ltd................ 5,104,678
370,000 Takeda Chemical Industries
Ltd......................... 7,746,187
450,000 Toyota Motor Corp............. 12,910,312
---------------
65,869,816
---------------
HEALTH CARE -- 9.6%
1,110,000 Abbott Laboratories........... 56,332,500
1,015,000 American Home Products
Corp........................ 59,504,375
430,000 Bristol-Myers Squibb Co....... 46,762,500
745,000 Columbia/HCA Healthcare
Corp........................ 30,358,750
1,150,000 Johnson & Johnson............. 57,212,500
865,000 Merck & Co., Inc.............. 68,551,250
600,000 Pfizer, Inc................... 49,725,000
725,000 Pharmacia & Upjohn, Inc....... 28,728,125
650,000 Rhone-Poulenc S.A. ADR........ 22,018,750
800,000 SmithKline Beecham PLC ADR.... 54,400,000
*870,000 Tenet Healthcare Corp......... 19,031,250
672,200 Vencor, Inc................... 21,258,325
700,000 Warner-Lambert Co............. 52,500,000
---------------
566,383,325
---------------
INDUSTRIAL MATERIALS -- 4.0%
245,000 Aluminum Company of America... 15,618,750
800,000 Crown Cork & Seal, Inc........ 43,500,000
765,000 Dow Chemical Co............... 59,956,875
450,000 du Pont (ei) de Nemours &
Co.......................... 42,468,750
400,000 International Paper Co........ 16,150,000
800,000 Phelps Dodge Corp............. 54,000,000
---------------
231,694,375
---------------
MANUFACTURING -- 1.6%
550,000 Caterpillar, Inc.............. 41,387,500
400,000 Ingersoll-Rand Co............. 17,800,000
420,000 Minnesota Mining &
Manufacturing Co............ 34,807,500
---------------
93,995,000
---------------
MEDIA & SERVICES -- 2.7%
1,070,000 Gannett Co., Inc.............. 80,116,250
1,111,088 Gaylord Entertainment Co.
Class A..................... 25,416,127
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
108
<PAGE>
<TABLE>
<CAPTION>
SHARES MARKET
----------- VALUE
---------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
MEDIA & SERVICES --
(CONTINUED)
*1,600,000 Viacom, Inc. Class B.......... $ 55,800,000
---------------
161,332,377
---------------
RETAIL -- 4.0%
630,000 CVS Corp...................... 26,066,250
815,000 Home Depot, Inc. (The)........ 40,851,875
400,000 Saks Holding Inc.............. 10,800,000
915,000 Sears, Roebuck & Co........... 42,204,375
*900,000 Toys "R" Us, Inc.............. 27,000,000
3,710,000 Wal-Mart Stores, Inc.......... 84,866,250
---------------
231,788,750
---------------
SOFTWARE & SERVICES -- 3.6%
250,000 Automatic Data Processing,
Inc......................... 10,718,750
*510,000 Computer Sciences Corp........ 41,883,750
*1,175,000 Electronic Data Systems
Corp........................ 50,818,750
1,200,000 First Data Corp............... 43,800,000
*590,000 Microsoft Corp................ 48,748,750
*425,000 Oracle Systems Corp........... 17,743,750
---------------
213,713,750
---------------
TRANSPORTATION -- 1.2%
1,700,000 Southwest Airlines Co......... 37,612,500
580,000 Union Pacific Corp............ 34,872,500
---------------
72,485,000
---------------
UTILITIES -- 1.2%
1,250,000 SBC Communications, Inc....... 64,687,500
120,000 Texas Utilities Co............ 4,890,000
---------------
69,577,500
---------------
Total common stocks........... $ 3,871,103,842
---------------
---------------
<CAPTION>
PRINCIPAL
AMOUNT
-----------
<C> <S> <C>
U.S. TREASURIES & FEDERAL AGENCIES -- 24.0%
U.S. TREASURY BONDS -- 3.9%
$214,000,000 7.25% due 05/15/16.......... 225,970,732
---------------
U.S. TREASURY NOTES -- 16.2%
100,000,000 5.75% due 08/15/03.......... 97,000,000
100,000,000 5.88% due 10/31/98.......... 99,875,000
200,000,000 6.25% due 05/31/00.......... 200,875,000
100,000,000 6.50% due 08/15/05.......... 100,687,500
75,000,000 6.50% due 10/15/06.......... 75,421,875
175,000,000 7.50% due 11/15/01.......... 184,242,275
75,000,000 7.50% due 02/15/05.......... 80,226,600
110,000,000 7.75% due 12/31/99.......... 115,018,750
---------------
953,347,000
---------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION -- 1.9%
114,696,688 6.50% due
06/15/23-03/15/26........... 109,762,699
4,191,434 9.00% due
06/20/16-07/20/16........... 4,441,578
---------------
114,204,277
---------------
FEDERAL HOME LOAN MORTGAGE
CORPORATION -- 2.0%
123,765,015 6.50% due
08/01/25-05/01/26........... 118,330,930
---------------
Total U.S. treasuries &
Federal agencies............ $ 1,411,852,939
---------------
---------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- ---------------
<C> <S> <C>
CORPORATE BONDS AND NOTES -- 6.0%
COMPUTERS & OFFICE
EQUIPMENT -- 0.2%
Honeywell Inc.
$13,135,000 6.60% due 04/15/01.......... $ 13,145,272
---------------
ENERGY & SERVICES -- 0.3%
Husky Oil Ltd.
15,000,000 6.88% due 11/15/03.......... 14,913,510
---------------
FINANCIAL SERVICES -- 3.9%
Associates Corp. N.A.
15,000,000 6.50% due 10/15/02.......... 14,872,110
Bank of Boston Corp.
10,000,000 6.63% due 02/01/04.......... 9,785,450
Banponce Corp.
4,825,000 6.75% due 12/15/05.......... 14,064,566
Bayerische Landesbank NY
15,000,000 5.63% due 02/26/01.......... 14,574,375
Belgium Credit National
20,000,000 7.00% due 11/14/05.......... 19,400,000
Browning-Ferris Industries
15,000,000 6.10% due 01/15/03.......... 14,487,165
Chase Manhattan Corp.
10,000,000 8.50% due 02/15/02.......... 10,738,300
CIT Group Holdings
20,000,000 6.75% due 05/14/01.......... 20,221,740
Fairfax Financial Holdings
10,000,000 7.75% due 12/15/03.......... 10,248,640
First Interstate Bank
12,000,000 9.00% due 11/15/04.......... 12,775,056
Ford Motor Credit Co.
10,000,000 5.63% due 12/15/98.......... 9,889,980
General Motors Acceptance
Corp.
15,000,000 5.63% due 02/01/99.......... 14,816,310
Great Western Financial
10,000,000 8.63% due 12/01/98.......... 10,353,710
Home Savings America
15,000,000 6.00% due 11/01/00.......... 14,656,530
London Insurance Group
20,500,000 6.88% due 09/15/05.......... 20,131,246
Travelers Group, Inc. (The)
10,000,000 6.25% due 12/01/05.......... 9,434,130
Travelers/Aetna P&C
10,000,000 6.75% due 04/15/01.......... 10,044,290
---------------
230,493,598
---------------
HEALTH CARE -- 0.2%
Zeneca Group PLC
10,000,000 6.30% due 06/15/03.......... 9,743,750
---------------
INDUSTRIAL MATERIALS -- 0.3%
Phillips Electronics
15,000,000 7.20% due 06/01/26.......... 15,182,130
Postal Square LP
4,523,092 8.95% due 06/15/22.......... 5,337,294
---------------
20,519,424
---------------
MEDIA & SERVICES -- 0.5%
360 Communications Co.
15,000,000 7.13% due 03/01/03.......... 14,829,510
Tele-Communications, Inc.
15,000,000 7.25% due 08/01/05.......... 14,081,250
---------------
28,910,760
---------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
109
<PAGE>
- --------------------------------------------------------------------------------
HARTFORD ADVISERS FUND, INC.
STATEMENT OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- ---------------
<C> <S> <C>
CORPORATE BONDS AND NOTES -- 6.0%
UTILITIES -- 0.6%
Hydro Quebec
$15,000,000 7.38% due 02/01/03.......... $ 15,453,300
Pacific Gas & Electric
11,000,000 7.88% due 03/01/02.......... 11,489,764
Southern California Gas Co.
10,000,000 5.75% due 11/15/03.......... 9,380,200
---------------
36,323,264
---------------
Total corporate bonds and
notes....................... $ 354,049,578
---------------
---------------
FOREIGN GOVERNMENT BONDS -- 0.5%
City Of Naples Italy
20,000,000 7.52% due 07/15/06.......... 20,422,200
Thailand Kingdom
10,000,000 5.88% due 09/30/00.......... 9,744,610
---------------
Total foreign governments..... $ 30,166,810
---------------
---------------
MUNICIPAL BONDS -- 0.4%
FINANCIAL SERVICES -- 0.4%
Mount Sinai School of Medicine
NY
20,000,000 6.00% due 07/01/03.......... $ 19,343,300
---------------
---------------
SHORT-TERM SECURITES -- 2.8%
REPURCHASE AGREEMENTS
$59,656,000 Interest in $399,594,000 joint
repurchase agreement dated
12/31/96 with State Street
Bank 6.7693% due 01/02/97;
maturity amount $59,678,435;
(Collateralized by
$218,212,000 U.S. Treasury
Note 6.25% due 06/30/98 and
$280,160,000 U.S. Treasury
Strip (principal) 0% due
05/15/19)................... 59,656,000
102,480,000 Interest in $300,000,000 joint
repurchase agreement dated
12/31/96 with First Boston
6.75% due 01/02/97; maturity
amount $102,518,430;
(Collateralized by
$301,035,000 U.S. Treasury
Note 6.25% due 10/31/01).... 102,480,000
---------------
Total short-term securites.... $ 162,136,000
---------------
---------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
VAULE
---------------
<S> <C> <C>
DIVERSIFICATION OF ASSETS:
Total common stocks (cost $2,927,719,303).... 65.8% $ 3,871,103,842
Total U.S. treasuries & Federal agencies
(cost $1,389,227,676)...................... 24.0 1,411,852,939
Total corporate bonds and notes (cost
$354,684,170).............................. 6.0 354,049,578
Total foreign government bonds (cost
$30,000,000)............................... 0.5 30,166,810
Total municipal bonds (cost $19,576,238)..... 0.4 19,343,300
Total short-term securities (cost
$162,136,000).............................. 2.8 162,136,000
------ ---------------
Total investment in securities
(Identified cost $4,883,343,387)........... 99.5 5,848,652,469
Excess of cash and receivables over
liabilities................................ 0.5 30,876,699
------ ---------------
Net assets (applicable to $2.16953 per share
based on 2,710,050,229 shares
outstanding)............................... 100.0% $ 5,879,529,168
------ ---------------
------ ---------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $.10 per share; authorized
4,000,000,000 shares; outstanding 2,710,050,229
shares............................................. $ 271,005,023
Capital surplus...................................... 4,374,578,836
Undistributed net investment income.................. 527,117
Undistributed net realized gain on investments....... 268,109,110
Unrealized appreciation of investments............... 965,309,082
---------------
Net assets, applicable to shares outstanding......... $ 5,879,529,168
---------------
---------------
</TABLE>
* Non-income producing during period.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
110
<PAGE>
- --------------------------------------------------------------------------------
HARTFORD U.S. GOVERNMENT MONEY MARKET FUND, INC.
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
AMORTIZED
PRINCIPAL COST AND
AMOUNT VALUE
- ----------- -------------
<C> <S> <C>
U.S. TREASURIES & FEDERAL AGENCIES -- 83.3%
Federal Farm Credit Bank
$ 750,000 5.22% due 02/11/97.......... $ 745,541
850,000 5.23% due 03/10/97.......... 841,603
470,000 5.28% due 01/16/97.......... 468,966
970,000 5.55% due 01/03/97.......... 969,701
-------------
3,025,811
-------------
Federal Home Loan Bank
500,000 5.21% due 01/16/97.......... 498,915
500,000 5.21% due 02/13/97.......... 496,888
565,000 5.22% due 02/18/97.......... 561,068
1,000,000 5.31% due 03/10/97.......... 989,970
500,000 5.44% due 01/24/97.......... 498,262
-------------
3,045,103
-------------
Federal Home Loan Mortgage
Corp.
435,000 5.22% due 01/27/97.......... 433,360
500,000 5.22% due 02/11/97.......... 497,028
500,000 5.22% due 03/17/97.......... 494,563
-------------
1,424,951
-------------
Federal National Mortgage
Association
495,000 5.22% due 02/04/97.......... 492,560
500,000 5.22% due 04/03/97.......... 493,330
795,000 5.23% due 01/22/97.......... 792,577
500,000 5.24% due 03/13/97.......... 494,833
-------------
2,273,300
-------------
Total U.S. treasuries &
Federal agencies............ $ 9,769,165
-------------
-------------
<CAPTION>
AMORTIZED
PRINCIPAL COST AND
AMOUNT VALUE
- ----------- -------------
<C> <S> <C>
REPURCHASE AGREEMENT -- 16.8%
$ 1,970,000 Interest in $108,163,000 joint
repurchase agreement dated
12/31/96 with State Street
Bank 6.70% due 01/02/97;
maturity amount $1,970,733;
(Collateralized by
$53,860,000 U.S. Treasury
Note 7.5% due 02/15/05 and
$54,303,000 U.S. Treasury
Note 8.875% due 08/15/17)... $ 1,970,000
-------------
Total short-term securities... $ 11,739,165
-------------
-------------
</TABLE>
<TABLE>
<S> <C> <C>
DIVERSIFICATION OF ASSETS:
Total investment in securities
(Identified cost $11,739,165)*............. 100.1% $ 11,739,165
Excess of liabilities over cash and
receivables................................ (0.1) (9,023)
------ ------------
Net assets (Applicable to $1.00 per share
based on 11,730,142 shares outstanding).... 100.0% $ 11,730,142
------ ------------
------ ------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share; authorized
100,000,000 shares; outstanding 11,730,142
shares............................................. $ 1,173,014
Capital surplus...................................... 10,557,128
------------
Net assets, applicable to shares outstanding......... $ 11,730,142
------------
------------
</TABLE>
* Aggregate cost for Federal income tax purposes.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
111
<PAGE>
- --------------------------------------------------------------------------------
Hartford Capital Appreciation Fund, Inc.
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES MARKET
----------- VALUE
--------------
<C> <S> <C>
COMMON STOCKS -- 89.2
AEROSPACE & DEFENSE -- 4.7%
341,100 Boeing Co..................... $ 36,284,513
1,012,900 Loral Space &
Communications.............. 18,612,038
380,200 Northrop Grumman Corp......... 31,461,550
357,000 Oregon Matallurgical Corp..... 11,513,250
971,500 Precision Castparts Corp...... 48,210,688
138,628 SPS Technologies, Inc......... 8,906,849
129,900 Wyman-Gordon Co............... 2,890,275
--------------
157,879,163
--------------
BUSINESS SERVICES -- 2.5%
675,100 Allegiance Corp............... 18,649,638
269,600 Corporate Express, Inc........ 7,936,350
*398,100 Ionics, Inc................... 19,108,800
801,400 Manpower, Inc................. 26,045,500
515,600 United Auto Group, Inc........ 13,276,700
--------------
85,016,988
--------------
COMMUNICATIONS EQUIPMENT --
6.5%
*378,600 Apt Satellite Holdings ADR.... 5,300,400
*600,000 Cisco Systems, Inc............ 38,175,000
970,000 ECI Telecom Ltd............... 20,612,500
*550,000 Geotek Communication.......... 3,918,750
956,100 Lucent Technologies, Inc...... 44,219,625
375,000 Network General Corp.......... 11,343,750
*917,400 Oak Industries, Inc........... 21,100,200
503,800 Omnipoint Corp................ 9,698,150
*313,600 Plantronics, Inc.............. 14,112,000
*200,000 Premisys Communications....... 6,750,000
550,000 Proxim, Inc................... 12,650,000
767,400 Scitex Corp. Ord.............. 7,290,300
*500,000 TCSI Corp..................... 3,125,000
*288,400 3 Com Corp.................... 21,161,350
--------------
219,457,025
--------------
COMPUTERS & OFFICE
EQUIPMENT -- 4.9%
*1,330,000 Adaptec, Inc.................. 53,200,000
*600,000 Computer Horizons Corp........ 23,100,000
650,000 EMC Corp...................... 21,531,250
500,000 Hewlett-Packard Co............ 25,125,000
*625,000 Symbol Technologies, Inc...... 27,656,250
*2,524,000 Unisys Corp................... 17,037,000
--------------
167,649,500
--------------
CONSUMER NON-DURABLES -- 1.7%
434,600 First Brands Corp............. 12,331,775
*631,600 Quiksilver, Inc............... 13,500,450
*344,500 Revlon Inc. Class A........... 10,291,938
125,000 Sunbeam Corp.................. 3,218,750
400,000 Tommy Hilfiger Corp........... 19,200,000
--------------
58,542,913
--------------
CONSUMER SERVICES -- 4.6%
1,214,500 America West Airlines Class
B........................... 19,280,188
395,100 Berg Electronics Corp......... 11,606,063
660,000 Cheesecake Factory............ 11,962,500
741,300 Harman International.......... 41,234,813
701,900 Landry's Seafood
Restaurants................. 15,003,113
*1,550,000 Mirage Resorts................ 33,518,750
*265,851 Planet Hollywood
International, Inc.......... 5,250,557
<CAPTION>
SHARES MARKET
----------- VALUE
--------------
<C> <S> <C>
CONSUMER SERVICES --
(CONTINUED)
458,100 Royal Caribbean............... $ 10,708,088
316,400 Starbucks Coffee.............. 9,056,950
--------------
157,621,022
--------------
ELECTRONICS -- 5.6%
*325,000 Analog Devices, Inc........... 11,009,375
*800,000 Credence Systems Corp......... 16,100,000
*214,600 DSP Communications, Inc....... 4,157,875
131,000 Etec Systems, Inc............. 5,010,750
610,000 Measurex Corp................. 14,640,000
500,750 Molex, Inc.................... 17,839,219
*715,000 Silicon Valley Group.......... 14,389,375
*746,600 Solectron Corp................ 39,849,775
825,000 Stewart & Stevenson........... 24,028,125
718,228 Thomas & Betts Corp........... 31,871,368
400,000 Vishay Intertechnology........ 9,350,000
--------------
188,245,862
--------------
ENERGY AND SERVICES -- 5.5%
548,800 Alberta Energy................ 13,171,200
660,600 Ashland, Inc.................. 28,983,825
*1,200,000 Input Output Inc.............. 22,200,000
620,000 J Ray McDermott S.A........... 13,640,000
155,000 Pride Petroleum Services,
Inc......................... 3,603,750
520,300 Repsol S.A. ADR............... 19,836,438
*586,000 Rowan Cos..................... 13,258,250
451,935 Transocean Offshore........... 28,302,429
1,000,000 USX-Marathon Group............ 23,875,000
720,000 YPF S.A. Sponsored ADR........ 18,180,000
--------------
185,050,892
--------------
FINANCIAL SERVICES -- 14.1%
730,000 Ace Ltd....................... 43,891,250
616,000 Allstate Corp................. 35,651,000
556,000 Ambac, Inc.................... 36,904,500
350,000 Bank of Boston Corp........... 22,487,500
*966,400 Dime Bancorp, Inc............. 14,254,400
652,800 First USA Inc................. 22,603,200
1,000,000 Greenpoint Financial Corp..... 47,250,000
*863,940 Imperial Credit Industries.... 18,142,740
519,100 Legg Mason, Inc............... 19,985,350
400,070 Long Island Bancorp........... 14,002,450
432,900 MBIA, Inc..................... 43,831,125
994,600 Morgan Stanley Group.......... 56,816,525
803,800 North American Mortgage
Company..................... 15,875,050
700,000 Peoples Bank.................. 20,212,500
925,000 The Money Store............... 25,553,125
637,500 United Cos Financial Corp..... 16,973,438
570,000 Washington Mutual............. 24,688,125
--------------
479,122,278
--------------
FOREIGN SECURITIES -- 3.2%
799,500 Amersham International PLC.... 15,734,122
121,500 Avenor, Inc................... 1,826,324
737,000 Banyu Pharmaceutical Co....... 10,286,378
1,856,000 Eisai Co. Ltd................. 36,457,998
910,000 Sankyo Co., Ltd............... 25,715,515
36,325 Sulzer AG PC.................. 19,370,145
--------------
109,390,482
--------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
112
<PAGE>
<TABLE>
<CAPTION>
SHARES MARKET
----------- VALUE
--------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
HEALTH CARE -- 13.6%
870,000 Abbott Laboratories........... $ 44,152,500
*595,000 Apria Healthcare.............. 11,156,250
448,800 Bard (C.R.), Inc.............. 12,566,400
852,300 Bergen Brunswig Corp. Class
A........................... 24,290,550
*1,075,000 Biomet, Inc................... 16,259,375
*650,000 Coventry Corp................. 6,022,656
1,169,800 Depuy, Inc.................... 23,688,450
147,500 Ergo Science Corp............. 1,935,938
*145,000 Genetics Institute-ADR........ 12,288,750
599,000 Genzyme Corp.................. 13,028,250
*576,800 Haemonetics................... 10,887,100
123,100 HEALTHSOUTH Rehabilitation
Corp........................ 4,754,738
*600,000 IDX Systems Corp.............. 17,175,000
641,700 Kinetic Concepts, Inc......... 7,860,825
*901,700 Magellan Health Services,
Inc......................... 20,175,538
420,700 McKesson...................... 23,559,200
755,900 Medpartners................... 15,873,900
*1,200,000 Multicare Cos., Inc........... 24,300,000
213,700 National Surgery Centers,
Inc......................... 8,120,600
1,082,800 Novacare, Inc................. 11,910,800
*1,050,000 Perrigo....................... 9,581,250
640,700 Perseptive Biosystems, Inc.... 4,444,856
510,000 Rhone-Poulenc Rorer........... 39,843,750
981,629 Rhone-Poulenc S.A............. 33,252,682
220,000 Shared Medical Systems
Corp........................ 10,835,000
*970,500 Tenet Healthcare Corp......... 21,229,688
*859,700 Vencor, Inc................... 27,188,013
295,000 Xomed Surgical................ 5,900,000
--------------
462,282,059
--------------
INDUSTRIAL MATERIALS -- 2.9%
623,000 Abitibi Price, Inc............ 9,812,250
50,000 American Pad & Paper, Inc..... 1,131,250
490,000 Owens Corning Fiberglass
Corp........................ 20,886,250
*1,800,000 Repap Enterprises............. 5,006,250
*309,500 Titan Exploration, Inc........ 3,714,000
*603,500 Titanium Metals Corp.......... 19,840,063
*971,300 UCAR Intl. Corp............... 36,545,163
--------------
96,935,226
--------------
MANUFACTURING -- 0.4%
755,000 Cognex Corp................... 13,967,500
--------------
MEDIA & SERVICES -- 2.5%
*3,011,600 Mobil Media Corp.............. 1,317,575
206,000 National Education Corp....... 3,141,500
*850,000 Pronet, Inc................... 3,718,750
471,140 TCI Satellite Entertainment
Class A..................... 4,652,508
*920,000 Tele-Comm Liberty Media Group
A........................... 26,277,500
*1,461,400 Tele-Communications, Inc.
Class A..................... 19,089,538
412,100 Univision Communication....... 15,247,700
*449,900 Western Wireless Corp. Class
A........................... 6,242,363
250,000 Westwood One, Inc............. 4,156,250
--------------
83,843,684
--------------
<CAPTION>
SHARES MARKET
----------- VALUE
--------------
<C> <S> <C>
REAL ESTATE -- 0.7%
*986,400 Castle & Cooke, Inc........... $ 15,659,100
380,800 Thornburg Mortgage Asset
Corp........................ 8,139,600
--------------
23,798,700
--------------
RETAIL -- 2.9%
*141,200 American Eagle Outfitters..... 1,111,950
*568,000 Gymboree Corp................. 12,993,000
450,000 Home Depot, Inc. (The)........ 22,556,250
560,000 Mercantile Stores, Inc........ 27,650,000
*701,000 Saks Holding, Inc............. 18,927,000
335,000 Limited, Inc. (The)........... 6,155,625
*600,000 Urban Outfitters, Inc......... 7,800,000
--------------
97,193,825
--------------
SOFTWARE & SERVICES -- 7.2%
*157,500 BBN Corp...................... 3,543,750
*860,000 BMC Software, Inc............. 35,582,500
401,800 Cadence Design System......... 15,971,550
271,200 Cognos Corp................... 7,627,500
*743,900 Compuware Corp................ 37,287,988
200,000 DST Systems, Inc.............. 6,275,000
530,218 First Data Corp............... 19,352,957
*482,500 Integrated Systems, Inc....... 12,545,000
1,154,000 Macromedia, Inc............... 20,772,000
*785,000 Mercury Interactive Corp...... 10,205,000
*425,000 Oracle Systems Corp........... 17,743,750
*412,400 Parametric Technology Corp.... 21,187,050
*281,100 Policy Management Systems
CP.......................... 12,965,738
*198,500 Rational Software Corp........ 7,853,156
*335,200 Sterling Software, Inc........ 10,600,700
*232,000 Workgroup Technology Corp..... 1,537,000
*263,600 Xeikon NV ADR................. 1,977,000
--------------
243,027,639
--------------
TRANSPORTATION -- 2.3%
*370,000 AMR Corp...................... 32,606,250
1,000,000 Canadian Pacific Ltd.......... 26,500,000
*560,780 M.S. Carriers................. 8,972,480
615,000 Werner Enterprises, Inc....... 11,146,875
--------------
79,225,605
--------------
UTILITIES -- 3.4%
1,550,000 Calpine Corp.................. 31,000,000
*650,000 MFS Communications Co.,
Inc......................... 35,425,000
320,000 Portugal Telecom S.A. ADR..... 9,040,000
1,471,800 Worldcom, Inc................. 38,358,788
--------------
113,823,788
--------------
Total common stocks........... $3,022,074,151
--------------
--------------
CONVERTIBLE PREFERRED STOCKS -- 1.1%
AEROSPACE & DEFENSE -- 0.7%
*1,228,000 Cooper Industries............. 23,792,500
--------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
113
<PAGE>
- --------------------------------------------------------------------------------
HARTFORD CAPITAL APPRECIATION FUND, INC.
