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[LOGO] 1999
SEMI-ANNUAL REPORT
- - Manager Discussions
- - Financials
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Table of Contents
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PAGE
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Investment Review................................. 1
Hartford Mutual Funds
Statements of Net Assets as of June 30, 1999:
Hartford Bond HLS Fund, Inc................... MF-1
Hartford Stock HLS Fund, Inc.................. MF-5
Hartford Money Market HLS Fund, Inc........... MF-7
Hartford Advisers HLS Fund, Inc............... MF-9
Hartford Capital Appreciation HLS Fund,
Inc.......................................... MF-13
Hartford Mortgage Securities HLS Fund, Inc.... MF-16
Hartford Index HLS Fund, Inc.................. MF-19
Hartford International Opportunities HLS Fund,
Inc.......................................... MF-25
Hartford Dividend and Growth HLS Fund, Inc.... MF-29
Hartford International Advisors HLS Fund,
Inc.......................................... MF-32
Hartford Small Company HLS Fund, Inc.......... MF-37
Hartford MidCap HLS Fund, Inc................. MF-39
Hartford Growth and Income HLS Fund........... MF-41
Hartford High Yield Bond HLS Fund............. MF-43
Hartford Global Leaders HLS Fund.............. MF-47
Statement of Operations for the Six Months Ended
June 30, 1999:
Hartford Mutual Funds......................... MF-50
Statement of Changes in Net Assets for the Six
Months Ended June 30, 1999 and the Year Ended
December 31, 1998:
Hartford Mutual Funds......................... MF-54
Notes to Financial Statements:
Hartford Mutual Funds......................... MF-62
Hartford Mutual Funds Financial Highlights...... MF-76
BB & T Growth and Income Fund
Statement of Portfolio Investments as of June
30, 1999:...................................... MF-81
Statement of Assets and Liabilities as of June
30, 1999:...................................... MF-83
Statement of Operations for the Six Months Ended
June 30, 1999:................................. MF-84
Statement of Changes in Net Assets for the Six
Months Ended June 30, 1999 and the Year Ended
December 31, 1998:............................. MF-85
Notes to Financial Statements:.................. MF-86
Financial Highlights............................ MF-88
AmSouth Equity Income Fund
Statement of Portfolio Investments as of June
30, 1999:...................................... MF-89
Statement of Assets and Liabilities as of June
30, 1999:...................................... MF-92
Statement of Operations for the Six Months Ended
June 30, 1999:................................. MF-93
Statement of Changes in Net Assets for the Six
Months Ended June 30, 1999 and the Year Ended
December 31, 1998:............................. MF-94
Notes to Financial Statements:.................. MF-95
Financial Highlights............................ MF-98
Mentor Mutual Funds
Statement of Assets and Liabilities as of June 30,
1999:............................................ MF-99
Statement of Operations for the Six Months Ended
June 30, 1999:
Mentor Mutual Funds........................... MF-100
Statement of Changes in Net Assets for the Six
Months Ended June 30, 1999:
Mentor Mutual Funds........................... MF-101
Statement of Changes in Net Assets for the
Period from March 3, 1998 to December 31, 1998:
Mentor Mutual Funds........................... MF-102
Financial Highlights............................ MF-103
Portfolio Schedule of Investments as of June 30,
1999:
Mentor VIP Capital Growth Portfolio........... MF-106
Mentor VIP Growth Portfolio................... MF-107
Mentor VIP Perpetual International
Portfolio.................................... MF-109
Notes to Financial Statements:................ MF-112
</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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HARTFORD
SMALL COMPANY HLS FUND
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PORTFOLIO MANAGER
[PHOTO]
MARK S. WATERHOUSE
Vice President
Wellington Management Company, LLP
[GRAPH]
PERFORMANCE OVERVIEW
8/9/96 - 6/30/99
GROWTH OF A $10,000 INVESTMENT.
$17,278 $14,526
- --- Small Company Fund IA --- Russell 2000
<TABLE>
<CAPTION>
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RETURNS
Returns for Period Ending June 30, 1999
YTD* 1 YEAR SINCE INCEPTION**
<S> <C> <C> <C>
Small Co IA 22.04% 25.10% 20.83%
Russell 2000 9.28% 1.50% 13.79%
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</TABLE>
*CUMULATIVE RETURNS **ANNUALIZED RETURNS
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE SMALL COMPANY HLS FUND.
(THE RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT EXCLUDE THE INSURANCE
CHARGES). PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE VALUE OF THE
CONTRACT WILL FLUCTUATE SO THAT WHEN REDEEMED, IT MAY BE WORTH MORE OR LESS THAN
THE ORIGINAL INVESTMENT.
Q. HOW DID THE FUND PERFORM?
The Hartford Small Company HLS Fund returned 19.8% in the second quarter
bringing the return for the 6-month period ending June 30, 1999 to 22% versus a
return of 9.9% for the Lipper Small Cap VA-UF Average over the same period.
Q. WHY DID THE FUND PERFORM THIS WAY?
The tide has clearly turned for small-cap stocks. In the second quarter, the
Russell 2000 Index posted a 15.5% gain compared to an increase of 7.0% for the
S&P 500 Index. This type of relative outperformance was long overdue and makes
sense as the valuations for small cap stocks are very attractive and the
earnings growth forecasts remain strong. Within the small cap universe, we focus
on those companies within dynamic global industries trading at attractive
valuations which exhibit high earnings growth, margin expansion potential,
healthy balance sheets and strong management.
Q. WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 1999?
We are well positioned for the expected global economic recovery with holdings
in oil service, semiconductors and semiconductor equipment. Currently, we are
heavily weighted in technology due to market appreciation, and we will be
reducing this exposure. We will continue to look for stocks one story at a time
to uncover compelling opportunities as they present themselves.
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HARTFORD
CAPITAL APPRECIATION HLS FUND
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PORTFOLIO MANAGER
[PHOTO]
SAUL J. PANNELL, CFA
Senior Vice President and Partner
Wellington Management Company, LLP
[GRAPH]
PERFORMANCE OVERVIEW
1/1/89 - 6/30/99
GROWTH OF A $10,000 INVESTMENT.
$65,101 $64,110
- -- Capital Appreciation Fund IA -- S&P 500
<TABLE>
<CAPTION>
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RETURNS
Returns for Period Ending June 30, 1999
YTD* 1 YEAR 5 YEAR** 10 YEAR**
<S> <C> <C> <C> <C>
Cap App IA 17.10% 20.93% 23.17% 18.67%
S&P 500 12.38% 22.77% 27.87% 18.78%
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</TABLE>
*CUMULATIVE RETURNS **ANNUALIZED RETURNS
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE CAPITAL APPRECIATION HLS
FUND. (THE RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT EXCLUDE THE INSURANCE
CHARGES). PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE VALUE OF THE
CONTRACT WILL FLUCTUATE SO THAT WHEN REDEEMED, IT MAY BE WORTH MORE OR LESS THAN
THE ORIGINAL INVESTMENT.
Q. HOW DID THE FUND PERFORM?
The Hartford Capital Appreciation HLS Fund returned 17.1% for the 6-month period
ending June 30, 1999 versus a return of 13.8% for the Lipper Capital
Appreciation VA-UF Average.
Q. WHY DID THE FUND PERFORM THIS WAY?
The change in market sentiment that we have been anticipating finally took hold
during the quarter. We are seeing downward earnings revisions for larger
"quality growth" companies and a stabilization in interest rates. The
re-strengthening of the US dollar will make earnings progress for mega-cap
multinationals more difficult. These aggregate factors should result in smaller,
more domestically oriented companies outperforming larger companies. Smaller
companies' relative price-to-earnings and price-to-book ratios remain
significantly below the overall market's, while relative growth prospects are
probably better. The historic disparity in both relative performance and
valuations should lead to a further broadening of the market. We believe that
this trend will endure well beyond the most recent quarter, perhaps for several
years. The Fund's performance was helped by a diverse group of companies, most
of these in the mid-to-smaller capitalization range.
Q. WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 1999?
As we have argued for much of the past two years, the dichotomy in valuations
between large-cap, recognized growth on the one hand, and virtually everything
else on the other, has become extreme. It remains so, despite last quarter's
improvement. Our overall strategy for the Fund remains dual faceted: an emphasis
on smaller companies with dynamic earnings growth prospects, and an
opportunistic trading approach to larger-cap stocks where we typically see a
catalyst for outperformance. We have tended to roam off the beaten path,
historically where the most upside potential has been. This approach should
provide positive absolute and relative results over a reasonable time frame.
While the overall market outlook remains controversial, macroeconomic and
valuation factors would tend to endorse our positioning.
<PAGE>
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HARTFORD
MIDCAP HLS FUND
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PORTFOLIO MANAGERS
[PHOTO]
PHILLIP H. PERELMUTER
Vice President
Wellington Management Company, LLP
[GRAPH]
PERFORMANCE OVERVIEW
7/15/97 - 6/30/99
GROWTH OF A $10,000 INVESTMENT.
$17,873 $13,992
- -- MidCap Fund IA -- S&P 400
<TABLE>
<CAPTION>
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RETURNS
Returns for Period Ending June 30, 1999
YTD* 1 YEAR SINCE INCEPTION**
<S> <C> <C> <C>
MidCap IA 24.07% 33.49% 34.45%
S&P 400 6.87% 17.18% 18.71%
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</TABLE>
*CUMULATIVE RETURNS **ANNUALIZED RETURNS
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE MIDCAP HLS FUND. (THE
RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT EXCLUDE THE INSURANCE CHARGES).
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE VALUE OF THE CONTRACT
WILL FLUCTUATE SO THAT WHEN REDEEMED, IT MAY BE WORTH MORE OR LESS THAN THE
ORIGINAL INVESTMENT.
Q. HOW DID THE FUND PERFORM?
In the second quarter of 1999, the Hartford MidCap HLS Fund returned 16.8%
bringing the total return through June 30 to 24.1% versus a return of 13% for
the Lipper Mid Cap VA-UF Average. For the 12-month and since inception periods,
the Fund has outperformed its peers and ranks in the first quartile of its
Lipper group.
Q. WHY DID THE FUND PERFORM THIS WAY?
The Fund had good participation in the better performing sectors and was
generally underweight the poorer performing sectors. Mid-cap stocks benefited
from the broadening market with the S&P Mid Cap 400 Index rising 14.2% compared
to the S&P 500 Index's 7.0% appreciation. Since the market's low on October 8,
1998, mid-cap stocks have risen 51%. This return outpaces that of large-cap
stocks (S&P 500 index) at 43% and small-cap stocks (Russell 2000 index) at 48%.
Within the mid-cap universe, the best performing areas have been media,
biotechnology, and technology. Some of the poorer performing sectors have been
banks, utilities, energy, and basic materials.
Q. WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 1999?
The Fund's strategy is to focus on high quality, mid-cap companies on the "verge
of greatness." These companies have established critical mass, yet have the
potential to be much larger. The Fund consists of companies within our five
sectors of opportunity: consumer products, finance, health care, services, and
technology. These are the sectors that we believe will show faster earnings
growth than the overall market over the next 12-18 months. The outlook for the
type of mid-cap companies we seek is very good. These high quality,
market-leading companies should fare relatively well during a period of
accelerating economic growth while their relative valuation is near 10-year
lows.
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HARTFORD
INTERNATIONAL OPPORTUNITIES HLS FUND
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LEAD PORTFOLIO MANAGER
[PHOTO]
TROND SKRAMSTAD
Senior Vice President and Partner
Wellington Management Company, LLP
[GRAPH]
PERFORMANCE OVERVIEW
7/2/90 - 6/30/99
GROWTH OF A $10,000 INVESTMENT.
$20,670 $20,226
- -- International Opportunities IA -- EAFE GDP
<TABLE>
<CAPTION>
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RETURNS
Returns for Period Ending June 30, 1999
YTD* 1 YEAR 5 YEAR** SINCE INCEP.**
<S> <C> <C> <C> <C>
Int'l Opp IA 10.80% 7.41% 10.19% 8.14%
EAFE GDP* 5.65% 9.84% 11.03% 8.40%
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</TABLE>
*CUMULATIVE RETURNS **Annualized Returns
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE INTERNATIONAL
OPPORTUNITIES HLS FUND. (THE RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT
EXCLUDE THE INSURANCE CHARGES). PAST PERFORMANCE DOES NOT GUARANTEE FUTURE
RESULTS. THE VALUE OF THE CONTRACT WILL FLUCTUATE SO THAT WHEN REDEEMED, IT MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL INVESTMENT.
*The Morgan Stanley Europe Australia Far East GDP-Net Index.
Q. HOW DID THE FUND PERFORM?
In the second quarter, the Hartford International Opportunities HLS Fund
returned 4.4% bringing the return for the 6-month period ending June 30, 1999 to
10.8% versus a return of 8.1% for the Lipper International VA-UF Average over
the same time period.
Q. WHY DID THE FUND PERFORM THIS WAY?
Most equity markets posted positive returns on the back of stronger-than-
expected world growth and continued recovery in the world's "crisis stricken"
economies. This led to further sharp rises in emerging and Asian markets as well
as Japan. Europe, on the other hand, was held back by a further decline in the
euro. Sluggish growth and concerns about the new European Central Bank have
dampened investor enthusiasm for the region. From a sector point of view,
information technology and materials stocks outperformed while health care and
finance underperformed.
Q. WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 1999?
We will continue to increase holdings in economically sensitive stocks in
anticipation of accelerating global growth later this year. Sector exposure will
be used on an opportunistic basis; we will shift the Fund toward sectors which
will benefit most from increasing economic growth. For example, we have been
increasing the weighting in the materials sector while reducing the weight in
selected growth sectors. Within Europe, we have been reducing our weighting in
the UK in favor of Continental Europe, which is likely to benefit more from
stronger global growth than the UK. Finally, we have been adding to Japan as the
good news has finally begun to outweigh the bad news. In general, we look to
shift to more cyclically oriented sectors and markets on the back of improving
global growth.
<PAGE>
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HARTFORD
GLOBAL LEADERS HLS FUND
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PORTFOLIO MANAGERS
[PHOTO]
RAND L. ALEXANDER, CFA
Senior Vice President
and Partner
Wellington Management
Company, LLP
ANDREW S. OFFIT
Vice President
Wellington Management Company, LLP
[GRAPH]
PERFORMANCE OVERVIEW
10/1/98 - 6/30/99
GROWTH OF A $10,000 INVESTMENT.
$14,975 $13,146
- -- Global Leaders IA -- MSCI World
<TABLE>
<CAPTION>
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CUMULATIVE RETURNS
Period Ended June, 30 1999
YTD* SINCE INCEPTION*
<S> <C> <C>
Global Leaders IA 13.55% 49.74%
MSCI World 8.51% 31.46%
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</TABLE>
*CUMULATIVE RETURNS
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE GLOBAL LEADERS HLS FUND.
(THE RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT EXCLUDE THE INSURANCE
CHARGES). PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE VALUE OF THE
CONTRACT WILL FLUCTUATE SO THAT WHEN REDEEMED, IT MAY BE WORTH MORE OR LESS THAN
THE ORIGINAL INVESTMENT.
Q. HOW DID THE FUND PERFORM?
For the quarter ended June 30, the Hartford Global Leaders HLS Fund returned
5.9%, underperforming the Lipper Global VA-UF Average. Since inception
(9/30/98), the Fund has returned 49.7%, well above the 33% return of its Lipper
peer group.
Q. WHY DID THE FUND PERFORM THIS WAY?
World growth increased due to worldwide interest rate cuts and the revival of
Asia and Japan. By mid-April, the markets began to respond to the good news.
Rising commodity prices drove the returns of the materials and industrial
sectors. The large weight in health care and small exposure to materials stocks
limited Fund performance. Health care stocks have been tremendous performers
over the last five years but with the impending Medicare plan in the United
States and earnings disappointments for some major players, the sector was the
worst performing in the quarter. The materials sector, which includes
commodity-based and cyclical stocks, rebounded following a long period of
underperformance. The biggest positive influence on performance for the quarter
was the overweight in technology, which continues to benefit from both the
cyclical rebound and the secular need for more hardware and software as we enter
the 21st century.
Q. WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 1999?
The next six months will likely prove both interesting and challenging for
global investors. Following the Asia meltdown, financial markets were greeted
with over 100 interest rate cuts around the globe aimed at restoring stability,
confidence and growth. Growth is now increasing and interest rates are rising,
yet financial markets continue to hit all time highs. Secondly, while much time,
effort and money has been spent to ensure a smooth transition at the turn of the
century, nothing is certain. At best, there will most likely be a temporary
slowdown in corporate activity as we approach Y2K. We continue to adhere to our
themes, focusing on long-term growth sectors, and keeping a watchful eye on
valuation. Global leaders, by their very nature, have superior products, market
share and management. Over the long-term, as we continue to identify the winning
sectors and companies, the Fund should succeed.
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HARTFORD
STOCK HLS FUND
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PORTFOLIO MANAGER
[PHOTO]
RAND L. ALEXANDER, CFA
Senior Vice President and Partner
Wellington Management Company, LLP
[GRAPH]
PERFORMANCE OVERVIEW
1/1/89 - 6/30/99
GROWTH OF A $10,000 INVESTMENT.
$65,101 $61,791
- -- Stock Fund IA -- S&P 500
<TABLE>
<CAPTION>
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RETURNS
Returns for Period Ending June 30, 1999
YTD* 1 YEAR 5 YEAR** 10 YEAR**
<S> <C> <C> <C> <C>
Stock IA 13.06% 24.34% 27.70% 18.31%
S&P 500 12.38% 22.77% 27.87% 18.78%
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</TABLE>
*CUMULATIVE RETURNS **ANNUALIZED RETURNS
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE STOCK HLS FUND. (THE
RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT EXCLUDE THE INSURANCE CHARGES).
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE VALUE OF THE CONTRACT
WILL FLUCTUATE SO THAT WHEN REDEEMED, IT MAY BE WORTH MORE OR LESS THAN THE
ORIGINAL INVESTMENT.
Q. HOW DID THE FUND PERFORM?
The Hartford Stock HLS Fund returned 13.1% for the 6-month period ended June 30,
1999. The Fund's return exceeded the returns of the S&P 500 Index (12.4%) and
the Lipper Growth VA-UF Average (12.6%). The Fund has outperformed its peer
universe over the 1-year, 3-year, and 5-year periods.
Q. WHY DID THE FUND PERFORM THIS WAY?
The US equity markets demonstrated remarkable resilience during the second
quarter of 1999. Shrugging off a Federal Reserve increase in short-term interest
rates, chaotic conditions in Kosovo, rising commodity prices, and falling bond
prices, investors instead focused on the continuing strength of the US economy
and improving global economic growth. Favorable US equity market performance has
broadened with smaller-caps doing better than larger-caps, cyclicals
outperforming non-cyclicals, and value outpacing growth. Strong sectors include
basic materials, communications equipment, machinery, computers and office
equipment, energy, and telephones. Weak groups included household products,
drugs and health services, media, and automotive. The Fund's performance was
helped by overweight positions in basic materials, energy and technology and by
our increasing commitment to industrial and commercial stocks.
Q. WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 1999?
With low inflation, strong economic growth, rising corporate earnings, a budget
surplus, and low unemployment, the US economic backdrop remains favorable for
stocks. The one dark cloud on the horizon is rising interest rates, but that
does not appear to be enough to blot out the optimism that has characterized the
US equity market over the last several years, at least for now. Nonetheless, the
interest rate situation merits close scrutiny. Since 1982, interest rates have
been in a secular decline, favoring the equity investor. We remain cautiously
optimistic about the equity market.
<PAGE>
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HARTFORD
GROWTH AND INCOME HLS FUND
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PORTFOLIO MANAGER
[PHOTO]
JAMES A. RULLO, CFA
Vice President
Wellington Management Company, LLP
[GRAPH]
PERFORMANCE OVERVIEW
6/1/98 - 6/30/99
GROWTH OF A $10,000 INVESTMENT.
$13,374 $12,773
- -- Growth and Income Fund IA -- S&P 500
<TABLE>
<CAPTION>
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RETURNS
Returns for Period Ending June 30,1999
YTD* 1 YEAR SINCE INCEPTION**
<S> <C> <C> <C>
Growth and Income IA 12.34% 28.52% 30.64%
S&P 500 12.38% 22.77% 25.45%
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</TABLE>
*CUMULATIVE RETURNS **ANNUALIZED RETURNS
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE GROWTH AND INCOME HLS
FUND. (THE RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT EXCLUDE THE INSURANCE
CHARGES). PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE VALUE OF THE
CONTRACT WILL FLUCTUATE SO THAT WHEN REDEEMED, IT MAY BE WORTH MORE OR LESS THAN
THE ORIGINAL INVESTMENT.
Q. HOW DID THE FUND PERFORM?
For the second quarter of 1999, the Hartford Growth and Income HLS Fund returned
7.7% bringing the return through June 30, 1999 to 12.3%, ahead of the Lipper
Growth and Income VA-UF Average (11.7%). Over the past year, the Fund has
returned 28.5%, exceeding the 15.8% return of the Lipper VA-UF Growth and Income
Average.
Q. WHY DID THE FUND PERFORM THIS WAY?
The S&P 500 Index continues to perform well, up over 12% for the 6-month period
ended June 30, 1999. While mega-cap growth stocks fueled the market rise in
1998, value plays have made a comeback in the first 6 months of 1999. Although
"value" has prevailed, many of the Fund's best returning stocks were in the
growth-oriented technology sector. Top performing holdings in this segment
included Analog Devices and Hewlett-Packard, which posted above consensus
earnings. Similarly, IBM beat the highest "Street" estimate. Cyclical stocks
recovered as investors move to economically sensitive industries. As energy
prices rebounded, companies leveraged to natural gas prices, such as Union
Pacific Resources, also recovered. Regional Bells rebounded as analysts started
to believe that competition for long distance services would be a positive. Bell
Atlantic, which has dominant market share in the local phone service in the
Northeast, was up sharply. Proposed merger partners Ameritech and SBC
Communications should also benefit from this development.
Q. WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 1999?
In light of healthy economic growth, we expect corporate earnings to rise by 10%
this year. The focus of the Fund is to seek superior stocks that we believe will
benefit from stronger global economic growth. We continue to view the secular
move in technology as a long-term positive. Drug stocks continue to look
expensive, but we will look to increase our weighting as opportunities present
themselves.
<PAGE>
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HARTFORD
DIVIDEND AND GROWTH HLS FUND
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PORTFOLIO MANAGER
[PHOTO]
LAURIE A. GABRIEL, CFA
Senior Vice President and Partner
Wellington Management Company, LLP
[GRAPH]
PERFORMANCE OVERVIEW
3/9/94 - 6/30/99
GROWTH OF A $10,000 INVESTMENT.
$32,824 $28,135
- -- Dividend and Growth Fund IA -- S&P 500
<TABLE>
<CAPTION>
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RETURNS
Returns for Period Ended June, 30 1999
YTD* 1 YEAR 5 YEAR** SINCE INCEPTION**
<S> <C> <C> <C> <C>
Div and Grow IA 7.22% 12.53% 23.14% 21.50%
S&P 500 12.38% 22.77% 27.87% 25.07%
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</TABLE>
*CUMULATIVE RETURNS **ANNUALIZED RETURNS
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE DIVIDEND AND GROWTH HLS
FUND. (THE RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT EXCLUDE THE INSURANCE
CHARGES). PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE VALUE OF THE
CONTRACT WILL FLUCTUATE SO THAT WHEN REDEEMED, IT MAY BE WORTH MORE OR LESS THAN
THE ORIGINAL INVESTMENT.
Q. HOW DID THE FUND PERFORM?
For the 6 months ending June 30, 1999, the Hartford Dividend and Growth HLS Fund
lagged the returns of the Lipper Equity Income VA-UF Average, returning 7.2%
versus the peer group's 10.8% return. For longer time periods, the fund has
outperformed its peers and ranks within the first quartile of its Lipper group.
Q. WHY DID THE FUND PERFORM THIS WAY?
In line with our dividend-oriented, value style, we continue to be underweighted
in the information technology sector. Despite some solid performers, this
underweight relative to the market was a source of underperformance. Over the
most recent quarter, our greatest source of outperformance came in the Consumer
Staples sector. Kimberly Clark has been surpassing street expectations through
strong earnings improvements in the tissue and personal care businesses. Hershey
Foods is a true turnaround story with a strong management team focused on
shareholder returns. The Materials sector was another source of positive
contribution due to the shift in market sentiment toward cyclical stocks.
Holdings in this sector include Alcoa, BOC Group, and Witco Chemical. Among our
top holdings are Bell Atlantic whose pending acquisition of GTE should both be
approved by the FCC and completed in the next several months. The company
continues to have good growth prospects, fueled by strong underlying demand and
by merger-related cost savings.
Q. WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 1999?
We expect further modest increases in interest rates over the next 18 months to
slow the growth rate of the US economy. However, small interest rate hikes
should not negatively affect the capital markets. We expect consumer income and
spending to continue to grow but at a more modest pace than in previous months.
We have increased our earnings growth expectations to 9% for 1999.
Broad diversification across economic sectors is an ongoing part of the Fund's
investment strategy. Since the focus of our investment approach is stock
selection, the sector representation will be fairly stable over time. In keeping
with the Fund's charter, the holdings have an above-average yield and below
average P/E and beta. Relative to the market, the Fund should continue to
exhibit these value-oriented characteristics over time.
<PAGE>
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HARTFORD
INTERNATIONAL ADVISERS HLS FUND
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PORTFOLIO MANAGER
[PHOTO]
ROBERT EVANS
Vice President
Wellington Management
Company, LLP
[PHOTO] TROND SKRAMSTAD
Senior Vice President
and Partner
Wellington Management
Company, LLP
[GRAPH]
PERFORMANCE OVERVIEW
3/1/95 - 6/30/99
GROWTH OF A $10,000 INVESTMENT.
$17,406 $16,513 $15,805
- -- International Advisers Fund IA -- EAFE GDP
- --Salomon World Government Bond ex-US Index
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
RETURNS
Returns for Period Ending June 30, 1999
YTD* 1 YEAR SINCE INCEP.**
<S> <C> <C> <C>
Int'l Advisers IA 6.61% 7.25% 12.27%
EAFE GDP* 5.65% 9.84% 13.64%
Salomon 1.20% 7.06% 11.70%
- --------------------------------------------------------------------------------
</TABLE>
*CUMULATIVE RETURNS **ANNUALIZED RETURNS
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE INTER-NATIONAL ADVISERS
HLS FUND. (THE RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT EXCLUDE THE
INSURANCE CHARGES). PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE
VALUE OF THE CONTRACT WILL FLUCTUATE SO THAT WHEN REDEEMED, IT MAY BE WORTH MORE
OR LESS THAN THE ORIGINAL INVESTMENT.
*The Morgan Stanley Europe Australia Far East GDP- Net Index.
Q. HOW DID THE FUND PERFORM?
The Hartford International Advisers HLS Fund returned 2.5% in the second quarter
bringing the returns for the 6-month period ended June 30, 1999 to 6.6% versus a
3.9% return for the Fund's Composite Index (55% MSCI EAFE, 35% SB Non-US World
Gov't Bond (hedged) and 10% T-Bill).
Q. WHY DID THE FUND PERFORM THIS WAY?
The global economic cycle is improving modestly. The US economy continues to
enjoy robust growth and low inflation. Europe is finally showing signs of
industrial revival and employment growth. Asia ex-Japan is experiencing a strong
recovery from the 1997-1998 recession while Japan and Latin America have
stabilized. In this environment, we maintained a slight overweight to stocks
(55-58%) and an underweight to bonds (31-34%), which boosted performance as
equities continued to outperform fixed income. In the middle of June, following
a significant bond sell-off, we added several percentage points to our fixed
income position. By quarter end, we had moved the portfolio to a neutral-weight
in stocks (55.2%), 33.5% in bonds, and slightly overweight cash (11.3%).
Q. WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 1999?
We believe global growth will be modest and inflation will remain low.
Accordingly, global interest rates will decline from present levels once the
markets realize inflation will remain low over the next few years. In the US,
unbridled growth would now damage equities, leading to higher inflationary
expectations, Fed Funds rates and bond yields. As economic expectations rise,
stock and bond markets become positively correlated, and higher yields can lead
to P/E contraction. This late-cycle risk for US stocks has kept us from being
more aggressive in our non-US equity exposure, since stock markets are generally
more correlated on the downside than the upside. US growth and valuation
excesses aside, fundamentals are good for global stock markets. Other than
several more 0.25% increases in short-term rates from the Federal Reserve, the
fundamental backdrop remains positive, and leads us to maintain neutral stock
exposure. European stocks offer value relative to the US. Investor sentiment on
the euro has gone from optimistic to pessimistic, and is overdone; we believe
that positive growth surprises are now likely to come from Continental Europe.
Quantitative indicators suggest weakness in Japanese stocks, but governmental
support should keep the economy going at least through the end of this year. On
a stock-by-stock basis, we are seeing many more Japanese companies restructuring
their operations. While Hong Kong is overvalued, the rest of Asia has room for
further upside. Overall, the outlook for equities outside of the US remains
constructive.
<PAGE>
- --------------------------------------------------------------------------------
HARTFORD
ADVISERS HLS FUND
- --------------------------------------------------------------------------------
PORTFOLIO MANAGERS
[PHOTO]
RAND L. ALEXANDER, CFA
Senior Vice President
and Partner
Wellington Management
Company, LLP
[PHOTO] PAUL D. KAPLAN
Senior Vice President
and Partner
Wellington Management Company, LLP
[GRAPH]
PERFORMANCE OVERVIEW
1/1/89 - 6/30/99
GROWTH OF A $10,000 INVESTMENT.
$65,101 $43,542 $23,853
- -- Advisers Fund IA -- S&P 500
- -- Lehman Govt/Corp
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
RETURNS
Returns for Period Ending June 30,1999
YTD* 1 YEAR 5 YEAR** 10 YEAR**
<S> <C> <C> <C> <C>
Advisers IA 6.91% 15.44% 20.37% 14.44%
S&P 500 12.38% 22.77% 27.87% 18.78%
Lehman Govt/Corp -2.28% 2.70% 7.76% 8.12%
- --------------------------------------------------------------------------------
</TABLE>
*CUMULATIVE RETURNS **Annualized Returns
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE ADVISERS HLS FUND. (THE
RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT EXCLUDE THE INSURANCE CHARGES).
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE VALUE OF THE CONTRACT
WILL FLUCTUATE SO THAT WHEN REDEEMED, IT MAY BE WORTH MORE OR LESS THAN THE
ORIGINAL INVESTMENT.
Q. HOW DID THE FUND PERFORM?
The Hartford Advisers HLS Fund outperformed its Lipper peer group for the
6-month period ending June 30, 1999. The Fund had a total return of 6.9% versus
5.9% for the Lipper Flexible VA-UF Average. Over the 1-year, 3-year, and 5-year
periods, the Fund ranks in the first quartile of its competitive group.
Q. WHY DID THE FUND PERFORM THIS WAY?
By gradually adjusting the weighting between stocks, bonds, and cash we were
able to use our expectations of market developments to produce attractive
returns. Although the economic environment continues to be supportive of stocks,
we reduced our equity exposure in response to higher equity valuations and
remain sensitive to the possible negative effects on the stock market which
might result from higher interest rates. At the beginning of 1999, the pattern
of bond yields reflected expectations for lower short-term interest rates. The
subsequent change in outlook has had a substantial effect on the bond market,
causing yields to move noticeably higher over the course of the year
Q. WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 1999?
The Federal Reserve may raise interest rates again as the economy continues to
grow at a rate above the 3% level that the Fed seems to find comfortable. On the
other hand, inflation remains under control and this is the key to interest rate
levels. We currently believe inflation will remain low and under control and
that, in the end, interest rates will head lower. It may not occur during the
third quarter, nor is it certain to occur during 1999. In fact, yields may go
higher than current levels for a time. Nonetheless, low inflation will mean
lower interest rates at some point in the foreseeable future.
<PAGE>
- --------------------------------------------------------------------------------
HARTFORD
HIGH YIELD HLS FUND
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER
[PHOTO]
ALISON D. GRANGER, CFA
Senior Vice President
The Hartford Investment
Management Company (HIMCO)
[GRAPH]
PERFORMANCE OVERVIEW
10/1/98 - 6/30/99
GROWTH OF A $10,000 INVESTMENT.
$10,693 $10,437
- -- High Yield Fund IA -- Lehman High Yield
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
CUMULATIVE RETURNS
Period Ended June 30.1999
YTD* SINCE INCEPTION*
<S> <C> <C>
High Yield IA 3.23% 6.92%
Lehman High Yield 2.20% 4.37%
- --------------------------------------------------------------------------------
</TABLE>
*CUMULATIVE RETURNS
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE HIGH YIELD HLS FUND. (THE
RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT EXCLUDE THE INSURANCE CHARGES).
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE VALUE OF THE CONTRACT
WILL FLUCTUATE SO THAT WHEN REDEEMED, IT MAY BE WORTH MORE OR LESS THAN THE
ORIGINAL INVESTMENT.
Q. HOW DID THE FUND PERFORM?
The Hartford High Yield HLS Fund commenced operations on September 30, 1998. The
Fund's Class IA shares placed in the 48th percentile of its Lipper peer group
for the three months ended June 30, 1999, producing a since-inception total
return of 6.92% versus the 6.08% return of the Lipper High Current Yield
Variable Annuity Fund average.
Q. WHY DID THE FUND PERFORM THIS WAY?
- - The Fund's overweight to securities in cyclically-sensitive industries aided
performance, as oil, steel, chemical and paper issues generally outperformed
during the second quarter.
- - The Fund's communications and media industry holdings benefited its
performance. These industries outperformed due to recent significant
credit-positive consolidation activity.
- - The Fund's allocation to Emerging Market sovereign issues which produced
excess performance during the first quarter, gave back some of that
performance during the second quarter.
Q. WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 1999?
The average current yield offered by high yield securities today exceeds 9.25%.
We believe that the high current income and potential for capital appreciation
offered by high yield bonds offers a very attractive income and diversification
alternative to equity investors.
We continue to pursue opportunities where we feel we can be rewarded for taking
on risk. We are increasingly wary of credit risk in the corporate bond sector
and will remain very selective in our corporate bond holdings. The Fund is
currently holding the majority of its assets in the higher-quality BB rated
segment of the high yield market. We believe that the risk/reward profile of
these issues is currently more attractive, on average, than those of lower-rated
high yield issues. We continue to overweight energy related issues in the Fund.
We also are opportunistically investing a small portion of Fund assets in
Emerging Market sovereign issues. These securities provide another way to
express our positive outlook on oil, as a number of Emerging Market economies
will significantly benefit from a sustained increase in the price of oil.
Finally, the investment grade market is also providing opportunities to the
Fund. Heavy new issue supply is causing the pricing of some investment grade
issues to be competitive with high yield securities. To the extent possible we
will capitalize on this technical anomaly.
<PAGE>
- --------------------------------------------------------------------------------
HARTFORD
BOND HLS FUND
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER
[PHOTO]
ALISON D. GRANGER, CFA
Senior Vice President
The Hartford Investment
Management Company (HIMCO)
[GRAPH]
PERFORMANCE OVERVIEW
1/1/89 - 6/30/99
GROWTH OF A $10,000 INVESTMENT. $23,853 $22,775
- -- Bond IA -- Lehman Govt/Corp
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
RETURNS
Returns for Period Ending June 30.1999
YTD* 1 YEAR5 YEAR** 10 YEAR**
<S> <C> <C> <C> <C>
Bond IA -2.56% 1.05% 7.69% 7.80%
Lehman
Govt/Corp -2.28% 2.70% 7.76% 8.12%
- --------------------------------------------------------------------------------
</TABLE>
*CUMULATIVE RETURNS **ANNUALIZED RETURNS
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE BOND HLS FUND. (THE
RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT EXCLUDE THE INSURANCE CHARGES).
PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE VALUE OF THE CONTRACT
WILL FLUCTUATE SO THAT WHEN REDEEMED, IT MAY BE WORTH MORE OR LESS THAN THE
ORIGINAL INVESTMENT.
Q. HOW DID THE FUND PERFORM?
The Hartford Bond HLS Fund Class IA shares placed in the 57th percentile of its
Lipper peer group for the quarter ended June 30, 1999, producing a total return
of -1.40% versus the -1.35% return of Lipper's Corporate Debt "BBB" rated
Variable Annuity Underlying Fund Universe.
Q. WHY DID THE FUND PERFORM THIS WAY?
- - The Fund's performance was aided by its holdings in Treasury Inflation
Protected Securities and cash, as the market favored these securities in
anticipation of the recent tightening of the Federal Reserve.
- - The average maturity and interest rate duration of the Fund, while shorter
than it had been in 1998 and during the first quarter of this year, remained
marginally longer than its benchmark index, resulting in relatively larger
price declines as yields rose sharply during the second quarter.
- - Having contributed excess returns to the Fund during the first quarter, the
Fund's holdings in long maturity (10+ year) corporate securities hindered its
performance during the second quarter, as corporate securities generally
underperformed Treasuries during May and June. The primary exception to this
included portfolio holdings in energy-related corporate issues which have
performed very well since March.
Q. WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 1999?
With long term rates hovering around the 6% mark, we will maintain a neutral
interest rate position in the fund. Effectively, we will keep the duration of
the Fund in line with that of its benchmark index.
We continue to view Treasuries as an attractive opportunity relative to other
sectors of the bond market. We believe Treasuries have a superior supply/ demand
profile given the US government's reduced need for financing.
We are increasingly wary of credit deterioration in the corporate bond sector
and will remain very selective in our corporate bond holdings. The liquidity
injected into the credit markets of the Federal Reserve last autumn resulted in
a significant recovery in the performance of the US economy and credit-related
fixed income, including investment grade and high yield corporate bonds. We
believe the recovery is temporary. Fundamentally, we see a rising trend in
credit ratings downgrades relative to upgrades, a steady rise in corporate
defaults, and a high ratio of corporate bonds trading at distressed levels. From
a technical standpoint, new issue supply has been coming to market at a high
rate, and we expect this to continue through the summer. As these issues price
to clear, they negatively impact the performance of existing securities, and
lead to underperformance relative to Treasuries. In light of these conditions,
our corporate strategy will be to continue to emphasize commodity-related
issues, and to look for opportunities across industries among attractively
priced new issues.
<PAGE>
- --------------------------------------------------------------------------------
HARTFORD
MORTGAGE SECURITIES HLS FUND
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER
[PHOTO]
TIMOTHY J. WILHIDE
Senior Vice President
The Hartford Investment
Management Company (HIMCO)
[GRAPH]
PERFORMANCE OVERVIEW
1/1/89 - 6/30/99
GROWTH OF A $10,000 INVESTMENT.
$24,078 22,164
- -- Mortgage -- Lehman Mortgage
Securities Fund IA Backed Securities
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
RETURNS
Returns for Period Ending June 30, 1999
YTD* 1 YEAR 5 YEAR** 10 YEAR**
<S> <C> <C> <C> <C>
Mort. Sec. IA 0.22% 3.49% 7.55% 7.51%
Lehman Mort. 0.53% 4.01% 7.97% 8.24%
- --------------------------------------------------------------------------------
</TABLE>
*CUMULATIVE RETURNS **ANNUALIZED RETURNS
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE MORTGAGE SECURITIES HLS
FUND. (THE RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT EXCLUDE THE INSURANCE
CHARGES). PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE VALUE OF THE
CONTRACT WILL FLUCTUATE SO THAT WHEN REDEEMED, IT MAY BE WORTH MORE OR LESS THAN
THE ORIGINAL INVESTMENT.
Q. HOW DID THE FUND PERFORM?
The Hartford Mortgage Securities HLS Fund had strong returns through the first
six months of 1999 posting a 0.22% return for that period versus -0.29% return
for the Lipper VA underlying Fund universe. This competitive performance
positioned the Fund in the 29th percentile for year to date performance through
June 30, 1999.
Q. WHY DID THE FUND PERFORM THIS WAY?
Fixed Income yields increased by about one percentage point during the first
half of the year, as the Federal Reserve interest rate hike was anticipated by
the market. The return on Mortgage Securities for the first half of the year was
relatively flat, with the backup in the treasury market being offset by
mortgages tightening on a spread basis.
Q. WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 1999?
With the continued strength in U.S. economic growth, the Federal Reserve will be
vigilant to act if inflation shows signs of increasing. Therefore, the market
will react unfavorably at any hint of a pickup in inflation. Also, technical
factors, such as an increased supply of corporate debt and other spread
products, may put near term pressure on mortgages. However, with spreads still
relatively wide and mortgage refinancing activity low, the fundamental valuation
of mortgages looks attractive.
As we continue through 1999, HIMCO will look to overweight the higher yielding
mortgage securities, as we believe they offer excellent relative value. The
portfolio will continue to emphasize high quality and highly liquid mortgage
securities in its holdings. Principally these are passthrough mortgages of U.S.
Government Agencies such as GNMA, FNMA, and FHLMC.
<PAGE>
- --------------------------------------------------------------------------------
BB&T GROWTH & INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER
RICK B.JONES, CFA
Vice President
Branch Banking & Trust Co.
[GRAPH]
PERFORMANCE OVERVIEW
6/3/97 - 6/30/99
GROWTH OF A $10,000 INVESTMENT.
$16,770 $14,134
- -- BB&T Growth and Income -- S&P 500
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
RETURNS
Returns for Period Ending June 30, 1999
YTD* 1 YEAR SINCE INCEPTION**
<S> <C> <C> <C>
BB&T G&I 3.93% 11.94% 18.16%
S&P 500 12.38% 22.77% 28.31%
- --------------------------------------------------------------------------------
</TABLE>
*CUMULATIVE RETURNS **ANNUALIZED RETURNS
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE BB&T GROWTH AND INCOME
FUND. (THE RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT EXCLUDE THE INSURANCE
CHARGES). PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE VALUE OF THE
CONTRACT WILL FLUCTUATE SO THAT WHEN REDEEMED, IT MAY BE WORTH MORE OR LESS THAN
THE ORIGINAL INVESTMENT.
Q. HOW DID THE FUND PERFORM?
The BB& T Growth & Income Variable Annuity Fund provided a total return
of 3.93% for the six-month period ended June 30, 1999. In comparison, the Lipper
Growth & Income Variable Annuity-Underlying Fund average gained 11.09%.
Q. WHY DID THE FUND PERFORM THIS WAY?
The six months could really be divided into two periods, fitting fairly neatly
into the first quarter and second quarter. The dominance of growth stocks that
has paced the market in recent years continued through the first quarter of 1999
and into the first week of April. At that point, investors quite abruptly turned
away from large-cap growth issues and began to reward the type of value stocks
we favor. The market broadened out and reached down to many second- and
third-tier issues that offered relatively compelling valuations.
Due in large measure to this dramatic turnaround, we had a very healthy second
quarter though it wasn't quite strong enough to overcome the resistance we
encountered in the first three months of the year.
As of June 30, the portfolio's five largest holdings were: Hewlett Packard,
AT&T, Raytheon Class A, Bausch & Lomb and SBC Communications.
Q. WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 1999?
The Federal Reserve's widely anticipated interest rate hike at the end of the
period did nothing to hinder the stock market's march forward, at least in the
short term. We expect the domestic economy to continue to be relatively strong
through the end of the year, which should help stocks.
At the same time, we don't expend too much energy trying to guess and time
macroeconomic events. We believe that, in the long run, investors will be
rewarded if they own the shares of high-quality, reasonably priced stocks - such
as the issues in our portfolio. Even with their robust performance in the second
quarter, the types of stocks we own are valued much more cheaply than many of
the high-priced growth names. We feel good about the companies we hold; we
believe that, as a group, they can continue to grow earnings at an impressive
10% annualized rate, and we own them at significant discounts to the S&P 500's
price-to-earnings ratio.
<PAGE>
- --------------------------------------------------------------------------------
AMSOUTH EQUITY INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER
CHRISTOPHER WILES, CFA
President Rockhaven Asset Management
[GRAPH]
PERFORMANCE OVERVIEW
10/23/99 - 6/30/99
GROWTH OF A $10,000 INVESTMENT.
$14,820 $12,621
- -- AmSouth Equity Income -- S&P 500
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
RETURNS
Returns for Period Ending June 30, 1999
YTD* 1 YEAR SINCE INCEPTION**
<S> <C> <C> <C>
Equity Income 9.52% 12.85% 14.81%
S&P 500 12.38% 22.77% 26.30%
- --------------------------------------------------------------------------------
</TABLE>
*CUMULATIVE RETURNS **ANNUALIZED RETURNS
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE AMSOUTH EQUITY INCOME
FUND. (THE RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT EXCLUDE THE INSURANCE
CHARGES). PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE VALUE OF THE
CONTRACT WILL FLUCTUATE SO THAT WHEN REDEEMED, IT MAY BE WORTH MORE OR LESS
THAN THE ORIGINAL INVESTMENT.
Q. HOW DID THE FUND PERFORM?
The Hartford Equity Income Variable Annuity Fund provided a total return of
9.52% for the six-month period ended June 30, 1999. In comparison, the Lipper
Equity Income Variable Annuity-Underlying Fund average gained 9.03%.
Q. WHY DID THE FUND PERFORM THIS WAY?
It's important to understand why, for most of 1998 and through the first quarter
of 1999, the large-cap growth sector was so in vogue - and why the market then
did an abrupt, 180-degree reversal and embraced small-cap value stocks in the
second quarter of this year. Just 12 months ago, many of the world's economies
were falling apart and there was real fear of the damage that could be wrought
by "deflation." The Federal Reserve quickly reacted by lowering interest rates
three times and the U.S. stock market, especially large stocks with high
valuations, reacted by exploding upward. Then, in the first months of 1999,
people began to worry about the economy overheating and possible inflation -
which caused many investors to seek out higher-yielding, lower-valuation stocks.
These shifts in perceptions about where the economy was heading both helped, and
hurt us at different times during the period. Because the portfolio had a
decidedly growth orientation, we outperformed in the first quarter of the year,
and underperformed in the second quarter. Overall, we did better than our
benchmark.
Throughout the period, we also succeeded in providing an above-average dividend
yield. As of June 30, our yield was 2.76%, versus 1.26% for the S&P 500.
Also as of June 30, the portfolio's five largest holdings were: Lincoln National
Convertible Preferred, Costco Convertible Bond, Nisource Convertible Preferred,
BCE Inc. and BankAmerica Convertible Preferred.
Q. WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 1999?
We don't believe we have to worry about runaway inflation, or runaway interest
rates, through the summer. Nor are we concerned about deflation, because the
world's economies are in much better shape than they were a year ago. We think
we'll see more of the middle-tier, solidly structured, fairly valued companies
doing better in the months ahead. This scenario should support the market as a
whole, and our portfolio, as well.
<PAGE>
- --------------------------------------------------------------------------------
AMSOUTH SELECT EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO MANAGERS
NEIL WRIGHT
JANNA SAMPSON
PETER JANKOVSKIS
OakBrook Investments
[GRAPH]
PERFORMANCE OVERVIEW
5/3/99 - 6/30/99
GROWTH OF A $10,000 INVESTMENT
$10,158 $9,937
- -- AmSouth Select Equity Fund -- S&P 500
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
CUMULATIVE RETURNS
Average Cumulative Returns
Period Ended June 30, 1999
SINCE INCEPTION
<S> <C>
Select Equity -0.63%
S&P 500 1.58%
- --------------------------------------------------------------------------------
</TABLE>
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE AMSOUTH SELECT EQUITY
FUND. (THE RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT EXCLUDE THE INSURANCE
CHARGES). PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE VALUE OF THE
CONTRACT WILL FLUCTUATE SO THAT WHEN REDEEMED, IT MAY BE WORTH MORE OR LESS THAN
THE ORIGINAL INVESTMENT.
Q. HOW DID THE FUND PERFORM?
Since its inception on May 3, 1999, which represents just under two months of
performance, the Amsouth Select Equity Variable Annuity Fund provided a total
return of -0.63% for the period ended June 30, 1999. In comparison, the S&P 500
average gained 1.58%.
Q. WHY DID THE FUND PERFORM THIS WAY?
It was a tumultuous time to start a new fund. During the first two weeks in May,
we were exposed to a period when large, high-flying growth stocks were doing
well; these are not the type of names we buy. The Fund surged in the first half
of June, when investors, frightened by signs of inflation, rotated back to
cyclical and value stocks. However, the Fund gave back some of those gains when
inflation fears eased toward the end of the month.
Q. WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 1999?
We think the broader market may be near its peak for the year. We wouldn't
be surprised if stocks hit a very rough patch in the months ahead. At the same
time, we feel the stocks in our portfolio can hold up very well in a market
that's moving down or sideways.
<PAGE>
- --------------------------------------------------------------------------------
MENTOR
VIP CAPITAL GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO MANAGERS
JOHN DAVENPORT, CFA
Managing Director
Mentor Investment Group
RICHARD SKEPPSTROM
Senior Vice President
Mentor Investment Group
CHRIS RUSBULDT, CFA
Vice President
Mentor Investment Group
STEVE CERTO
Vice President
Mentor Investment Group
[GRAPH]
PERFORMANCE OVERVIEW
3/3/98 - 6/30/99
GROWTH OF A $10,000 INVESTMENT.
$13,295 $11,888
- -- VIP Capital Growth -- S&P 500
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
RETURNS
Returns for Period Ended June, 9 1999
YTD* 1 YEAR SINCE INCEPTION**
<S> <C> <C> <C>
VIP Capital Growth 9.43% 16.55% 13.93%
S&P 500 12.38% 22.77% 23.96%
- --------------------------------------------------------------------------------
</TABLE>
*CUMULATIVE RETURNS **ANNUALIZED RETURNS
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE MENTOR VIP CAPITAL GROWTH
PORTFOLIO. (THE RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT EXCLUDE THE
INSURANCE CHARGES). PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE
VALUE OF THE CONTRACT WILL FLUCTUATE SO THAT WHEN REDEEMED, IT MAY BE WORTH MORE
OR LESS THAN THE ORIGINAL INVESTMENT.
Q. HOW DID THE FUND PERFORM?
For the quarter ended June 30, 1999, the Mentor VIP Capital Growth Portfolio
returned 10.24%, outperforming the S&P 500 Index benchmark return of 7.05%. For
the 12-month period ending June 30, 1999, the fund has returned 16.55% versus
the S&P 500 Index return of 22.77%.
Q. WHY DID THE FUND PERFORM THIS WAY?
We enjoyed a strong second quarter with returns well ahead of the S&P 500.
Nonetheless, our "quality-growth-at-a-reasonable-price" philosophy remains out
of sync with the market, and our returns are slightly behind the S&P 500 on a
year-to-date basis. Our investment approach tends to avoid the extreme areas of
the market, such as the high P/E, high momentum, high expectations stocks as
well as the lower quality, lower growth, more volatile stocks. This core
approach has kept us out of the "hottest" areas for a while. We know that market
rotations come and go, but in the long run it is solid fundamentals such as ours
that prevail.
Q. WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 1999?
We have no idea how the stock market will progress over the remainder of the
year. The economy appears to be in remarkably good shape with solid growth and
low inflation likely to continue. However, if market momentum continues to shift
from one extreme to another our performance could lag the major market averages.
Furthermore, speculative impulses seem to be as strong as ever. We have no idea
when or what the catalyst will be, but some event will eventually bring an end
to this remarkable bull market run. Between now and then the market could
experience significant volatility. Our singular goal is to get through this
highly unusual period with our discipline intact, as we know most others will
not.
<PAGE>
- --------------------------------------------------------------------------------
MENTOR PERPETUAL
VIP INTERNATIONAL PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO MANAGERS
SCOTT MCGLASHAN
Far East Team Leader
Perpetual, PLC
KATHRYN LANGRIDGE
Southeast Asia Team Leader
Perpetual, PLC
STEPHEN WHITTAKER
UK Team Leader
Perpetual, PLC
MARGARET RODDAN
Europe Team Leader
Perpetual, PLC
MARK TURNER
Latin America Team Leader
Perpetual, PLC
[GRAPH]
PERFORMANCE OVERVIEW
3/3/98 - 6/30/99
GROWTH OF A $10,000 INVESTMENT.
$12,520 $11,082
- -- VIP International -- MSCI EAFE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
RETURNS
Returns for Period Ending June 30, 1999
YTD* 1 YEAR SINCE INCEPTION**
<S> <C> <C> <C>
VIP International 11.71% 13.74% 18.47%
MSCI EAFE 3.97% 7.62% 8.06%
- --------------------------------------------------------------------------------
</TABLE>
*CUMULATIVE RETURNS **ANNUALIZED RETURNS
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE MENTOR VIP INTERNATIONAL
PORTFOLIO. (THE RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT EXCLUDE THE
INSURANCE CHARGES). PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE
VALUE OF THE CONTRACT WILL FLUCTUATE SO THAT WHEN REDEEMED, IT MAY BE WORTH MORE
OR LESS THAN THE ORIGINAL INVESTMENT.
Q. HOW DID THE FUND PERFORM?
For the quarter ended June 30, 1999, the Mentor VIP International Portfolio
returned 8.68%, handily beating the MSCI EAFE Index benchmark return of 2.61%.
For the 12-month period ending June 30, 1999, the fund has returned 13.74%
versus the MSCI EAFE Index return of 7.62%.
Q. WHY DID THE FUND PERFORM THIS WAY?
Contributions to our performance this year have come from both stock selection
and asset allocation sources. We have more assets in Japan and Asia than our
competitors, and our stock selection within those markets has been positive. In
addition we have had stock selection gains in European and U. K. markets. We
made further transfers towards those parts of the world where markets were
demonstrating strong recovery. By mid-April, we had raised our weighting in
Japan to 23% and Asia to 9%, and cash allocated from the U. K. and Europe
financed these moves. In Japan, our stock selection strategy continues to
emphasize value stocks, which have shown a persistent tendency to outperform
growth stocks over the last nine years. In Europe, we are overweight industrial
cyclicals, reflecting our belief that the economic cycle has turned up. In the
U. K., our preference for mid-cap. stocks has borne fruit.
Q. WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 1999?
It can be seen that there are two dominant interdependent themes underlying our
strategy. First, corporate restructuring activity in all major markets is
uncovering value opportunities and giving managers opportunities to demonstrate
their stock selection skills. Second, the virtuous circle in the U. S. of strong
stock market performance, positive wealth effect, booming consumer spending, and
rising imports has persisted long enough to enable the restructuring to take
place against an encouraging demand background. This favorable conjuncture will
only be threatened if U. S. consumer demand slows before demand elsewhere is
restored to long-term trend levels. Clearly, if inflation were to reappear in
the U. S. the Federal Reserve could be expected to act in a way that might slow
the pace of recovery elsewhere. Nevertheless, relative to U. S. large-cap.
stocks, there are still many opportunities throughout international markets to
buy stocks at more reasonable combinations of earnings growth and price.
<PAGE>
- --------------------------------------------------------------------------------
MENTOR
VIP GROWTH PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO MANAGERS
TED PRICE, CFA
Managing Director
Mentor Investment Group
LINDA ZIGLAR, CFA
Managing Director
Mentor Investment Group
JEFF DRUMMOND, CFA
Senior Vice President
Mentor Investment Group
[GRAPH]
PERFORMANCE OVERVIEW 3/3/98 - 6/30/99
GROWTH OF A$10,000 INVESTMENT.
$10,069 $8,664
- -- VIP Growth -- Russell 2000
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
RETURNS
Returns for Period Ending June 30, 1999
YTD* 1 YEAR SINCE INCEPTION**
<S> <C> <C> <C>
VIP Growth -5.50% -6.72% -10.25%
Russell 2000 9.28% 1.50% 0.52%
- --------------------------------------------------------------------------------
</TABLE>
*CUMULATIVE RETURNS **ANNUALIZED RETURNS
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE MENTOR VIPGROWTH
PORTFOLIO. (THE RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT EXCLUDE THE
INSURANCE CHARGES). PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE
VALUE OF THE CONTRACT WILL FLUCTUATE SO THAT WHEN REDEEMED, IT MAY BE WORTH MORE
OR LESS THAN THE ORIGINAL INVESTMENT.
Q. HOW DID THE FUND PERFORM?
For the quarter ended June 30, 1999, the Mentor VIP Growth Portfolio returned
10.40%, trailing the Russell 2000 Index benchmark return of 15.55% over the same
period. For the 12-month period ending June 30, 1999, the fund has returned
- -6.72% versus the Russell 2000 Index return of 1.50%.
Q. WHY DID THE FUND PERFORM THIS WAY?
The recent performance of the Portfolio has been a painful aberration. We have
identified two sectors that have contributed to this recent underperformance.
Technology and healthcare investments in the Portfolio have always been very
important positive contributors to performance, and typically represent as much
as 50% of the holdings. Through year-end 1998, our technology and healthcare
companies showed strong absolute and relative performance. However, in the first
quarter of 1999 a number of important healthcare and technology holdings gave
back a significant portion of the gains they achieved in the latter months of
1998. Contributing to the collapse of these sectors were specific industry
factors that impacted our companies as well as a small number of earnings
disappointments. However, next year's overall expected earnings growth for the
technology companies in our Portfolio is projected to significantly improve, and
our healthcare companies are efficient operators which should fare well in the
new Medicare environment.
Q. WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 1999?
We have not changed the way that we value companies in order to chase the latest
vogue in investing. We continue to view our investment philosophy as correct,
despite this short-term period of underperformance. We continue to invest in
small, exciting, and rapidly growing companies. Finally, we believe in
purchasing this strong earnings growth at a discount to the market. Aberrations
in performance do occur from time to time, and we recognize that the performance
of the Portfolio in 1999 has been far less than any of us would have liked. At
the same time, we also know that the fundamentals of nearly all of our companies
are superior and vastly unappreciated by the broad market. Over long periods of
time it has paid to stick to one's fundamentals and we have done just that. We
are confident that the market will soon get back to the basics of investing and
recognize the attractiveness of our holdings.
<PAGE>
- --------------------------------------------------------------------------------
MITCHELL HUTCHINS
GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER
MARK A. TINCHER, CFA
Managing Director and Chief Investment
Officer of Equities
Mitchell Hutchins Asset Management, Inc.
[GRAPH]
PERFORMANCE
OVERVIEW 1/2/92 - 6/30/99
GROWTH OF A $10,000 INVESTMENT
$39,099 $24,086
- -- Growth & Income -- S&P 500
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
RETURNS
Returns for Period Ending June 30, 1999
YTD* 1 YEAR 5 YEAR**
<S> <C> <C> <C>
Growth & Income 3.38% 5.32% 20.75%
S&P 500 12.38% 22.77% 27.87%
- --------------------------------------------------------------------------------
</TABLE>
*CUMULATIVE RETURNS **ANNUALIZED RETURNS
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE MITCHELL HUTCHINS GROWTH &
INCOME PORTFOLIO. (THE RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT EXCLUDE THE
INSURANCE CHARGES). PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE
VALUE OF THE CONTRACT WILL FLUCTUATE SO THAT WHEN REDEEMED, IT MAY BE WORTH MORE
OR LESS THAN THE ORIGINAL INVESTMENT.
Q. HOW DID THE FUND PERFORM?
The Mitchell Hutchins Growth and Income Fund provided a total return of 3.38%
for the six month period ending June 30, 1999.
Q. WHY DID THE FUND PERFORM THIS WAY?
The stock market turned in a half-year of impressive gains, with the S&P 500
Index advancing 12.4%. Better news than that for the Portfolio was the breadth
in performance. The market's leadership shifted dramatically beginning in early
April from the high-price-earnings-ratio, nifty 20 growth stocks that had led
the market for most of the last two years, toward value-oriented stocks. As
investors began to seek undervalued stocks, the performance gap between growth
and value narrowed to more normal levels. Value stocks outperformed growth
stocks by a large margin: the Russell 10000 Value Index gained 11.3% and the
Russell 1000 Value Index returned 3.9%. Smaller and mid-cap stocks also
improved.
Q. WHAT IS YOUR OUTLOOK
For The Remainder Of 1999? We expect second-half 1999 economic growth (real
gross domestic product) to slow to 21/2 %-3%, inflation to remain modest between
2%-21/2% and corporate earnings to grow 9%-10%. Putting this together, our
valuation model indicates that the stock market, as measured by the S&P 500
Index, is about 25% above fair value. These valuations might be cause for
concern; however, two factors distinguish the current environment from recent
quarters when valuations were at similar levels. First, we feel that the
majority of the negative move in interest rates is behind us; and second,
corporate profit growth expectations are being raised, not lowered. Therefore,
we believe the market will grow into its valuation, barring any external shocks.
We expect a fairly stable market through year-end. In this environment, stock
picking will be a key contributor to performance. We favor select cyclically
oriented companies that do not need a lot of commodity-priced inflation to
achieve attractive earnings, most notably in the capital goods, industrial
cyclical and consumer cyclical sectors.
<PAGE>
- --------------------------------------------------------------------------------
MITCHELL HUTCHINS
STRATEGIC INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER
DENNIS L. MCCAULEY
Managing Director and Chief Investment
Officer of Fixed Income Investments
Mitchell Hutchins Asset Management, Inc.
[GRAPH]
PERFORMANCE OVERVIEW
9/29/98 -6/30/99
GROWTH OF A $10,000 INVESTMENT
$10,468 $10,427 $9,765 $9.612
- -- Strategic Income -- Lehman Govt Bond
- -- ML High Yld Master -- SB World Govt Bond
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
CUMULATIVE RETURNS
Period Ending June 30, 1999
YTD SINCE INCEPTION
<S> <C> <C>
Strategic Income 1.39% 4.27%
ML High Yld Master 1.76% 4.68%
Lehman Govt Bond -2.28% -2.35%
SB World Govt Bond -7.17% -3.88%
- --------------------------------------------------------------------------------
</TABLE>
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE MITCHELL HUTCHINS
STRATEGIC INCOME PORTFOLIO. (THE RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT
EXCLUDE THE INSURANCE CHARGES). PAST PERFORMANCE DOES NOT GUARANTEE FUTURE
RESULTS. THE VALUE OF THE CONTRACT WILL FLUCTUATE SO THAT WHEN REDEEMED, IT MAY
BE WORTH MORE OR LESS THAN THE ORIGINAL INVESTMENT.
Q. HOW DID THE FUND PERFORM?
The Mitchell Hutchins Strategic Income Fund provided a total return of 1.39% for
the six month period ending June 30, 1999.
Q. WHY DID THE FUND PERFORM THIS WAY?
The dominant theme driving bond yields changed from deflation contagion to a
reassessment of inflation risk. The Federal Reserve announced a bias toward
raising short-term interest rates, citing the rapid growth of domestic demand,
reduced global risk and few apparent offsets to inflation. Investors took this
to mean that the Federal Reserve might raise rates at its next Open Market
Committee meeting of June 29-30, and bond yields rose in response. The yield on
the 30-year U.S. Treasury bond rose from 5.07% at the beginning of the period to
5.82% at period-end.
The Fund allocates assets among three main sectors of the global bond market -
U.S. government/investment grade bonds, U.S. high-yield bonds and non-U.S. bonds
- - and shift emphasis among them as conditions warrant.
During the six-month period ended June, the Fund benefited from its exposure to
high-yield bonds. We gradually trimmed the Fund's exposure through April. *
The Fund's other allocations, however, hurt returns for the period, offsetting
some the gains achieved in the high-yield sector. The
U.S.government/investment-grade corporate sector suffered as the "flight to
quality" faded. Non-U.S. bonds lifted performance during March and April but
lost ground for the six-month period.
Q. WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 1999?
We expect the following over the next six months:
- - Market rates to stay in a trading range, with the long bond yielding
5.75-6.25%
- - The Federal Reserve to raise the short-term interest rate by 50 basis points
(a basis point equals 1/100th of one percent)--this increase appears to be
discounted in the market already
- - Corporate bond spreads to tighten, based on the strong economy and improved
corporate profits
- - Spread sectors to outperform Treasurys in a range-bound interest-rate
environment
*The Fund's portfolio is actively managed and its composition will vary over
time.
<PAGE>
- --------------------------------------------------------------------------------
MITCHELL HUTCHINS
TACTICAL ALLOCATION FUND
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER
T. KIRKHAM BARNEBY
Director and Chief Investment Officer of
Quantitatve Investments Mitchell
Hutchins Asset Management, Inc.
[GRAPH]
PERFORMANCE OVERVIEW
9/29/98-6/30/99
GROWTH OF A $10,000 INVESTMENT
$13,958 $13,629
- -- Tactical Allocation -- S&P 500
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
CUMULATIVE RETURNS
Period Ending June 30.1999
YTD SINCE INCEPTION
<S> <C> <C>
Tactical Allocation 11.68% 39.58%
S&P 500 12.38% 36.29%
- --------------------------------------------------------------------------------
</TABLE>
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE MITCHELL HUTCHINS TACTICAL
ALLOCATION PORTFOLIO. (THE RETURNS INCLUDE THE FUND LEVEL EXPENSES, BUT EXCLUDE
THE INSURANCE CHARGES). PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE
VALUE OF THE CONTRACT WILL FLUCTUATE SO THAT WHEN REDEEMED, IT MAY BE WORTH MORE
OR LESS THAN THE ORIGINAL INVESTMENT.
Q. HOW DID THE FUND PERFORM?
The Mitchell Hutchins Tactical Allocation Fund provided a total return of 11.68%
for the six month period ending June 30, 1999.
Q. WHY DID THE FUND PERFORM THIS WAY?
The Portfolio attempts to outperform the S&P 500 Index (the "Index") over the
long term with less volatility be shifting assets between stocks and bonds or
cash. Management employs the Tactical Allocation Model (the "Model") to
determine the Portfolio's asset mix between an equity portion designed to track
the performance of the Index and a fixed-income portion consisting of either
bonds (five-year U.S. Treasury notes) or cash (30-day U.S. Treasury bills).
The Portfolio remained 100% allocated to stocks throughout the six-month period
ended June 30, 1999. The Funds return this reflected the return produced by the
Index.
In recent years a large of proportion of the Index's total return has come from
a narrow subset of stocks. Of course, the reason to own the Index is to benefit
from its performance regardless of which stocks contribute to its return. The
financial services and technology sectors have grown significantly over the last
several years and as a result have increased as a percentage of the Index. The
Portfolio's indexing approach reflects these sector gains in its asset
allocation.
Q. WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 1999?
We expect second-half 1999 economic growth (real gross domestic product) to slow
to 21/2 %-3%, inflation to remain 2%-21/2% and corporate earnings to grow about
9%-10%. Putting this together, our valuation model indicates that the stock
market, as measured by the S&P 500 Index, is about 25% above fair value.
These valuations might be cause for concern; however, two factors distinguish
the current environment from recent quarters when valuations were at similar
levels. First, we feel that the majority of the negative move in interest rates
is behind us; and second, corporate profit growth expectations are being raised,
not lowered. Therefore, we believe the market will grow into its valuation
barring any external shocks. We expect a fairly stable market through year-end.
<PAGE>
HARTFORD BOND HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------- ------------
<C> <S> <C>
ASSET-BACKED SECURITIES -- 3.9%
$ 3,600,000 California Infrastructure Pacific Gas &
Electric, Series 1997-1, Class A6
6.32% due 09/25/05.................... $ 3,597,840
3,250,000 California Infrastructure Southern
California Edison, Series 1997-1, Class
A3
6.17% due 03/25/03.................... 3,260,367
7,400,000 California Infrastructure Southern
California Edison, Series 1997-1, Class
A6
6.38% due 09/25/08.................... 7,342,354
11,400,000 Chemical Master Credit Card Trust,
Series 1996-1, Class A
5.55% due 09/15/03.................... 11,344,824
7,600,000 Comed Transitional Funding Trust, Series
1998-1, Class A5
5.44% due 03/25/07.................... 7,274,720
4,441,512 Premier Auto Trust, Series 1998-5, Class
A2
5.07% due 04/09/01.................... 4,431,430
------------
Total asset-backed securities........... $ 37,251,535
------------
------------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 0.1%
742,911 Oakwood Mortgage Investors, Inc., Series
94-A, Class B1
8.40% due 02/15/15.................... $ 748,223
------------
------------
COMMERCIAL MORTGAGE-BACKED SECURITIES -- 1.1%
5,718,811 Capital Lease Funding Securitization,
Series 1997-CTL1, Class A1
7.421% due 06/22/24................... $ 5,803,922
5,175,000 DLJ Commercial Mortgage Corp., Series
1998-CF1, Class B2
7.33% due 01/15/10.................... 4,718,772
------------
Total commercial mortgage-backed
securities.............................. $ 10,522,694
------------
------------
CORPORATE NOTES -- 51.3%
COLLEGES -- 1.2%
7,700,000 Massachusetts Institute of Technology
7.25% due 11/02/2096.................. $ 7,614,922
3,500,000 Yale University
7.375% due 04/15/2096................. 3,489,965
------------
11,104,887
------------
CONSUMER DURABLES -- 0.6%
1,150,000 Federal-Mogul Corp.
7.375% due 01/15/06................... 1,082,880
4,500,000 TRW, Inc.
7.125% due 06/01/09................... 4,388,391
------------
5,471,271
------------
ENERGY & SERVICES -- 9.5%
8,250,000 Amoco Company
6.00% due 06/09/08.................... 7,870,087
2,225,000 CMS Energy Corp.
6.75% due 01/15/04.................... 2,103,612
800,000 CMS Energy Corp.
7.50% due 01/15/09.................... 744,715
5,100,000 Conoco, Inc.
6.95% due 04/15/29.................... 4,763,563
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------- ------------
<C> <S> <C>
</TABLE>
CORPORATE NOTES -- (CONTINUED)
ENERGY & SERVICES -- (CONTINUED)
<TABLE>
<C> <S> <C>
$ 5,400,000 Conoco, Inc.
5.90% due 04/15/04.................... $ 5,261,846
6,500,000 Enterprise Oil PLC
6.50% due 05/01/05.................... 6,181,779
3,000,000 Enterprise Oil PLC
6.70% due 09/15/07.................... 2,831,511
1,200,000 Gulf Canada Resources Ltd.
8.375% due 11/15/05................... 1,179,000
1,000,000 Gulf Canada Resources Ltd.
8.25% due 03/15/17.................... 902,840
6,500,000 Noble Drilling Corp.
7.50% due 03/15/19.................... 6,343,473
11,800,000 Occidental Petroleum Corp.
7.375% due 11/15/08................... 11,619,530
3,600,000 Panhandle Eastern Pipeline
6.125% due 03/15/04................... 3,501,961
1,000,000 Pioneer Natural Resource
6.50% due 01/15/08.................... 853,450
5,650,000 Pioneer Natural Resource
7.20% due 01/15/28.................... 4,347,477
1,975,000 R&B Falcon Corp.
6.75% due 04/15/05.................... 1,659,000
2,000,000 R&B Falcon Corp.
7.375% due 04/15/18................... 1,440,000
2,500,000 R&B Falcon Corp.
11.375% due 03/15/09.................. 2,587,500
9,511,000 Seagull Energy Corp.
7.50% due 09/15/27.................... 7,875,269
6,850,000 Tenneco, Inc.
8.20% due 11/15/99.................... 6,891,257
1,000,000 Tesoro Petroleum Corp.
9.00% due 07/01/08.................... 972,500
2,850,000 Tuboscope, Inc.
7.50% due 02/15/08.................... 2,479,500
2,500,000 Union Oil Co. of California
9.375% due 02/15/11................... 2,913,302
4,500,000 Vastar Resource, Inc.
6.50% due 04/01/09.................... 4,358,925
------------
89,682,097
------------
FINANCIAL SERVICES -- 10.4%
1,765,000 Allstate Corp.
6.75% due 05/15/18.................... 1,698,291
4,500,000 Associates Corporation of North America
5.80% due 04/20/04.................... 4,344,489
5,100,000 Associates Corporation of North America
5.75% due 11/01/03.................... 4,941,741
6,500,000 Bank of New York Co., Inc. (The)
7.625% due 07/15/02................... 6,704,139
3,750,000 BankBoston Corp.
7.00% due 09/15/07.................... 3,729,296
3,000,000 Chase Manhattan Corp.
7.75% due 11/01/99.................... 3,016,692
4,500,000 CIT Group, Inc.
7.125% due 06/17/02................... 4,570,317
4,450,000 CIT Group, Inc.
5.57% due 12/08/03.................... 4,245,856
10,000,000 Ford Motor Credit Co.
5.80% due 01/12/09.................... 9,143,000
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-1
<PAGE>
HARTFORD BOND HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------- ------------
<C> <S> <C>
</TABLE>
CORPORATE NOTES -- (CONTINUED)
FINANCIAL SERVICES -- (CONTINUED)
<TABLE>
<C> <S> <C>
$10,000,000 Ford Motor Credit Co.
5.75% due 02/23/04.................... $ 9,634,190
3,800,000 General Motors Acceptance Corp.
5.10% due 08/18/03.................... 3,771,538
1,000,000 General Motors Acceptance Corp.
6.55% due 11/17/03.................... 992,771
4,850,000 Golden State Holdings
6.75% due 08/01/01.................... 4,790,655
9,000,000 Goldman Sachs Group
6.65% due 05/15/09.................... 8,674,893
14,560,000 NationsBank Corp.
7.00% due 09/15/01.................... 14,760,767
4,300,000 Trenwick Group
6.70% due 04/01/03.................... 4,255,353
7,150,000 Wachovia Corp.
6.25% due 08/01/08.................... 6,807,007
3,050,000 Wachovia Corp.
5.625% due 12/15/08................... 2,783,033
------------
98,864,028
------------
FOOD, BEVERAGE & TOBACCO -- 0.9%
400,000 Keebler Corp.
10.75% due 07/01/06................... 437,215
8,325,000 Seagram (J) & Sons, Inc.
6.25% due 12/15/01.................... 8,261,871
------------
8,699,086
------------
HEALTH CARE -- 0.3%
1,675,00 Columbia Healthcare
7.50% due 12/15/23.................... 1,327,241
2,250,000 Columbia/HCA Healthcare Corp.
7.50% due 11/15/95.................... 1,775,045
------------
3,102,286
------------
HOME BUILDING -- 0.4%
2,800,000 U.S. Home Corp.
8.25% due 08/15/04.................... 2,751,000
1,390,000 U.S. Home Corp.
7.95% due 03/01/01.................... 1,399,522
------------
4,150,522
------------
HOTELS & GAMING -- 2.3%
600,000 HMH Properties
7.875% due 08/01/05................... 567,000
3,100,000 La Quinta Motor Inns
7.25% due 03/15/04.................... 2,743,546
5,500,000 Marriott International
6.875% due 11/15/05................... 5,326,788
4,825,000 MGM Grand, Inc.
6.875% due 02/06/08................... 4,319,233
2,765,000 Park Place Entertainment
7.875% due 12/15/05................... 2,633,662
6,531,000 Starwood Hotels & Resorts
7.375% due 11/15/15................... 5,616,679
1,000,000 Starwood Hotels & Resorts
6.75% due 11/15/05.................... 906,232
------------
22,113,140
------------
INDUSTRIAL -- 5.3%
520,000 Agriculture Minerals and Chemicals Co.
10.75% due 09/30/03................... 515,450
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------- ------------
<C> <S> <C>
</TABLE>
INDUSTRIAL -- (CONTINUED)
<TABLE>
<C> <S> <C>
$ 1,800,000 Arco Chemical Co.
9.80% due 02/01/20.................... $ 1,757,700
1,500,000 Bowater
8.50% due 12/15/01.................... 1,558,837
2,550,000 Domtar, Inc.
9.50% due 08/01/16.................... 2,703,000
5,700,000 du Pont (E.I.) de Nemours & Co.
6.75% due 09/01/07.................... 5,730,956
10,000,000 James River Corp.
6.75% due 10/01/99.................... 10,013,260
6,200,000 Placer Dome, Inc.
7.125% due 06/15/07................... 5,815,327
800,000 Polaroid Corporation
11.50% due 02/15/06................... 850,000
7,400,000 Ralcorp Holdings, Inc.
8.75% due 09/15/04.................... 8,103,599
3,750,000 Raytheon Co.
6.15% due 11/01/08.................... 3,527,681
2,600,000 Tyco International Group
6.125% due 01/15/09................... 2,413,988
7,650,000 United Technologies Corp.
6.50% due 06/01/09.................... 7,478,081
------------
50,467,879
------------
MEDIA & SERVICES -- 3.7%
5,000,000 British Sky Broadcasting
6.875% due 02/23/09................... 4,559,580
232,000 CBS Corp.
8.875% due 06/01/22................... 233,936
1,000,000 Continental Cablevision, Inc.
9.50% due 08/01/13.................... 1,154,303
1,750,000 CSC Holdings, Inc.
7.25% due 07/15/08.................... 1,662,500
500,000 CSC Holdings, Inc.
9.875% due 02/15/13................... 533,750
1,305,000 Hollinger International Publishing
8.625% due 03/15/05................... 1,321,312
3,400,000 Jones Intercable, Inc.
10.50% due 03/01/08................... 3,638,000
900,000 Jones Intercable, Inc.
7.625% due 04/15/08................... 900,000
400,000 Jones Intercable, Inc.
9.625% due 03/15/02................... 422,000
4,000,000 Liberty Media
7.875% due 07/15/09................... 3,976,160
6,500,000 News America Holdings
7.70% due 10/30/25.................... 6,294,788
865,000 News America, Inc.
7.30% due 04/30/28.................... 797,299
3,019,000 Time Warner Entertainment, Inc.
8.875% due 10/01/12................... 3,392,574
5,900,000 Turner Broadcasting System, Inc.
7.40% due 02/01/04.................... 6,014,991
------------
34,901,193
------------
PACKAGES & CONTAINERS -- 0.1%
1,000,000 Owens-Illinois, Inc.
8.10% due 05/15/07.................... 984,975
------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-2
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------- ------------
<C> <S> <C>
</TABLE>
CORPORATE NOTES -- (CONTINUED)
<TABLE>
<C> <S> <C>
RETAIL -- 3.9%
$ 2,700,000 Ahold Finance USA, Inc.
6.25% due 05/01/09.................... $ 2,546,432
6,000,000 Fred Meyer, Inc.
7.375% due 03/01/05................... 6,080,562
5,000,000 Kmart Corp.
8.96% due 12/10/19.................... 5,081,075
1,750,000 Kmart Corp.
7.75% due 10/01/12.................... 1,737,695
4,000,000 Kmart Corp.
12.50% due 03/01/05................... 4,700,980
6,500,000 Kroger Co. (The)
7.00% due 05/01/18.................... 6,059,807
1,300,000 Safeway, Inc.
6.50% due 11/15/08.................... 1,245,806
8,585,000 Stop & Shop Companies, Inc.
9.75% due 02/01/02.................... 9,169,338
------------
36,621,695
------------
SHIPBUILDING -- 0.2%
2,000,000 Newport News Shipbuilding
8.625% due 12/01/06................... 2,100,000
------------
TELECOMMUNICATIONS -- 3.7%
7,000,000 AT&T Corp.
7.00% due 05/15/05.................... 7,080,101
9,500,000 AT&T Corp.
6.50% due 03/15/29.................... 8,544,167
1,100,000 MCI WorldCom, Inc.
8.875% due 01/15/06................... 1,167,089
1,230,000 Rogers Cablesystems, Inc.
10.125% due 09/01/12.................. 1,317,637
115,000 Rogers Cablesystems, Inc.
9.625% due 08/01/02................... 120,175
1,350,000 Rogers Cantel Mobile, Inc.
8.30% due 10/01/07.................... 1,333,125
9,000,000 Sprint Capital Corp.
6.90% due 05/01/19.................... 8,375,562
7,000,000 Tele-Communications, Inc.
8.35% due 02/15/05.................... 7,527,317
------------
35,465,173
------------
TRANSPORTATION -- 1.9%
400,000 AMR Corp.
10.00% due 03/07/01................... 420,004
6,653,430 Continental Airlines, Inc.
7.461% due 04/01/13................... 6,781,043
4,000,000 CSX Corp.
7.25% due 05/01/04.................... 4,056,744
1,100,000 Interpool, Inc.
7.35% due 08/01/07.................... 1,036,060
900,000 Interpool, Inc.
7.20% due 08/01/07.................... 842,241
4,596,047 U.S. Air Inc., Series - Class A
6.76% due 04/15/08.................... 4,493,232
------------
17,629,324
------------
UTILITIES -- 6.3%
1,400,000 Calpine Corp.
7.875% due 04/01/08................... 1,323,000
1,650,000 Calpine Corp.
7.625% due 04/15/06................... 1,553,062
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------- ------------
<C> <S> <C>
</TABLE>
UTILITIES -- (CONTINUED)
<TABLE>
<C> <S> <C>
$ 1,500,000 Chesapeake & Potomac Telephone Co.
8.30% due 08/01/31.................... $ 1,689,420
1,750,000 Cleveland Electric Illuminating Co.
7.13% due 07/01/07.................... 1,748,376
3,300,000 Connecticut Light & Power Co.
7.875% due 10/01/24................... 3,380,091
4,500,000 El Paso Electric Co.
8.90% due 02/01/06.................... 4,823,397
1,341,000 El Paso Electric Co.
9.40% due 05/01/11.................... 1,484,735
7,250,000 Illinois Power Co.
6.25% due 07/15/02.................... 7,136,747
4,725,000 Niagara Mohawk Power Corp.
6.875% due 03/01/01................... 4,763,877
6,850,000 Niagara Mohawk Power Corp.
7.25% due 10/01/02.................... 6,897,806
13,150,000 PacifiCorp
6.375% due 05/15/08................... 12,698,323
3,100,000 PacifiCorp
6.12% due 01/15/06.................... 2,977,333
6,000,000 Philadelphia Electric
5.625% due 11/01/01................... 5,907,636
4,000,000 Public Service EI-IBC
7.00% due 09/01/24.................... 3,761,956
------------
60,145,759
------------
WASTE MANAGEMENT -- 0.5%
5,750,000 Browning-Ferris, Inc.
7.40% due 09/15/35.................... 4,633,580
------------
Total corporate notes................... $486,136,895
------------
------------
ENHANCED EQUIPMENT TRUST CERTIFICATES -- 0.3%
2,312,001 Norwest Airlines Trust, Series 2
11.30% due 06/21/14................... $ 2,674,707
------------
------------
FOREIGN/YANKEE BONDS & NOTES -- 6.8%
FOREIGN CORPORATIONS -- 0.7%
6,000,000 KFW International Finance, Inc.
9.50% due 12/15/00.................... $ 6,303,852
------------
FOREIGN GOVERNMENTS -- 6.0%
12,545,000 Abbey National First Capital (Yankee)
8.20% due 10/15/04.................... 13,291,753
7,000,000 Bayerische Landesbank NY
6.20% due 02/09/06.................... 6,731,529
6,775,000 Landesbank Baden-Wuerttemberg
7.625% due 02/01/23................... 7,102,821
2,100,000 Petroleos Mexicanos
9.50% due 09/15/27.................... 1,979,250
3,200,000 Province of Alberta
4.875% due 10/29/03................... 3,027,552
3,563,000 Province of Manitoba
5.50% due 10/01/08.................... 3,250,972
5,350,000 Quebec Province
5.75% due 02/15/09.................... 4,908,625
5,600 Republic of Argentina
8.375% due 12/20/03................... 39,200
3,200,000 Republic of Colombia
9.75% due 04/23/09.................... 2,640,000
1,650,000 Republic of Colombia
7.625% due 02/15/07................... 1,250,370
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-3
<PAGE>
HARTFORD BOND HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------- ------------
<C> <S> <C>
</TABLE>
FOREIGN/YANKEE BONDS & NOTES -- (CONTINUED)
FOREIGN GOVERNMENTS -- (CONTINUED)
<TABLE>
<C> <S> <C>
$ 2,000,000 Republic of Panama
8.875% due 09/30/27................... $ 1,640,000
2,000,000 Republic of Venezuela, Discount Series A
5.8125% due 03/31/20.................. 1,360,000
2,000,000 Russian Federation (The)
10.00% due 06/26/07................... 998,750
5,400,000 United Mexican States
6.25% due 12/31/19.................... 4,006,125
750,000 United Mexican States
6.25% due 12/31/19.................... 556,406
5,000,000 United Mexican States Discount Bond
5.8743% due 12/31/19.................. 4,168,750
------------
56,952,103
------------
YANKEE BONDS -- 0.1%
1,000,000 Swiss Bank Corporation - NY
7.375% due 06/15/17................... 988,587
------------
Total foreign/yankee bonds & notes...... $ 64,244,542
------------
------------
REAL ESTATE INVESTMENT TRUST -- 0.5%
5,000,000 Duke Realty LP
7.25% due 09/22/02.................... $ 5,025,615
------------
------------
SUPRANATIONAL -- 1.0%
7,900,000 Inter-American Development Bank
8.875% due 06/01/09................... $ 9,254,842
------------
------------
U.S. TREASURIES & FEDERAL AGENCIES -- 32.1%
FEDERAL NATIONAL MORTGAGE ASSOCIATION --
8.6%
4,000,000 5.25% due 01/15/03.................... $ 3,897,600
66,447,074 6.00% due 07/01/12 - 10/01/28......... 64,062,011
2,892,176 6.48% due 12/01/05.................... 2,881,134
5,739,478 6.50% due 10/01/12 - 09/01/28......... 5,627,660
5,000,000 6.95% due 07/15/04.................... 5,048,200
------------
81,516,605
------------
U.S. TREASURY BONDS -- 12.5%
5,100,000 6.125% due 11/15/27.................... 5,052,187
5,660,000 6.50% due 11/15/26.................... 5,858,100
692,000 6.75% due 08/15/26.................... 738,277
15,330,000 6.875% due 08/15/25.................... 16,551,617
940,000 7.50% due 11/15/24.................... 1,088,050
2,150,000 7.625% due 02/15/25.................... 2,525,579
22,175,000 8.125% due 08/15/19.................... 26,720,875
5,100,000 8.75% due 05/15/17.................... 6,418,033
31,295,000 8.875% due 08/15/17.................... 39,862,006
4,750,000 10.625% due 08/15/15.................... 6,814,768
5,830,000 11.875% due 11/15/03.................... 7,167,256
------------
118,796,748
------------
U.S. TREASURY INFLATION-INDEXED
SECURITIES -- 5.8%
6,168,641 3.375% due 01/15/07.................... 6,086,702
49,853,028 3.625% due 07/15/02 - 04/15/28......... 48,776,318
------------
54,863,020
------------
U.S. TREASURY NOTES -- 5.1%
4,250,000 6.25% due 04/30/01.................... 4,301,799
8,430,000 6.625% due 03/31/02 - 05/15/07......... 8,670,066
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------- ------------
<C> <S> <C>
</TABLE>
U.S. TREASURIES & FEDERAL AGENCIES -- (CONTINUED)
U.S. TREASURY NOTES -- (CONTINUED)
<TABLE>
<C> <S> <C>
$18,360,000 6.875% due 05/15/06.................... $ 19,329,646
15,445,000 7.00% due 07/15/06.................... 16,362,046
------------
48,663,557
------------
Total U.S. treasuries & federal
agencies................................ $303,839,930
------------
------------
SHORT-TERM SECURITIES -- 1.8%
REPURCHASE AGREEMENT
$17,513,000 Interest in $153,141,000 joint
repurchase agreement dated 06/30/99 with
State Street Bank 4.800% due 07/01/99;
maturity amount $17,515,335
(Collateralized by $153,141,000 U.S.
Treasury Bonds 8.125% due 05/15/21)..... $ 17,513,000
------------
------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
DIVERSIFICATION OF NET ASSETS:
Total asset-backed securities (cost
$37,406,440)........................... 3.9% $ 37,251,535
Total collateralized mortgage
obligations (cost $741,170)............ 0.1 748,223
Total commercial mortgage-backed
securities (cost $10,673,593).......... 1.1 10,522,694
Total corporate notes (cost
$497,158,179).......................... 51.3 486,136,895
Total enhanced equipment trust
certificates (cost $2,852,563)......... 0.3 2,674,707
Total foreign/yankee bonds & notes (cost
$67,170,865)........................... 6.8 64,244,542
Total real-estate investment trust (cost
$4,978,900)............................ 0.5 5,025,615
Total supranational (cost $9,911,679)... 1.0 9,254,842
Total U.S. treasuries & federal agencies
(cost $313,570,702).................... 32.1 303,839,930
Total short-term securities (cost
$17,513,000)........................... 1.8 17,513,000
----- ------------
Total investment in securities (total
cost $961,977,091)..................... 98.9 937,211,983
Cash, receivables and other assets...... 3.7 34,655,538
Payable for securities purchased........ (2.2) (21,010,563)
Payable for Fund shares redeemed........ (0.3) (2,951,030)
Other liabilities....................... (0.1) (8,482)
----- ------------
Net assets.............................. 100.0% $947,897,446
----- ------------
----- ------------
</TABLE>
<TABLE>
<S> <C>
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share;
2,000,000,000 shares authorized; 907,816,134
shares outstanding............................... $ 90,781,613
Capital surplus................................... 858,941,972
Accumulated undistributed net investment income... 27,112,752
Distribution in excess of net realized gain on
investments...................................... (4,173,783)
Unrealized depreciation of investments............ (24,765,108)
------------
Net assets........................................ $947,897,446
------------
------------
</TABLE>
<TABLE>
<S> <C>
Class IA
Net assets value per share ($937,915,440
DIVIDED BY 897,555,942 shares outstanding)
(1,600,000,000 shares authorized)................ $1.04
-----
-----
Class IB
Net assets value per share ($9,982,006
DIVIDED BY 10,260,192 shares outstanding)
(400,000,000 shares authorized).................. $0.97
-----
-----
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-4
<PAGE>
HARTFORD STOCK HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------------ --------------
<C> <S> <C>
COMMON STOCKS -- 96.6%
AEROSPACE & DEFENSE -- 2.6%
2,000,000 AlliedSignal, Inc....................... $ 126,000,000
1,400,000 United Technologies Corporation......... 100,362,500
--------------
226,362,500
--------------
COMMUNICATIONS
EQUIPMENT -- 4.0%
*2,625,000 Cisco Systems, Inc...................... 169,312,500
2,600,000 Lucent Technologies, Inc................ 175,337,500
--------------
344,650,000
--------------
COMPUTERS & OFFICE
EQUIPMENT -- 4.0%
1,600,000 Compaq Computer Corporation............. 37,900,008
1,300,000 International Business Machines Corp.... 168,025,000
2,350,000 Xerox Corporation....................... 138,796,875
--------------
344,721,883
--------------
CONSUMER DURABLES -- 0.9%
1,350,000 Ford Motor Co........................... 76,190,625
--------------
CONSUMER NON-DURABLES -- 1.5%
1,430,000 Procter & Gamble Co..................... 127,627,500
--------------
ELECTRONICS -- 7.6%
*1,100,000 Altera Corporation...................... 40,493,750
*735,000 Analog Devices, Inc..................... 36,887,812
2,530,000 General Electric Company................ 285,890,000
2,440,000 Intel Corporation....................... 145,180,000
*1,600,000 Micron Technology, Inc.................. 64,499,950
550,000 Texas Instruments, Inc.................. 79,750,000
--------------
652,701,512
--------------
ENERGY & SERVICES -- 6.9%
700,000 Chevron Corporation..................... 66,631,250
400,000 Conoco, Inc............................. 11,150,000
2,400,000 Exxon Corporation....................... 185,100,000
2,050,000 Royal Dutch Petroleum................... 123,512,500
556,100 Santa Fe International Corporation...... 12,790,300
1,850,000 Schlumberger Ltd........................ 117,821,875
1,875,000 Unocal Corporation...................... 74,296,875
--------------
591,302,800
--------------
FINANCIAL SERVICES -- 13.9%
500,000 Ace Ltd................................. 14,125,000
1,355,900 American General Corporation............ 102,200,962
1,105,000 American International Group, Inc....... 129,354,062
4,107,000 Associates First Capital Corporation.... 181,991,437
3,079,500 Citigroup, Inc.......................... 146,276,250
500,000 First Union Corporation................. 23,500,000
2,850,000 Franklin Resources, Inc................. 115,781,250
2,300,000 Marsh & McLennan Companies, Inc......... 173,650,000
1,650,000 Merrill Lynch & Co., Inc................ 131,896,875
1,350,000 State Street Corporation................ 115,256,250
1,500,000 U.S. Bancorp............................ 51,000,000
--------------
1,185,032,086
--------------
FOOD, BEVERAGE & TOBACCO -- 3.1%
2,890,000 Philip Morris Co., Inc.................. 116,141,875
*1,650,000 Safeway, Inc............................ 81,675,000
<CAPTION>
MARKET
SHARES VALUE
- ------------ --------------
<C> <S> <C>
</TABLE>
FOOD, BEVERAGE & TOBACCO -- (CONTINUED)
<TABLE>
<C> <S> <C>
1,005,357 Unilever N.V. New York Shares........... $ 70,123,650
--------------
267,940,525
--------------
HEALTH CARE -- 14.4%
2,460,000 Abbott Laboratories..................... 111,930,000
2,950,000 American Home Products Corporation...... 169,625,000
1,550,000 Baxter International, Inc............... 93,968,750
*1,232,100 Boston Scientific Corporation........... 54,135,393
200,000 Bristol-Myers Squibb Company............ 14,087,500
1,400,000 Cardinal Health, Inc.................... 89,775,000
100,000 Guidant Corporation..................... 5,143,750
1,300,000 Johnson & Johnson Co.................... 127,400,000
2,100,000 Merck & Co., Inc........................ 155,400,000
*375,000 Pe Corp - Celera Genomics Group......... 6,070,312
700,000 Pe Corporation - Pe Biosystems Group.... 80,325,000
1,800,000 Pharmacia & Upjohn, Inc................. 102,262,500
1,100,000 Service Corporation International....... 21,175,000
1,302,350 ServiceMaster Company (The)............. 24,419,062
700,000 SmithKline Beecham PLC ADR.............. 46,243,750
1,900,000 Warner-Lambert Company.................. 131,812,500
--------------
1,233,773,517
--------------
INDUSTRIAL MATERIALS -- 4.7%
1,700,000 Alcoa, Inc.............................. 105,187,500
550,000 Dow Chemical Company.................... 69,781,250
1,450,000 du Pont (E.I.) de Nemours & Co.......... 99,053,125
1,000,000 Praxair, Inc............................ 48,937,500
*300,000 Sealed Air Corporation.................. 19,462,500
850,000 Weyerhaeuser Company.................... 58,437,500
--------------
400,859,375
--------------
MANUFACTURING -- 2.2%
650,000 Caterpillar, Inc........................ 39,000,000
200,000 Corning, Inc............................ 14,025,000
490,000 Illinois Tool Works, Inc................ 40,180,000
1,000,000 Tyco International, Ltd................. 94,750,000
--------------
187,955,000
--------------
MEDIA & SERVICES -- 4.7%
*2,200,000 AT&T Liberty Media Group - Class A...... 80,850,000
*1,730,000 CBS Corporation......................... 75,146,875
2,438,900 Gannett Co., Inc........................ 174,076,487
2,300,000 Walt Disney Company (The)............... 70,868,750
--------------
400,942,112
--------------
REAL ESTATE -- 0.1%
*6,150 Security Capital Group, Inc............. 4,458,750
--------------
RETAIL -- 8.5%
1,700,000 CVS Corporation......................... 86,275,000
2,362,500 Gap, Inc. (The)......................... 119,010,937
2,505,000 Home Depot, Inc. (The).................. 161,415,937
3,850,000 McDonald's Corporation.................. 159,053,125
*1,185,000 Staples, Inc............................ 36,660,937
3,400,000 Wal-Mart Stores, Inc.................... 164,050,000
--------------
726,465,936
--------------
SOFTWARE & SERVICES -- 6.9%
1,851,000 Automatic Data Processing, Inc.......... 81,444,000
*1,000,000 Computer Sciences Corp.................. 69,187,500
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-5
<PAGE>
HARTFORD STOCK HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------------ --------------
<C> <S> <C>
</TABLE>
COMMON STOCKS -- (CONTINUED)
SOFTWARE & SERVICES -- (CONTINUED)
<TABLE>
<C> <S> <C>
1,216,600 Electronic Data Systems Corporation..... $ 68,813,937
1,600,000 First Data Corporation.................. 78,300,000
*3,200,000 Microsoft Corporation................... 288,600,000
--------------
586,345,437
--------------
TRANSPORTATION -- 2.5%
*1,470,000 AMR Corporation......................... 100,327,500
300,000 CSX Corp................................ 13,593,750
1,800,000 Southwest Airlines Co................... 56,025,000
750,000 Union Pacific Corporation............... 43,734,375
--------------
213,680,625
--------------
UTILITIES -- 8.0%
2,610,000 AT&T Corp............................... 145,670,625
2,200,000 Bell Atlantic Corporation............... 143,825,000
*2,471,950 MCI WorldCom, Inc....................... 213,205,687
3,150,000 SBC Communications, Inc................. 182,700,000
--------------
685,401,312
--------------
Total common stocks..................... $8,256,411,495
--------------
--------------
PREFERRED STOCKS -- 0.6%
COMMUNICATIONS
EQUIPMENT -- 0.5%
500,000 Nokia Corp. - Sponsored ADR............. $ 45,781,250
--------------
INDUSTRIAL MATERIALS -- 0.1%
203,500 Monsanto Company........................ 8,165,437
--------------
Total Preferred Stocks.................. $ 53,946,687
--------------
--------------
<CAPTION>
PRINCIPAL
AMOUNT
- ------------
<C> <S> <C>
SHORT-TERM SECURITIES -- 4.5%
REPURCHASE AGREEMENT
$383,419,000 Interest in $1,933,099,000 joint
repurchase agreement dated 06/30/99 with
State Street Bank 4.822% due 07/01/99;
maturity amount $383,470,361
(Collateralized by $125,000,000 U.S.
Treasury Notes 6.625% due 05/15/07,
$1,170,609,000 U.S. Treasury Bonds
6.125% - 12.000% due 08/15/13 -
11/15/27, $637,490,000 U.S. Treasury
Strips (principal) 0.00% due 06/30/00 -
05/15/15)............................... $ 383,419,000
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
VALUE
--------------
<S> <C> <C>
DIVERSIFICATION OF NET ASSETS:
Total common stocks (cost
$5,250,350,987)........................ 96.6% $8,256,411,495
Total preferred stocks (cost
$41,686,540)........................... 0.6 53,946,687
Total short-term securities (cost
$383,419,000).......................... 4.5 383,419,000
----- --------------
Total investment in securities (total
cost $5,675,456,527)................... 101.7 $8,693,777,182
Cash, receivables and other assets...... 1.4 119,215,172
Payable for securities purchased........ (3.0) (256,075,901)
Payable for Fund shares redeemed........ (0.1) (6,891,862)
Other liabilities....................... (0.0) (111,375)
----- --------------
Net assets.............................. 100.0% $8,549,913,216
----- --------------
----- --------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share;
3,000,000,000 shares authorized; 1,297,054,972
shares outstanding............................... $ 129,705,497
Capital surplus................................... 4,965,372,344
Accumulated undistributed net investment income... 35,188,899
Accumulated undistributed net realized gain on
investments...................................... 401,325,821
Unrealized appreciation of investments............ 3,018,320,655
--------------
Net assets........................................ $8,549,913,216
--------------
--------------
</TABLE>
<TABLE>
<S> <C>
Class IA
Net assets value per share ($8,521,637,814
DIVIDED BY 1,252,229,806 shares outstanding)
(2,250,000,000 shares authorized)................ $6.81
-----
-----
Class IB
Net assets value per share ($28,275,402
DIVIDED BY 44,825,166 shares outstanding)
(750,000,000 shares authorized).................. $0.63
-----
-----
</TABLE>
* Non-income producing during period.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-6
<PAGE>
HARTFORD MONEY MARKET HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- --------------
<C> <S> <C>
COMMERCIAL PAPER -- 61.3%
$20,000,000 Abbey National, North America
4.93% due 01/18/00.................... $ 19,449,483
10,000,000 Abbey National, North America
5.00% due 09/08/99.................... 9,904,166
20,000,000 Abbott Laboratories
4.80% due 07/08/99.................... 19,981,333
8,000,000 American Honda Finance
4.95% due 07/07/99.................... 7,993,400
20,000,000 Anz (Delaware), Inc.
4.93% due 11/22/99.................... 19,605,627
30,000,000 Aristar, Inc.
5.18% due 08/16/99.................... 29,801,433
10,000,000 BankAmerica Corp.
5.05% due 02/14/00.................... 9,680,166
10,000,000 BankAmerica Corp.
4.81% due 08/09/99.................... 9,947,891
25,000,000 Bradford and Bingley
4.84% due 10/25/99.................... 24,610,111
15,000,000 Cafco
5.04% due 08/02/99.................... 14,932,800
10,000,000 Cafco
4.93% due 07/20/99.................... 9,973,980
5,000,000 Cafco
4.89% due 07/06/99.................... 4,996,604
20,000,000 Campbell Soup Company
4.83% due 01/31/00.................... 19,425,766
10,000,000 Christiania Capital Corp.
4.82% due 10/04/99.................... 9,872,805
10,000,000 Ciesco L.P.
5.13% due 08/02/99.................... 9,954,400
20,000,000 Ciesco L.P.
5.05% due 08/24/99.................... 19,848,500
10,000,000 Coca-Cola Company, (The)
4.81% due 07/12/99.................... 9,985,302
10,000,000 Daimler Benz N.A.
4.80% due 08/30/99.................... 9,920,000
10,000,000 Daimler Chrysler
4.82% due 07/13/99.................... 9,983,933
15,000,000 du Pont (E.I.) de Nemours & Company
4.83% due 09/07/99.................... 14,863,150
10,000,000 du Pont (E.I.) de Nemours & Company
4.81% due 07/12/99.................... 9,985,302
20,000,000 Electronic Data Systems
4.95% due 07/26/99.................... 19,931,250
10,000,000 Ford Motor Credit Co.
4.88% due 07/12/99.................... 9,985,088
10,000,000 Ford Motor Credit Co.
4.79% due 07/08/99.................... 9,990,686
10,000,000 General Electric Capital Corp.
4.87% due 08/30/99.................... 9,918,833
20,000,000 General Mills, Inc.
4.78% due 07/19/99.................... 19,952,200
10,000,000 General Mills, Inc.
4.84% due 07/06/99.................... 9,993,277
10,000,000 Goldman Sachs Group
5.12% due 10/18/99.................... 9,844,977
5,000,000 Goldman Sachs Group
4.94% due 11/01/99.................... 4,915,608
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- --------------
<C> <S> <C>
</TABLE>
<TABLE>
<C> <S> <C>
$20,000,000 Halifax PLC
4.83% due 09/07/99.................... $ 19,817,533
5,000,000 International Lease Finance
4.84% due 07/07/99.................... 4,995,966
5,000,000 International Lease Finance
4.83% due 07/19/99.................... 4,987,925
10,000,000 International Lease Finance
4.78% due 07/06/99.................... 9,993,361
20,000,000 Johnson & Johnson
4.83% due 07/12/99.................... 19,970,483
10,000,000 KFW International
4.78% due 07/23/99.................... 9,970,788
20,000,000 Lucent Technologies, Inc.
4.92% due 01/24/00.................... 19,434,200
20,000,000 Market Street Funding, Inc.
5.10% due 07/26/99.................... 19,929,166
10,000,000 Merita Bank Ltd.
5.18% due 08/09/99.................... 9,943,883
10,000,000 Merita Bank Ltd.
4.81% due 10/06/99.................... 9,870,397
10,000,000 Merita Bank Ltd.
4.80% due 07/06/99.................... 9,993,333
10,000,000 Morgan (J.P.) & Co.
5.18% due 11/22/99.................... 9,792,800
5,000,000 National Rural Utilities
4.90% due 10/19/99.................... 4,925,138
20,000,000 Nationwide Building Society
4.82% due 08/10/99.................... 19,892,888
5,000,000 Southland Corp.
4.82% due 07/27/99.................... 4,982,594
10,000,000 Swedbank, Inc.
4.84% due 08/26/99.................... 9,924,711
10,000,000 Toyota Motor Credit Corp.
4.80% due 07/01/99.................... 10,000,000
20,000,000 Volkswagon of America
4.90% due 09/10/99.................... 19,806,722
10,190,000 Wood Street Funding Corp.
4.94% due 07/13/99.................... 10,173,220
10,000,000 Wood Street Funding Corp.
4.94% due 07/16/99.................... 9,979,416
--------------
Total commercial paper.................. $ 627,632,595
--------------
--------------
CORPORATE NOTES -- 34.6%
14,000,000 Air Products and Chemicals
8.22% due 12/07/99.................... $ 14,162,552
8,000,000 Association Corporation of North America
6.68% due 09/17/99.................... 8,018,868
10,000,000 BankAmerica Corporation
6.44% due 02/09/00.................... 10,014,255
20,000,000 Citigroup, Inc.
5.3195% due 02/03/00.................. 20,011,432
20,000,000 Comerica
4.8788% due 02/02/00.................. 19,996,515
10,000,000 Countrywide Home Loans
5.6875% due 08/30/99.................. 10,000,000
10,000,000 Countrywide Home Loans
5.472% due 10/29/99................... 10,000,000
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-7
<PAGE>
HARTFORD MONEY MARKET HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- --------------
<C> <S> <C>
</TABLE>
CORPORATE NOTES -- (CONTINUED)
<TABLE>
<C> <S> <C>
$20,000,000 Dow Chemical
4.90% due 03/15/00.................... $ 19,994,773
10,000,000 First Union National Bank
4.945% due 03/10/00................... 10,000,000
14,000,000 First Union National Bank
5.4369% due 11/17/99.................. 14,003,717
20,000,000 General Motors Acceptance Corp.
5.605% due 02/03/00................... 20,001,215
20,000,000 Goldman Sachs Group
5.0497% due 02/01/00.................. 20,000,000
20,000,000 Honda Motor Corp.
5.00% due 02/23/00.................... 19,996,193
10,000,000 Key Bank N.A.
5.6488% due 08/20/99.................. 9,999,974
5,000,000 Key Bank N.A.
5.44% due 09/15/99.................... 5,000,042
10,000,000 Key Bank N.A.
5.61% due 01/31/00.................... 9,998,932
20,000,000 Merrill Lynch & Co., Inc.
5.6075% due 08/13/99.................. 20,000,000
25,000,000 Morgan (J.P.) & Co.
5.575% due 02/25/00................... 25,003,131
10,000,000 Morgan Stanley Group
5.7475% due 03/10/00.................. 10,007,375
15,000,000 Morgan Stanley Group
5.705% due 01/20/00................... 15,010,244
19,250,000 PepsiCo, Inc.
5.4975% due 08/19/99.................. 19,247,083
24,000,000 Texaco Capital, Inc.
4.845% due 05/03/00................... 23,981,078
20,000,000 Wells Fargo & Co.
4.8913% due 03/10/00.................. 19,992,436
--------------
Total corporate notes................... $ 354,439,815
--------------
--------------
REPURCHASE AGREEMENT -- 6.3%
$64,466,000 Interest in $153,141,000 joint
repurchase agreement dated 06/30/99
with State Street Bank 4.800% due
07/01/99; maturity amount $64,474,595
(Collateralized by $153,141,000 U.S.
Treasury Bonds 8.125% due 05/15/21)... $ 64,466,000
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
VALUE
--------------
<S> <C> <C>
DIVERSIFICATION OF NET ASSETS:
Total commercial paper (cost
$627,632,595).......................... 61.3% $ 627,632,595
Total corporate notes (cost
$354,439,815).......................... 34.6 354,439,815
Total repurchase agreement (cost
$64,466,000)........................... 6.3 64,466,000
----- --------------
Total investment in securities
(total cost $1,046,538,410)............ 102.2 1,046,538,410
Cash, receivables and other assets...... 0.7 6,910,788
Payable for Fund shares redeemed........ (2.4) (24,955,623)
Payable for dividends................... (0.4) (3,901,395)
Other liabilities....................... (0.1) (178,765)
----- --------------
Net assets.............................. 100.0% $1,024,413,415
----- --------------
----- --------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share;
3,000,000,000 shares authorized; 1,024,413,415
shares outstanding............................... $ 102,441,341
Capital surplus................................... 921,972,074
--------------
Net assets........................................ $1,024,413,415
--------------
--------------
Class IA
Shares of benefical interest outstanding, $0.10
par value 2,475,000,000 shares authorized (Net
assets $1,018,656,601)........................... 1,018,656,601
--------------
--------------
</TABLE>
<TABLE>
<S> <C>
Net asset value................................... $1.00
-----
-----
</TABLE>
<TABLE>
<S> <C>
Class IB
Shares of benefical interest outstanding, $0.10
par value 525,000,000 shares authorized (Net
assets $5,756,814)............................... 5,756,814
-------------
-------------
</TABLE>
<TABLE>
<S> <C>
Net asset value................................... $1.00
-----
-----
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-8
<PAGE>
HARTFORD ADVISERS HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ------------ ---------------
<C> <S> <C>
ASSET-BACKED SECURITIES -- 0.3%
S$43,000,000 Aesop Funding II LLC Series 1998-1, Class A
6.140% due 05/20/06........................ $ 42,147,740
---------------
---------------
<CAPTION>
SHARES
- ------------
<C> <S> <C>
COMMON STOCKS -- 60.3%
AEROSPACE & DEFENSE -- 1.6%
1,850,000 AlliedSignal, Inc............................ $ 116,550,000
1,400,000 United Technologies Corporation.............. 100,362,500
---------------
216,912,500
---------------
COMMUNICATIONS
EQUIPMENT -- 2.5%
*2,600,000 Cisco Systems, Inc........................... 167,700,000
2,400,000 Lucent Technologies, Inc..................... 161,850,000
---------------
329,550,000
---------------
COMPUTERS & OFFICE
EQUIPMENT -- 2.7%
1,100,000 Compaq Computer Corporation.................. 26,056,264
1,440,000 International Business Machines
Corp......................................... 186,120,000
2,450,000 Xerox Corporation............................ 144,703,125
---------------
356,879,389
---------------
CONSUMER DURABLES -- 0.6%
1,350,000 Ford Motor Co................................ 76,190,625
---------------
CONSUMER NON-DURABLES -- 0.9%
1,375,000 Procter & Gamble Co.......................... 122,718,750
---------------
ELECTRONICS -- 4.8%
*800,000 Altera Corporation........................... 29,450,000
*600,000 Analog Devices, Inc.......................... 30,112,500
2,565,000 General Electric Company..................... 289,845,000
2,700,000 Intel Corporation............................ 160,650,000
*1,350,000 Micron Technology, Inc....................... 54,421,875
550,000 Texas Instruments, Inc....................... 79,750,000
---------------
644,229,375
---------------
ENERGY & SERVICES -- 4.2%
800,000 Chevron Corporation.......................... 76,150,000
400,000 Conoco, Inc.................................. 11,150,000
2,300,000 Exxon Corporation............................ 177,387,500
2,050,000 Royal Dutch Petroleum........................ 123,512,500
1,770,000 Schlumberger Ltd............................. 112,726,875
1,675,000 Unocal Corporation........................... 66,371,875
---------------
567,298,750
---------------
FINANCIAL SERVICES -- 8.8%
1,000,000 Ace Ltd...................................... 28,250,000
1,200,000 American General Corporation................. 90,450,000
1,100,000 American International Group, Inc............ 128,768,750
3,955,400 Associates First Capital Corporation......... 175,273,662
2,850,000 Citigroup, Inc............................... 135,375,000
600,000 First Union Corporation...................... 28,200,000
2,850,000 Franklin Resources, Inc...................... 115,781,250
2,395,000 Marsh & McLennan Companies, Inc.............. 180,822,500
1,500,000 Merrill Lynch & Co., Inc..................... 119,906,250
1,450,000 State Street Corporation..................... 123,793,750
1,645,000 U.S. Bancorp................................. 55,930,000
---------------
1,182,551,162
---------------
FOOD, BEVERAGE & TOBACCO -- 1.9%
2,870,000 Philip Morris Co., Inc....................... 115,338,125
<CAPTION>
MARKET
SHARES VALUE
- ------------ ---------------
<C> <S> <C>
</TABLE>
COMMON STOCKS -- (CONTINUED)
FOOD, BEVERAGE & TOBACCO -- (CONTINUED)
<TABLE>
<C> <S> <C>
*1,650,000 Safeway, Inc................................. $ 81,675,000
907,142 Unilever N.V. New York Shares................ 63,273,154
---------------
260,286,279
---------------
HEALTH CARE -- 8.9%
2,410,000 Abbott Laboratories.......................... 109,655,000
2,800,000 American Home Products
Corporation.................................. 161,000,000
1,500,000 Baxter International, Inc.................... 90,937,500
*1,432,000 Boston Scientific Corporation................ 62,918,500
200,000 Bristol-Myers Squibb Company................. 14,087,500
1,300,000 Cardinal Health, Inc......................... 83,362,500
1,370,000 Johnson & Johnson Co......................... 134,260,000
1,920,000 Merck & Co., Inc............................. 142,080,000
*275,000 Pe Corp - Celera Genomics Group.............. 4,451,562
550,000 Pe Corporation - Pe Biosystems
Group........................................ 63,112,500
1,900,000 Pharmacia & Upjohn, Inc...................... 107,943,750
900,000 Service Corporation International............ 17,325,000
1,456,050 ServiceMaster Company (The).................. 27,300,937
860,000 SmithKline Beecham PLC ADR................... 56,813,750
1,775,000 Warner-Lambert Company....................... 123,140,625
---------------
1,198,389,124
---------------
INDUSTRIAL MATERIALS -- 2.9%
1,500,000 Alcoa, Inc................................... 92,812,500
400,000 Dow Chemical Company......................... 50,750,000
1,550,000 du Pont (E.I.) de Nemours & Co............... 105,884,375
1,100,000 Praxair, Inc................................. 53,831,250
*300,000 Sealed Air Corporation....................... 19,462,500
900,000 Weyerhaeuser Company......................... 61,875,000
---------------
384,615,625
---------------
MANUFACTURING -- 1.3%
550,000 Caterpillar, Inc............................. 33,000,000
200,000 Corning, Inc................................. 14,025,000
390,000 Illinois Tool Works, Inc..................... 31,980,000
1,000,000 Tyco International, Ltd...................... 94,750,000
---------------
173,755,000
---------------
MEDIA & SERVICES -- 3.0%
*2,200,000 AT&T Liberty Media Group -
Class A...................................... 80,850,000
*1,500,000 CBS Corporation.............................. 65,156,250
2,700,000 Gannett Co., Inc............................. 192,712,500
2,000,000 Walt Disney Company (The).................... 61,625,000
---------------
400,343,750
---------------
REAL ESTATE -- 0.0%
*6,150 Security Capital Group, Inc.................. 4,458,750
---------------
RETAIL -- 5.5%
2,219,600 CVS Corporation.............................. 112,644,700
2,081,250 Gap, Inc. (The).............................. 104,842,968
2,500,000 Home Depot, Inc. (The)....................... 161,093,750
3,900,000 McDonald's Corporation....................... 161,118,750
*1,335,000 Staples, Inc................................. 41,301,562
3,200,000 Wal-Mart Stores, Inc......................... 154,400,000
---------------
735,401,730
---------------
SOFTWARE & SERVICES -- 4.2%
1,806,400 Automatic Data Processing, Inc............... 79,481,600
*1,000,000 Computer Sciences Corp....................... 69,187,500
1,083,400 Electronic Data Systems Corporation.......... 61,279,812
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-9
<PAGE>
HARTFORD ADVISERS HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------------ ---------------
<C> <S> <C>
</TABLE>
COMMON STOCKS -- (CONTINUED)
SOFTWARE & SERVICES -- (CONTINUED)
<TABLE>
<C> <S> <C>
1,650,000 First Data Corporation....................... $ 80,746,875
*3,000,000 Microsoft Corporation........................ 270,562,500
---------------
561,258,287
---------------
TRANSPORTATION -- 1.6%
*1,450,000 AMR Corporation.............................. 98,962,500
300,000 CSX Corporation.............................. 13,593,750
1,750,000 Southwest Airlines Co........................ 54,468,750
900,000 Union Pacific Corporation.................... 52,481,250
---------------
219,506,250
---------------
UTILITIES -- 4.9%
2,580,000 AT&T Corp.................................... 143,996,250
1,700,000 Bell Atlantic Corporation.................... 111,137,500
*2,300,000 MCI WorldCom, Inc............................ 198,375,000
3,625,000 SBC Communications, Inc...................... 210,250,000
---------------
663,758,750
---------------
Total common stocks.......................... $ 8,098,104,096
---------------
---------------
CONVERTIBLE PREFERRED STOCKS -- 0.2%
INDUSTRIAL MATERIALS -- 0.2%
S29,000,000 Monsanto Company
6.60% due 12/01/08......................... $ 25,771,720
---------------
---------------
<CAPTION>
PRINCIPAL
AMOUNT
- ------------
<C> <S> <C>
CORPORATE NOTES -- 12.1%
ELECTRONICS -- 0.1%
$ 15,000,000 Hydro-Quebec
7.375% due 02/01/03........................ $ 15,380,400
---------------
ENERGY & SERVICES -- 0.3%
18,140,000 Conoco, Inc.
5.90% due 04/15/04......................... 17,675,906
20,000,000 Williams Companies, Inc.
6.50% due 11/15/02......................... 19,779,720
---------------
37,455,626
---------------
FINANCIAL SERVICES -- 7.4%
30,000,000 Allmerica Financial Corp.
7.625% due 10/15/25........................ 30,052,500
26,485,000 Amerus Life Holdings
6.95% due 06/15/05......................... 25,449,542
21,670,000 Amvescap PLC
6.60% due 05/15/05......................... 20,476,069
30,000,000 Apache Finance Property Limited
7.00% due 03/15/09......................... 29,316,810
25,000,000 Associates Corp. N.A.
6.00% due 07/15/05......................... 23,981,825
15,000,000 Associates Corp. N.A.
6.50% due 10/15/02......................... 14,978,190
10,000,000 Bank of Boston Corp.