STATEMENT OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES MARKET
----------- VALUE
--------------
<C> <S> <C>
CONVERTIBLE PREFERRED STOCKS -- (CONTINUED)
ENERGY & SERVICES -- 0.4%
472,100 Sun Co........................ $ 11,861,501
--------------
Total convertible preferred
stocks...................... $ 35,654,001
--------------
--------------
PREFERRED STOCKS -- 0.6%
ELECTRONICS
350,000 Nokia PFD ADS................. $ 20,168,750
--------------
--------------
<CAPTION>
PRINCIPAL
AMOUNT
-----------
<C> <S> <C>
CORPORATE NOTES -- 0.5%
FOOD, BEVERAGE & TOBACCO
Unisys Corp.***
$15,000,000 12.00% due 04/15/03......... $ 16,050,000
--------------
--------------
<CAPTION>
SHARES
-----------
<C> <S> <C>
WARRANTS -- 0.1%
*920,200 Nordic American Tanker........ $ 4,140,900
--------------
--------------
<CAPTION>
PRINCIPAL
AMOUNT
-----------
<C> <S> <C>
SHORT-TERM SECURITIES -- 8.3%
U.S. TREASURY BILL -- 0.2%
$ 5,000,000 5.06% due 06/26/97.......... 4,876,433
--------------
REPURCHASE AGREEMENTS -- 8.1%
174,848,000 Interest in $399,594,000 joint
repurchase agreement dated
12/31/96 with State Street
Bank 6.7693% due 01/02/97;
maturity amount
$174,913,755;
(Collateralized by
$218,212,000 U.S. Treasury
Note 6.25% due 06/30/98 and
$280,160,000 U.S. Treasury
Strip (principal) 0% due
05/15/19)................... 174,848,000
100,672,000 Interest in $300,000,000 joint
repurchase agreement dated
12/31/96 with First Boston
6.75% due 01/02/97; maturity
amount $100,709,752;
(Collateralized by
$301,035,000 U.S. Treasury
Note 6.25% due 10/31/01).... 100,672,000
--------------
275,520,000
--------------
Total short-term securities... $ 280,396,433
--------------
--------------
</TABLE>
MARKET
VALUE
--------------
DIVERSIFICATION OF ASSETS:
Total common stocks (cost $2,527,790,617).... 89.2 % $3,022,074,151
Total convertible preferred stocks (cost
$31,208,778)............................... 1.1 35,654,001
Total non-convertible preferred stocks (cost
$16,381,570)............................... 0.6 20,168,750
Total corporate notes (cost $15,293,984)..... 0.5 16,050,000
Total warrants (cost $4,586,075)............. 0.1 4,140,900
Total short-term securities (cost
$280,396,433).............................. 8.3 280,396,433
------ --------------
Total investment in securities
(Identified cost $2,875,657,457)........... 99.8 3,378,484,235
Excess of cash and receivables over
liabilities................................ 0.2 8,185,553
------ --------------
Net assets (applicable to $3.91433 per share
based on 865,198,432 shares outstanding)... 100.0 % $3,386,669,788
------ --------------
------ --------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share; authorized
2,000,000,000 shares; outstanding 865,198,432
shares............................................. $ 86,519,843
Capital surplus...................................... 2,536,015,068
Distribution in excess of net investment income...... (1,027,494)
Undistributed net realized gain on investments....... 261,597,674
Unrealized appreciation of investments............... 502,826,778
Unrealized depreciation of futures contracts......... (322,442)
Unrealized appreciation of forward foreign currency
contracts (Note 2)................................. 1,053,529
Unrealized appreciation of translation on other
assets and liabilities in foreign currencies....... 6,832
--------------
Net assets, applicable to shares outstanding......... $3,386,669,788
--------------
--------------
* Non-income producing during period.
** The Fund had 650 Russell 2000 March futures contracts open at December 31,
1996. The contracts had a market value of $117,893,750 at December 31, 1996.
*** Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
FORWARD FOREIGN CURRENCY CONTRACTS -- NOTE 2 -- OUTSTANDING AT DECEMBER 31, 1996
<TABLE>
<CAPTION>
UNREALIZED
TOTAL AGGREGATE DELIVERY APPRECIATION
DESCRIPTION VALUE FACE VALUE DATE (DEPRECIATION)
- ------------------------------ ---------- ---------- --------- -------------
<S> <C> <C> <C> <C>
French Francs (Sell) $25,310,813 $25,000,000 06/30/97 $ (310,813)
Japanese Yen (Sell) 28,933,082 30,000,000 04/23/97 1,066,918
Japanese Yen (Sell) 19,702,576 20,000,000 05/26/97 297,424
-------------
$ 1,053,529
-------------
-------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
114
<PAGE>
- --------------------------------------------------------------------------------
Hartford Mortgage Securities Fund, Inc.
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------- --------------
<C> <S> <C>
U.S. TREASURIES & FEDERAL AGENCIES -- 78.3%
U.S. TREASURY NOTES -- 0.8%
$ 1,500,000 5.25% due 12/31/97.......... $ 1,490,157
1,000,000 6.25% due 10/31/01.......... 1,000,625
--------------
$ 2,490,782
--------------
FEDERAL HOME LOAN MORTGAGE
CORPORATION -- 25.7%
Pass-Throughs
4,336,494 6.00% due 02/01/11 -
03/01/11.................... 4,175,965
17,119,433 6.50% due 02/01/09 -
06/01/26.................... 16,531,773
23,195,925 7.00% due 12/01/10 -
03/01/26.................... 22,865,736
10,874,607 7.50% due 01/01/24 -
01/01/27.................... 10,901,623
6,551,157 8.00% due 02/01/13 -
11/01/24.................... 6,719,828
5,771,032 8.50% due 07/01/01 -
05/01/25.................... 5,985,146
5,643,753 9.00% due 10/15/01 -
10/01/06.................... 5,889,887
6,435,620 9.50% due 11/01/08......... 6,832,891
3,548,703 10.00% due 09/01/05 -
11/01/20.................... 3,873,224
--------------
83,776,073
--------------
COLLATERALIZED MORTGAGE
OBLIGATIONS -- 1.4%
Federal Home Loan Mortgage
Corp. Series 1033, Class E
503,972 8.10% due 12/15/04......... 506,351
Fanniemae Strip Series D,
Class 2
978,898 11.00% due 04/01/09......... 1,098,189
Federal National Mortgage
Association Series 89-87,
Class G
391,392 8.75% due 02/25/18......... 390,218
Federal National Mortgage
Association Series 90-108,
Class E
301,099 8.50% due 06/25/19......... 305,920
Federal National Mortgage
Association Series 91-134,
Class H
526,965 7.95% due 03/25/20......... 531,707
Federal National Mortgage
Association Series 91-G8,
Class D
2,064,174 8.50% due 03/25/19......... 2,084,526
--------------
4,916,911
--------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION -- 26.5%
Pass-Throughs
588,933 5.50% due 04/01/11.......... 554,322
5,402,124 6.00% due 02/01/26.......... 5,015,537
1,981,980 6.20% due 01/01/06.......... 1,893,465
19,190,073 6.50% due 02/01/11 -
07/01/26.................... 18,438,097
13,667,807 7.00% due 05/01/09 -
06/01/26.................... 13,460,793
14,519,347 7.50% due 01/01/12 -
01/01/27.................... 14,576,793
15,467,234 8.00% due 04/01/22 -
01/01/27.................... 15,767,541
7,505,003 8.50% due 06/01/24 -
11/01/26.................... 7,799,528
8,247,902 9.00% due 05/01/21 -
06/01/25.................... 8,741,329
--------------
86,247,405
--------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION -- 23.9%
Pass-Throughs
11,704,162 7.00% due 01/15/24 -
09/15/26.................... 11,459,691
30,642,805 7.50% due 11/15/09 -
01/01/27.................... 30,734,208
20,979,555 8.00% due 02/15/01 -
12/29/26.................... 21,450,457
3,411,531 8.50% due 06/15/17 -
02/15/25.................... 3,555,333
2,294,258 9.00% due 01/15/25 -
12/15/25.................... 2,417,758
4,007,636 9.50% due 10/15/09 -
11/15/09.................... 4,376,498
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------- --------------
<C> <S> <C>
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION -- (CONTINUED)
$ 2,349,643 10.00% due 11/15/09 -
05/15/13.................... $ 2,590,286
660,828 11.00% due 02/15/10 -
09/15/10.................... 744,026
81,745 11.25% due 01/15/01......... 87,921
116,888 12.00% due 05/15/15......... 132,700
74,704 12.50% due 06/15/14 -
08/15/15.................... 86,234
42,849 13.00% due 11/15/14......... 49,378
8,658 13.50% due 07/15/14......... 10,047
--------------
77,694,537
--------------
Total U.S. treasuries &
Federal agencies............ $ 255,125,708
--------------
--------------
CORPORATE NOTES -- 1.0%
FINANCIAL SERVICES
Capital Holding Corp.
3,000,000 0.00% due 02/07/97.......... $ 3,091,800
--------------
--------------
ASSET-BACKED SECURITIES -- 1.1%
Corestates Home Equity Trust
Series 94-1, Class A
3,525,605 6.65% due 05/15/09.......... $ 3,537,380
--------------
--------------
<CAPTION>
COLLATERALIZED MORTGAGE OBLIGATIONS -- 16.9%
<C> <S> <C>
Bear Stearns Mortgage
Securities, Inc. Series 95-1,
Class 1A
4,240,254 6.47% due 05/25/10.......... 4,131,678
Chase Mortgage Finance Corp.
Series 93-C2, Class 2A-3
3,907,530 8.25% due 01/25/24.......... 3,957,523
CMC Securities Corp., Series
92-D, Class D-2L
460,081 7.20% due 12/25/08.......... 461,075
Collateralized Mortgage
Obligation Trust Series 52,
Class A
802,740 0.00% due 05/01/17.......... 561,918
Countrywide Mortgage Backed
Securities, Inc. Series 93-C,
Class A1
1,902,890 6.50% due 01/25/24.......... 1,898,494
DLJ Mortgage Acceptance
Corporation Series 96-TD,
Class A
1,163,558 6.88% due 09/29/23.......... 1,105,381
DLJ Mortgage Acceptance
Corporation Series 96-I, B1
512,343 7.25% due 09/25/11.......... 503,698
DLJ Mortgage Acceptance
Corporation Series 96-I, B2
170,781 7.25% due 09/25/11.......... 161,975
GE Capital Mortgage Services,
Inc. Series 94-21, Class A
8,027,019 6.50% due 08/25/09.......... 7,867,843
GE Capital Mortgage Services,
Inc. Series 94-26, Class A
8,092,516 7.01% due 07/25/09.......... 8,088,114
GE Capital Mortgage Services,
Inc. Series 96-1, Class B2
609,941 6.75% due 02/25/11.......... 581,425
GE Capital Mortgage Services,
Inc. Series 96-1, Class M
1,827,881 6.75% due 02/25/11.......... 1,764,953
GE Capital Mortgage Services,
Inc. Series 96-10, Class B1
610,837 6.75% due 06/25/11.......... 584,861
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
115
<PAGE>
- --------------------------------------------------------------------------------
HARTFORD MORTGAGE SECURITIES FUND, INC.
STATEMENT OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------- --------------
<C> <S> <C>
COLLATERALIZED MORTGAGE
OBLIGATIONS -- (CONTINUED)
GE Capital Mortgage Services,
Inc. Series 96-10, Class B2
$ 610,837 6.75% due 06/25/11.......... $ 581,751
Housing Securities, Inc.
Series 93-E, Class E15
4,619,952 10.00% due 09/25/08......... 4,923,210
PNC Mortgage Securities Corp.
Series 96-2, Class B1
633,668 6.60% due 02/25/11.......... 606,935
PNC Mortgage Securities Corp.
Series 96-2, Class B2
211,223 6.60% due 02/25/11.......... 200,926
PNC Mortgage Securities Corp.
Series 96-2, Class B3
337,956 6.60% due 02/25/11.......... 312,187
Prudential Home Mortgage
Securities Co. Series 96-3,
Class B1
1,212,532 6.75% due 03/25/11.......... 1,165,421
Prudential Home Mortgage
Securities Co. Series 96-3,
Class B2
605,781 6.75% due 03/25/11.......... 572,519
Prudential Home Mortgage
Securities Co. Series 93-H,
Class 2B
4,863,581 6.76% due 09/28/08.......... 4,735,912
Residential Funding Mortgage
Sec I Series 95-S15, Class M3
1,313,748 7.00% due 10/25/10.......... 1,255,456
Residential Funding Mortgage
Sec I Series 95-S18, Class M3
743,469 7.00% due 11/25/10.......... 710,289
Residential Funding Mortgage
Sec I Series 96-S11, Class M3
281,525 7.00% due 04/25/11.......... 268,456
Residential Funding Mortgage
Sec I Series 96-S5, Class M3
579,746 6.75% due 02/25/11.......... 545,235
Residential Funding Mortgage
Sec I Series 95-S19, Class M3
575,072 7.00% due 12/25/10.......... 548,375
Residential Funding Mortgage
Sec I Series 96-S8, Class M3
555,599 6.75% due 03/25/11.......... 522,526
Residential Funding Mortgage
Sec I Series 96-S17, Class M3
598,871 7.25% due 07/25/11.......... 576,787
Residential Funding Mortgage
Sec I Series 96-S19, Class M3
521,079 7.50% due 09/25/11.......... 508,052
Ryland Acceptance Corp. Series
82, Class 1
385,057 10.25% due 09/13/11......... 386,380
Structured Asset Securities
Corp. Series 96-CFL, Class D
5,000,000 7.03% due 02/25/28.......... 4,910,970
--------------
Total collateralized mortgage
obligations................. $ 55,000,325
--------------
--------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------- --------------
<C> <S> <C>
SHORT-TERM SECURITIES -- 10.9%
COMMERCIAL PAPER -- 6.1%
$10,000,000 Smith Barney Corp.
5.45% due 01/10/97.......... $ 9,986,375
10,000,000 Smith Barney Corp.
5.45% due 01/09/97.......... 9,987,889
--------------
$ 19,974,264
--------------
REPURCHASE AGREEMENT -- 4.8%
15,447,000 Interest in $108,163,000 joint
repurchase agreement dated
12/31/96 with State Street
Bank 6.70% due 01/02/97;
maturity amount $15,452,750;
(Collateralized by
$53,860,000 U.S. Treasury
Note 7.5% due 02/15/05 and
$54,303,000 U.S. Treasury
Note 8.875% due 08/15/17)... 15,447,000
--------------
Total short-term securities... $ 35,421,264
--------------
--------------
</TABLE>
<TABLE>
<S> <C> <C>
DIVERSIFICATION OF ASSETS:
Total U.S. treasuries & Federal agencies
(cost $263,510,647)........................ 78.3% $255,125,708
Total corporate notes (cost $3,204,548)...... 1.0 3,091,800
Total asset-backed securities (cost
$3,481,027)................................ 1.1 3,537,380
Total collateralized mortgage obligations
(cost $45,270,675)......................... 16.9 55,000,325
Total short-term securities (cost
$35,421,264)............................... 10.9 35,421,264
-------- -------------
Total investment in securities
(Identified cost $350,888,161)............. 108.2 352,176,477
Excess of liabilities over cash and
receivables................................ (8.2) (26,681,294)
-------- -------------
Net assets (applicable to $1.05576 per share
based on 308,302,596 shares outstanding)... 100.0% $325,495,183
-------- -------------
-------- -------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share; authorized
800,000,000 shares; outstanding 308,302,596 shares... $ 30,830,260
Capital surplus........................................ 305,843,809
Undistributed net investment income.................... 179,286
Net realized loss on investments....................... (12,646,488)
Unrealized appreciation of investments................. 1,288,316
-------------
Net assets, applicable to shares outstanding........... $325,495,183
-------------
-------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
116
<PAGE>
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Hartford Index Fund, Inc.
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES MARKET
----------- VALUE
-------------
<C> <S> <C>
COMMON STOCKS -- 99.1%
AEROSPACE & DEFENSE -- 2.6%
30,700 Allied Signal, Inc............ $ 2,056,900
38,999 Boeing Co..................... 4,148,519
6,900 General Dynamics Corp......... 486,450
21,000 Lockheed Martin Corp.......... 1,921,500
23,100 McDonnell Douglas Corp........ 1,478,400
6,300 Northrop Grumman Corp......... 521,325
25,700 Raytheon Co................... 1,236,813
23,800 Rockwell International
Corp........................ 1,448,825
9,000 Textron, Inc.................. 848,250
26,100 United Technologies Corp...... 1,722,600
-------------
15,869,582
-------------
BUSINESS SERVICES -- 1.1%
14,200 Alco Standard Corp............ 733,075
23,100 Browning Ferris Industries,
Inc......................... 606,375
9,000 DeLuxe Corp................... 294,750
16,400 Donnelley (R.R.) & Sons Co.... 514,550
4,100 Fleming Companies, Inc........ 70,725
9,100 Fluor Corp.................... 571,025
4,400 Foster Wheeler Corp........... 163,350
5,800 Grainger (W.W.), Inc.......... 465,450
3,400 John H. Harland Co............ 112,200
10,900 Moore Corp. Ltd............... 222,088
5,200 National Service Industries,
Inc......................... 194,350
6,300 Safety Kleen Corp............. 103,163
7,300 Supervalu, Inc................ 207,138
19,400 Sysco Corp.................... 632,925
52,700 WMX Technologies, Inc......... 1,719,338
-------------
6,610,502
-------------
COMMUNICATIONS EQUIPMENT --
2.9%
*6,600 Andrew Corp................... 350,213
21,100 Bay Networks, Inc............. 440,463
*17,000 Cabletron Systems, Inc........ 565,250
*70,600 Cisco Systems, Inc............ 4,491,925
*12,700 DSC Communications............ 227,013
14,900 General Instrument............ 322,213
4,200 Harris Corp................... 288,225
69,200 Lucent Technologies........... 3,200,500
64,500 Motorola, Inc................. 3,958,688
28,100 Northern Telecom Ltd.......... 1,738,688
4,900 Raychem Corp.................. 392,613
8,400 Scientific Atlanta, Inc....... 126,000
19,500 Tellabs, Inc.................. 733,688
*18,900 3 Com Corp.................... 1,386,788
-------------
18,222,267
-------------
COMPUTERS & OFFICE
EQUIPMENT -- 3.9%
13,200 Amdahl Corp................... 160,050
13,500 Apple Computer, Inc........... 281,813
*29,400 Compaq Computer Corp.......... 2,182,950
*4,300 Data General Corp............. 62,350
19,600 Dell Computer Corp............ 1,041,250
*16,800 Digital Equipment Corp........ 611,100
25,300 EMC Corp. - Mass.............. 838,063
110,600 Hewlett-Packard Co............ 5,557,650
56,300 International Business
Machines Corp............... 8,501,300
16,100 Pitney Bowes, Inc............. 877,450
27,300 Seagate Technology, Inc....... 1,078,350
39,900 Sun Microsystems, Inc......... 1,024,931
*12,900 Tandem Computers.............. 177,375
*19,000 Unisys Corp................... 128,250
<CAPTION>
SHARES MARKET
----------- VALUE
-------------
<C> <S> <C>
COMPUTERS & OFFICE
EQUIPMENT -- (CONTINUED)
35,300 Xerox Corp.................... $ 1,857,663
-------------
24,380,545
-------------
CONSUMER DURABLES -- 2.3%
79,200 Chrysler Corp................. 2,613,600
8,900 Cooper Tire & Rubber Co....... 175,775
11,100 Dana Corp..................... 362,138
6,700 Echlin, Inc................... 211,888
128,900 Ford Motor Co................. 4,108,688
82,200 General Motors Corp........... 4,582,650
13,100 Genuine Parts Co.............. 582,950
16,900 Goodyear Tire & Rubber Co..... 868,238
12,800 ITT Industries................ 313,600
13,800 TRW, Inc...................... 683,100
-------------
14,502,627
-------------
CONSUMER NON-DURABLES -- 4.2%
3,000 Alberto Culver Co............. 144,000
14,400 Avon Products, Inc............ 822,600
9,500 Black & Decker Corp........... 286,188
3,100 Briggs & Stratton............. 136,400
3,100 Centex Corp................... 116,638
5,600 Clorox Co..................... 562,100
16,000 Colgate Palmolive Co.......... 1,476,000
3,900 Fleetwood..................... 107,250
8,400 Fruit of the Loom, Inc. Class
A........................... 318,150
60,100 Gillette Co................... 4,672,775
12,000 International Flavors &
Fragrances.................. 540,000
4,200 Kaufman & Broad Home Corp..... 54,075
30,700 Kimberly-Clark Corp........... 2,924,175
7,800 Liz Claiborne, Inc............ 301,275
17,400 Masco Corp.................... 626,400
10,900 Maytag Corp................... 215,275
17,300 Newell Co..................... 544,950
31,300 NIKE, Inc. Class B............ 1,870,175
74,100 Proctor & Gamble Co........... 7,965,750
2,500 Pulte Corp.................... 76,875
6,100 Reebok International Ltd...... 256,200
16,300 Rubbermaid, Inc............... 370,825
4,200 Russell Corp.................. 124,950
6,600 Snap-On, Inc.................. 235,125
2,200 Springs Industries, Inc....... 94,600
9,700 Stanley Works................. 261,900
5,400 Stride Rite Corp.............. 54,000
6,800 Tupperware Corp............... 364,650
6,900 V F Corp...................... 465,750
8,100 Whirlpool Corp................ 377,663
-------------
26,366,714
-------------
CONSUMER SERVICES -- 2.0%
10,700 Brunswick..................... 256,800
17,100 Darden Restaurants, Inc....... 149,625
36,200 Eastman Kodak................. 2,905,050
11,300 H & R Block, Inc.............. 327,700
*11,200 Harrah's Entertainment,
Inc......................... 222,600
9,400 Hasbro, Inc................... 365,425
14,000 HFS, Inc...................... 836,500
26,900 Hilton Hotels Corp............ 702,763
12,700 ITT Corp...................... 550,863
13,900 Marriott International,
Inc......................... 767,975
29,600 Mattel, Inc................... 821,400
75,900 McDonalds Corp................ 3,434,475
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
117
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HARTFORD INDEX FUND, INC.