6.625% due 02/01/04........................ 9,930,680
20,000,000 BankAmerica Corp.
5.875% due 02/15/09........................ 18,345,740
14,825,000 Banponce Corp.
6.75% due 12/15/05......................... 14,137,238
15,000,000 Bayerische Landesbank NY
5.625% due 02/26/01........................ 14,896,950
25,000,000 Bayerische Landesbank NY
5.65% due 02/01/09......................... 22,887,650
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ------------ ---------------
<C> <S> <C>
</TABLE>
CORPORATE NOTES -- (CONTINUED)
FINANCIAL SERVICES -- (CONTINUED)
<TABLE>
<C> <S> <C>
$ 22,000,000 Becton Dickinson & Co.
6.70% due 08/01/28......................... $ 19,866,946
10,000,000 Chase Manhattan Corp.
8.50% due 02/15/02......................... 10,457,480
15,740,000 Cigna Corp.
7.40% due 05/15/07......................... 15,921,702
30,000,000 Cincinnati Financial Group
6.90% due 05/15/28......................... 28,205,400
20,000,000 CIT Group Holdings
6.75% due 05/14/01......................... 20,143,400
20,000,000 Citicorp
5.625% due 02/15/01........................ 19,831,580
10,000,000 Citigroup, Inc.
6.25% due 12/01/05......................... 9,669,790
15,000,000 City of Naples Italy
7.52% due 07/15/06......................... 15,403,950
24,000,000 Credit National
7.00% due 11/14/05......................... 23,491,200
30,000,000 Danaher Corp.
6.00% due 10/15/08......................... 27,733,110
10,000,000 Fairfax Financial Holdings
7.75% due 12/15/03......................... 10,113,300
18,000,000 Finova Capital Corporation
6.39% due 10/08/02......................... 17,796,888
12,000,000 First Interstate Bank
9.00% due 11/15/04......................... 12,145,008
25,000,000 First Union National Bank
5.80% due 12/01/08......................... 22,776,250
20,000,000 Fleet Financial Group
6.875% due 01/15/28........................ 18,203,900
35,000,000 Ford Motor Co.
6.625% due 10/01/28........................ 31,707,900
35,000,000 General Motors Corporation
6.75% due 05/01/28......................... 31,987,515
20,000,000 Heller Financial
6.382% due 11/10/00........................ 20,021,200
15,000,000 Home Savings of America
6.00% due 11/01/00......................... 14,905,110
13,135,000 Honeywell, Inc.
6.60% due 04/15/01......................... 13,191,047
30,000,000 International Business Machines Corp.
6.50% due 01/15/28......................... 27,713,340
S27,000,000 Jackson National Life Insurance Co.
8.15% due 03/15/27......................... 28,555,308
36,745,000 Key Bank N.A.
5.80% due 04/01/04......................... 35,127,448
11,400,000 Liberty Financial Co.
6.75% due 11/15/08......................... 11,050,202
S30,000,000 Liberty Mutual Insurance
8.20% due 05/04/07......................... 31,218,210
20,000,000 Liberty Property Trust REIT
7.25% due 08/15/07......................... 18,892,320
S10,000,000 Lumbermens Mutual Casualty
9.15% due 07/01/26......................... 10,524,440
20,000,000 NationsBank Corp.
7.80% due 09/15/16......................... 20,694,620
S30,000,000 New England Mutual Life Insurance Company
7.875% due 02/15/24........................ 31,407,390
25,000,000 Parker Hannifin Corp.
5.65% due 09/15/03......................... 24,012,250
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-10
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ------------ ---------------
<C> <S> <C>
</TABLE>
CORPORATE NOTES -- (CONTINUED)
FINANCIAL SERVICES -- (CONTINUED)
<TABLE>
<C> <S> <C>
$ 7,255,334 Postal Square LP
8.95% due 06/15/22......................... $ 8,447,022
27,600,000 Torchmark Corp.
8.25% due 08/15/09......................... 28,720,118
30,000,000 Toyota Motor Credit Corp.
5.50% due 12/15/08......................... 27,489,000
25,000,000 Transamerica Financial
6.125% due 11/01/01........................ 24,797,225
10,000,000 Travelers Property & Casualty
6.75% due 04/15/01......................... 10,085,780
S43,000,000 TXU Eastern Funding
6.45% due 05/15/05......................... 41,458,450
---------------
988,218,993
---------------
FOOD, BEVERAGE & TOBACCO -- 0.2%
30,000,000 Coca-Cola Enterprises, Inc.
6.75% due 09/15/28......................... 27,762,060
---------------
HEALTH CARE -- 0.2%
S29,000,000 United HealthCare Corp.
6.60% due 12/01/03......................... 28,436,008
---------------
INDUSTRIAL -- 1.9%
26,000,000 American Home Products
7.25% due 03/01/23......................... 25,729,782
25,000,000 Boise Cascade Office
7.05% due 05/15/05......................... 24,344,425
18,000,000 Colgate-Palmolive Co.
5.58% due 11/06/08......................... 16,752,096
25,000,000 Computer Associates International
6.50% due 04/15/08......................... 23,198,150
30,000,000 Equitable Cos., Inc.
7.00% due 04/01/28......................... 28,644,270
15,000,000 Husky Oil Ltd.
6.875% due 11/15/03........................ 14,448,150
18,000,000 Pitney Bowes, Inc.
5.50% due 04/15/04......................... 17,413,794
30,000,000 Rockwell International Corp.
6.70% due 01/15/28......................... 27,668,190
15,710,000 US West Cap Funding, Inc.
6.875% due 07/15/28........................ 14,161,135
35,000,000 USX Corporation
6.65% due 02/01/06......................... 33,695,620
35,000,000 Whitman Corp.
6.375% due 05/01/09........................ 33,252,555
---------------
259,308,167
---------------
INDUSTRIAL MATERIALS -- 0.8%
30,000,000 Alcan Aluminum Ltd.
7.25% due 11/01/28......................... 28,546,020
20,000,000 ICI Wilmington
6.95% due 09/15/04......................... 19,952,460
25,000,000 Praxair, Inc.
6.15% due 04/15/03......................... 24,347,125
19,420,000 Scripps (E.W.) Company
6.375% due 10/15/02........................ 19,329,036
10,000,000 Zeneca Group PLC
6.30% due 06/15/03......................... 9,919,520
---------------
102,094,161
---------------
MEDIA & SERVICES -- 0.1%
10,400,000 Times Mirror Co.
7.50% due 07/01/23......................... 10,440,123
---------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ------------ ---------------
<C> <S> <C>
</TABLE>
<TABLE>
<C> <S> <C>
RETAIL -- 0.1%
$ 20,200,000 Dayton Hudson Corp.
5.875% due 11/01/08........................ $ 18,792,868
---------------
TRANSPORTATION -- 0.3%
23,700,000 Continental Airlines
6.90% due 01/02/18......................... 23,222,682
S20,000,000 Santiago Air 144A
6.95% due 07/01/12......................... 18,952,800
---------------
42,175,482
---------------
UTILITIES -- 0.7%
40,000,000 AT&T Corp.
6.50% due 03/15/29......................... 35,975,440
10,000,000 Bellsouth Telecommunications
6.375% due 06/01/28........................ 8,973,740
30,000,000 MCI WorldCom, Inc.
6.40% due 08/15/05......................... 29,438,940
11,000,000 Pacific Gas & Electric
7.875% due 03/01/02........................ 11,403,997
10,000,000 Southern California Gas Co.
5.75% due 11/15/03......................... 9,740,700
---------------
95,532,817
---------------
Total corporate notes........................ $ 1,625,596,705
---------------
---------------
MORTGAGE-BACKED SECURITIES -- 0.7%
FINANCIAL SERVICES -- 0.5%
18,000,000 Asset Securitization Corp. Series 97-D4,
Class A1D
7.49% due 04/14/29......................... $ 18,512,100
17,225,000 First Union - Lehman Brothers
7.38% due 04/18/07......................... 17,554,514
28,500,000 Newcourt Receivable Asset Trust Series 97-1,
Class A4
6.193% due 05/20/05........................ 28,415,355
---------------
64,481,969
---------------
REAL ESTATE -- 0.2%
25,000,000 Chase Commercial Mortgage 97-A2
7.37% due 02/19/07......................... 25,538,500
---------------
Total mortgage-backed securities............. $ 90,020,469
---------------
---------------
MUNICIPAL BONDS -- 0.2%
7,000,000 Miami Beach, Florida
8.80% due 12/01/15......................... $ 7,907,557
16,635,000 Mount Sinai School of Medicine NY
6.00% due 07/01/03......................... 16,829,097
---------------
Total municipal bonds........................ $ 24,736,654
---------------
---------------
<CAPTION>
SHARES
- ------------
<C> <S> <C>
PREFERRED STOCKS -- 0.4%
COMMUNICATIONS
EQUIPMENT -- 0.3%
500,000 Nokia Corp. - Sponsored ADR.................. $ 45,781,250
---------------
INDUSTRIAL MATERIALS -- 0.1%
204,900 Monsanto Company............................. 8,221,612
---------------
Total preferred stocks....................... $ 54,002,862
---------------
---------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-11
<PAGE>
HARTFORD ADVISERS HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ------------ ---------------
U.S. TREASURIES & FEDERAL AGENCIES -- 22.0%
<C> <S> <C>
FEDERAL HOME LOAN MORTGAGE ASSOCIATION --
0.1%
$ 21,350,000 6.00% due 12/01/28........................... $ 17,946,169
---------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION -- 0.1%
S12,245,000 7.40% due 07/15/09........................... 12,242,061
---------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION --
4.1%
346,804,280 6.00% due 06/15/24 - 03/15/29.............. 325,064,165
142,329,903 6.50% due 03/15/26 - 06/15/28.............. 137,202,470
81,396,294 7.00% due 11/15/23 - 11/15/24.............. 80,560,921
1,421,975 9.00% due 06/20/16 - 07/20/16.............. 1,502,050
---------------
544,329,606
---------------
U.S. GOVERNMENT
AGENCIES -- 0.4%
50,000,000 Tennesse Valley Authority
6.00% due 03/15/13......................... 47,299,200
---------------
47,299,200
---------------
U.S. TREASURY BONDS -- 1.8%
243,750,000 6.25% due 8/15/23.......................... 243,978,637
---------------
243,978,637
---------------
U.S. TREASURY NOTES -- 15.5%
215,000,000 4.62% due 12/31/00......................... 212,379,795
10,000,000 5.62% due 05/15/08......................... 9,793,750
605,000,000 5.75% due 10/31/02 - 08/15/03.............. 605,453,300
280,000,000 5.87% due 11/15/05......................... 279,825,000
75,000,000 6.25% due 05/31/00......................... 75,632,850
378,500,000 6.50% due 08/15/05 - 10/15/06.............. 390,433,507
207,000,000 7.25% due 05/15/04 - 08/15/04.............. 219,747,916
283,000,000 7.50% due 11/15/01......................... 294,762,329
---------------
2,088,028,447
---------------
$ 2,953,824,120
Total U.S. treasuries & federal agencies.....
---------------
---------------
SHORT-TERM SECURITIES -- 4.4%
REPURCHASE AGREEMENT
$592,793,000 Interest in $1,933,099,000 joint repurchase
agreement dated 06/30/99 with State Street
Bank 4.822% due 07/01/99; maturity amount
$592,872,408 (Collateralized by $125,000,000
U.S. Treasury Notes 6.625% due 05/15/07,
$1,170,609,000 U.S. Treasury Bonds 6.125% -
12.000% due 08/15/13 -11/15/27, $637,490,000
U.S. Treasury Strips (principal) 0.00% due
06/30/00 -05/15/15).......................... $ 592,793,000
---------------
---------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
<CAPTION>
MARKET
VALUE
---------------
<S> <C> <C>
DIVERSIFICATION OF NET ASSETS:
Total asset-backed securities (cost
$42,834,289)........................... 0.3% $ 42,147,740
Total common stocks (cost
$4,887,347,417)........................ 60.3 8,098,104,096
Total convertible preferred stocks (cost
$29,575,267)........................... 0.2 25,771,720
Total corporate notes (cost
$1,700,968,347)........................ 12.1 1,625,596,705
Total mortgage backed securities (cost
$90,352,570)........................... 0.7 90,020,469
Total municipal bonds (cost
$23,745,139)........................... 0.2 24,736,654
Total preferred stocks (cost
$41,742,540)........................... 0.4 54,002,862
Total U.S. treasuries & federal agencies
(cost $2,999,698,676).................. 22.0 2,953,824,120
Total short-term securities (cost
$592,793,000).......................... 4.4 592,793,000
----- ---------------
Total investment in securities (total
cost $10,409,057,245).................. 100.6 13,506,997,366
Cash, receivables and other assets...... 0.9 122,327,874
Payable for securities purchased........ (1.4) (190,720,112)
Payable for Fund shares redeemed........ (0.1) (1,945,226)
Other liabilities....................... (0.0) (654,333)
----- ---------------
Net assets.............................. 100.0% $13,436,005,569
----- ---------------
----- ---------------
</TABLE>
<TABLE>
<S> <C>
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per amount;
$7,000,000,000 shares authorized; 4,659,717,910
shares outstanding............................... $ 465,971,791
Capital surplus................................... 9,161,173,290
Accumulated undistributed net investment income... 150,989,652
Accumulated undistributed net realized gain on
investments...................................... 559,930,716
Unrealized appreciation of investments............ 3,097,940,120
---------------
Net assets........................................ $13,436,005,569
---------------
---------------
</TABLE>
<TABLE>
<S> <C>
Class IA
Net assets value per amount ($13,351,904,048
DIVIDED BY 4,562,880,507 shares outstanding)
(6,500,000,000 shares authorized)................ $2.93
-----
-----
Class IB
Net assets value per amount ($84,101,521
DIVIDED BY 96,837,403 shares outstanding)
(500,000,000 shares authorized).................. $0.87
-----
-----
</TABLE>
* Non-income producing during period.
S 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. At June 30, 1999,
the market value of these securities amounted to $270,554,195 or 2.01% of
net assets.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-12
<PAGE>
HARTFORD CAPITAL APPRECIATION HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------------ --------------
<C> <S> <C>
COMMON STOCKS -- 92.6%
AEROSPACE & DEFENSE -- 2.0%
*1,890,000 Loral Space & Communications............ $ 34,020,000
600,000 Northrop Grumman Corporation............ 39,787,500
1,336,500 Precision Castparts Corporation......... 56,801,250
--------------
130,608,750
--------------
BUSINESS SERVICES -- 2.8%
2,200,000 Comdisco, Inc........................... 56,375,000
*555,500 Concord EFS, Inc........................ 23,504,593
*934,900 Ionics, Inc............................. 34,123,850
*326,600 Iron Mountain, Inc...................... 9,348,925
1,700,000 Manpower, Inc........................... 38,462,500
1,000,000 Ogden Corp.............................. 26,937,500
--------------
188,752,368
--------------
COMMUNICATIONS
EQUIPMENT -- 7.2%
*1,600,000 ADC Telecommunications, Inc............. 72,900,000
*1,700,000 Cisco Systems, Inc...................... 109,650,000
*1,184,100 Energis PLC............................. 28,128,107
*458,200 Oak Industries, Inc..................... 20,017,612
*900,000 Qualcomm................................ 129,150,000
272,400 Raychem Corporation..................... 10,078,800
1,000,000 Scientific-Atlanta, Inc................. 36,000,000
*1,300,000 Sprint Corporation (PCS Group).......... 74,262,500
--------------
480,187,019
--------------
COMPUTERS & OFFICE
EQUIPMENT -- 2.5%
406,800 Danka Business Systems PLC.............. 2,288,250
*3,000,000 Maxtor Corporation...................... 15,093,764
*827,700 NCR Corporation......................... 40,402,106
*205,400 Newbridge Networks Corp................. 5,905,250
*1,200,000 Seagate Technology, Inc................. 30,750,000
1,950,000 Symbol Technologies, Inc................ 71,906,250
--------------
166,345,620
--------------
CONSUMER NON-DURABLES -- 1.2%
1,350,000 Kimberly-Clark Corporation.............. 76,950,000
--------------
CONSUMER SERVICES -- 1.2%
*425,000 Anchor Gaming........................... 20,426,562
*1,000,000 Cheesecake Factory Incorporated (The)... 30,500,000
1,600,000 International Game Technology........... 29,600,000
--------------
80,526,562
--------------
ELECTRONICS -- 11.5%
*2,000,000 Altera Corporation...................... 73,625,000
*1,083,333 Analog Devices, Inc..................... 54,369,774
*850,000 Cognex Corporation...................... 26,828,125
*820,900 Credence Systems Corporation............ 30,475,912
1,500,100 General Cable Corporation............... 24,001,600
*700,000 Jabil Circuit, Inc...................... 31,587,500
1,385,336 Koninklijke (Royal) Philips Electronics
N.V. - NY Shares....................... 139,745,769
*1,900,000 Micron Technology, Inc.................. 76,593,750
1,450,000 Siemens AG.............................. 111,851,761
*1,000,000 Solectron Corporation................... 66,687,500
1,000,000 Sony Corporation........................ 110,375,000
<CAPTION>
MARKET
SHARES VALUE
- ------------ --------------
<C> <S> <C>
</TABLE>
ELECTRONICS -- (CONTINUED)
<TABLE>
<C> <S> <C>
*875,000 Vishay Intertechnology, Inc............. $ 18,375,000
--------------
764,516,691
--------------
ENERGY & SERVICES -- 1.7%
1,094,500 Repsol S.A. ADR......................... 22,232,139
324,100 Suncor Energy, Inc...................... 13,328,612
1,691,570 Transocean Offshore, Inc................ 44,403,712
2,200,000 Union Pacific Resources Group, Inc...... 35,887,500
--------------
115,851,963
--------------
FINANCIAL SERVICES -- 16.1%
3,200,000 Ace Ltd................................. 90,400,000
1,349,300 AMBAC Financial Group, Inc.............. 77,078,762
900,000 Banc One Corporation.................... 53,606,250
1,100,000 BankBoston Corporation.................. 56,237,500
2,300,000 Citigroup, Inc.......................... 109,250,000
3,200,000 Conseco, Inc............................ 97,400,000
1,000,000 Federal National Mortgage Association... 68,375,000
1,100,000 Fleet Financial Group, Inc.............. 48,812,500
1,000,000 Green Point Financial Corp.............. 32,812,500
1,200,000 Heller Financial, Inc................... 33,375,000
1,337,200 Household International, Inc............ 63,349,850
*701,600 Imperial Credit......................... 4,976,975
1,522,400 Legg Mason, Inc......................... 58,612,400
1,050,000 Marsh & McLennan Companies, Inc......... 79,275,000
500,000 MBIA, Inc............................... 32,375,000
793,100 MMI Companies, Inc...................... 13,383,562
1,300,000 Morgan Stanley, Dean Witter, Discover
and Co................................. 133,250,000
120,000 Providian Financial Corporation......... 11,220,000
*141,100 TD Waterhouse Group, Inc................ 3,536,318
--------------
1,067,326,617
--------------
FOOD, BEVERAGE & TOBACCO -- 0.5%
800,000 Philip Morris Co., Inc.................. 32,150,000
--------------
32,150,000
--------------
HEALTH CARE -- 11.1%
1,600,000 Abbott Laboratories..................... 72,800,012
*1,174,500 Boston Scientific Corporation........... 51,604,593
2,200,000 Columbia/HCA Healthcare Corporation..... 50,187,500
1,900,000 Eisai Co., Ltd.......................... 37,439,224
*1,800,000 Genzyme Corporation..................... 87,300,000
*1,135,000 Magellan Health Services, Inc........... 11,350,000
1,305,600 McKesson HBOC, Inc...................... 41,942,400
*600,000 Pediatrix Medical Group, Inc............ 12,750,000
*30 Perkin-Elmer Corporation................ 390
2,653,000 Pharmacia & Upjohn, Inc................. 150,723,562
1,700,000 Rhone-Poulenc S.A....................... 78,412,500
1,400,000 United Healthcare Corporation........... 87,675,000
1,500,000 Zeneca Group PLC........................ 58,118,181
--------------
740,303,362
--------------
INDUSTRIAL MATERIALS -- 1.9%
1,150,000 Engelhard Corporation................... 26,018,750
2,320,700 Freeport-McMoRan Copper & Gold, Inc..... 41,627,556
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-13
<PAGE>
HARTFORD CAPITAL APPRECIATION HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------------ --------------
<C> <S> <C>
</TABLE>
COMMON STOCKS -- (CONTINUED)
INDUSTRIAL MATERIALS -- (CONTINUED)
<TABLE>
<C> <S> <C>
1,221,300 IMC Global, Inc......................... $ 21,525,412
*1,900,000 Smurfit-Stone Container Corporation..... 39,068,750
--------------
128,240,468
--------------
MANUFACTURING -- 3.5%
1,222,200 Corning, Inc............................ 85,706,775
1,700,000 Delphi Automotive Systems Corporation... 31,556,250
*1,558,400 Quintiles Transnational Corp............ 65,452,800
150,000 Tyco International, Ltd................. 14,212,500
*1,350,000 UCAR International, Inc................. 34,087,500
--------------
231,015,825
--------------
MEDIA & SERVICES -- 4.9%
*950,000 America Online, Inc..................... 104,975,000
*1,556,600 American Tower Corporation.............. 37,358,400
*1,000,000 Donotuse - Chancellor Media Corp........ 55,125,000
*450,000 PSINet Inc.............................. 19,687,500
*4,084,300 Rogers Communications, Inc.............. 66,114,606
*1,100,650 Valasis Communications, Inc............. 40,311,306
--------------
323,571,812
--------------
REAL ESTATE -- 2.2%
S*2,000,000 Beacon Properties Corporation........... 30,750,000
1,000,000 Boston Properties, Inc.................. 35,875,000
*2,100,000 Security Capital Group, Inc............. 30,581,250
1,500,000 Starwood Hotels & Resorts Worldwide,
Inc.................................... 45,843,750
--------------
143,050,000
--------------
RETAIL -- 6.7%
*225,000 Amazon.com, Inc......................... 28,153,125
*1,187,700 Ames Department Stores, Inc............. 54,188,812
2,499,750 Gap, Inc. (The)......................... 125,924,906
2,100,000 Limited, Inc. (The)..................... 95,287,500
660,100 McDonald's Corporation.................. 27,270,381
*1,200,000 United Rentals (North America), Inc..... 35,400,000
1,600,000 Wal-Mart Stores, Inc.................... 77,200,000
--------------
443,424,724
--------------
SOFTWARE & SERVICES -- 6.4%
*1,476,400 Avant! Corporation...................... 18,639,550
*1,400,000 Ceridan Corporation..................... 45,762,500
*1,000,000 Cognos, Inc............................. 21,750,000
*1,200,000 Compuware Corporation................... 38,175,000
2,430,218 First Data Corporation.................. 118,928,793
*1,000,000 Microsoft Corporation................... 90,187,500
*700,000 Policy Management Systems Corporation... 21,000,000
*2,100,000 Rational Software Corporation........... 69,168,750
--------------
423,612,093
--------------
TRANSPORTATION -- 2.8%
*1,300,000 AMR Corporation......................... 88,725,000
1,000,000 Canadian Pacific Ltd.................... 23,812,500
1,091,300 USFreightways Corporation............... 50,540,831
1,149,800 Werner Enterprises, Inc................. 23,858,350
--------------
186,936,681
--------------
<CAPTION>
MARKET
SHARES VALUE
- ------------ --------------
<C> <S> <C>
</TABLE>
<TABLE>
<C> <S> <C>
UTILITIES -- 5.0%
*438,500 APT Satellite Holdings ADR.............. $ 1,781,406
1,300,000 AT&T Corp............................... 72,556,250
*1,700,000 Calpine Corporation..................... 91,800,000
*922,199 Intermedia Communications, Inc.......... 27,665,970
*1,250,000 MCI WorldCom, Inc....................... 107,812,500
800,000 Portugal Telecom S.A. ADR............... 32,950,000
--------------
334,566,126
--------------
WASTE MANAGEMENT -- 1.4%
1,700,000 Waste Management, Inc................... 91,375,000
--------------
Total common stocks..................... $6,149,311,681
--------------
--------------
CONVERTIBLE PREFERRED STOCKS -- 0.4%
UTILITIES -- 0.4%
S1,200,000 Intermedia Communications, Inc.......... $ 27,900,000
--------------
--------------
<CAPTION>
PRINCIPAL
AMOUNT
- ------------
<C> <S> <C>
CORPORATE NOTES -- 0.2%
INDUSTRIAL MATERIALS -- 0.2%
UNISYS Corp.
$ 15,000,000 12.00% due 12/30/99................... $ 16,350,000
--------------
--------------
<CAPTION>
SHARES
- ------------
<C> <S> <C>
PREFERRED STOCKS -- 0.0%
CONSUMER SERVICES -- 0.0%
+*1,094,544 SGW Holdings Corporation................ $ 1,094,544
--------------
--------------
<CAPTION>
PRINCIPAL
AMOUNT
- ------------
<C> <S> <C>
SHORT-TERM SECURITIES -- 5.6%
REPURCHASE AGREEMENT
$374,177,000 Interest in $1,933,099,000 joint
repurchase agreement dated 06/30/99 with
State Street Bank 4.822% due 07/01/99;
maturity amount $374,227,123
(Collateralized by $125,000,000 U.S.
Treasury Notes 6.625% due 05/15/07,
$1,170,609,000 U.S. Treasury Bonds
6.125% - 12.000% due 08/15/13 -
11/15/27, $637,490,000 U.S. Treasury
Strips (principal) 0.00% due 06/30/00 -
05/15/15)............................... $ 374,177,000
--------------
--------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-14
<PAGE>
<TABLE>
<CAPTION>
MARKET
VALUE
--------------
<S> <C> <C>
DIVERSIFICATION OF NET ASSETS:
Total common stocks (cost $4,515,168,662).... 92.6% $6,149,311,681
Total convertible preferred stocks (cost
$30,000,000)................................ 0.4 27,900,000
Total corporate notes (cost $15,293,984)..... 0.2 16,350,000
Total preferred stocks (cost $11,311,018).... 0.0 1,094,544
Total short-term securities (cost
$374,177,000)............................... 5.6 374,177,000
------ --------------
Total investment in securities (total cost
$4,945,950,664)............................. 98.8 6,568,833,225
Cash, receivables and other assets........... 1.6 102,991,905
Payable for securities purchased............. (0.4) (27,724,195)
Payable for Fund shares redeemed............. (0.0) (317,618)
Other liabilities............................ (0.0) (965,690)
------ --------------
Net assets................................... 100.0% $6,642,817,627
------ --------------
------ --------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share;
3,000,000,000 shares authorized; 1,286,533,028
shares outstanding................................. $ 128,653,303
Capital surplus..................................... 4,235,909,422
Accumulated undistributed net investment income..... 24,743,102
Accumulated undistributed net realized gain on
investments........................................ 630,696,144
Unrealized appreciation of investments.............. 1,622,883,726
Unrealized depreciation of other assets and
liabilities in foreign currencies.................. (68,069)
--------------
Net assets.......................................... $6,642,817,627
--------------
--------------
</TABLE>
<TABLE>
<S> <C>
Class IA
Net assets value per share ($6,630,462,658 DIVIDED BY
1,271,176,208 shares outstanding) (2,250,000,000 shares
authorized).................................................. $5.22
-----
-----
Class IB
Net assets value per share ($12,354,969 DIVIDED BY 15,356,820
shares outstanding) (750,000,000 shares authorized).......... $0.80
-----
-----
</TABLE>
* Non-income producing during period.
S 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. At June 30, 1999,
the market value of these securities amounted to $58,650,000 or 0.88% of
net assets.
+ Restricted Security (see Note 2).
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-15
<PAGE>
HARTFORD MORTGAGE SECURITIES HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------- ------------
<C> <S> <C>
ASSET-BACKED SECURITIES -- 1.4%
$ 3,000,000 Chase Manhattan RV Owner Trust, Series
97-A, Class A9
6.32% due 12/15/08................... $ 3,014,160
1,800,101 Corestates Home Equity Trust, Series
94-1, Class A
6.65% due 05/15/09................... 1,815,132
------------
Total asset-backed securities........... $ 4,829,292
------------
------------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 17.8%
4,595,806 BA Mortgage Securities, Inc., Series
97-1, Class A10
7.10% due 07/25/26................... $ 4,606,679
3,934,217 BA Mortgage Securities, Inc., Series
97-2, Class 2A1
7.25% due 10/25/27................... 3,932,337
2,721,547 Bear Stearns Mortgage Securities, Inc.,
Series 95-1, Class 1A
6.47% due 05/25/10................... 2,676,314
5,140,962 Citicorp Mortgage Securities, Inc.,
Series 98-8, Class A3
6.75% due 09/25/28................... 4,896,972
1,542,988 Countrywide Mortgage Backed Securities,
Series 97-2, Class A13
7.50% due 04/25/27................... 1,538,960
3,791,201 Countrywide Mortgage Backed Securities,
Series 98-6, Class A
6.50% due 06/25/13................... 3,706,922
453,452 DLJ Mortgage Acceptance Corporation,
Series 96-1, B1
7.25% due 09/25/11................... 444,442
151,151 DLJ Mortgage Acceptance Corporation,
Series 96-1, B2
7.25% due 09/25/11................... 146,560
3,000,000 Fannie Mae Series 97-28, Class PD
7.50% due 07/18/23................... 3,028,600
2,529,725 Fannie Mae Series 99-24, Class SG
7.65% due 01/25/29................... 1,759,400
547,567 Fannie Mae Strip Series D, Class 2
11.00% due 04/01/09................... 581,618
3,204,904 GE Capital Mortgage Services, Inc.,
Series 94-19, Class A6
7.50% due 06/25/24................... 3,212,728
4,623,755 GE Capital Mortgage Services, Inc.,
Series 94-21, Class A
6.50% due 08/25/09................... 4,551,624
4,385,364 GE Capital Mortgage Services, Inc.,
Series 94-26, Class A
6.94% due 07/25/09................... 4,365,103
534,849 GE Capital Mortgage Services, Inc.,
Series 96-1, Class B2
6.75% due 02/25/11................... 515,647
1,602,843 GE Capital Mortgage Services, Inc.,
Series 96-1, Class M
6.75% due 02/25/11................... 1,571,811
540,927 GE Capital Mortgage Services, Inc.,
Series 96-10, Class B1
6.75% due 06/25/11................... 519,576
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------- ------------
<C> <S> <C>
</TABLE>
COLLATERALIZED MORTGAGE OBLIGATIONS -- (CONTINUED)
<TABLE>
<C> <S> <C>
$ 540,927 GE Capital Mortgage Services, Inc.,
Series 96-10, Class B2
6.75% due 06/25/11.................... $ 519,576
3,644,172 GE Capital Mortgage Services, Inc.,
Series 98-7, Class A
6.50% due 04/25/13.................... 3,564,583
2,360,138 Housing Securities, Inc., Series 93-E,
Class E15
10.00% due 09/25/08................... 2,467,548
533,788 PNC Mortgage Securities Corp., Series
96-2, Class B1
6.60% due 02/25/11.................... 514,176
177,950 PNC Mortgage Securities Corp., Series
96-2, Class B2
6.60% due 02/25/11.................... 171,411
284,687 PNC Mortgage Securities Corp., Series
96-2, Class B3
6.60% due 02/25/11.................... 274,227
3,825,396 Prudential Home Mortgage Securities Co.,
Series 93-H, Class 2B
6.75% due 09/28/08.................... 3,776,699
4,200,000 Prudential Home Mortgage Securities Co.,
Series 94-8, Class A3
6.75% due 03/25/24.................... 4,161,864
1,068,970 Prudential Home Mortgage Securities Co.,
Series 96-3, Class B1
6.75% due 03/25/11.................... 1,028,915
534,056 Prudential Home Mortgage Securities Co.,
Series 96-3, Class B2
6.75% due 03/25/11.................... 514,044
653,539 Residential Funding Mortgage Sec I,
Series 95-S18, Class M3
7.00% due 11/25/10.................... 635,952
249,259 Residential Funding Mortgage Sec I,
Series 96-S11, Class M3
7.00% due 04/25/11.................... 242,192
467,270 Residential Funding Mortgage Sec I,
Series 96-S19, Class M3
7.50% due 09/25/11.................... 462,896
511,734 Residential Funding Mortgage Sec I,
Series 96-S5, Class M3
6.75% due 02/25/11.................... 490,681
2,302,797 Residential Funding Mortgage Sec I,
Series 98-S22, Class A1
6.50% due 09/25/13.................... 2,247,184
------------
Total collateralized mortgage
obligations............................. $ 63,127,241
------------
------------
COMMERCIAL MORTGAGE-BACKED SECURITIES -- 0.8%
1,000,000 GGP Collateralized Fixed Rate Notes
Series 97-C1, Class A1
6.53% due 11/15/04.................... $ 995,100
1,000,000 Merrill Lynch Mortgage Investors,Inc.,
Series 96-C2, Class B
6.96% due 11/21/28.................... 1,017,080
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-16
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------- ------------
<C> <S> <C>
</TABLE>
COMMERCIAL MORTGAGE-BACKED SECURITIES -- (CONTINUED)
<TABLE>
<C> <S> <C>
$ 930,000 Morgan Stanley Capital, Series 97-C1,
Class A1C
7.63% due 02/15/20.................... $ 953,398
------------
Total commercial mortgage-backed
securities.............................. $ 2,965,578
------------
------------
SHORT-TERM SECURITIES -- 45.0%
COMMERCIAL PAPER -- 36.4%
5,000,000 American Stores
5.15% due 07/14/99.................... $ 4,990,743
10,000,000 Anadarko Petroleum Corp.
5.10% due 07/14/99.................... 9,981,583
5,000,000 Burlington Northern Santa Fe
5.15% due 07/14/99.................... 4,990,701
5,000,000 CINergy Corp.
5.15% due 07/20/99.................... 4,986,409
5,000,000 CINergy Corp.
5.25% due 07/12/99.................... 4,991,979
4,655,000 Cox Enterprises
5.17% due 07/13/99.................... 4,646,977
5,000,000 Dominion Resources, Inc.
5.25% due 07/14/99.................... 4,990,520
5,000,000 Eastman Chemical Corp.
5.15% due 07/14/99.................... 4,990,701
5,000,000 El Paso Natural Gas Corp.
5.15% due 07/14/99.................... 4,990,701
5,000,000 General American Transportation Corp.
5.20% due 07/12/99.................... 4,992,055
5,000,000 Guident Corp.
5.15% due 07/14/99.................... 4,990,701
10,000,000 Market Street Funding
5.04% due 07/13/99.................... 9,983,200
10,000,000 Norfolk Southern Corp.
5.20% due 07/14/99.................... 9,981,222
5,000,000 Old Line Funding Corp.
5.03% due 07/14/99.................... 4,990,918
5,000,000 Praxair Inc.
5.14% due 07/14/99.................... 4,990,719
5,000,000 Praxair Inc.
5.12% due 07/14/99.................... 4,990,755
5,000,000 Raytheon Company
5.15% due 07/23/99.................... 4,984,263
5,000,000 Texas Utilities Electric Co.
5.15% due 07/14/99.................... 4,990,701
5,000,000 Tyco International Group
5.15% due 07/09/99.................... 4,994,277
5,000,000 Tyson Foods, Inc.
5.15% due 07/15/99.................... 4,989,986
10,000,000 Vastar Resources, Inc.
5.14% due 07/14/99.................... 9,981,438
5,000,000 Waste Management
5.20% due 07/14/99.................... 4,990,611
------------
129,411,160
------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------- ------------
<C> <S> <C>
</TABLE>
SHORT-TERM SECURITIES -- (CONTINUED)
<TABLE>
<C> <S> <C>
REPURCHASE AGREEMENT -- 8.5%
$30,317,000 Interest in $153,141,000 joint
repurchase agreement dated 06/30/99 with
State Street Bank 4.800% due 07/01/99;
maturity amount $30,321,042
(Collateralized by $153,141,000 U.S.
Treasury Bonds 8.125% due 05/15/21)..... $ 30,317,000
------------
Total short-term securities............. $159,728,160
------------
------------
U.S. TREASURIES & FEDERAL AGENCIES -- 79.3%
FEDERAL HOME LOAN MORTGAGE ASSOCIATION
-- 41.5%
$ 1,387,837 10.00% due 09/01/05 - 11/01/20........ $ 1,500,800
58,607,610 6.50% due 02/01/09 - 07/15/29........ 56,734,940
29,825,000 7.00% due 07/01/29................... 29,536,055
50,460,561 7.50% due 01/01/24 - 08/01/29........ 50,954,120
2,379,147 8.00% due 02/01/13 - 11/01/24........ 2,447,446
1,863,520 8.50% due 07/01/01 - 05/01/25........ 1,929,126
1,967,267 9.00% due 10/15/01 - 10/01/06........ 2,029,962
2,336,027 9.50% due 11/01/08................... 2,428,170
------------
147,560,619
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION --
15.0%
2,813,612 6.00% due 05/01/13 - 11/01/13........ 2,718,250
22,185,911 6.50% due 09/01/25 - 07/14/29........ 21,445,139
9,204,561 7.00% due 01/01/13 - 08/01/24........ 9,215,109
15,124,493 7.50% due 02/01/10 - 08/01/28........ 15,324,758
1,115,613 8.00% due 04/01/22................... 1,149,733
1,231,631 8.50% due 06/01/24 - 07/01/25........ 1,287,347
1,971,711 9.00% due 05/01/21 - 09/01/21........ 2,106,807
------------
53,247,143
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
-- 21.2%
1,128,677 10.00% due 11/15/09 - 05/15/13........ 1,230,064
337,973 11.00% due 02/15/10 - 09/15/10........ 377,270
11,384 11.25% due 01/15/01................... 11,877
51,798 12.00% due 05/15/15................... 58,460
43,896 12.50% due 03/15/15 - 08/15/15........ 50,688
9,711,712 6.50% due 03/15/28 - 11/15/28........ 9,365,715
20,110,479 7.00% due 01/15/24 - 09/15/28........ 19,881,434
28,478,870 7.50% due 11/15/09 - 06/15/28........ 28,844,391
10,988,641 8.00% due 02/15/01 - 11/29/27........ 11,315,217
1,261,497 8.50% due 06/15/17 - 02/15/25........ 1,323,030
764,176 9.00% due 01/15/25 - 12/15/25........ 811,485
2,032,133 9.50% due 10/15/09 - 11/15/09........ 2,188,250
------------
75,457,881
------------
U.S. TREASURY NOTES 1.5%
5,000,000 6.875% due 05/15/06................... 5,264,065
------------
Total U.S. treasuries & federal
agencies................................ $281,529,708
------------
------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-17
<PAGE>
HARTFORD MORTGAGE SECURITIES HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
VALUE
------------
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
ASSETS
Investments in securities, at value (total cost
$513,208,631) -- see accompanying portfolio........ $512,179,979
Receivable for investment securities sold........... 47,464,052
Receivable for Fund shares sold..................... 82,013
Receivable for dividends and interest............... 1,680,616
Cash and other assets............................... 26,558
------------
Total assets........................................ $561,433,218
------------
------------
LIABILITIES
Investment securities purchased..................... $202,965,053
Fund shares redeemed................................ 3,269,823
------------
Total liabilities................................... 206,234,876
------------
Net assets.......................................... $355,198,342
------------
------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share;
800,000,000 shares authorized; 326,778,095 shares
outstanding........................................ $ 32,677,809
Capital surplus..................................... 324,415,521
Accumulated undistributed net investment income..... 10,694,544
Distribution in excess of net realized gain on
investments........................................ (11,560,880)
Unrealized depreciation of investments.............. (1,028,652)
------------
Net assets, applicable to shares outstanding........ $355,198,342
------------
------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Class IA
Net assets value per share ($355,198,342 DIVIDED BY
326,778,095 shares outstanding) (600,000,000 shares
authorized)............................................... $1.09
-----
-----
Class IB
Net assets value per share ($0 DIVIDED BY 0 shares
outstanding) (200,000,000 shares authorized).............. $0.00
-----
-----
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-18
<PAGE>
HARTFORD INDEX HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ----------- --------------
<C> <S> <C>
COMMON STOCKS -- 99.2%
AEROSPACE & DEFENSE -- 1.7%
110,000 AlliedSignal, Inc....................... $ 6,930,000
193,998 Boeing Company (The).................... 8,572,286
25,200 General Dynamics Corporation............ 1,726,200
78,200 Lockheed Martin Corporation............. 2,912,950
13,800 Northrop Grumman Corporation............ 915,112
67,223 Raytheon Company - Class B.............. 4,730,818
38,100 Rockwell International Corporation...... 2,314,575
30,000 Textron, Inc............................ 2,469,375
96,000 United Technologies Corporation......... 6,882,000
--------------
37,453,316
--------------
BUSINESS SERVICES -- 0.4%
*152,545 Cendant Corp............................ 3,127,172
15,500 Deluxe Corporation...................... 603,531
26,100 Donnelly (R.R.) & Sons Company.......... 967,331
15,100 Fluor Corporation....................... 611,550
8,100 Foster Wheeler Corporation.............. 114,412
18,900 Grainger (W.W.), Inc.................... 1,017,056
29,300 IKON Office Solutions................... 439,500
8,300 National Service Industries, Inc........ 298,800
24,000 SuperValu, Inc.......................... 616,500
65,800 Sysco Corporation....................... 1,961,662
--------------
9,757,514
--------------
COMMUNICATIONS
EQUIPMENT -- 5.4%
*71,900 3Com Corporation........................ 1,918,831
*16,450 Andrew Corporation...................... 311,521
*34,300 Cabletron Systems, Inc.................. 445,900
*636,250 Cisco Systems, Inc...................... 41,038,125
*34,300 General Instrument Corporation.......... 1,457,750
15,900 Harris Corporation...................... 623,081
605,519 Lucent Technologies, Inc................ 40,834,670
120,100 Motorola, Inc........................... 11,379,475
*14,300 Network Appliance, Inc.................. 799,012
132,340 Nortel Networks Corp.................... 11,488,766
15,700 Raychem Corporation..................... 580,900
14,900 Scientific-Atlanta, Inc................. 536,400
*87,500 Sprint Corporation (PCS Group).......... 4,998,437
*78,000 Tellabs, Inc............................ 5,269,875
--------------
121,682,743
--------------
COMPUTERS & OFFICE
EQUIPMENT -- 5.9%
*31,700 Apple Computer, Inc..................... 1,468,106
338,597 Compaq Computer Corporation............. 8,020,516
*9,900 Data General Corporation................ 144,168
*505,200 Dell Computer Corp...................... 18,692,400
*201,400 EMC Corporation......................... 11,077,000
*31,200 Gateway, Inc............................ 1,840,800
202,000 Hewlett-Packard Company................. 20,301,000
361,300 International Business Machines Corp.... 46,698,025
53,500 Pitney Bowes, Inc....................... 3,437,375
*44,400 Seagate Technology, Inc................. 1,137,750
*154,000 Sun Microsystems, Inc................... 10,606,750
*53,700 Unisys Corporation...................... 2,090,943
131,700 Xerox Corporation....................... 7,778,644
--------------
133,293,477
--------------
<CAPTION>
MARKET
SHARES VALUE
- ----------- --------------
<C> <S> <C>
</TABLE>
<TABLE>
<C> <S> <C>
CONSUMER DURABLES -- 1.3%
15,000 Cooper Tire & Rubber Company............ $ 354,375
241,000 Ford Motor Co........................... 13,601,437
129,200 General Motors Corporation.............. 8,527,200
35,850 Genuine Parts Company................... 1,254,750
31,100 Goodyear Tire & Rubber Company (The).... 1,829,068
17,500 ITT Industries, Inc..................... 667,187
55,887 Newell Rubbermaid, Inc.................. 2,598,745
23,800 TRW, Inc................................ 1,306,025
--------------
30,138,787
--------------
CONSUMER NON-DURABLES -- 2.9%
11,000 Alberto-Culver Company - Class B........ 292,875
52,300 Avon Products, Inc...................... 2,902,650
17,400 Black & Decker Corporation.............. 1,098,375
4,700 Briggs & Stratton Corporation........... 271,425
11,900 Centex Corporation...................... 446,993
23,301 Clorox Company (The).................... 2,488,806
58,300 Colgate-Palmolive Company............... 5,757,125
6,900 Fleetwood Enterprises, Inc.............. 182,418
*14,400 Fruit Of The Loom, Inc.................. 140,400
220,600 Gillette Company (The).................. 9,044,600
21,100 International Flavors & Fragrances,
Inc.................................... 936,312
9,600 Kaufman & Broad Home Corporation........ 238,800
105,900 Kimberly-Clark Corporation.............. 6,036,300
12,800 Liz Claiborne, Inc...................... 467,200
67,400 Masco Corporation....................... 1,946,175
17,900 Maytag Corporation...................... 1,247,406
56,000 NIKE, Inc. - Class B.................... 3,545,500
264,600 Procter & Gamble Co..................... 23,615,550
*11,200 Reebok International Ltd................ 208,600
6,800 Russell Corporation..................... 132,600
13,100 Snap-On, Inc............................ 474,056
3,800 Springs Industries, Inc................. 165,775
17,600 Stanley Works (The)..................... 566,500
11,400 Tupperware Corporation.................. 290,700
23,900 VF Corp................................. 1,021,725
15,100 Whirlpool Corporation................... 1,117,400
--------------
64,636,266
--------------
CONSUMER SERVICES -- 0.9%
18,300 Brunswick Corporation................... 510,112
122,000 Carnival Corp. - Class A................ 5,917,000
26,700 Darden Restaurants, Inc................. 582,393
64,000 Eastman Kodak Company................... 4,336,000
19,400 H&R Block, Inc.......................... 970,000
*25,200 Harrah's Entertainment, Inc............. 554,400
39,175 Hasbro, Inc............................. 1,094,451
51,200 Hilton Hotels Corporation............... 726,400
49,700 Marriott International.................. 1,857,537
82,700 Mattel, Inc............................. 2,186,381
*39,300 Mirage Resorts, Inc..................... 658,275
8,700 Polaroid Corporation.................... 240,337
24,800 Wendy's International, Inc.............. 702,150
--------------
20,335,436
--------------
ELECTRONICS -- 6.5%
*28,900 Advanced Micro Devices, Inc............. 522,006
*74,200 Applied Materials, Inc.................. 5,481,525
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-19
<PAGE>
HARTFORD INDEX HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ----------- --------------
<C> <S> <C>
</TABLE>
COMMON STOCKS -- (CONTINUED)
ELECTRONICS -- (CONTINUED)
<TABLE>
<C> <S> <C>
8,900 EG&G, Inc............................... $ 317,062
86,600 Emerson Electric Company................ 5,444,975
651,400 General Electric Company................ 73,608,200
660,900 Intel Corporation....................... 39,323,550
16,900 Johnson Controls, Inc................... 1,171,381
*17,400 KLA-Tencor Corporation.................. 1,128,825
*28,500 LSI Logic Corporation................... 1,314,562
*49,900 Micron Technology, Inc.................. 2,011,593
*33,500 National Semiconductor Corporation...... 847,968
*37,400 Silicon Graphics, Inc................... 612,425
*50,200 Solectron Corporation................... 3,347,712
9,400 Tektronix, Inc.......................... 283,762
78,100 Texas Instruments, Inc.................. 11,324,500
*11,300 Thomas & Betts Corporation.............. 533,925
--------------
147,273,971
--------------
ENERGY AND SERVICES -- 6.2%
*37,900 Aes Corporation (The)................... 2,202,937
18,000 Amerada Hess Corporation................ 1,071,000
24,100 Anadarko Petroleum Corporation.......... 887,181
22,000 Apache Corporation...................... 858,000
14,800 Ashland, Inc............................ 593,850
64,100 Atlantic Richfield Company.............. 5,356,356
65,110 Baker Hughes, Inc....................... 2,181,185
35,320 Burlington Resources, Inc............... 1,527,590
130,500 Chevron Corporation..................... 12,421,968
23,400 CMS Energy Corporation.................. 979,875
42,300 Coastal Corporation (The)............... 1,692,000
19,100 Consolidated Natural Gas Company........ 1,160,325
483,600 Exxon Corporation....................... 37,297,650
87,500 Halliburton Company..................... 3,959,375
10,000 Helmerich & Payne, Inc.................. 238,125
17,232 Kerr-McGee Corporation.................. 864,831
11,800 McDermott International, Inc............ 333,350
155,900 Mobil Corporation....................... 15,434,100
69,300 Occidental Petroleum Corporation........ 1,463,962
50,200 Phillips Petroleum Company.............. 2,525,687
*16,700 Rowan Companies, Inc.................... 307,906
426,700 Royal Dutch Petroleum................... 25,708,675
108,799 Schlumberger Ltd........................ 6,929,136
47,853 Sempra Energy........................... 1,082,674
18,000 Sunoco, Inc............................. 543,375
106,500 Texaco, Inc............................. 6,656,250
50,000 Union Pacific Resources Group, Inc...... 815,625
48,000 Unocal Corporation...................... 1,902,000
61,300 USX Corporation......................... 1,996,081
--------------
138,991,069
--------------
FINANCIAL SERVICES -- 15.8%
30,100 Aetna, Inc.............................. 2,692,068
54,700 AFLAC Incorporated...................... 2,618,762
165,300 Allstate Corp........................... 5,930,137
90,000 American Express Company................ 11,711,250
53,002 American General Corporation............ 3,995,025
253,698 American International Group, Inc....... 29,698,522
35,000 AmSouth Bancorporation.................. 811,562
52,275 Aon Corporation......................... 2,156,343
144,926 Associates First Capital Corporation.... 6,422,033
<CAPTION>
MARKET
SHARES VALUE
- ----------- --------------
<C> <S> <C>
</TABLE>
FINANCIAL SERVICES -- (CONTINUED)
<TABLE>
<C> <S> <C>
235,256 Banc One Corporation.................... $ 14,012,435
347,543 Bank of America Corp.................... 25,479,246
151,500 Bank of New York Company, Inc. (The).... 5,558,156
59,100 BankBoston Corporation.................. 3,021,487
62,600 BB&T Corporation........................ 2,296,637
23,145 Bear Stearns Company, Inc............... 1,082,028
39,100 Capital One Financial Corporation....... 2,177,381
81,225 Charles Schwab Corporation.............. 8,924,596
168,500 Chase Manhattan Corp.................... 14,596,312
33,300 Chubb Corporation (The)................. 2,314,350
43,400 CIGNA Corporation....................... 3,862,600
33,800 Cincinnati Financial Corporation........ 1,269,612
672,207 Citigroup, Inc.......................... 31,929,832
31,050 Comerica, Inc........................... 1,845,534
68,562 Conseco, Inc............................ 2,086,855
22,300 Countrywide Credit Industries, Inc...... 953,325
28,800 Equifax, Inc............................ 1,027,800
138,300 Federal Home Loan Mortgage
Corporation............................ 8,021,400
204,200 Federal National Mortgage Association... 13,962,175
53,475 Fifth Third Bancorp..................... 3,559,429
192,530 First Union Corporation................. 9,048,910
131,500 Firstar Corporation..................... 3,682,000
113,600 Fleet Financial Group, Inc.............. 5,041,000
50,300 Franklin Resources, Inc................. 2,043,437
11,300 Golden West Financial Corp.............. 1,107,400
95,499 Household International, Inc............ 4,524,265
41,960 Huntington Bancshares, Inc.............. 1,468,600
22,300 Jefferson-Pilot Corporation............. 1,475,981
89,200 KeyCorp................................. 2,865,550
23,700 Lehman Brothers Holdings, Inc........... 1,475,325
42,600 Lincoln National Corporation............ 2,228,512
52,350 Marsh & McLennan Companies, Inc......... 3,952,425
19,900 MBIA, Inc............................... 1,288,525
159,675 MBNA Corporation........................ 4,890,046
103,900 Mellon Bank Corporation................. 3,779,362
31,300 Mercantile Bancorp, Inc................. 1,788,012
73,300 Merrill Lynch & Co., Inc................ 5,859,418
22,400 MGIC Investment Corp.................... 1,089,200
35,300 Morgan (J.P.) & Co., Inc................ 4,959,650
113,575 Morgan Stanley, Dean Witter, Discover
and Co................................. 11,641,437
62,600 National City Corporation............... 4,100,300
22,100 Northern Trust Corporation.............. 2,143,700
29,000 Paine Webber Group, Inc................. 1,355,750
60,600 PNC Bank Corp........................... 3,492,075
14,900 Progressive Corp. of Ohio............... 2,160,500
27,700 Provident Companies, Inc................ 1,108,000
28,150 Providian Financial Corporation......... 2,632,025
44,600 Regions Financial Corporation........... 1,714,312
21,300 Republic New York Corporation........... 1,452,393
27,900 SAFECO Corp............................. 1,231,087
32,400 SLM Holding Corporation................. 1,484,325
33,300 SouthTrust Corp......................... 1,277,887
46,280 St. Paul Companies, Inc................. 1,472,282
31,900 State Street Corporation................ 2,723,462
34,100 Summit Bancorp.......................... 1,425,806
63,900 SunTrust Banks, Inc..................... 4,437,056
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-20
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ----------- --------------
<C> <S> <C>
</TABLE>
COMMON STOCKS -- (CONTINUED)
FINANCIAL SERVICES -- (CONTINUED)
<TABLE>
<C> <S> <C>
53,850 Synovus Financial Corp.................. $ 1,070,268
28,300 Torchmark Corporation................... 965,737
26,200 Transamerica Corporation................ 1,965,000
144,519 U.S. Bancorp............................ 4,913,646
28,400 Union Planters Corporation.............. 1,269,125
28,400 Unum Corporation........................ 1,554,900
40,300 Wachovia Corporation.................... 3,448,168
118,156 Washington Mutual, Inc.................. 4,179,768
329,200 Wells Fargo & Co........................ 14,073,300
--------------
355,876,819
--------------
FOOD, BEVERAGE & TOBACCO -- 5.6%
7,200 Adolph Coors Company - Class B.......... 356,400
94,700 Anheuser-Busch Companies, Inc........... 6,717,781
116,702 Archer-Daniels-Midland Company.......... 1,801,587
55,600 Bestfoods............................... 2,752,200
13,600 Brown-Forman Corporation - Class B...... 886,550
86,900 Campbell Soup Company................... 4,029,987
491,400 Coca-Cola Company, (The)................ 30,712,500
84,500 Coca-Cola Enterprises, Inc.............. 2,513,875
97,200 Conagra, Inc............................ 2,587,950
33,200 Fortune Brands, Inc..................... 1,373,650
30,400 General Mills, Inc...................... 2,443,400
71,500 Heinz (H.J.) Company.................... 3,583,937
27,800 Hershey Foods Corporation............... 1,650,625
80,700 Kellogg Company......................... 2,663,100
64,700 Nabisco Group Holdings Corp............. 1,265,693
293,700 PepsiCo, Inc............................ 11,362,518
480,600 Philip Morris Co., Inc.................. 19,314,112
27,200 Quaker Oats Company (The)............... 1,805,409
64,700 Ralston Purina Company.................. 1,969,306
98,800 Safeway, Inc............................ 4,890,600
180,000 Sara Lee Corporation.................... 4,083,750
85,200 Seagram Company Ltd. (The).............. 4,291,950
*30,330 Tricon Global Restaurants, Inc.......... 1,641,611
113,792 Unilever N.V. New York Shares........... 7,936,992
35,000 UST, Inc................................ 1,023,750
23,100 Wrigley, (Wm.) Jr. Co................... 2,079,000
--------------
125,738,233
--------------
HEALTH CARE -- 11.1%
302,900 Abbott Laboratories..................... 13,781,950
13,100 Allergan, Inc........................... 1,454,100
*19,800 ALZA Corporation........................ 1,007,325
260,600 American Home Products Corporation...... 14,984,500
*101,900 Amgen, Inc.............................. 6,203,162
10,200 Bard (C.R.), Inc........................ 487,687
11,100 Bausch & Lomb, Inc...................... 849,150
58,100 Baxter International, Inc............... 3,522,312
49,700 Becton Dickinson & Co................... 1,491,000
22,400 Biomet, Inc............................. 890,400
*78,700 Boston Scientific Corporation........... 3,457,881
395,600 Bristol-Myers Squibb Company............ 27,865,075
53,951 Cardinal Health, Inc.................... 3,459,607
112,900 Columbia/HCA Healthcare Corporation..... 2,575,531
219,000 Eli Lilly and Co........................ 15,685,875
60,000 Guidant Corporation..................... 3,086,250
*22,000 HCR Manor Care, Inc..................... 532,125
<CAPTION>
MARKET
SHARES VALUE
- ----------- --------------
<C> <S> <C>
</TABLE>
HEALTH CARE -- (CONTINUED)
<TABLE>
<C> <S> <C>
*82,300 HealthSouth Corp........................ $ 1,229,356
*33,400 Humana, Inc............................. 432,112
267,600 Johnson & Johnson Co.................... 26,224,800
22,400 Loews Corporation....................... 1,772,400
14,200 Mallinckrodt, Inc....................... 516,525
55,209 McKesson HBOC, Inc...................... 1,773,589
116,200 Medtronic, Inc.......................... 9,049,075
470,200 Merck & Co., Inc........................ 34,794,800
8,700 Millipore Corporation................... 352,893
24,700 Pall Corporation........................ 548,031
9,900 Pe Corporation - Pe Biosystems Group.... 1,136,025
257,600 Pfizer, Inc............................. 28,271,600
101,100 Pharmacia & Upjohn, Inc................. 5,743,743
47,700 Pioneer Hi-Bred International, Inc...... 1,857,318
293,000 Schering-Plough Corporation............. 15,529,000
54,300 Service Corporation International....... 1,045,275
5,300 Shared Medical Systems Corporation...... 345,825
*16,800 St. Jude Medical, Inc................... 598,500
*61,600 Tenet Healthcare Corporation............ 1,143,450
34,500 United Healthcare Corporation........... 2,160,562
169,300 Warner-Lambert Company.................. 11,745,187
*19,300 Watson Pharmaceuticals, Inc............. 676,706
*13,400 Wellpoint Health Networks, Inc.......... 1,137,325
--------------
249,418,027
--------------
INDUSTRIAL MATERIALS -- 3.4%
45,600 Air Products & Chemicals, Inc........... 1,835,400
44,900 Alcan Aluminum Ltd...................... 1,433,993
73,600 Alcoa, Inc.............................. 4,554,000
38,400 Allegheny Teledyne Incorporated......... 868,800
8,000 Armstrong World Industries, Inc......... 462,500
7,900 ASARCO, Inc............................. 148,618
77,700 Barrick Gold Corp....................... 1,505,437
44,600 Battle Mountain Gold Company............ 108,712
10,400 Bemis Company, Inc...................... 413,400
*25,900 Bethlehem Steel Corporation............. 199,106
14,800 BFGoodrich Co........................... 629,000
11,200 Boise Cascade Corporation............... 480,200
19,000 Champion International Corporation...... 909,625
24,400 Crown Cork & Seal Company, Inc.......... 695,400
18,200 Cyprus Amax Minerals Company............ 276,412
43,700 Dow Chemical Company.................... 5,544,437
224,700 du Pont (E.I.) de Nemours & Co.......... 15,349,818
15,700 Eastman Chemical Company................ 812,475
25,700 Ecolab, Inc............................. 1,121,162
25,000 Engelhard Corporation................... 565,625
*6,300 FMC Corporation......................... 430,368
32,800 Freeport-McMoRan Copper & Gold, Inc..... 588,350
34,200 Georgia-Pacific Corporation............. 1,620,225
*13,800 Grace (W.R.) & Co....................... 253,575
11,800 Great Lakes Chemical Corporation........ 543,537
20,100 Hercules, Inc........................... 790,181
51,800 Homestake Mining Company................ 424,112
38,100 Inco Ltd................................ 685,800
81,556 International Paper Company............. 4,118,584
43,800 James River Corporation of Virginia..... 1,658,925
21,600 Louisiana-Pacific Corporation........... 513,000
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-21
<PAGE>
HARTFORD INDEX HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ----------- --------------
<C> <S> <C>
</TABLE>
COMMON STOCKS -- (CONTINUED)
INDUSTRIAL MATERIALS -- (CONTINUED)
<TABLE>
<C> <S> <C>
20,500 Mead Corporation (The).................. $ 855,875
125,600 Monsanto Company........................ 4,953,350
13,000 Nalco Chemical Company.................. 674,375
33,193 Newmont Mining Corporation.............. 659,710
17,400 Nucor Corporation....................... 825,412
10,800 Owens Corning........................... 371,250
*30,900 Owens-Illinois, Inc..................... 1,010,043
11,500 Phelps Dodge Corporation................ 712,281
64,500 Placer Dome, Inc........................ 761,906
5,800 Potlatch Corporation.................... 254,837
34,600 PPG Industries, Inc..................... 2,043,562
31,400 Praxair, Inc............................ 1,536,637
12,800 Reynolds Metals Company................. 755,200
42,388 Rohm & Haas Company..................... 1,817,364
*16,624 Sealed Air Corporation.................. 1,078,482
34,200 Sherman-Williams Company................ 949,050
20,000 Sigma-Aldrich Corporation............... 688,750
11,000 Temple-Inland, Inc...................... 750,750
26,500 Union Carbide Corporation............... 1,291,875
17,600 USX Corporation......................... 475,200
20,100 Westvaco Corporation.................... 582,900
39,700 Weyerhaeuser Company.................... 2,729,375
22,100 Willamette Industries, Inc.............. 1,017,981
18,400 Worthington Industries, Inc............. 302,450
--------------
76,639,392
--------------
MANUFACTURING -- 2.6%
22,600 Avery Dennison Corporation.............. 1,364,475
6,100 Ball Corporation........................ 257,725
14,500 Case Corporation........................ 697,812
70,900 Caterpillar, Inc........................ 4,254,000
18,800 Cooper Industries, Inc.................. 977,600
48,500 Corning, Inc............................ 3,401,062
13,600 Crane Co................................ 427,550
8,300 Cummins Engine Company, Inc............. 474,137
33,036 Dana Corporation........................ 1,521,720
26,700 Danaher Corporation..................... 1,551,937
46,100 Deere & Company......................... 1,826,712
111,937 Delphi Automotive Systems Corporation... 2,077,834
42,400 Dover Corporation....................... 1,484,000
14,200 Eaton Corporation....................... 1,306,400
25,100 Honeywell, Inc.......................... 2,908,462
49,800 Illinois Tool Works, Inc................ 4,083,600
32,750 Ingersoll-Rand Company.................. 2,116,468
7,700 Milacron, Inc........................... 142,450
79,900 Minnesota Mining and Manufacturing
Company................................ 6,946,306
1,700 NACCO Industries, Inc................... 124,950
*13,300 Navistar International Corporation...... 665,000
15,500 PACCAR, Inc............................. 827,312
21,650 Parker Hannifin Corporation............. 990,487
33,900 Tenneco, Inc............................ 809,362
31,600 Thermo Electron Corporation............. 633,975
12,400 Timken Company (The).................... 241,800
163,510 Tyco International, Ltd................. 15,492,577
--------------
57,605,713
--------------
<CAPTION>
MARKET
SHARES VALUE
- ----------- --------------
<C> <S> <C>
</TABLE>
<TABLE>
<C> <S> <C>
MEDIA & SERVICES -- 4.8%
*216,300 America Online, Inc..................... $ 23,901,150
*141,800 CBS Corporation......................... 6,159,437
*66,100 Clear Channel Communications............ 4,556,768
*147,000 Comcast Corporation - Class A........... 5,650,312
18,000 Dow Jones & Company, Inc................ 955,125
32,700 Dun & Bradstreet Corporation (The)...... 1,158,806
55,700 Gannett Co., Inc........................ 3,975,587
14,200 Harcourt General, Inc................... 732,187
63,100 IMS Health, Inc......................... 1,971,875
27,650 Interpublic Group of Companies, Inc..... 2,395,181
14,100 King World Productions, Inc............. 490,856
15,600 Knight-Ridder, Inc...................... 857,025
39,200 McGraw-Hill Companies, Inc. (The)....... 2,114,350
*120,800 MediaOne Group, Inc..................... 8,984,500
10,400 Meredith Corporation.................... 360,100
35,200 New York Times Company (The)............ 1,295,800
35,600 Omnicom Group, Inc...................... 2,848,000
237,600 Time Warner, Inc........................ 17,463,600
14,400 Times Mirror Co. - Class A.............. 853,200
23,600 Tribune Company......................... 2,056,150
*137,500 Viacom, Inc. - Class B.................. 6,050,000
410,200 Walt Disney Company (The)............... 12,639,287
--------------
107,469,296
--------------
REAL ESTATE -- 0.0%
8,600 Pulte Corporation....................... 198,337
--------------
RETAIL -- 6.7%
83,676 Albertson's, Inc........................ 4,314,543
13,400 American Greetings Corporation.......... 403,675
*29,800 AutoZone, Inc........................... 897,725
*40,400 Best Buy Company, Inc................... 2,727,000
19,900 Circuit City Stores, Inc................ 1,850,700
*21,800 Consolidated Stores, Inc................ 588,600
*43,500 Costco Companies, Inc................... 3,482,718
77,600 CVS Corporation......................... 3,938,200
88,100 Dayton-Hudson Corp...................... 5,726,500
21,300 Dillard's, Inc.......................... 748,162
44,160 Dollar General Corporation.............. 1,280,640
*41,800 Federated Department Stores, Inc........ 2,212,787
170,513 Gap, Inc. (The)......................... 8,589,567
7,700 Great Atlantic & Pacific Tea Company,
Inc.................................... 260,356
294,800 Home Depot, Inc. (The).................. 18,996,175
7,100 Jostens, Inc............................ 149,543
*98,100 Kmart Corp.............................. 1,612,518
*164,600 Kroger Company (The).................... 4,598,512
42,200 Limited, Inc. (The)..................... 1,914,825
7,800 Longs Drug Store, Inc................... 269,587
73,800 Lowe's Companies, Inc................... 4,183,537
66,550 May Department Stores Company........... 2,720,231
269,800 McDonald's Corporation.................. 11,146,112
28,200 Nordstrom, Inc.......................... 944,700
*73,500 Office Depot, Inc....................... 1,621,593
52,500 Penney (J.C.) Company, Inc.............. 2,549,531
10,500 Pep Boys - Manny, Moe & Jack............ 227,062
51,400 Rite Aid Corporation.................... 1,265,725
75,800 Sears Roebuck & Co...................... 3,377,837
*92,600 Staples, Inc............................ 2,864,812
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-22
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ----------- --------------
<C> <S> <C>
</TABLE>
COMMON STOCKS -- (CONTINUED)
RETAIL -- (CONTINUED)
<TABLE>
<C> <S> <C>
38,600 Tandy Corporation....................... $ 1,886,575
64,200 TJX Companies, Inc. (The)............... 2,138,662
*49,400 Toys R Us, Inc.......................... 1,021,962
886,400 Wal-Mart Stores, Inc.................... 42,768,800
199,000 Walgreen Co............................. 5,845,625
29,500 Winn-Dixie Stores, Inc.................. 1,089,656
--------------
150,214,753
--------------
SOFTWARE & SERVICES -- 6.1%
12,200 Adobe Systems Incorporated, Inc......... 1,002,306
11,800 Autodesk, Inc........................... 348,837
123,300 Automatic Data Processing, Inc.......... 5,425,200
*46,700 BMC Software, Inc....................... 2,521,800
*28,400 Ceridan Corporation..................... 928,325
107,050 Computer Associates International,
Inc.................................... 5,887,750
*31,600 Computer Sciences Corp.................. 2,186,325
*73,100 Compuware Corporation................... 2,325,493
98,200 Electronic Data Systems Corporation..... 5,554,437
86,000 First Data Corporation.................. 4,208,625
*1,016,700 Microsoft Corporation................... 91,693,631
*67,200 Novell, Inc............................. 1,780,800
*286,425 Oracle Corporation...................... 10,633,528
*53,900 Parametric Technology Corporation....... 747,862
48,800 Paychex, Inc............................ 1,555,500
*48,000 PeopleSoft, Inc......................... 828,000
--------------
137,628,419
--------------
TRANSPORTATION -- 1.1%
*30,600 AMR Corporation......................... 2,088,450
93,400 Burlington Northern Santa Fe
Corporation............................ 2,895,400
43,400 CSX Corporation......................... 1,966,562
27,900 Delta Air Lines, Inc.................... 1,607,737
*59,220 FDX Corporation......................... 3,212,685
21,800 Kansas City Southern Industries, Inc.... 1,391,112
32,400 Kohls Corp.............................. 2,500,875
65,000 Laidlaw, Inc............................ 479,375
75,500 Norfolk Southern Corporation............ 2,274,437
14,300 Ryder System, Inc....................... 371,800
67,000 Southwest Airlines Co................... 2,085,375
49,200 Union Pacific Corporation............... 2,868,975
*14,700 US Airways Group, Inc................... 640,368
24,383,151
--------------
--------------
UTILITIES -- 10.6%
56,000 Alltel Corp............................. 4,004,000
27,300 Ameren Corporation...................... 1,047,637
38,400 American Electric Power Co., Inc........ 1,442,400
218,900 Ameritech Corporation................... 16,089,150
633,124 AT&T Corp............................... 35,336,233
309,162 Bell Atlantic Corporation............... 20,211,465
377,300 BellSouth Corp.......................... 17,685,937
30,100 Carolina Power & Light Company.......... 1,288,656
42,200 Central & South West Corp............... 986,425
27,750 CenturyTel, Inc......................... 1,103,062
31,600 CINergy Corp............................ 1,011,200
16,600 Columbia Gas System, Inc................ 1,040,612
45,200 Consolidated Edison Company of New York,
Inc.................................... 2,045,300
<CAPTION>
MARKET
SHARES VALUE
- ----------- --------------
<C> <S> <C>
</TABLE>
UTILITIES -- (CONTINUED)
<TABLE>
<C> <S> <C>
29,700 Constellation Energy Group, Inc......... $ 879,862
38,200 Dominion Resources, Inc................. 1,654,537
28,900 DTE Energy Company...................... 1,156,000
72,552 Duke Energy Corporation................. 3,945,015
4,500 Eastern Enterprises..................... 178,875
69,000 Edison International.................... 1,845,750
70,400 Enron Corp.............................. 5,755,200
49,100 Entergy Corporation..................... 1,534,375
46,700 FirstEnergy Corp........................ 1,447,700
18,600 Florida Progress Corp................... 768,412
36,000 FPL Group, Inc.......................... 1,966,500
34,200 Frontier Corporation.................... 2,017,800
25,000 GPU, Inc................................ 1,054,687
193,600 GTE Corporation......................... 14,665,200
*370,399 MCI WorldCom, Inc....................... 31,946,913
22,800 New Century Energies, Inc............... 884,925
*58,900 NEXTEL Communications, Inc.............. 2,956,043
*37,300 Niagara Mohawk Holdings, Inc............ 599,131
9,500 NICOR, Inc.............................. 361,593
30,300 Northern States Power Company........... 732,881
6,300 ONEOK, Inc.............................. 200,025
59,200 PacifiCorp.............................. 1,087,800
38,200 Peco Energy Company..................... 1,599,625
7,000 Peoples Energy Corporation.............. 263,812
76,200 PG&E Corp............................... 2,476,500
31,400 PP&L Resources Inc...................... 965,550
43,700 Public Service Enterprise Group, Inc.... 1,786,237
58,992 Reliant Energy, Inc..................... 1,629,654
391,220 SBC Communications, Inc................. 22,690,760
21,800 Sonat, Inc.............................. 722,125
138,500 Southern Company........................ 3,670,250
172,100 Sprint Corporation (FON Group).......... 9,089,031
56,215 Texas Utilities Company................. 2,318,868
43,300 Unicom Corporation...................... 1,669,756
100,143 US West, Inc............................ 5,883,401
86,100 Williams Companies, Inc................. 3,664,631
--------------
239,361,501
--------------
WASTE MANAGEMENT -- 0.3%
31,500 Browning-Ferris Industries, Inc......... 1,354,500
121,182 Waste Management, Inc................... 6,513,532
--------------
7,868,032
--------------
Total common stocks..................... $2,235,964,252
--------------
--------------
<CAPTION>
PRINCIPAL
AMOUNT
- -----------
<C> <S> <C>
U.S. TREASURIES & FEDERAL AGENCIES -- 0.1%
U.S. TREASURY BILL -- 0.1%
$ 125,000 4.25% due 08/19/99...................... $ 124,276
500,000 4.28% due 08/19/99...................... 497,087
750,000 4.42% due 08/12/99...................... 746,132
380,000 4.44% due 08/12/99...................... 378,031
--------------
Total U.S. treasuries & federal
agencies................................ $ 1,745,526
--------------
--------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-23
<PAGE>
HARTFORD INDEX HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------- --------------
<C> <S> <C>
SHORT-TERM SECURITIES -- 1.1%
REPURCHASE AGREEMENT -- 1.1%
$25,412,000 Interest in $153,141,000 joint
repurchase agreement dated 06/30/99 with
State Street Bank 4.800% due 07/01/99;
maturity amount $25,415,388
(Collateralized by $153,141,000 U.S.