STATEMENT OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES MARKET
----------- VALUE
-------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
CONSUMER SERVICES --
(CONTINUED)
4,900 Polaroid Corp................. $ 213,150
11,500 Ralston Purina Group.......... 843,813
14,100 Wendy's International, Inc.... 289,050
-------------
12,687,189
-------------
ELECTRONICS -- 6.3%
14,800 Advanced Micro Devices,
Inc......................... 381,100
23,900 AMP, Inc...................... 917,163
19,500 Applied Materials, Inc........ 700,781
5,100 E G & G, Inc.................. 102,638
24,400 Emerson Electric Co........... 2,360,700
179,000 General Electric.............. 17,698,625
5,400 General Signal Corp........... 230,850
89,200 Intel Corp.................... 11,679,625
4,500 Johnson Controls, Inc......... 372,938
14,000 LSI Logic Corp................ 374,500
22,700 Micron Technology, Inc........ 661,138
*15,100 National Semiconductor
Corp........................ 368,063
*19,000 Silicon Graphics, Inc......... 484,500
3,600 Tektronix, Inc................ 184,500
20,700 Texas Instruments, Inc........ 1,319,625
5,800 Thomas & Betts Corp........... 257,375
67,900 Westinghouse Electric Corp.... 1,349,513
-------------
39,443,634
-------------
ENERGY & SERVICES -- 9.2%
10,100 Amerada Hess Corp............. 584,538
54,100 Amoco Corp.................... 4,355,050
7,000 Ashland, Inc.................. 307,125
17,500 Atlantic Richfield Co......... 2,318,750
15,700 Baker Hughes, Inc............. 541,650
13,600 Burlington Resources, Inc..... 685,100
70,900 Chevron Corp.................. 4,608,500
11,400 Coastal Corp.................. 557,175
19,100 Dresser Industries, Inc....... 592,100
135,000 Exxon Corp.................... 13,230,000
13,600 Halliburton Co................ 819,400
2,700 Helmerich & Payne, Inc........ 140,738
5,300 Kerr-McGee Corp............... 381,600
3,700 Louisiana Land & Exploration
Co.......................... 198,413
6,000 McDermott International,
Inc......................... 99,750
42,800 Mobil Corp.................... 5,232,300
35,800 Occidental Petroleum Corp..... 836,825
11,400 Oryx Energy Co................ 282,150
16,400 Panenergy Corp................ 738,000
5,100 Pennzoil Co................... 288,150
28,600 Phillips Petroleum Co......... 1,265,550
*9,300 Rowan Cos., Inc............... 210,413
58,300 Royal Dutch Petroleum Co...... 9,954,725
9,900 Santa Fe Energy Resources,
Inc......................... 137,363
26,800 Schlumberger Ltd.............. 2,676,650
7,900 Sun Company, Inc.............. 192,563
28,800 Texaco, Inc................... 2,826,000
27,200 Union Pacific Resources
Group....................... 795,600
27,200 Unocal Corp................... 1,105,000
31,300 USX-Marathon Group............ 747,288
*5,800 Western Atlas, Inc............ 411,075
-------------
57,119,541
-------------
FINANCIAL SERVICES -- 14.6%
12,200 AON Corp...................... 757,925
17,600 Aetna Life & Casualty Co...... 1,408,000
11,500 H.F. Ahmanson & Co............ 373,750
<CAPTION>
SHARES MARKET
----------- VALUE
-------------
<C> <S> <C>
FINANCIAL SERVICES --
(CONTINUED)
4,900 Alexander & Alexander......... $ 85,138
49,800 Allstate Corp................. 2,882,175
51,500 American Express Co........... 2,909,750
23,700 American General Corp......... 968,738
52,700 American International Group,
Inc......................... 5,704,775
46,500 Banc One Corp................. 1,999,500
39,000 BankAmerica Corp.............. 3,890,250
16,600 Bank of Boston Corp........... 1,066,550
42,600 Bank of New York, Inc......... 1,437,750
8,900 Bankers Trust NY Corp......... 767,625
21,200 Barnett Banks, Inc............ 871,850
5,800 Beneficial Corp............... 367,575
16,800 Boatman Bancshares, Inc....... 1,083,600
47,700 Chase Manhattan Corp.......... 4,257,225
19,500 Chubb Corp. (The)............. 1,048,125
8,400 CIGNA Corp.................... 1,147,650
51,200 Citicorp...................... 5,273,600
11,700 Comerica, Inc................. 612,788
24,200 Corestates Financial Corp..... 1,255,375
17,500 Dean Witter, Discover & Co.... 1,159,375
19,400 Federal Home Loan Mortgage
Corp........................ 2,136,425
118,700 Federal National Mortgage
Association................. 4,421,575
11,500 Fifth Third Bancorp........... 722,344
14,600 First Bank System, Inc........ 996,450
34,700 First Chicago Corp............ 1,865,125
30,800 First Union Corp.............. 2,279,200
28,500 Fleet Financial Group, Inc.... 1,421,438
9,300 General Re Corp............... 1,467,075
6,200 Golden West Financial Corp.... 391,375
15,000 Great Western Financial
Corp........................ 435,000
14,900 Greentree Financial Corp...... 575,513
10,500 Household International
Corp........................ 968,625
8,300 Jefferson Pilot Corp.......... 469,988
24,500 Keycorp....................... 1,237,250
12,100 Lincoln National Corp......... 635,250
4,800 MBIA, Inc..................... 486,000
24,200 MBNA Corp..................... 1,004,300
8,000 Marsh and McLennan Cos.,
Inc......................... 832,000
14,100 Mellon Bank Corp.............. 1,001,100
17,900 Merrill Lynch & Co., Inc...... 1,458,850
6,600 MGIC Investment............... 501,600
20,300 Morgan (J.P.) & Co., Inc...... 1,981,788
16,600 Morgan Stanley Group.......... 948,275
24,100 National City Corp............ 1,081,488
31,300 NationsBank Corp.............. 3,059,575
40,300 Norwest Corp.................. 1,753,050
37,100 PNC Bank Corp................. 1,395,888
10,900 Providian Corp................ 559,988
6,000 Republic New York Corp........ 489,750
14,100 Safeco Corp................... 556,069
11,900 Salomon Brothers, Inc......... 560,788
9,300 St. Paul Cos., Inc............ 545,213
24,200 Sun Trust Banks, Inc.......... 1,191,850
7,900 Torchmark Corp................ 398,950
7,700 Transamerica Corp............. 608,300
69,600 Travelers Group, Inc. (The)... 3,158,100
8,200 UNUM Corp..................... 592,450
16,400 US Bancorp Oregon............. 736,975
4,000 USLife Corp................... 133,000
13,000 USF&G Corp.................... 271,375
18,000 Wachovia Corp................. 1,017,000
10,100 Wells Fargo & Co.............. 2,724,475
-------------
90,399,919
-------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
118
<PAGE>
<TABLE>
<CAPTION>
SHARES MARKET
----------- VALUE
-------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
FOOD, BEVERAGE & TOBACCO --
8.4%
18,500 American Brands, Inc.......... $ 918,063
54,300 Anheuser Busch Cos., Inc...... 2,172,000
59,200 Archer-Daniels-Midland........ 1,302,400
7,500 Brown-Forman.................. 343,125
15,600 CPC International............. 1,209,000
25,400 Campbell Soup Co.............. 2,038,350
270,500 Coca-Cola Co.................. 14,235,063
26,200 Conagra, Inc.................. 1,303,450
4,100 Coors Adolph Class B.......... 77,900
17,000 General Mills Co.............. 1,077,375
40,000 H.J. Heinz Co................. 1,430,000
16,700 Hershey Foods Corp............ 730,625
22,900 Kellogg Co.................... 1,502,813
168,900 Pepsico, Inc.................. 4,940,325
88,500 Philip Morris Cos., Inc....... 9,967,313
14,800 Quaker Oats Co................ 564,250
52,600 Sara Lee Corp................. 1,959,350
40,600 Seagram....................... 1,573,250
20,200 UST, Inc...................... 653,975
17,400 Unilever NV................... 3,049,350
11,300 Whitman Corp.................. 258,488
12,600 Wrigley Wm Jr., Co............ 708,750
-------------
52,015,215
-------------
HEALTH CARE -- 10.7%
84,500 Abbott Laboratories........... 4,288,375
7,100 Allergan, Inc................. 252,938
*9,200 Alza Corp..................... 238,050
69,400 American Home Products
Corp........................ 4,068,575
28,800 Amgen, Inc.................... 1,566,000
6,200 Bard (C.R.), Inc.............. 173,600
6,000 Bausch & Lomb, Inc............ 210,000
29,700 Baxter International, Inc..... 1,217,700
13,500 Becton, Dickinson & Co........ 585,563
10,800 Beverly Enterprises, Inc...... 137,700
12,600 Biomet, Inc. ADR.............. 190,575
19,300 Boston Scientific Corp........ 1,158,000
54,500 Bristol-Myers Squibb Co....... 5,926,875
73,000 Columbia/HCA Healthcare
Corp........................ 2,974,750
8,100 Guidant Corp.................. 461,700
17,700 Humana, Inc................... 338,513
144,800 Johnson & Johnson............. 7,203,800
60,000 Lilly Eli & Co................ 4,380,000
12,900 Loews Corp.................... 1,215,825
8,000 Mallinckrodt Group, Inc....... 353,000
6,800 Manor Care, Inc............... 183,600
26,100 Medtronic, Inc................ 1,774,800
131,100 Merck & Co., Inc.............. 10,389,675
4,700 Millipore Corp................ 194,463
12,500 Pall Corp..................... 318,750
70,100 Pfizer, Inc................... 5,809,538
55,200 Pharmacia & Upjohn, Inc....... 2,187,300
9,000 Pioneer Hi-Bred
International............... 630,000
40,200 Schering-Plough Corp.......... 2,602,950
25,600 Service Corp. International... 716,800
2,600 Shared Medical Systems
Corp........................ 128,050
8,800 St. Jude Medical, Inc......... 375,100
23,600 Tenet Healthcare Corp......... 516,250
20,000 United Health Care Corp....... 900,000
6,800 U.S. Surgical Corp............ 267,750
29,500 Warner-Lambert Co............. 2,212,500
-------------
66,149,065
-------------
<CAPTION>
SHARES MARKET
----------- VALUE
-------------
<C> <S> <C>
INDUSTRIAL MATERIALS -- 5.7%
12,100 Air Products & Chemicals
Corp........................ $ 836,413
24,600 Alcan Aluminum Ltd............ 827,175
19,000 Allegheny Teledyne, Inc....... 437,000
18,900 Aluminum Company of America... 1,204,875
11,600 Armco, Inc.................... 47,850
4,500 Armstrong World Industries,
Inc......................... 312,750
4,700 Asarco, Inc................... 116,913
38,800 Barrick Gold Corp............. 1,115,500
24,400 Battle Mountain Gold Co....... 167,750
5,700 Bemis, Inc.................... 210,188
12,100 Bethlehem Steel Corp.......... 108,900
5,300 Boise Cascade Corp............ 168,275
10,400 Champion International
Corp........................ 449,800
13,900 Crown Cork & Seal, Inc........ 755,813
10,100 Cyprus Amax Minerals.......... 236,088
26,400 Dow Chemical Co............... 2,069,100
61,200 du Pont (ei) de Nemours &
Co.......................... 5,775,750
8,400 Eastman Chemical Co........... 464,100
15,200 Echo Bay Mines Ltd............ 100,700
7,000 Ecolab, Inc................... 263,375
15,600 Englehard Corp................ 298,350
4,000 FMC Corp...................... 280,500
21,000 Freeport-McMoran Copper &
Gold, Inc. Class B.......... 627,375
9,900 Georgia-Pacific Corp.......... 712,800
5,800 B.F. Goodrich Co. (The)....... 234,900
9,700 Grace (WR) & Co............... 501,975
6,900 Great Lakes Chemical Corp..... 322,575
11,100 Hercules, Inc................. 480,075
15,900 Homestake Mining Co........... 226,575
18,300 Inco Co. Ltd.................. 583,313
5,300 Inland Steel Industries,
Inc......................... 106,000
32,600 International Paper Co........ 1,316,225
9,400 James River Corp.............. 311,375
11,800 Louisiana-Pacific Corp........ 249,275
5,700 Mead Corp..................... 331,313
63,900 Monsanto Co................... 2,484,113
15,500 Morton International, Inc..... 631,625
7,300 Nalco Chemical Co............. 263,713
10,800 Newmont Mining Corp........... 483,300
9,500 Nucor Corp.................... 484,500
5,600 Owens Corning Fiberglass
Corp........................ 238,700
19,900 PPG Industries, Inc........... 1,116,888
7,000 Phelps Dodge Corp............. 472,500
26,000 Placer Dome, Inc.............. 565,500
3,100 Potlatch Corp................. 133,300
17,000 Praxair....................... 784,125
6,900 Reynolds Metal Co............. 388,988
7,000 Rohm & Haas Co................ 571,375
14,300 Santa Fe Pacific Gold Corp.... 219,863
9,300 Sherwin Williams.............. 520,800
5,400 Sigma Aldrich Corp............ 337,163
10,800 Stone Container Corp.......... 160,650
6,000 Temple-Inland, Inc............ 324,750
7,600 Union Camp Corp............... 362,900
13,800 Union Carbide Corp............ 564,075
9,200 USX - U.S. Steel Group........ 288,650
11,100 Westvaco Corp................. 319,125
21,600 Weyerhaeuser Co............... 1,023,300
6,000 Willamette Industries, Inc.... 419,250
9,900 Worthington Industries,
Inc......................... 179,438
-------------
35,589,532
-------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
119
<PAGE>
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HARTFORD INDEX FUND, INC.
STATEMENT OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES MARKET
----------- VALUE
-------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
MANUFACTURING -- 2.8%
11,400 Avery Dennison
International............... $ 403,275
3,300 Ball Corp..................... 85,800
8,000 Case Corp..................... 436,000
20,800 Caterpillar, Inc.............. 1,565,200
4,300 Cincinnati Milacron, Inc...... 94,063
11,700 Cooper Industries............. 492,863
25,000 Corning, Inc.................. 1,156,250
5,000 Crane Co...................... 145,000
4,300 Cummins Engine, Inc........... 197,800
28,100 Deere & Co.................... 1,141,563
12,200 Dover Corp.................... 613,050
8,400 Eaton Corp.................... 585,900
3,600 Giddings & Lewis.............. 46,350
5,300 Harnischfeger Industries,
Inc......................... 255,063
13,800 Honeywell, Inc................ 907,350
13,500 Illinois Tool Works, Inc...... 1,078,313
11,900 Ingersoll-Rand Co............. 529,550
45,400 Minnesota Mining &
Manufacturing Co............ 3,762,525
900 Nacco Industries.............. 48,150
*8,000 Navistar International
Corp........................ 73,000
4,200 PACCAR, Inc................... 285,600
8,100 Parker-Hannifin Corp.......... 313,875
4,700 Perkin Elmer.................. 276,713
18,600 Tenneco, Inc.................. 839,325
16,300 Thermo Electron Corp.......... 670,338
3,400 Timken Co..................... 155,975
3,000 Trinova Corp.................. 109,125
17,000 Tyco International Ltd........ 898,875
-------------
17,166,891
-------------
MEDIA & SERVICES -- 3.1%
54,500 Airtouch Communications....... 1,376,125
18,600 Cognizant Corp................ 613,800
35,500 Comcast Corp.................. 632,344
73,700 Walt Disney Co................ 5,131,363
10,500 Dow Jones & Co................ 355,688
18,500 Dun & Bradstreet Corp......... 439,375
15,300 Gannett Co., Inc.............. 1,145,588
7,700 Harcourt General, Inc......... 355,163
8,800 Interpublic Group............. 418,000
*4,100 King World Productions,
Inc......................... 151,188
10,200 Knight Ridder, Inc............ 390,150
10,800 McGraw-Hill Cos., Inc......... 498,150
2,900 Meredith Corp................. 152,975
10,500 New York Times Co. (The) Class
A........................... 399,000
*72,200 Tele-Communications, Inc.
Class A..................... 943,113
61,800 Time Warner, Inc.............. 2,317,500
10,800 Times Mirror Co. Class A...... 537,300
6,700 Tribune Co.................... 528,463
67,900 U.S. West Media Group......... 1,256,150
38,500 Viacom, Inc. Class B.......... 1,342,688
-------------
18,984,123
-------------
RETAIL -- 4.5%
27,400 Albertson's, Inc.............. 976,125
8,100 American Greetings Corp. Class
A........................... 229,838
15,800 American Stores Co............ 645,825
16,300 Autozone...................... 442,138
11,500 CVS Corp...................... 475,813
11,400 Charming Shoppes, Inc......... 57,713
10,600 Circuit City Stores, Inc...... 319,325
*42,800 CUC International............. 1,016,500
23,600 Dayton Hudson Corp............ 926,300
<CAPTION>
SHARES MARKET
----------- VALUE
-------------
<C> <S> <C>
RETAIL -- (CONTINUED)
12,300 Dillard Department Stores,
Inc. Class A................ $ 379,763
22,600 Federated Department Stores... 771,225
30,800 Gap, Inc...................... 927,850
6,500 Giant Food, Inc............... 224,250
4,200 Great Atlantic & Pacific Tea
Co.......................... 133,875
52,200 Home Depot, Inc. (The)........ 2,616,525
4,200 Jostens, Inc.................. 88,725
52,600 K Mart Corp................... 545,725
*13,700 Kroger Co..................... 637,050
29,500 Limited, Inc. (The)........... 542,063
2,100 Longs Drug Store.............. 103,163
18,800 Lowe's Cos., Inc.............. 667,400
27,400 May Department Stores Co.
(The)....................... 1,280,950
4,000 Mercantile Stores, Inc........ 197,500
8,800 Nordstrom, Inc................ 311,850
25,100 J.C. Penney, Inc.............. 1,223,625
6,800 Pep Boys--Manny, Moe, Jack.... 209,100
21,400 Price/Costco, Inc............. 537,675
13,300 Rite Aid Corp................. 528,675
42,600 Sears Roebuck & Co............ 1,964,925
8,500 TJX Cos., Inc................. 402,688
6,300 Tandy Corp.................... 277,200
*29,800 Toys "R" Us Inc............... 894,000
249,400 Wal-Mart Stores, Inc.......... 5,705,025
26,800 Walgreen Co................... 1,072,000
16,400 Winn Dixie Stores Inc......... 518,650
14,500 Woolworth (F.W.) Co........... 317,188
-------------
28,168,242
-------------
SOFTWARE & SERVICES -- 3.3%
5,000 Autodesk, Inc................. 140,000
31,600 Automatic Data Processing..... 1,354,850
*7,500 Ceridian Corp................. 303,750
39,700 Computer Associates Corp...... 1,975,075
8,300 Computer Sciences Corp........ 681,638
48,700 First Data Corp............... 1,777,550
*5,200 Intergraph Corp............... 53,300
*130,000 Microsoft Corp................ 10,741,250
*37,400 Novell, Inc................... 354,131
*71,500 Oracle Systems Corp........... 2,985,125
-------------
20,366,669
-------------
TRANSPORTATION -- 1.5%
*9,900 AMR Corp...................... 872,438
16,600 Burlington Northern Santa Fe
Corp........................ 1,433,825
23,600 CSX Corp...................... 997,100
4,300 Caliber System, Inc........... 82,775
8,700 Consolidated Freightways,
Inc......................... 866,738
8,100 Delta Airlines, Inc........... 574,088
*12,400 Federal Express Corp.......... 551,800
34,100 Laidlaw, Inc. Class B......... 392,150
13,600 Norfolk Southern Corp......... 1,190,000
8,900 Ryder Systems, Inc............ 250,313
15,800 Southwest Air Lines Co........ 349,575
26,600 Union Pacific Corp............ 1,599,325
7,000 USAir Group................... 163,625
-------------
9,323,752
-------------
UTILITIES -- 10.0%
20,600 Alltel Corp................... 646,325
20,400 American Electric Power Co.,
Inc......................... 838,950
59,700 Ameritech Corp................ 3,619,313
175,900 AT&T Corp..................... 7,651,650
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
120
<PAGE>
<TABLE>
<CAPTION>
SHARES MARKET
----------- VALUE
-------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
UTILITIES -- (CONTINUED)
16,000 Baltimore Gas and Electric.... $ 428,000
47,600 Bell Atlantic Corp............ 3,082,100
108,000 BellSouth Corp................ 4,360,500
16,500 Carolina Power and Lighting
Co.......................... 602,250
22,900 Central & Southwest Corp...... 586,813
17,100 Cinergy Corp.................. 570,713
6,000 Columbia Gas System, Inc.
(The)....................... 381,750
25,600 Consolidated Edison NY........ 748,800
10,300 Consolidated Natural Gas
Co.......................... 569,075
15,800 DTE Energy Co................. 511,525
19,600 Dominion Resources, Inc....... 754,600
21,900 Duke Power Co................. 1,012,875
2,200 Eastern Enterprises........... 77,825
47,100 Edison International.......... 936,113
1 El Paso Natural Gas........... 10
27,700 Enron Corp.................... 1,194,563
7,600 Enserch Corp.................. 174,800
25,100 Entergy Corp.................. 696,525
19,900 FPL Group, Inc................ 915,400
17,800 Frontier Corp................. 402,725
13,100 GPU, Inc...................... 440,488
104,600 GTE Corp...................... 4,759,243
25,500 Houston Industries, Inc....... 576,938
74,300 MCI Communications Corp....... 2,428,681
15,700 Niagara Mohawk Power Corp..... 155,038
5,400 Nicor, Inc.................... 193,050
14,900 Noram Energy Corp............. 229,088
7,500 Northern States Power Co...... 344,063
47,800 NYNEX Corp.................... 2,300,375
16,600 Ohio Edison Co................ 377,650
3,000 Oneok, Inc.................... 90,000
9,200 Pacific Enterprises........... 279,450
44,800 Pacific Gas & Electric Co..... 940,800
46,600 Pacific Telesis Group......... 1,712,550
32,000 Pacificorp.................... 656,000
24,200 Peco Energy Company........... 611,050
3,800 Peoples Energy Corp........... 128,725
17,600 PP&L Resources, Inc........... 404,800
25,900 Public Service Enterprises.... 705,775
65,600 SBC Communications, Inc....... 3,394,800
9,400 Sonat, Inc.................... 484,100
73,200 Southern Co. (The)............ 1,656,150
46,800 Sprint Corp................... 1,866,150
24,400 Texas Utilities Co............ 994,300
51,900 U.S. West Communications
Group....................... 1,673,775
23,400 Unicom Corp................... 634,725
11,100 Union Electric Co............. 427,350
17,100 Williams Companies, Inc.
(The)....................... 641,250
<CAPTION>
SHARES MARKET
----------- VALUE
-------------
<C> <S> <C>
UTILITIES -- (CONTINUED)
94,500 Worldcom, Inc................. $ 2,462,906
-------------
62,332,470
-------------
Total common stocks........... $ 615,698,479
-------------
-------------
PRINCIPAL
AMOUNT
-----------
SHORT-TERM SECURITIES -- 1.4%
U.S. TREASURY BILL -- 0.1%
U.S. Treasury Bill
$ 500,000 5.23% due 01/09/97.......... $ 499,419
-------------
REPURCHASE AGREEMENT -- 1.3%
8,197,000 Interest in $108,163,000 joint
repurchase agreement dated
12/31/96 with State Street
Bank 6.70% due 01/02/97;
maturity amount $8,200,051;
(Collaterlized by
$53,860,000 U.S. Treasury
Note 7.5% due 02/15/05 and
$54,303,000 U.S. Treasury
Note 8.875% due 08/15/17)... 8,197,000
-------------
Total short-term securities... $ 8,696,419
-------------
-------------
</TABLE>
<TABLE>
<S> <C> <C>
DIVERSIFICATION OF ASSETS:
Total common stocks (cost $511,532,419)...... 99.1 % $615,698,479
Total short-term securities (cost
$8,696,419)................................ 1.4 8,696,419
------ ------------
Total investment in securities
(Identified cost $520,228,838)............. 100.5 624,394,898
Excess of liabilities over cash and
receivables................................ (0.5) (3,330,337)
------ ------------
Net assets (applicable to $2.38177 per share
based on 260,757,272 shares outstanding)... 100.0% $621,064,561
------ ------------
------ ------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share; authorized
400,000,000 shares; outstanding 260,757,272
shares............................................. $ 26,075,727
Capital surplus...................................... 436,555,681
Undistributed net investment income.................. 72,621
Undistributed net realized gain on investments....... 54,305,106
Unrealized depreciation on futures contracts**....... (110,634)
Unrealized appreciation of investments............... 104,166,060
------------
Net assets, applicable to shares outstanding......... $621,064,561
------------
------------
</TABLE>
* Non-income producing during period.
** The Fund had 12 Standard & Poor's 500 March 1997 futures contracts open at
December 31, 1996. The contracts had a market value of $4,457,000 at December
31, 1996.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
121
<PAGE>
- --------------------------------------------------------------------------------
Hartford International Opportunities Fund, Inc.
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
----------- --------------
<C> <S> <C>
COMMON STOCKS -- 91.4%
ARGENTINA -- 0.9%
500,000 Perezcompanc S.A. B........... $ 3,515,619
203,000 YPY S.A. ADR.................. 5,125,750
--------------
8,641,369
--------------
AUSTRALIA -- 4.1%
1,164,035 Amcor Ltd..................... 7,479,531
2,584,978 Boral Ltd..................... 7,350,209
697,260 Broken Hill Proprietary Co.
Ltd......................... 9,924,129
5,082,141 Goodman Fielder Ltd........... 6,296,962
1,790,000 Pioneer International Ltd..... 5,331,435
243,700 Qantas Airways Ltd. ADR***.... 4,064,745
--------------
40,447,011
--------------
AUSTRIA -- 0.9%
83,350 OMV AG........................ 9,388,810
--------------
BELGIUM -- 0.7%
*81,500 Credit Communal Holding***.... 7,427,866
--------------
BRAZIL -- 1.4%
4,780,000 Centrais Electicas SA......... 1,711,262
2,569,600 Cervejaria Brahma Pref........ 1,404,622
241,000 Electrobras On ADR............ 4,313,948
22,840,000 Petroleo Brasileiro........... 3,637,807
42,650,000 Telecommunic Brasileiras...... 3,057,883
--------------
14,125,522
--------------
CANADA -- 2.0%
620,000 Canadian Pacific Ltd.......... 16,430,000
*325,500 Canwest Global Communication
Corp........................ 3,336,375
--------------
19,766,375
--------------
CHILE -- 0.7%
240,000 Enersis S.A. ADR.............. 6,660,000
--------------
DENMARK -- 2.1%
254,300 TeleDanmark B ADR............. 6,929,675
293,000 UniDanmark A Registered....... 15,149,417
--------------
22,079,092
--------------
FINLAND -- 1.6%
2,100 Kesko......................... 29,570
*1,380,000 Merita Bank Ltd. A............ 4,281,614
765,000 Metsa-Serla Oy B.............. 5,726,284
291,000 Rauma Oy...................... 6,124,309
--------------
16,161,777
--------------
FRANCE -- 7.8%
61,443 Accor......................... 7,764,973
99,600 Assurances Generales***....... 3,209,049
231,000 Assurances Generales de
France...................... 7,442,673
247,000 Banque Nationale de Paris..... 9,540,317
88,000 Credit Commerical de France... 4,062,525
132,432 Havas SA...................... 9,272,492
13,000 Peugeot SA.................... 1,460,355
103,315 Remy Cointreau................ 2,921,345
286,005 Rhone-Poulenc SA.............. 9,732,034
35,965 Saint Gobain.................. 5,077,831
56,945 Societe Generale.............. 6,144,982
66,000 Societe Nationale Elf
Acquitaine.................. 5,996,033
58,303 Total SA...................... 4,732,663
--------------
77,357,272
--------------
<CAPTION>
SHARES MARKET
----------- VALUE
--------------
<C> <S> <C>
GERMANY -- 4.8%
171,000 Daimler-Benz AG............... $ 11,706,180
17,250 Degussa AG.................... 7,835,267
70,600 Hornbach Holdings Pref
(Non-Vtg)................... 5,039,228
16,800 Karstadt AG................... 5,581,435
10,449 Mannesmann AG................. 4,489,837
658,000 Metallgesellschaft AG......... 13,415,248
--------------
48,067,195
--------------
HONG KONG -- 3.6%
850,000 Citic Pacific Ltd............. 4,934,068
1,090,000 Hutchison Whampoa Ltd......... 8,560,767
270,000 New World Development Co.
Ltd......................... 1,823,854
748,000 Sun Hung Kai Properties....... 9,162,642
915,000 Swire Pacific Ltd............. 8,724,148
11,350,000 Tingyi Holding Corp........... 2,971,398
--------------
36,176,877
--------------
INDIA -- 0.4%
217,100 State Bank of India........... 3,853,525
--------------
INDONESIA -- 0.9%
4,785,500 Bank Negara Indonesa BNI...... 2,532,010
71,000 Indosat ADR................... 1,943,625
1,098,000 Jaya Real Property -
Foreign..................... 1,533,714
960,000 Jaya Real Property - Foreign
Reg. D...................... 1,340,952
1,724,000 Kalbe Farma - Foreign
Registered.................. 1,970,285
--------------
9,320,586
--------------
IRELAND -- 0.5%
1,840,000 Smurfit Jefferson Group....... 5,463,155
--------------
ITALY -- 3.2%
738,300 Arnoldo Mondadori Editore
SPA......................... 5,996,715
2,370,600 Banca Commerciale Italiana
SPA......................... 4,303,095
1,550,000 Fiat SPA...................... 4,679,053
*2,630,000 Finanziaria Autogrill SPA..... 2,542,650
2,190,000 Stet.......................... 9,938,178
1,530,000 Telecom Italia SPA............ 3,964,617
--------------
31,424,308
--------------
JAPAN -- 18.9%
503,000 Asahi Organic Chemicals
Industry Co................. 2,959,843
194,700 Canon Sales Co., Inc.......... 4,327,785
90,000 Chudenko Corp................. 2,589,816
561,000 Chugai Pharmaceutical Co...... 4,688,291
54,000 Cosel Co...................... 842,078
435,000 Dai Nippon Printing Co........ 7,607,909
172,000 Danto Corp.................... 1,674,507
174,000 Fuji Machine Manufacturing
Co.......................... 4,602,223
81,000 Japan Associated Finance
Co.......................... 6,385,371
652,000 JGC Corp...................... 4,881,433
231,000 Kyudenko Corp................. 2,388,214
193,000 Mabuchi Motor Co.............. 9,694,064
380,000 Maruichi Steel Tube........... 6,547,773
529,000 Matsushita Electric Industrial
Co.......................... 8,613,853
899,000 Mitsubishi Heavy Industries... 7,125,700
186,000 Murata Manufacturing Co....... 6,169,553
801,000 NGK Spark Plug................ 8,764,280
553,000 Nippon Express Co............. 3,782,907
39,230 Nippon Television Network
Corp........................ 11,829,499
350,000 Nomura Securities Co.......... 5,246,834
792,000 Onward Kashiyama Co. Ltd...... 11,122,253
525,000 Sakura Bank................... 3,745,154
224,000 Sankyo Co. Ltd................ 6,329,973
305,000 Sanwa Bank Ltd................ 4,151,805
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
122
<PAGE>
<TABLE>
<CAPTION>
SHARES MARKET
----------- VALUE
--------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
JAPAN -- (CONTINUED)
407,000 Seventy-Seven Bank............ $ 3,331,179
55,000 Sony Corp..................... 3,596,536
935,000 Sumitomo Realty &
Development................. 5,880,503
167,000 Sumitomo Trust & Banking
Co.......................... 1,668,993
616,000 Toda Construction Co.......... 4,670,285
516,000 Tokio Marine & Fire Insurance
Co.......................... 4,845,696
1,468,000 Toyo Ink Manufacturing Co..... 6,007,581
265,000 Toyota Motor Corp............. 7,602,739
139,600 World Co...................... 5,773,068
918,000 Yamato Kogyo Co............... 8,462,651
27,000 Yamazaki Baking Co............ 430,342
--------------
188,340,691
--------------
LUXEMBOURG -- 0.2%
192,100 Indo Gulf GDR................. 155,486
202,500 Quilmes Industrial ADR........ 1,847,813
--------------
2,003,299
--------------
MALAYSIA -- 1.5%
1,870,000 Land & General Holdings
Berhad...................... 4,479,696
876,000 MBF Capital Berhad............ 1,422,131
720,000 Resorts World Berhad.......... 3,278,551
1,367,400 Sime Darby Berhad............. 5,387,289
--------------
14,567,667
--------------
MEXICO -- 2.0%
364,800 Cemex S.A. - CPO.............. 1,309,146
675,200 Cemex S.A. De C.V............. 2,423,069
1,466,000 FEMSA S.A. B.................. 4,990,955
1,030,000 Grupo Carao S.A. Series A1.... 5,364,583
*11,140,000 Grupo Financiero Bancomer B... 4,457,698
274,900 Transportacion Maritima A
ADR......................... 1,271,413
--------------
19,816,864
--------------
NETHERLANDS -- 3.5%
62,800 Akzo Nobel NV................. 8,568,239
268,787 Ing Groep NV.................. 9,665,372
218,178 KLM........................... 6,130,094
209,000 Polygram NV................... 10,632,830
--------------
34,996,535
--------------
NEW ZEALAND -- 0.9%
1,720,680 Air New Zealand Ltd. B........ 4,668,374
1,916,000 Carter Holt Harvey Ltd........ 4,345,451
--------------
9,013,825
--------------
NORWAY -- 1.9%
645,500 Fokus Bank.................... 4,437,865
553,801 Nycomed ASA A................. 8,456,130
370,000 Saga Petroleum AS A........... 6,171,129
--------------
19,065,124
--------------
PHILIPPINES -- 0.5%
44,000 Philippine Long Distance
ADR......................... 2,244,000
2,710,000 Pilipino Telephone............ 2,292,680
--------------
4,536,680
--------------
PORTUGAL -- 0.1%
10,300 Telecel Communicacoes 144A.... 656,811
--------------
SINGAPORE -- 3.2%
708,875 Development Bank of
Singapore................... 9,577,892
970,000 Far East-Levingston
Shipbuilding................ 5,062,127
1,000,000 Keppel Corp................... 7,792,288
<CAPTION>
SHARES MARKET
----------- VALUE
--------------
<C> <S> <C>
SINGAPORE -- (CONTINUED)
1,240,000 Straits Steamship Land........ $ 3,971,350
515,000 United Overseas Bank.......... 5,743,417
--------------
32,147,074
--------------
SOUTH KOREA -- 1.0%
51,920 Cho Sun Brewery Co............ 1,320,260
157,000 Korea Electric Power Corp.
ADR......................... 3,218,500
*80,260 Korean Air.................... 1,234,039
221,000 Pohang Iron & Steel Ltd.
ADR......................... 4,475,250
--------------
10,248,049
--------------
SPAIN -- 2.1%
20,700 Acerinox SA................... 2,985,446
128,000 Empresa Nacional de
Electricidad ADR............ 9,092,598
63,000 Empresa Nacional de
Electricidad................ 4,410,000
175,000 Telefonica de Espana SA....... 4,056,313
--------------
20,544,357
--------------
SWEDEN -- 1.4%
132,400 BT Industries AB.............. 2,462,615
269,000 Pharmacia & Upjohn DR......... 11,011,310
--------------
13,473,925
--------------
SWITZERLAND -- 2.7%
4,030 Cie Financiere Richemont AG... 5,642,572
7,850 Nestle SA..................... 8,401,187
13,100 Sulzer AG - Part Certified.... 6,985,517
3,200 Sulzer AG - Registered........ 1,842,229
5,475 Swissair Registered........... 4,415,977
--------------
27,287,482
--------------
THAILAND -- 1.0%
6,251,763 Bangkok Metropolitan Bank..... 2,438,281
375,000 Land & House Co. Ltd.......... 2,734,980
310,000 Siam City Cement Public Co.
Ltd......................... 1,620,122
450,000 Siam Commercial............... 3,264,426
--------------
10,057,809
--------------
UNITED KINGDOM -- 14.6%
310,622 Allied Irish Banks PLC........ 2,081,087
133,000 Amersham International PLC.... 2,617,434
852,000 Associated British Foods...... 7,064,145
160,000 Bank of Ireland............... 1,460,766
1,030,000 Bank of Scotland.............. 5,437,742
471,000 Boc Group PLC................. 7,040,606
770,000 Boots Company PLC............. 7,939,150
2,700,000 British Gas PLC............... 10,373,046
1,032,000 British Telecommunications
PLC......................... 6,967,114
1,650,000 BTR........................... 8,019,153
2,110,000 Cookson Group PLC............. 8,521,591
960,000 CN de la Rue PLC.............. 9,405,306
1,870,000 National Grid Group PLC....... 6,256,257
1,747,000 Northern Foods PLC............ 6,113,817
754,784 Powergen PLC.................. 7,394,765
1,220,000 Rank Group PLC................ 9,092,309
616,550 Reckitt & Colman PLC.......... 7,638,940
769,381 Royal & Sun Alliance
Insurance................... 5,852,473
675,082 Royal Bank of Scotland
Group....................... 6,509,935
1,856,529 Sainsbury (J) PLC............. 12,327,065
1,110,000 Sun Life & Provincial
Holdings.................... 4,967,303
610,000 United Biscuits PLC........... 2,192,176
--------------
145,272,180
--------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
123
<PAGE>
- --------------------------------------------------------------------------------
HARTFORD INTERNATIONAL OPPORTUNITIES FUND, INC.
STATEMENT OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES MARKET
----------- VALUE
--------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
VENEZUELA -- 0.3%
95,600 Cia Anonima Telef De Venezuela
ADR......................... $ 2,688,750
--------------
Total common stocks........... $ 911,077,862
--------------
--------------
PREFERRED STOCKS -- 0.8%
140,900 Nokia Pref. ADS............... $ 8,119,363
--------------
--------------
<CAPTION>
PRINCIPAL
AMOUNT
-----------
<C> <S> <C>
SHORT-TERM SECURITIES -- 7.3%
U.S. TREASURY BILL -- 1.0%
$10,000,000 5.00% due 12/11/97.......... $ 9,501,678
--------------
REPURCHASE AGREEMENTS -- 6.3%
40,063,000 Interest in $399,594,000 joint
repurchase agreement dated
12/31/96 with State Street
Bank 6.7693% due 01/02/97;
maturity amount $40,078,067;
(Collateralized by
$218,212,000 U.S. Treasury
Note 6.25% due 06/30/98 and
$280,160,000 U.S. Treasury
Strip (principal) 0% due
05/15/19)................... 40,063,000
22,526,000 Interest in $300,000,000 joint
repurchase agreement dated
12/31/96 with First Boston
6.75% due 01/02/97; maturity
amount $22,534,447;
(Collateralized by
$301,035,000 U.S. Treasury
Note 6.25% due 10/31/01).... 22,526,000
--------------
62,589,000
--------------
Total short-term securities... $ 72,090,678
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
VALUE
-------------
<S> <C> <C>
DIVERSIFICATION OF ASSETS:
Total common stocks (cost $840,423,679)...... 91.4% $911,077,862
Total preferred stock (cost $4,920,928)...... 0.8 8,119,363
Total short term securities (cost
$72,090,678)............................... 7.3 72,090,678
------ -------------
Total investment in securities
(Identified cost $917,435,285)............. 99.5 991,287,903
Excess of cash and receivables over
liabilities................................ 0.5 5,255,128
------ -------------
Net assets (applicable to $1.40688 per share
based on 708,337,983 shares outstanding)... 100.0% $996,543,031
------ -------------
------ -------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share authorized
1,500,000,000 shares, outstanding 708,337,983
shares............................................. $ 70,833,798
Capital surplus...................................... 775,305,019
Undistributed net investment income.................. 34,249
Undistributed net realized gain on investments....... 75,679,809
Unrealized appreciation of investments............... 73,852,618
Unrealized appreciation on futures contracts**....... 704,364
Unrealized appreciation on forward foreign currency
contracts (Note 2)................................. 99,800
Unrealized appreciation on translation on other
assets and liabilities in foreign currencies....... 33,374
-------------
Net assets, applicable to shares outstanding......... $996,543,031
-------------
-------------
</TABLE>
* Non-income producing during period.
** The Fund had 155 March TSE 35 Index futures contracts, 170 March MATIF CAC
40 Index futures contracts, 388 March ALL ORDS Index futures, 47 Hang Seng
index futures contracts, 1600 January IBEX futures contracts, 68 March TSE
TOPIX Index futures contracts, 323 January OMX Stock Index futures
contracts, 40 March MIB 30 Index futures contracts, and 164 March DTB DAX
Index futures contracts open at December 31, 1996. The contracts had a
market value of $822,332 at December 31, 1996.
*** Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
FORWARD FOREIGN CURRENCY CONTRACTS -- NOTE 2 -- OUTSTANDING AT DECEMBER 31, 1996
<TABLE>
<CAPTION>
UNREALIZED
AGGREGATE DELIVERY APPRECIATION
DESCRIPTION TOTAL VALUE FACE VALUE DATE (DEPRECIATION)
- ------------------------------ ----------- ----------- --------- -------------
<S> <C> <C> <C> <C>
German Deutschemark (Buy) $2,987,465 $2,954,956 03/20/97 $ 32,509
Spanish Peseta (Buy) 3,581,466 3,543,485 01/17/97 37,981
Japanese Yen (Buy) 2,107,726 2,127,015 03/13/97 (19,289)
Swedish Krona (Buy) 4,357,300 4,308,701 01/24/97 48,599
-------------
$ 99,800
-------------
-------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
124
<PAGE>
- --------------------------------------------------------------------------------
Hartford Dividend and Growth Fund, Inc.
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES MARKET
- ----------- VALUE
--------------
<C> <S> <C>
COMMON STOCKS -- 94.5%
AEROSPACE & DEFENSE -- 3.2%
198,200 Northrop Grumman Corp......... $ 16,401,050
269,600 Sundstrand Corp............... 11,458,000
--------------
27,859,050
--------------
BUSINESS SERVICES -- 0.2%
81,500 Browning Ferris Industries,
Inc......................... 2,139,375
--------------
COMMUNICATIONS EQUIPMENT --
2.9%
27,000 Comsat Corp................... 664,875
141,200 Frontier Corp................. 3,194,650
138,300 NYNEX Corp.................... 6,655,688
281,200 SBC Communications, Inc....... 14,552,100
--------------
25,067,313
--------------
COMPUTERS & OFFICE EQUIPMENT -- 1.4%
226,500 Xerox Corp.................... 11,919,563
--------------
CONSUMER DURABLES -- 5.9%
342,400 Ford Motor Co................. 10,914,000
229,130 General Electric Corp......... 22,655,229
188,800 Goodyear Tire & Rubber Co..... 9,699,600
163,800 ITT Industries................ 4,013,100
143,900 Smith A.O. Corp............... 4,299,013
--------------
51,580,942
--------------
CONSUMER NON-DURABLES -- 4.5%
181,700 Avon Products, Inc............ 10,379,613
161,600 Colgate Palmolive Co.......... 14,907,600
154,000 Kimberly Clark Corp........... 14,668,500
--------------
39,955,713
--------------
CONSUMER SERVICES -- 0.3%
29,100 Eastman Kodak Co.............. 2,335,275
--------------
ENERGY & SERVICES -- 13.3%
280,200 Ashland, Inc.................. 12,293,775
333,400 Chevron Corp.................. 21,671,000
78,300 Equitable Resources........... 2,329,425
211,600 Exxon Corp.................... 20,736,800
221,600 Pennzoil Co................... 12,520,400
296,300 Phillips Petroleum Co......... 13,111,275
328,200 Sun Company, Inc.............. 7,999,875
105,444 Union Pacific Resources
Group....................... 3,084,237
292,600 Unocal Corp................... 11,886,875
481,600 USX-Marathon Group............ 11,498,200
--------------
117,131,862
--------------
FINANCIAL SERVICES -- 17.3%
294,300 Allstate Corp................. 17,032,613
245,300 American Express Co........... 13,859,450
371,600 Bancorp Hawaii, Inc........... 15,607,200
63,000 CIGNA Corp.................... 8,607,375
339,800 Citicorp...................... 34,999,400
414,800 First Bank System, Inc........ 28,310,100
395,700 First Union Corp.............. 29,281,800
84,300 Wachovia Corp................. 4,762,950
--------------
152,460,888
--------------
FOOD, BEVERAGE & TOBACCO --
8.2%
778,950 Flowers Industries, Inc....... 16,747,425
211,500 General Mills Co.............. 13,403,813
134,100 Interstate Bakeries........... 6,587,663
120,900 Kellogg Co.................... 7,934,063
<CAPTION>
SHARES MARKET
- ----------- VALUE
--------------
<C> <S> <C>
FOOD, BEVERAGE &
TOBACCO -- (CONTINUED)
247,700 Philip Morris Cos., Inc....... $ 27,897,213
--------------
72,570,177
--------------
HEALTH CARE -- 11.0%
236,700 American Home Products
Corp........................ 13,876,538
199,200 Bard (C.R.), Inc.............. 5,577,600
141,700 Bristol-Myers Squibb Co....... 15,409,875
272,000 Merck & Co., Inc.............. 21,556,000
495,300 Pharmacia & Upjohn............ 19,626,263
280,900 Warner-Lambert Co............. 21,067,500
--------------
97,113,776
--------------
INDUSTRIAL MATERIALS -- 4.9%
137,800 Calgon Carbon Corp............ 1,688,050
48,800 Crompton & Knowles Corp....... 939,400
46,600 Dow Chemical Co............... 3,652,275
91,000 EI du Pont de Nemours & Co.... 8,588,125
30,300 Eastman Chemical Co........... 1,674,075
30,100 Georgia Gulf Corp............. 808,938
267,700 International Paper Co........ 10,808,388
44,100 Nalco Chemical Co............. 1,593,113
46,600 W.R. Grace Co................. 2,411,550
210,900 Weyerhaeuser Co............... 9,991,388
26,200 Witco Chemical Corp........... 799,100
--------------
42,954,402
--------------
MANUFACTURING -- 1.5%
160,100 Minnesota Mining &
Manufacturing Corp.......... 13,268,288
--------------
MEDIA & SERVICES -- 1.5%
17,900 Acnielson Corp................ 270,738
93,200 Cognizant Corp................ 3,075,600
126,600 Gannett Co., Inc.............. 9,479,175
--------------
12,825,513
--------------
REAL ESTATE -- 1.2%
134,100 Patriot American
Hospitality................. 5,783,063
80,400 Starwood Lodging Trust........ 4,432,050
--------------
10,215,113
--------------
RETAIL -- 2.5%
253,500 Mercantile Stores, Inc........ 12,516,563
208,700 Sears, Roebuck & Co........... 9,626,288
--------------
22,142,851
--------------
TRANSPORTATION -- 1.1%
167,300 Union Pacific Corp............ 10,058,913
--------------
UTILITIES -- 13.6%
210,700 Ameritech Corp................ 12,773,688
330,400 BellSouth Corp................ 13,339,900
96,800 Carolina Power & Lighting..... 3,533,200
187,500 Cinergy Corp.................. 6,257,813
258,000 DPL, Inc...................... 6,321,000
189,850 DQE, Inc...................... 5,505,650
415,800 Edison International.......... 8,264,025
255,100 GTE Corp...................... 11,607,050
50,000 Illinova Corp................. 1,375,000
130,200 N E Electric System........... 4,540,725
157,400 NIPSCO Industries............. 6,236,975
159,900 Pacific Enterprises........... 4,856,963
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
125
<PAGE>
- --------------------------------------------------------------------------------
HARTFORD DIVIDEND AND GROWTH FUND, INC.
STATEMENT OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES MARKET
- ----------- VALUE
--------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
UTILITIES -- (CONTINUED)
251,100 Pacific Gas & Electric Co..... $ 5,273,100
289,400 Pinnacle West Capital......... 9,188,450
93,700 Public Service Co. of
Colorado.................... 3,642,588
118,400 Scana Corp.................... 3,167,200
218,600 Texas Utilities............... 8,907,950
233,500 The Southern Co............... 5,282,939
--------------
120,074,216
--------------
Total common stocks........... $831,673,230
--------------
--------------
<CAPTION>
PRINCIPAL
AMOUNT
- -----------
<C> <S> <C>
CONVERTIBLE PREFERRED STOCK -- 2.7%
ELECTRONICS -- 1.0%
$ 150,400 Loral Space & Comm 144A....... $ 8,422,387
--------------
MEDIA & SERVICES -- 1.7%
331,800 American Radio 144A........... 15,262,800
--------------
Total convertible preferred
stocks...................... $ 23,685,187
--------------
--------------
REPURCHASE AGREEMENTS -- 4.1%
25,430,000 Interest in $399,594,000 joint
repurchase agreement dated
12/31/96 with State Street
Bank 6.7693% due 01/02/97;
maturity amount $25,439,564;
(Collateralized by
$218,212,000 U.S. Treasury
Note 6.25% due 06/30/98 and
$280,160,000 U.S. Treasury
Strip (principal) 0% due
05/15/19)................... $ 25,430,000
11,036,000 Interest in $300,000,000 joint
repurchase agreement dated
12/31/96 with First Boston
6.75% due 01/02/97; maturity
amount $11,040,138;
(Collateralized by
$301,035,000 U.S. Treasury
Note 6.25% due 10/31/01).... 11,036,000
--------------
Total short-term securities... $ 36,466,000
--------------
--------------
<CAPTION>
MARKET
VALUE
--------------
<C> <S> <C>
DIVERSIFICATION OF ASSETS:
Total common stocks (cost $724,008,011)...... 94.5 % $831,673,230
Total convertible preferred stocks (cost
$24,312,725)............................... 2.7 23,685,187
Total short-term securities (cost
$36,466,000)............................... 4.1 36,466,000
------ ------------
Total investment in securities
(Identified cost $784,786,736)............. 101.3 891,824,417
Excess of liabilities over cash and
receivables................................ (1.3) (11,843,975)
------ ------------
Net assets (applicable to $1.5474 per share
based on 568,675,128 shares outstanding)... 100.0 % $879,980,442
------ ------------
------ ------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share; authorized
1,500,000,000 shares; outstanding 568,675,128
shares............................................. $ 56,867,513
Capital surplus...................................... 688,039,346
Undistributed net investment income.................. 246,581
Undistributed net realized gain on investments....... 27,789,321
Unrealized appreciation of investments............... 107,037,681
------------
Net assets, applicable to shares outstanding......... $879,980,442
------------
------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
126
<PAGE>
- --------------------------------------------------------------------------------
Hartford International Advisers Fund, Inc.