Treasury Bonds 8.125% due 05/15/21)..... $ 25,412,000
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
<CAPTION>
MARKET
VALUE
----------------
<S> <C> <C>
DIVERSIFICATION OF NET ASSETS:
Total common stocks (cost
$1,416,106,259)........................... 99.2% $ 2,235,964,252
Total U.S. treasuries & federal agencies
(cost $1,745,528)......................... 0.1 1,745,526
Total short-term securities (cost
$25,412,000).............................. 1.1 25,412,000
----- ----------------
Total investment in securities
(total cost $1,443,263,787)............... 100.4 2,263,121,778
Cash, receivables and other assets......... 0.7 16,062,890
Payable for securities purchased........... (0.1) (2,667,408)
Payable for Fund shares redeemed........... (0.9) (20,955,423)
Other liabilities.......................... (0.1) (1,056,557)
----- ----------------
Net assets................................. 100.0% $ 2,254,505,280
----- ----------------
----- ----------------
</TABLE>
<TABLE>
<S> <C>
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share;
2,000,000,000 shares authorized; 573,527,878
shares outstanding............................... $ 57,352,788
Capital surplus................................... 1,348,213,631
Accumulated undistributed net investment income... 10,187,945
Accumulated undistributed net realized gain on
investments...................................... 18,550,213
Unrealized appreciation of investments............ 819,857,990
Unrealized appreciation of futures contracts ++... 342,713
--------------
Net assets, applicable to shares outstanding...... $2,254,505,280
--------------
--------------
</TABLE>
<TABLE>
<S> <C>
Class IA
Net assets value per share ($2,254,505,280 DIVIDED BY
573,527,878 shares outstanding) (1,500,000,000 shares
authorized).............................................. $3.93
-----
-----
Class IB
Net assets value per share ($0 DIVIDED BY 0 shares
outstanding) (500,000,000 shares authorized)............. $0.00
-----
-----
</TABLE>
* Non-income producing during period.
++ The Fund had 49 Standard & Poor's 500 September 1999 Futures contracts open
as of June 30, 1999. These contracts had a value of $16,925,825 as of June
30, 1999 and were collateralized by various U.S. Treasury obligations with
a market value of $1,745,526.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-24
<PAGE>
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------------ --------------
<C> <S> <C>
COMMON STOCKS -- 89.8%
AUSTRALIAN -- 3.1%
1,376,457 Australia & New Zealand Banking
(Financial Services)................... $ 10,121,483
905,211 Broken Hill Proprietary Co. (Industrial
Materials)............................. 10,485,627
942,118 News Corp., Ltd. (Media and Services)... 8,038,310
5,403,734 Pasminco Ltd. (Industrial Materials).... 5,966,182
*833,178 Telstra Corporation Ltd. (Utilities).... 4,774,322
--------------
39,385,924
--------------
BRAZIL -- 1.0%
5,367,400 Companhia Cervejaria Brahma (Food,
Beverage, & Tobacco)................... 2,954,792
224,700 Embratel Participacoes S.A.
(Utilities)............................ 3,117,712
28,104,000 Petroleo Brasileiro S.A. (Energy &
Services).............................. 4,327,474
109,000 Telesp Participacoes S.A. (Utilities)... 2,493,375
--------------
12,893,353
--------------
CANADA -- 2.5%
362,800 Alcan Aluminum Ltd. (Industrial
Materials)............................. 11,496,464
362,900 Canadian Imperial Bank of Commerce
(Financial Services)................... 8,606,335
112,900 Canadian National Railway Company
(Transportation)....................... 7,564,300
*144,200 Newbridge Networks Corp. (Communication
Equipment)............................. 4,092,029
--------------
31,759,128
--------------
CHINA -- 1.8%
*863,000 Cheung Kong Holdings Ltd. (Business
Services).............................. 7,674,955
*826,100 China Telecom (Hong Kong) Ltd. (Media
and Services).......................... 2,294,541
1,158,000 New World Development (Real Estate)..... 3,470,143
546,000 Oversea-Chinese Banking Corp., Ltd.
(Financial Services)................... 4,554,094
633,000 Overseas Union Bank - Foreign (Financial
Services).............................. 3,048,867
246,000 Sun Hung Kai Properties (Real Estate)... 2,243,249
--------------
23,285,849
--------------
DENMARK -- 0.6%
124,270 Unidanmark A/S - A Shares (Financial
Services).............................. 8,294,138
--------------
FINLAND -- 2.2%
245,422 Nokia Oy (Communication Equipment)...... 21,513,231
222,500 UPM-Kymmene Oyj (Industrial
Materials)............................. 6,378,932
--------------
27,892,163
--------------
FRANCE -- 12.4%
79,500 Accor S.A. (Consumer Services).......... 19,963,621
50,810 Alcatel (Communication Equipment)....... 7,152,453
116,700 Alstom (Manufacturing).................. 3,670,657
<CAPTION>
MARKET
SHARES VALUE
- ------------ --------------
<C> <S> <C>
</TABLE>
FRANCE -- (CONTINUED)
<TABLE>
<C> <S> <C>
85,300 Axa (Financial Services)................ $ 10,406,555
99,471 Banque National de Paris (Financial
Services).............................. 8,288,597
41,530 Casino Guichard-Perrachon S.A.
(Retail)............................... 3,640,441
64,800 Compagnie de Saint-Gobain S.A.
(Industrial Materials)................. 10,324,682
163,490 Compagnie Financiere de Paribas
(Financial Services)................... 18,327,109
73,440 Elf Aquitaine (Energy & Services)....... 10,777,320
235,300 Michelin - Class B (Consumer
Durables).............................. 9,626,254
65,600 Societe Generale - A shares (Financial
Services).............................. 11,561,631
79,130 Suez Lyonnaise des Eaux (Utilities)..... 14,272,636
137,403 Total S.A. - B Shares (Energy &
Services).............................. 17,726,653
164,670 Vivendi (Utilities)..................... 13,339,326
--------------
159,077,935
--------------
GERMANY -- 9.3%
28,080 Allianz AG (Financial Services)......... 7,847,649
371,350 Bayer AG (Health Care).................. 15,452,551
142,010 DaimlerChrysler AG (Consumer
Durables).............................. 12,404,394
106,400 Deutsche Bank AG Dem (Financial
Services).............................. 6,484,885
320,060 Hoechst AG (Health Care)................ 14,424,011
132,312 Mannesmann AG (Media and Services)...... 19,785,200
50,000 Muenchener Rueckversicherungs-
Gesellschaft AG (Financial Services)... 9,420,669
273,900 Siemens AG (Electronics)................ 21,128,411
213,100 Veba AG (Utilities)..................... 12,570,504
--------------
119,518,274
--------------
ITALY -- 1.5%
1,434,500 Telecom Italia S.p.A. (Utilities)....... 14,911,945
1,010,900 Unicredito Italiano S.p.A. (Financial
Services).............................. 4,441,104
--------------
19,353,049
--------------
JAPAN -- 17.2%
38,000 Advantest Corporation (Electronics)..... 4,175,611
607,000 Bank of Toyko-Mitsubishi Ltd. (Financial
Services).............................. 8,640,897
184,000 Bridgestone Corp. (Consumer Durables)... 5,563,957
587,000 Dai Nippon Printing Co. (Media and
Services).............................. 9,384,344
209,000 Eisai Co., Ltd. (Health Care)........... 4,118,314
109,000 Fuji Machine Manufacturing Co.
(Manufacturing)........................ 3,359,078
381,000 Fujisawa Pharmaceutical (Health Care)... 6,201,204
328,000 Fujitsu Limited (Electronics)........... 6,598,689
1,098,000 Hitachi Ltd. (Electronics).............. 10,296,344
226,000 Kao Corporation (Consumer Non-
Durables).............................. 6,348,515
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-25
<PAGE>
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------------ --------------
<C> <S> <C>
</TABLE>
COMMON STOCKS -- (CONTINUED)
JAPAN -- (CONTINUED)
<TABLE>
<C> <S> <C>
37,600 Mabuchi Motor Co., Ltd. (Electronics)... $ 3,494,823
182,700 Matsumotokiyoshi (Retail)............... 10,943,630
47,000 Matsushita Communication Industrial Co.,
Ltd. (Communication Equipment)......... 3,358,913
258,000 Matsushita Electric Industrial Co.
(Media and Services)................... 5,009,246
683,000 Nikko Securities Co. (Financial
Services).............................. 4,407,137
12,300 Nippon Telegraph & Telephone Corp.
(Utilities)............................ 14,328,775
1,170 NTT Mobile Communication Network, Inc.
(Media and Services)................... 1,585,311
4,680 NTT Mobile New (Media and Services)..... 6,263,913
865,000 Olympus Optical Co., Ltd. (Health
Care).................................. 12,785,311
33,000 Rohm Company Ltd. (Electronics)......... 5,166,637
672,000 Sharp Corporation (Computer & Office
Equipment)............................. 7,939,445
18,500 Softbank Corp. (Software & Services).... 3,746,277
200,600 Sony Corporation (Media and Services)... 21,628,494
256,000 Takeda Chemical Industries Ltd. (Health
Care).................................. 11,865,544
205,300 Takefuji Corp. (Financial Services)..... 21,219,303
370,000 Tokyo Style Co. (Consumer Non-
Durables).............................. 3,974,018
1,872,000 Toshiba Corporation (Computer & Office
Equipment)............................. 13,347,548
137,000 Yamanouchi Pharmaceuticals Co., Ltd.
(Health Care).......................... 5,240,665
--------------
220,991,943
--------------
MEXICO -- 0.7%
54,000 Femsa (Food, Beverage & Tobacco)........ 2,153,250
83,600 Grupo Televisa S.A. (Media and
Services).............................. 3,746,325
105,000 Panamerican Beverages, Inc. (Food,
Beverage & Tobacco).................... 2,500,312
--------------
8,399,887
--------------
NETHERLANDS -- 7.0%
293,357 ING Groep N.V. (Financial Services)..... 15,882,870
331,918 Koninklijke Ahold N.V. (Retail)......... 11,432,744
146,384 Koninklijke KPN N.V. (Utilities)........ 6,868,758
*256,036 Koninklijke Philips Electronics N.V.
(Electronics).......................... 25,255,689
134,500 Royal Dutch Petroleum Company (Energy &
Services).............................. 7,878,505
318,911 Unilever N.V. - CVA (Consumer Non-
Durables).............................. 21,492,549
271,500 Unilever N.V. (Consumer Non-Durables)... 1,455,949
--------------
90,267,064
--------------
NEW ZEALAND -- 0.3%
116,300 Telecom Corporation (Utilities)......... 4,063,231
--------------
<CAPTION>
MARKET
SHARES VALUE
- ------------ --------------
<C> <S> <C>
</TABLE>
<TABLE>
<C> <S> <C>
PHILLIPINES -- 0.2%
210,500 Metropolitan Bank & Trust (Financial
Services).............................. $ 2,102,297
--------------
SPAIN -- 3.9%
147,100 Banco Popular Espanol (Financial
Services).............................. 10,581,082
585,400 ENDESA - Empresa Nacional de
Electricidad S.A. (Utilities).......... 12,484,653
369,600 Repsol S.A. (Energy & Services)......... 7,546,931
63,666 Telefonica S.A. (Utilities)............. 3,066,836
110,047 Telefonica S.A. (Utilities)............. 16,190,632
--------------
49,870,134
--------------
SWEDEN -- 2.9%
*228,720 Hennes & Mauritz (Retail)............... 5,649,569
1,230,180 Nordbanken Holding AB (Financial
Services).............................. 7,191,458
270,230 Pharmacia & Upjohn (Health Care)........ 14,939,062
288,060 Telefonaktiebolaget LM Ericsson
(Ericsson AB) (Communication
Equipment)............................. 9,232,969
--------------
37,013,058
--------------
SWITZERLAND -- 5.8%
3,160 Alusuisse Lonza Group AG (Industrial
Materials)............................. 3,683,234
79,940 Credit Suisse Group (Financial
Services).............................. 13,832,496
6,030 Holderbank Financiere Glarus AG (Bearer)
(Industrial Materials)................. 7,117,664
12,469 Nestle S.A. (Food, Beverage &
Tobacco)............................... 22,466,160
7,120 Novartis (Health Care).................. 10,396,567
780 Roche Holdings AG Genusss (Health
Care).................................. 8,017,805
23,690 Swisscom AG (Utilities)................. 8,914,665
--------------
74,428,591
--------------
THAILAND -- 0.3%
*5,227,500 Siam Commercial Warrants (Financial
Services).............................. 3,366,966
--------------
UNITED KINGDOM -- 16.2%
896,811 Allied Irish Banks PLC (Financial
Services).............................. 11,789,784
345,600 Barclays PLC (Financial Services)....... 10,072,784
472,400 British Airways PLC (Media and
Services).............................. 3,248,510
1,691,261 British Petroleum Co., PLC (Energy &
Services).............................. 30,285,018
397,978 British Telecommunications PLC
(Utilities)............................ 6,649,726
*1,295,947 Cadbury Schweppes PLC (Food, Beverage &
Tobacco)............................... 8,273,345
587,792 Diageo PLC (Food, Beverage & Tobacco)... 6,124,406
314,817 Granada Group PLC (Media and
Services).............................. 5,875,553
210,200 HSBC Holdings PLC (Financial
Services).............................. 7,455,110
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-26
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------------ --------------
<C> <S> <C>
</TABLE>
COMMON STOCKS -- (CONTINUED)
UNITED KINGDOM -- (CONTINUED)
<TABLE>
<C> <S> <C>
836,100 Imperial Chemical Industries PLC
(Industrial Materials)................. $ 8,263,511
2,207,800 Invensys PLC (Electronics).............. 10,457,866
723,600 National Westminster Bank PLC (Financial
Services).............................. 15,329,807
601,100 Prudential Corporation PLC (Financial
Services).............................. 8,897,155
420,600 Reed International PLC (Media and
Services).............................. 2,827,659
963,300 Scottish Power PLC (Utilities).......... 8,336,289
1,604,010 Smith & Nephew PLC (Health Care)........ 4,873,492
2,748,120 SmithKline Beecham PLC (Health Care).... 35,672,880
S*168,000 South African Breweries PLC (Food,
Beverage & Tobacco).................... 1,440,612
1,113,514 Vodafone Group PLC (Media and
Services).............................. 22,010,610
--------------
207,884,117
--------------
UNITED STATES OF AMERICA -- 1.1%
*459,100 Asia Pulp & Paper Company Ltd.
(Industrial Materials)................. 4,418,837
*49,700 China Telecom (Hong Kong) Ltd. (Media
and Services).......................... 2,832,900
*47,000 Telebras-Sponsored ADR (Utilities)...... 2,937
47,000 Telecomunicacoes Brasileiras S.A.
(Utilities)............................ 4,238,812
37,100 Telefonos de Mexico S.A. ADR
(Utilities)............................ 2,998,143
--------------
14,491,629
--------------
Total common stocks..................... $1,154,338,730
--------------
--------------
<CAPTION>
PRINCIPAL
AMOUNT
- ------------
<C> <S> <C>
U.S. TREASURIES & FEDERAL AGENCIES -- 0.3%
U.S. TREASURY BILL -- 0.3%
$ 3,000,000 4.175% due 07/08/99..................... $ 2,997,564
500,000 4.29% due 07/08/99...................... 499,582
--------------
$ 3,497,146
--------------
--------------
SHORT-TERM SECURITIES -- 7.2%
REPURCHASE AGREEMENT
$ 92,229,000 Interest in $1,933,099,000 joint
repurchase agreement dated 06/30/99 with
State Street Bank 4.822% due 07/01/99;
maturity amount $92,241,355
(Collateralized by $125,000,000 U.S.
Treasury Notes 6.625% due 05/15/07,
$1,170,609,000 U.S. Treasury Bonds
6.125% - 12.000% due 08/15/13 -
11/15/27, $637,490,000 U.S. Treasury
Strips (principal) 0.00% due
06/30/00-05/15/15)...................... $ 92,229,000
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
VALUE
--------------
<S> <C>
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share;
1,500,000,000 shares authorized; 857,048,620
shares outstanding............................ $ 85,704,862
Capital surplus................................ 954,982,236
Accumulated undistributed net investment
income........................................ 11,778,057
Accumulated undistributed net realized gain on
investments................................... 100,482,783
Unrealized appreciation of investments......... 131,701,003
Unrealized depreciation of futures
contracts f................................... (1,433)
Unrealized appreciation of forward foreign
currency contracts (See Note 2) w............. 564,949
Unrealized depreciation of other assets and
liabilities in foreign currencies............. (298,262)
--------------
Net assets..................................... $1,284,914,195
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Class IA
Net assets value per share ($1,283,659,800 DIVIDED BY
855,881,379 shares outstanding) (1,125,000,000 shares
authorized)............................................ $1.50
-----
-----
Class IB
Net assets value per share ($1,254,395 DIVIDED BY
1,167,241 shares outstanding) (375,000,000 shares
authorized)............................................ $1.07
-----
-----
</TABLE>
<TABLE>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
ASSETS
Investments in securities, at value (total cost
$1,118,363,873) -- see accompanying
portfolio..................................... $1,250,064,876
Receivable for investment securities sold...... 49,414,822
Receivable for Fund shares sold................ 18,375,841
Receivable for dividends and interest.......... 8,061,378
Cash and other assets.......................... 2,014
--------------
Total assets................................... $1,325,918,931
--------------
--------------
LIABILITIES
Investment securities purchased................ $ 27,154,437
Fund shares redeemed........................... 10,738,686
Other accrued expenses......................... 3,111,613
--------------
Total liabilities.............................. 41,004,736
--------------
Net assets..................................... $1,284,914,195
--------------
--------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-27
<PAGE>
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
VALUE
--------------
<S> <C> <C>
DIVERSIFICATION BY INDUSTRY:
Business Services............................ 0.6% $ 7,674,955
Communication Equipment...................... 3.5 45,349,595
Computer & Office Equipment.................. 1.7 21,286,993
Consumer Durables............................ 2.1 27,594,605
Consumer Non-Durables........................ 2.6 33,271,031
Consumer Services............................ 1.6 19,963,621
Electronics.................................. 6.7 86,574,070
Energy & Services............................ 6.1 78,541,901
Financial Services........................... 19.6 252,172,262
Food, Beverage, & Tobacco.................... 3.6 45,912,877
Health Care.................................. 11.2 143,987,406
Industrial Materials......................... 5.3 68,135,133
Manufacturing................................ 0.5 7,029,735
Media & Services............................. 8.9 114,530,916
Real Estate.................................. 0.4 5,713,392
Retail....................................... 2.5 31,666,384
Software & Services.......................... 0.3 3,746,277
Transportation............................... 0.6 7,564,300
Utilities.................................... 12.0 153,623,277
------ --------------
Total common stocks............................ 89.8% $1,154,338,730
------ --------------
------ --------------
</TABLE>
* Non-income producing during period.
SSecurity 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. At June 30, 1999, the market value
of these securities amounted to $1,440,612 or .11% of net assets.
f The fund had 4 September MATIF CAC 40 Index futures contracts, 2 September MIB
30 Index futures contracts, 3 September DTB DAX Index futures contracts open
as of June 30, 1999. These contracts had a market value of $965,883 as of June
30, 1999 and are collateralized by various U.S. Treasury obligations having a
market value of $2,997,564.
wFORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AT JUNE 30, 1999
<TABLE>
<CAPTION>
TOTAL AGGREGATE DELIVERY UNREALIZED
DESCRIPTION MARKET VALUE FACE VALUE DATE (DEPRECIATION)
- ------------------ ------------ ---------- --------- -------------
<S> <C> <C> <C> <C>
Japanese Yen
(Sell) $30,268,793 $30,810,327 07/16/99 $ 541,534
Japanese Yen
(Sell) 1,277,878 1,301,294 07/16/99 23,415
-------------
564,949
-------------
-------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-28
<PAGE>
HARTFORD DIVIDEND AND GROWTH HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------------ --------------
<C> <S> <C>
COMMON STOCKS -- 96.2%
AEROSPACE & DEFENSE -- 4.7%
S350,000 Qwest Trends Trust...................... $ 19,950,000
1,918,200 United Technologies Corporation......... 137,510,962
--------------
157,460,962
--------------
COMPUTERS & OFFICE
EQUIPMENT -- 1.3%
715,900 Xerox Corporation....................... 42,282,866
--------------
CONSUMER DURABLES -- 1.9%
622,200 Ford Motor Co........................... 35,115,412
319,200 General Motors Corporation.............. 21,067,200
183,900 Newell Rubbermaid, Inc.................. 8,551,350
--------------
64,733,962
--------------
CONSUMER NON-DURABLES -- 3.6%
199,200 Clorox Company (The).................... 21,277,050
449,000 Colgate-Palmolive Company............... 44,338,750
693,600 Kimberly-Clark Corporation.............. 39,535,200
413,700 Stanley Works (The)..................... 13,315,968
--------------
118,466,968
--------------
CONSUMER SERVICES -- 0.4%
209,300 Eastman Kodak Company................... 14,180,075
--------------
ELECTRONICS -- 4.1%
1,197,160 General Electric Company................ 135,279,080
--------------
ENERGY & SERVICES -- 8.2%
609,600 Chevron Corporation..................... 58,026,533
328,900 Kerr-McGee Corporation.................. 16,506,668
421,000 Mobil Corporation....................... 41,679,000
2,446,300 Repsol S.A. ADR......................... 49,690,468
1,573,006 Sunoco, Inc............................. 47,485,118
910,100 Total Fina S.A. ADR..................... 58,644,568
--------------
272,032,355
--------------
FINANCIAL SERVICES -- 17.9%
369,300 CIGNA Corporation....................... 32,867,700
2,548,350 Citigroup, Inc.......................... 121,046,625
582,300 Edwards (A.G.) & Sons, Inc.............. 18,779,175
347,100 Federal National Mortgage Association... 23,732,962
707,300 Household International, Inc............ 33,508,337
768,850 Marsh & McLennan Companies, Inc......... 58,048,175
1,089,000 MBNA Corporation........................ 33,350,625
565,700 National City Corporation............... 37,053,350
998,500 National Commerce Bancorporation........ 21,842,187
1,375,700 Pacific Century Financial Corporation... 29,663,531
478,300 Peoples Bank............................ 14,558,256
766,300 Pinnacle West Capital Corporation....... 30,843,575
2,031,500 U.S. Bancorp............................ 69,071,000
511,000 UnionBanCal Corporation................. 18,459,875
388,300 Wachovia Corporation.................... 33,223,918
364,700 XI Capital Ltd - Class A................ 20,605,550
--------------
596,654,841
--------------
FOOD, BEVERAGE & TOBACCO -- 7.1%
318,200 Anheuser-Busch Companies, Inc........... 22,572,312
827,975 Flowers Industries, Inc................. 17,956,707
547,500 Hershey Foods Corporation............... 32,507,812
1,238,800 McCormick & Co., Inc.................... 39,099,625
<CAPTION>
MARKET
SHARES VALUE
- ------------ --------------
<C> <S> <C>
</TABLE>
FOOD, BEVERAGE & TOBACCO -- (CONTINUED)
<TABLE>
<C> <S> <C>
103,800 Nabisco Group Holdings Corp............. $ 2,030,587
840,100 Nabisco Holdings Corporation............ 36,334,325
1,655,300 Philip Morris Co., Inc.................. 66,522,368
650,233 Reynolds (R.J.) Tobacco Holdings,
Inc.................................... 20,482,342
--------------
237,506,078
--------------
HEALTH CARE -- 9.2%
547,200 Abbott Laboratories..................... 24,897,600
671,400 American Home Products Corporation...... 38,605,500
240,000 AstraZeneca Group PLC................... 9,405,000
748,000 Baxter International, Inc............... 45,347,500
314,200 Bristol-Myers Squibb Company............ 22,131,462
321,800 Merck & Co., Inc........................ 23,813,200
1,283,300 Pharmacia & Upjohn, Inc................. 72,907,481
1,010,900 Warner-Lambert Company.................. 70,131,187
--------------
307,238,930
--------------
INDUSTRIAL MATERIALS -- 4.3%
622,700 Abitibi-Consolidated, Inc............... 7,083,212
186,300 Air Products & Chemicals, Inc........... 7,498,575
431,000 Alcoa, Inc.............................. 26,668,125
193,500 BOC Group PLC - Sponsored ADR........... 7,800,468
167,900 Bowater, Inc............................ 7,933,275
517,700 du Pont (E.I.) de Nemours & Co.......... 35,365,381
82,600 Eastman Chemical Company................ 4,274,550
315,300 Temple-Inland, Inc...................... 21,519,225
291,700 Weyerhaeuser Company.................... 20,054,375
96,200 Willamette Industries, Inc.............. 4,431,212
--------------
142,628,398
--------------
MANUFACTURING -- 5.3%
552,700 Caterpillar, Inc........................ 33,162,000
735,300 Corning, Inc............................ 51,562,912
429,200 Dana Corporation........................ 19,770,025
223,098 Delphi Automotive Systems Corporation... 4,141,265
282,100 Eaton Corporation....................... 25,953,200
306,800 Minnesota Mining and Manufacturing
Company................................ 26,672,425
423,400 New Holland N.V......................... 7,250,725
275,400 Trinity Industries, Inc................. 9,225,900
--------------
177,738,452
--------------
MEDIA & SERVICES -- 2.1%
S16,830,000 CBS Radio, Inc.......................... 26,759,700
608,800 Gannett Co., Inc........................ 43,453,100
31,066 Nielson Media Research, Inc............. 908,680
--------------
71,121,480
--------------
REAL ESTATE -- 2.0%
632,300 Archstone Communities Trust............. 13,871,081
211,200 Boston Properties, Inc.................. 7,576,800
402,000 Corp. REIT.............................. 15,728,250
159,900 Spieker Properties, Inc. REIT........... 6,216,112
363,348 Starwood Hotels & Resorts Worldwide,
Inc.................................... 11,104,823
527,400 Trust REIT.............................. 13,119,075
--------------
67,616,141
--------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-29
<PAGE>
HARTFORD DIVIDEND AND GROWTH HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------------ --------------
<C> <S> <C>
</TABLE>
COMMON STOCKS -- (CONTINUED)
<TABLE>
<C> <S> <C>
RETAIL -- 3.0%
1,311,030 Intimate Brands, Inc.................... $ 62,110,046
938,400 May Department Stores Company........... 38,357,100
--------------
100,467,146
--------------
SOFTWARE & SERVICES -- 0.8%
144,300 Cabot Corp.............................. 3,490,256
425,300 Electronic Data Systems Corporation..... 24,056,031
--------------
27,546,287
--------------
TRANSPORTATION -- 0.7%
497,400 USFreightways Corporation............... 23,035,837
--------------
UTILITIES -- 19.6%
898,500 Ameritech Corporation................... 66,039,750
1,599,300 AT&T Corp............................... 89,260,931
1,538,846 Bell Atlantic Corporation............... 100,602,057
640,000 BellSouth Corp.......................... 30,000,000
239,400 Columbia Gas System, Inc................ 15,007,387
696,700 DQE, Inc................................ 27,955,087
263,800 Duke Energy Corporation................. 14,344,125
694,100 El Paso Energy Corporation.............. 24,423,643
1,107,500 Endesa S.A.............................. 23,534,375
560,600 Enron Corp.............................. 45,829,050
728,600 GPU, Inc................................ 30,737,812
*237,581 MCI WorldCom, Inc....................... 20,491,361
205,200 Montana Power Company................... 14,466,600
664,800 Nisource, Inc........................... 17,160,150
487,600 Peco Energy Company..................... 20,418,250
333,200 Powergen PLC Sponsored ADR.............. 14,285,950
577,900 SBC Communications, Inc................. 33,518,200
399,200 Sprint Corporation (FON Group).......... 21,082,750
324,000 Texas Utilities Company................. 13,365,000
427,400 Unicom Corporation...................... 16,481,612
476,850 UtiliCorp United, Inc................... 11,593,415
--------------
650,597,505
--------------
Total common stocks..................... $3,206,587,363
--------------
--------------
<CAPTION>
PRINCIPAL
AMOUNT
- ------------
<C> <S> <C>
CONVERTIBLE PREFERRED STOCKS -- 1.1%
FINANCIAL SERVICES -- 0.5%
$ 1,771,000 Morgan Street WCOM...................... $ 15,717,627
--------------
MEDIA AND SERVICES -- 0.6%
160,000 Tribune Co.............................. 19,900,000
--------------
Total convertible preferred stocks...... $ 35,617,627
--------------
--------------
<CAPTION>
SHARES
- ------------
<C> <S> <C>
PREFERRED STOCKS -- 0.3%
SOFTWARE & SERVICES -- 0.1%
49,500 Microsoft Corporation................... $ 4,946,906
--------------
UTILITIES -- 0.1%
65,400 Texas Utilities Co...................... 3,597,000
--------------
Total preferred stocks.................. $ 8,543,906
--------------
--------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ------------ --------------
<C> <S> <C>
SHORT-TERM SECURITIES -- 2.6%
REPURCHASE AGREEMENT 2.6%
$ 86,956,000 Interest in $1,933,099,000 joint
repurchase agreement dated 06/30/99 with
State Street Bank 4.822% due 07/01/99;
maturity amount $86,967,648
(Collateralized by $125,000,000 U.S.
Treasury Notes 6.625% due 05/15/07,
$1,170,609,000 U.S. Treasury Bonds
6.125% - 12.000% due 08/15/13 -
11/15/27, $637,490,000 U.S. Treasury
Strips (principal) 0.00% due 06/30/00 -
05/15/15)............................... $ 86,956,000
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
DIVERSIFICATION OF NET ASSETS:
Total common stocks (cost $2,611,546,569)...... 96.2% $3,206,587,363
Total convertible preferred stocks (cost
$40,015,810).................................. 1.1 35,617,627
Total preferred stocks (cost $7,446,036)....... 0.3 8,543,906
Total short-term securities (cost
$86,956,000).................................. 2.6 86,956,000
----- --------------
Total investment in securities (total cost
$2,745,964,415)............................... 100.2 3,337,704,896
Cash, receivables and other assets............. 0.5 17,405,337
Payable for securities purchased............... (0.4) (12,051,684)
Payable for Fund shares redeemed............... (0.3) (8,687,781)
Other liabilities.............................. (0.0) (825,765)
----- --------------
Net assets..................................... 100.0% $3,333,545,003
----- --------------
----- --------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.001 per share;
4,000,000,000 shares authorized; 1,503,793,863 shares
outstanding.......................................... $ 150,379,386
Capital surplus....................................... 2,366,881,302
Accumulated undistributed net investment income....... 25,515,621
Accumulated undistributed net realized gain on
investments.......................................... 199,223,869
Unrealized appreciation of investments................ 591,740,480
Unrealized depreciation of option contracts written
(See Note 2) V....................................... (195,655)
--------------
Net assets............................................ $3,333,545,003
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Class IA
Net assets value per share ($3,319,524,584 DIVIDED BY
1,489,622,451 shares outstanding) (3,500,000,000 shares
authorized)................................................... $2.23
-----
-----
Class IB
Net assets value per share ($14,020,419 DIVIDED BY 14,171,412
shares outstanding) (500,000,000 shares authorized)........... $0.99
-----
-----
</TABLE>
* Non-income producing during period.
S 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. At June 30, 1999,
the market value of these securities amounted to $46,709,700 or 1.40% of
net assets.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-30
<PAGE>
V OPTION CONTRACTS WRITTEN -- NOTE 2 -- OUTSTANDING AT JUNE 30, 1999
<TABLE>
<CAPTION>
NUMBER OF EXERCISE EXPIRATION MARKET
DESCRIPTION CONTRACTS PRICE DATE VALUE
- ------------------------------------------- ------------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Bristol-Myers Squibb Company 456 $ 73 July 1999 $ (52,896)
Eastman Kodak Company 209 75 July 1999 (1,881)
General Electric Company 398 117 August 1999 (66,306)
Minnesota Mining and Manufacturing Company 306 100 August 1999 (6,732)
U.S. Bancorp 1016 36 July 1999 (38,933)
Warner-Lambert Company 1011 70 August 1999 (382,158)
---------
Total option contracts written (cost
($353,251)) $(548,906)
---------
---------
</TABLE>
The securities underlying these option contracts are included in the Fund's
Statement of Net Assets.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-31
<PAGE>
HARTFORD INTERNATIONAL ADVISERS HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ---------- ------------
<C> <S> <C>
COMMON STOCKS -- 51.8%
AUSTRALIAN -- 1.7%
193,148 Australia & New Zealand Banking
(Financial Services)................... $ 1,420,272
130,967 Broken Hill Proprietary Co. (Industrial
Materials)............................. 1,517,072
127,279 News Corp., Ltd. (Media & Services)..... 1,085,965
753,987 Pasminco Ltd. (Industrial Materials).... 832,465
*116,956 Telstra Corporation Ltd. (Utilities).... 670,187
------------
5,525,961
------------
BRAZIL -- 0.6%
33,000 Embratel Participacoes S.A.
(Utilities)............................ 457,875
4,016,800 Petroleo Brasileiro S.A. (Energy &
Services).............................. 618,509
*6,700 Telebras-sponsored ADR (Utilities)...... 418
6,700 Telecomunicacoes Brasileiras S.A.
(Utilities)............................ 604,256
15,600 Telesp Participacoes S.A. (Utilities)... 356,850
------------
2,037,908
------------
CANADA -- 1.4%
50,300 Alcan Aluminum Ltd. (Industrial
Materials)............................. 1,593,914
51,700 Canadian Imperial Bank of Commerce
(Financial Services)................... 1,226,088
15,600 Canadian National Railway Company
(Transportation)....................... 1,045,200
*21,900 Newbridge Networks Corp. (Communications
Equipment)............................. 621,466
------------
4,486,668
------------
CHINA -- 0.9%
*128,000 Cheung Kong Holdings Ltd. (Business
Services).............................. 1,138,347
*150,100 China Telecom (Hong Kong) Ltd. (Media &
Services).............................. 416,911
*6,900 China Telecom (Hong Kong) Ltd. ADR
(Media & Services)..................... 393,300
165,000 New World Development (Real Estate)..... 494,450
32,500 Sun Hung Kai Properties (Real Estate)... 296,364
------------
2,739,372
------------
DENMARK -- 0.4%
17,900 Unidanmark A/S - A Shares (Financial
Services).............................. 1,194,697
------------
FINLAND -- 1.2%
34,793 Nokia Oy (Communications Equipment)..... 3,049,888
32,000 UPM-Kymmene Oyj (Industrial Materials).. 917,419
------------
3,967,307
------------
FRANCE -- 7.1%
11,400 Accor S.A. (Consumer Services).......... 2,862,707
7,200 Alcatel (Communications Equipment)...... 1,013,534
16,700 Alstom (Manufacturing).................. 525,278
12,140 AXA (Financial Services)................ 1,481,073
14,140 Banque National de Paris (Financial
Services).............................. 1,178,240
5,830 Casino Guichard-Perrachon S.A. D73
(Consumer Durables).................... 511,046
<CAPTION>
MARKET
SHARES VALUE
- ---------- ------------
<C> <S> <C>
</TABLE>
FRANCE -- (CONTINUED)
<TABLE>
<C> <S> <C>
9,300 Compagnie de Saint-Gobain S.A.
(Industrial Materials)................. $ 1,481,783
23,300 Compagnie Financiere de Paribas
(Financial Services)................... 2,611,912
10,590 Elf Aquitaine (Energy & Services)....... 1,554,082
33,600 Michelin - Class B (Consumer Durables).. 1,374,594
9,200 Societe Generale - Class A (Financial
Services).............................. 1,621,448
11,410 Suez Lyonnaise des Eaux (Utilities)..... 2,058,015
19,889 Total S.A. - B Shares (Energy &
Services).............................. 2,565,922
23,100 Vivendi (Utilities)..................... 1,871,248
------------
22,710,882
------------
GERMANY -- 5.3%
3,960 Allianz AG (Financial Services)......... 1,106,719
52,100 Bayer AG (Health Care).................. 2,167,976
19,530 DaimlerChrysler AG (Consumer
Durables).............................. 1,705,920
15,400 Deutsche Bank AG (Financial Services)... 938,601
46,130 Hoechst AG (Health Care)................ 2,078,921
18,598 Mannesmann AG (Media & Services)........ 2,781,041
7,200 Muenchener Rueckversicherungs-
Gesellschaft AG (Financial Services)... 1,356,576
39,210 Siemens AG (Electronics)................ 3,024,625
31,300 Veba AG (Utilities)..................... 1,846,348
------------
17,006,727
------------
INDIA -- 0.1%
770,700 Companhia Cervejaria Brahma (Food,
Beverage & Tobacco).................... 424,266
------------
INDONESIA -- 0.2%
*65,900 Asia Pulp & Paper Company Ltd.
(Industrial Materials)................. 634,287
------------
IRELAND -- 0.5%
126,272 Allied Irish Banks PLC (Financial
Services).............................. 1,660,021
------------
ITALY -- 0.9%
206,544 Telecom Italia S.p.A. (Utilities)....... 2,147,075
140,100 Unicredito Italiano S.p.A. (Financial
Services).............................. 615,489
------------
2,762,564
------------
JAPAN -- 10.1%
5,000 Advantest Corporation (Electronics)..... 549,422
85,000 Bank of Toyko-Mitsubishi Ltd. (Financial
Services).............................. 1,210,010
30,000 Bridgestone Corp. (Consumer Durables)... 907,166
85,000 Dai Nippon Printing Co. (Media &
Services).............................. 1,358,891
29,000 Eisai Co., Ltd. (Health Care)........... 571,440
15,000 Fuji Machine Manufacturing Co.
(Manufacturing)........................ 462,258
54,000 Fujisawa Pharmaceutical (Health Care)... 878,910
45,000 Fujitsu Limited (Electronics)........... 905,307
153,000 Hitachi Ltd. (Electronics).............. 1,434,736
32,000 Kao Corporation (Consumer Non-
Durables).............................. 898,904
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-32
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ---------- ------------
<C> <S> <C>
</TABLE>
COMMON STOCKS -- (CONTINUED)
JAPAN -- (CONTINUED)
<TABLE>
<C> <S> <C>
5,400 Mabuchi Motor Co., Ltd. (Electronics)... $ 501,916
40,000 Matsumotokiyoshi (Retail)............... 2,395,978
7,000 Matsushita Communication Industrial Co.,
Ltd. (Communications Equipment)........ 500,263
36,000 Matsushita Electric Industrial Co.
(Media & Services)..................... 698,964
95,000 Nikko Securities Co. (Financial
Services).............................. 612,998
1,780 Nippon Telegraph & Telephone Corp.
(Utilities)............................ 2,073,595
640 NTT Mobile Communication Network, Inc.
(Media & Services)..................... 856,603
160 NTT Mobile Communication Network, Inc.
(Media & Services)..................... 216,794
125,000 Olympus Optical Co., Ltd. (Health
Care).................................. 1,847,588
5,000 Rohm Company Ltd. (Electronics)......... 782,823
94,000 Sharp Corporation (Computers & Office
Equipment)............................. 1,110,577
2,700 Softbank Corp. (Software & Services).... 546,753
28,900 Sony Corporation (Media & Services)..... 3,115,969
37,000 Takeda Chemical Industries Ltd. (Health
Care).................................. 1,714,942
29,000 Takefuji Corp. (Financial Services)..... 2,997,451
52,000 Tokyo Style Co., Ltd. (Consumer Non-
Durables).............................. 558,510
289,000 Toshiba Corporation (Computers & Office
Equipment)............................. 2,060,599
19,000 Yamanouchi Pharmaceuticals Co., Ltd.
(Health Care).......................... 726,807
------------
32,496,174
------------
MEXICO -- 0.5%
7,600 FEMSA S.A. ADR (Food, Beverage &
Tobacco)............................... 303,050
11,900 Grupo Televisa S.A. (Media &
Services).............................. 533,268
15,000 Panamerican Beverages, Inc. (Food,
Beverage & Tobacco).................... 357,187
5,300 Telefonos de Mexico S.A. ADR
(Utilities)............................ 428,306
------------
1,621,811
------------
NETHERLANDS -- 4.1%
42,291 ING Groep N.V. (Financial Services)..... 2,289,710
47,444 Koninklijke Ahold N.V. (Retail)......... 1,634,184
20,912 Koninklijke KPN N.V. (Utilities)........ 981,251
*36,064 Koninklijke Philips Electronics N.V.
(Electronics).......................... 3,557,395
19,400 Royal Dutch Petroleum Company (Energy &
Services).............................. 1,136,379
*39,000 Unilever N.V. (Consumer Non-Durables)... 209,141
48,721 Unilever N.V. - CVA (Consumer Non-
Durables).............................. 3,283,513
------------
13,091,573
------------
NEW ZEALAND -- 0.2%
16,400 Telecom Corporation (Utilities)......... 572,975
------------
PHILLIPINES -- 0.1%
29,500 Metropolitan Bank & Trust (Financial
Services).............................. 294,621
------------
<CAPTION>
MARKET
SHARES VALUE
- ---------- ------------
<C> <S> <C>
</TABLE>
<TABLE>
<C> <S> <C>
SINGAPORE -- 0.3%
78,000 Oversea-Chinese Banking Corp., Ltd.
(Financial Services)................... $ 650,584
91,000 Overseas Union Bank - Foreign (Financial
Services).............................. 438,304
------------
1,088,888
------------
SPAIN -- 2.4%
25,700 Banco Popular Espanol (Financial
Services).............................. 1,848,632
82,100 ENDESA - Empresa Nacional de
Electricidad S.A. (Utilities).......... 1,750,922
53,100 Repsol S.A. (Energy & Services)......... 1,084,258
11,720 Telefonica S.A. (Utilities)............. 564,560
16,066 Telefonica S.A., ADR (Utilities)........ 2,363,713
------------
7,612,085
------------
SWEDEN -- 1.0%
*31,320 Hennes & Mauritz (Retail)............... 773,629
175,950 Nordbanken Holding AB (Financial
Services).............................. 1,028,578
41,480 Telefonaktiebolaget LM Ericsson
(Ericsson AB) (Communications
Equipment)............................. 1,329,527
------------
3,131,734
------------
SWITZERLAND -- 3.3%
450 Alusuisse Lonza Group AG (Industrial
Materials)............................. 524,511
11,510 Credit Suisse Group (Financial
Services).............................. 1,991,644
850 Holderbank Financiere Glarus AG (Bearer)
(Industrial Materials)................. 1,003,319
1,755 Nestle S.A. (Food, Beverage & Tobacco).. 3,162,090
1,010 Novartis AG (Health Care)............... 1,474,794
110 Roche Holdings AG Genusss (Health
Care).................................. 1,130,716
3,320 Swisscom AG (Utilities)................. 1,249,332
------------
10,536,406
------------
THAILAND -- 0.1%
*745,800 Siam Commercial Warrants (Financial
Services).............................. 480,360
------------
UNITED KINGDOM -- 8.8%
49,300 Barclays PLC (Financial Services)....... 1,436,887
67,600 British Airways PLC (Consumer
Services).............................. 464,858
237,340 British Petroleum Co., PLC (Energy &
Services).............................. 4,249,992
56,174 British Telecommunications PLC
(Utilities)............................ 938,599
*185,945 Cadbury Schweppes PLC (Food, Beverage &
Tobacco)............................... 1,187,075
85,094 Diageo PLC (Food, Beverage & Tobacco)... 886,623
45,235 Granada Group PLC (Consumer Services)... 844,238
27,800 HSBC Holdings PLC (Financial Services).. 985,975
119,300 Imperial Chemical Industries PLC
(Industrial Materials)................. 1,179,089
316,000 Invensys PLC (Electronics).............. 1,496,822
103,200 National Westminster Bank PLC (Financial
Services).............................. 2,186,340
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-33
<PAGE>
HARTFORD INTERNATIONAL ADVISERS HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ---------- ------------
<C> <S> <C>
</TABLE>
COMMON STOCKS -- (CONTINUED)
UNITED KINGDOM -- (CONTINUED)
<TABLE>
<C> <S> <C>
86,400 Prudential Corporation PLC (Financial
Services).............................. $ 1,278,845
56,800 Reed International PLC (Media &
Services).............................. 381,861
137,400 Scottish Power PLC (Utilities).......... 1,189,044
230,801 Smith & Nephew PLC (Health Care)........ 701,246
395,543 SmithKline Beecham PLC (Health Care).... 5,134,476
S*23,700 South African Breweries PLC (Food,
Beverage & Tobacco).................... 203,229
169,089 Vodafone Group PLC (Media & Services)... 3,342,348
------------
28,087,547
------------
UNITED STATES OF AMERICA -- 0.7%
38,920 Pharmacia & Upjohn (Health Care)........ 2,151,605
------------
Total common stocks..................... $166,316,439
------------
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
(IN LOCAL
CURRENCY)
- ----------
<C> <S> <C>
CORPORATE BONDS -- 3.9%
UNITED KINGDOM -- 0.6%
$1,100,000 European Investment Banking (Financial $ 1,904,314
Services)
7.625% due 12/07/06...................