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ----------- --------------
<C> <S> <C>
COMMON STOCKS -- 53.0%
ARGENTINA -- 0.4%
20,000 Perezcompanc S.A. B..................... $ 140,625
12,000 YPY S.A. ADR............................ 303,000
--------------
443,625
--------------
AUSTRALIA -- 2.1%
63,750 Amcor Ltd............................... 409,627
154,955 Boral Ltd............................... 440,604
32,047 Broken Hill Proprietary Co. Ltd......... 456,128
272,252 Goodman Fielder Ltd..................... 337,330
110,000 Pioneer International Ltd............... 327,630
13,000 Qantas Airways Ltd. ADR***.............. 216,831
--------------
2,188,150
--------------
AUSTRIA -- 0.5%
4,400 OMV AG.................................. 495,630
--------------
BELGIUM -- 0.4%
*4,800 Credit Communal Holding***.............. 437,469
--------------
BRAZIL -- 0.7%
250,000 Centrais Eletricas S.A.................. 89,501
128,200 Cervejaria Brahma Pref.................. 70,078
13,750 Electrobras On ADR...................... 246,128
1,080,000 Petrol Brasileiro....................... 172,015
2,070,000 Telecomunic Brasileiras................. 148,413
--------------
726,135
--------------
CANADA -- 0.9%
31,000 Canadian Pacific Ltd.................... 821,500
15,900 Canwest Global Communication Corp....... 162,975
--------------
984,475
--------------
CHILE -- 0.4%
15,000 Enersis S.A. ADR........................ 416,250
--------------
DENMARK -- 1.4%
19,000 Tele Danmark ADR Class B................ 517,750
18,500 UniDanmark A Registered................. 956,533
--------------
1,474,283
--------------
FINLAND -- 0.9%
100 Kesko................................... 1,408
*95,000 Merita Bank Ltd. A...................... 294,749
42,000 Metsa-Serla Oy B........................ 314,384
18,000 Rauma Oy................................ 378,823
--------------
989,364
--------------
FRANCE -- 4.4%
3,751 Accor................................... 474,040
4,800 Assurances Generales***................. 154,653
11,500 Assurances Generales de France.......... 370,523
12,500 Banque Nationale de Paris............... 482,810
6,000 Credit Commercial de France............. 276,990
8,215 Havas S.A............................... 575,190
700 Peugeot S.A............................. 78,634
7,016 Remy Cointreau.......................... 198,385
15,487 Rhone-Poulenc S.A....................... 526,984
3,382 Saint Gobain............................ 477,497
2,808 Societe Generale........................ 303,014
3,200 Societe Nationale Elf Aquitaine......... 290,717
4,389 Total S.A............................... 356,271
--------------
4,565,708
--------------
<CAPTION>
SHARES MARKET
- ----------- VALUE
--------------
<C> <S> <C>
GERMANY -- 2.7%
9,950 Daimler-Benz AG......................... $ 681,149
980 Degussa AG.............................. 445,134
4,800 Hornbach Holdings Pref (Non-Vtg)........ 342,610
1,230 Karstadt AG............................. 408,641
450 Mannesmann AG........................... 193,361
38,400 Metallgesellschaft AG................... 782,896
--------------
2,853,791
--------------
HONG KONG -- 2.0%
50,000 Citic Pacific Ltd....................... 290,239
70,000 Hutchison Whampoa Ltd................... 549,774
51,000 Lai Sun Development..................... 77,143
14,000 New World Development Co. Ltd........... 94,570
39,000 Sun Hung Kai Properties................. 477,731
50,000 Swire Pacific Ltd....................... 476,729
700,000 Tingyi Holding Corp..................... 183,258
--------------
2,149,444
--------------
INDIA -- 0.2%
11,600 State Bank of India GDR................. 205,900
--------------
INDONESIA -- 0.5%
265,600 Bank Negara Indonesa BNI................ 140,476
4,000 Indosat ADR............................. 109,500
38,000 Jaya Real Property - Foreign............ 53,079
60,000 Jaya Real Property - Foreign Reg. D..... 83,810
80,000 Kalbe Farma - Foreign Registered........ 91,429
--------------
478,294
--------------
IRELAND -- 0.3%
110,000 Smurfit Jefferson Group................. 326,602
--------------
ITALY -- 1.7%
47,900 Arnoldo Mondadori Editore SPA........... 389,060
160,300 Banca Commerciale Italiana SPA.......... 290,975
70,000 Fiat SPA................................ 211,312
*100,000 Finanziaria Autogril.................... 96,679
128,500 Stet.................................... 583,131
62,000 Telecom Italia SPA...................... 160,657
--------------
1,731,814
--------------
JAPAN -- 11.6%
16,000 Asahi Organic Chemicals Industry Co..... 94,150
17,600 Canon Sales Co., Inc.................... 391,212
4,000 Chudenko Corp........................... 115,103
29,000 Chugai Pharmaceutical Co................ 242,354
2,000 Cosel Co................................ 31,188
39,000 Dai Nippon Printing Co.................. 682,088
7,000 Danto Corp.............................. 68,149
13,000 Fuji Machine Mfg. Co.................... 343,844
42,000 JGC Corp................................ 314,448
4,000 Japan Associated Finance Co............. 315,327
11,000 Kyudenko Corp........................... 113,724
12,000 Mabuchi Motor Co........................ 602,740
16,000 Maruichi Steel Tube..................... 275,696
42,000 Matsushita Electric Industrial Co....... 683,898
83,000 Mitsubishi Heavy Industries............. 657,879
12,000 Murata Manufacturing Co................. 398,036
50,000 NGK Spark Plug.......................... 547,084
67,000 Nippon Express Co....................... 458,327
1,890 Nippon Television Network Corp.......... 569,915
18,000 Nomura Securities Co.................... 269,837
51,000 Onward Kashiyama Co..................... 716,206
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
127
<PAGE>
- --------------------------------------------------------------------------------
HARTFORD INTERNATIONAL ADVISERS FUND, INC.
STATEMENT OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES MARKET
- ----------- VALUE
--------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
JAPAN -- (CONTINUED)
50,000 Sakura Bank............................. $ 356,681
11,000 Sankyo Co. Ltd.......................... 310,847
26,000 Sanwa Bank Ltd.......................... 353,924
20,000 Seventy-Seven Bank...................... 163,694
4,200 Sony Corp............................... 274,645
46,000 Sumitomo Realty & Development........... 289,308
8,000 Sumitomo Trust & Banking Co............. 79,952
44,000 Toda Construction Co.................... 333,592
26,000 Tokio Marine & Fire Insurance Co........ 244,163
81,000 Toyo Ink Manufacturing Co............... 331,481
20,000 Toyota Motor Corp....................... 573,792
9,100 World Co................................ 376,325
55,000 Yamato Kogyo Co......................... 507,022
1,000 Yamazaki Baking Co. Ltd................. 15,939
--------------
12,102,570
--------------
LUXEMBOURG -- 0.1%
8,500 Indo Gulf GDR........................... 6,880
11,900 Quilmes Industrial ADR.................. 108,588
--------------
115,468
--------------
MALAYSIA -- 0.9%
101,000 Land & General Holdings Berhad.......... 241,952
110,000 MBF Capital Berhad...................... 178,578
36,000 Resort World Berhad..................... 163,928
94,000 Sime Darby Berhad....................... 370,342
--------------
954,800
--------------
MEXICO -- 1.2%
41,700 Cemex S.A. - CPO........................ 149,647
31,300 Cemex S.A. De C.V....................... 112,325
90,000 FEMSA S.A. B............................ 306,402
60,000 Grupo Carso S.A. Series A1.............. 312,500
*670,000 Grupo Financiero Bancomer B............. 268,102
14,650 Transportacion Maritima A ADR........... 67,756
--------------
1,216,732
--------------
NETHERLANDS -- 2.1%
3,300 Akzo Nobel NV........................... 450,242
19,187 Ing Groep NV............................ 689,950
13,010 KLM..................................... 365,539
13,000 Polygram NV............................. 661,372
--------------
2,167,103
--------------
NEW ZEALAND -- 0.4%
102,600 Air New Zealand Ltd. B.................. 278,364
78,000 Carter Holt Harvey Ltd.................. 176,902
--------------
455,266
--------------
NORWAY -- 1.2%
59,100 Fokus Bank.............................. 406,317
33,344 Nycomed ASA A........................... 509,138
22,500 Saga Petroleum AS A..................... 375,271
--------------
1,290,726
--------------
PHILIPPINES -- 0.3%
3,000 Philippine Long Distance ADR............ 153,000
160,000 Pilipino Telephone...................... 135,361
--------------
288,361
--------------
PORTUGAL -- 0.1%
600 Telecel Communicacoes***................ 38,261
--------------
<CAPTION>
SHARES MARKET
- ----------- VALUE
--------------
<C> <S> <C>
SINGAPORE -- 1.9%
46,000 Development Bank of Singapore........... $ 621,524
60,000 Far East-Levingston Shipbuilding........ 313,121
69,000 Keppel Corp............................. 537,668
80,000 Straits Steamship Land.................. 256,216
23,000 United Overseas Bank.................... 256,502
--------------
1,985,031
--------------
SOUTH KOREA -- 0.5%
2,830 Cho Sun Brewery Co...................... 71,963
4,350 Korean Air.............................. 66,883
5,000 Korea Electric Power ADR................ 102,500
13,000 Pohang Iron & Steel Ltd. ADR............ 263,250
--------------
504,596
--------------
SPAIN -- 1.2%
1,750 Acerinox S.A............................ 252,393
4,000 Empresa Nacional de Electricidad ADR.... 284,144
5,250 Empresa Nacional de Electricidad........ 367,500
17,000 Telefonica de Espana S.A................ 394,042
--------------
1,298,079
--------------
SWEDEN -- 0.7%
6,000 BT Industries AB........................ 111,599
16,000 Pharmacia & Upjohn DR................... 654,948
--------------
766,547
--------------
SWITZERLAND -- 1.5%
240 Cie Financiere Richemont AG............. 336,034
390 Nestle SA............................... 417,384
865 Sulzer AG - Part Certified.............. 461,257
200 Sulzer AG - Registered.................. 115,139
300 Swissair Registered..................... 241,971
--------------
1,571,785
--------------
THAILAND -- 0.6%
310,127 Bangkok Metropolitan Bank............... 120,954
24,100 Land & House Co. Ltd.................... 175,768
16,000 Siam City Cement Public Co. Ltd......... 83,619
30,000 Siam Commercial......................... 217,628
--------------
597,969
--------------
UNITED KINGDOM -- 9.0%
14,637 Allied Irish Banks PLC.................. 98,064
7,000 Amersham International PLC.............. 137,760
64,000 Associated British Foods................ 530,640
20,000 Bank of Ireland......................... 182,596
100,000 Bank of Scotland........................ 527,936
29,000 Boc Group PLC........................... 433,498
50,000 Boots Co. PLC........................... 515,529
76,000 British Gas PLC......................... 614,699
760,000 British Telecom Co. PLC................. 513,082
80,000 BTR..................................... 388,807
120,000 Cookson Group PLC....................... 484,640
62,000 CN de la Rue PLC........................ 607,426
90,000 National Grid Group PLC................. 301,103
104,000 Northern Foods PLC...................... 363,959
50,690 Powergen PLC............................ 496,620
77,000 Rank Group PLC.......................... 573,859
40,350 Reckitt & Colman PLC.................... 499,929
58,469 Royal & Sun Alliance Insurance.......... 444,754
55,233 Royal Bank of Scotland.................. 532,622
116,143 Sainsbury (J) PLC....................... 771,172
60,000 Sun Life & Provincial Holdings.......... 268,503
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
128
<PAGE>
<TABLE>
<CAPTION>
SHARES MARKET
- ----------- VALUE
--------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
UNITED KINGDOM -- (CONTINUED)
20,000 United Biscuits PLC..................... $ 71,875
--------------
9,359,073
--------------
VENEZUELA -- 0.2%
5,600 Cia Anonima Telef De Venezuela ADR...... 157,500
--------------
Total common stocks..................... $ 55,336,801
--------------
--------------
PREFERRED STOCK -- 0.4%
FINLAND -- 0.4%
6,800 Nokia Corp. Pref. ADS................... $ 391,850
--------------
--------------
<CAPTION>
PRINCIPAL
AMOUNT
- -----------
<C> <S> <C>
FOREIGN CORPORATE BONDS -- 1.6%
CANADA -- 0.7%
Centra Gas Ontario
$ 465,000 7.80% due 12/01/06.................... $ 360,889
Trans-Canada Pipelines
415,000 8.55% due 02/01/06.................... 341,930
--------------
702,819
--------------
FRANCE -- 0.9%
Credit National
3,300,000 7.25% due 05/14/03.................... 687,932
Electricite Defrance
32,000,000 4.75% due 12/05/01.................... 316,016
--------------
1,003,948
--------------
Total foreign corporate bonds........... $ 1,706,767
--------------
--------------
FOREIGN GOVERNMENT BONDS -- 28.1%
AUSTRALIA -- 1.2%
Australia Commonwealth
1,400,000 9.50% due 08/15/03.................... $ 1,244,669
--------------
AUSTRIA -- 1.2%
Austria Republic
75,000,000 5.00% due 01/22/01.................... 735,009
50,000,000 6.25% due 10/16/03.................... 537,930
--------------
1,272,939
--------------
BELGIUM -- 0.9%
Belgium Kingdom
5,000,000 7.00% due 05/15/06.................... 170,001
18,000,000 7.25% due 04/29/04.................... 626,511
3,050,000 9.00% due 06/27/01.................... 112,967
--------------
909,479
--------------
CANADA -- 2.2%
Canada Government
340,000 6.50% due 06/01/04.................... 253,172
1,150,000 7.25% due 06/01/03.................... 896,463
100,000 8.00% due 06/01/23.................... 81,239
1,050,000 8.50% due 03/01/00.................... 844,610
250,000 8.75% due 12/01/05.................... 212,176
--------------
2,287,660
--------------
DENMARK -- 1.6%
Denmark Kingdom
2,860,000 8.00% due 03/15/06.................... 533,319
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------- --------------
<C> <S> <C>
FOREIGN GOVERNMENT BONDS -- (CONTINUED)
DENMARK -- (CONTINUED)
5,600,000 9.00% due 11/15/00.................... $ 1,081,760
--------------
1,615,079
--------------
FINLAND -- 1.6%
Finnish Republic
7,000,000 7.25% due 04/18/06.................... 1,629,309
--------------
FRANCE -- 1.5%
France O.A.T.
5,900,000 6.00% due 10/25/25.................... 1,018,565
2,626,000 9.50% due 01/25/01.................... 600,843
--------------
1,619,408
--------------
GERMANY -- 6.0%
German Federal Unity
2,679,000 6.25% due 01/04/24.................... 1,649,876
375,000 6.50% due 07/15/03.................... 258,758
3,260,000 8.25% due 09/20/01.................... 2,421,875
1,400,000 8.50% due 02/20/01.................... 1,041,614
1,200,000 8.75% due 07/20/00.................... 890,164
--------------
6,262,287
--------------
ITALY -- 3.4%
Italy BTPS
260,000,000 8.50% due 01/04/99................... 178,520
1,360,000,000 8.50% due 08/01/99................... 934,961
335,000,000 8.50% due 01/01/99................... 229,355
2,100,000,000 9.00% due 10/01/03................... 1,511,641
275,000,000 10.50% due 07/15/00................... 202,601
675,000,000 12.00% due 06/01/01................... 530,056
--------------
3,587,134
--------------
JAPAN -- 0.4%
Japan Government #33B
49,000,000 3.80% due 09/20/16.................... 452,512
--------------
NETHERLANDS -- 0.4%
Netherlands Government
705,000 7.00% due 06/15/05.................... 444,666
--------------
PORTUGAL -- 0.3%
Portugal Republic
43,000,000 9.50% due 02/23/06.................... 325,443
--------------
SPAIN -- 1.0%
Spanish Government
71,500,000 8.40% due 04/30/01................... 601,408
13,700,000 10.00% due 02/28/05................... 126,715
29,000,000 11.30% due 01/15/02................... 273,506
--------------
1,001,629
--------------
SWEDEN -- 1.5%
Sweden Kingdom
1,500,000 8.00% due 08/15/07................... 239,878
4,300,000 10.25% due 05/05/03................... 769,897
2,700,000 13.00% due 06/15/01................... 509,831
--------------
1,519,606
--------------
UNITED KINGDOM -- 4.9%
United Kingdom Treasury Gilt
475,000 7.00% due 11/06/01.................... 804,231
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
129
<PAGE>
- --------------------------------------------------------------------------------
HARTFORD INTERNATIONAL ADVISERS FUND, INC.
STATEMENT OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------- --------------
$FOREIGN GOVERNMENT BONDS -- (CONTINUED$)
800,000 7.75% due 09/08/06.................... 1,389,576
<C> <S> <C>
660,000 9.75% due 08/27/02.................... 1,251,934
940,000 9.00% due 03/03/00.................... 1,693,075
--------------
5,138,816
--------------
Total foreign government bonds.......... $ 29,310,636
--------------
--------------
<CAPTION>
SUPRANATIONAL -- 4.4%
<C> <S> <C>
Asian Development Bank
120,000,000 5.00% due 02/02/03.................... $ 1,201,861
European Investment Bank
160,000,000 3.00% due 09/20/06.................... 1,408,633
Interamerican Development Bank
100,000,000 6.00% due 10/30/01.................... 1,029,551
International Bank for Recon &
Development
100,000,000 4.75% due 12/20/04.................... 1,003,705
--------------
Total supranational..................... $ 4,643,750
--------------
--------------
U.S. TREASURIES & FEDERAL AGENCIES -- 3.8%
U.S. Treasury Notes
2,000,000 5.25% due 12/31/97................... $ 1,986,874
2,000,000 6.125% due 12/31/01................... 1,992,500
--------------
Total U.S. treasuries & Federal
agencies.............................. $ 3,979,374
--------------
--------------
SHORT-TERM SECURITIES -- 9.9%
U.S. TREASURY BILL -- 0.1%
U.S. Treasury Bill
150,000 4.87% due 01/02/97.................... 149,980
--------------
REPURCHASE AGREEMENT -- 9.8%
6,609,000 Interest in $399,594,000 joint
repurchase agreement dated 12/31/96
with State Street Bank 6.7693% due
01/02/97; maturity amount $6,611,485;
(Collateralized by $218,212,000 U.S.
Treasury Note 6.25% due 06/30/98 and
$280,160,000 U.S. Treasury Strip
(principal) 0% due 05/15/19).......... 6,609,000
3,578,000 Interest in $300,000,000 joint
repurchase agreement dated 12/31/96
with First Boston 6.75% due 01/02/97;
maturity amount $3,579,342;
(Collateralized by $301,035,000 U.S.
Treasury Note 6.25% due 10/31/01)..... 3,578,000
--------------
10,187,000
--------------
Total short-term securities............. $ 10,336,980
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
VALUE
--------------
<S> <C> <C>
DIVERSIFICATION OF ASSETS:
Total common stocks (cost $52,493,855)....... 53.0% $ 55,336,801
Total preferred stock (cost $237,480)........ 0.4 391,850
Total foreign corporate bonds (cost
$1,426,239)................................ 1.6 1,706,767
Total foreign government bonds (cost
$28,725,284)............................... 28.1 29,310,636
Total supranational (cost $4,792,408)........ 4.4 4,643,750
Total U.S. treasuries & Federal agencies
(cost $3,987,969).......................... 3.8 3,979,374
Total short-term securities (cost
$10,336,980)............................... 9.9 10,336,980
------ --------------
Total investment in securities
(Identified cost $102,000,215)............. 101.2 105,706,158
Excess of liabilities over cash and
receivables................................ (1.2) (1,220,416)
------ --------------
Net assets (applicable to $1.16657 per share
based on 89,565,973 shares outstanding).... 100.0% $ 104,485,742
------ --------------
------ --------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share; authorized
750,000,000 shares; outstanding 89,565,973
shares............................................. $ 8,956,597
Capital surplus...................................... 91,427,240
Distribution in excess of net investment income...... (107,552)
Undistributed net realized gain on investments....... 367,957
Unrealized appreciation of investments............... 3,705,943
Unrealized appreciation on futures contracts**....... 122,560
Unrealized appreciation on forward foreign currency
contracts (Note 2)................................. 23,782
Unrealized depreciation on translation on other
assets and liabilities in foreign currencies....... (10,785)
--------------
Net assets, applicable to shares outstanding......... $ 104,485,742
--------------
--------------
</TABLE>
* Non-income producing during period.
** The Fund had 12 March TSE 35 Index futures contracts, 8 March MATIF CAC 40
Index futures contracts, 16 March ALL ORDS Index futures, 3 March LIF FTSE
100 Index futures contracts, 158 January IBEX futures contracts, 23 January
OMX Stock Index futures contracts, 4 March MIB 30 Index futures contracts,
and 11 March DTB DAX Index futures contracts, 1 March TSE 10 year JGB Index
futures contract open at December 31, 1996. The contracts had a market value
of $129,156 at December 31, 1996.
*** Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
130
<PAGE>
FORWARD FOREIGN CURRENCY CONTRACTS -- NOTE 2 -- OUTSTANDING AT DECEMBER 31, 1996
<TABLE>
<CAPTION>
UNREALIZED
AGGREGATE DELIVERY APPRECIATION
DESCRIPTION TOTAL VALUE FACE VALUE DATE (DEPRECIATION)
- ------------------------------ ----------- ----------- --------- -------------
<S> <C> <C> <C> <C>
Australian Dollars (Buy) $ 555,909 $ 554,232 01/17/97 $ 1,677
Australian Dollars (Sell) 1,240,273 1,242,571 01/29/97 2,298
Belgian Francs (Sell) 906,180 901,473 03/27/97 (4,707)
British Pounds (Buy) 667,705 610,506 01/08/97 57,199
British Pounds (Buy) 667,705 608,868 01/08/97 58,837
British Pounds (Buy) 1,151,605 1,125,580 03/26/97 26,025
British Pounds (Sell) 1,335,411 1,266,720 01/08/97 (68,691)
British Pounds (Sell) 1,457,980 1,343,486 01/29/97 (114,494)
British Pounds (Sell) 345,671 329,260 01/29/97 (16,411)
British Pounds (Sell) 343,960 326,424 01/29/97 (17,536)
British Pounds (Sell) 516,796 493,619 01/29/97 (23,177)
British Pounds (Sell) 515,085 494,242 01/29/97 (20,843)
British Pounds (Sell) 344,816 338,923 01/29/97 (5,893)
British Pounds (Sell) 855,622 825,000 01/29/97 (30,622)
British Pounds (Sell) 766,638 739,200 01/29/97 (27,438)
Canadian Dollars (Buy) 549,652 552,771 03/03/97 (3,119)
Canadian Dollars (Buy) 857,457 859,662 03/03/97 (2,205)
Canadian Dollars (Buy) 307,826 309,415 03/20/97 (1,589)
Canadian Dollars (Sell) 2,194,105 2,200,301 01/29/97 6,196
Canadian Dollars (Sell) 782,564 784,745 01/29/97 2,181
Canadian Dollars (Sell) 1,407,109 1,426,237 03/03/97 19,128
Danish Krone (Sell) 1,617,087 1,601,318 03/26/97 (15,769)
Dutch Guilder (Sell) 445,576 441,210 03/27/97 (4,366)
Finnish Markkas (Sell) 1,619,641 1,606,639 03/27/97 (13,002)
French Franc (Sell) 2,317,094 2,285,714 01/29/97 (31,380)
French Franc (Sell) 684,892 677,255 03/27/97 (7,637)
German Deutschemarks (Sell) 1,146,384 1,133,721 03/26/97 (12,663)
German Deutschemarks (Sell) 6,264,698 6,218,067 03/27/97 (46,631)
German Deutschemarks (Buy) 689,284 681,783 03/20/97 7,501
German Deutschemarks (Buy) 1,301,992 1,292,120 03/21/97 9,872
Italian Lira (Buy) 367,159 363,372 03/21/97 3,787
Italian Lira (Sell) 3,580,832 3,552,444 01/29/97 (28,388)
Japanese Yen (Sell) 3,285,764 3,494,893 01/13/97 209,129
Japanese Yen (Sell) 484,345 503,289 01/13/97 18,944
Japanese Yen (Sell) 340,339 347,667 01/13/97 7,328
Japanese Yen (Sell) 83,895 87,452 01/13/97 3,557
Japanese Yen (Sell) 1,072,479 1,123,422 01/13/97 50,943
Japanese Yen (Sell) 389,206 407,056 01/13/97 17,850
Japanese Yen (Sell) 787,061 810,402 01/13/97 23,341
Japanese Yen (Sell) 289,742 295,310 01/13/97 5,568
Japanese Yen (Sell) 549,546 558,242 01/17/97 8,696
Portuguese Escudo (Sell) 323,319 319,335 01/29/97 (3,984)
Spanish Pesetas (Buy) 406,759 402,446 01/17/97 4,313
Spanish Pesetas (Sell) 992,519 981,686 01/29/97 (10,833)
Swedish Kronas (Buy) 301,510 298,147 01/24/97 3,363
Swedish Kronas (Buy) 97,302 96,217 01/24/97 1,085
Swedish Kronas (Sell) 751,127 746,487 01/29/97 (4,640)
Swedish Kronas (Sell) 772,482 763,464 01/29/97 (9,018)
-------------
$ 23,782
-------------
-------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
131
<PAGE>
- --------------------------------------------------------------------------------
Hartford Small Company Fund, Inc.
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ----------- --------------
<C> <S> <C>
COMMON STOCKS -- 88.1%
AEROSPACE & DEFENSE -- 1.1%
14,100 Gulfstream Aerospace Corp............... $ 341,925
5,000 Rohr, Inc............................... 113,125
--------------
455,050
--------------
BUSINESS SERVICES -- 2.4%
*44,100 Borg-Warner Security.................... 474,075
3,000 Lason, Inc.............................. 61,500
16,800 Prepaid Legal Services.................. 306,600
13,500 Western Wireless Corp. Class A.......... 187,313
--------------
1,029,488
--------------
COMMUNICATION EQUIPMENT -- 5.2%
4,200 Etec Systems, Inc....................... 160,650
*23,600 Gilat Satellite Network................. 581,150
*16,600 Natural Microsystems Corp............... 522,900
*14,400 Oak Industries, Inc..................... 331,200
22,100 Scitex Corp............................. 209,950
*9,600 Videoserver, Inc........................ 408,000
--------------
2,213,850
--------------
COMPUTERS & OFFICE
EQUIPMENT -- 1.1%
*40,000 Diamond Multimedia Systems.............. 475,000
--------------
CONSUMER DURABLES -- 1.0%
15,200 First Brands Corp....................... 431,300
--------------
CONSUMER NON-DURABLES -- 0.1%
4,900 Vans, Inc............................... 61,250
--------------
CONSUMER SERVICES -- 2.9%
22,600 Golden Bear Golf, Inc................... 254,250
43,600 Iwerks Entertainment, Inc............... 218,000
3,200 PJ America, Inc......................... 57,600
*4,700 Planet Hollywood International, Inc..... 92,825
25,800 Prime Hospitality Corp.................. 416,025
*44,600 Rally's Hamburgers, Inc................. 203,488
--------------
1,242,188
--------------
ELECTRONICS -- 5.4%
*15,100 Actel Corp.............................. 358,625
18,400 Cinductus, Inc.......................... 119,600
25,800 Dallas Semiconductor.................... 593,392
25,000 Gemstar International Group Ltd......... 437,500
87,300 Intelligent Electronics................. 698,400
6,900 Puma Technology, Inc.................... 119,025
--------------
2,326,542
--------------
ENERGY & SERVICES -- 1.2%
*12,900 Falcon Drilling Co...................... 506,325
--------------
FINANCIAL SERVICES -- 9.8%
8,700 Bancorp Hawaii, Inc..................... 365,400
992 Conseco, Inc............................ 63,248
12,500 Frontier Insurance Group................ 478,125
16,900 Imperial Bancorp........................ 386,588
29,000 Imperial Credit Industries.............. 609,000
12,500 Legg Mason, Inc......................... 481,250
9,300 MMI Companies, Inc...................... 299,925
12,600 Reinsurance Group of America............ 593,775
20,000 Resource Bancshares..................... 285,000
29,300 Westcorp, Inc........................... 640,938
--------------
4,203,249
--------------
<CAPTION>
SHARES MARKET
- ----------- VALUE
--------------
<C> <S> <C>
FOOD, BEVERAGE & TOBACCO -- 1.1%
12,600 Robert Mondavi Corp. Class B............ $ 459,900
--------------
HEALTH CARE -- 18.7%
16,800 Alliance Pharmaceuticlas Corp........... 228,900
27,700 Amylin Pharmaceuticals, Inc............. 360,100
*19,400 Apria Healthcare........................ 363,750
11,800 Bergen Brunswig Corp. Class A........... 336,300
*12,600 FHP International....................... 467,775
*17,000 Genesis Health Ventures, Inc............ 529,125
*21,900 Haemonetics............................. 413,363
15,200 IDX Systems Corp........................ 435,100
10,600 Isomedix, Inc........................... 137,800
33,900 Kinetic Concepts, Inc................... 415,275
16,800 Ligand Pharmaceuticals Class B.......... 249,900
13,600 Liposome Co., Inc....................... 260,100
23,500 Magainin Pharmaceuticals, Inc........... 226,188
24,000 Magellan Health Services, Inc........... 537,000
18,300 McKesson................................ 1,024,800
22,100 Medpartners............................. 464,100
39,400 NABI, Inc............................... 344,750
20,900 Physio-Control International Corp....... 470,250
23,500 Vencor, Inc............................. 743,188
--------------
8,007,764
--------------
INDUSTRIAL MATERIALS -- 2.2%
*21,500 Noble Drilling Corp..................... 427,313
20,000 Tetra Technologies...................... 505,000
--------------
932,313
--------------
MANUFACTURING -- 4.2%
15,000 Fore Systems, Inc....................... 493,125
9,800 Memtec Ltd. ADR......................... 322,175
12,100 NN Ball & Roller, Inc................... 184,525
34,500 Tyco Toys, Inc.......................... 405,375
10,600 UCAR International, Inc................. 398,825
--------------
1,804,025
--------------
MEDIA & SERVICES -- 6.2%
29,900 American Telecasting.................... 171,925
17,730 HSN..................................... 421,088
*15,500 International Cabletel, Inc............. 391,375
19,300 Macromedia, Inc......................... 347,400
*1,700 Metro Networks, Inc..................... 42,925
*30,500 Pegasus Communications Corp............. 419,375
25,400 Peoples Choice TV Corp.................. 155,575
32,500 Playboy Enterprises Class B............. 316,875
62,300 Valuevisiom International, Inc. Cla..... 334,863
2,400 West Teleservices Corp.................. 54,600
--------------
2,656,001
--------------
REAL ESTATE -- 0.8%
20,200 Castle & Cooke, Inc..................... 320,675
--------------
RETAIL -- 8.2%
13,900 Bed & Bath Beyond, Inc.................. 337,075
12,900 Brinker International, Inc.............. 206,400
18,500 Ethan Allen, Inc........................ 712,250
21,200 Gymboree Corp........................... 484,950
9,700 Mercantile Stores, Inc.................. 478,938
14,000 Saks Holding, Inc....................... 378,000
69,000 Sports and Recreation................... 534,750
29,700 Urban Outfitters, Inc................... 386,100
--------------
3,518,463
--------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
132
<PAGE>
<TABLE>
<CAPTION>
SHARES MARKET
- ----------- VALUE
--------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
SOFTWARE & SERVICES -- 11.4%
13,000 Affiliated Computer Services Class...... $ 386,750
*5,100 Aurum Software, Inc..................... 117,938
*3,500 BA Merchant Services, Inc. Class A...... 62,563
*12,500 Bisys Group, Inc........................ 463,281
*18,650 Boole & Babbage, Inc.................... 466,250
12,200 Caere Corp.............................. 140,300
*6,700 Cybermedia, Inc......................... 105,525
*4,500 Desktop Data, Inc....................... 86,625
18,000 DST Systems, Inc........................ 564,750
*24,100 IKOS Systems, Inc....................... 482,000
3,200 Information Management Resources........ 67,600
11,600 Kronos, Inc............................. 371,200
22,300 Mercury Interactive Corp................ 289,900
*29,800 Premenos Technology Corp................ 257,025
*11,137 Sterling Commerce....................... 392,579
*19,500 Sterling Software, Inc.................. 616,688
--------------
4,870,974
--------------
TRANSPORTATION -- 2.8%
23,500 Air Express International............... 757,875
19,400 Swift Transportation.................... 455,900
--------------
1,213,775
--------------
UTILITIES -- 2.3%
21,100 McLeod Inc. Class A..................... 538,050
134,600 Peoples Telephone Co., Inc.............. 429,038
--------------
967,088
--------------
Total common stocks..................... $ 37,695,220
--------------
--------------
PREFERRED STOCKS -- 0.6%
CONSUMER SERVICES -- 0.6%
9,600 AMC Entertainment....................... $ 259,200
--------------
--------------
<CAPTION>
PRINCIPAL
AMOUNT
- -----------
<C> <S> <C>
REPURCHASE AGREEMENTS -- 10.3%
$ 2,959,000 Interest in $399,594,000 joint
repurchase agreement dated 12/31/96
with State Street Bank 6.76935 due
01/02/97; maturity amount $2,960,113;
(Collateralized by $218,212,000 U.S.
Treasury Note 6.25% due 06/30/98 and
$280,160,000 U.S. Treasury Strip
(principal) 0% due 05/15/19).......... 2,959,000
1,470,000 Interest in $300,000,000 joint
repurchase agreement dated 12/31/96
with First Boston 6.75% due 01/02/97;
maturity amount $1,470,551;
(Collateralized by $301,035,000 U.S.
Treasury Note 6.25% due 10/31/01)..... 1,470,000
--------------
Total short-term securities............. $ 4,429,000
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
VALUE
--------------
<S> <C> <C>
DIVERSIFICATION OF ASSETS:
Total common stocks (cost $37,333,971)....... 88.1% $ 37,695,220
Total preferred stock (cost $314,555)........ 0.6 259,200
Total short-term securities (cost
$4,429,000)................................ 10.3 4,429,000
------ --------------
Total investment in securities
(Identified cost $42,077,526).............. 99.0 42,383,420
Excess of cash and receivables over
liabilities................................ 1.0 428,501
------ --------------
Net assets (applicable to $1.06916 per share
on 40,042,487 shares outstanding).......... 100.0% $ 42,811,921
------ --------------
------ --------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share; authorized
750,000,000 shares; outstanding 40,042,487
shares............................................. $ 4,004,249
Capital surplus...................................... 38,312,307
Undistributed net investment income.................. 156
Undistributed net realized gain on investments....... 189,315
Unrealized appreciation of investments............... 305,894
--------------
Net assets, applicable to shares outstanding......... $ 42,811,921
--------------
--------------
</TABLE>
* Non income producing during period.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
133
<PAGE>
- --------------------------------------------------------------------------------
Hartford Mutual Funds
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
HARTFORD HARTFORD HVA HARTFORD
BOND STOCK MONEY MARKET ADVISERS
FUND, INC. FUND, INC. FUND, INC. FUND, INC.
-------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ -- $ 44,361,165 $ -- $ 63,598,453
Interest............... 25,148,015 5,715,495 24,739,450 116,030,928
Less: Foreign tax
withheld.............. (34,375) (543,069) -- (740,316)
-------------- ------------- ------------ -------------
Total income......... 25,113,640 49,533,591 24,739,450 178,889,065
-------------- ------------- ------------ -------------
EXPENSES:
Investment advisory
fees.................. 1,152,953 6,450,702 1,121,482 22,209,882
Administrative service
fees.................. 636,196 4,210,075 784,977 8,785,932
Accounting services.... 18,193 119,798 22,428 250,625
Custodian fees......... 11,200 23,700 25,535 371,643
Board of directors..... 2,583 17,011 3,184 35,587
Other expenses......... 42,113 229,275 43,206 184,623
-------------- ------------- ------------ -------------
Total expenses....... 1,863,238 11,050,561 2,000,812 31,838,292
-------------- ------------- ------------ -------------
Net investment
income................ 23,250,402 38,483,030 22,738,638 147,050,773
-------------- ------------- ------------ -------------
Net realized gain
(loss) on security
transactions.......... 2,775,436 161,403,731 2,197 267,921,758
Net realized gain
(loss) on futures
contracts............. -- -- -- --
Net realized gain
(loss) on options
contracts............. -- -- -- --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ (12,099,332) 329,790,776 -- 373,870,758
-------------- ------------- ------------ -------------
Net realized and
unrealized gain (loss)
on investments........ (9,323,896) 491,194,507 2,197 641,792,516
-------------- ------------- ------------ -------------
Net increase (decrease)
in net assets
resulting from
operations............ $ 13,926,506 $ 529,677,537 $22,740,835 $788,843,289
-------------- ------------- ------------ -------------
-------------- ------------- ------------ -------------
</TABLE>
* From inception, August 9, 1996, to December 31, 1996.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
134
<PAGE>
<TABLE>
<CAPTION>
HARTFORD
U.S. HARTFORD HARTFORD HARTFORD HARTFORD
GOVERNMENT CAPITAL MORTGAGE HARTFORD INTERNATIONAL DIVIDEND
MONEY MARKET APPRECIATION SECURITIES INDEX OPPORTUNITIES AND GROWTH
FUND, INC. FUND, INC. FUND, INC. FUND, INC. FUND, INC. FUND, INC.
------------ ------------- ------------- ----------- ------------------ -----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ -- $ 23,305,642 $ -- $ 9,760,927 $20,730,041 $16,432,783
Interest............... 569,859 11,974,675 22,969,872 1,963,795 3,341,358 1,591,811
Less: Foreign tax
withheld.............. -- (961,249) -- (60,040) (2,392,963) (17,265)
------------ ------------- ------------- ----------- ------------------ -----------
Total income......... 569,859 34,319,068 22,969,872 11,664,682 21,678,436 18,007,329
------------ ------------- ------------- ----------- ------------------ -----------
EXPENSES:
Investment advisory
fees.................. 26,505 12,519,486 804,297 945,609 4,428,186 2,968,879
Administrative service
fees.................. 18,554 4,795,769 563,008 827,408 1,493,655 965,006
Accounting services.... 530 136,636 16,145 23,472 42,646 27,177
Custodian fees......... 14,713 46,610 18,100 16,740 649,998 7,900
Board of directors..... 75 19,401 2,293 3,333 6,055 3,859
Other expenses......... 1,362 264,845 56,199 49,602 113,743 52,279
------------ ------------- ------------- ----------- ------------------ -----------
Total expenses....... 61,739 17,782,747 1,460,042 1,866,164 6,734,283 4,025,100
------------ ------------- ------------- ----------- ------------------ -----------
Net investment
income................ 508,120 16,536,321 21,509,830 9,798,518 14,944,153 13,982,229
------------ ------------- ------------- ----------- ------------------ -----------
Net realized gain
(loss) on security
transactions.......... 99 255,377,198 (441,923) 44,514,753 76,113,210 27,744,666
Net realized gain
(loss) on futures
contracts............. -- 6,073,616 (41,164) 9,782,117 1,237,540 --
Net realized gain
(loss) on options
contracts............. -- -- (65,625) -- (3,126) 44,654
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- 239,094,440 (5,189,787) 32,113,387 10,899,075 76,776,242
------------ ------------- ------------- ----------- ------------------ -----------
Net realized and
unrealized gain (loss)
on investments........ 99 500,545,254 (5,738,499) 86,410,257 88,246,699 104,565,562
------------ ------------- ------------- ----------- ------------------ -----------
Net increase (decrease)
in net assets
resulting from
operations............ $508,219 $517,081,575 $ 15,771,331 $96,208,775 $103,190,852 $118,547,791
------------ ------------- ------------- ----------- ------------------ -----------
------------ ------------- ------------- ----------- ------------------ -----------
<CAPTION>
HARTFORD
INTERNATIONAL HARTFORD
ADVISERS SMALL COMPANY
FUND, INC. FUND, INC.*
------------- -------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends.............. $1,003,081 $ 26,626
Interest............... 1,995,178 66,570
Less: Foreign tax
withheld.............. (147,422) (78)
------------- -------------
Total income......... 2,850,837 93,118
------------- -------------
EXPENSES:
Investment advisory
fees.................. 392,271 31,521
Administrative service
fees.................. 119,528 13,232
Accounting services.... 3,374 315
Custodian fees......... 100,000 10,420
Board of directors..... 479 45
Other expenses......... 8,699 829
------------- -------------
Total expenses....... 624,351 56,362
------------- -------------
Net investment
income................ 2,226,486 36,756
------------- -------------
Net realized gain
(loss) on security
transactions.......... 3,178,372 176,416
Net realized gain
(loss) on futures
contracts............. 120,799 12,899
Net realized gain
(loss) on options
contracts............. -- --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 2,337,601 305,895
------------- -------------
Net realized and
unrealized gain (loss)
on investments........ 5,636,772 495,210
------------- -------------
Net increase (decrease)
in net assets
resulting from
operations............ $7,863,258 $531,966
------------- -------------
------------- -------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
135
<PAGE>
- --------------------------------------------------------------------------------
Hartford Mutual Funds
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
HARTFORD HARTFORD HVA HARTFORD
BOND STOCK MONEY MARKET ADVISERS
FUND, INC. FUND, INC. FUND, INC. FUND, INC.
---------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment
income................ $ 23,250,402 $ 38,483,030 $ 22,738,638 $ 147,050,773
Net realized gain on
security transactions
and foreign
currency.............. 2,775,436 161,403,731 2,197 267,921,758
Net realized gain
(loss) on futures
contracts............. -- -- -- --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ (12,099,332) 329,790,776 -- 373,870,758
---------------- --------------- --------------- ---------------
Net increase
(decrease) in net
assets resulting
from operations..... 13,926,506 529,677,537 22,740,835 788,843,289
DISTRIBUTIONS TO
SHAREHOLDERS:
Net investment
income................ (23,252,299) (38,048,174) (22,738,638) (146,336,279)
Net realized gain on
security
transactions.......... -- (80,821,138) (2,197) (97,284,143)
CAPITAL SHARE
TRANSACTIONS:
Proceeds from sale of
shares................ 254,369,346 1,358,328,493 2,549,507,437 1,211,458,165
Reinvested dividends
and distributions..... 23,252,298 118,869,307 22,740,798 243,620,416
Cost of shares
redeemed.............. (208,242,998) (770,681,048) (2,369,371,242) (383,541,029)
---------------- --------------- --------------- ---------------
Net increase
(decrease) from
capital share
transactions........ 69,378,646 706,516,752 202,876,993 1,071,537,552
---------------- --------------- --------------- ---------------
Total increase
(decrease) in net
assets.............. 60,052,853 1,117,324,977 202,876,993 1,616,760,419
NET ASSETS:
Beginning of period.... 342,494,947 1,876,883,614 339,708,583 4,262,768,749
---------------- --------------- --------------- ---------------
End of period.......... $ 402,547,800 $ 2,994,208,591 $ 542,585,576 $5,879,529,168
---------------- --------------- --------------- ---------------
---------------- --------------- --------------- ---------------
CHANGE IN CAPITAL SHARES
OUTSTANDING:
Shares sold............ 254,649,109 360,788,240 2,549,507,437 597,537,609
Reinvested
distributions......... 23,512,053 33,332,051 22,740,798 122,083,331
Shares redeemed........ (208,369,007) (203,498,988) (2,369,371,242) (186,184,804)
---------------- --------------- --------------- ---------------
Net increase (decrease)
in shares
outstanding........... 69,792,155 190,621,303 202,876,993 533,436,136
---------------- --------------- --------------- ---------------
---------------- --------------- --------------- ---------------
</TABLE>
* From inception, August 9, 1996, to December 31, 1996.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
136
<PAGE>
<TABLE>
<CAPTION>
HARTFORD
U.S. HARTFORD HARTFORD HARTFORD
GOVERNMENT CAPITAL MORTGAGE HARTFORD INTERNATIONAL HARTFORD
MONEY MARKET APPRECIATION SECURITIES INDEX OPPORTUNITIES DIVIDEND AND GROWTH
FUND, INC. FUND, INC. FUND, INC. FUND, INC. FUND, INC. FUND, INC.
------------ --------------- ------------- ------------- ------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment
income................ $ 508,120 $ 16,536,321 $ 21,509,830 $ 9,798,518 $ 14,944,153 $ 13,982,229
Net realized gain on
security transactions
and foreign
currency.............. 99 255,377,198 (507,548) 44,514,753 76,110,084 27,789,320
Net realized gain
(loss) on futures
contracts............. -- 6,073,616 (41,164) 9,782,117 1,237,540 --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- 239,094,440 (5,189,787) 32,113,387 10,899,075 76,776,242
------------ --------------- ------------- ------------- ------------- -------------------
Net increase
(decrease) in net
assets resulting
from operations..... 508,219 517,081,575 15,771,331 96,208,775 103,190,852 118,547,791
DISTRIBUTIONS TO
SHAREHOLDERS:
Net investment
income................ (508,120) (18,981,972) (20,576,313) (9,725,897) (16,566,894) (13,722,811)
Net realized gain on
security
transactions.......... (99) (144,074,825) -- (6,503,101) (20,342,973) (6,559,586)
CAPITAL SHARE
TRANSACTIONS:
Proceeds from sale of
shares................ 11,370,111 1,992,482,669 60,478,861 909,101,858 271,959,848 514,924,406
Reinvested dividends
and distributions..... 508,218 163,056,776 20,576,314 16,228,997 36,909,865 20,282,403
Cost of shares
redeemed.............. (10,218,454) (1,280,786,138) (78,320,323) (702,498,963) (65,082,872) (18,562,229)
------------ --------------- ------------- ------------- ------------- -------------------
Net increase
(decrease) from
capital share
transactions........ 1,659,875 874,753,307 2,734,852 222,831,892 243,786,841 516,644,580
------------ --------------- ------------- ------------- ------------- -------------------
Total increase
(decrease) in net
assets.............. 1,659,875 1,228,778,085 (2,070,130) 302,811,669 310,067,826 614,909,974
NET ASSETS:
Beginning of period.... 10,070,267 2,157,891,703 327,565,313 318,252,892 686,475,205 265,070,467
------------ --------------- ------------- ------------- ------------- -------------------
End of period.......... $11,730,142 $ 3,386,669,788 $ 325,495,183 $ 621,064,561 $996,543,031 $879,980,441
------------ --------------- ------------- ------------- ------------- -------------------
------------ --------------- ------------- ------------- ------------- -------------------
CHANGE IN CAPITAL SHARES
OUTSTANDING:
Shares sold............ 11,370,111 550,329,695 57,507,862 418,317,811 202,942,268 365,817,586
Reinvested
distributions......... 508,218 48,709,013 19,671,794 7,617,074 27,910,095 14,561,833
Shares redeemed........ (10,218,454) (352,206,856) (74,651,995) (322,113,339) (48,271,571) (12,969,461)
------------ --------------- ------------- ------------- ------------- -------------------
Net increase (decrease)
in shares
outstanding........... 1,659,875 246,831,852 2,527,661 103,821,546 182,580,792 367,409,958
------------ --------------- ------------- ------------- ------------- -------------------
------------ --------------- ------------- ------------- ------------- -------------------
<CAPTION>
HARTFORD
INTERNATIONAL HARTFORD
ADVISERS SMALL COMPANY
FUND, INC. FUND, INC.*
------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment
income................ $ 2,226,486 $ $36,756
Net realized gain on
security transactions
and foreign
currency.............. 3,178,372 176,416
Net realized gain
(loss) on futures
contracts............. 120,799 12,899
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 2,337,601 305,895
------------- -------------
Net increase
(decrease) in net
assets resulting
from operations..... 7,863,258 531,966
DISTRIBUTIONS TO
SHAREHOLDERS:
Net investment
income................ (3,160,906) (36,601)
Net realized gain on
security
transactions.......... (2,100,363) --
CAPITAL SHARE
TRANSACTIONS:
Proceeds from sale of
shares................ 80,121,321 42,814,882
Reinvested dividends
and distributions..... 5,081,390 29,636
Cost of shares
redeemed.............. (14,583,123) (527,962)
------------- -------------
Net increase
(decrease) from
capital share
transactions........ 70,619,588 42,316,556
------------- -------------
Total increase
(decrease) in net
assets.............. 73,221,577 42,811,921
NET ASSETS:
Beginning of period.... 31,264,165 --
------------- -------------
End of period.......... $104,485,742 $42,811,921
------------- -------------
------------- -------------
CHANGE IN CAPITAL SHARES
OUTSTANDING:
Shares sold............ 69,719,902 40,509,778
Reinvested
distributions......... 4,382,000 27,965
Shares redeemed........ (12,726,579) (495,256)
------------- -------------
Net increase (decrease)
in shares
outstanding........... 61,375,323 40,042,487
------------- -------------
------------- -------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
137
<PAGE>
- --------------------------------------------------------------------------------
Hartford Mutual Funds
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
HARTFORD HARTFORD HVA HARTFORD
BOND STOCK MONEY MARKET ADVISERS
FUND, INC. FUND, INC. FUND, INC. FUND, INC.