------------
UNITED STATES OF AMERICA -- 3.3%
925,000 Ford Motor Credit Co. (Financial 935,187
Services)
7.50% due 04/03/00....................
2,000,000 General Motors Acceptence Corp. 2,015,426
(Financial Services)
6.90% due 07/05/00....................
3,000,000 Prudential Funding Medium Term Note 2,992,500
(Financial Services)
5.063% due 12/21/00...................
3,000,000 Wells Fargo Co. (Financial Services) 3,002,346
5.55% due 08/31/99....................
1,500,000 Xerox Corp. (Computers & Office 1,536,609
Equipment)
9.75% due 03/15/00....................
------------
10,482,068
------------
Total corporate bonds................... $ 12,386,382
------------
------------
ENHANCED EQUIPMENT TRUST CERTIFICATES -- 0.2%
620,000 Daimler-Benz Vehicle Trust Series $ 619,373
1998-A, Class A2
5.23% due 12/20/01....................
------------
------------
FOREIGN GOVERNMENT BONDS -- 19.5%
CANADA -- 4.4%
6,600,000 Canada Government $ 4,809,014
8.50% due 04/01/02....................
8,460,000 Canada Government 5,914,034
7.50% due 03/01/01....................
1,600,000 Canada Government 1,149,173
7.25% due 06/01/03....................
<CAPTION>
PRINCIPAL
AMOUNT
(IN LOCAL MARKET
CURRENCY) VALUE
- ---------- ------------
<C> <S> <C>
</TABLE>
FOREIGN GOVERNMENT BONDS -- (CONTINUED)
CANADA -- (CONTINUED)
<TABLE>
<C> <S> <C>
$2,000,000 Ontario Province $ 2,000,000
4.813% due 08/17/99...................
1,660,000 Province de Quebec 288,069
6.875% due 04/22/04...................
------------
14,160,290
------------
FRANCE -- 4.5%
7,000,000 France BTAN 7,182,809
3.00% due 07/12/01....................
3,295,000 France BTAN 3,327,022
3.50% due 07/12/04....................
3,400,000 France O.A.T. 3,779,818
6.00% due 10/25/25....................
------------
14,289,649
------------
GERMANY -- 4.9%
3,000,000 Bundesschatzanweisungen 3,104,025
3.25% due 09/15/00....................
3,000,000 Deutschland Republic 3,526,331
6.875% due 05/12/05...................
6,040,579 Deutschland Republic 6,975,771
6.25% due 01/04/24....................
997,904 Deutschland Republic 1,191,195
6.50% due 07/04/27....................
1,500,000 Republic of Slovenia 824,338
5.75% due 06/16/04....................
------------
15,621,660
------------
ITALY -- 0.2%
568,102 Buoni Poliennali Del Tes 659,979
6.50% due 11/01/27....................
------------
JAPAN -- 0.1%
46,000,000 Japan Government 352,307
0.90% due 12/22/08....................
------------
SINGAPORE -- 1.7%
6,500,000 Singapore Government 3,777,134
3.50% due 02/01/04....................
2,560,000 Singapore Government 1,602,793
5.625% due 07/01/08...................
------------
5,379,927
------------
SWEDEN -- 1.4%
29,500,000 Sweden Kingdom #1034 4,504,141
9.00% due 04/20/09....................
------------
UNITED KINGDOM -- 2.4%
S2,000,000 Abbey National Treasury 1,999,786
5.64% due 07/15/99....................
381,000 Iceland Republic 646,393
8.75% due 05/12/03....................
2,755,000 United Kingdom Treasury Gilt 4,925,497
7.75% due 09/08/06....................
------------
7,571,676
------------
Total foreign government bonds.......... $ 62,539,629
------------
------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-34
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ---------- ------------
<C> <S> <C>
</TABLE>
FOREIGN GOVERNMENT BONDS -- (CONTINUED)
UNITED KINGDOM -- (CONTINUED)
<TABLE>
<C> <S> <C>
U.S. TREASURIES & FEDERAL AGENCIES -- 1.6%
FEDERAL HOME LOAN MORTGAGE ASSOCIATION
-- 0.4%
$1,420,000 5.125% due 10/15/08................... $ 1,288,414
FEDERAL NATIONAL MORTGAGE
ASSOCIATION -- 0.8%
1,300,000 FNMA - Global Medium Term Note 2,011,280
5.50% due 12/07/03...................
1,020,000 FNMA - Global Medium Term Note 664,863
6.375% due 08/15/07...................
------------
2,676,143
------------
U. S. TREASURY NOTES -- 0.4%
1,300,000 5.875% due 07/31/99................... 1,300,812
------------
Total U.S. treasuries & federal $ 5,265,369
agencies................................
------------
------------
SHORT-TERM SECURITIES -- 20.7%
CERTIFICATES OF DEPOSIT -- 6.6%
$3,000,000 Ciesco L.P. $ 2,984,340
5.22% due 08/06/99....................
1,800,000 Corporate Receivable 1,795,373
4.87% due 07/20/99....................
3,000,000 Delaware Funding Corp. 2,981,293
4.88% due 08/16/99....................
2,229,000 Enterprise Funding 2,225,359
4.90% due 07/13/99....................
1,127,000 Greenwich Funding 1,124,103
4.87% due 07/20/99....................
2,000,000 GTE Funding, Inc. 1,995,833
5.00% due 07/16/99....................
2,000,000 Kitty Hawk Funding Corp. 1,996,720
4.92% due 07/13/99....................
3,000,000 Peacock Funding Group 2,986,173
4.88% due 08/04/99....................
3,000,000 Prefco 2,979,951
5.23% due 08/16/99....................
------------
$ 21,069,145
------------
REPURCHASE AGREEMENT -- 14.2%
45,494,000 Interest in $1,933,099,000 joint 45,494,000
repurchase agreement dated 06/30/99 with
State Street Bank 4.822% due 07/01/99;
maturity amount $45,500,094
(Collateralized by $125,000,000 U.S.
Treasury Notes 6.625% due 05/15/07,
$1,170,609,000 U.S. Treasury Bonds
6.125% - 12.000% due 08/15/13 -
11/15/27, $637,490,000 U.S. Treasury
Strips (principal) 0.00% due
06/30/00-05/15/15)......................
------------
Total short-term securities............. $ 66,563,145
------------
------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
<CAPTION>
MARKET
VALUE
------------
<S> <C> <C>
DIVERSIFICATION OF NET ASSETS:
Total common stocks (cost $148,925,491)...... 51.8% $166,316,439
Total corporate bonds (cost $12,586,701)..... 3.9 12,386,382
Total enhanced equipment trust certificates
(cost $619,944)............................. 0.2 619,373
Total foreign government bonds (cost
$64,726,531)................................ 19.5 62,539,629
Total U.S. treasuries & federal agencies
(cost $5,377,537)........................... 1.6 5,265,369
Total short-term securities (cost
$66,563,148)................................ 20.7 66,563,145
----- ------------
Total investment in securities (total cost
$298,799,352)............................... 97.7 313,690,337
Cash, receivables and other assets........... 3.6 11,433,743
Payable for securities purchased............. (0.9) (2,826,122)
Payable for Fund shares redeemed............. (0.0) (63)
Other liabilities............................ (0.4) (1,404,913)
----- ------------
Net assets................................... 100.0% $320,892,982
----- ------------
----- ------------
</TABLE>
<TABLE>
<S> <C>
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share;
750,000,000 shares authorized; 260,661,822 shares
outstanding........................................ $ 26,066,182
Capital surplus..................................... 255,605,338
Accumulated undistributed net investment income..... 5,252,577
Accumulated undistributed net realized gain on
investments........................................ 19,511,718
Unrealized appreciation of investments.............. 14,890,984
Unrealized depreciation of futures contractsf....... (907,296)
Unrealized appreciation of forward foreign currency
contracts (See Note 2)w............................ 574,075
Unrealized depreciation of other assets and
liabilities in foreign currencies.................. (100,596)
------------
Net assets, applicable to shares outstanding........ $320,892,982
------------
------------
Class IA
Net assets value per share ($320,892,982
DIVIDED BY 260,661,822 shares outstanding)
(562,500,000 shares authorized).................... $ 1.23
------------
------------
Class IB
Net assets value per share ($0 DIVIDED BY 0 shares
outstanding) (187,500,000 shares authorized)....... $ 0.00
------------
------------
</TABLE>
<TABLE>
<S> <C> <C>
DIVERSIFICATION BY INDUSTRY:
Business Services............................ 0.4% $ 1,138,347
Communication Equipment...................... 2.0 6,514,678
Computer & Office Equipment.................. 1.0 3,171,176
Consumer Durables............................ 1.4 4,498,726
Consumer Non-Durables........................ 1.5 4,950,068
Consumer Services............................ 1.3 4,171,803
Electronics.................................. 3.8 12,253,046
Energy & Services............................ 3.5 11,209,142
Financial Services........................... 12.0 37,988,423
Food, Beverage, & Tobacco.................... 2.0 6,523,520
Health Care.................................. 6.4 20,579,421
Industrial Materials......................... 3.0 9,683,859
Manufacturing................................ 0.3 987,536
Media & Services............................. 4.7 15,181,915
Real Estate.................................. 0.2 790,814
Retail....................................... 1.5 4,803,791
Software & Services.......................... 0.2 546,753
Transportation............................... 0.3 1,045,200
Utilities.................................... 6.3 20,278,221
----- ------------
Total common stocks.......................... 51.8% $166,316,439
----- ------------
----- ------------
Computer & Office Equipment.................. 0.5 1,536,609
Financial Services........................... 3.4 10,849,773
----- ------------
Total corporate bonds........................ 3.9% $ 12,386,382
----- ------------
----- ------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-35
<PAGE>
HARTFORD INTERNATIONAL ADVISERS HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
* Non-income producing during period.
S 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. At June 30, 1999,
the market value of these securities amounted to $2,203,015 or .69% of net
assets.
f The fund had 25 September NEW FTSE 100 Index future contracts, 2 September
TSE 35 Index futures contracts, 38 September MATIF CAC 40 Index futures
contracts, 10 September ASX ALL ORDS
Index futures contracts, 3 July IBEX 35 PLUS Index futures contracts, 15
September TSE 10 year JGB Index futures contracts, 10 September TSE TOPIX
Index futures contracts, 60 July OMX Index futures contracts, 5 September
MIB 30 Index futures contracts, 7 September DTB DAX Index futures
contracts, 89 September EURO BUND DEUTSCHLAND future contracts, 2 HANG SENG
Index futures contracts open as of June 30, 1999. These contracts had a
market value of $35,321,051 as of June 30, 1999 and are collateralized by
various U.S. Treasury obligations having a market value of $1,300,812.
wFORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AT JUNE 30, 1999
<TABLE>
<CAPTION>
TOTAL AGGREGATE DELIVERY UNREALIZED
DESCRIPTION MARKET VALUE FACE VALUE DATE (DEPRECIATION)
- ------------------------- ------------ ---------- --------- -------------
<S> <C> <C> <C> <C>
Australian Dollars (Buy) $ 147,024 $ 147,296 09/30/99 $ (272)
Australian Dollars (Buy) 346,875 345,105 09/30/99 1,770
Australian Dollars (Buy) 1,519,958 1,545,980 07/20/99 (26,022)
Australian Dollars (Buy) 1,011,102 1,008,500 07/20/99 2,603
Australian Dollars (Sell) 692,481 693,577 07/06/99 1,096
Australian Dollars (Sell) 2,220,460 2,212,829 07/20/99 (7,631)
British Pounds (Buy) 2,556,935 2,582,408 09/17/99 (25,473)
British Pounds (Sell) 9,442,087 9,485,416 09/30/99 43,328
Canadian Dollars (Buy) 173,748 273,032 09/16/99 (99,284)
Canadian Dollars (Buy) 271,010 273,032 09/16/99 (2,022)
Canadian Dollars (Sell) 10,456,088 10,602,891 07/06/99 146,803
Canadian Dollars (Sell) 1,608,525 1,625,069 07/06/99 16,544
EURO Dollars (Buy) 2,536,752 2,686,689 07/12/99 (149,937)
EURO Dollars (Buy) 314,030 317,470 07/16/99 (3,440)
EURO Dollars (Buy) 61,938 62,964 07/28/99 (1,026)
EURO Dollars (Buy) 392,274 393,786 07/28/99 (1,512)
EURO Dollars (Buy) 376,790 382,067 07/28/99 (5,278)
EURO Dollars (Buy) 1,085,683 1,104,580 08/06/99 (18,897)
EURO Dollars (Buy) 1,879,589 1,899,994 09/17/99 (20,405)
EURO Dollars (Buy) 1,810,835 1,815,811 09/30/99 (4,975)
EURO Dollars (Sell) 1,033,000 1,061,800 08/06/99 28,800
EURO Dollars (Sell) 2,455,472 2,551,428 07/22/99 95,956
EURO Dollars (Sell) 2,170,927 2,218,980 07/28/99 48,054
EURO Dollars (Sell) 2,496,101 2,545,961 07/28/99 49,859
EURO Dollars (Sell) 13,775,011 14,041,024 07/28/99 266,013
EURO Dollars (Sell) 2,049,116 2,064,102 07/28/99 14,987
EURO Dollars (Sell) 118,715 119,592 07/28/99 877
EURO Dollars (Sell) 9,303,088 9,346,796 07/28/99 43,708
EURO Dollars (Sell) 1,806,525 1,828,103 07/28/99 21,578
Japanese Yen (Buy) 1,088,570 1,067,394 08/06/99 21,176
Japanese Yen (Buy) 1,042,160 1,025,325 08/06/99 16,835
Japanese Yen (Buy) 1,098,690 1,095,583 09/09/99 3,108
Japanese Yen (Sell) 4,391,550 4,460,793 08/06/99 69,243
Japanese Yen (Sell) 1,030,281 1,031,995 08/06/99 1,713
Japanese Yen (Sell) 990,786 1,007,768 08/06/99 16,982
Japanese Yen (Sell) 1,043,522 1,052,054 08/23/99 8,532
Japanese Yen (Sell) 3,969,800 4,042,540 07/16/99 72,740
New Zealand Dollars (Buy) 2,651,355 2,817,624 07/20/99 (166,269)
Singapore Dollars (Buy) 1,049,587 1,049,587 08/23/99 0
Singapore Dollars (Sell) 5,413,065 5,348,904 07/12/99 (64,161)
Swedish Krona (Buy) 2,512,571 2,556,898 07/22/99 (44,327)
Swedish Krona (Buy) 184,151 180,945 07/23/99 3,206
Swedish Krona (Buy) 593,711 599,871 07/23/99 (6,161)
Swedish Krona (Sell) 4,792,653 4,879,808 07/23/99 87,155
Swiss Francs (Sell) 2,532,493 2,686,689 07/12/99 154,197
-------------
$ 574,074
-------------
-------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-36
<PAGE>
HARTFORD SMALL COMPANY HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ----------- ------------
<C> <S> <C>
COMMON STOCKS -- 94.5%
AEROSPACE & DEFENSE -- 0.8%
161,100 Primex Technologies, Inc................ $ 3,473,718
------------
BUSINESS SERVICES -- 3.8%
*52,600 Consolidated Graphics, Inc.............. 2,630,000
*203,100 Iron Mountain, Inc...................... 5,813,737
*77,000 Lason, Inc.............................. 3,821,125
*182,500 Pierce Leahy Corp....................... 4,505,468
------------
16,770,330
------------
COMMUNICATIONS EQUIPMENT -- 10.1%
*292,800 Andrew Corporation...................... 5,544,900
*102,700 Burr-Brown Corp......................... 3,761,387
*114,700 Computer Network Technology
Corporation............................ 2,480,387
*294,400 Digital Microwave Corporation........... 3,753,600
*147,900 Gilat Satellite Network................. 7,764,750
*185,100 ICG Communications, Inc................. 3,956,512
*173,900 MMC Networks, Inc....................... 7,782,025
*162,300 Oak Industries, Inc..................... 7,090,481
*86,200 Visual Networks, Inc.................... 2,758,400
------------
44,892,442
------------
COMPUTERS & OFFICE
EQUIPMENT -- 5.6%
*851,100 Concurrent Computer Corp................ 5,372,568
369,700 Danka Bus Systems PLC................... 2,079,562
*1,137,100 Maxtor Corporation...................... 5,721,060
*363,000 Mentor Graphics......................... 4,650,937
*421,600 Pairgain Technologies, Inc.............. 4,848,400
*121,100 SeaChange International, Inc............ 2,194,937
------------
24,867,464
------------
CONSUMER DURABLES -- 3.0%
*244,300 Dollar Thrifty Automotive............... 5,679,975
*316,800 Unova, Inc.............................. 5,029,200
113,900 Valero Energy Corporation............... 2,441,731
------------
13,150,906
------------
CONSUMER NON-DURABLES -- 2.9%
*594,600 Ivex Packaging Corp..................... 13,081,200
------------
ELECTRONICS -- 13.1%
*231,100 Amkor Technology, Inc................... 2,368,775
*66,000 Applied Micro Circuits Corporation...... 5,428,500
*260,500 Cypress Semiconductor Corporation....... 4,298,250
*213,600 Electroglas, Inc........................ 4,272,000
*120,500 Flextronics International Ltd........... 6,687,750
*244,600 GaSonics International Corporation...... 3,424,400
411,100 General Cable Corporation............... 6,577,600
*217,000 Kulicke and Soffa Industries, Inc....... 5,818,312
*68,400 Micrel, Inc............................. 5,061,600
*114,700 Quanta Services, Inc.................... 5,046,800
*82,200 Sawtek, Inc............................. 3,770,925
*152,000 The DII Group, Inc...................... 5,671,500
------------
58,426,412
------------
ENERGY & SERVICES -- 4.3%
*213,300 BJ Services Company..................... 6,279,018
65,500 Coflexip ADR............................ 2,849,250
*311,300 Marine Drilling Company, Inc............ 4,260,918
<CAPTION>
MARKET
SHARES VALUE
- ----------- ------------
<C> <S> <C>
</TABLE>
ENERGY & SERVICES -- (CONTINUED)
<TABLE>
<C> <S> <C>
230,800 Pennzoil-Quaker State Company........... $ 3,462,000
127,000 Pogo Producing Company.................. 2,365,375
------------
19,216,561
------------
FINANCIAL SERVICES -- 8.9%
276,400 Annuity and Life Re (Holdings), Ltd..... 6,201,725
193,900 Heller Financial, Inc................... 5,392,843
148,500 Legg Mason, Inc......................... 5,717,250
*157,400 NCO Group, Inc.......................... 5,981,200
*100,300 NextCard, Inc........................... 3,403,931
111,525 Reinsurance Group of America, Inc....... 3,931,256
37,100 Reinsurance Group of America, Inc....... 1,242,850
36,600 Southwest Securities Group, Inc......... 2,626,050
*105,000 The Profit Recovery Group International,
Inc.................................... 4,967,812
------------
39,464,917
------------
FOOD, BEVERAGE & TOBACCO -- 1.0%
*176,000 United Natural Foods, Inc............... 4,356,000
------------
HEALTH CARE -- 4.1%
*49,600 Human Genome Sciences, Inc.............. 1,959,200
*344,700 NeXstar Pharmaceuticals, Inc............ 6,872,456
*133,200 Trigon Healthcare, Inc.................. 4,845,150
*272,900 Varian Semiconductor Equipment
Associates, Inc........................ 4,639,300
------------
18,316,106
------------
INDUSTRIAL MATERIALS -- 2.3%
186,400 Minerals Technologies, Inc.............. 10,403,450
------------
MANUFACTURING -- 2.6%
*169,200 Covance, Inc............................ 4,050,225
*282,700 Quest Diagnostics, Inc.................. 7,738,912
------------
11,789,137
------------
MEDIA & SERVICES -- 3.6%
*252,200 Capstar Broadcasting Corporation........ 6,903,975
*64,500 Pegasus Communications Corp............. 2,543,718
*110,100 Rogers Communications, Inc.............. 1,782,243
*135,700 Valasis Communications, Inc............. 4,970,012
------------
16,199,948
------------
RETAIL -- 4.0%
*30,000 Charming Shoppes, Inc................... 182,812
53,850 Ethan Allen Interiors, Inc.............. 2,032,837
*250,000 Guitar Center, Inc...................... 2,609,375
*234,450 Pacific Sunwear of California........... 5,714,718
*151,000 Whole Foods Market, Inc................. 7,257,437
------------
17,797,179
------------
SOFTWARE & SERVICES -- 9.9%
*330,800 Aspen Technologies, Inc................. 3,886,900
*109,200 Bisys Group, Inc. (The)................. 6,388,200
*173,700 Cognex Corporation...................... 5,482,406
*220,600 Cognos, Inc............................. 4,798,050
*127,900 Genesys Telecomm Labs, Inc.............. 3,197,500
*129,200 National Instruments Corporation........ 5,216,450
*147,000 Policy Management Systems Corporation... 4,410,000
*148,000 Sterling Software, Inc.................. 3,949,750
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-37
<PAGE>
HARTFORD SMALL COMPANY HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ----------- ------------
<C> <S> <C>
</TABLE>
COMMON STOCKS -- (CONTINUED)
SOFTWARE & SERVICES -- (CONTINUED)
<TABLE>
<C> <S> <C>
*233,600 TSI International Software Ltd.......... $ 6,628,400
------------
43,957,656
------------
TRANSPORTATION -- 5.6%
*241,800 Atlas Air, Inc.......................... 7,798,050
171,600 Robinson (C.H.) Worldwide, Inc.......... 6,306,300
*274,100 Swift Transportation Co., Inc........... 6,030,200
107,500 USFreightways Corporation............... 4,978,593
------------
25,113,143
------------
UTILITIES -- 8.7%
*887,200 Advanced Fibre Communications........... 13,862,500
*376,900 Intermedia Communications, Inc.......... 11,307,000
*189,200 Primus Telecommunications Group, Inc.... 4,245,170
*167,800 Viatel, Inc............................. 9,417,775
------------
38,832,445
------------
Total common stocks..................... $420,109,014
------------
------------
PREFERRED STOCKS -- 0.0%
CONSUMER SERVICES -- 0.0%
*+58,060 SGW Holdings Corporation................ $ 58,060
------------
------------
<CAPTION>
PRINCIPAL
AMOUNT
- -----------
<C> <S> <C>
SHORT-TERM SECURITIES -- 5.3%
REPURCHASE AGREEMENT
$23,380,000 Interest in 1,933,099,000 joint
repurchase agreement dated 06/30/99 with
State Street Bank 4.822% due 07/01/99;
maturity amount $23,383,132
(Collateralized by $125,000,000 U.S.
Treasury Notes 6.625% due 05/15/07,
$1,170,609,000 U.S. Treasury Bonds
6.125% - 12.000% due 08/15/13 -
11/15/27, $637,490,000 U.S. Treasury
Strips (principal) 0.00% due 06/30/00 -
05/15/15)............................... $ 23,380,000
------------
------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
<CAPTION>
MARKET
VALUE
------------
<S> <C> <C>
DIVERSIFICATION OF NET ASSETS:
Total common stocks (cost
$363,133,542).......................... 94.5% $420,109,014
Total preferred stocks (cost
$599,992).............................. 0.0 58,060
Total short-term securities (cost
$23,380,000)........................... 5.3 23,380,000
----- ------------
Total investment in securities
(total cost $387,113,534).............. 99.8 443,547,074
Cash, receivables and other assets...... 2.0 8,779,377
Payable for securities purchased........ (1.8) (7,955,429)
Payable for Fund shares redeemed........ (0.0) (7,618)
Other liabilities....................... (0.0) (6,484)
----- ------------
Net assets.............................. 100.0% $444,356,920
----- ------------
----- ------------
</TABLE>
<TABLE>
<S> <C>
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share;
750,000,000 shares authorized; 276,503,239
shares outstanding............................ $ 27,650,324
Capital surplus................................ 304,874,881
Distribution in excess of net investment
income........................................ (884,426)
Accumulated undistributed net realized gain on
investments................................... 56,282,610
Unrealized appreciation of investments......... 56,433,531
------------
Net assets..................................... $444,356,920
------------
------------
</TABLE>
<TABLE>
<S> <C>
Class IA
Net assets value per share ($440,171,278 DIVIDED BY
273,025,065 shares outstanding) (562,500,000 shares
authorized).......................................... $1.61
-----
-----
Class IB
Net assets value per share ($4,185,642 DIVIDED BY
3,478,174 shares outstanding) (187,500,000 shares
authorized).......................................... $1.20
-----
-----
</TABLE>
* Non-income producing during period.
+ Restricted Security (see Note 2).
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-38
<PAGE>
HARTFORD MIDCAP HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ----------- ------------
<C> <S> <C>
COMMON STOCKS -- 97.4%
AEROSPACE & DEFENSE -- 1.0%
*158,055 Loral Space & Communications............ $ 2,844,990
------------
BUSINESS SERVICES -- 9.3%
*187,450 Iron Mountain, Inc...................... 5,365,756
278,800 Manpower, Inc........................... 6,307,850
*146,600 Pierce Leahy Corp....................... 3,619,187
151,800 Viad Corp............................... 4,696,312
*59,600 Waters Corp............................. 3,166,250
100,100 Young & Rubicam, Inc.................... 4,548,293
------------
27,703,648
------------
COMMUNICATIONS EQUIPMENT -- 1.5%
*48,900 ADC Telecommunications, Inc............. 2,228,006
*15,600 Exodus Communications, Inc.............. 1,871,025
*2,800 Juniper Networks, Inc................... 417,200
------------
4,516,231
------------
COMPUTERS & OFFICE
EQUIPMENT -- 9.6%
*69,500 Affiliated Computer Services, Inc....... 3,518,461
*53,900 ASM Lithography Holding N.V. ........... 3,200,312
*27,800 Lexmark International Group, Inc........ 1,836,537
*54,300 NCR Corporation......................... 2,650,518
*22,100 Qualcomm................................ 3,171,350
227,900 Steelcase, Inc.......................... 4,558,000
51,100 Symbol Technologies, Inc................ 1,884,312
*147,700 Unisys Corporation...................... 5,751,068
*34,100 Xilinx, Inc............................. 1,952,225
------------
28,522,783
------------
CONSUMER DURABLES -- 2.5%
54,530 Hertz Corporation....................... 3,380,860
*253,800 Unova, Inc.............................. 4,029,075
------------
7,409,935
------------
CONSUMER NON-DURABLES -- 3.6%
54,100 Avon Products, Inc...................... 3,002,550
58,400 Black & Decker Corporation.............. 3,686,500
190,600 Miller (Herman), Inc.................... 4,002,600
------------
10,691,650
------------
CONSUMER SERVICES -- 5.3%
81,800 Galileo International, Inc.............. 4,371,187
*102,500 ITT Educational Services, Inc........... 2,671,406
*179,800 Mirage Resorts, Inc..................... 3,011,650
*83,400 Ryanair Holdings PLC - ADR.............. 4,420,200
*35,900 Starbucks Corporation................... 1,348,493
------------
15,822,936
------------
ELECTRONICS -- 8.4%
*118,360 Analog Devices, Inc..................... 5,940,192
*66,200 Flextronics International Ltd........... 3,674,100
31,500 Linear Technology Corporation........... 2,118,375
*35,700 Maxim Integrated Products, Inc.......... 2,374,050
*106,700 Micron Technology, Inc.................. 4,301,343
*31,700 Sanmina Corporation..................... 2,405,237
*57,000 Teradyne, Inc........................... 4,089,750
------------
24,903,047
------------
<CAPTION>
MARKET
SHARES VALUE
- ----------- ------------
<C> <S> <C>
</TABLE>
<TABLE>
<C> <S> <C>
ENERGY & SERVICES -- 1.1%
88,700 Anadarko Petroleum Corporation.......... $ 3,265,268
------------
FINANCIAL SERVICES -- 15.4%
95,400 Ace Ltd................................. 2,695,050
90,100 City National Corporation............... 3,373,118
102,300 Franklin Resources, Inc................. 4,155,937
115,300 Heller Financial, Inc................... 3,206,781
86,296 Legg Mason, Inc......................... 3,322,396
66,200 Lincoln National Corporation............ 3,463,087
81,200 MBIA, Inc............................... 5,257,700
56,182 Old Kent Financial Corporation.......... 2,352,600
*46,700 Sabre Group Holdings.................... 3,210,625
49,900 SAFECO Corp............................. 2,201,837
27,905 State Street Corporation................ 2,382,389
83,900 Summit Bancorp.......................... 3,508,068
101,100 UnionBanCal Corporation................. 3,652,237
52,200 Unum Corporation........................ 2,857,950
------------
45,639,775
------------
FOOD, BEVERAGE & TOBACCO -- 0.6%
*61,300 Keebler Foods Company................... 1,861,987
------------
HEALTH CARE -- 5.7%
*64,500 Forest Laboratories, Inc................ 2,983,125
*65,300 Human Genome Sciences, Inc.............. 2,579,350
*29,800 Immunex Corporation..................... 3,797,637
30,175 Pe Corporation -- Pe Biosystems Group... 3,462,581
221,950 ServiceMaster Company (The)............. 4,161,562
------------
16,984,255
------------
INDUSTRIAL MATERIALS -- 4.4%
375,500 Abitibi-Consolidated, Inc............... 4,271,312
51,400 Phelps Dodge Corporation................ 3,183,587
*84,900 Sealed Air Corporation.................. 5,507,887
------------
12,962,786
------------
MANUFACTURING -- 4.4%
*227,010 Covance, Inc............................ 5,434,051
*77,500 Quintiles Transnational Corp............ 3,255,000
116,600 Weatherford International............... 4,270,475
------------
12,959,526
------------
MEDIA & SERVICES -- 8.0%
*299,800 American Tower Corporation.............. 7,195,200
*77,400 Donotuse -- Chancellor Media Corp....... 4,266,675
*14,600 Echostar Communications Corporation..... 2,240,187
*77,300 Lamar Advertising Company............... 3,164,468
*71,712 Outdoor Systems, Inc.................... 2,617,488
37,400 Scripps (E.W.) Co....................... 1,778,837
*37,400 Univision Communications, Inc........... 2,468,400
------------
23,731,255
------------
RETAIL -- 6.4%
49,000 Circuit City Stores, Inc................ 4,557,000
196,775 Dollar General Corporation.............. 5,706,475
143,200 Family Dollar Stores, Inc............... 3,436,800
114,870 Intimate Brands, Inc.................... 5,441,966
------------
19,142,241
------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-39
<PAGE>
HARTFORD MIDCAP HLS FUND, INC.
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ----------- ------------
<C> <S> <C>
</TABLE>
COMMON STOCKS -- (CONTINUED)
<TABLE>
<C> <S> <C>
SOFTWARE & SERVICES -- 5.7%
*2,700 Ariba, Inc.............................. $ 262,575
*37,100 Bisys Group, Inc. (The)................. 2,170,350
*130,710 Ceridan Corporation..................... 4,272,583
81,300 First Data Corporation.................. 3,978,618
*47,800 Policy Management Systems Corporation... 1,434,000
*55,000 Rational Software Corporation........... 1,811,562
*44,700 Siebel Systems, Inc..................... 2,966,962
------------
16,896,650
------------
TRANSPORTATION -- 0.7%
64,118 Southwest Airlines Co................... 1,995,672
------------
UTILITIES -- 3.7%
*108,300 Intermedia Communications, Inc.......... 3,249,000
*80,700 McLeodUSA Incorporated.................. 4,438,500
*78,900 Smith International, Inc................ 3,427,218
------------
11,114,718
------------
Total common stocks..................... $288,969,353
------------
------------
<CAPTION>
PRINCIPAL
AMOUNT
- -----------
<C> <S> <C>
SHORT-TERM SECURITIES -- 6.7%
REPURCHASE AGREEMENT
$20,001,000 Interest in $1,933,099,000 joint $ 20,001,000
repurchase agreement dated 06/30/99 with
State Street Bank 4.822% due 07/01/99;
maturity amount $20,003,679
(Collateralized by $125,000,000 U.S.
Treasury Notes 6.625% due 05/15/07,
$1,170,609,000 U.S. Treasury Bonds
6.125% - 12.000% due 08/15/13 -
11/15/27, $637,490,000 U.S. Treasury
Strips (principal) 0.00% due 06/30/00 -
05/15/15)...............................
------------
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
VALUE
------------
<S> <C> <C>
DIVERSIFICATION OF NET ASSETS:
Total common stocks (cost
$244,609,259).......................... 97.4% $288,969,353
Total short-term securities (cost
$20,001,000)........................... 6.7 20,001,000
------ ------------
Total investment in securities (total
cost $264,610,259)..................... 104.1 308,970,353
Cash, receivables and other assets...... 2.7 7,961,341
Payable for securities purchased........ (5.7) (16,780,162)
Payable for Fund shares redeemed........ (1.1) (3,333,545)
Other liabilities....................... (0.0) (6,069)
------ ------------
Net assets.............................. 100.0% $296,811,918
------ ------------
------ ------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per
share; 1,000,000,000 shares authorized;
170,144,619 shares outstanding......... $ 17,014,462
Capital surplus......................... 214,341,351
Distribution in excess of net investment
income................................. (205,526)
Accumulated undistributed net realized
gain on investments.................... 21,301,538
Unrealized appreciation of
investments............................ 44,360,093
------------
Net assets, applicable to shares
outstanding............................ $296,811,918
------------
------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Class IA
Net assets value per share
($296,811,918 DIVIDED BY 170,144,619
shares outstanding) (800,000,000
shares authorized)................... $1.74
-----
-----
Class IB
Net assets value per share ($0
DIVIDED BY 0 shares outstanding)
(200,000,000 shares authorized)...... $0.00
-----
-----
</TABLE>
* Non-income producing during period.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-40
<PAGE>
HARTFORD GROWTH AND INCOME HLS FUND
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ---------- -----------
<C> <S> <C>
COMMON STOCKS -- 94.2%
AEROSPACE & DEFENSE -- 2.8%
7,900 AlliedSignal, Inc....................... $ 497,700
22,400 United Technologies Corporation......... 1,605,800
-----------
2,103,500
-----------
COMMUNICATIONS EQUIPMENT -- 4.4%
*19,500 Cisco Systems, Inc...................... 1,257,750
12,300 Lucent Technologies, Inc................ 829,481
11,200 Motorola, Inc........................... 1,061,200
*2,750 Sprint Corporation (PCS Group).......... 157,093
-----------
3,305,524
-----------
COMPUTERS & OFFICE EQUIPMENT -- 6.4%
*15,000 Adaptec, Inc............................ 529,706
*7,200 Dell Computer Corp...................... 266,400
*5,500 EMC Corporation......................... 302,500
13,800 Hewlett-Packard Company................. 1,386,900
18,200 International Business Machines Corp.... 2,352,350
-----------
4,837,856
-----------
CONSUMER DURABLES -- 1.1%
11,900 Ford Motor Co........................... 671,606
2,400 General Motors Corporation.............. 158,400
-----------
830,006
-----------
CONSUMER NON-DURABLES -- 2.6%
18,400 Kimberly-Clark Corporation.............. 1,048,800
10,100 Procter & Gamble Co..................... 901,425
-----------
1,950,225
-----------
CONSUMER SERVICES -- 1.5%
22,400 Darden Restaurants, Inc................. 488,600
3,300 Vodafone Airtouch PLC ADR............... 650,100
-----------
1,138,700
-----------
ELECTRONICS -- 5.6%
*11,200 Analog Devices, Inc..................... 562,100
12,200 General Electric Company................ 1,378,600
27,100 Intel Corporation....................... 1,612,450
5,000 Texas Instruments, Inc.................. 725,000
-----------
4,278,150
-----------
ENERGY & SERVICES -- 5.1%
4,000 Atlantic Richfield Company.............. 334,250
5,600 Exxon Corporation....................... 431,900
22,400 Noble Affiliates, Inc................... 631,400
33,500 Pennzoil-Quaker State Company........... 502,500
7,100 Royal Dutch Petroleum................... 427,775
7,200 Sunoco, Inc............................. 217,350
900 Transocean Offshore, Inc................ 23,625
14,900 Transocean Offshore, Inc................ 391,125
55,300 Union Pacific Resources Group, Inc...... 902,081
-----------
3,862,006
-----------
FINANCIAL SERVICES -- 14.7%
5,600 American International Group, Inc....... 655,550
12,400 Associates First Capital Corporation.... 549,475
7,100 Chase Manhattan Corp.................... 615,037
3,500 CIGNA Corporation....................... 311,500
47,550 Citigroup, Inc.......................... 2,258,625
<CAPTION>
MARKET
SHARES VALUE
- ---------- -----------
<C> <S> <C>
</TABLE>
FINANCIAL SERVICES -- (CONTINUED)
<TABLE>
<C> <S> <C>
9,300 City National Corporation............... $ 348,168
9,800 Conseco, Inc............................ 298,287
22,400 Cullen/Frost Bankers, Inc............... 617,400
11,900 Edwards (A.G.) & Sons, Inc.............. 383,775
5,600 Federal Home Loan Mortgage Corporation.. 324,800
11,200 Federal National Mortgage Association... 765,800
8,500 FINOVA Group, Inc....................... 447,312
10,000 Lincoln National Corporation............ 523,125
6,600 Marsh & McLennan Companies, Inc......... 498,300
3,800 Merrill Lynch & Co., Inc................ 303,762
13,200 National City Corporation............... 864,600
23,000 Pacific Century Financial Corporation... 495,937
10,500 UnionBanCal Corporation................. 379,312
5,600 Wachovia Corporation.................... 479,150
-----------
11,119,915
-----------
FOOD, BEVERAGE & TOBACCO -- 4.7%
23,000 Anheuser-Busch Companies, Inc........... 1,631,562
1,600 Coca-Cola Company, (The)................ 100,000
17,100 Nabisco Group Holdings Corp............. 334,518
33,100 Philip Morris Co., Inc.................. 1,330,206
5,367 Reynolds (R.J.) Tobacco Holdings,
Inc.................................... 169,049
-----------
3,565,335
-----------
HEALTH CARE -- 10.2%
26,900 Abbott Laboratories..................... 1,223,972
8,400 American Home Products Corporation...... 483,000
*10,100 Amgen, Inc.............................. 614,837
13,900 Bergen Brunswig Corporation............. 239,775
*19,000 Boston Scientific Corporation........... 834,812
7,900 Bristol-Myers Squibb Company............ 556,456
11,200 Cardinal Health, Inc.................... 718,200
16,400 Columbia/HCA Healthcare Corporation..... 374,125
*16,200 Genzyme Corporation..................... 785,700
*399 Genzyme Molecular Oncology.............. 1,097
*2,900 Genzyme Surgical Products............... 12,777
6,400 Johnson & Johnson Co.................... 627,200
7,900 Merck & Co., Inc........................ 584,600
5,300 Pharmacia & Upjohn, Inc................. 301,106
5,600 Warner-Lambert Company.................. 388,500
-----------
7,746,157
-----------
INDUSTRIAL MATERIALS -- 3.5%
23,700 Engelhard Corporation................... 536,212
17,600 Freeport-McMoRan Copper & Gold, Inc..... 294,800
*16,300 Grace (W.R.) & Co....................... 299,512
5,600 Minerals Technologies, Inc.............. 312,550
8,500 Monsanto Company........................ 335,218
4,400 Temple-Inland, Inc...................... 300,300
5,000 Weyerhaeuser Company.................... 343,750
5,000 Willamette Industries, Inc.............. 230,312
-----------
2,652,654
-----------
MANUFACTURING -- 3.5%
9,500 Caterpillar, Inc........................ 570,000
11,200 Corning, Inc............................ 785,400
15,577 Delphi Automotive Systems Corporation... 289,156
4,400 Eaton Corporation....................... 404,800
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-41
<PAGE>
HARTFORD GROWTH AND INCOME HLS FUND
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ---------- -----------
<C> <S> <C>
</TABLE>
COMMON STOCKS -- (CONTINUED)
MANUFACTURING -- (CONTINUED)
<TABLE>
<C> <S> <C>
14,400 York International Corp................. $ 616,500
-----------
2,665,856
-----------
MEDIA & SERVICES -- 2.1%
*7,400 America Online, Inc..................... 817,700
11,200 Gannett Co., Inc........................ 799,400
-----------
1,617,100
-----------
RETAIL -- 8.3%
9,200 Dayton-Hudson Corp...................... 598,000
26,175 Gap, Inc. (The)......................... 1,318,565
15,800 Home Depot, Inc. (The).................. 1,018,112
14,350 May Department Stores Company........... 586,556
12,400 McDonald's Corporation.................. 512,275
47,500 Wal-Mart Stores, Inc.................... 2,291,875
-----------
6,325,383
-----------
SOFTWARE & SERVICES -- 6.0%
*9,200 Bisys Group, Inc. (The)................. 538,200
*5,000 BMC Software, Inc....................... 270,000
*37,500 Microsoft Corporation................... 3,382,031
*14,700 Sterling Software, Inc.................. 392,306
-----------
4,582,537
-----------
TRANSPORTATION -- 0.6%
9,200 USFreightways Corporation............... 426,075
-----------
UTILITIES -- 11.2%
2,900 ALLTEL Corp............................. 207,350
18,500 Ameritech Corporation................... 1,359,750
21,100 AT&T Corp............................... 1,177,643
27,600 Bell Atlantic Corporation............... 1,804,350
15,800 BellSouth Corp.......................... 740,625
5,300 DQE, Inc................................ 212,662
5,800 El Paso Energy Corporation.............. 204,087
14,100 GPU, Inc................................ 594,843
*11,200 MCI WorldCom, Inc....................... 966,000
11,900 SBC Communications, Inc................. 690,200
4,200 Sprint Corporation (FON Group).......... 221,812
8,500 Unicom Corporation...................... 327,781
-----------
8,507,103
-----------
Total common stocks..................... $71,514,082
-----------
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
- -----------
<C> <S> <C>
SHORT-TERM SECURITIES -- 4.4%
REPURCHASE AGREEMENT
Interest in $1,933,099,000 joint
repurchase agreement dated 06/30/99 with
State Street Bank 4.822% due 07/01/99;
maturity amount $3,317,444
(Collateralized by $125,000,000 U.S.
Treasury Notes 6.625% due 05/15/07,
$1,170,609,000 U.S. Treasury Bonds
6.125% - 12.000% due 08/15/13 -
11/15/27, $637,490,000 U.S. Treasury
Strips (principal) 0.00% due
06/30/00-05/15/15)...................... $ 3,317,000
$ 3,317,000
-----------
-----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
VALUE
-----------
<S> <C> <C>
DIVERSIFICATION OF NET ASSETS:
Total common stocks (cost $63,135,685)....... 94.2% $71,514,082
Total short-term securities (cost
$3,317,000)................................. 4.4 3,317,000
------ -----------
Total investment in securities (total cost
$66,452,685)................................ 98.6 74,831,082
Cash, receivables and other assets........... 1.4 1,087,813
Payable for securities purchased............. (0.0) (13,575)
Other liabilities............................ (0.0) (3,483)
------ -----------
Net assets................................... 100.0% $75,901,837
------ -----------
------ -----------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.001 per share;
1,000,000,000 shares authorized; 56,971,430 shares
outstanding......................................... $ 5,697,035
Capital surplus...................................... 61,019,274
Accumulated undistributed net investment income...... 143,643
Accumulated undistributed net realized gain on
investments......................................... 594,892
Unrealized appreciation of investments............... 8,378,397
Unrealized appreciation of futures contracts ++...... 68,596
-----------
Net assets........................................... $75,901,837
-----------
-----------
</TABLE>
<TABLE>
<S> <C>
Class IA
Net assets value per share ($75,888,499 DIVIDED BY
56,961,399 shares outstanding) (800,000,000 shares
authorized)............................................... $1.33
-----
-----
Class IB
Net assets value per share ($13,338 DIVIDED BY 10,031
shares outstanding) (200,000,000 shares authorized)....... $1.33
-----
-----
</TABLE>
* Non-income producing during period.
++ The Fund had 9 Standard & Poor's 500 September 199 Futures contracts open
as of June 30, 1999. These contracts had a value of $3,108,825 as of June
30, 1999 and were collateralized by $168,750 of Cash.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-42
<PAGE>
HARTFORD HIGH YIELD HLS FUND
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ---------- -----------
<C> <S> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS -- 0.4%
$ 150,000 DLJ Commercial Mortgage Corp., Series
1998-CF1, Class B2
7.33% due 01/15/10.................... $ 136,776
-----------
-----------
<CAPTION>
SHARES
- ----------
<C> <S> <C>
CONVERTIBLE PREFERRED STOCKS -- 0.8%
ENERGY & SERVICES -- 0.8%
12,000 Coastal Finance Corp.................... $ 296,250
-----------
-----------
<CAPTION>
PRINCIPAL
AMOUNT
- ----------
<C> <S> <C>
CORPORATE NOTES -- 86.1%
CONSUMER DURABLES -- 1.0%
200,000 Federal-Mogul Corp.
7.375% due 01/15/06................... $ 188,327
200,000 Federal-Mogul Corp.
7.50% due 01/15/09.................... 184,325
-----------
372,652....
-----------
CONSUMER NON-DURABLES -- 0.1%
50,000 Revlon Consumer Products Corp.
8.625% due 02/01/08................... 46,750
-----------
CONSUMER SERVICES -- 1.0%
125,000 Simmons Company
10.25% due 03/15/09................... 126,875
250,000 Six Flags Entertainment Corp.
8.875% due 04/01/06................... 250,000
-----------
376,875
-----------
ELECTRONICS -- 1.6%
100,000 Advanced Micro Devices
11.00% due 08/01/03................... 100,500
300,000 Polaroid Corporation
11.50% due 02/15/06................... 318,750
150,000 UNISYS Corp.
12.00% due 04/15/03................... 163,500
-----------
582,750
-----------
ENERGY & SERVICES -- 13.7%
100,000 AES Corp. Senior Subordinated Note
10.25% due 07/15/06................... 102,250
160,000 AES Corp. Senior Subordinated Note
9.50% due 06/01/09.................... 164,400
200,000 Belco Oil & Gas Corp.
8.875% due 09/15/07................... 197,000
250,000 Clark Oil Refining
8.625% due 08/15/08................... 232,500
175,000 Clark Refining & Marketing, Inc.
8.375% due 11/15/07................... 159,906
300,000 CMS Energy Corp.
6.75% due 01/15/04.................... 283,633
200,000 Coda Energy Group
10.50% due 04/01/06................... 205,500
125,000 Cogentrix Energy, Inc.
8.75% due 10/15/08.................... 124,375
75,000 Cross Timbers Oil Co.
8.75% due 11/01/09.................... 72,187
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ---------- -----------
<C> <S> <C>
</TABLE>
CORPORATE NOTES -- (CONTINUED)
ENERGY & SERVICES -- (CONTINUED)
<TABLE>
<C> <S> <C>
$ 50,000 Gulf Canada Resources Ltd.
8.375% due 11/15/05................... $ 49,125
100,000 Gulf Canada Resources Ltd.
9.625% due 07/01/05................... 102,500
103,000 Nuevo Energy Co.
9.50% due 04/15/06.................... 102,485
200,000 Pioneer Natural Resource
6.50% due 01/15/08.................... 170,690
500,000 Pioneer Natural Resource
7.20% due 01/15/28.................... 384,732
850,000 Pogo Producing Co.
10.375% due 02/15/09.................. 881,875
100,000 R&B Falcon Corp.
7.375% due 04/15/18................... 72,000
150,000 R&B Falcon Corp.
6.50% due 04/15/03.................... 127,125
550,000 R&B Falcon Corp.
11.375% due 03/15/09.................. 569,250
525,000 Seagull Energy Corp.
7.50% due 09/15/27.................... 434,708
100,000 Tesoro Petroleum Corp.
9.00% due 07/01/08.................... 97,250
300,000 Tuboscope, Inc.
7.50% due 02/15/08.................... 261,000
125,000 Vintage Petroleum
9.75% due 06/30/09.................... 127,812
100,000 Vintage Petroleum
9.00% due 12/15/05.................... 99,000
-----------
5,021,303
-----------
FINANCIAL SERVICES -- 1.6%
250,000 Golden State Holdings
6.75% due 08/01/01.................... 246,941
250,000 Sumitomo Bank International
8.50% due 06/15/09.................... 251,636
100,000 Trizec Finance Ltd.
10.875% due 10/15/05.................. 104,125
-----------
602,702
-----------
FOOD, BEVERAGE & TOBACCO -- 4.0%
500,000 Agrilink Foods, Inc.
11.875% due 11/01/08.................. 515,000
150,000 Canandaigua Brands, Inc.
8.50% due 03/01/09.................... 144,375
200,000 Chiquita Brands International, Inc.
10.25% due 11/01/06................... 202,000
200,000 Chiquita Brands International, Inc.
10.00% due 06/15/09................... 199,500
250,000 Keebler Corp.
10.75% due 07/01/06................... 273,259
150,000 New World Pasta Company
9.25% due 02/15/09.................... 145,875
-----------
1,480,009
-----------
HEALTH CARE -- 3.1%
150,000 Columbia/HCA Healthcare Corp.
9.00% due 12/15/14.................... 148,330
150,000 Express Scripts, Inc.
9.625% due 06/15/09................... 151,875
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-43
<PAGE>
HARTFORD HIGH YIELD HLS FUND
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ---------- -----------
<C> <S> <C>
</TABLE>
CORPORATE NOTES -- (CONTINUED)
HEALTH CARE -- (CONTINUED)
<TABLE>
<C> <S> <C>
$ 250,000 Owens & Minor, Inc.
10.875% due 06/01/06.................. $ 265,000
200,000 Quorum Health Group, Inc.
8.75% due 11/01/05.................... 195,000
100,000 Tenet Healthcare Corp.
8.625% due 12/01/03................... 100,869
300,000 Tenet Healthcare Corp.
8.625% due 01/15/07................... 295,500
-----------
1,156,574
-----------
HOME BUILDING -- 3.3%
400,000 American Standard Companies
7.375% due 04/15/05................... 382,000
150,000 Del Webb Corp.
9.375% due 05/01/09................... 144,187
100,000 Del Webb Corp.
10.25% due 02/15/10................... 99,000
250,000 Kaufman & Broad Home Corp.
9.625% due 11/15/06................... 261,250
100,000 MDC Holdings, Inc.
8.375% due 02/01/08................... 96,500
100,000 Toll Corp.
8.75% due 11/15/06.................... 98,500
125,000 Toll Corp.
7.75% due 09/15/07.................... 117,500
-----------
1,198,937
-----------
HOTELS & GAMINGS -- 6.7%
350,000 Circus Circus Enterprises, Inc.
7.625% due 07/15/13................... 315,679
600,000 Horseshoe Gaming Holdings
8.625% due 05/15/09................... 582,750
425,000 Host Marriot Properties
8.45% due 12/01/08.................... 403,750
200,000 La Quinta Motor Inns
7.25% due 03/15/04.................... 177,003
143,000 La Quinta Motor Inns
7.40% due 09/15/05.................... 121,845
350,000 MGM Grand, Inc.
6.875% due 02/06/08................... 313,312
150,000 Park Place Entertainment
7.875% due 12/15/05................... 142,875
372,000 Starwood Hotels & Resorts
7.375% due 11/15/15................... 319,921
100,000 Starwood Hotels & Resorts
6.75% due 11/15/05.................... 90,623
-----------
2,467,758
-----------
INDUSTRIAL -- 10.5%
150,000 Agriculture Minerals and Chemicals Co.
10.75% due 09/30/03................... 148,687
350,000 AK Steel
7.875% due 02/15/09................... 336,000
225,000 Arco Chemical Co.
9.80% due 02/01/20.................... 219,712
300,000 Bethlehem Steel
7.625% due 08/01/04................... 282,733
100,000 Borden Chemical, Inc.
9.50% due 05/01/05.................... 95,500
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ---------- -----------
<C> <S> <C>
</TABLE>
INDUSTRIAL -- (CONTINUED)
<TABLE>
<C> <S> <C>
$ 300,000 Domtar, Inc.
8.75% due 08/01/06.................... $ 310,500
200,000 Domtar, Inc.
9.50% due 08/01/16.................... 212,000
125,000 Equistar Chemicals LP
8.75% due 02/15/09.................... 126,338
275,000 Fisher Scientific International, Inc.
9.00% due 02/01/08.................... 261,250
125,000 Fisher Scientific International, Inc.
9.00% due 02/01/08.................... 118,750
150,000 General Chemical Industrial
10.625% due 05/01/09.................. 150,750
500,000 Huntsman Corp.
9.50% due 07/01/07.................... 472,500
425,000 Huntsman ICI Chemical
10.125% due 07/01/09.................. 429,250
125,000 ISP Holdings, Inc.
9.00% due 10/15/03.................... 124,375
250,000 Lyondell Chemical Co.
9.625% due 05/01/07................... 256,875
75,000 Oregon Steel Mills
11.00% due 06/15/03................... 78,937
70,000 Terra Industries, Inc.
10.50% due 06/15/05................... 67,200
180,000 WHX Corp.
10.50% due 04/15/05................... 169,650
-----------
3,861,007
-----------
MANUFACTURING -- 1.6%
550,000 Condor Systems, Inc.
11.875% due 05/01/09.................. 530,750
75,000 Hayes Lemmerz International, Inc.
8.25% due 12/15/08.................... 71,437
-----------
602,187
-----------
MEDIA & SERVICES -- 9.2%
148,000 Adelphia Communications Corp.
9.25% due 10/01/02.................... 149,850
250,000 AMC Entertainment
9.50% due 03/15/09.................... 237,500
125,000 Big Flower Press Holdings
8.625% due 12/01/08................... 115,000
200,000 Chancellor Media Corp. of Los Angeles
8.75% due 06/15/07.................... 199,250
200,000 CSC Holdings, Inc.
9.875% due 02/15/13................... 213,500
25,000 CSC Holdings, Inc.
9.25% due 11/01/05.................... 25,812
500,000 Fox Family Worldwide, Inc.
9.25% due 11/01/07.................... 463,750
500,000 Fox/Liberty Networks LLC
8.875% due 08/15/07................... 518,750
100,000 Hollinger International Publishing, Inc.
9.25% due 02/01/06.................... 102,125
100,000 Jones Intercable
10.50% due 03/01/08................... 107,000
300,000 Liberty Media
7.875% due 07/15/09................... 298,212
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-44
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ---------- -----------
<C> <S> <C>
</TABLE>
CORPORATE NOTES -- (CONTINUED)
MEDIA & SERVICES -- (CONTINUED)
<TABLE>
<C> <S> <C>
$ 300,000 Premier Parks, Inc.
9.75% due 06/15/07.................... $ 303,000
250,000 Primedia, Inc.
10.25% due 06/01/04................... 261,875
200,000 Regal Cinemas, Inc.
9.50% due 06/01/08.................... 187,000
225,000 World Color Press, Inc.
7.75% due 02/15/09.................... 211,500
-----------
3,394,124
-----------
PACKAGES & CONTAINERS -- 2.4%
115,000 Ball Corp.
8.25% due 08/01/08.................... 113,275
175,000 Container Corp. of America
11.25% due 05/01/04................... 182,875
200,000 Owens-Illinois, Inc.
7.80% due 05/15/18.................... 182,272
250,000 Packaging Corp. of America
9.625% due 04/01/09................... 253,750
125,000 Stone Container Corp.
12.58% due 08/01/16................... 137,343
-----------
869,515
-----------
RETAIL -- 4.8%
600,000 Ames Department Stores
10.00% due 04/15/06................... 588,750
325,000 Duane Reade, Inc.
9.25% due 02/15/08.................... 328,250
300,000 Kmart Corp.
7.95% due 02/01/23.................... 291,137
347,000 Kmart Corp.
12.50% due 03/01/05................... 407,810
50,000 Kmart Corp.
7.75% due 10/01/12.................... 49,648
110,000 Nine West Group, Inc.
8.375% due 08/15/05................... 113,300
-----------
1,778,895
-----------
SHIPBUILDING -- 1.0%
350,000 Newport News Shipbuilding
9.25% due 12/01/06.................... 362,250
-----------
TELECOMMUNICATIONS -- 15.0%
200,000 Call-Net Enterprises, Inc.
8.00% due 08/15/08.................... 176,000
225,000 Call-Net Enterprises, Inc.
9.375% due 05/15/09................... 214,312
500,000 Charter Communication International
8.625% due 04/01/09................... 480,000
100,000 Comcast Cellular Holdings Corp.
9.50% due 05/01/07.................... 111,875
200,000 Echostar Communications Corp.
9.375% due 02/01/09................... 203,500
375,000 Echostar Communications Corp.
9.25% due 02/01/06.................... 379,218
150,000 Flag Limited
8.25% due 01/30/08.................... 141,000
325,000 Hyperion Telecommunication
12.00% due 11/01/07................... 332,312
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ---------- -----------
<C> <S> <C>
</TABLE>
TELECOMMUNICATIONS -- (CONTINUED)
<TABLE>
<C> <S> <C>
$ 475,000 Level 3 Communications
9.125% due 05/01/08................... $ 466,687
350,000 Loral Space & Communications
9.50% due 01/15/06.................... 303,625
100,000 McLeod USA, Inc.
8.125% due 02/15/09................... 92,500
100,000 McLeod USA, Inc.
9.25% due 07/15/07.................... 99,250
100,000 McLeod USA, Inc.
9.50% due 11/08/08.................... 99,250
200,000 Metromedia Fiber Network
10.00% due 11/15/08................... 205,500
175,000 Nextel Communications
9.75% due 08/15/04.................... 178,062
150,000 Nextlink Communications
12.50% due 04/15/06................... 159,750
200,000 Nextlink Communications
10.75% due 11/15/08................... 204,500
200,000 Nextlink Communications
10.75% due 06/01/09................... 205,000
125,000 Price Communications
9.125% due 12/15/06................... 126,250
100,000 PSINet, Inc.
10.00% due 02/15/05................... 100,500
243,000 Rogers Cablesystems, Inc.
10.125% due 09/01/12.................. 260,313
250,000 Rogers Cablesystems, Inc.
9.625% due 08/01/02................... 261,250
50,000 Rogers Cantel Mobile, Inc.
9.75% due 06/01/16.................... 55,375
150,000 Rogers Cantel Mobile, Inc.
9.375% due 06/01/08................... 155,437
50,000 Telewest Communications PLC
9.625% due 10/01/06................... 51,500
100,000 Telewest Communications PLC
11.25% due 11/01/08................... 112,250
250,000 Teligent, Inc.
11.50% due 12/01/07................... 247,500
100,000 Time Warner Telecom LLC
9.75% due 07/15/08.................... 102,500
-----------
5,525,216
-----------
TEXTILE -- 0.3%
100,000 Westpoint Stevens, Inc.
7.875% due 06/15/05................... 98,000
-----------
TRANSPORTATION -- 1.7%
150,000 AMR Corp.
10.00% due 03/07/01................... 157,501
150,000 Interpool, Inc.
7.35% due 08/01/07.................... 141,303
250,000 Teekay Shipping Corp.
8.32% due 02/01/08.................... 235,937
100,000 United Air Lines, Inc.