-------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment
income................ $ 18,291,476 $ 32,886,265 $ 17,286,032 $ 127,308,402
Net realized gain
(loss) on security
transactions and
foreign currency...... 6,010,729 80,821,093 -- 97,284,118
Net realized gain
(loss) on futures
contracts............. -- -- -- --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 22,790,429 308,861,831 -- 649,451,880
-------------- --------------- --------------- ----------------
Net increase
(decrease) in net
assets resulting
from operations..... 47,092,634 422,569,189 17,286,032 874,044,400
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment
income................ (18,291,476) (32,886,265) (17,286,032) (127,308,402)
Net realized gain on
security
transactions.......... -- (47,489,646) -- (36,509,652)
CAPITAL SHARE
TRANSACTIONS:
Proceeds from sale of
shares................ 227,913,447 668,241,451 1,501,677,031 462,346,769
Reinvested dividends
and distributions..... 18,291,476 80,375,915 17,286,033 163,818,063
Cost of shares
redeemed.............. (179,969,221) (377,085,012) (1,500,719,153) (107,656,490)
-------------- --------------- --------------- ----------------
Net increase (decrease)
in net assets
resulting from capital
share transactions.... 66,235,702 371,532,354 18,243,911 518,508,342
-------------- --------------- --------------- ----------------
Total increase
(decrease) in net
assets.............. 95,036,860 713,725,632 18,243,911 1,228,734,688
NET ASSETS:
Beginning of period.... 247,458,087 1,163,157,982 321,464,672 3,034,034,061
-------------- --------------- --------------- ----------------
End of period.......... $ 342,494,947 $ 1,876,883,614 $ 339,708,583 $ 4,262,768,749
-------------- --------------- --------------- ----------------
-------------- --------------- --------------- ----------------
CHANGE IN CAPITAL SHARES
OUTSTANDING:
Shares sold............ 230,010,396 209,187,665 1,501,677,031 249,891,294
Reinvested
distributions......... 18,548,321 27,804,998 17,286,033 93,801,847
Shares redeemed........ (182,704,340) (120,045,047) (1,500,719,153) (62,784,455)
-------------- --------------- --------------- ----------------
Net increase (decrease)
in shares
outstanding........... 65,854,377 116,947,616 18,243,911 280,908,686
-------------- --------------- --------------- ----------------
-------------- --------------- --------------- ----------------
</TABLE>
* From inception, March 1, 1995, to December 31, 1995.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
138
<PAGE>
<TABLE>
<CAPTION>
HARTFORD U.S. HARTFORD HARTFORD HARTFORD
GOVERNMENT CAPITAL MORTGAGE HARTFORD INTERNATIONAL
MONEY MARKET APPRECIATION SECURITIES INDEX OPPORTUNITIES
FUND, INC. FUND, INC. FUND, INC. FUND, INC. FUND, INC.
----------------- --------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment
income................ $ 522,636 $ 15,311,450 $ 20,533,930 $ 5,497,890 $ 9,584,461
Net realized gain
(loss) on security
transactions and
foreign currency...... -- 127,384,090 5,901,957 461,701 21,336,447
Net realized gain
(loss) on futures
contracts............. -- 18,046,253 70,186 6,181,218 --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- 236,498,480 20,383,033 55,250,626 48,716,467
----------------- --------------- -------------- ------------- -------------
Net increase
(decrease) in net
assets resulting
from operations..... 522,636 397,240,273 46,889,106 67,391,435 79,637,375
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment
income................ (522,636) (15,311,450) (20,533,930) (5,497,890) (9,584,461)
Net realized gain on
security
transactions.......... -- (63,784,485) -- (65,176) (5,087,710)
CAPITAL SHARE
TRANSACTIONS:
Proceeds from sale of
shares................ 3,856,273 1,268,592,773 26,917,379 473,229,846 97,286,805
Reinvested dividends
and distributions..... 522,636 79,095,935 20,533,929 5,563,067 14,672,173
Cost of shares
redeemed.............. (3,927,941) (666,584,981) (50,387,738) (380,028,762) (54,214,080)
----------------- --------------- -------------- ------------- -------------
Net increase (decrease)
in net assets
resulting from capital
share transactions.... 450,968 681,103,727 (2,936,430) 98,764,151 57,744,898
----------------- --------------- -------------- ------------- -------------
Total increase
(decrease) in net
assets.............. 450,968 999,248,065 23,418,746 160,592,520 122,710,102
NET ASSETS:
Beginning of period.... 9,619,299 1,158,643,638 304,146,567 157,660,372 563,765,103
----------------- --------------- -------------- ------------- -------------
End of period.......... $10,070,267 $ 2,157,891,703 $ 327,565,313 $ 318,252,892 $686,475,205
----------------- --------------- -------------- ------------- -------------
----------------- --------------- -------------- ------------- -------------
CHANGE IN CAPITAL SHARES
OUTSTANDING:
Shares sold............ 3,856,273 393,716,534 25,766,526 251,812,101 79,597,149
Reinvested
distributions......... 522,636 28,381,165 19,717,253 3,055,911 12,477,963
Shares redeemed........ (3,927,941) (208,868,838) (48,682,017) (201,506,805) (45,827,064)
----------------- --------------- -------------- ------------- -------------
Net increase (decrease)
in shares
outstanding........... 450,968 213,228,861 (3,198,238) 53,361,207 46,248,048
----------------- --------------- -------------- ------------- -------------
----------------- --------------- -------------- ------------- -------------
<CAPTION>
HARTFORD
HARTFORD INTERNATIONAL
DIVIDEND AND GROWTH ADVISERS
FUND, INC. FUND, INC.*
------------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment
income................ $ 3,832,811 $ 473,778
Net realized gain
(loss) on security
transactions and
foreign currency...... 6,559,586 473,990
Net realized gain
(loss) on futures
contracts............. -- --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 31,161,907 1,503,899
------------------- -------------
Net increase
(decrease) in net
assets resulting
from operations..... 41,554,304 2,451,667
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment
income................ (3,832,811) (473,778)
Net realized gain on
security
transactions.......... -- (477,974)
CAPITAL SHARE
TRANSACTIONS:
Proceeds from sale of
shares................ 174,323,932 30,838,557
Reinvested dividends
and distributions..... 3,757,111 478,342
Cost of shares
redeemed.............. (5,797,586) (1,552,649)
------------------- -------------
Net increase (decrease)
in net assets
resulting from capital
share transactions.... 172,283,457 29,764,250
------------------- -------------
Total increase
(decrease) in net
assets.............. 210,004,950 31,264,165
NET ASSETS:
Beginning of period.... 55,065,517 --
------------------- -------------
End of period.......... $265,070,467 $31,264,165
------------------- -------------
------------------- -------------
CHANGE IN CAPITAL SHARES
OUTSTANDING:
Shares sold............ 147,459,686 29,196,317
Reinvested
distributions......... 3,182,667 434,386
Shares redeemed........ (4,769,969) (1,440,053)
------------------- -------------
Net increase (decrease)
in shares
outstanding........... 145,872,384 28,190,650
------------------- -------------
------------------- -------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
139
<PAGE>
- --------------------------------------------------------------------------------
Hartford Mutual Funds
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. ORGANIZATION:
Hartford Bond Fund, Inc., Hartford Stock Fund, Inc., HVA Money Market Fund,
Inc., Hartford Advisers Fund, Inc., Hartford U.S. Government Money Market
Fund, Inc., Hartford Capital Appreciation Fund, Inc., Hartford Mortgage
Securities Fund, Inc., Hartford Index Fund, Inc., Hartford International
Opportunities Fund, Inc., Hartford Dividend and Growth Fund, Inc., Hartford
International Advisers Fund, Inc. and Hartford Small Company Fund, Inc. (the
Funds) are organized under the laws of the State of Maryland and are
registered with the Securities and Exchange Commission (SEC) under the
Investment Company Act of 1940, as amended, as diversified open-ended
management investment companies.
Fund shares are made available to serve as the underlying investment media
of the variable annuity, variable life insurance and group pension contracts
issued by the affiliated life insurance company Separate Accounts of ITT
Hartford Life Insurance Companies (Hartford Life Insurance Company and ITT
Hartford Life and Annuity Insurance Company). The Fund's objectives are as
follows:
<TABLE>
<S> <C>
Hartford Bond Fund, Inc. Seeks a high level of current income while preserving capital through
investing in high-grade government and corporate bonds and other debt
securities.
Hartford Stock Fund, Inc. Seeks long-term capital growth through a diversified portfolio of equity
securities.
HVA Money Market Fund, Inc. Seeks a high level of current income consistent with liquidity and the
need for preservation of capital through high-quality money-market
securities.
Hartford Advisers Fund, Inc. Seeks a high, long-term total rate of return (capital growth and current
income) through a varying mix of stocks, bonds and money market
instruments.
Hartford U.S. Government Seeks a high level of current income consistent with preservation of
Money Market Fund, Inc. capital through short-term securities issued or guaranteed by the U.S.
Government and its Agencies.
Hartford Capital Appreciation Seeks growth of capital through investment in equity securities of
Fund, Inc. companies with high growth potential, including small emerging
companies.
Hartford Mortgage Securities Seeks a high level of current income by investing primarily in
Fund, Inc. mortgage-backed securities, including securities issued by the
Government National Mortgage Association.
Hartford Index Fund, Inc. Seeks to approximate the price and yield performance represented by the
Standard & Poor's 500 Composite Stock Price Index through investments in
common stocks.
Hartford International Seeks a long-term total return consistent with that of international
Opportunities Fund, Inc. equity markets through investment primarily in foreign equity securities
issues.
Hartford Dividend and Growth Seeks a high level of current income consistent with growth of capital
Fund, Inc. and moderate investment risk. Primary investments are equity securities
and securities convertible into equity securities that typically have
above average yield.
Hartford International Seeks a long-term total rate of return consistent with moderate risk.
Advisers Fund, Inc. Investments include a mix of debt, equity and money market instruments
primarily with foreign issuers.
Hartford Small Company Fund, Seeks growth of capital by investing primarily in equity securities
Inc. selected on the basis of potential for capital appreciation.
</TABLE>
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the Funds,
which are in accordance with generally accepted accounting principles in the
investment company industry:
a) SECURITY TRANSACTIONS--Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Security gains and
losses are determined on the basis of identified cost.
b) SECURITY VALUATION--Debt securities (other than short-term obligations)
are valued on the basis of valuations furnished by an unaffiliated
pricing service which determines valuations for normal institutional size
trading units of debt securities. Mortgage securities are valued at the
bid price. Short-term securities held in the HVA Money Market Fund, Inc.
and Hartford U.S. Government Money Market Fund, Inc. are valued at
amortized cost or original cost plus
140
<PAGE>
accrued interest receivable, both of which approximate market value. In
Hartford Bond Fund, Inc., Hartford Stock Fund, Inc., Hartford Advisers
Fund, Inc., Hartford Capital Appreciation Fund, Inc., Hartford Mortgage
Securities Fund, Inc., Hartford Index Fund, Inc., Hartford International
Opportunities Fund, Inc., Hartford Dividend and Growth Fund, Inc.,
Hartford International Advisers Fund, Inc., and Hartford Small Company
Fund Inc., 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 occurred 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 occurred on such day, then
options are valued at the mean between the bid and asked prices.
Securities for which market quotations are not readily available and all
other assets are valued in good faith at fair value by a person designated
by the Funds' Board of Directors.
c) FOREIGN CURRENCY TRANSACTIONS--The accounting records of the Funds are
maintained in U.S. dollars. All assets and liabilities initially
expressed in foreign currencies are converted into U.S. dollars at
prevailing exchange rates. Purchases and sales of investment securities,
dividend and interest income, and certain expenses are translated at the
rates of exchange prevailing on the respective dates of such
transactions.
The Funds do not isolate that portion of the results of operations
resulting from changes in the foreign exchange rates on investments from
the fluctuations arising from changes in the market prices of securities
held. Such fluctuations are included with the net realized and unrealized
gain or loss on investments.
Net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales of foreign currencies, and the difference
between asset and liability amounts initially stated in foreign currencies
and the U.S. dollar value of the amounts actually received or paid. Net
unrealized foreign exchange gains or losses arise from changes in the
value of portfolio securities and other assets and liabilities at the end
of the reporting period, resulting from changes in the exchange rates.
d) REPURCHASE TRANSACTIONS--A repurchase agreement is an agreement by which
the seller of a security agrees to repurchase the security sold at a
mutually agreed upon time and price. At the time the Funds enter into a
repurchase agreement, the value of the underlying collateral
security(ies), including accrued interest, will be equal to or exceed the
value of the repurchase agreement and, in the case of repurchase
agreements exceeding one day, the value of the underlying security(ies),
including accrued interest, is required during the term of the agreement
to be equal to or exceed the value of the repurchase agreement.
Securities which serve to collateralize the repurchase agreement are held
by each Fund's custodian in book entry or physical form in the custodial
account of the Fund. Repurchase agreements are valued at cost plus
accrued interest receivable.
In June 1996, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 125, ACCOUNTING FOR
TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENTS OF
LIABILITIES. This Statement provides consistent standards for
distinguishing transfers of financial assets that are sales from transfers
that are secured borrowings. Under the provisions of SFAS No. 125,
transfers of certain financial assets, such as repurchase agreements, are
required to be accounted for as sales if control, as defined, over those
assets has been surrendered by the transferor. The Statement also requires
collateral under repurchase agreements and securities lending transactions
to be separately classified by the debtor and recognized as an asset by
the creditor in the respective financial statements if certain conditions
are met. SFAS No. 125 is effective for transfers of financial assets
occurring after December 31, 1996, except for certain transfers for which
the effective date has been delayed to January 1, 1998 by SFAS No. 127,
DEFERRAL OF THE EFFECTIVE DATE OF CERTAIN PROVISIONS OF FASB STATEMENT NO.
125, issued by the FASB in December 1996. Management does not believe the
adoption of this new accounting standard will have a material impact on
the financial position or future results of operations of the Funds.
141
<PAGE>
- --------------------------------------------------------------------------------
HARTFORD MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
e) JOINT TRADING ACCOUNT--Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Funds may transfer uninvested
cash balances into a joint trading account managed by Hartford Investment
Management Company (HIMCO). These balances may be invested in one or more
repurchase agreements and/or short-term money market instruments.
f) FUTURES, OPTIONS ON FUTURES AND OPTIONS TRANSACTIONS--The Funds enter
into futures contracts to retain their cash balances and yet be exposed
to the market thereby providing the liquidity necessary to accommodate
redemptions while at the same time providing shareholders the investment
return of a fully invested portfolio. A futures contract is an agreement
between two parties to buy and sell a security for a set price on a
future date. When the funds enter into such contracts, they are required
to deposit with their custodian an amount of "initial margin" of cash or
U.S. Treasury bills. Subsequent payments, called maintenance margin, to
and from the broker, are made on a daily basis as the price of the
underlying debt security fluctuates, making the long and short positions
in the futures contract more or less valuable (i.e., mark-to-market),
which results in an unrealized gain or loss to the Funds. The market
value of a traded futures contract is the last sale price or, in the
absence of a last sale price, the last offering price or, in the absence
of either of these prices, fair value is determined according to
procedures established by the Funds' Board of Directors. The variation
margin on futures contracts is included in excess of cash and receivables
over liabilities or excess of liabilities over cash and receivables, as
applicable, in the Fund's Statement of Net Assets.
At any time prior to expiration of the futures contract, the Funds may
close the position by taking an opposite position which would operate to
terminate the position in the futures contract. A final determination of
maintenance margin is then made, additional cash is required to be paid by
or released to the Funds and the Funds realize a gain or loss.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's Statement of Net Assets as excess of cash and
receivables over liabilities or excess of liabilities over cash and
receivables and subsequently "marked to market" to reflect the current
market value of the option purchased as of the end of the reporting
period. If an option which the Fund has purchased expires on its
stipulated expiration date, the Fund realizes a loss in the amount of the
cost of the option. If the Fund enters into a closing transaction, it
realizes a gain or loss, depending on whether the proceeds from the sale
are greater or less than the cost of the option. If the Fund exercises a
put option, it realizes a gain or loss from the sale of the underlying
security and the proceeds from such sale will be decreased by the premium
originally paid. If the Fund exercises a call option, the cost of the
security which the Fund purchases upon exercise will be increased by the
premium originally paid.
g) FEDERAL INCOME TAXES--For Federal income tax purposes, the Funds intend
to continue to qualify as regulated investment companies under Subchapter
M of the Internal Revenue Code by distributing substantially all of their
taxable income to their shareholders or otherwise complying with the
requirements for regulated investment companies. Accordingly, no
provision for Federal income taxes has been made in the accompanying
Financial Statements.
h) FUND SHARE VALUATION AND DIVIDEND DISTRIBUTIONS TO SHAREHOLDERS--Orders
for the Fund's shares are executed in accordance with the investment
instructions of the contract owners. Dividend income is accrued as of the
ex-dividend date. Interest income and expenses are accrued on a daily
basis. The net asset value of the Fund's shares is determined as of the
close of each business day of the New York Stock Exchange (the Exchange).
Orders for the purchase of the Funds' shares received prior to the close
of the Exchange on any day on which the fund is open for business are
priced at the per-share net asset value determined as of the close of the
Exchange. Orders received after the close of the Exchange, or on a day on
which the Exchange and/or the Fund is not open for business, are priced
at the per-share net asset value next determined.
Dividends are declared by the Funds' Board of Directors based upon the
investment performance of the respective Funds. The policy with respect to
the Hartford Bond Fund, Inc., Hartford Stock Fund, Inc., Hartford Advisers
Fund, Inc., Hartford Capital Appreciation Fund, Inc., Hartford Mortgage
Securities Fund, Inc., Hartford Index Fund, Inc., Hartford International
Opportunities Fund, Inc., Hartford Dividend and Growth Fund, Inc.,
Hartford International Advisers Fund, Inc. and Hartford Small Company
Fund, Inc. is to distribute dividends from net investment income monthly
and distribute realized capital gains, if any, annually.
HVA Money Market Fund, Inc. and Hartford U.S. Government Money Market
Fund, Inc. seek to maintain a stable net asset value per share of $1.00 by
declaring a daily dividend from net investment income, including net
short-term capital gains and losses, and by valuing their investments
using the amortized cost method. Dividends are distributed monthly.
142
<PAGE>
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences include the treatment of non-taxable
dividends, expiring capital loss carryforwards, foreign currency
gain/loss, partnerships, and losses deferred due to cash sales and excise
tax regulations. Permanent book and tax basis differences relating to
shareholder distributions will result in reclassifications to capital
accounts (see Note 7).
i) FOREIGN CURRENCY CONTRACTS--As of December 31, 1996, Hartford Capital
Appreciation Fund, Inc., Hartford International Opportunities Fund, Inc.
and Hartford International Advisers Fund, Inc. have entered into forward
foreign currency exchange contracts that obligate the Funds to repurchase
currencies at specified future dates. The Funds enter into forward
foreign currency contracts to manage currency exchange rate risk. The
forward foreign currency contracts cost are included in excess cash and
receivables over liabilities or excess liabilities over cash and
receivables, as applicable, in the Funds Statement of Net Assets.
Forward contracts involve elements of market risk in excess of the amount
reflected in the Statement of Net Assets. The Fund bears the risk of an
unfavorable change in the foreign exchange rate underlying the forward
contract.
j) USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and the reported
amounts of income and expenses during the period. Operating results in
the future could vary from the amounts derived from management's
estimates.
3. EXPENSES:
a) INVESTMENT MANAGEMENT AND ADVISORY AGREEMENTS--HIMCO, a wholly-owned
subsidiary of Hartford Life Insurance Company (HL), provides investment
management services and supervision for Hartford Stock Fund, Inc.,
Hartford Advisers Fund, Inc., Hartford Capital Appreciation Fund, Inc.,
Hartford International Opportunities Fund, Inc., Hartford Dividend and
Growth Fund, Inc., Hartford International Advisers, Fund, Inc. and
Hartford Small Company Fund, Inc. pursuant to an Investment Management
Agreement, which was approved by each Fund's Board of Directors and
shareholders.
The schedule below reflects the rates of compensation paid to HIMCO for
services rendered:
<TABLE>
<CAPTION>
HARTFORD BOND FUND, INC.
AND HARTFORD STOCK FUND, INC.
AVERAGE DAILY NET ASSETS ANNUAL FEE
- ------------------------------------ ------------
<S> <C>
On first $250 million .325%
On next $250 million .300
On next $500 million .275
Over $1 billion .250
<CAPTION>
HARTFORD ADVISERS FUND, INC.,
HARTFORD CAPITAL APPRECIATION FUND, INC.,
HARTFORD INTERNATIONAL OPPORTUNITIES FUND, INC.,
HARTFORD DIVIDEND AND GROWTH FUND, INC.,
HARTFORD INTERNATIONAL ADVISERS FUND, INC.
AND HARTFORD SMALL COMPANY FUND, INC.
AVERAGE DAILY NET ASSETS ANNUAL FEE
- ------------------------------------ ------------
<S> <C>
On first $250 million .575%
On next $250 million .525
On next $500 million .475
Over $1 billion .425
</TABLE>
HIMCO also serves as investment adviser to Hartford Bond Fund Inc., HVA
Money Market Fund, Inc., Hartford U.S. Government Money Market Fund, Inc.,
Hartford Mortgage Securities Fund, Inc. and Hartford Index Fund, Inc.
pursuant to an Agreement, which was approved by each Fund's Board of
Directors and shareholders. The annual fees
143
<PAGE>
- --------------------------------------------------------------------------------
HARTFORD MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
paid to HIMCO are .25% of the average daily net assets for HVA Money
Market Fund, Inc., Hartford U.S. Government Money Market Fund, Inc. and
Hartford Mortgage Securities Fund, Inc. and .20% of the average daily net
assets for Hartford Index Fund, Inc.
For Hartford Small Company Fund, Inc., HIMCO waived its fees until the
Fund's assets (excluding assets contributed by companies affiliated with
HIMCO) reached $20 million. For 1996, the fee waived was $11,952.
Wellington Management Company (Wellington), under a Sub-Investment
Advisory Agreement with HIMCO, furnishes an investment program to HIMCO,
for utilization by HIMCO in rendering services to Hartford Stock Fund,
Inc., Hartford Advisers Fund, Inc., Hartford Capital Appreciation Fund,
Inc., Hartford International Opportunities Fund, Inc., Hartford Dividend
and Growth Fund, Inc., Hartford International Advisers Fund, Inc. and
Hartford Small Company Fund, Inc. Wellington determines the purchase and
sale of portfolio securities and places such orders for execution, in the
name of the respective Fund. In conjunction with such activities,
Wellington regularly furnishes reports to the Funds' Board of Directors
concerning economic forecasts, investment strategy, portfolio activity and
performance of the Funds.
b) ADMINISTRATIVE SERVICES AGREEMENT--Under an Administrative Services
Agreement between HL and each of the Funds, HL provides administrative
services to the Funds and receives monthly compensation at the annual
rate of .175% of each Fund's average daily net assets. The Funds assume
and pay certain other expenses (including, but not limited to,
shareholder accounting, state taxes and directors' fees). Directors' fees
represent remuneration paid or accrued to directors not affiliated with
HL or any other related company.
c) OPERATING EXPENSES--Allocable expenses of the Funds are charged to each
fund based on the ratio of the net assets of each fund to the combined
net assets of the Funds. Nonallocable expenses are charged to each fund
based on specific identification.
4. TAX COST AND UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS:
As of December 31, 1996, the tax cost, aggregate gross unrealized
appreciation on all investments where there was an excess of value over tax
cost, the aggregate gross unrealized depreciation of investments where there
was an excess of tax cost over value and the net unrealized appreciation
(depreciation) of investments were as follows:
<TABLE>
<CAPTION>
AGGREGATE GROSS AGGREGATE GROSS
UNREALIZED UNREALIZED NET UNREALIZED
TAX COST APPRECIATION DEPRECIATION APPRECIATION
---------------- ---------------- --------------- --------------
<S> <C> <C> <C> <C>
Hartford Bond Fund, Inc............................... $ 411,959,593 $ 5,910,050 $ (2,624,945) $ 3,285,105
Hartford Stock Fund, Inc.............................. 2,320,023,744 705,165,338 (36,069,327) 669,096,011
Hartford Advisers Fund, Inc........................... 4,886,005,355 1,025,238,238 (62,591,124) 962,647,114
Hartford Dividend and Growth Fund, Inc................ 784,890,284 117,004,938 (10,070,806) 106,934,132
Hartford Capital Appreciation Fund, Inc............... 2,876,667,293 660,646,685 (158,829,742) 501,816,943
Hartford Mortgage Securities Fund, Inc................ 350,954,028 3,866,619 (2,644,170) 1,222,449
Hartford Index Fund, Inc.............................. 520,448,400 117,761,059 (13,814,561) 103,946,498
Hartford International Opportunities Fund, Inc........ 917,435,336 120,474,019 (46,621,452) 73,852,567
Hartford International Advisers Fund, Inc............. 102,027,721 6,840,836 (3,162,399) 3,678,437
Hartford Small Company Fund, Inc...................... 42,166,118 2,408,726 (2,191,424) 217,302
</TABLE>
5. EQUITY OF AFFILIATES:
a) HARTFORD INTERNATIONAL ADVISERS FUND, INC.--HL redeemed ownership of
10,000,000 shares during 1996 realizing a gain of $1,463,486.
b) HARTFORD SMALL COMPANY FUND, INC.--HIMCO has ownership of 3,000,000
shares of Hartford Small Company Fund, Inc. representing 7.5% of the
total outstanding shares of the Fund as of December 31, 1996.
144
<PAGE>
c) As of December 31, 1996, certain HL group pension contracts held direct
interest in shares as follows:
<TABLE>
<CAPTION>
PERCENT OF
TOTAL
SHARES SHARES
------------ -----------
<S> <C> <C>
Hartford Bond Fund, Inc........................................................................... 47,060 0.01%
Hartford Stock Fund, Inc.......................................................................... 92,167 0.01%
HVA Money Market Fund, Inc........................................................................ 31,633 0.01%
Hartford Advisers Fund, Inc....................................................................... 18,752,510 0.69%
Hartford Capital Appreciation Fund, Inc........................................................... 15,519,596 1.79%
Hartford Mortgage Securities Fund, Inc............................................................ 17,408,850 5.65%
Hartford Index Fund, Inc.......................................................................... 16,432,999 6.30%
Hartford International Opportunities Fund, Inc.................................................... 7,835,802 1.11%
Hartford Dividend and Growth Fund, Inc............................................................ 443,556 0.08%
Hartford International Advisers Fund, Inc......................................................... 27,096 0.03%
Hartford Small Company Fund, Inc.................................................................. 28,535 0.07%
</TABLE>
6. INVESTMENT TRANSACTIONS:
Investment transactions (excluding short-term investments) for the year
ended December 31, 1996, were as follows:
<TABLE>
<CAPTION>
PURCHASES AT SALES AT
COST PROCEEDS
---------------- ----------------
<S> <C> <C>
Hartford Bond Fund, Inc................................................................. $ 829,303,424 $ 745,960,818
Hartford Stock Fund, Inc................................................................ 1,587,351,083 980,091,109
Hartford Advisers Fund, Inc............................................................. 3,629,548,507 2,632,120,718
Hartford Capital Appreciation Fund, Inc................................................. 2,864,732,163 2,170,279,640
Hartford Mortgage Securities Fund, Inc.................................................. 627,266,106 629,848,302
Hartford Index Fund, Inc................................................................ 318,741,927 85,951,283
Hartford International Opportunities Fund, Inc.......................................... 738,825064 554,302,885
Hartford Dividend and Growth Fund, Inc.................................................. 797,686,130 302,163,138
Hartford International Advisers, Fund, Inc.............................................. 122,147,523 59,862,398
Hartford Small Company Fund, Inc........................................................ 42,881,641 5,409,531
</TABLE>
7. RECLASS OF CAPITAL ACCOUNTS
In accordance with statement of position 93-2, Determination, Disclosure,
and Financial Statement presentation of Income, Capital Gain, and Return of
Capital Distributions by Investment Companies, the Funds have recorded
several reclassifications in their capital accounts. These reclassifications
have no impact on the net asset value of the Funds and are designed
generally to present undistributed income and realized gains on a tax basis
which is considered to be more informative to the shareholder. As of
December 31, 1996 the Funds recorded the following reclassifications to
increase (decrease) the accounts listed below:
<TABLE>
<CAPTION>
UNDISTRIBUTED UNDISTRIBUTED
NET INVESTMENT NET REALIZED CAPITAL
INCOME (LOSS) GAINS (LOSS) SURPLUS
-------------- ------------- -----------
<S> <C> <C> <C>
Hartford Bond Fund, Inc.......................................................... $ 8,085 $ 30,403 $ (38,488)
Hartford Stock Fund, Inc......................................................... (237,625) 237,625 --
Hartford Advisers Fund, Inc...................................................... (187,377) 187,377 --
Hartford Capital Appreciation Fund, Inc.......................................... 1,418,157 (1,418,157) --
Hartford Mortgage Securities Fund, Inc........................................... (754,232) 754,232 --
Hartford Index Fund, Inc......................................................... -- -- --
Hartford International Opportunities Fund, Inc................................... 1,662,153 (1,731,747) 69,594
Hartford Dividend and Growth Fund, Inc........................................... (12,837) -- 12,837
Hartford International Advisers Fund, Inc........................................ 826,948 (826,948) --
</TABLE>
145
<PAGE>
- --------------------------------------------------------------------------------
Hartford Mutual Funds
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
NET REALIZED
AND
NET ASSET UNREALIZED
VALUE AT NET GAIN TOTAL FROM
BEGINNING INVESTMENT (LOSS) ON INVESTMENT
OF PERIOD INCOME INVESTMENTS OPERATIONS
--------- ---------- ------------ -----------
<S> <C> <C> <C> <C>
HARTFORD BOND FUND, INC.
For the Year Ended
December 31, 1996..... $1.028 $0.064 $(0.029) $ 0.035
1995................... 0.926 0.064 0.102 0.166
1994................... 1.044 0.060 (0.100) (0.040)
1993................... 1.024 0.062 0.039 0.101
1992................... 1.061 0.074 (0.019) 0.055
1991................... 0.979 0.072 0.082 0.154
HARTFORD STOCK FUND, INC.
For the Year Ended
December 31, 1996..... 3.527 0.060 0.763 0.823
1995................... 2.801 0.070 0.840 0.910
1994................... 3.099 0.061 (0.111) (0.050)
1993................... 2.965 0.053 0.339 0.392
1992................... 2.927 0.051 0.219 0.270
1991................... 2.452 0.059 0.532 0.591
HVA MONEY MARKET FUND,
INC.
For the Year Ended
December 31, 1996..... 1.00 0.500 -- 0.050
1995................... 1.000 0.056 -- 0.056
1994................... 1.000 0.039 -- 0.039
1993................... 1.000 0.029 -- 0.029
1992................... 1.000 0.036 -- 0.036
1991................... 1.000 0.059 -- 0.059
HARTFORD ADVISERS FUND,
INC.
For the Year Year Ended
December 31, 1996...... 1.958 0.059 0.255 0.314
1995................... 1.600 0.064 0.377 0.441
1994................... 1.752 0.054 (0.100) (0.046)
1993................... 1.676 0.050 0.145 0.195
1992................... 1.649 0.059 0.070 0.129
1991................... 1.436 0.063 0.223 0.286
HARTFORD U.S. GOVERNMENT
MONEY MARKET FUND, INC.
For the Year Ended
December 31, 1996..... 1.000 0.048 -- 0.048
1995................... 1.000 0.054 -- 0.054
1994................... 1.000 0.036 -- 0.036
1993................... 1.000 0.027 -- 0.027
1992................... 1.000 0.032 -- 0.032
1991................... 1.000 0.055 -- 0.055
HARTFORD CAPITAL
APPRECIATION FUND, INC.
For the Year Ended
December 31, 1996..... 3.490 0.022 0.655 0.677
1995................... 2.860 0.030 0.785 0.815
1994................... 3.052 0.011 0.070 0.081
1993................... 2.634 0.003 0.526 0.529
1992................... 2.607 0.008 0.388 0.396
1991................... 1.709 0.021 0.898 0.919
HARTFORD MORTGAGE
SECURITIES FUND, INC.
For the Year Ended
December 31, 1996..... 1.071 0.069 (0.018) 0.051
1995................... 0.984 0.068 0.087 0.155
1994................... 1.075 0.068 (0.086) (0.018)
1993................... 1.079 0.071 (0.004) 0.067
1992................... 1.115 0.086 (0.036) 0.050
1991................... 1.054 0.088 0.061 0.149
HARTFORD INDEX FUND, INC.
For the Year Ended
December 31, 1996..... 2.028 0.044 0.393 0.437
1995................... 1.522 0.044 0.507 0.551
1994................... 1.546 0.038 (0.024) 0.014
1993................... 1.450 0.035 0.096 0.131
1992................... 1.390 0.033 0.060 0.093
1991................... 1.134 0.036 0.294 0.330
HARTFORD INTERNATIONAL
OPPORTUNITIES FUND,
INC.
For the Year Ended
December 31, 1996..... 1.306 0.023 0.140 0.163
1995................... 1.176 0.020 0.141 0.161
1994................... 1.215 0.016 (0.039) (0.023)
1993................... 0.917 0.009 0.298 0.307
1992................... 0.973 0.013 (0.056) (0.043)
1991................... 0.871 0.011 0.102 0.113
HARTFORD DIVIDEND AND
GROWTH FUND, INC.
For the Year Ended
December 31, 1996..... 1.317 0.034 0.258 0.292
1995................... 0.994 0.033 0.323 0.356
From inception, March
8, 1994, through
December 31, 1994..... 1.000 0.024 (0.005) 0.019
HARTFORD INTERNATIONAL
ADVISERS FUND, INC.
For the Year Ended
December 31, 1996..... 1.109 0.040 0.093 0.133
From inception, March
1, 1995, through
December 31, 1995..... 1.000 0.030 0.126 0.156
HARTFORD SMALL COMPANY
FUND, INC.
From inception, August
9, 1996, through
December 31, 1996..... 1.000 0.002 0.069 0.071
</TABLE>
(1) Annualized.
(2) Management fees were waived until assets (excluding assets contributed by
companies affiliated with HIMCO) reached $20 million. The ratio of operating
expenses to average net assets would have been higher if management fees
were not waived. The ratio of net investment income to average net assets
would have been lower if management fees were not waived.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
146
<PAGE>
<TABLE>
<CAPTION>
DIVIDENDS NET ASSET NET ASSETS
FROM NET DISTRIBUTIONS NET INCREASE VALUE AT AT END OF
INVESTMENT FROM REALIZED (DECREASE) IN END TOTAL PERIOD
INCOME CAPITAL GAINS NET ASSETS OF PERIOD RETURN (IN THOUSANDS)
---------- ------------- ------------- --------- ------- --------------
<S> <C> <C> <C> <C> <C> <C>
HARTFORD BOND FUND, INC.
For the Year Ended
December 31, 1996..... $(0.063) $ -- $(0.028) $1.00 3.54% $ 402,548
1995................... (0.064) -- 0.102 1.028 18.49 342,495
1994................... (0.060) (0.018) (0.118) 0.926 (3.95) 247,458
1993................... (0.062) (0.019) 0.020 1.044 10.24 239,602
1992................... (0.074) (0.018) (0.037) 1.024 5.53 128,538
1991................... (0.072) -- 0.082 1.061 16.43 97,377
HARTFORD STOCK FUND, INC.
For the Year Ended
December 31, 1996..... (0.059) (0.148) 0.616 4.143 24.33 2,994,209
1995................... (0.070) (0.114) 0.726 3.527 34.10 1,876,884
1994................... (0.061) (0.187) (0.298) 2.801 (1.89) 1,163,158
1993................... (0.053) (0.205) 0.134 3.099 14.34 968,425
1992................... (0.051) (0.181) 0.038 2.965 10.04 569,903
1991................... (0.059) (0.057) 0.475 2.927 24.58 406,489
HVA MONEY MARKET FUND,
INC.
For the Year Ended
December 31, 1996..... (0.050) -- -- 1.000 5.09 542,586
1995................... (0.056) -- -- 1.000 5.74 339,709
1994................... (0.039) -- -- 1.000 3.95 321,465
1993................... (0.029) -- -- 1.000 2.94 234,088
1992................... (0.036) -- -- 1.000 3.63 190,246
1991................... (0.059) -- -- 1.000 6.01 177,483
HARTFORD ADVISERS FUND,
INC.
For the Year Year Ended
December 31, 1996...... (0.059) (0.044) 0.211 2.169 16.62 5,879,529
1995................... (0.064) (0.019) 0.358 1.958 28.34 4,262,769
1994................... (0.054) (0.052) (0.152) 1.600 (2.74) 3,034,034
1993................... (0.050) (0.069) 0.076 1.752 12.25 2,426,550
1992................... (0.059) (0.043) 0.027 1.676 8.30 985,747
1991................... (0.063) (0.010) 0.213 1.649 20.33 631,424
HARTFORD U.S. GOVERNMENT
MONEY MARKET FUND, INC.
For the Year Ended
December 31, 1996..... (0.048) -- -- 1.000 4.87 11,730
1995................... (0.054) -- -- 1.000 5.52 10,070
1994................... (0.036) -- -- 1.000 3.67 9,619
1993................... (0.027) -- -- 1.000 2.68 9,449
1992................... (0.032) -- -- 1.000 3.22 10,525
1991................... (0.055) -- -- 1.000 5.61 11,257
HARTFORD CAPITAL
APPRECIATION FUND, INC.
For the Year Ended
December 31, 1996..... (0.025) (0.228) 0.424 3.914 20.70 3,386,670
1995................... (0.030) (0.155) 0.630 3.490 30.25 2,157,892
1994................... (0.011) (0.262) (0.192) 2.860 2.50 1,158,644
1993................... (0.003) (0.108) 0.418 3.052 20.80 778,904
1992................... (0.008) (0.361) 0.027 2.634 16.98 300,373
1991................... (0.021) -- 0.898 2.607 53.99 158,046
HARTFORD MORTGAGE
SECURITIES FUND, INC.
For the Year Ended
December 31, 1996..... (0.066) -- (0.015) 1.056 4.99 325,495
1995................... (0.068) -- 0.087 1.071 16.17 327,565
1994................... (0.068) (0.005) (0.091) 0.984 (1.61) 304,147
1993................... (0.071) -- (0.004) 1.075 6.31 365,198
1992................... (0.086) -- (0.036) 1.079 4.64 258,711
1991................... (0.088) -- 0.061 1.115 14.71 162,484
HARTFORD INDEX FUND, INC.
For the Year Ended
December 31, 1996..... (0.044) (0.039) 0.354 2.382 22.09 621,065
1995................... (0.044) (0.001) 0.506 2.028 36.55 318,253
1994................... (0.038) -- (0.024) 1.522 0.94 157,660
1993................... (0.035) -- 0.096 1.546 9.12 140,396
1992................... (0.033) -- 0.060 1.450 6.82 82,335
1991................... (0.036) (0.038) 0.256 1.390 29.53 47,770
HARTFORD INTERNATIONAL
OPPORTUNITIES FUND,
INC.
For the Year Ended
December 31, 1996..... (0.025) (0.037) 0.101 1.407 12.91 996,543
1995................... (0.020) (0.011) 0.130 1.306 13.93 686,475
1994................... (0.016) -- (0.039) 1.176 (1.94) 563,765
1993................... (0.009) -- 0.298 1.215 33.73 281,608
1992................... (0.013) -- (0.056) 0.917 (4.43) 47,560
1991................... (0.011) -- 0.102 0.973 13.00(1) 22,854
HARTFORD DIVIDEND AND
GROWTH FUND, INC.
For the Year Ended
December 31, 1996..... (0.034) (0.028) 0.230 1.547 22.91 879,980
1995................... (0.033) -- 0.323 1.317 36.37 265,070
From inception, March
8, 1994, through
December 31, 1994..... (0.024) (0.001) (0.006) 0.994 1.96(1) 55,066
HARTFORD INTERNATIONAL
ADVISERS FUND, INC.
For the Year Ended
December 31, 1996..... (0.051) (0.024) 0.058 1.167 12.25 104,486
From inception, March
1, 1995, through
December 31, 1995..... (0.030) (0.017) 0.109 1.109 15.84(1) 31,264
HARTFORD SMALL COMPANY
FUND, INC.
From inception, August
9, 1996, through
December 31, 1996..... (0.002) -- 0.069 1.069 18.12(1) 42,812
<CAPTION>
RATIO OF
RATIO OF NET
OPERATING INVESTMENT
EXPENSES INCOME PORTFOLIO AVERAGE
TO AVERAGE TO AVERAGE TURNOVER COMMISSION
NET ASSETS NET ASSETS RATE RATE PAID
------------- ------------- --------- ----------
<S> <C> <C> <C> <C>
HARTFORD BOND FUND, INC.
For the Year Ended
December 31, 1996..... 0.52% 6.37% 212.0% $ --
1995................... 0.53 6.51 215.0 --
1994................... 0.55 6.23 328.8 --
1993................... 0.57 5.93 494.3 --
1992................... 0.64 7.21 434.1 --
1991................... 0.66 7.29 337.0 --
HARTFORD STOCK FUND, INC.
For the Year Ended
December 31, 1996..... 0.46 1.59 42.3 0.0490
1995................... 0.48 2.23 52.9 --
1994................... 0.50 2.17 63.8 --
1993................... 0.53 1.86 69.0 --
1992................... 0.57 1.90 69.8 --
1991................... 0.60 2.14 24.3 --
HVA MONEY MARKET FUND,
INC.
For the Year Ended
December 31, 1996..... 0.44 5.04 -- --
1995................... 0.45 5.57 -- --
1994................... 0.47 3.99 -- --
1993................... 0.48 2.91 -- --
1992................... 0.53 3.60 -- --
1991................... 0.54 5.88 -- --
HARTFORD ADVISERS FUND,
INC.
For the Year Year Ended
December 31, 1996...... 0.63 2.92 53.8 0.0487
1995................... 0.65 3.57 63.5 --
1994................... 0.65 3.34 60.0 --
1993................... 0.69 3.07 55.3 --
1992................... 0.78 3.55 72.8 --
1991................... 0.81 4.13 42.1 --
HARTFORD U.S. GOVERNMENT
MONEY MARKET FUND, INC.
For the Year Ended
December 31, 1996..... 0.58 4.77 -- --
1995................... 0.57 5.38 -- --
1994................... 0.58 3.63 -- --
1993................... 0.58 2.65 -- --
1992................... 0.75 3.19 -- --
1991................... 0.73 5.48 -- --
HARTFORD CAPITAL
APPRECIATION FUND, INC.
For the Year Ended
December 31, 1996..... 0.65 0.60 85.4 0.0665
1995................... 0.68 0.95 78.6 --
1994................... 0.72 0.40 73.3 --
1993................... 0.76 0.12 91.4 --
1992................... 0.87 0.36 100.3 --
1991................... 0.92 0.92 107.2 --
HARTFORD MORTGAGE
SECURITIES FUND, INC.
For the Year Ended
December 31, 1996..... 0.45 6.67 201.0 --
1995................... 0.47 6.50 489.4 --
1994................... 0.48 6.65 365.7 --
1993................... 0.49 6.49 183.4 --
1992................... 0.56 7.96 277.2 --
1991................... 0.58 8.25 152.2 --
HARTFORD INDEX FUND, INC.
For the Year Ended
December 31, 1996..... 0.39 2.07 19.3 0.0500
1995................... 0.39 2.46 1.5 --
1994................... 0.45 2.50 1.8 --
1993................... 0.49 2.36 0.8 --
1992................... 0.60 2.48 1.2 --
1991................... 0.67 2.89 6.7 --
HARTFORD INTERNATIONAL
OPPORTUNITIES FUND,
INC.
For the Year Ended
December 31, 1996..... 0.79 1.74 70.0 --
1995................... 0.86 1.60 55.6 --
1994................... 0.85 1.42 46.4 --
1993................... 1.00 0.84 31.8 --
1992................... 1.23 1.40 25.1 --
1991................... 1.24 1.17 24.7 --
HARTFORD DIVIDEND AND
GROWTH FUND, INC.
For the Year Ended
December 31, 1996..... 0.73 2.52 56.9 0.0715
1995................... 0.77 2.91 41.4 --
From inception, March
8, 1994, through
December 31, 1994..... 0.83(1) 3.52(1) 27.8 --
HARTFORD INTERNATIONAL
ADVISERS FUND, INC.
For the Year Ended
December 31, 1996..... 0.96 3.24 95.2 0.0064
From inception, March
1, 1995, through
December 31, 1995..... 0.65(1)(2) 3.36(1)(2) 47.2 --
HARTFORD SMALL COMPANY
FUND, INC.
From inception, August
9, 1996, through
December 31, 1996..... 0.72(1)(2) 0.31(1)(2) 31.8 0.0290
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
147
<PAGE>
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
HARTFORD BOND FUND, INC., HARTFORD STOCK FUND, INC., HVA MONEY MARKET FUND,
INC.,
HARTFORD ADVISERS FUND, INC., HARTFORD U.S. GOVERNMENT MONEY MARKET FUND, INC.,
HARTFORD CAPITAL APPRECIATION FUND, INC., HARTFORD MORTGAGE SECURITIES FUND,
INC.,
HARTFORD INDEX FUND, INC., HARTFORD INTERNATIONAL OPPORTUNITIES FUND, INC.,
HARTFORD DIVIDEND AND GROWTH FUND, INC., HARTFORD INTERNATIONAL ADVISERS FUND,
INC.
AND HARTFORD SMALL COMPANY FUND, INC.:
We have audited the accompanying statement of assets of Hartford Bond Fund,
Inc., Hartford Stock Fund, Inc., HVA Money Market Fund, Inc., Hartford Advisers
Fund, Inc., Hartford U.S. Government Money Market Fund, Inc., Hartford Capital
Appreciation Fund, Inc., Hartford Mortgage Securities Fund, Inc., Hartford
Index Fund, Inc., Hartford International Opportunities Fund, Inc., Hartford
Dividend and Growth Fund, Inc., Hartford International Advisers Fund, Inc. and
Hartford Small Company Fund, Inc. (all Maryland corporations) (the Funds) as of
December 31, 1996, and the related statement of operations for the year then
ended (except for Hartford Small Company Fund, Inc., which reflects the period
from inception, August 9, 1996, to December 31, 1996), the statements of
changes in net assets for each of the two years in the period then ended
(except for Hartford International Advisers Fund, Inc., which reflects the year
ended December 31, 1996 and the period from inception, March 1, 1995, to
December 31, 1995, and Hartford Small Company Fund, Inc., which reflects the
period from inception, August 9, 1996, to December 31, 1996) and the financial
highlights for each of the five years in the period then ended (except for
Hartford Dividend and Growth Fund, Inc., which reflects the two years ended
December 31, 1996 and the period from inception, March 8, 1994, to December 31,
1994, Hartford International Advisers Fund, Inc., which reflects the year ended
December 31, 1996 and the period from inception, March 1, 1995, to December 31
1995, and Hartford Small Company Fund, Inc., which reflects the period from
inception, August 9, 1996, to December 31, 1996). These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of December 31, 1996,
by correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Hartford Bond Fund, Inc., Hartford Stock Fund, Inc., HVA Money Market Fund,
Inc., Hartford Advisers Fund, Inc., Hartford U.S. Government Money Market Fund,
Inc., Hartford Capital Appreciation Fund, Inc., Hartford Mortgage Securities
Fund, Inc., Hartford Index Fund, Inc., Hartford International Opportunities
Fund, Inc., Hartford Dividend and Growth Fund, Inc., Hartford International
Advisers Fund, Inc. and Hartford Small Company Fund, Inc. of December 31, 1996,
the results of their operations for the year then ended (except for Hartford
Small Company Fund, Inc., which reflects the period from inception, August 9,
1996, to December 31, 1996), the changes in its net assets for each of the two
years in the period then ended (except for Hartford International Advisers
Fund, Inc., which reflects the year ended December 31, 1996 and the period from
inception, March 1, 1995, to December 31, 1995, and Hartford Small Company
Fund, Inc., which reflects the period from inception, August 9, 1996, to
December 31, 1996) and the financial highlights for each of the five years in
the period then ended (except for Hartford Dividend and Growth Fund, Inc.,
which reflects the two years ended December 31, 1996 and the period from
inception, March 8, 1994, to December 31, 1994, Hartford International Advisers
Fund, Inc., which reflects the year ended December 31, 1996 and the period from
inception, March 1, 1995, to December 31, 1995, and Hartford Small Company
Fund, Inc., which reflects the period from inception, August 9, 1996, to
December 31, 1996) in conformity with generally accepted accounting principles.
Hartford, Connecticut
February 19, 1997 ARTHUR ANDERSEN LLP
148
<PAGE>
DIRECTORS OF THE FUNDS:
JOSEPH A. BIERNAT - Director
JOSEPH H. GAREAU - Director/President
GOVERNOR WILLIAM A. O'NEILL - Director
MILLARD H. PRYOR, JR. - Director
LOWNDES A. SMITH - Director/Chairman
JOHN K. SPRINGER - Director
WINIFRED E. COLEMAN - Director
CUSTODIAN:
State Street Bank and Trust Company
P.O. Box 1912
Boston, MA 02107
INVESTMENT ADVISER FOR THE MUTUAL FUNDS:
The Hartford Investment Management Company (HIMCO)
Hartford Plaza
Hartford, CT 06115
SUB-ADVISER FOR THE HARTFORD STOCK FUND, INC., HARTFORD ADVISERS FUND, INC.,
HARTFORD CAPITAL APPRECIATION FUND, INC., HARTFORD INTERNATIONAL
OPPORTUNITIES
FUND, INC., HARTFORD DIVIDEND AND GROWTH FUND, INC., HARTFORD INTERNATIONAL
ADVISERS FUND, INC., HARTFORD SMALL COMPANY FUND INC.:
Wellington Management Company
75 State Street
Boston, MA 02109
PRINCIPAL UNDERWRITER FOR THE SEPARATE ACCOUNTS:
Hartford Equity Sales Company, Inc. (HESCO)
Hartford Plaza
Hartford, CT 06115
Hartford Securities Distribution Company, Inc. (HSD)
Hartford Plaza
Hartford, CT 06115
INDEPENDENT PUBLIC ACCOUNTANTS:
Arthur Andersen LLP
One Financial Plaza
Hartford, CT 06103
<PAGE>
_____________________________________________________________________________
Harford Life Insurance Companies BULK RATE
P.O. Box 2999 U.S. POSTAGE
Hartford, CT 06104-2999 PAID
PERMIT NO. 1
HARTFORD, CT
HV-1892-21 Printed in U.S.A.