9.125% due 01/15/12................... 108,055
-----------
642,796
-----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-45
<PAGE>
HARTFORD HIGH YIELD HLS FUND
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ---------- -----------
<C> <S> <C>
</TABLE>
CORPORATE NOTES -- (CONTINUED)
<TABLE>
<C> <S> <C>
UTILITIES -- 2.4%
$ 100,000 Calpine Corp.
7.625% due 04/15/06................... $ 94,125
100,000 Calpine Corp.
10.50% due 05/15/06................... 106,500
200,000 Calpine Corp.
9.25% due 02/01/04.................... 202,500
225,000 Connecticut Light & Power Co.
7.875% due 10/01/24................... 230,460
125,000 El Paso Electric Co.
9.40% due 05/01/11.................... 138,398
100,000 Public Service Company of New Mexico
7.10% due 08/01/05.................... 98,640
-----------
870,623
-----------
WASTE MANAGEMENT -- 0.9%
275,000 Allied Waste North American
7.625% due 01/01/06................... 256,093
100,000 Browning-Ferris, Inc.
7.40% due 09/15/35.................... 80,584
-----------
336,677
-----------
Total corporate notes................... $31,647,600
-----------
-----------
FOREIGN/YANKEE BONDS & NOTES -- 6.7%
FOREIGN CORPORATIONS -- 1.5%
600,000 Petroleos Mexicanos
9.50% due 9/15/27..................... $ 565,500
-----------
FOREIGN GOVERNMENTS -- 5.2%
1,250,000 Ecuador Discount
6.00% due 02/28/25.................... 578,906
250 Republic of Argentina
8.375% due 12/20/03................... 1,750
225,000 Republic of Brazil
11.625% due 04/15/04.................. 211,781
250,000 Republic of Colombia
8.375% due 02/15/27................... 176,012
250,000 Republic of Panama
8.875% due 09/30/27................... 205,000
250,000 Republic of Venezuela
6.75% due 03/31/20.................... 173,281
200,000 Russian Federation (The)
12.75% due 06/24/28................... 111,250
300,000 United Mexican States Discount Bond
6.25% due 12/31/19.................... 222,562
250,000 United Mexican States Discount Bond
6.0975% due 12/31/19.................. 208,437
-----------
1,888,979
-----------
Total foreign/yankee bonds & notes...... $ 2,454,479
-----------
-----------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ---------- -----------
<C> <S> <C>
SHORT-TERM SECURITIES -- 3.4%
REPURCHASE AGREEMENT
$1,271,000 Interest in $153,141,000 joint $ 1,271,000
repurchase agreement dated 06/30/99 with
State Street Bank 4.800% due 07/01/99;
maturity amount $1,271,169
(Collateralized by $153,141,000 U.S.
Treasury Bonds 8.125% due 05/15/21).....
-----------
-----------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
DIVERSIFICATION OF NET ASSETS:
Total collateralized mortgage obligations
(cost $140,406)............................ 0.4% 136,776
Total convertible preferred stock (cost
$294,500).................................. 0.8 296,250
Total corporate notes (cost $32,071,881).... 86.1 31,647,600
Total foreign/yankee bonds & notes (cost
$2,523,537)................................ 6.7 2,454,479
Total short-term securities (cost
$1,271,000)................................ 3.4 1,271,000
----- -----------
Total investment in securities (total cost
$36,301,324)............................... 97.4 35,806,105
Cash, receivables and other assets.......... 4.0 1,480,009
Payable for securities purchased............ (1.3) (474,842)
Other liabilities........................... (0.1) (36,658)
----- -----------
Net assets.................................. 100.0% $36,774,614
----- -----------
----- -----------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share;
1,000,000,000 shares authorized; 35,085,700 shares
outstanding........................................ $ 3,508,570
Capital surplus..................................... 32,589,228
Accumulated undistributed net investment income..... 1,107,566
Accumulated undistributed net realized gain on
investments........................................ 64,468
Unrealized depreciation of investments.............. (495,218)
-----------
Net assets.......................................... $36,774,614
-----------
-----------
</TABLE>
<TABLE>
<S> <C>
Class IA
Net assets value per share ($36,668,011 DIVIDED BY
34,983,880
shares outstanding) (800,000,000 shares authorized)...... $1.05
-----
-----
Class IB
Net assets value per share ($106,603 DIVIDED BY 101,820
shares outstanding) (200,000,000 shares authorized)...... $1.05
-----
-----
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-46
<PAGE>
HARTFORD GLOBAL LEADERS HLS FUND
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ---------- -----------
<C> <S> <C>
COMMON STOCKS -- 96.4%
FINLAND -- 1.7%
9,220 Nokia Oy (Communication Equipment)...... $ 808,207
-----------
FRANCE -- 5.7%
1,900 Accor S.A. (Consumer Services).......... 477,117
5,300 Banque National de Paris (Financial
Services).............................. 441,631
300 L'Oreal (Consumer Non-Durables)......... 202,799
2,900 Pinault-Printemps-Redoute S.A. (Consumer
Durables).............................. 497,650
4,410 Total S.A. - B Shares (Energy &
Services).............................. 568,943
6,210 Vivendi (Utilities)..................... 503,049
-----------
2,691,189
-----------
GERMANY -- 5.1%
5,530 DaimlerChrysler AG (Consumer Durables).. 483,038
9,000 Deutsche Bank AG Dem (Financial
Services).............................. 548,533
4,220 Mannesmann AG (Media & Services)........ 631,035
9,400 Siemens AG (Electronics)................ 725,107
-----------
2,387,713
-----------
JAPAN -- 14.2%
27,000 Dai Nippon Printing Co. (Media &
Services).............................. 431,647
26,000 Fujitsu Limited (Electronics)........... 523,066
49,000 Hitachi Ltd. (Electronics).............. 459,490
15,000 Kao Corporation (Consumer
Non-Durables).......................... 421,361
4,000 Matsushita Communication Industrial Co.,
Ltd. (Communication Equipment)......... 285,864
1,300 NIDEC Corp. (Computer & Office
Equipment)............................. 195,586
73,000 Nikko Securities Co. (Financial
Services).............................. 471,041
560 Nippon Telegraph & Telephone Corp.
(Utilities)............................ 652,367
40,000 Olympus Optical Co., Ltd. (Health
Care).................................. 591,228
42,000 Sharp Corporation (Computer & Office
Equipment)............................. 496,215
2,000 Softbank Corp. (Software & Services).... 405,002
5,760 Sony Corporation (Media & Services)..... 621,037
5,300 Takefuji Corp. (Financial Services)..... 547,794
76,710 Toshiba Corporation (Computer & Office
Equipment)............................. 546,950
-----------
6,648,648
-----------
MEXICO -- 0.5%
4,900 Grupo Televisa S.A. (Media &
Services).............................. 219,581
-----------
NETHERLANDS -- 5.3%
9,470 ING Groep N.V. (Financial Services)..... 512,722
17,444 Koninklijke Ahold N.V. (Consumer
Durables).............................. 600,849
*6,808 Koninklijke Philips Electronics N.V.
(Electronics).......................... 671,549
10,061 Unilever N.V. - CVA (Consumer Non-
Durables).............................. 678,028
-----------
2,463,148
-----------
SPAIN -- 1.6%
15,400 Telefonica S.A. (Utilities)............. 741,829
-----------
SWEDEN -- 2.5%
22,840 Assa Abloy AB (Business Services)....... 247,158
<CAPTION>
MARKET
SHARES VALUE
- ---------- -----------
<C> <S> <C>
</TABLE>
SWEDEN -- (CONTINUED)
<TABLE>
<C> <S> <C>
*22,540 Hennes & Mauritz (Consumer Durables).... $ 556,756
6,550 Pharmacia & Upjohn (Health Care)........ 362,102
-----------
1,166,016
-----------
SWITZERLAND -- 2.1%
3,160 Credit Suisse Group (Financial
Services).............................. 546,793
230 Nestle S.A. (Food, Beverage &
Tobacco)............................... 414,405
-----------
961,198
-----------
UNITED KINGDOM -- 8.8%
27,000 British American Tobacco PLC (Food,
Beverage & Tobacco).................... 251,955
41,910 British Petroleum Co., PLC (Energy &
Services).............................. 750,472
32,500 British Telecommunications PLC
(Utilities)............................ 543,035
*20,500 COLT Telecom Group PLC (Utilities)...... 430,424
10,800 HSBC Holdings PLC (Financial
Services).............................. 383,040
72,300 Invensys PLC (Electronics).............. 342,469
53,570 SmithKline Beecham PLC (Health Care).... 695,383
35,730 Vodafone Group PLC (Media & Services)... 706,267
-----------
4,103,045
-----------
UNITED STATES OF AMERICA -- 49.0%
5,900 Alcoa, Inc. (Industrial Materials)...... 365,062
9,900 AlliedSignal, Inc. (Manufacturing)...... 623,700
5,370 American International Group, Inc.
(Financial Services)................... 628,625
*9,400 AMR Corporation (Consumer Services)..... 641,550
9,840 Associates First Capital Corporation
(Financial Services)................... 436,035
12,305 AT&T Corp. (Utilities).................. 686,772
12,900 Automatic Data Processing, Inc.
(Software & Services).................. 567,600
10,900 Bristol-Myers Squibb Company (Health
Care).................................. 767,768
7,300 Caterpillar, Inc. (Manufacturing)....... 438,000
*13,740 Cisco Systems, Inc. (Communication
Equipment)............................. 886,230
16,385 Citigroup, Inc. (Financial Services).... 778,287
5,600 Colgate-Palmolive Company (Consumer
Non-Durables).......................... 553,000
3,200 Corning, Inc. (Manufacturing)........... 224,400
8,070 Exxon Corporation (Energy & Services)... 622,398
12,758 Gap, Inc. (The) (Consumer Durables)..... 642,659
10,660 General Electric Company
(Electronics).......................... 1,204,580
11,300 Home Depot, Inc. (The) (Consumer
Durables).............................. 728,143
6,900 Illinois Tool Works, Inc.
(Manufacturing)........................ 565,800
11,880 Intel Corporation (Electronics)......... 706,860
6,440 International Business Machines Corp.
(Computer & Office Equipment).......... 832,401
5,800 Johnson & Johnson Co. (Health Care)..... 568,400
11,680 Lucent Technologies, Inc. (Communication
Equipment)............................. 787,670
10,080 Marsh & McLennan Companies, Inc.
(Financial Services)................... 761,040
8,480 McDonald's Corporation (Consumer
Services).............................. 350,330
*6,995 MCI WorldCom, Inc. (Utilities).......... 603,318
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-47
<PAGE>
HARTFORD GLOBAL LEADERS HLS FUND
- --------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ---------- -----------
<C> <S> <C>
</TABLE>
COMMON STOCKS -- (CONTINUED)
UNITED STATES OF AMERICA -- (CONTINUED)
<TABLE>
<C> <S> <C>
*12,900 Micron Technology, Inc. (Electronics)... $ 520,031
*9,780 Microsoft Corporation (Software &
Services).............................. 882,033
4,700 Morgan Stanley, Dean Witter, Discover
and Co. (Financial Services)........... 481,750
*4,700 Qualcomm (Communication Equipment)...... 674,450
*8,800 Ryanair Holdings PLC - ADR (Consumer
Services).............................. 466,400
7,730 Schlumberger Ltd. (Energy & Services)... 492,304
1,640 Telecomunicacoes Brasileiras S.A.
(Utilities)............................ 147,907
5,440 Texas Instruments, Inc. (Electronics)... 788,800
5,910 Tyco International, Ltd.
(Manufacturing)........................ 559,972
18,240 Wal-Mart Stores, Inc. (Consumer
Durables).............................. 880,080
8,600 Warner-Lambert Company (Health Care).... 596,625
6,800 Weyerhaeuser Company (Electronics)...... 467,500
-----------
22,928,480
-----------
Total common stocks..................... $45,119,054
-----------
-----------
<CAPTION>
PRINCIPAL
AMOUNT
- ----------
<C> <S> <C>
SHORT-TERM SECURITIES -- 7.6%
REPURCHASE AGREEMENT -- 7.6%
$3,541,000 Interest in $1,933,099,000 joint
repurchase agreement dated 06/30/99 with
State Street Bank 4.822% due 07/01/99;
maturity amount $3,541,474
(Collateralized by $125,000,000 U.S.
Treasury Notes 6.625% due 05/15/07,
$1,170,609,000 U.S. Treasury Bonds
6.125% - 12.000% due 08/15/13 -
11/15/27, $637,490,000 U.S. Treasury
Strips (principal) 0.00% due 06/30/00 -
05/15/15)............................... $ 3,541,000
-----------
-----------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
STATEMENT OF ASSETS AND LIABILITIES
ASSETS
Investments in securities, at value (total cost
$46,103,060) - see accompanying portfolio........ $ 48,660,054
Receivable for investment securities sold......... 2,995,194
Receivable for Fund shares sold................... 520,277
Receivable for dividends and interest............. 101,449
Cash and other assets............................. 588
------------
Total assets...................................... $ 52,277,562
------------
------------
LIABILITIES
Investment securities purchased................... $ 5,407,001
Other accrued expenses............................ 56,936
------------
Total liabilities................................. 5,463,937
------------
Net assets........................................ $ 46,813,625
------------
------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
VALUE
-----------
<S> <C> <C>
DIVERSIFICATION BY INDUSTRY:
Business Services..................... 0.5% $ 247,158
Communication Equipment............... 7.4 3,442,421
Computer & Office Equipment........... 4.4 2,071,152
Consumer Durables..................... 9.4 4,389,175
Consumer Non-Durables................. 4.0 1,855,188
Consumer Services..................... 4.1 1,935,397
Electronics........................... 13.7 6,409,452
Energy & Services..................... 5.2 2,434,117
Financial Services.................... 13.8 6,537,291
Food, Beverage, & Tobacco............. 1.4 666,360
Health Care........................... 7.7 3,581,506
Industrial Materials.................. 0.8 365,062
Manufacturing......................... 5.2 2,411,872
Media & Services...................... 5.6 2,609,567
Software & Services................... 4.0 1,854,635
Utilities............................. 9.2 4,308,701
----- -----------
Total common stocks..................... 96.4% $45,119,054
----- -----------
----- -----------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share;
1,000,000,000 shares authorized; 32,244,592
shares outstanding............................ $ 3,224,459
Capital surplus................................ 39,942,130
Accumulated undistributed net investment
income........................................ 171,510
Accumulated undistributed net realized gain on
investments................................... 920,377
Unrealized appreciation of investments......... 2,556,996
Unrealized depreciation of forward foreign
currencies contracts (See Note 2)w............ (4,841)
Unrealized appreciation of other assets and
liabilities in foreign currencies............. 2,994
-----------
Net assets..................................... $46,813,625
-----------
-----------
</TABLE>
<TABLE>
<S> <C>
Class IA
Net assets value per share ($46,769,029 DIVIDED BY
32,213,848
shares outstanding) (800,000,000 shares
authorized)......................................... $1.45
-----
-----
Class IB
Net assets value per share ($44,596 DIVIDED BY
30,744
shares outstanding) (200,000,000 shares
authorized)......................................... $1.45
-----
-----
</TABLE>
* Non-income producing during period.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-48
<PAGE>
w FORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AT JUNE 30, 1999
<TABLE>
<CAPTION>
TOTAL AGGREGATE DELIVERY UNREALIZED
DESCRIPTION MARKET VALUE FACE VALUE DATE (DEPRECIATION)
- ------------------- ------------- ----------- --------- ---------------
<S> <C> <C> <C> <C>
British Pounds
(Sell) $ 627,190 $ 627,270 07/06/99 $ 80
British Pounds
(Sell) 177,723 177,695 07/07/99 (28)
EURO Dollars (Buy) 534,819 536,473 07/02/99 (1,654)
EURO Dollars (Buy) 185,210 185,754 07/02/99 (544)
EURO Dollars (Buy) 109,335 109,699 07/06/99 (364)
EURO Dollars (Buy) 198,090 199,094 07/30/99 (1,004)
Japanese Yen (Buy) 543,302 544,152 07/02/99 (850)
Japanese Yen (Buy) 757,667 758,144 07/02/99 (477)
-------
$ 4,841
-------
-------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-49
<PAGE>
HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
HARTFORD HARTFORD
BOND STOCK
HLS FUND, INC. HLS FUND, INC.
--------------- ---------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ -- $ 47,527,939
Interest............... 29,532,040 6,804,700
Less foreign tax
withheld.............. -- (1,613,036)
--------------- ---------------
Total investment
income.............. 29,532,040 52,719,603
--------------- ---------------
EXPENSES:
Investment advisory
fees.................. 1,368,103 9,848,920
Administrative services
fees.................. 927,363 7,705,573
Accounting services.... 69,681 578,949
Custodian fees gross... 7,580 13,769
Custodian fee expense
offset................ (2,842) (3,342)
Board of Directors
fees.................. 1,549 12,789
Distribution Fees --
Class IB.............. 6,120 16,005
Other expenses......... 41,825 372,836
--------------- ---------------
Total expenses,
net................. 2,419,380 18,545,498
Less advisory fees
waived by HL
Advisors.............. -- --
--------------- ---------------
Net expenses......... 2,419,380 18,545,498
--------------- ---------------
Net investment income
(loss)................ 27,112,660 34,174,104
--------------- ---------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... (3,631,703) 402,392,606
Net realized gain
(loss) on futures
contracts............. -- --
Net realized gain
(loss) on forward
foreign currency
contracts............. -- --
Net realized gain
(loss) on option
contracts............. -- --
Net realized gain
(loss) on foreign
currency
transactions.......... -- --
Net unrealized
appreciation
(depreciation) of
investments........... (47,862,960) 527,382,429
Net unrealized
appreciation
(depreciation) of
futures contracts..... -- --
Net unrealized
appreciation
(depreciation) of
forward foreign
currency contracts.... -- --
Net unrealized
appreciation
(depreciation) on
translation of other
assets and liabilities
in foreign
currencies............ -- --
Net unrealized
appreciation of option
contracts............. -- --
--------------- ---------------
Net realized and
unrealized gain (loss)
on investments........ (51,494,663) 929,775,035
--------------- ---------------
Net increase in net
assets resulting from
operations............ $(24,382,003) $963,949,139
--------------- ---------------
--------------- ---------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-50
<PAGE>
<TABLE>
<CAPTION>
HARTFORD HARTFORD HARTFORD
HARTFORD HARTFORD CAPITAL MORTGAGE HARTFORD INTERNATIONAL
MONEY MARKET ADVISERS APPRECIATION SECURITIES INDEX OPPORTUNITIES
HLS FUND, INC. HLS FUND, INC. HLS FUND, INC. HLS FUND, INC. HLS FUND, INC. HLS FUND, INC.
--------------- --------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ -- $ 47,402,375 $ 38,608,734 $ -- $ 13,416,064 $ 16,445,552
Interest............... 23,986,397 144,317,783 6,641,056 11,548,804 1,285,230 1,734,824
Less foreign tax
withheld.............. -- (1,467,114) (937,291) -- (206,404) (1,443,366)
--------------- --------------- --------------- --------------- --------------- ---------------
Total investment
income.............. 23,986,397 190,253,045 44,312,499 11,548,804 14,494,890 16,737,009
--------------- --------------- --------------- --------------- --------------- ---------------
EXPENSES:
Investment advisory
fees.................. 1,192,511 26,835,601 13,303,635 446,457 2,021,026 3,026,235
Administrative services
fees.................. 954,009 12,424,327 6,056,344 357,166 2,021,026 1,219,920
Accounting services.... 71,676 933,514 455,060 26,837 151,844 91,668
Custodian fees gross... 5,554 32,621 68,139 14,896 12,061 371,265
Custodian fee expense
offset................ (2,827) (15,516) (5,743) (387) (1,035) (11,331)
Board of Directors
fees.................. 1,661 20,672 10,039 599 3,341 2,015
Distribution Fees --
Class IB.............. 3,593 49,994 7,695 -- -- 773
Other expenses......... 37,967 595,535 257,192 8,689 98,677 84,938
--------------- --------------- --------------- --------------- --------------- ---------------
Total expenses,
net................. 2,264,143 40,876,748 20,152,361 854,257 4,306,940 4,785,483
Less advisory fees
waived by HL
Advisors.............. -- -- -- -- -- --
--------------- --------------- --------------- --------------- --------------- ---------------
Net expenses......... 2,264,143 40,876,748 20,152,361 854,257 4,306,940 4,785,483
--------------- --------------- --------------- --------------- --------------- ---------------
Net investment income
(loss)................ 21,722,253 149,376,297 24,160,138 10,694,547 10,187,950 11,951,525
--------------- --------------- --------------- --------------- --------------- ---------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 21,491 561,926,692 632,817,666 (4,214,950) 15,487,318 128,854,454
Net realized gain
(loss) on futures
contracts............. -- -- -- -- 4,485,696 240,720
Net realized gain
(loss) on forward
foreign currency
contracts............. -- -- 322,419 -- -- 3,673,143
Net realized gain
(loss) on option
contracts............. -- -- -- -- -- --
Net realized gain
(loss) on foreign
currency
transactions.......... -- -- (376,880) -- -- (2,973,983)
Net unrealized
appreciation
(depreciation) of
investments........... -- 133,652,412 315,216,129 (5,718,143) 204,363,067 (13,447,478)
Net unrealized
appreciation
(depreciation) of
futures contracts..... -- -- -- -- 337,629 (1,433)
Net unrealized
appreciation
(depreciation) of
forward foreign
currency contracts.... -- -- -- -- -- 1,652,458
Net unrealized
appreciation
(depreciation) on
translation of other
assets and liabilities
in foreign
currencies............ -- -- (95,450) -- -- (332,461)
Net unrealized
appreciation of option
contracts............. -- -- -- -- -- --
--------------- --------------- --------------- --------------- --------------- ---------------
Net realized and
unrealized gain (loss)
on investments........ 21,491 695,579,105 947,883,884 (9,933,093) 224,673,709 117,675,103
--------------- --------------- --------------- --------------- --------------- ---------------
Net increase in net
assets resulting from
operations............ $21,743,744 $844,955,401 $972,044,022 $ 761,454 $234,861,659 $129,626,629
--------------- --------------- --------------- --------------- --------------- ---------------
--------------- --------------- --------------- --------------- --------------- ---------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-51
<PAGE>
HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS -- (CONTINUED)
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
HARTFORD HARTFORD
DIVIDEND AND INTERNATIONAL
GROWTH ADVISERS
HLS FUND, INC. HLS FUND, INC.
--------------- ----------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 34,212,290 $ 2,336,498
Interest............... 2,170,898 3,837,218
Less foreign tax
withheld.............. (328,332) (219,638)
--------------- ----------------
Total investment
income.............. 36,054,856 5,954,078
--------------- ----------------
EXPENSES:
Investment advisory
fees.................. 7,075,243 850,855
Administrative services
fees.................. 3,125,336 300,521
Accounting services.... 234,827 22,580
Custodian fees gross... 7,797 97,282
Custodian fee expense
offset................ (3,239) (295)
Board of Directors
fees.................. 5,129 499
Distribution Fees --
Class IB.............. 9,903 --
Other expenses......... 164,390 29,979
--------------- ----------------
Total expenses,
net................. 10,619,386 1,301,420
Less advisory fees
waived by HL
Advisors.............. -- --
--------------- ----------------
Net expenses......... 10,619,386 1,301,420
--------------- ----------------
Net investment income
(loss)................ 25,435,470 4,652,658
--------------- ----------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 198,929,557 16,178,271
Net realized gain
(loss) on futures
contracts............. -- 2,408,911
Net realized gain
(loss) on forward
foreign currency
contracts............. -- 2,656,651
Net realized gain
(loss) on option
contracts............. 299,625 --
Net realized gain
(loss) on foreign
currency
transactions.......... -- (490,833)
Net unrealized
appreciation
(depreciation) of
investments........... (280,725) (6,571,844)
Net unrealized
appreciation
(depreciation) of
futures contracts..... -- (1,126,215)
Net unrealized
appreciation
(depreciation) of
forward foreign
currency contracts.... -- 1,381,952
Net unrealized
appreciation
(depreciation) on
translation of other
assets and liabilities
in foreign
currencies............ -- 127,622
Net unrealized
appreciation of option
contracts............. 41,849 --
--------------- ----------------
Net realized and
unrealized gain (loss)
on investments........ 198,990,307 14,564,516
--------------- ----------------
Net increase in net
assets resulting from
operations............ $224,425,776 $19,217,173
--------------- ----------------
--------------- ----------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-52
<PAGE>
<TABLE>
<CAPTION>
HARTFORD HARTFORD
SMALL HARTFORD GROWTH AND HARTFORD HARTFORD
COMPANY MIDCAP INCOME HIGH YIELD GLOBAL LEADERS
HLS FUND, INC. HLS FUND, INC. HLS FUND HLS FUND HLS FUND
--------------- --------------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ 277,722 $ 454,001 $ 273,830 $ 12,563 $ 221,960
Interest............... 240,504 148,139 60,915 1,167,091 57,062
Less foreign tax
withheld.............. -- (5,403) (972) -- (10,929)
--------------- --------------- ------------ ------------ ---------------
Total investment
income.............. 518,225 596,738 333,773 1,179,654 268,093
--------------- --------------- ------------ ------------ ---------------
EXPENSES:
Investment advisory
fees.................. 999,550 571,268 132,626 76,656 65,028
Administrative services
fees.................. 357,167 198,986 44,916 26,502 22,318
Accounting services.... 26,837 14,945 3,372 1,990 1,675
Custodian fees gross... 5,075 3,995 5,633 2,928 26,164
Custodian fee expense
offset................ (4,188) (657) (199) (1,619) (156)
Board of Directors
fees.................. 567 310 70 44 33
Distribution Fees --
Class IB.............. 1,595 -- 10 94 37
Other expenses......... 16,053 13,417 3,701 3,626 2,920
--------------- --------------- ------------ ------------ ---------------
Total expenses,
net................. 1,402,653 802,264 190,130 110,220 118,019
Less advisory fees
waived by HL
Advisors.............. -- -- -- (39,575) (20,851)
--------------- --------------- ------------ ------------ ---------------
Net expenses......... 1,402,653 802,264 190,130 70,644 97,168
--------------- --------------- ------------ ------------ ---------------
Net investment income
(loss)................ (884,428) (205,527) 143,643 1,109,009 170,925
--------------- --------------- ------------ ------------ ---------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain
(loss) on security
transactions.......... 80,939,331 21,734,722 663,997 65,144 943,472
Net realized gain
(loss) on futures
contracts............. -- -- 12,328 -- --
Net realized gain
(loss) on forward
foreign currency
contracts............. (7,873) -- -- -- (48,320)
Net realized gain
(loss) on option
contracts............. -- -- -- -- --
Net realized gain
(loss) on foreign
currency
transactions.......... 8,039 -- -- -- 32,543
Net unrealized
appreciation
(depreciation) of
investments........... (3,247,053) 25,285,143 5,090,703 (659,214) 1,686,897
Net unrealized
appreciation
(depreciation) of
futures contracts..... -- -- 55,031 -- --
Net unrealized
appreciation
(depreciation) of
forward foreign
currency contracts.... -- -- -- -- (4,841)
Net unrealized
appreciation
(depreciation) on
translation of other
assets and liabilities
in foreign
currencies............ (157) -- -- -- 2,987
Net unrealized
appreciation of option
contracts............. -- -- -- -- --
--------------- --------------- ------------ ------------ ---------------
Net realized and
unrealized gain (loss)
on investments........ 77,669,206 47,019,865 5,822,060 (594,070) 2,612,739
--------------- --------------- ------------ ------------ ---------------
Net increase in net
assets resulting from
operations............ $76,807,858 $46,814,338 $5,965,703 $ 514,939 $2,783,664
--------------- --------------- ------------ ------------ ---------------
--------------- --------------- ------------ ------------ ---------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-53
<PAGE>
HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
HARTFORD HARTFORD
BOND STOCK
HLS FUND, INC. HLS FUND, INC.
--------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income....... $ 27,112,660 $ 34,174,104
Net realized gain (loss).... (3,631,703) 402,392,606
Net unrealized appreciation
(depreciation) of
investments................ (47,862,960) 527,382,429
--------------- --------------
Net increase (decrease) in
net assets resulting from
operations................. (24,382,003) 963,949,139
--------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class IA.................. (595,336) (1,498,024 )
Class IB.................. (5,697) (17,728 )
From realized gain on
investments
Class IA.................. (6,264,409) (601,121,973 )
Class IB.................. (48,163) (6,730,814 )
--------------- --------------
Total Distributions....... (6,913,605) (609,368,539 )
--------------- --------------
CAPITAL SHARE TRANSACTIONS:
Class IA.................. 66,464,607 979,549,510
Class IB.................. 4,963,028 22,569,936
--------------- --------------
Net increase (decrease)
from capital share
transactions............ 71,427,635 1,002,119,446
--------------- --------------
Net increase (decrease)
in net assets........... 40,132,027 1,356,700,046
NET ASSETS:
Beginning of period......... 907,765,419 7,193,213,170
--------------- --------------
End of period............... $ 947,897,446 $8,549,913,216
--------------- --------------
--------------- --------------
Accumulated undistributed
(distribution in excess of)
net investment income...... $ 27,112,752 $ 35,188,899
--------------- --------------
--------------- --------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-54
<PAGE>
<TABLE>
<CAPTION>
HARTFORD HARTFORD HARTFORD
HARTFORD HARTFORD CAPITAL MORTGAGE HARTFORD INTERNATIONAL
MONEY MARKET ADVISERS APPRECIATION SECURITIES INDEX OPPORTUNITIES
HLS FUND, INC. HLS FUND, INC. HLS FUND, INC. HLS FUND, INC. HLS FUND, INC. HLS FUND, INC.
-------------- --------------- -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income....... $ 21,722,253 $ 149,376,297 $ 24,160,138 $ 10,694,547 $ 10,187,950 $ 11,951,525
Net realized gain (loss).... 21,491 561,926,692 632,763,206 (4,214,950) 19,973,014 129,794,335
Net unrealized appreciation
(depreciation) of
investments................ -- 133,652,412 315,120,678 (5,718,143) 204,700,695 (12,119,231)
-------------- --------------- -------------- --------------- --------------- ---------------
Net increase (decrease) in
net assets resulting from
operations................. 21,743,744 844,955,401 972,044,022 761,454 234,861,659 129,626,629
-------------- --------------- -------------- --------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class IA.................. (21,634,724 ) (6,754,191 ) (60,670 ) -- (3,697,906) (1,079,835)
Class IB.................. (87,529 ) (72,846 ) (614 ) -- -- (1,029)
From realized gain on
investments
Class IA.................. (21,416 ) (985,224,028 ) (362,201,817 ) -- (30,133,602) --
Class IB.................. (75 ) (10,509,514 ) (2,134,680 ) -- -- --
-------------- --------------- -------------- --------------- --------------- ---------------
Total Distributions....... (21,743,744 ) (1,002,560,579 ) (364,397,781 ) -- (33,831,508) (1,080,864)
-------------- --------------- -------------- --------------- --------------- ---------------
CAPITAL SHARE TRANSACTIONS:
Class IA.................. 146,170,593 1,697,397,551 214,617,109 (2,397,445) 207,357,909 (41,495,152)
Class IB.................. 3,577,772 56,088,062 7,132,665 -- -- 507,000
-------------- --------------- -------------- --------------- --------------- ---------------
Net increase (decrease)
from capital share
transactions............ 149,748,365 1,753,485,613 221,749,774 (2,397,445) 207,357,909 (40,988,152)
-------------- --------------- -------------- --------------- --------------- ---------------
Net increase (decrease)
in net assets........... 149,748,365 1,595,880,435 829,396,015 (1,635,991) 408,388,060 87,557,613
NET ASSETS:
Beginning of period......... 874,665,050 11,840,125,134 5,813,421,612 356,834,333 1,846,117,220 1,197,356,582
-------------- --------------- -------------- --------------- --------------- ---------------
End of period............... $1,024,413,415 $13,436,005,569 $6,642,817,627 $355,198,342 $2,254,505,280 $1,284,914,195
-------------- --------------- -------------- --------------- --------------- ---------------
-------------- --------------- -------------- --------------- --------------- ---------------
Accumulated undistributed
(distribution in excess of)
net investment income...... $ -- $ 150,989,652 $ 24,743,102 $ 10,694,544 $ 10,187,945 $ 11,778,057
-------------- --------------- -------------- --------------- --------------- ---------------
-------------- --------------- -------------- --------------- --------------- ---------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-55
<PAGE>
HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
HARTFORD HARTFORD
DIVIDEND AND INTERNATIONAL
GROWTH ADVISERS
HLS FUND, INC. HLS FUND, INC.
--------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income....... $ 25,435,470 $ 4,652,658
Net realized gain (loss).... 199,229,182 20,753,000
Net unrealized appreciation
(depreciation) of
investments................ (238,876) (6,188,485)
--------------- ----------------
Net increase (decrease) in
net assets resulting from
operations................. 224,425,776 19,217,173
--------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class IA.................. (2,308,202) --
Class IB.................. (17,059) --
From realized gain on
investments
Class IA.................. (111,768,043) --
Class IB.................. (775,470) --
--------------- ----------------
Total Distributions....... (114,868,774) --
--------------- ----------------
CAPITAL SHARE TRANSACTIONS:
Class IA.................. 178,713,198 15,823,280
Class IB.................. 5,381,006 --
--------------- ----------------
Net increase (decrease)
from capital share
transactions............ 184,094,204 15,823,280
--------------- ----------------
Net increase (decrease)
in net assets........... 293,651,206 35,040,453
NET ASSETS:
Beginning of period......... 3,039,893,797 285,852,529
--------------- ----------------
End of period............... $3,333,545,003 $320,892,982
--------------- ----------------
--------------- ----------------
Accumulated undistributed
(distribution in excess of)
net investment income...... $ 25,515,621 $ 5,252,577
--------------- ----------------
--------------- ----------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-56
<PAGE>
<TABLE>
<CAPTION>
HARTFORD HARTFORD
SMALL HARTFORD GROWTH AND HARTFORD HARTFORD
COMPANY MIDCAP INCOME HIGH YIELD GLOBAL LEADERS
HLS FUND, INC. HLS FUND, INC. HLS FUND HLS FUND HLS FUND
--------------- --------------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income....... $ (884,428) $ (205,527) $ 143,643 $ 1,109,009 $ 170,925
Net realized gain (loss).... 80,939,496 21,734,722 676,326 65,144 927,695
Net unrealized appreciation
(depreciation) of
investments................ (3,247,210) 25,285,143 5,145,734 (659,214) 1,685,044
--------------- --------------- ------------ ------------ ---------------
Net increase (decrease) in
net assets resulting from
operations................. 76,807,858 46,814,338 5,965,703 514,939 2,783,664
--------------- --------------- ------------ ------------ ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class IA.................. -- -- (278) (1,436) --
Class IB.................. -- -- -- (7) --
From realized gain on
investments
Class IA.................. -- (3,763,151) -- (6,008) (55,124)
Class IB.................. -- -- -- (28) (167)
--------------- --------------- ------------ ------------ ---------------
Total Distributions....... -- (3,763,151) (278) (7,479) (55,291)
--------------- --------------- ------------ ------------ ---------------
CAPITAL SHARE TRANSACTIONS:
Class IA.................. 13,162,145 110,267,088 44,613,253 21,681,170 38,284,815
Class IB.................. 2,957,005 -- 34 1,851 992
--------------- --------------- ------------ ------------ ---------------
Net increase (decrease)
from capital share
transactions............ 16,119,150 110,267,088 44,613,287 21,683,021 38,285,807
--------------- --------------- ------------ ------------ ---------------
Net increase (decrease)
in net assets........... 92,927,008 153,318,275 50,578,712 22,190,481 41,014,180
NET ASSETS:
Beginning of period......... 351,429,912 143,493,643 25,323,125 14,584,133 5,799,445
--------------- --------------- ------------ ------------ ---------------
End of period............... $444,356,920 $296,811,918 $75,901,837 $ 36,774,614 $46,813,625
--------------- --------------- ------------ ------------ ---------------
--------------- --------------- ------------ ------------ ---------------
Accumulated undistributed
(distribution in excess of)
net investment income...... $ (884,426) $ (205,526) $ 143,643 $ 1,107,566 $ 171,510
--------------- --------------- ------------ ------------ ---------------
--------------- --------------- ------------ ------------ ---------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-57
<PAGE>
HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
HARTFORD HARTFORD
BOND STOCK
HLS FUND, INC. HLS FUND, INC.
--------------- ---------------
<S> <C> <C>
OPERATIONS:
Net investment
income................ $ 42,251,914 $ 55,715,839
Net realized gain
(loss)................ 6,857,968 606,814,688
Net unrealized
appreciation
(depreciation) of
investments........... 6,537,524 1,025,014,678
--------------- ---------------
Net increase (decrease)
in net assets
resulting from
operations............ 55,647,406 1,687,545,205
--------------- ---------------
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income
Class IA............. (42,744,233) (54,276,510)
Class IB............. (255,767) (423,490)
In excess of net
investment income
Class IA............. -- --
Class IB............. -- --
From realized gain on
investments
Class IA............. -- (173,700,001)
Class IB............. -- --
From Capital
Class IA............. -- --
Class IB............. -- --
--------------- ---------------
Total
distributions....... (43,000,000) (228,400,001)
--------------- ---------------
CAPITAL SHARE
TRANSACTIONS:
Class IA............. 336,835,852 1,011,129,116
Class IB............. 5,412,364 9,617,289
--------------- ---------------
Net increase
(decrease) from
capital share
transactions...... 342,248,216 1,020,746,405
--------------- ---------------
Net increase in
net assets........ 354,895,622 2,479,891,609
NET ASSETS:
Beginning of period.... 552,869,797 4,713,321,561
--------------- ---------------
End of period.......... $907,765,419 $7,193,213,170
--------------- ---------------
--------------- ---------------
Accumulated
undistributed
(distribution in
excess of) net
investment income..... $ 601,032 $ 2,530,584
--------------- ---------------
--------------- ---------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-58
<PAGE>
<TABLE>
<CAPTION>
HARTFORD HARTFORD
HARTFORD HARTFORD CAPITAL MORTGAGE HARTFORD
MONEY MARKET ADVISERS APPRECIATION SECURITIES INDEX
HLS FUND, INC. HLS FUND, INC. HLS FUND, INC. HLS FUND, INC. HLS FUND, INC.
--------------- ---------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment
income................ $ 36,098,085 $ 238,749,776 $ 30,647,752 $ 20,754,294 $ 17,720,807
Net realized gain
(loss)................ 11,475 996,514,487 364,010,892 2,198,060 29,925,343
Net unrealized
appreciation
(depreciation) of
investments........... -- 952,207,563 357,874,298 (1,261,828) 316,666,304
--------------- ---------------- --------------- --------------- ---------------
Net increase (decrease)
in net assets
resulting from
operations............ 36,109,560 2,187,471,826 752,532,942 21,690,526 364,312,454
--------------- ---------------- --------------- --------------- ---------------
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income
Class IA............. (36,067,869) (233,135,052) (30,859,661) (20,754,294) (15,000,000)
Class IB............. (30,216) (1,804,946) (140,339) -- --
In excess of net
investment income
Class IA............. -- -- -- (963,871) --
Class IB............. -- -- -- -- --
From realized gain on
investments
Class IA............. (11,470) (297,100,001) (320,000,000) -- (29,600,000)
Class IB............. (5) -- -- -- --
From Capital
Class IA............. -- -- -- (481,835) --
Class IB............. -- -- -- -- --
--------------- ---------------- --------------- --------------- ---------------
Total
distributions....... (36,109,560) (532,039,999) (351,000,000) (22,200,000) (44,600,000)
--------------- ---------------- --------------- --------------- ---------------
CAPITAL SHARE
TRANSACTIONS:
Class IA............. 260,005,789 1,866,824,047 603,278,396 31,642,127 402,949,764
Class IB............. 2,179,043 33,957,359 5,618,272 -- --
--------------- ---------------- --------------- --------------- ---------------
Net increase
(decrease) from
capital share
transactions...... 262,184,832 1,900,781,406 608,896,668 31,642,127 402,949,764
--------------- ---------------- --------------- --------------- ---------------
Net increase in
net assets........ 262,184,832 3,556,213,233 1,010,429,610 31,132,653 722,662,218
NET ASSETS:
Beginning of period.... 612,480,218 8,283,911,901 4,802,992,002 325,701,680 1,123,455,002
--------------- ---------------- --------------- --------------- ---------------
End of period.......... $874,665,050 $11,840,125,134 $5,813,421,612 $356,834,333 $1,846,117,220
--------------- ---------------- --------------- --------------- ---------------
--------------- ---------------- --------------- --------------- ---------------
Accumulated
undistributed
(distribution in
excess of) net
investment income..... $ -- $ 8,440,413 $ 61,286 $ -- $ 3,697,905
--------------- ---------------- --------------- --------------- ---------------
--------------- ---------------- --------------- --------------- ---------------
<CAPTION>
HARTFORD
INTERNATIONAL
OPPORTUNITIES
HLS FUND, INC.
---------------
<S> <C>
OPERATIONS:
Net investment
income................ $ 17,575,788
Net realized gain
(loss)................ 12,666,849
Net unrealized
appreciation
(depreciation) of
investments........... 109,161,058
---------------
Net increase (decrease)
in net assets
resulting from
operations............ 139,403,695
---------------
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income
Class IA............. (15,638,936)
Class IB............. (11,063)
In excess of net
investment income
Class IA............. --
Class IB............. --
From realized gain on
investments
Class IA............. (72,215,058)
Class IB............. --
From Capital
Class IA............. --
Class IB............. --
---------------
Total
distributions....... (87,865,057)
---------------
CAPITAL SHARE
TRANSACTIONS:
Class IA............. 52,208,761
Class IB............. 663,583
---------------
Net increase
(decrease) from
capital share
transactions...... 52,872,344
---------------
Net increase in
net assets........ 104,410,982
NET ASSETS:
Beginning of period.... 1,092,945,600
---------------
End of period.......... $1,197,356,582
---------------
---------------
Accumulated
undistributed
(distribution in
excess of) net
investment income..... $ 958,685
---------------
---------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-59
<PAGE>
HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS -- (CONTINUED)
FOR THE PERIOD ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
HARTFORD HARTFORD
DIVIDEND AND INTERNATIONAL
GROWTH ADVISERS
HLS FUND, INC. HLS FUND, INC.
-------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment
income................ $ 46,444,855 $ 6,916,112
Net realized gain
(loss)................ 112,675,011 3,156,134
Net unrealized
appreciation
(depreciation) of
investments........... 219,406,183 19,040,441
-------------- ----------------
Net increase (decrease)
in net assets
resulting from
operations............ 378,526,049 29,112,687
-------------- ----------------
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income
Class IA............. (47,843,520 ) (6,916,112)
Class IB............. (256,480 ) --
In excess of net
investment income
Class IA............. -- (1,129,081)
Class IB............. -- --
From realized gain on
investments
Class IA............. (76,700,000 ) (5,712,912)
Class IB............. -- --
From Capital
Class IA............. -- (15,954,807)
Class IB............. -- --
-------------- ----------------
Total
distributions....... (124,800,000 ) (29,712,912)
-------------- ----------------
CAPITAL SHARE
TRANSACTIONS:
Class IA............. 783,146,614 78,871,230
Class IB............. 8,367,912 --
-------------- ----------------
Net increase
(decrease) from
capital share
transactions........ 791,514,526 78,871,230
-------------- ----------------
Net increase in net
assets.............. 1,045,240,575 78,271,005
NET ASSETS:
Beginning of period.... 1,994,653,222 207,581,524
-------------- ----------------
End of period.......... $3,039,893,797 $285,852,529
-------------- ----------------
-------------- ----------------
Accumulated
undistributed
(distribution in
excess of) net
investment income..... $ 2,405,420 $ 763,703
-------------- ----------------
-------------- ----------------
</TABLE>
* From inception, April 30, 1998, to December 31, 1998.
** From inception, September 21, 1998, to December 31, 1998.
*** From inception, September 30, 1998, to December 31, 1998.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-60
<PAGE>
<TABLE>
<CAPTION>
HARTFORD HARTFORD
SMALL HARTFORD GROWTH AND HARTFORD HARTFORD
COMPANY MIDCAP INCOME HIGH YIELD GLOBAL LEADERS
HLS FUND, INC. HLS FUND, INC. HLS FUND* HLS FUND** HLS FUND***
--------------- --------------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment
income................ $ (635,225) $ (120,272) $ 95,278 $ 271,464 $ 6,394
Net realized gain
(loss)................ (23,736,323) 3,573,191 (81,434) 3,896 194,164
Net unrealized
appreciation
(depreciation) of
investments........... 58,188,250 17,561,240 3,301,259 163,996 870,104
--------------- --------------- ------------ ------------ ---------------
Net increase (decrease)
in net assets
resulting from
operations............ 33,816,702 21,014,159 3,315,103 439,356 1,070,662
--------------- --------------- ------------ ------------ ---------------
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income
Class IA............. -- (1,000) (94,966) (268,149) (6,969)
Class IB............. -- -- (34) (1,851) (31)
In excess of net
investment income
Class IA............. -- -- -- -- --
Class IB............. -- -- -- -- --
From realized gain on
investments
Class IA............. (3,776,000) -- -- -- (144,039)
Class IB............. -- -- -- -- (961)
From Capital
Class IA............. -- -- -- -- --
Class IB............. -- -- -- -- --
--------------- --------------- ------------ ------------ ---------------
Total
distributions....... (3,776,000) (1,000) (95,000) (270,000) (152,000)
--------------- --------------- ------------ ------------ ---------------
CAPITAL SHARE
TRANSACTIONS:
Class IA............. 109,974,909 94,891,577 22,093,022 14,314,777 4,850,783
Class IB............. 644,867 -- 10,000 100,000 30,000
--------------- --------------- ------------ ------------ ---------------
Net increase
(decrease) from
capital share
transactions........ 110,619,776 94,891,577 22,103,022 14,414,777 4,880,783
--------------- --------------- ------------ ------------ ---------------
Net increase in net
assets.............. 140,660,478 115,904,736 25,323,125 14,584,133 5,799,445
NET ASSETS:
Beginning of period.... 210,769,434 27,588,907 -- -- --
--------------- --------------- ------------ ------------ ---------------
End of period.......... $351,429,912 $143,493,643 $25,323,125 $14,584,133 $5,799,445
--------------- --------------- ------------ ------------ ---------------
--------------- --------------- ------------ ------------ ---------------
Accumulated
undistributed
(distribution in
excess of) net
investment income..... $ -- $ -- $ 278 $ -- $ 585
--------------- --------------- ------------ ------------ ---------------
--------------- --------------- ------------ ------------ ---------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-61
<PAGE>
HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 (UNAUDITED)
1. ORGANIZATION:
Hartford Bond HLS Fund, Inc., Hartford Stock HLS Fund, Inc., Hartford
Money Market HLS Fund, Inc., Hartford Advisers HLS Fund, Inc., Hartford
Capital Appreciation HLS Fund, Inc., Hartford Mortgage Securities HLS
Fund, Inc., Hartford Index HLS Fund, Inc., Hartford International
Opportunities HLS Fund, Inc., Hartford Dividend and Growth HLS Fund, Inc.,
Hartford International Advisers HLS Fund, Inc., Hartford Small Company HLS
Fund, Inc., Hartford MidCap HLS Fund, Inc., and Hartford Series Fund, Inc.
(comprised of Hartford Growth and Income HLS Fund, Hartford High Yield HLS
Fund and Hartford Global Leaders HLS Fund) (each a "Fund" or together 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-end
management investment companies.
The Funds serve as the underlying investment vehicles for certain variable
annuity and variable life insurance separate accounts and group pension
contracts of Hartford Life Insurance Company and Hartford Life and Annuity
Insurance Company (collectively, The Hartford Life Insurance Companies).
The Hartford Life Insurance Companies are affiliates of the Funds. The
Funds, which have different investment objectives and policies, are
described below.
<TABLE>
<S> <C>
Hartford Bond HLS Fund, Inc. Seeks maximum current income consistent with
preservation of capital through investing
primarily in high-grade government and corporate
bonds and other debt securities.
Hartford Stock HLS Fund, Inc. Seeks long-term capital growth through investment
in a diversified portfolio of equity securities.
Hartford Money Market HLS Fund, Inc. Seeks a high level of current income consistent
with liquidity and the need for preservation of
capital through investment in high-quality
money-market securities.
Hartford Advisers HLS Fund, Inc. Seeks maximum long-term total rate of return
(capital growth and current income) through
investment in a varying mix of stocks, bonds and
money market instruments.
Hartford Capital Appreciation HLS Fund, Inc. Seeks growth of capital through investment in
equity securities of companies with high growth
potential, including small, medium and large
companies.
Hartford Mortgage Securities HLS Fund, Inc. Seeks a high level of current income by investing
primarily in mortgage-backed securities, including
securities issued by Government National Mortgage
Association.
Hartford Index HLS 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 Opportunities HLS Fund, Seeks growth of capital through investing
Inc. primarily in foreign equity securities issues.
Hartford Dividend and Growth HLS Fund, Inc. Seeks a high level of current income consistent
with growth of capital and moderate investment
risk. Primary investments are equity securities
and securities convertible into equity securities
that typically have above average yield.
Hartford International Advisers HLS Fund, Inc. Seeks a long-term total rate of return consistent
with moderate risk. Investments include a mix of
debt, equity and money market instruments
primarily with foreign issuers.
Hartford Small Company HLS Fund, Inc. Seeks growth of capital by investing primarily in
equity securities selected on the basis of
potential for capital appreciation.
Hartford MidCap HLS Fund, Inc. Seeks long term capital growth through capital
appreciation by investing primarily in equity
securities.
Hartford Growth and Income HLS Fund Seeks growth of capital and current income by
investing primarily in equity securities with
earnings growth potential and steady or rising
dividends.
Hartford High Yield Bond HLS Fund Seeks high current income, growth of capital is a
secondary objective.
</TABLE>
--------------------------------------------------- MF-62
---------------------------------------------------
<PAGE>
<TABLE>
<S> <C>
Hartford Global Leaders HLS Fund Seeks growth of capital by investing primarily in
equity securities selected on the basis of
potential for capital appreciation.
</TABLE>
Each Fund, with the exception of Hartford Mortgage Securities HLS,
Hartford Index HLS, Hartford International Advisers HLS and Hartford
MidCap HLS Funds are divided into Class IA and IB shares. Each class is
offered at net asset value without a sales charge and is subject to the
same expenses except that the Class IB shares are subject to distribution
fees charged pursuant to a Rule 12b-1 plan. Distribution and Service Plans
have been adopted in accordance with rule 12b-1 of the Investment Company
Act of 1940, as amended.
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 (the day 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 Hartford Money Market HLS
Fund, Inc. are valued at amortized cost or original cost plus accrued
interest receivable, both of which approximate market value. In the
remaining Funds, short-term investments purchased with a maturity of 60
days or less are valued at amortized cost, which approximates market
value. Short-term investments purchased with a maturity of more than 60
days 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 on which such securities are traded
(domestic or foreign) or on the principal over-the-counter market on
which such securities are traded as of the close of business on the day
the securities are being valued. If no sale occurred on a particular 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 prevailing exchange rates at the end of each business
day. Options are valued at the last sales price; if no sale took place
on such day, then options are valued at the mean between the bid and
asked prices. Securities for which market quotations are not readily
available and all other assets are valued in good faith at their fair
values under the direction of 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 the
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 in the accompanying financial
statements.
Net realized foreign exchange gains or losses arise from 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 other assets
and liabilities at the end of the reporting period, resulting from
changes in the exchange rates.
d) REPURCHASE AGREEMENTS-- A repurchase agreement is an agreement by which
the seller of a security agrees to repurchase the security sold at a
mutually agreed upon time and price. 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
--------------------------------------------------- MF-63
---------------------------------------------------
<PAGE>
HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
held by each Fund's custodian in book entry or physical form in the
custodial account of the Fund. Repurchase agreements are valued at cost plus
accrued interest receivable.
e) JOINT TRADING ACCOUNT-- Pursuant to an exemptive order issued by the
SEC, the Funds may transfer uninvested cash balances into a joint
trading account managed by The Hartford Investment Management Company
(HIMCO) or Wellington Management Company, LLP (Wellington). 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 balance and yet be exposed
to the market, thereby providing the liquidity necessary to accommodate
redemptions while at the same time providing shareholders with the
investment return of a fully invested portfolio. A futures contract is
an agreement between two parties to buy and sell a security at 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-dealer, 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. In the absence of a last sale price, the last offering
price is used. 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, receivables and other assets over liabilities, or excess
of liabilities over cash, receivables and other assets, as applicable,
in each Funds' Statement of Net Assets.
At any time prior to the 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,
receivables and other assets over liabilities or excess of liabilities
over cash, receivables and other assets 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
to buy the call.
The Funds may write covered options. "Covered" means that so long as the
fund is obligated as the writer of an option, it will own either the
underlying securities or currency or an option to purchase or sell the
same underlying securities or currency having an expiration date of the
covered option at an exercise price equal to or less than the exercise
price of the covered option, or will establish or maintain with its
custodian for the term of the option a "segregated account" consisting
of cash or other liquid securities having a value equal to the
fluctuating market value of the option securities or currencies. The
Fund receives a premium from writing a call or put option, which
increases
--------------------------------------------------- MF-64
---------------------------------------------------
<PAGE>
the Fund's return if the option expires unexercised or is closed out at
a net profit. The Funds' option activity was as follows as of June 30,
1999:
HLS DIVIDEND AND GROWTH FUND
<TABLE>
<CAPTION>
<S> <C> <C>
OPTIONS CONTRACTS
WRITTEN DURING THE
PERIOD
------------------------
NUMBER OF DOLLAR
CALL WRITES CONTRACTS AMOUNTS
- ---------------------------------------- --------- ------------
Beginning of Period..................... 7,650 $ 684,605
During the Period....................... 29,756 2,680,163
Expired during the period............... (25,581) (2,346,859)
Closed during the period................ (7,769) (607,332)
Exercised during the period............. (660) (57,325)
--------- ------------
Balanced at the end of period........... 3,396 $ 353,251
--------- ------------
--------- ------------
</TABLE>
g) FORWARD FOREIGN CURRENCY CONTRACTS-- As of June 30, 1999 Hartford
International Opportunities HLS Fund, Inc., Hartford International
Advisers HLS Fund, Inc., and Hartford Global Leaders HLS Fund, Inc., had
entered into forward foreign currency exchange contracts that obligate
the funds to repurchase/replace or sell currencies at specified future
dates. The Funds enter into forward foreign currency contracts to hedge
against adverse fluctuations in exchange rates between currencies. The
forward foreign currency contracts' cost are included in excess of cash,
receivables and other assets over liabilities or excess of liabilities
over cash, receivables and other assets, as applicable, in the Funds'
Statement of Net Assets.
Forward foreign currency contracts involve elements of market risk in
excess of the amount reflected in the Statement of Net Assets. In
addition, risk may arise upon entering into these contracts from the
potential inability of the counterparties to meet the terms of the
contracts and from unanticipated movements in the value of the foreign
currencies relative to the U.S. dollar.
h) 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 net investment income and net realized capital
gains to their shareholders or otherwise complying with the requirements
of regulated investment companies. Accordingly, no provision for federal
income taxes has been made in the accompanying financial statements.
i) FUND SHARE VALUATION AND DISTRIBUTIONS TO SHAREHOLDERS-- Orders for the
Funds' shares are executed in accordance with the investment
instructions of the contract holders. Dividend income is accrued as of
the ex-dividend date, except that certain dividends for foreign
securities where the ex-dividend date may have passed, are recorded as
soon as the fund is informed of the ex-dividend date in the exercise of
due diligence. Interest income and expenses are accrued on a daily
basis. The net asset value of each 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 a Fund's 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
Dividends are declared by the Funds' Board of Directors based upon the
investment performance of the respective Funds. The policy of all funds
except the Hartford Money Market HLS Fund, Inc. is to pay dividends from
net investment income and distribute realized capital gains, if any,
annually.
Hartford Money Market HLS Fund, Inc. seeks 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 its investments using the amortized cost method.
Dividends are distributed monthly.
Distributions from net investment income, realized capital gains and
capital are determined in accordance with federal 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 gains and losses,
partnerships, losses deferred due to wash sales and excise tax
regulations. Permanent book and tax basis differences relating to
shareholder distributions result in reclassifications to capital
accounts (see Note 7).
--------------------------------------------------- MF-65
---------------------------------------------------
<PAGE>
HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
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.
k) RESTRICTED SECURITIES-- Each Fund is permitted to invest up to 15% of
its net assets in illiquid securities, except for Money Market HLS Fund,
Inc., which may invest up to 10% in such securities. "Illiquid
Securities" are those that may not be sold or disposed of in the
ordinary course of business, at approximately the price used to
determine a Fund's net asset value per share. Each Fund may also
purchase certain restricted securities, commonly known as Rule 144A
securities, that can be resold to institutions and which may be
determined to be liquid pursuant to policies and guidelines established
by the Funds' Board of Directors.
At June 30, 1999, the Funds held the following restricted securities
(excluding 144A issues):
<TABLE>
<CAPTION>
ACQUISITION MARKET
FUND SECURITY DATE COST VALUE
- -------------------------------------------------- ------------------------------ ----------- ------------- ------------
<S> <C> <C> <C> <C>
Capital Appreciation HLS Fund, Inc. SGW Holding Corporation 8/15/97 $ 11,311,018 $ 1,094,544
Small Company HLS Fund, Inc. SGW Holding Corporation 8/15/97 $ 599,992 $ 58,060
<CAPTION>
% OF
FUND NET ASSETS
- -------------------------------------------------- -----------
<S> <C>
Capital Appreciation HLS Fund, Inc. 0.016%
Small Company HLS Fund, Inc. 0.013%
</TABLE>
3. EXPENSES:
a) INVESTMENT MANAGEMENT AND ADVISORY AGREEMENTS-- HL Investment Advisors,
LLC (HL Advisors) an indirect majority-owned subsidiary of The Hartford
Financial Services Group, Inc. (The Hartford), serves as investment
manager to the Funds pursuant to Investment Management Agreements
approved by each Funds' Board of Directors and shareholders.
--------------------------------------------------- MF-66
---------------------------------------------------
<PAGE>
The schedule below reflects the rates of compensation paid to HL
Advisors for services rendered:
HARTFORD INDEX HLS FUND, INC.
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- -------------------------------------------------- -----------
<S> <C>
All Assets 0.200%
</TABLE>
HARTFORD MORTGAGE SECURITIES HLS FUND, INC.
AND HARTFORD MONEY MARKET HLS FUND, INC.
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- -------------------------------------------------- -----------
<S> <C>
All Assets 0.250%
</TABLE>
HARTFORD BOND HLS FUND, INC.
AND HARTFORD STOCK HLS FUND, INC.
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- -------------------------------------------------- -----------
<S> <C>
On first $250 million .325%
On next $250 million .300
On next $500 million .275
Over $1 billion .250
</TABLE>
HARTFORD ADVISERS HLS FUND, INC.,
HARTFORD CAPITAL APPRECIATION HLS FUND, INC.,
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND, INC.,
HARTFORD DIVIDEND AND GROWTH HLS FUND, INC.,
HARTFORD INTERNATIONAL ADVISERS HLS FUND, INC.,
HARTFORD SMALL COMPANY HLS FUND, INC.,
HARTFORD MIDCAP HLS FUND, INC.,
HARTFORD GROWTH AND INCOME HLS FUND,
HARTFORD HIGH YIELD HLS FUND AND
HARTFORD GLOBAL LEADERS HLS FUND
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSETS ANNUAL RATE
- -------------------------------------------------- -----------
<S> <C>
On first $250 million .575%
On next $250 million .525
On next $500 million .475
Over $1 billion .425
</TABLE>
HL Advisors has agreed to waive its fees for the Hartford High Yield HLS
Fund and Hartford Global Leaders HLS Fund until the net assets of these
Funds, excluding assets contributed by companies affiliated with HL
Advisors, reaches $20 million. Total fees waived during the six months
ended June 30, 1999 amounted to $39,575 and $20,851 on Hartford High
Yield HLS Fund and Hartford Global Leaders HLS Fund, respectively.
Pursuant to investment services agreements between HL Advisors and
HIMCO, HIMCO provides the day-to-day investment management services to
the Hartford Bond HLS Fund, Inc., Hartford Money Market HLS Fund, Inc.,
Hartford Mortgage Securities HLS Fund, Inc., Hartford Index HLS Fund,
Inc. and Hartford High Yield HLS Fund. HIMCO is a wholly-owned
subsidiary of The Hartford.
Pursuant to sub-advisory agreements between HL Advisors and Wellington,
Wellington provides the day-to-day investment management services to the
Hartford Stock HLS Fund, Inc., Hartford Advisers HLS Fund, Inc.,
Hartford Capital Appreciation HLS Fund, Inc., Hartford International
Opportunities HLS Fund, Inc., Hartford Dividend and Growth HLS Fund,
Inc., Hartford International Advisers HLS Fund, Inc., Hartford Small
Company HLS Fund, Inc., Hartford MidCap HLS Fund, Inc., Hartford Growth
and Income HLS Fund and Hartford Global Leaders HLS Fund.
Wellington and HIMCO determine the purchase and sale of portfolio
securities and place such orders for execution in the name of the
respective Fund. In conjunction with their investment activity,
Wellington and HIMCO regularly
--------------------------------------------------- MF-67
---------------------------------------------------
<PAGE>
HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
furnish reports to the Funds' Board of Directors concerning economic forecasts,
investment strategy, portfolio activity and performance of the Funds.
b) ADMINISTRATIVE SERVICES AGREEMENT-- Under the Administrative Services
Agreement between Hartford Life Insurance Company (HL) and each of the
Funds, HL provides administrative services to the Funds and receives
monthly compensation at the annual rate of 0.175% 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. Non-allocable expenses are charged to each fund
based on specific identification.
d) EXPENSE OFFSET-- The Funds have entered into certain expense offset
arrangements with the Custodian Bank. The amount of the Funds' expense
reductions is shown on the accompanying statements of operations as
custodian expense offset.
e) DISTRIBUTION PLAN FOR CLASS IB SHARES-- Each Fund has adopted a
Distribution Plan pursuant to Rule 12b-1 under the 1940 Act for the
Class IB shares. Pursuant to the Distribution Plan, each Fund
compensates the Distributor from assets attributable to the Class IB
shares for services rendered and expenses borne in connection with
activities primarily intended to result in the sale of the Class IB
shares.
Although the Distribution Plan provides that each Fund may pay annually
up to 0.25% of the average daily net assets of a Fund attributable to
its Class IB shares for activities primarily intended to result in the
sale of Class IB shares, the Distributor has voluntarily agreed to waive
0.07% of the fee. This waiver may be withdrawn at any time after notice
to shareholders. Under the terms of the Distribution Plan and the
principal underwriting agreement, each Fund is authorized to make
payments monthly to the Distributor which may be used to pay or
reimburse entities providing distribution and shareholder servicing with
respect to the Class IB shares for such entities' fees or expenses
incurred or paid in that regard.
--------------------------------------------------- MF-68
---------------------------------------------------
<PAGE>
4. TAX COST AND UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS:
As of June 30, 1999, the aggregate gross unrealized appreciation and
depreciation of all investments, based on cost for federal income tax
purposes, was as follows:
<TABLE>
<CAPTION>
AGGREGATE GROSS AGGREGATE GROSS NET UNREALIZED
UNREALIZED UNREALIZED APPRECIATION/
FUND TAX COST APPRECIATION DEPRECIATION DEPRECIATION
- ------------------------------ --------------- ---------------- ---------------- ---------------
Hartford Bond HLS Fund,
Inc........................... 962,503,321 5,079,613 (30,370,951) (25,291,338)
<S> <C> <C> <C> <C>
Hartford Stock HLS Fund,
Inc........................... 5,675,508,645 3,129,960,926 (111,692,391) 3,018,266,537
Hartford Advisers HLS Fund,
Inc........................... 10,409,415,242 3,327,990,851 (230,407,727) 3,097,582,124
Hartford Capital Appreciation
HLS Fund, Inc................. 4,934,143,402 1,887,641,188 (254,221,365) 1,633,418,823
Hartford Mortgage Securities
HLS Fund, Inc................. 513,584,295 1,666,817 (3,071,133) 1,404,316
Hartford Index HLS Fund,
Inc........................... 1,444,914,526 864,920,340 (46,469,400) 818,450,941
Hartford International
Opportunities HLS Fund,
Inc........................... 1,125,464,529 158,151,104 (33,550,757) 124,600,349
Hartford Dividend & Growth HLS
Fund, Inc..................... 274,580,951 655,446,035 (63,550,729) 591,895,306
Hartford International
Advisers HLS Fund, Inc........ 299,713,767 21,917,807 (7,941,237) 13,976,570
Hartford Small Company HLS
Fund, Inc..................... 388,170,086 73,408,246 (17,502,557) 55,905,689
Hartford MidCap Fund HLS Fund,
Inc........................... 265,503,292 48,285,840 (4,811,736) 43,474,104
Hartford Growth and Income HLS
Fund.......................... 66,523,009 9,429,338 (1,121,265) 8,308,073
Hartford High Yield HLS
Fund.......................... 36,303,443 323,156 (820,494) (497,338)
Hartford Global Leaders HLS
Fund.......................... 46,279,619 3,192,562 (812,123) 2,380,438
</TABLE>
5. AFFILIATE HOLDINGS:
a) As of June 30, 1999, HL Investment Advisers, LLC. held direct interests
in shares as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
PERCENT OF
FUND SHARES TOTAL SHARES
- ---------------------------------------- --------- ------------
Hartford MidCap HLS Fund, Inc........... 3,000,000 1.76%
Hartford Growth and Income HLS Fund..... 2,990,000 5.25%
Hartford High Yield HLS Fund............ 9,900,000 28.29%
Hartford Global Leaders HLS Fund........ 2,970,000 9.22%
</TABLE>
--------------------------------------------------- MF-69
---------------------------------------------------
<PAGE>
HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
b) As of June 30, 1999, certain HL group pension contracts held direct
interests in shares as follows:
<TABLE>
<CAPTION>
PERCENT OF
FUND SHARES TOTAL SHARES
- ---------------------------------------- ---------- ------------
<S> <C> <C>
Hartford Bond HLS Fund, Inc............. 11,686,204 1.30%
Hartford Stock HLS Fund, Inc............ 37,933,510 3.03%
Hartford Money Market HLS Fund Inc...... 80,158,182 7.87%
Hartford Advisers HLS Fund, Inc......... 86,962,402 1.91%
Hartford Capital Appreciation HLS Fund,
Inc.................................... 38,645,158 3.04%
Hartford Mortgage Securities HLS Fund,
Inc.................................... 15,833,875 4.84%
Hartford Index HLS Fund, Inc............ 38,002,272 6.63%
Hartford International Opportunities HLS
Fund, Inc.............................. 11,055,015 1.29%
Hartford Dividend and Growth HLS Fund,
Inc.................................... 9,751,280 0.65%
Hartford International Advisers HLS
Fund, Inc.............................. 2,128,075 0.82%
Hartford Small Company HLS Fund, Inc.... 6,031,912 2.21%
Hartford MidCap HLS Fund, Inc........... 183,581 0.11%
</TABLE>
6. INVESTMENT TRANSACTIONS:
For the year ended June 30, 1999, aggregate purchases and sales of
investment securities (excludes short-term investments) were as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
FUND PURCHASE AT COST SALES AT PROCEEDS
- ---------------------------------------- ------------------ ------------------
Hartford Bond HLS Fund, Inc............. $ 659,981,077 $ 543,385,427
Hartford Stock HLS Fund, Inc............ 1,801,245,813 1,313,100,853
Hartford Advisers HLS Fund, Inc......... 2,831,513,586 2,245,386,495
Hartford Capital Appreciation HLS Fund,
Inc.................................... 2,210,012,522 2,575,895,839
Hartford Mortgage Securities HLS Fund,
Inc.................................... 906,047,610 831,496,735
Hartford Index HLS Fund, Inc............ 208,487,846 32,603,290
Hartford International Opportunities HLS
Fund, Inc.............................. 731,540,404 822,038,327
Hartford Dividend and Growth HLS Fund,
Inc.................................... 1,060,973,292 922,765,974
Hartford International Advisers HLS
Fund, Inc.............................. 180,785,981 182,819,677
Hartford Small Company HLS Fund, Inc.... 385,845,735 370,778,050
Hartford MidCap HLS Fund, Inc........... 200,259,417 98,989,916
Hartford Growth and Income HLS Fund..... 51,004,080 9,892,789
Hartford High Yield HLS Fund............ 26,751,234 5,897,653
Hartford Global Leaders HLS Fund........ 61,269,645 23,900,626
</TABLE>
7. CAPITAL LOSS CARRY FORWARD:
At December 31, 1998, (tax year-end) the following Funds had capital loss
carry forwards for U.S. Federal Tax purposes of approximately:
<TABLE>
<CAPTION>
<S> <C> <C>
FUND AMOUNT YEAR OF EXPIRATION
- ---------------------------------------- ----------- ------------------
Hartford International Opportunities HLS
Fund, Inc.............................. $17,680,925 2006
Hartford Small Company HLS Fund, Inc.... 15,134,644 2006
Hartford Mortgage Securities HLS Fund,
Inc.................................... 7,251,161 2002
Hartford Growth & Income HLS Fund....... 44,062 2006
</TABLE>
--------------------------------------------------- MF-70
---------------------------------------------------
<PAGE>
8. CAPITAL SHARE TRANSACTIONS:
The following information is for the period ending June 30, 1999:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
HARTFORD STOCK HLS FUND, HARTFORD MONEY MARKET
HARTFORD BOND HLS FUND, INC. INC. HLS FUND, INC.
---------------------------- --------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------ -------------- ----------- -------------- -------------- --------------
CLASS IA
Shares sold.............. 139,977,907 $ 149,045,159 132,126,392 $ 871,753,434 1,611,459,779 $1,611,459,779
Shares issued on
reinvestment of
distributions........... 6,512,085 6,859,742 99,365,260 602,619,996 21,657,622 21,657,622
Shares Redeemed.......... (84,050,058) (89,440,295) (73,960,442) (494,823,919) (1,486,946,808) (1,486,946,808)
------------ -------------- ----------- -------------- -------------- --------------
Net Increase............. 62,439,934 $ 66,464,607 157,531,210 $ 979,549,510 146,170,593 $ 146,170,593
------------ -------------- ----------- -------------- -------------- --------------
------------ -------------- ----------- -------------- -------------- --------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
HARTFORD CAPITAL
HARTFORD ADVISERS HLS FUND, APPRECIATION HARTFORD MORTGAGE SECURITIES
INC. HLS FUND, INC. HLS FUND, INC.
---------------------------- ---------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------ -------------- ------------ -------------- -------------- --------------
CLASS IA
Shares sold.............. 378,414,347 $1,096,912,237 98,409,273 $ 488,144,762 29,686,285 $ 32,416,523
Shares issued on
reinvestment of
distributions........... 363,039,239 991,978,219 81,507,512 362,262,486
Shares Redeemed.......... (133,148,942) (391,492,904) (129,035,038) (635,790,139) (31,923,165) (34,813,968)
------------ -------------- ------------ -------------- -------------- --------------
Net Increase............. 608,304,644 $1,697,397,551 50,881,747 $ 214,617,109 (2,236,880) $ (2,397,445)
------------ -------------- ------------ -------------- -------------- --------------
------------ -------------- ------------ -------------- -------------- --------------
</TABLE>
<TABLE>
<CAPTION>
HARTFORD INDEX HLS FUND, HARTFORD INTERNATIONAL HARTFORD DIVIDEND AND GROWTH
INC. OPPORTUNITIES HLS FUND, INC. HLS FUND, INC.
---------------------------- ---------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------ -------------- ------------ -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
CLASS IA
Shares sold.............. 92,197,444 $ 342,615,622 449,610,399 $ 646,391,147 117,954,691 $ 254,115,367
Shares issued on
reinvestment of
distributions........... 9,566,839 33,831,509 794,482 1,079,835 56,175,685 114,076,244
Shares Redeemed.......... (45,290,542) (169,089,221) (477,785,819) (688,966,132) (87,568,998) (189,478,414)
------------ -------------- ------------ -------------- -------------- --------------
Net Increase............. 56,473,741 $ 207,357,909 (27,380,938) $ (41,495,152) 86,561,378 $ 178,713,198
------------ -------------- ------------ -------------- -------------- --------------
------------ -------------- ------------ -------------- -------------- --------------
</TABLE>
--------------------------------------------------- MF-71
---------------------------------------------------
<PAGE>
HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
HARTFORD INTERNATIONAL HARTFORD SMALL COMPANY
ADVISERS HLS FUND, INC. HLS FUND, INC. HARTFORD MIDCAP HLS FUND, INC.
---------------------------- ---------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------ -------------- ------------ -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
CLASS IA
Shares sold.............. 20,624,986 $ 24,828,262 172,883,205 $ 245,872,122 113,028,187 $ 179,790,478
Shares issued on
reinvestment of
distributions........... -- -- -- -- 2,663,006 3,665,479
Shares Redeemed.......... (7,521,169) (9,004,982) (165,341,432) (232,709,978) (45,246,428) (73,188,869)
------------ -------------- ------------ -------------- -------------- --------------
Net Increase............. 13,103,817 $ 15,823,280 7,541,773 $ 13,162,145 70,444,765 $ 110,267,088
------------ -------------- ------------ -------------- -------------- --------------
------------ -------------- ------------ -------------- -------------- --------------
</TABLE>
<TABLE>
<CAPTION>
HARTFORD GROWTH AND INCOME HARTFORD HIGH YIELD HLS HARTFORD GLOBAL LEADERS HLS
HLS FUND FUND FUND
---------------------------- --------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------ -------------- ----------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
CLASS IA
Shares sold.............. 36,091,547 $ 45,180,275 24,122,651 $ 25,180,399 29,230,676 $ 40,341,865
Shares issued on
reinvestment of
distributions........... 211 249 3,983 4,112 29,964 38,996
Shares Redeemed.......... (473,518) (567,271) (3,386,678) (3,503,341) (1,529,340) (2,096,047)
------------ -------------- ----------- -------------- -------------- --------------
Net Increase............. 35,618,240 $ 44,613,253 20,739,956 $ 21,681,170 27,731,300 $ 38,284,815
------------ -------------- ----------- -------------- -------------- --------------
------------ -------------- ----------- -------------- -------------- --------------
</TABLE>
<TABLE>
<CAPTION>
HARTFORD STOCK HLS FUND, HARTFORD MONEY MARKET
HARTFORD BOND HLS FUND, INC. INC. HLS FUND, INC.
---------------------------- --------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------ -------------- ----------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
CLASS IB
Shares sold.............. 6,756,334 $ 6,672,014 24,470,249 $ 16,524,289 6,862,736 $ 6,862,736
Shares issued on
reinvestment of
distributions........... 54,886 53,860 11,997,622 6,748,542 87,605 87,605
Shares Redeemed.......... (1,795,349) (1,762,847) (875,606) (702,896) (3,372,570) (3,372,570)
------------ -------------- ----------- -------------- -------------- --------------
Net Increase............. 5,015,871 $ 4,963,028 35,592,265 $ 22,569,936 3,577,771 $ 3,577,771
------------ -------------- ----------- -------------- -------------- --------------
------------ -------------- ----------- -------------- -------------- --------------
</TABLE>
<TABLE>
<CAPTION>
HARTFORD CAPITAL HARTFORD INTERNATIONAL
HARTFORD ADVISERS APPRECIATION OPPORTUNITIES
HLS FUND, INC. HLS FUND, INC. HLS FUND INC.
---------------------------- --------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------ -------------- ----------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
CLASS IB
Shares sold.............. 51,162,090 $ 45,568,461 6,530,495 $ 5,267,183 586,540 $ 608,648
Shares issued on
reinvestment of
distributions........... 13,041,216 10,582,360 3,109,971 2,135,295 1,056 1,029
Shares Redeemed.......... (75,167) (62,760) (270,761) (269,811) (102,084) (102,678)
------------ -------------- ----------- -------------- -------------- --------------
Net Increase............. 64,128,139 $ 56,088,062 9,369,705 $ 7,132,666 485,512 $ 507,000
------------ -------------- ----------- -------------- -------------- --------------
------------ -------------- ----------- -------------- -------------- --------------
</TABLE>
--------------------------------------------------- MF-72
---------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
HARTFORD DIVIDEND AND GROWTH HARTFORD SMALL COMPANY HARTFORD GROWTH AND INCOME
HLS FUND, INC. HLS FUND, INC. HLS FUND
---------------------------- --------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------ -------------- ----------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
CLASS IB
Shares sold.............. 4,981,231 $ 4,822,946 2,779,638 $ 2,964,069 -- $ --
Shares issued on
reinvestment of
distributions........... 878,538 792,530 -- -- 31 34
Shares Redeemed.......... (239,227) (234,470) (6,630) ( 7,064) -- --
------------ -------------- ----------- -------------- -------------- --------------
Net Increase............. 5,620,542 $ 5,381,006 2,773,008 $ 2,957,006 31 $ 34
------------ -------------- ----------- -------------- -------------- --------------
------------ -------------- ----------- -------------- -------------- --------------
</TABLE>
<TABLE>
<CAPTION>
HARTFORD GLOBAL LEADERS
HARTFORD HIGH YIELD HLS FUND HLS FUND
---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
------------ -------------- ----------- --------------
<S> <C> <C> <C> <C>
CLASS IB
Shares sold................... -- $ -- -- $ --
Shares issued on reinvestment
of distributions............. 1,821 1,851 744 992
Shares Redeemed............... -- -- -- --
------------ -------------- ----------- --------------
Net Increase.................. 1,821 $ 1,851 744 $ 992
------------ -------------- ----------- --------------
------------ -------------- ----------- --------------
</TABLE>
The following information is for the period ending December 31, 1998:
<TABLE>
<CAPTION>
HARTFORD STOCK HLS FUND, HARTFORD MONEY MARKET
HARTFORD BOND HLS FUND, INC. INC. HLS FUND, INC.
---------------------------- --------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------ -------------- ----------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
CLASS IA
Shares sold.............. 334,981,284 $ 366,472,552 226,124,652 $1,307,750,395 2,279,384,552 $2,279,385,544
Shares issued on
reinvestment of
distributions........... 39,579,874 42,744,216 40,523,153 227,976,510 36,079,243 36,079,243
Shares Redeemed.......... (66,010,394) (72,380,915) (91,923,857) (524,597,789) (2,055,458,998) (2,055,458,998)
------------ -------------- ----------- -------------- -------------- --------------
Net Increase............. 308,550,764 $ 336,835,853 174,723,948 $1,011,129,116 260,004,797 $ 260,005,789
------------ -------------- ----------- -------------- -------------- --------------
------------ -------------- ----------- -------------- -------------- --------------
</TABLE>
<TABLE>
<CAPTION>
HARTFORD CAPITAL
HARTFORD ADVISERS HLS FUND, APPRECIATION HARTFORD MORTGAGE SECURITIES
INC. HLS FUND, INC. HLS FUND, INC.
---------------------------- ---------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------ -------------- ------------ -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
CLASS IA
Shares sold.............. 567,555,489 $1,567,924,884 281,342,857 $1,257,555,081 57,937,610 $ 64,363,026
Shares issued on
reinvestment of
distributions........... 192,639,731 530,235,045 77,711,309 350,859,661 20,461,506 22,200,000
Shares Redeemed.......... (84,108,984) (231,335,882) (227,943,459) (1,005,136,346) (49,367,564) (54,920,899)
------------ -------------- ------------ -------------- -------------- --------------
Net Increase............. 676,086,236 $1,866,824,047 131,110,707 $ 603,278,396 29,031,552 $ 31,642,127
------------ -------------- ------------ -------------- -------------- --------------
------------ -------------- ------------ -------------- -------------- --------------
</TABLE>
--------------------------------------------------- MF-73
---------------------------------------------------
<PAGE>
HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
HARTFORD INDEX HLS FUND, HARTFORD INTERNATIONAL HARTFORD DIVIDEND AND GROWTH
INC. OPPORTUNITIES HLS FUND, INC. HLS FUND, INC.
---------------------------- ---------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------ -------------- ------------ -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
CLASS IA
Shares sold.............. 216,433,464 $ 689,009,410 313,574,429 $ 398,422,898 372,555,830 $ 763,971,073
Shares issued on
reinvestment of
distributions........... 13,976,294 44,600,001 66,706,915 87,853,994 60,744,430 124,543,520
Shares Redeemed.......... (103,754,732) (330,659,647) (341,346,342) (434,068,131) (51,918,413) (105,367,979)
------------ -------------- ------------ -------------- -------------- --------------
Net Increase............. 126,655,026 $ 402,949,764 38,935,002 $ 52,208,761 381,381,847 $ 783,146,614
------------ -------------- ------------ -------------- -------------- --------------
------------ -------------- ------------ -------------- -------------- --------------
</TABLE>
<TABLE>
<CAPTION>
HARTFORD INTERNATIONAL HARTFORD SMALL COMPANY
ADVISERS HLS FUND, INC. HLS FUND, INC. HARTFORD MIDCAP HLS FUND, INC.
---------------------------- ---------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------ -------------- ------------ -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
CLASS IA
Shares sold.............. 56,027,943 $ 63,375,108 221,875,243 $ 257,442,860 79,802,187 $ 100,347,290
Shares issued on
reinvestment of
distributions........... 27,522,863 29,712,912 2,958,223 3,776,000 747 916
Shares Redeemed.......... (12,689,383) (14,216,790) (134,668,328) (151,243,951) (4,365,974) (5,456,629)
------------ -------------- ------------ -------------- -------------- --------------
Net Increase............. 70,861,423 $ 78,871,230 90,165,138 $ 109,974,909 75,436,960 $ 94,891,577
------------ -------------- ------------ -------------- -------------- --------------
------------ -------------- ------------ -------------- -------------- --------------
</TABLE>
<TABLE>
<CAPTION>
HARTFORD GROWTH AND INCOME HARTFORD HIGH YIELD HLS HARTFORD GLOBAL LEADERS HLS
HLS FUND FUND FUND
---------------------------- --------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------ -------------- ----------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
CLASS IA
Shares sold.............. 22,409,375 $ 23,210,363 15,548,498 $ 15,659,286 5,396,366 $ 5,971,006
Shares issued on
reinvestment of
distributions........... 68,752 81,537 78,581 79,897 39,896 51,273
Shares Redeemed.......... (1,134,968) (1,198,878) (1,383,155) (1,424,406) (953,712) (1,171,496)
------------ -------------- ----------- -------------- -------------- --------------
Net Increase............. 21,343,159 $ 22,093,022 14,243,924 $ 14,314,777 4,482,550 $ 4,850,783
------------ -------------- ----------- -------------- -------------- --------------
------------ -------------- ----------- -------------- -------------- --------------
</TABLE>
<TABLE>
<CAPTION>
HARTFORD STOCK HLS FUND, HARTFORD MONEY MARKET
HARTFORD BOND HLS FUND, INC. INC. HLS FUND, INC.
---------------------------- --------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------ -------------- ----------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
CLASS IB
Shares sold.............. 5,125,307 $ 5,297,213 8,894,358 $ 9,242,551 2,658,059 $ 2,658,060
Shares issued on
reinvestment of
distributions........... 253,800 255,767 384,582 423,490 30,221 30,221
Shares Redeemed.......... (134,784) (140,616) (46,040) (48,752) (509,238) (509,238)
------------ -------------- ----------- -------------- -------------- --------------
Net Increase............. 5,244,323 $ 5,412,364 9,232,900 $ 9,617,289 2,179,042 $ 2,179,043
------------ -------------- ----------- -------------- -------------- --------------
------------ -------------- ----------- -------------- -------------- --------------
</TABLE>
--------------------------------------------------- MF-74
---------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
HARTFORD INTERNATIONAL
HARTFORD ADVISERS HLS FUND, HARTFORD CAPITAL OPPORTUNITIES
INC. APPRECIATION HLS FUND, INC. HLS FUND, INC.
---------------------------- --------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------ -------------- ----------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
CLASS IB
Shares sold.............. 31,357,674 $ 32,503,646 5,950,525 $ 5,572,551 680,037 $ 661,681
Shares issued on
reinvestment of
distributions........... 1,700,713 1,804,946 141,407 140,339 11,380 11,063
Shares Redeemed.......... (349,123) (351,233) (104,818) (94,618) (9,688) (9,161)
------------ -------------- ----------- -------------- -------------- --------------
Net Increase............. 32,709,264 $ 33,957,359 5,987,114 $ 5,618,272 681,729 $ 663,583
------------ -------------- ----------- -------------- -------------- --------------
------------ -------------- ----------- -------------- -------------- --------------
</TABLE>
<TABLE>
<CAPTION>
HARTFORD DIVIDEND AND GROWTH HARTFORD SMALL COMPANY HARTFORD GROWTH AND INCOME
HLS FUND, INC. HLS FUND, INC. HLS FUND
---------------------------- --------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------ -------------- ----------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
CLASS IB
Shares sold.............. 8,473,373 $ 8,276,226 708,407 $ 647,615 10,000 $ 10,000
Shares issued on
reinvestment of
distributions........... 255,001 256,481 -- -- -- --
Shares Redeemed.......... (177,503) (164,795) (3,241) (2,748) -- --
------------ -------------- ----------- -------------- -------------- --------------
Net Increase............. 8,550,871 $ 8,367,912 705,166 $ 644,867 10,000 $ 10,000
------------ -------------- ----------- -------------- -------------- --------------
------------ -------------- ----------- -------------- -------------- --------------
</TABLE>
<TABLE>
<CAPTION>
HARTFORD GLOBAL LEADERS
HARTFORD HIGH YIELD HLS FUND HLS FUND
---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
------------ -------------- ----------- --------------
<S> <C> <C> <C> <C>
CLASS IB
Shares sold................... 100,000 $ 100,000 30,000 $ 30,000
Shares issued on reinvestment
of distributions............. -- -- -- --
Shares Redeemed............... -- -- -- --
------------ -------------- ----------- --------------
Net Increase.................. 100,000 $ 100,000 30,000 $ 30,000
------------ -------------- ----------- --------------
------------ -------------- ----------- --------------
</TABLE>
9. EUROPEAN MONETARY UNION:
On January 1, 1999, the European Monetary Union "EMU" introduced a new
single currency, the euro, which will replace the national currencies of
the participating members countries. Until 2002, the national currencies
will continue to exist, but exchange rates will be tied to the euro. The
introduction of the euro is likely to effect all stages of the investment
process, including trading, foreign exchange and accounting. Because this
change to a single currency is new, the introduction of the euro may
result in market volatility and may effect the business or financial
conditions of European issuers or of a portfolio investing in European
issuers. In addition, while the conversion will eliminate currency risk
among the participating nations, currency risk between the euro and the
U.S. dollar remains a factor.
10. LINE OF CREDIT:
The funds participate in a $500,000,000 committed revolving line of credit
facility. The facility is to be used for temporary or emergency purposes.
Under the arrangement, the funds are required to own securities having a
market value in excess of 300% of the total bank borrowings. The interest
rate on borrowings varies depending on the nature of the loan. The
facility also requires a fee to be paid based on the amount of the
commitment which has not been utilized. During the period ended June 30,
1999, the funds did not have any borrowings under these facilities.
--------------------------------------------------- MF-75
---------------------------------------------------
<PAGE>
HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
-- SELECTED PER-SHARE DATA(4) --
--------------------------------------------------------------------
NET REALIZED
AND
NET ASSET UNREALIZED DIVIDENDS
VALUE AT NET GAIN TOTAL FROM FROM NET
BEGINNING INVESTMENT (LOSS) ON INVESTMENT INVESTMENT
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME
---------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
HARTFORD BOND HLS FUND,
INC.
For the Six Months
Ended June 30, 1999
(unaudited)
Class 1A............... $1.081 $0.037 $(0.065) $(0.028) $(0.001)
Class 1B............... 1.008 0.041 (0.068) (0.027) (0.001)
For the Year Ended
December 31, 1998
Class 1A............... 1.050 0.053 0.032 0.085 (0.054)
From inception April 1,
1998, through December
31, 1998
Class 1B............... 1.000 0.021 0.038 0.059 (0.051)
For the Year Ended
December 31
1997................... 1.000 0.063 0.047 0.110 (0.060)
1996................... 1.028 0.064 (0.029) 0.035 (0.063)
1995................... 0.926 0.064 0.102 0.166 (0.064)
1994................... 1.044 0.060 (0.100) (0.040) (0.060)
HARTFORD STOCK HLS FUND,
INC.
For the Six Months
Ended June 30, 1999
(unaudited)
Class 1A............... 6.562 0.572 0.218 0.790 (0.001)
Class 1B............... 1.101 0.582 (0.506) 0.076 (0.001)
For the Year Ended
December 31, 1998
Class 1A............... 5.123 0.051 1.622 1.673 (0.050)
From inception April 1,
1998, through December
31, 1998
Class 1B............... 1.000 0.004 0.145 0.149 (0.048)
For the Year Ended
December 31
1997................... 4.143 0.050 1.196 1.246 (0.049)
1996................... 3.527 0.060 0.763 0.823 (0.059)
1995................... 2.801 0.070 0.840 0.910 (0.070)
1994................... 3.099 0.061 (0.111) (0.050) (0.061)
HARTFORD MONEY MARKET HLS
FUND, INC.
For the Six Months
Ended June 30, 1999
(unaudited)
Class 1A............... 1.000 0.023 -- 0.023 (0.023)
Class 1B............... 1.000 0.022 -- 0.022 (0.022)
For the Year Ended
December 31, 1998
Class 1A............... 1.000 0.051 -- 0.051 (0.051)
From inception April 1,
1998, through December
31, 1998
Class 1B............... 1.000 0.037 -- 0.037 (0.037)
For the Year Ended
December 31
1997................... 1.000 0.049 -- 0.049 (0.049)
1996................... 1.000 0.050 -- 0.050 (0.050)
1995................... 1.000 0.056 -- 0.056 (0.056)
1994................... 1.000 0.039 -- 0.039 (0.039)
HARTFORD ADVISERS HLS
FUND, INC.
For the Six Months
Ended June 30, 1999
(unaudited)
Class 1A............... 2.985 0.278 (0.090) 0.189 (0.002)
Class 1B............... 1.061 0.285 (0.230) 0.055 (0.002)
For the Year Ended
December 31, 1998
Class 1A............... 2.527 0.061 0.546 0.607 (0.060)
From inception April 1,
1998, through December
31, 1998
Class 1B............... 1.000 0.010 0.109 0.119 (0.058)
For the Year Ended
December 31
1997................... 2.169 0.056 0.455 0.511 (0.055)
1996................... 1.958 0.059 0.255 0.314 (0.059)
1995................... 1.600 0.064 0.377 0.441 (0.064)
1994................... 1.752 0.054 (0.100) (0.046) (0.054)
HARTFORD CAPITAL
APPRECIATION HLS FUND,
INC.
For the Six Months
Ended June 30, 1999
(unaudited)
Class 1A............... 4.759 0.323 0.438 0.761 (0.000)
Class 1B............... 0.992 0.358 (0.242) 0.116 (0.000)
For the Year Ended
December 31, 1998
Class 1A............... 4.410 0.025 0.525 0.550 (0.026)
From inception April 1,
1998, through December
31, 1998
Class 1B............... 1.000 0.002 0.014 0.016 (0.024)
For the Year Ended
December 31
1997................... 3.914 0.020 0.794 0.814 (0.022)
1996................... 3.490 0.022 0.655 0.677 (0.025)
1995................... 2.860 0.030 0.785 0.815 (0.030)
1994................... 3.052 0.011 0.070 0.081 (0.011)
HARTFORD MORTGAGE
SECURITIES HLS FUND,
INC.
For the Six Months
Ended June 30, 1999
(unaudited)........... 1.085 0.033 (0.030) 0.002 --
For the Year Ended
December 31, 1998
1998................... 1.084 0.067 0.006 0.073 (0.067)
1997................... 1.056 0.071 0.022 0.093 (0.065)
1996................... 1.071 0.069 (0.018) 0.051 (0.066)
1995................... 0.984 0.068 0.087 0.155 (0.068)
1994................... 1.075 0.068 (0.086) (0.018) (0.068)
</TABLE>
(1) Annualized.
(2) Not annualized.
(3) Management fees were waived until assets (excluding assets contributed by
companies affiliated with The Hartford Investment Management Company)
reached $20 million. The ratio of 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.
(4) Information presented relates to a share of capital stock outstanding for
the indicated period.
(5) Excluding mortgage dollar rolls.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-76
<PAGE>
<TABLE>
<CAPTION>
-- SELECTED PER-SHARE DATA --
----------------------------------------------------------------------------------------------------
DISTRIBUTIONS
DIVIDENDS FROM NET NET ASSET
IN EXCESS OF REALIZED NET INCREASE VALUE AT
NET INVESTMENT GAINS ON DISTRIBUTIONS TOTAL (DECREASE) IN END
INCOME INVESTMENTS FROM CAPITAL DISTRIBUTIONS NET ASSETS VALUE OF PERIOD
--------------- --------------- -------------- -------------- ----------------- ----------
<S> <C> <C> <C> <C> <C> <C>
HARTFORD BOND HLS FUND,
INC.
For the Six Months
Ended June 30, 1999
(unaudited)
Class 1A............... $-- $(0.007) $-- $(0.008) $(0.036) $1.045
Class 1B............... -- (0.007) -- (0.008) (0.035) 0.973
For the Year Ended
December 31, 1998
Class 1A............... -- -- -- (0.054) 0.031 1.081
From inception April 1,
1998, through December
31, 1998
Class 1B............... -- -- -- (0.051) 0.008 1.008
For the Year Ended
December 31
1997................... -- -- -- (0.060) 0.050 1.050
1996................... -- -- -- (0.063) (0.028) 1.000
1995................... -- -- -- (0.064) 0.102 1.028
1994................... -- (0.018) -- (0.078) (0.118) 0.926
HARTFORD STOCK HLS FUND,
INC.
For the Six Months
Ended June 30, 1999
(unaudited)
Class 1A............... -- (0.545) -- (0.547) 0.243 6.805
Class 1B............... -- (0.545) -- (0.547) (0.470) 0.631
For the Year Ended
December 31, 1998
Class 1A............... -- (0.184) -- (0.234) 1.439 6.562
From inception April 1,
1998, through December
31, 1998
Class 1B............... -- -- -- (0.048) 0.101 1.101
For the Year Ended
December 31
1997................... -- (0.217) -- (0.266) 0.980 5.123
1996................... -- (0.148) -- (0.207) 0.616 4.143
1995................... -- (0.114) -- (0.184) 0.726 3.527
1994................... -- (0.187) -- (0.248) (0.298) 2.801
HARTFORD MONEY MARKET HLS
FUND, INC.
For the Six Months
Ended June 30, 1999
(unaudited)
Class 1A............... -- -- -- (0.023) -- 1.000
Class 1B............... -- -- -- (0.022) -- 1.000
For the Year Ended
December 31, 1998
Class 1A............... -- -- -- (0.051) -- 1.000
From inception April 1,
1998, through December
31, 1998
Class 1B............... -- -- -- (0.037) -- 1.000
For the Year Ended
December 31
1997................... -- -- -- (0.049) -- 1.000
1996................... -- -- -- (0.050) -- 1.000
1995................... -- -- -- (0.056) -- 1.000
1994................... -- -- -- (0.039) -- 1.000
HARTFORD ADVISERS HLS
FUND, INC.
For the Six Months
Ended June 30, 1999
(unaudited)
Class 1A............... -- (0.246) -- (0.248) (0.059) 2.926
Class 1B............... -- (0.246) -- (0.248) (0.193) 0.868
For the Year Ended
December 31, 1998
Class 1A............... -- (0.089) -- (0.149) 0.458 2.985
From inception April 1,
1998, through December
31, 1998
Class 1B............... -- -- -- (0.058) 0.061 1.061
For the Year Ended
December 31
1997................... -- (0.098) -- (0.153) 0.358 2.527
1996................... -- (0.044) -- (0.103) 0.211 2.169
1995................... -- (0.019) -- (0.083) 0.358 1.958
1994................... -- (0.052) -- (0.106) (0.152) 1.600
HARTFORD CAPITAL
APPRECIATION HLS FUND,
INC.
For the Six Months
Ended June 30, 1999
(unaudited)
Class 1A............... -- (0.304) -- (0.304) 0.457 5.216
Class 1B............... -- (0.304) -- (0.304) (0.188) 0.805
For the Year Ended
December 31, 1998
Class 1A............... -- (0.175) -- (0.201) 0.349 4.759
From inception April 1,
1998, through December
31, 1998
Class 1B............... -- -- -- (0.024) (0.008) 0.992
For the Year Ended
December 31
1997................... -- (0.296) -- (0.318) 0.496 4.410
1996................... -- (0.228) -- (0.253) 0.424 3.914
1995................... -- (0.155) -- (0.185) 0.630 3.490
1994................... -- (0.262) -- (0.273) (0.192) 2.860
HARTFORD MORTGAGE
SECURITIES HLS FUND,
INC.
For the Six Months
Ended June 30, 1999
(unaudited)........... -- -- -- -- 0.002 1.087
For the Year Ended
December 31, 1998
1998................... (0.003) -- (0.002) (0.072) 0.001 1.085
1997................... -- -- -- (0.065) 0.028 1.084
1996................... -- -- -- (0.066) (0.015) 1.056
1995................... -- -- -- (0.068) 0.087 1.071
1994................... -- (0.005) -- (0.073) (0.091) 0.984
<CAPTION>
-- RATIOS AND SUPPLEMENTAL DATA --
-------------------------------------------------------------------
RATIO OF RATIO OF
EXPENSES NET
NET ASSETS TO AVERAGE INVESTMENT
AT END OF NET ASSETS INCOME PORTFOLIO
PERIOD AFTER TO AVERAGE TURNOVER
TOTAL RETURN (IN THOUSANDS) WAIVERS NET ASSETS RATE
------------ --------------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
HARTFORD BOND HLS FUND,
INC.
For the Six Months
Ended June 30, 1999
(unaudited)
Class 1A............... (2.56)% $ 937,915 0.26% 2.90% 59.9%
Class 1B............... (2.65) 9,982 0.35 2.82 --
For the Year Ended
December 31, 1998
Class 1A............... 8.15(2) 902,480 0.50 5.86 122.3
From inception April 1,
1998, through December
31, 1998
Class 1B............... 5.89(2) 5,285 0.69(1) 5.54(1) --
For the Year Ended
December 31
1997................... 11.35 552,870 0.51 6.58 112.9
1996................... 3.54 402,548 0.52 6.37 212.0
1995................... 18.49 342,495 0.53 6.51 215.0
1994................... (3.95) 247,458 0.55 6.23 328.8
HARTFORD STOCK HLS FUND,
INC.
For the Six Months
Ended June 30, 1999
(unaudited)
Class 1A............... 13.06 8,521,638 0.22 0.44 17.5
Class 1B............... 12.96 28,275 0.31 0.37 --
For the Year Ended
December 31, 1998
Class 1A............... 33.47(2) 7,183,046 0.46 0.95 27.1
From inception April 1,
1998, through December
31, 1998
Class 1B............... 14.91(2) 10,167 0.65(1) 0.73(1) --
For the Year Ended
December 31
1997................... 31.38 4,713,322 0.45 1.11 31.6
1996................... 24.33 2,994,209 0.46 1.59 42.3
1995................... 34.10 1,876,884 0.48 2.23 52.9
1994................... (1.89) 1,163,158 0.50 2.17 63.8
HARTFORD MONEY MARKET HLS
FUND, INC.
For the Six Months
Ended June 30, 1999
(unaudited)
Class 1A............... 2.28 1,018,657 0.23 2.26 --
Class 1B............... 2.20 5,757 0.32 2.16 --
For the Year Ended
December 31, 1998
Class 1A............... 5.25(2) 872,486 0.45 5.12 --
From inception April 1,
1998, through December
31, 1998
Class 1B............... 3.76(2) 2,179 0.64(1) 4.81(1) --
For the Year Ended
December 31
1997................... 5.31 612,480 0.44 5.21 --
1996................... 5.09 542,586 0.44 5.04 --
1995................... 5.74 339,709 0.45 5.57 --
1994................... 3.95 321,465 0.47 3.99 --
HARTFORD ADVISERS HLS
FUND, INC.
For the Six Months
Ended June 30, 1999
(unaudited)
Class 1A............... 6.91 13,351,904 0.31 1.19 18.5
Class 1B............... 6.81 84,102 0.40 1.12 --
For the Year Ended
December 31, 1998
Class 1A............... 24.66(2) 11,805,411 0.63 2.40 36.7
From inception April 1,
1998, through December
31, 1998
Class 1B............... 11.96(2) 34,714 0.83(1) 2.22(1) --
For the Year Ended
December 31
1997................... 24.51 8,283,912 0.63 2.44 36.1
1996................... 16.62 5,879,529 0.63 2.92 53.8
1995................... 28.34 4,262,769 0.65 3.57 63.5
1994................... (2.74) 3,034,034 0.65 3.34 60.0
HARTFORD CAPITAL
APPRECIATION HLS FUND,
INC.
For the Six Months
Ended June 30, 1999
(unaudited)
Class 1A............... 17.10 6,630,463 0.32 0.40 33.0
Class 1B............... 16.99 12,355 0.41 0.34 --
For the Year Ended
December 31, 1998
Class 1A............... 15.48(2) 5,807,480 0.64 0.59 51.2
From inception April 1,
1998, through December
31, 1998
Class 1B............... 1.65(2) 5,942 0.82(1) 0.30(1) --
For the Year Ended
December 31
1997................... 22.34 4,802,992 0.64 0.44 57.6
1996................... 20.70 3,386,670 0.65 0.60 85.4
1995................... 30.25 2,157,892 0.68 0.95 78.6
1994................... 2.50 1,158,644 0.72 0.40 73.3
HARTFORD MORTGAGE
SECURITIES HLS FUND,
INC.
For the Six Months
Ended June 30, 1999
(unaudited)........... 0.22 355,198 0.24 2.97 240.4
For the Year Ended
December 31, 1998
1998................... 6.72 356,834 0.46 6.18 207.8
1997................... 9.01 325,702 0.45 6.60 46.5
1996................... 4.99 325,495 0.45 6.67 201.0
1995................... 16.17 327,565 0.47 6.50 489.4
1994................... (1.61) 304,147 0.48 6.65 365.7
</TABLE>
(1) Annualized.
(2) Not annualized.
(3) Management fees were waived until assets (excluding assets contributed by
companies affiliated with The Hartford Investment Management Company)
reached $20 million. The ratio of 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.
(4) Information presented relates to a share of capital stock outstanding for
the indicated period.
(5) Excluding mortgage dollar rolls.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-77
<PAGE>
HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
-- SELECTED PER-SHARE DATA(4) --
--------------------------------------------------------------------
NET REALIZED
AND
NET ASSET UNREALIZED DIVIDENDS
VALUE AT NET GAIN TOTAL FROM FROM NET
BEGINNING INVESTMENT (LOSS) ON INVESTMENT INVESTMENT
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME
---------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
HARTFORD INDEX HLS FUND,
INC.
For the Six Months
Ended June 30, 1999
(unaudited).......... $3.570 $ 0.075 $ 0.350 $ 0.424 $(0.007)
For the Year Ended
December 31, 1998
1998.................. 2.878 0.032 0.759 0.791 (0.027)
1997.................. 2.382 0.035 0.692 0.727 (0.035)
1996.................. 2.028 0.044 0.393 0.437 (0.044)
1995.................. 1.522 0.044 0.507 0.551 (0.044)
1994.................. 1.546 0.038 (0.024) 0.014 (0.038)
HARTFORD INTERNATIONAL
OPPORTUNITIES HLS FUND,
INC.
For the Six Months
Ended June 30, 1999
(unaudited)
Class 1A.............. 1.355 0.014 0.132 0.146 (0.001)
Class 1B.............. 0.972 0.014 0.090 0.104 (0.001)
For the Year Ended
December 31, 1998
Class 1A.............. 1.294 0.021 0.147 0.168 (0.019)
From inception April
1, 1998, through
December 31, 1998
Class 1B.............. 1.000 0.003 (0.015) (0.012) (0.016)
For the Year Ended
December 31
1997.................. 1.407 0.022 (0.019) 0.003 (0.012)
1996.................. 1.306 0.023 0.140 0.163 (0.025)
1995.................. 1.176 0.020 0.141 0.161 (0.020)
1994.................. 1.215 0.016 (0.039) (0.023) (0.016)
HARTFORD DIVIDEND AND
GROWTH HLS FUND, INC.
For the Six Months
Ended June 30, 1999
(unaudited)
Class 1A.............. 2.160 0.096 0.053 0.148 (0.002)
Class 1B.............. 1.006 0.094 (0.031) 0.064 (0.002)
For the Year Ended
December 31, 1998
Class 1A.............. 1.952 0.033 0.280 0.313 (0.035)
From inception April
1, 1998, through
December 31, 1998
Class 1B.............. 1.000 0.007 0.030 0.037 (0.031)
For the Year Ended
December 31
1997.................. 1.547 0.035 0.445 0.480 (0.031)
1996.................. 1.317 0.034 0.258 0.292 (0.034)
1995.................. 0.994 0.033 0.323 0.356 (0.033)
From inception, March
8, 1994, through
December 31, 1994.... 1.000 0.024 (0.005) 0.019 (0.024)
HARTFORD INTERNATIONAL
ADVISERS HLS FUND, INC.
For the Six Months
Ended June 30, 1999
(unaudited).......... 1.155 0.018 0.059 0.076 --
For the Year Ended
December 31, 1998
1998.................. 1.175 0.064 0.082 0.146 (0.039)
1997.................. 1.167 0.056 0.006 0.062 (0.050)
1996.................. 1.109 0.040 0.093 0.133 (0.051)
From inception, March
1, 1995, through
December 31, 1995.... 1.000 0.030 0.126 0.156 (0.030)
HARTFORD SMALL COMPANY
HLS FUND, INC.
For the Six Months
Ended June 30, 1999
(unaudited)
Class 1A.............. 1.321 (0.003) 0.294 0.291 --
Class 1B.............. 0.987 (0.002) 0.218 0.216 --
For the Year Ended
December 31, 1998
Class 1A.............. 1.202 (0.002) 0.141 0.139 --
From inception April
1, 1998, through
December 31, 1998
Class 1B.............. 1.000 (0.002) (0.011) (0.013) --
For the Year Ended
December 31
1997.................. 1.069 0.001 0.195 0.196 (0.001)
From inception, August
9, 1996 through
December 31, 1996.... 1.000 0.002 0.069 0.071 (0.002)
HARTFORD MIDCAP HLS FUND,
INC.
For the Six Months
Ended June 30, 1999
(unaudited).......... 1.439 0.031 0.306 0.338 --
For the Year Ended
December 31, 1998
1998.................. 1.137 (0.001) 0.303 0.302 (0.000)
From inception, July
15, 1997 through
December 31, 1997.... 1.000 0.001 0.137 0.138 (0.001)
HARTFORD GROWTH AND
INCOME HLS FUND
For the Six Months
Ended June 30, 1999
(unaudited)
Class 1A.............. 1.186 0.003 0.144 0.146 (0.000)
Class 1B.............. 1.094 0.013 0.223 0.236 --
From inception, May
31, 1998 through
December 31, 1998
Class 1A.............. 1.000 0.005 0.185 0.190 (0.004)
Class 1B.............. 1.000 0.009 0.088 0.097 (0.003)
HARTFORD HIGH YIELD HLS
FUND
For the Six Months
Ended June 30, 1999
(unaudited)
Class 1A.............. 1.017 0.033 (0.000) 0.033 (0.000)
Class 1B.............. 1.017 0.043 (0.012) 0.032 (0.000)
From inception,
September 21, 1998
through December 31,
1998
Class 1A.............. 1.000 0.019 0.017 0.036 (0.019)
Class 1B.............. 1.000 0.022 0.014 0.036 (0.019)
HARTFORD GLOBAL LEADERS
HLS FUND
For the Six Months
Ended June 30, 1999
(unaudited)
Class 1A.............. 1.285 0.012 0.161 0.173 --
Class 1B.............. 1.285 0.015 0.158 0.172 --
From inception,
September 30, 1998
through December 31,
1998
Class 1A.............. 1.000 0.001 0.318 0.319 (0.002)
Class 1B.............. 1.000 0.002 0.316 0.318 (0.001)
</TABLE>
(1) Annualized.
(2) Not annualized.
(3) Management fees were waived until assets (excluding assets contributed by
companies affiliated with The Hartford Investment Management Company)
reached $20 million. The ratio of 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.
(4) Information presented relates to a share of capital stock outstanding for
the indicated period.
(5) Excluding mortgage dollar rolls.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-78
<PAGE>
<TABLE>
<CAPTION>
-- SELECTED PER-SHARE DATA --
---------------------------------------------------------------------------------------------------
DISTRIBUTIONS
DIVIDENDS FROM NET NET ASSET
IN EXCESS OF REALIZED NET INCREASE VALUE AT
NET INVESTMENT GAINS ON DISTRIBUTIONS TOTAL (DECREASE) IN END
INCOME INVESTMENTS FROM CAPITAL DISTRIBUTIONS NET ASSETS VALUE OF PERIOD
--------------- -------------- -------------- -------------- ----------------- ----------
<S> <C> <C> <C> <C> <C> <C>
HARTFORD INDEX HLS FUND,
INC.
For the Six Months
Ended June 30, 1999
(unaudited)........... $-- $(0.057) $-- $(0.064) $ 0.360 $3.931
For the Year Ended
December 31, 1998
1998................... -- (0.072) -- (0.099) 0.692 3.570
1997................... -- (0.196) -- (0.231) 0.496 2.878
1996................... -- (0.039) -- (0.083) 0.354 2.382
1995................... -- (0.001) -- (0.045) 0.506 2.028
1994................... -- -- -- (0.038) (0.024) 1.522
HARTFORD INTERNATIONAL
OPPORTUNITIES HLS FUND,
INC.
For the Six Months
Ended June 30, 1999
(unaudited)
Class 1A............... -- -- -- (0.001) 0.145 1.500
Class 1B............... -- -- -- (0.001) 0.102 1.075
For the Year Ended
December 31, 1998
Class 1A............... -- (0.088) -- (0.107) 0.061 1.355
From inception April 1,
1998, through December
31, 1998
Class 1B............... -- -- -- (0.016) (0.028) 0.972
For the Year Ended
December 31
1997................... -- (0.104) -- (0.116) (0.113) 1.294
1996................... -- (0.037) -- (0.062) 0.101 1.407
1995................... -- (0.011) -- (0.031) 0.130 1.306
1994................... -- -- -- (0.016) (0.039) 1.176
HARTFORD DIVIDEND AND
GROWTH HLS FUND, INC.
For the Six Months
Ended June 30, 1999
(unaudited)
Class 1A............... -- (0.079) -- (0.080) 0.068 2.228
Class 1B............... -- (0.079) -- (0.080) (0.017) 0.989
For the Year Ended
December 31, 1998
Class 1A............... -- (0.070) -- (0.105) 0.208 2.160
From inception April 1,
1998, through December
31, 1998
Class 1B............... -- -- -- (0.031) 0.006 1.006
For the Year Ended
December 31
1997................... -- (0.044) -- (0.075) 0.405 1.952
1996................... -- (0.028) -- (0.062) 0.230 1.547
1995................... -- -- -- (0.033) 0.323 1.317
From inception, March
8, 1994, through
December 31, 1994..... -- (0.001) -- (0.025) (0.006) 0.994
HARTFORD INTERNATIONAL
ADVISERS HLS FUND, INC.
For the Six Months
Ended June 30, 1999
(unaudited)........... -- -- -- -- 0.076 1.231
For the Year Ended
December 31, 1998
1998................... (0.006) (0.032) (0.089) (0.166) (0.020) 1.155
1997................... -- (0.004) -- (0.054) 0.008 1.175
1996................... -- (0.024) -- (0.075) 0.058 1.167
From inception, March
1, 1995, through
December 31, 1995..... -- (0.017) -- (0.047) 0.109 1.109
HARTFORD SMALL COMPANY
HLS FUND, INC.
For the Six Months
Ended June 30, 1999
(unaudited)
Class 1A............... -- -- -- -- 0.291 1.612
Class 1B............... -- -- -- -- 0.216 1.203
For the Year Ended
December 31, 1998
Class 1A............... -- (0.020) -- (0.020) 0.119 1.321
From inception April 1,
1998, through December
31, 1998
Class 1B............... -- -- -- -- (0.013) 0.987
For the Year Ended
December 31
1997................... -- (0.062) -- (0.063) 0.133 1.202
From inception, August
9, 1996 through
December 31, 1996..... -- -- -- (0.002) 0.069 1.069
HARTFORD MIDCAP HLS FUND,
INC.
For the Six Months
Ended June 30, 1999
(unaudited)........... -- (0.033) -- (0.033) 0.305 1.744
For the Year Ended
December 31, 1998
1998................... -- -- -- (0.000) 0.302 1.439
From inception, July
15, 1997 through
December 31, 1997..... -- -- -- (0.001) 0.137 1.137
HARTFORD GROWTH AND
INCOME HLS FUND
For the Six Months
Ended June 30, 1999
(unaudited)
Class 1A............... -- -- -- (0.000) 0.146 1.332
Class 1B............... -- -- -- -- 0.236 1.330
From inception, May 31,
1998 through December
31, 1998
Class 1A............... -- -- -- (0.004) 0.186 1.186
Class 1B............... -- -- -- (0.003) 0.094 1.094
HARTFORD HIGH YIELD HLS
FUND
For the Six Months
Ended June 30, 1999
(unaudited)
Class 1A............... -- (0.000) -- (0.000) 0.032 1.049
Class 1B............... -- (0.000) -- (0.000) 0.031 1.048
From inception,
September 21, 1998
through December 31,
1998
Class 1A............... -- -- -- (0.019) 0.017 1.017
Class 1B............... -- -- -- (0.019) 0.017 1.017
HARTFORD GLOBAL LEADERS
HLS FUND
For the Six Months
Ended June 30, 1999
(unaudited)
Class 1A............... -- (0.005) -- (0.005) 0.168 1.453
Class 1B............... -- (0.005) -- (0.005) 0.167 1.452
From inception,
September 30, 1998
through December 31,
1998
Class 1A............... -- (0.032) -- (0.034) 0.285 1.285
Class 1B............... -- (0.032) -- (0.033) 0.285 1.285
<CAPTION>
-- RATIOS AND SUPPLEMENTAL DATA --
-------------------------------------------------------------------------------
RATIO OF RATIO OF RATIO OF
EXPENSES EXPENSES NET
NET ASSETS TO AVERAGE TO AVERAGE INVESTMENT
AT END OF NET ASSETS NET ASSETS INCOME PORTFOLIO
TOTAL PERIOD AFTER BEFORE TO AVERAGE TURNOVER
RETURN (IN THOUSANDS) WAIVERS WAIVERS NET ASSETS RATE
----------- --------------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
HARTFORD INDEX HLS FUND,
INC.
For the Six Months
Ended June 30, 1999
(unaudited)........... 12.09% $2,254,505 0.21% --% 0.50% 1.64%
For the Year Ended
December 31, 1998
1998................... 28.06 1,846,117 0.40 -- 1.21 4.5
1997................... 32.61 1,123,455 0.39 -- 1.52 5.7
1996................... 22.09 621,065 0.39 -- 2.07 19.3
1995................... 36.55 318,253 0.39 -- 2.46 1.5
1994................... 0.94 157,660 0.45 -- 2.50 1.8
HARTFORD INTERNATIONAL
OPPORTUNITIES HLS FUND,
INC.
For the Six Months
Ended June 30, 1999
(unaudited)
Class 1A............... 10.80 1,283,660 0.30 -- 0.97 60.3
Class 1B............... 10.70 1,254 0.38 -- 1.03 --
For the Year Ended
December 31, 1998
Class 1A............... 13.16(2) 1,196,694 0.77 -- 1.51 157.4
From inception April 1,
1998, through December
31, 1998
Class 1B............... (1.13)(2) 663 0.94(1) -- 0.71(1) --
For the Year Ended
December 31
1997................... 0.34 1,092,946 0.77 -- 1.48 72.7
1996................... 12.91 996,543 0.79 -- 1.74 70.0
1995................... 13.93 686,475 0.86 -- 1.60 55.6
1994................... (1.94) 563,765 0.85 -- 1.42 46.4
HARTFORD DIVIDEND AND
GROWTH HLS FUND, INC.
For the Six Months
Ended June 30, 1999
(unaudited)
Class 1A............... 7.22 3,319,525 0.33 -- 0.81 32.2
Class 1B............... 7.12 14,020 0.42 -- 0.72 --
For the Year Ended
December 31, 1998
Class 1A............... 16.42(2) 3,031,293 0.66 -- 1.81 48.2
From inception April 1,
1998, through December
31, 1998
Class 1B............... 3.67(2) 8,600 0.85(1) -- 1.57(1) --
For the Year Ended
December 31
1997................... 31.89 1,994,653 0.68 -- 2.21 34.2
1996................... 22.91 879,980 0.73 -- 2.52 56.9
1995................... 36.37 265,070 0.77 -- 2.91 41.4
From inception, March
8, 1994, through
December 31, 1994..... 1.60(2) 55,066 0.83(1) 1.64(1) 3.52(1)(3) 27.8
HARTFORD INTERNATIONAL
ADVISERS HLS FUND, INC.
For the Six Months
Ended June 30, 1999
(unaudited)........... 6.61 320,893 0.43 -- 1.53 77.3
For the Year Ended
December 31, 1998
1998................... 13.35 285,853 0.86 -- 2.77 161.1
1997................... 5.52 207,582 0.87 -- 3.08 162.5
1996................... 12.25 104,486 0.96 -- 3.24 95.2
From inception, March
1, 1995, through
December 31, 1995..... 13.24(2) 31,264 0.65(1) 1.23(1) 3.36(1)(3) 47.2
HARTFORD SMALL COMPANY
HLS FUND, INC.
For the Six Months
Ended June 30, 1999
(unaudited)
Class 1A............... 22.04 440,171 0.39 -- (0.24) 104.6
Class 1B............... 21.93 4,186 0.48 -- (0.33) --
For the Year Ended
December 31, 1998
Class 1A............... 11.62(2) 350,734 0.77 -- (0.24) 235.7
From inception April 1,
1998, through December
31, 1998
Class 1B............... (1.30)(2) 696 0.95(1) -- (0.46)(1) --
For the Year Ended
December 31
1997................... 18.38 210,769 0.77 -- 0.08 222.2
From inception, August
9, 1996 through
December 31, 1996..... 7.15(2) 42,812 0.72(1) 0.88(1) 0.31(1)(3) 31.8
HARTFORD MIDCAP HLS FUND,
INC.
For the Six Months
Ended June 30, 1999
(unaudited)........... 24.07 296,812 0.40 -- (0.10) 49.7
For the Year Ended
December 31, 1998
1998................... 26.57 143,494 0.79 -- (0.15) 134.1
From inception, July
15, 1997 through
December 31, 1997..... 13.81(2) 27,589 0.46(1) 0.86(1) 0.45(1)(3) 46.1
HARTFORD GROWTH AND
INCOME HLS FUND
For the Six Months
Ended June 30, 1999
(unaudited)
Class 1A............... 12.34 75,888 0.41 -- 0.31 22.1
Class 1B............... 12.24 13 0.51 -- 0.22 --
From inception, May 31,
1998 through December
31, 1998
Class 1A............... 19.05(2) 25,312 0.28(1) 0.84(1) 1.42(1)(3) 29.6
Class 1B............... 18.82(2) 11 0.44(1) 1.00(1) 1.34(1)(3) --
HARTFORD HIGH YIELD HLS
FUND
For the Six Months
Ended June 30, 1999
(unaudited)
Class 1A............... 3.23 36,668 0.12 0.27 4.26 23.3
Class 1B............... 3.11 107 0.22 0.36 4.16 --
From inception,
September 21, 1998
through December 31,
1998
Class 1A............... 3.59(2) 14,482 0.35(1) 0.92(1) 8.04(1)(3) 15.4
Class 1B............... 3.53(2) 102 0.53(1) 1.10(1) 7.77(1)(3) --
HARTFORD GLOBAL LEADERS
HLS FUND
For the Six Months
Ended June 30, 1999
(unaudited)
Class 1A............... 13.55 46,769 0.19 0.28 0.94 110.3
Class 1B............... 13.45 45 0.29 0.38 0.68 --
From inception,
September 30, 1998
through December 31,
1998
Class 1A............... 31.88(2) 5,761 0.89(1) 1.46(1) 0.63(1)(3) 47.9
Class 1B............... 31.82(2) 39 0.98(1) 1.55(1) 0.59(1)(3) --
</TABLE>
(1) Annualized.
(2) Not annualized.
(3) Management fees were waived until assets (excluding assets contributed by
companies affiliated with The Hartford Investment Management Company)
reached $20 million. The ratio of 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.
(4) Information presented relates to a share of capital stock outstanding for
the indicated period.
(5) Excluding mortgage dollar rolls.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-79
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
BB&T GROWTH & INCOME FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES DESCRIPTION VALUE
- ----------- -------------------------------------- ------------
<C> <S> <C>
COMMON STOCKS (97.3%):
AEROSPACE/DEFENSE -- (3.9%):
17,400 Lockheed Martin Corp.................. $ 648,150
21,000 Raytheon Co.-Class A.................. 1,446,375
------------
2,094,525
------------
APPAREL -- (0.8%):
10,600 VF Corp............................... 453,150
------------
BANKING -- (7.6%):
13,000 Banc One Corp......................... 774,313
19,600 Central Carolina Bank Financial
Corp................................ 1,036,349
5,700 J.P. Morgan & Co...................... 800,849
11,907 Old Kent Financial Corp............... 498,606
19,000 Pacific Century Financial Corp........ 409,688
7,200 Wachovia Corp......................... 616,050
------------
4,135,855
------------
BEVERAGES -- (1.9%):
14,400 Anheuser-Busch Cos., Inc.............. 1,021,500
------------
BUSINESS EQUIPMENT & SERVICES -- (0.8%):
7,000 Pitney Bowes, Inc..................... 449,750
------------
CAPITAL EQUIPMENT -- (1.7%):
19,900 Parker-Hannifin Corp.................. 910,425
------------
CHEMICALS -- (1.9%):
14,000 Air Products & Chemicals, Inc......... 563,500
9,400 Vulcan Materials Co................... 453,550
------------
1,017,050
------------
COMMUNICATIONS EQUIPMENT -- (2.1%):
28,200 Harris Corp........................... 1,105,088
------------
COMPUTER - PERIPHERALS -- (1.7%):
11,000 Adobe Systems, Inc.................... 903,719
------------
COMPUTER SOFTWARE -- (1.1%):
11,000 Computer Associates International,
Inc................................. 605,000
------------
COMPUTERS - MAIN & MINI -- (5.0%):
15,600 Hewlett-Packard Co.................... 1,567,799
8,800 International Business Machines
Corp................................ 1,137,400
------------
2,705,199
------------
CONTAINERS -- (0.9%):
16,800 Sonoco Products Co.................... 502,950
------------
COSMETICS/PERSONAL CARE -- (1.8%):
17,000 Kimberly-Clark Corp................... 969,000
------------
ELECTRICAL EQUIPMENT -- (1.9%):
16,500 Emerson Electric Co................... 1,037,438
------------
ELECTRONIC COMPONENTS -- (2.3%):
20,100 Avnet, Inc............................ 934,650
5,000 Intel Corp............................ 297,500
------------
1,232,150
------------
<CAPTION>
MARKET
SHARES DESCRIPTION VALUE
- ----------- -------------------------------------- ------------
<C> <S> <C>
ELECTRONIC INSTRUMENTS -- (1.2%):
22,150 Tektronix, Inc........................ $ 668,653
------------
ENGINEERING -- (0.9%):
12,400 Fluor Corp............................ 502,200
------------
FINANCIAL SERVICES -- (1.1%):
15,800 Deluxe Corp........................... 615,213
------------
FOOD & RELATED -- (5.5%):
26,000 Bob Evans Farms....................... 516,750
6,200 Dean Foods Co......................... 257,688
15,000 Dole Food Co., Inc.................... 440,625
46,800 SUPERVALU, Inc........................ 1,202,174
26,000 Universal Foods Corp.................. 549,250
------------
2,966,487
------------
FOREST & PAPER PRODUCTS -- (1.2%):
9,000 Weyerhaeuser Co....................... 618,750
------------
HEALTH CARE - DRUGS -- (1.9%):
22,200 Abbott Laboratories................... 1,010,100
------------
HEALTH CARE - GENERAL -- (1.8%):
26,600 Mallinckrodt, Inc..................... 967,575
------------
HOUSEHOLD - GENERAL PRODUCTS -- (3.6%):
26,000 American Greetings Corp............... 783,250
10,000 Corning, Inc.......................... 701,250
6,785 Unilever.............................. 473,254
------------
1,957,754
------------
HOUSEHOLD - MAJOR APPLIANCES -- (1.5%):
11,100 Whirlpool Corp........................ 821,400
------------
INSURANCE - LIFE & HEALTH -- (1.8%):
11,000 Aetna, Inc............................ 983,813
------------
INSURANCE - PROPERTY & CASUAL -- (5.0%):
20,200 Lincoln National Corp................. 1,056,712
23,800 SAFECO Corp........................... 1,050,175
17,600 Saint Paul Companies, Inc............. 559,900
------------
2,666,787
------------
LEISURE TIME INDUSTRY -- (1.4%):
26,300 Hasbro, Inc........................... 734,756
------------
MEDIA -- (2.4%):
22,000 Banta Corp............................ 462,000
16,100 Media General, Inc. Class A........... 821,100
------------
1,283,100
------------
MEDICAL EQUIPMENT & SUPPLIES -- (5.1%):
18,500 Bausch & Lomb, Inc.................... 1,415,249
13,700 Johnson & Johnson..................... 1,342,600
------------
2,757,849
------------
METAL FABRICATION -- (0.9%):
14,100 Trinity Industries, Inc............... 472,350
------------
OIL & GAS -- (1.2%):
13,100 National Fuel Gas..................... 635,350
------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
-------------------------------------------------- MF-81
--------------------------------------------------
<PAGE>
BB&T GROWTH & INCOME FUND
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS -- (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES DESCRIPTION VALUE
- ----------- -------------------------------------- ------------
PETROLEUM - DOMESTIC -- (3.3%):
<C> <S> <C>
19,100 Ashland, Inc.......................... $ 766,388
19,700 Phillips Petroleum Co................. 991,156
------------
1,757,544
------------
PETROLEUM - INTERNATIONAL -- (2.8%):
6,900 Chevron Corp.......................... 656,794
6,300 Mobil Corp............................ 623,700
3,500 Royal Dutch Petroleum Co.............. 210,875
------------
1,491,369
------------
PHARMACEUTICALS -- (3.1%):
8,600 Bristol-Myers Squibb Co............... 605,763
14,000 Merck & Co., Inc...................... 1,036,000
------------
1,641,763
------------
PHOTOGRAPHIC EQUIPMENT -- (0.3%):
2,000 Eastman Kodak Co...................... 135,500
------------
PUBLISHING -- (0.3%):
3,000 Houghton Mifflan Co................... 141,188
------------
RAILROAD -- (0.7%):
13,200 Norfolk Southern Corp................. 397,650
------------
RETAIL - FOOD STORES -- (1.5%):
15,400 Albertson's, Inc...................... 794,063
------------
RETAIL - GENERAL MERCHANDISE -- (1.3%):
17,400 May Department Stores Co.............. 711,225
------------
SECURITY & COMMISSION BROKERS -- (1.0%):
16,150 A.G. Edwards, Inc..................... 520,838
------------
TOBACCO -- (1.7%):
10,000 Philip Morris Co., Inc................ 401,875
17,200 UST, Inc.............................. 503,100
------------
904,975
------------
TRANSPORTATION - MARINE -- (0.3%):
8,000 Alexander & Baldwin, Inc.............. 178,000
------------
<CAPTION>
MARKET
SHARES DESCRIPTION VALUE
- ----------- -------------------------------------- ------------
<C> <S> <C>
UTILITIES - ELECTRIC -- (1.3%):
17,200 New Century Energies, Inc............. $ 667,575
1,100 Western Resources, Inc................ 29,288
------------
696,863
------------
UTILITIES - GAS & PIPELINE -- (0.6%):
7,900 Nicor, Inc............................ 300,694
------------
UTILITIES - TELEPHONE -- (7.2%):
27,150 AT&T Corp............................. 1,515,308
20,800 BellSouth Corp........................ 975,000
23,400 SBC Communications, Inc............... 1,357,200
------------
3,847,508
------------
Total Common Stocks................... 52,324,116
------------
U.S. GOVERNMENT AGENCY MORTGAGES -- (1.9%):
$ 1,000,000 Federal Home Loan Bank, 4.74%,
8/4/99.............................. 995,290
------------
Total U.S. Government Agency
Mortgages........................... 995,290
------------
INVESTMENT COMPANIES -- (2.2%):
1,181,743 Federated Government Obligation
Fund................................ 1,181,743
------------
Total Investment Companies............ 1,181,743
------------
TOTAL INVESTMENTS (COST $45,331,675) (A) -- 54,501,149
101.4%.............................................
------------
LIABILITIES IN EXCESS OF OTHER ASSETS -- (1.4)%.... (739,123)
------------
TOTAL NET ASSETS -- 100.0%......................... $53,762,026
------------
------------
</TABLE>
- --------------------------
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation (depreciation) of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation................... $10,532,513
Unrealized depreciation................... (1,363,039)
----------
Net unrealized appreciation............... $9,169,474
----------
----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
-------------------------------------------------- MF-82
--------------------------------------------------
<PAGE>
BB&T GROWTH & INCOME FUND
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<S> <C>
ASSETS:
Investments, at value (cost $45,331,675)...................................................... $54,501,149
Receivable for investment securities sold..................................................... 299,638
Interest and dividends receivable............................................................. 78,704
Prepaid expenses and other assets............................................................. 5,542
----------
Total Assets.............................................................................. 54,885,033
----------
LIABILITIES:
Dividends payable............................................................................. 202,391
Payable for investment securities purchased................................................... 866,997
Accrued expenses and other payables:
Investment advisory fees.................................................................... 25,983
Administration fees......................................................................... 217
Other....................................................................................... 27,419
----------
Total Liabilities......................................................................... 1,123,007
----------
NET ASSETS:
Capital....................................................................................... 44,404,114
Undistibuted (distributions in excess of) net investment income............................... (13,806)
Net unrealized appreciation (depreciation) from investments................................... 9,169,474
Accumulated undistributed net realized gains (losses) from investment transactions............ 202,244
----------
Net Assets................................................................................ $53,762,026
----------
----------
Outstanding units of beneficial interest (shares)............................................... 3,836,625
----------
----------
Net asset value -- offering and redemption price per share...................................... $ 14.01
----------
----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
-------------------------------------------------- MF-83
--------------------------------------------------
<PAGE>
BB&T GROWTH & INCOME FUND
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest income................................................................................ $ 23,576
Dividend income................................................................................ 553,850
---------
Total Income................................................................................. 577,426
EXPENSES:
Investment advisory fees....................................................................... 182,282
Administration fees............................................................................ 49,266
Custodian fees................................................................................. 6,557
Accounting fees................................................................................ 17,027
Legal fees..................................................................................... 16,261
Organization costs............................................................................. 2,734
Trustees' fees and expenses.................................................................... 2,890
Other.......................................................................................... 10,888
---------
Total expenses before voluntary reductions..................................................... 287,905
Expenses voluntarily reduced................................................................... (70,481)
---------
Net expenses................................................................................. 217,424
---------
Net Investment Income.......................................................................... 360,002
---------
REALIZED/UNREALIZED GAINS (LOSSES) FROM INVESTMENTS:
Net realized gains (losses) from investment transactions....................................... 262,147
Net change in unrealized appreciation (depreciation) from investments.......................... 2,498,442
---------
Net realized/unrealized gains (losses) from investments...................................... 2,760,589
---------
Change in net assets resulting from operations............................................... $3,120,591
---------
---------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
-------------------------------------------------- MF-84
--------------------------------------------------
<PAGE>
BB&T GROWTH & INCOME FUND
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS
ENDED
JUNE 30, 1999
-----------------
(UNAUDITED)
<S> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income......................................................................... $ 360,002
Net realized gains (losses) from investment transactions...................................... 262,147
Net change in unrealized appreciation (depreciation) from investments......................... 2,498,442
-----------------
Change in net assets resulting from operations................................................ 3,120,591
-----------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income.................................................................... (372,760)
-----------------
Change in net assets from shareholder distributions........................................... (372,760)
-----------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued................................................................... 2,367,182
Dividends reinvested.......................................................................... 313,840
Cost of shares redeemed....................................................................... (728,434)
-----------------
Change in net assets from capital transactions................................................ 1,952,588
-----------------
Change in net assets.......................................................................... 4,700,419
NET ASSETS:
Beginning of period........................................................................... 49,061,607
-----------------
End of period................................................................................. $ 53,762,026
-----------------
-----------------
SHARE TRANSACTIONS:
Issued........................................................................................ 179,205
Reinvested.................................................................................... 24,527
Redeemed...................................................................................... (55,365)
-----------------
Change in shares.............................................................................. 148,367
-----------------
-----------------
<CAPTION>
FOR THE YEAR
<S> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income......................................................................... $ 530,644
Net realized gains (losses) from investment transactions...................................... (36,048)
Net change in unrealized appreciation (depreciation) from investments......................... 4,670,681
-----------------
Change in net assets resulting from operations................................................ 5,165,277
-----------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income.................................................................... (514,713)
-----------------
Change in net assets from shareholder distributions........................................... (514,713)
-----------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued................................................................... 15,172,449
Dividends reinvested.......................................................................... 513,105
Cost of shares redeemed....................................................................... (103,445)
-----------------
Change in net assets from capital transactions................................................ 15,582,109
-----------------
Change in net assets.......................................................................... 20,232,673
NET ASSETS:
Beginning of period........................................................................... 28,828,934
-----------------
End of period................................................................................. $ 49,061,607
-----------------
-----------------
SHARE TRANSACTIONS:
Issued........................................................................................ 1,227,333
Reinvested.................................................................................... 42,578
Redeemed...................................................................................... (8,596)
-----------------
Change in shares.............................................................................. 1,261,315
-----------------
-----------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
-------------------------------------------------- MF-85
--------------------------------------------------
<PAGE>
BB&T GROWTH & INCOME FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 (UNAUDITED)
1. ORGANIZATION:
The BB&T Variable Insurance Funds (the "Trust") was organized on July 20,
1994, and is registered under the Investment Company Act of 1940, as amended
(the "Act"), as an open-end investment company established as a
Massachusetts business trust. Between the date of organization and the dates
of commencement of operations (June 3, 1997), the Trust had no operations
other than incurring organizational expenses and the sale of initial units
of beneficial interest ("shares").
The Trust is authorized to issue an unlimited number of shares of beneficial
interest without par value. The Trust presently offers shares of the BB&T
Growth & Income Fund (The "Fund"). Shares of the Fund are offered to a
separate account of Hartford Life Insurance Company, as well as other
eligible purchasers.
The investment objective of the Fund is to seek to provide capital growth,
current income or both. Under normal market conditions, it seeks this
objective by investing at least 65% of its total assets in stocks, which for
this purpose may include common stock, preferred stock, warrants, or debt
instruments that are, convertible into common stock.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by
the Trust in the preparation of its financial statements. The policies are
in conformity with generally accepted accounting principles. The preparation
of financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of income and
expenses for the period. Actual results could differ from those estimates.
SECURITIES VALUATION--Exchange listed securities are valued at the closing
sales price on the exchange on the day of computation, or, if there have
been no sales during such day, at the latest bid quotation. Unlisted
securities are valued at their latest bid quotation in their principal
market. If no such bid price is available, then such securities are valued
in good faith at their respective fair market values using methods
determined by or under the supervision of the Board of Trustees. Portfolio
securities with a remaining maturity of 60 days or less are valued either at
amortized cost or original cost plus accrued interest, which approximates
current value.
All other assets and securities, including securities for which market
quotations are not readily available, are valued at their fair market value
as determined in good faith under the general supervision of the Board of
Trustees.
SECURITIES TRANSACTIONS AND RELATED INCOME--Securities transactions are
accounted for on the date the security is purchased or sold (trade date).
Interest income is recognized on the accrual basis and includes, where
applicable, the pro rata amortization of premium or discount. Dividend
income is recorded on the ex-dividend date. Gains or losses realized on
sales of securities are determined by comparing the identified cost of the
security lot sold with the net sales proceeds.
DIVIDENDS AND DISTRIBUTIONS--Dividends from net investment income are
declared and paid quarterly for the Fund. Distributable net realized gains,
if any are declared and distributed at least annually.
The amounts of dividends from net investment income and of distributions
from net realized gains are determined in accordance with federal income tax
regulations, which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such
amounts are reclassified within the composition of net assets based on their
federal tax-basis treatment; temporary differences do not require
reclassification.
Dividends and distributions to shareholders which exceed net investment
income and net realized capital gains for financial reporting purposes but
not for tax purposes are reported as dividends in excess of net investment
income or distributions in excess of net realized gains. To the extent they
exceed net investment income and net realized gains for tax purposes, they
are reported as distributions of capital.
FEDERAL INCOME TAXES--It is the Funds's policy to comply with the
requirement of the Internal Revenue Code applicable to regulated investment
companies and to distribute timely, all, or substantially all, of its net
investment company taxable and net capital gains to shareholders. Therefore,
no federal income tax provision is required.
ORGANIZATION COSTS--Costs incurred by the Fund in connection with its
organization and registration of shares have been deferred and are amortized
using the straight-line method over a period of two years from
-------------------------------------------------- MF-86
--------------------------------------------------
<PAGE>
BB&T GROWTH & INCOME FUND
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
June 3, 1997, the commencement of the public offering of shares of the Fund.
In the event that any of the initial shares of the Fund are redeemed during
the amortization period by any holder thereof, the redemption proceeds may
be reduced by any unamortized organizational expenses of the Fund in the
same proportion as the number of said shares the Fund being redeemed bears
to the number of initial shares of the Fund of that fund that are
outstanding at the time of redemption.
OTHER--Expenses that are directly related to the Fund are charged directly
to the Fund.
3. PURCHASES AND SALES OF SECURITIES:
Cost of purchases and proceeds from sales of portfolio securities, excluding
short-term securities, were $4,297,703 and $2,296,838, respectively, for the
six months ended June 30, 1999.
4. RELATED PARTY TRANSACTIONS:
Investment advisory services are provided to the Fund by BB&T. Under the
terms of the investment advisory agreement, BB&T is entitled to receive fees
based on a percentage of the average daily net assets of the Fund.
BISYS Fund Services Ohio, Inc. ("BISYS Ohio"), with whom certain officers
and trustees of the Trust are affiliated, serves the Trust as Administrator.
Such officers and trustees are paid no fees directly by the Trust for
serving as officers and trustees of the Trust. Under the terms of the
Management and Administration Agreement between BISYS and the Trust, BISYS's
fees are computed daily as a percentage of the average net assets of the
Fund. BISYS Fund Services Limited Partnership ("BISYS") serves, without
compensation, as Distributor of the Fund. BISYS Ohio also serves the Fund as
Transfer agent and Mutual fund accountant. BISYS, an Ohio limited
partnership, and BISYS Ohio are subsidiaries of The BISYS Group, Inc.
Shares of the Trust are subject to a Variable Contract Owner Servicing Plan
(the "Servicing Plan") permitting payment of the compensation to financial
institutions that agree to provide certain administrative support services
for their customers or account holders. The Fund has entered into a specific
arrangement with BISYS for the provision of such services and reimburses
BISYS for its cost of providing these services, subject to a maximum annual
rate equal to 0.25% of the average daily net assets of the Fund.
Fees may be voluntarily reduced or reimbursed to assist the Fund in
maintaining competitive expense ratios. Information regarding these
transactions is as follows for the six months ended June 30, 1999:
<TABLE>
<S> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee
reductions (percentage of average
net assets)........................ 0.74%
Voluntary fee reductions............. $ 33,532
ADMINISTRATION FEES:
Annual fee before voluntary fee
reductions (percentage of average
net assets)........................ 0.20%
Voluntary fee reductions............. $ 36,949
TRANSFER AGENT AND FUND ACCOUNTANT
FEES: $ 22,659
</TABLE>
-------------------------------------------------- MF-87
--------------------------------------------------
<PAGE>
BB&T GROWTH & INCOME FUND
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE YEAR JUNE 3, 1997
ENDED THROUGH
DECEMBER 31, 1998 DECEMBER 31, 1997(B)
SIX MONTHS ----------------- --------------------
ENDED
JUNE 30,
1999(A)
---------------
(UNAUDITED)
<S> <C> <C> <C>
NET ASSETS VALUE, BEGINNING OF PERIOD.................................... $ 13.30 $ 11.88 $ 10.00
------- ------- -------
INVESTMENT ACTIVITIES:
Net investment income.................................................. 0.10 0.16 0.10
Net realized and unrealized gain....................................... 0.71 1.42 1.89
------- ------- -------
Total investment activities............................................ 0.81 1.58 1.99
------- ------- -------
DISTRIBUTIONS:
Net investment income.................................................. (0.10) (0.16) (0.10)
In excess of net investment income..................................... -- -- (0.01)
------- ------- -------
Total distributions.................................................... (0.10) (0.16) (0.11)
------- ------- -------
NET ASSET VALUE, END OF PERIOD......................................... $ 14.01 $ 13.30 $ 11.88
------- ------- -------
------- ------- -------
Total Return........................................................... 6.12%(c) 13.36% 19.96%(c)
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of period (000)..................................... $ 53,762 $ 49,062 $ 28,829
Ratio of expenses to average net assets................................ 0.88%(d) 0.91% 0.91%(d)
Ratio of net investment income to average net assets................... 1.46%(d) 1.37% 1.68%(d)
Ratio of expenses to average net assets*............................... 1.17%(d) 1.24% 2.31%(d)
Ratio of net investment income to average net assets*.................. 1.17%(d) 1.04% 0.28%(d)
Portfolio turnover rate................................................ 4.78% 2.77% 7.75%
</TABLE>
- ------------------------
(a) Net investment income is based on average shares outstanding during the
period.
(b) Period from commencement of operations.
(c) Not annualized.
(d) Annualized.
* During the period certain fees were reimbursed and voluntarily reduced. If
such reimbursements and voluntary fee reductions had not occurred, the
ratios would have been as indicated.
-------------------------------------------------- MF-88
--------------------------------------------------
<PAGE>
AMSOUTH EQUITY INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL MARKET
AMOUNT VALUE
- ---------- -----------
<C> <S> <C>
COMMON STOCKS & SECURITIES CONVERTIBLE TO COMMON STOCKS --
BASIC MATERIALS -- 3.3%
6,100 E.I. du Pont de Nemours................. $ 416,706
8,000 Sealed Air Corp., CVT. PFD., 4/1/18..... 500,000
-----------
916,706
-----------
CAPITAL GOODS/DIVERSIFIED -- 6.3%
6,650 Emerson Electric Co..................... 418,119
6,850 General Electric Co..................... 774,050
18,100 Ingersoll-Rand Co., 6.75%, CVT. PFD., 543,000
12/31/49................................
-----------
1,735,169
-----------
CONSUMER CYCLICAL -- 2.8%
5,350 Ford Motor Co........................... 301,940
8,300 Mattel, Inc............................. 219,431
8,900 Tribune/The Learning Co., 6.25%, CVT. 250,313
PFD., 8/1/01............................
-----------
771,684
-----------
ENERGY -- 6.5%
7,300 Mobil Corp.............................. 722,700
12,350 Shell Transport & Trading PLC (ADR)..... 572,731
11,900 Williams Companies, Inc................. 506,494
-----------
1,801,925
-----------
FINANCE -- 15.8%
14,100 Citigroup, Inc.......................... 669,750
6,200 Fannie Mae.............................. 423,925
4,550 J.P. Morgan & Co........................ 639,275
6,050 Jefferson Pilot/ NationsBank (ACES)..... 744,150
30,540 Lincoln National Corp., 7.75%, CVT. 830,306
PFD., 8/16/01...........................
20,100 National Australia Bank, 7.88%, CVT. 610,538
PFD.,12/31/49...........................
7,850 Wilmington Trust Corp................... 450,394
-----------
4,368,338
-----------
HEALTH CARE -- 11.0%
9,600 American Home Products Corp............. 551,999
520,000 Athena Neurosciences, Inc., 4.75%, 546,650
11/15/04................................
7,800 Bristol-Myers Squibb Co................. 549,413
290,000 Centocor, Inc., 4.75%, CVT. BD., 327,700
2/15/05.................................
2,650 Johnson & Johnson....................... 259,700
8,950 Monsanto (ACES), 6.50%, CVT. PFD., 359,119
11/30/01................................
7,800 Pharmacia & Upjohn, Inc................. 443,138
-----------
3,037,719
-----------
RETAILING -- 6.1%
895,000 Costco Co., Inc., 0.00%, CVT. BD., 817,806
8/19/02.................................
10,800 Dollar General Corp..................... 313,200
7,400 Dollar General STRYPES Trust............ 317,275
230,000 Rite Aid Corp., 5.25%, CVT. BD., 231,438
9/15/02.................................
-----------
1,679,719
-----------
<CAPTION>
SHARES
OR
PRINCIPAL MARKET
AMOUNT VALUE
- ---------- -----------
<C> <S> <C>
</TABLE>
<TABLE>
<C> <S> <C>
SERVICES -- 5.5%
12,800 McDonald's Corp......................... $ 528,800
220,000 Omnicom Group, 4.25%, CVT. BD., 1/3/07.. 542,300
14,800 The Walt Disney Co...................... 456,025
-----------
1,527,125
-----------
STAPLES -- 7.7%
7,400 Coca-Cola Co............................ 462,500
7,900 H.J. Heinz Co........................... 395,988
6,500 Hershey Foods Corp...................... 385,938
9,600 Mc Cormick & Co., Inc................... 303,000
9,000 Quaker Oats Co.......................... 597,374
-----------
2,144,800
-----------
TECHNOLOGY -- 22.9%
24,300 Amdocs Ltd., 6.75%, CVT. PFD., 540,675
9/11/02.................................
8,800 Corning Glass Works..................... 617,100
120,000 EMC Corp., 3.25%, CVT. BD., 3/15/02..... 595,500
4,300 I.B.M. Corp............................. 555,775
3,000 Intel Corp.............................. 178,500
120,000 Level One Communications, 4.00%, CVT. 234,300
BD., 9/1/04.............................
5,900 Motorola, Inc........................... 559,025
17,800 Nextel STRYPES Trust, 7.25%, CVT. PFD., 747,599
5/15/00.................................
9,650 Pitney Bowes, Inc....................... 620,013
4,800 Texas Instruments, Inc.................. 696,000
7,100 United Technologies Corp................ 508,981
8,700 Xerox Corp.............................. 513,844
-----------
6,367,312
-----------
TRANSPORTATION -- 0.9%
4,800 Union Pacific, 6.25%, CVT. PFD., 247,200
4/1/28..................................
-----------
UTILITIES -- 10.2%
8,100 Ameritech Corp.......................... 595,350
16,300 BCE, Inc................................ 803,794
17,100 Nisource, Inc., 7.75%, CVT. PFD., 844,312
2/19/03.................................
1 Sempra Energy........................... 23
16,300 Skytel Communications, Inc./ Worldcom, 594,950
CVT. PFD., 12/31/49.....................
-----------
2,838,429
-----------
Total Common Stocks & Securities 27,436,126
Convertible to Common Stocks............
-----------
-----------
INVESTMENT COMPANIES -- 0.8%
228,779 Firstar Stellar Treasury Fund........... $ 228,779
-----------
Total Investment Companies.............. 228,779
-----------
TOTAL (Cost $24,712,835)(a)............. $27,664,905
-----------
-----------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-89
<PAGE>
AMSOUTH EQUITY INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS -- (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
- ------------------------------
Percentages indicated are based on net assets of $27,712,501.
(a) Represents cost for federal income tax purposes and differs from value by
net appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation.............. $3,336,096
Unrealized depreciation.............. (384,026)
---------
Net unrealized appreciation.......... $2,952,070
---------
---------
</TABLE>
<TABLE>
<C> <C> <S>
ACES -- Adjustable Conversion-Rate Equity Securities
ADR -- American Depository Receipt
CVT. PFD -- Convertible Preferred
CVT. BD -- Convertible Bond
PLC -- Public Limited Co.
STRYPES -- Structured Yield Product Exchangeable for Stock
</TABLE>
<TABLE>
<CAPTION>
BREAKDOWN OF SECTORS
- -----------------------------------------------------------
<S> <C>
Common Stocks.............................................. 61.3%
Convertible Preferred Stocks............................... 25.8%
Convertible Bonds.......................................... 11.9%
Investment Companies....................................... .8%
---
TOTAL.................................................... 99.8%
---
---
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-90
<PAGE>
AMSOUTH SELECT EQUITY FUND
- --------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------ ----------
<C> <S> <C>
COMMON STOCKS -- 99.3%
COMPUTER SOFTWARE -- 3.8%
1,500 IMS Health, Inc......................... $ 46,875
----------
CONSUMER GOODS -- 4.1%
1,700 American Greetings Corp., Class A....... 51,213
----------
DATA PROCESSING & REPRODUCTION -- 8.5%
2,400 Automatic Data Processing, Inc.......... 105,600
----------
ELECTRICAL EQUIPMENT -- 10.5%
2,900 Hubbell Harvey, Inc., Class B........... 131,587
----------
ELECTRONIC COMPONENTS/INSTRUMENTS --
9.6%
1,900 Emerson Electric Co..................... 119,462
----------
FINANCIAL SERVICES -- 9.7%
1,700 Dun & Bradstreet Corp................... 60,243
1,200 H & R Block, Inc........................ 60,000
----------
120,243
----------
FOOD DISTRIBUTORS & WHOLESALERS -- 10.6%
2,000 Ralston Purina Co....................... 60,874
700 Smuckers Co., Class A................... 15,575
1,900 SYSCO Corp.............................. 56,644
----------
133,093
----------
FOOD PROCESSING & PACKAGING -- 3.4%
700 Hershey Foods Corp...................... 41,563
----------
MACHINERY & EQUIPMENT -- 4.3%
600 Briggs & Stratton Corp.................. 34,650
500 Snap-On, Inc............................ 18,094
----------
52,744
----------
MEDIA -- 1.2%
500 Nielsen Media Research (b).............. 14,625
----------
NEWSPAPERS -- 8.3%
800 Gannett Co., Inc........................ 57,100
600 Lee Enterprises......................... 18,300
<CAPTION>
MARKET
SHARES VALUE
- ------ ----------
<C> <S> <C>
</TABLE>
NEWSPAPERS -- (CONTINUED)
<TABLE>
<C> <S> <C>
50 Washington Post, Class B................ $ 26,888
----------
102,288
----------
OFFICE EQUIPMENT & SERVICES -- 4.7%
900 Pitney Bowes, Inc....................... 57,825
----------
PHARMACEUTICALS -- 8.0%
1,400 Bristol-Myers Squibb Co................. 98,613
----------
POLLUTION CONTROL SERVICES
& EQUIPMENT -- 6.9%
1,600 Waste Management, Inc................... 86,000
----------
RESTAURANTS -- 4.7%
1,400 McDonald's Corp......................... 57,838
----------
TOBACCO -- 1.0%
300 Philip Morris Cos., Inc................. 12,056
----------
Total Common Stocks..................... 1,231,625
----------
INVESTMENT COMPANIES -- 4.2%
51,137 BONY Hamilton Prime Money Market Fund... 51,137
601 BONY Hamilton Treasury Money Market 601
Fund....................................
----------
Total Investment Companies.............. 51,738
----------
TOTAL (Cost $1,274,687) (a)............. 1,283,363
----------
----------
-------------------------------
</TABLE>
Percentages indicated are based on net assets of $1,239,820.
(a) Represents cost for financial reporting purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation................ $ 34,445
Unrealized depreciation................ (25,769)
---------
Net unrealized appreciation............ $ 8,676
---------
---------
</TABLE>
(b) Represents non-income producing securities.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-91
<PAGE>
AMSOUTH VARIABLE INSURANCE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
EQUITY INCOME SELECT EQUITY
FUND FUND
-------------- --------------
<S> <C> <C>
ASSETS:
Investments, at value (cost
$24,712,835 and $1,274,687).......... $27,664,905 $1,283,363
Interest and dividends receivable..... 49,051 1,958
Receivable for investments sold....... 261,757 --
Unamortized organization costs........ 1,831 --
Reimbursement receivable.............. 3,050 10,330
Prepaid expenses and other............ 5,347 --
-------------- --------------
Total Assets...................... 27,985,941 1,295,651
-------------- --------------
LIABILITIES:
Payable for investments purchased..... 244,966 46,043
Accrued expenses and other payables:
Investment advisory fees............ 4,907 279
Administration fees................. 444 --
Distribution fees................... 5,433 195
Other............................... 17,690 9,314
-------------- --------------
Total Liabilities................. 273,440 55,831
-------------- --------------
NET ASSETS:
Capital............................... 24,599,100 1,231,006
Undistibuted (distributions in excess
of) net investment income............ (14,540) 138
Net unrealized appreciation
(depreciation) on investments........ 2,952,070 8,676
Undistributed net realized gains
(losses) on investment
transactions......................... 175,871 --
-------------- --------------
Net Assets........................ $27,712,501 $1,239,820
-------------- --------------
-------------- --------------
Outstanding units of beneficial interest
(shares)............................... 2,263,537 124,923
-------------- --------------
-------------- --------------
Net asset value -- offering and
redemption price per share............. $ 12.24 $ 9.92
-------------- --------------
-------------- --------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-92
<PAGE>
AMSOUTH VARIABLE INSURANCE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
EQUITY INCOME SELECT EQUITY
FUND FUND(A)
-------------- --------------
<S> <C> <C>
INVESTMENT INCOME:
Interest income....................... $ 100,126 $--
Dividend income....................... 226,715 3,211
-------------- --------------
Total income........................ 326,841 3,211
-------------- --------------
EXPENSES:
Investment advisory fees.............. 72,657 962
Administration fees................... 24,219 241
Distribution fees..................... 30,274 301
Custodian fees........................ 694 7
Accounting fees....................... 5,468 384
Legal fees............................ 10,965 3,933
Audit fees............................ 5,361 2,378
Organization costs.................... 3,102 --
Trustees' fees and expenses........... 2,784 1,218
Transfer agent fees................... 1,779 18
Printing costs........................ 2,378 1,392
Insurance............................. 2,808 1,392
Other................................. 50 --
-------------- --------------
Total expenses........................ 162,539 12,226
Expenses waived....................... (10,899) (373)
Expenses voluntarily reimbursed....... (3,050) (10,330)
-------------- --------------
Net expenses........................ 148,590 1,523
-------------- --------------
Net investment income................. 178,251 1,688
-------------- --------------
REALIZED/UNREALIZED GAINS (LOSSES) ON
INVESTMENTS:
Net realized gains (losses) from
investment transactions.............. 1,457,073 --
Net change in unrealized appreciation
(depreciation) from investments...... 653,330 8,676
-------------- --------------
Net realized/unrealized gains
(losses) on investments............ 2,110,403 8,676
-------------- --------------
Change in net assets resulting from
operations......................... $2,288,654 $ 10,364
-------------- --------------
-------------- --------------
</TABLE>
(a) For the period from May 3, 1999 (commencement of operations) through June
30, 1999.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-93
<PAGE>
AMSOUTH VARIABLE INSURANCE FUNDS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
EQUITY INCOME SELECT EQUITY
FUND FUND
----------------------------- --------------
SIX MONTHS FOR THE PERIOD
ENDED YEAR ENDED ENDED
JUNE 30, DECEMBER 31, JUNE 30,
1999 1999 1999(A)
----------- ---------------- --------------
<S> <C> <C> <C>
<CAPTION>
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income............ $ 178,251 $ 303,721 $ 1,688
Net realized gains (losses) from
investment transactions......... 1,457,073 (1,278,675) --
Net change in unrealized
appreciation/depreciation from
investments..................... 653,330 2,263,855 8,676
----------- ---------------- --------------
Change in net assets resulting
from operations................. 2,288,654 1,288,901 10,364
----------- ---------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income....... (184,084) (304,238) (1,550)
In excess of net investment
income.......................... -- (9,161) --
----------- ---------------- --------------
Change in net assets resulting
from shareholder
distributions................... (184,084) (313,399) (1,550)
----------- ---------------- --------------
CAPITAL TRANSACTIONS:
Proceeds from shares issued...... 4,128,365 20,248,784 1,229,456
Dividends reinvested............. 184,084 313,399 1,550
Cost of shares redeemed.......... (1,247,254) (1,381,615) --
----------- ---------------- --------------
Change in net assets from capital
transactions.................... 3,065,195 19,180,568 1,231,006
----------- ---------------- --------------
Change in net assets............. 5,169,765 20,156,070 1,239,820
NET ASSETS:
Beginning of period.............. 22,542,736 2,386,666 --
----------- ---------------- --------------
End of period.................... $27,712,501 $ 22,542,736 $1,239,820
----------- ---------------- --------------
----------- ---------------- --------------
SHARE TRANSACTIONS:
Issued........................... 353,301 1,874,103 124,767
Reinvested....................... 15,727 29,521 156
Redeemed......................... (107,433) (134,871) --
----------- ---------------- --------------
Change in shares................. 261,595 1,768,753 124,923
----------- ---------------- --------------
----------- ---------------- --------------
</TABLE>
(a) For the period from May 3, 1999 (commencement of operations) through June
30, 1999.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-94
<PAGE>
AMSOUTH VARIABLE INSURANCE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1999 (UNAUDITED)
1. ORGANIZATION:
The Variable Insurance Funds (the Trust) was organized on July 20, 1994, and
is registered under the Investment Company Act of 1940, as amended (the
"Act"), as a diversified, open-end management investment company established
as a Massachusetts business trust.
The Trust is authorized to issue an unlimited number of shares without par
value. The Trust currently offers shares of the AmSouth Equity Income Fund
("Equity Income") and the AmSouth Select Equity Fund ("Select Equity")
(collectively, "the Funds" and individually "a Fund"). Shares of the Funds
are offered to a separate account of Hartford Life Insurance Company, as
well as other eligible purchasers.
The Equity Income Fund seeks to provide above average income and capital
appreciation. It seeks this objective by investing, under normal market
conditions, at least 65% of its total assets in income-producing equity
securities, including common stock, preferred stock, and securities that are
convertible into common stocks, such as convertible bonds and convertible
preferred stocks. The Select Equity Fund seeks to provide long-term growth
of capital by investing primarily in common stocks and securities
convertible into common stocks, such as convertible bonds and convertible
preferred stocks.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by
the Trust in the preparation of its financial statements. The policies are
in conformity with generally accepted accounting principles ("GAAP"). The
preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities
at the date of the financial statements and the reported amounts of income
and expenses for the period. Actual results could differ from those
estimates.
SECURITIES VALUATION--Exchange-listed securities are valued at the closing
price on the exchange on the day of computation, or, if there have been no
sales during such day, at the latest bid quotation. Unlisted securities are
valued at their latest bid quotation in their principal market. If no such
bid is available, then such securities are valued in good faith at their
respective fair market values using methods determined by or under the
supervision of the Trust's Board of Trustees. Portfolio securities with a
remaining maturity of 60 days or less are valued either at amortized cost or
original cost plus accrued interest, which approximates current value.
SECURITIES TRANSACTIONS AND RELATED INCOME--Securities transactions are
accounted for on the date the security is purchased or sold (trade date).
Interest income is recognized on the accrual basis and includes, where
applicable, the pro rata amortization of premium or discount. Dividend
income is recorded on the ex-dividend date. Gains or losses realized on
sales of securities are determined by comparing the identified cost of the
security lot sold with the net sales proceeds.
REPURCHASE AGREEMENTS--The Funds may enter into repurchase agreements with
member banks of the Federal Deposit Insurance Corporation and from
registered broker/dealers that AmSouth Bank ("AmSouth") deems creditworthy
under guidelines approved by the Trust's Board of Trustees, subject to the
seller's agreement to repurchase such securities at a mutually agreed-upon
date and price. The repurchase price generally equals the price paid by the
Funds plus interest negotiated on the basis of current short-term rates,
which may be more or less than the rate on the underlying collateral. The
seller, under a repurchase agreement, is required to maintain the value of
collateral held pursuant to the agreement at not less than the repurchase
price (including accrued interest).
DIVIDENDS TO SHAREHOLDERS--Dividends from net investment income, if any, are
declared and paid monthly for the Funds. Distributable net realized gains,
if any, are declared and distributed at least annually.
Dividends from net investment income and net realized capital gains are
determined in accordance with income tax regulations, which may differ from
GAAP. These differences are primarily due to differing treatments of
deferrals of certain losses.
These "book/tax" differences are considered to be either temporary or
permanent in nature. To the extent these differences are permanent in
nature, such amounts are reclassified within the composition of net assets
based on their federal tax-basis treatment; temporary differences do not
require reclassifications. Dividends and distributions to shareholders which
exceed net investment income and net realized gains for financial reporting
purposes but not for tax purposes are reported as dividends in excess of net
investment income or distributions in excess of net realized gains. To the
extent they exceed net investment income
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-95
<PAGE>
AMSOUTH VARIABLE INSURANCE FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
and net realized gains for tax purposes, they are reported as distribution
of capital.
FEDERAL INCOME TAXES--It is the intention of the Funds to continue to
qualify as a regulated investment company by complying with the provisions
available to certain investment companies, as defined in applicable sections
of the Internal Revenue Code, and to make distributions of net investment
income and net realized capital gains sufficient to relieve it from all, or
substantially all, federal income taxes.
ORGANIZATION COSTS--Costs incurred by the Equity Income Fund, in connection
with its organization and registration of shares have been deferred and are
amortized using the straight-line method over a period of two years from the
commencement of the public offering of shares of the Fund. In the event that
any of the initial shares of the Equity Income Fund are redeemed during the
amortization period by any holder thereof, the redemption proceeds may be
reduced by any unamortized organizational expenses of the Equity Income Fund
in the same proportion as the number of said shares of the Equity Income
Fund being redeemed bears to the number of initial shares of the Equity
Income Fund that are outstanding at the time of redemption.
OTHER--Expenses that are directly related to a Fund are charged directly to
that Fund, while general Trust expenses are allocated between the Funds
based on their relative net assets or another appropriate method.
3. PURCHASES AND SALES OF SECURITIES:
Purchases and sales of portfolio securities (excluding short-term
securities) for the period from January 1, 1999 through June 30, 1999 were
as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
----------- -----------
<S> <C> <C>
AmSouth Equity Income Fund $17,928,498 $14,526,017
AmSouth Select Equity Fund(a) $ 1,222,949 $ --
- ----------------------------------
</TABLE>
(a) For the period from May 3, 1999 (commencement of operations) through
June 30, 1999.
4. RELATED PARTY TRANSACTIONS:
Investment advisory services are provided to the Funds by AmSouth. Under the
terms of the investment advisory agreement, AmSouth is entitled to receive
fees based on a percentage of the average daily net assets of the Funds.
Sub-advisory services are provided to the Equity Income Fund by Rockhaven
Asset Management, LLC ("Rockhaven"). Under the terms of the sub-advisory
agreement, Rockhaven is entitled to receive fees, payable by AmSouth, based
on a percentage of the average daily net assets of the Fund, provided that
if AmSouth waives a portion of its investment advisory fee, Rockhaven has
agreed that its sub-advisory fee shall not exceed 60% of AmSouth's net
investment advisory fee.
Sub-advisory services are provided to the Select Equity Fund by Oakbrook
Investments, LLC ("Oakbrook"). Under the terms of the sub-advisory
agreement, Oakbrook is entitled to receive fees, payable by AmSouth, based
on a percentage of the average daily net assets of the Fund, provided that
if AmSouth waives a portion of its investment advisory fee, Oakbrook has
agreed that its sub-advisory fee shall not exceed 70% of AmSouth's net
investment advisory fee.
AmSouth also serves as custodian for the Funds. Pursuant to the Custodian
Agreement with the Trust, the Custodian receives compensation from the Funds
for such services in an amount equal to an asset-based fee plus fixed fees
charged for certain portfolio transactions and out-of-pocket expenses.
BISYS Fund Services Ohio, Inc. (BISYS Ohio) with which certain officers and
trustees of the Trust are affiliated, serves the Trust as Administrator.
Such officers and trustees are paid no fees directly by the Trust for
serving as officers and trustees of the Trust. Under the terms of the
Management and Administration Agreement between BISYS Ohio and the Trust,
BISYS Ohio's fees are computed daily as a percentage of the average net
assets of the Funds. BISYS Fund Services Limited Partnership ("BISYS")
serves, without compensation, as Distributor of the Fund's. BISYS Ohio also
serves the Funds as Transfer agent and Mutual fund accountant. BISYS, an
Ohio limited partnership, and BISYS Ohio are subsidiaries of The BISYS
Group, Inc.
Shares of the Trust are subject to a Variable Contract Owner Servicing Plan
(the "Servicing Plan") permitting payment of compensation to financial
institutions that agree to provide certain administrative support services
for their customers or account holders. The Funds have entered into a
specific arrangement with BISYS for the provision of such services and
reimburses BISYS for its cost of providing these services, subject to a
maximum annual rate equal to 0.25% of the average daily net assets of the
Funds.
Fees may be voluntarily reduced or reimbursed to assist the Funds in
maintaining competitive expense
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-96
<PAGE>
ratios. Information regarding these transactions is as follows for the
six-month period ended June 30, 1999:
<TABLE>
<CAPTION>
EQUITY INCOME SELECT EQUITY(A)
-------------- -----------------
<S> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee
reductions (percentage of average
daily net assets) 0.60% 0.80%
Voluntary fee reductions $10,899 $ 96
ADMINISTRATION FEES:
Annual fee before voluntary fee
reductions and reimbursements
(percentage of average daily net
assets) 0.20% 0.20%
Voluntary fee reductions $-- $ 241
Voluntary fee reimbursements $ 3,050 $10,330
VARIABLE CONTRACT OWNER SERVICING FEES:
Annual fee (percentage of average
daily net assets) 0.25% 0.25%
CUSTODIAN FEES:
Annual fee (percentage of average
daily net assets) 0.006% 0.006%
TRANFER AGENT FEES:
Annual fee (percentage of average
daily net assets) 0.015% 0.015%
MUTUAL FUND ACCOUNTING FEES:
Annual fee before voluntary fee
reductions
(percentage of average daily net
assets) 0.03% 0.03%
Voluntary fee reductions $-- $ 36
- ----------------------------------
</TABLE>
(a) For the period from May 3, 1999 (commencement of operations) through
June 30, 1999.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-97
<PAGE>
AMSOUTH VARIABLE INSURANCE FUNDS
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
EQUITY INCOME SELECT EQUITY
------------------------------------------------- --------------
FOR THE YEAR OCTOBER 23, MAY 3,
SIX MONTHS ENDED ENDED 1997 TO 1999 TO
JUNE 30, DECEMBER 31, DECEMBER 31, JUNE 30,
1999 1998 1997(A) 1999(A)
----------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
<CAPTION>
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD....................... $ 11.26 $ 10.23 $10.00 $10.00
------- ------------- ------ ------
INVESTMENT ACTIVITIES:
Net investment income....... 0.08 0.22 0.03 0.02
Net realized and unrealized
gains...................... 0.99 1.03 0.23 (0.08)
------- ------------- ------ ------
Total investment
activities................. 1.07 1.25 0.26 (0.06)
------- ------------- ------ ------
DISTRIBUTIONS:
From net investment
income..................... (0.09) (0.22) (0.03) (0.02)
------- ------------- ------ ------
Total distributions......... (0.09) (0.22) (0.03) (0.02)
------- ------------- ------ ------
NET ASSET VALUE, END OF
PERIOD....................... $ 12.24 $ 11.26 $10.23 $ 9.92
------- ------------- ------ ------
------- ------------- ------ ------
Total return................ 9.52%(b) 12.36% 2.27%(b) (0.63%)(b)
RATIOS/SUPPLEMENTAL DATA:
Net assets, at end of period
(000)...................... $27,713 $22,543 $2,387 $1,240
Ratio of expenses to average
net assets................. 1.23%(c) 1.14% 1.22%(c) 1.24%(c)
Ratio of net investment
income to average net
assets..................... 1.47%(c) 2.13% 2.39%(c) 1.38%(c)
Ratio of expenses to average
net assets*................ 1.34%(c) 1.53% 7.26%(c) 9.99%(c)
Portfolio turnover rate..... 60.44% 120.83% 4.00% 0.00%
- ------------------------
</TABLE>
(a) Period from commencement of operations.
(b) Not annualized
(c) Annualized
* During the period certain fees were reimbursed and voluntarily reduced. If
such reimbursements and voluntary fee reductions had not occurred, the ratios
would have been as indicated.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-98
<PAGE>
MENTOR VARIABLE INVESTMENT PORTFOLIOS
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MENTOR VIP
MENTOR VIP PERPETUAL
CAPITAL GROWTH MENTOR VIP INTERNATIONAL
PORTFOLIO GROWTH PORTFOLIO PORTFOLIO
--------------- ----------------- --------------
<S> <C> <C> <C>
ASSETS:
Identified cost of securities.... $22,805,844 $ 9,867,820 $ 15,153,022
Net unrealized gains on
securities...................... 3,744,474 1,354,067 1,774,275
--------------- ----------------- --------------
Market value of securities....... 26,550,318 11,221,887 16,927,297
Cash............................. 17,838 -- 156,758
Foreign currency, at value (cost
$0, $0 and $7,078,
respectively)................... -- -- 6,977
Receivable for securities sold... 492,663 116,217 470,347
Dividends, interest and tax
reclaims receivable............. 22,347 1,246 109,511
Deferred organization expenses... 12,426 7,021 8,461
--------------- ----------------- --------------
Total assets................... 27,095,592 11,346,371 17,679,351
--------------- ----------------- --------------
LIABILITIES
Payable for securities
purchased....................... 712,253 170,955 494,566
Due to custodian bank............ -- 11,641 --
Accrued expenses and other
liabilities..................... 52,970 7,821 60,536
--------------- ----------------- --------------
Total liabilities.............. 765,223 190,417 555,102
--------------- ----------------- --------------
NET ASSETS......................... $26,330,369 $11,155,954 $ 17,124,249
--------------- ----------------- --------------
--------------- ----------------- --------------
NET ASSETS REPRESENTED BY
Paid-in capital.................. $22,350,653 $11,040,270 $ 14,779,154
Undistributed (overdistributed)
net investment income or loss... (16,493) (37,275) 31,949
Accumulated net realized gains or
losses on securities and foreign
currency related transactions... 251,735 (1,201,108) 545,968
Net unrealized gains on
securities and foreign currency
related transactions............ 3,744,474 1,354,067 1,767,178
--------------- ----------------- --------------
Total net assets............. $26,330,369 $11,155,954 $ 17,124,249
--------------- ----------------- --------------
--------------- ----------------- --------------
Shares outstanding................. 1,771,449 1,029,330 1,094,218
--------------- ----------------- --------------
--------------- ----------------- --------------
Net asset value per share.......... $ 14.86 $ 10.84 $ 15.65
--------------- ----------------- --------------
--------------- ----------------- --------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-99
<PAGE>
MENTOR VARIABLE INVESTMENT PORTFOLIOS
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MENTOR VIP
MENTOR VIP PERPETUAL
CAPITAL GROWTH MENTOR VIP INTERNATIONAL
PORTFOLIO GROWTH PORTFOLIO PORTFOLIO
--------------- ----------------- --------------
<S> <C> <C> <C>
INVESTMENT INCOME
Dividends (net of foreign
withholding taxes of $0, $0,
and $27,340, respectively)...... $ 111,460 $ 5,343 $ 209,631
Interest......................... 30,546 20,978 16,226
--------------- ----------------- --------------
Total investment income........ 142,006 26,321 225,857
--------------- ----------------- --------------
EXPENSES
Advisory fee..................... 90,469 35,981 72,659
Distribution Plan expenses....... 28,353 12,846 18,046
Administrative services fees..... 11,309 5,140 7,266
Trustees' fees and expenses...... 1,033 713 875
Printing and postage expenses.... 6,379 2,464 3,993
Custodian fee.................... 48,938 21,000 77,661
Professional fees................ 27,281 11,790 17,908
Organization expenses............ 1,678 948 1,142
Other............................ 6,759 2,248 1,459
--------------- ----------------- --------------
Total expenses................. 222,199 93,130 201,009
--------------- ----------------- --------------
Less: Fee waivers and expense
reimbursements.................. (28,353) (12,846) (18,046)
--------------- ----------------- --------------
Net expenses................... 193,846 80,284 182,963
--------------- ----------------- --------------
NET INVESTMENT INCOME OR LOSS.... (51,840) (53,963) 42,894
--------------- ----------------- --------------
NET REALIZED AND UNREALIZED GAINS
OR LOSSES ON SECURITIES AND
FOREIGN CURRENCY RELATED
TRANSACTIONS
Net realized gains or losses on:
Securities..................... 264,296 (650,882) 581,411
Foreign currency related
transactions.................. -- -- (30,857)
--------------- ----------------- --------------
Net realized gains or losses on
securities and foreign
currency
related transactions.......... 264,296 (650,882) 550,554
--------------- ----------------- --------------
Net change in unrealized gains
on securities and foreign
currency
related transactions.......... 1,963,416 153,083 1,114,495
--------------- ----------------- --------------
Net realized and unrealized
gains or losses on securities
and foreign currency related
transactions.................. 2,227,712 (497,799) 1,665,049
--------------- ----------------- --------------
Net increase (decrease) in net
assets resulting from
operations.................... $2,175,872 $(551,762) $1,707,943
--------------- ----------------- --------------
--------------- ----------------- --------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-100
<PAGE>
MENTOR VARIABLE INVESTMENT PORTFOLIOS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
MENTOR VIP
MENTOR VIP PERPETUAL
CAPITAL GROWTH MENTOR VIP INTERNATIONAL
PORTFOLIO GROWTH PORTFOLIO PORTFOLIO
--------------- ----------------- --------------
<S> <C> <C> <C>
OPERATIONS
Net investment income or loss.... $ (51,840) $ (53,963) $ 42,894
Net realized gains or losses on
securities and foreign currency
related transactions............ 264,296 (650,882) 550,554
Net change in unrealized gains on
securities and foreign currency
related transactions............ 1,963,416 153,083 1,114,495
--------------- ----------------- --------------
Net increase (decrease) in net
assets resulting from
operations.................... 2,175,872 (551,762) 1,707,943
--------------- ----------------- --------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold........ 6,149,813 2,587,067 4,269,898
Payment for shares redeemed...... (2,137,321) (1,943,579) (674,834)
--------------- ----------------- --------------
Net increase in net assets
resulting from capital share
transactions.................. 4,012,492 643,488 3,595,064
--------------- ----------------- --------------
Total increase in net assets... 6,188,364 91,726 5,303,007
NET ASSETS
Beginning of period.............. 20,142,005 11,064,228 11,821,242
--------------- ----------------- --------------
END OF PERIOD.................... $26,330,369 $11,155,954 $ 17,124,249
--------------- ----------------- --------------
--------------- ----------------- --------------
Undistributed (overdistributed) net
investment income or loss......... $ (16,493) $ (37,275) $ 31,949
--------------- ----------------- --------------
--------------- ----------------- --------------
SHARE TRANSACTIONS
Shares sold...................... 444,114 248,807 296,041
Shares redeemed.................. (156,326) (184,738) (45,889)
--------------- ----------------- --------------
Net increase..................... 287,788 64,069 250,152
--------------- ----------------- --------------
--------------- ----------------- --------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-101
<PAGE>
MENTOR VARIABLE INVESTMENT PORTFOLIOS
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM INCEPTION, MARCH 3, 1998 TO DECEMBER 31, 1998
<TABLE>
<CAPTION>
MENTOR VIP
MENTOR VIP PERPETUAL
CAPITAL GROWTH MENTOR VIP INTERNATIONAL
PORTFOLIO GROWTH PORTFOLIO PORTFOLIO
--------------- ----------------- --------------
<S> <C> <C> <C>
OPERATIONS
Net investment income............ $ 35,347 $ 16,688 $ 14,914
Net realized losses on securities
and foreign currency related
transactions.................... (12,561) (550,226) (30,445)
Net change in unrealized gains on
securities and foreign currency
related transactions............ 1,781,058 1,200,984 652,683
--------------- ----------------- --------------
Net increase in net assets
resulting from operations..... 1,803,844 667,446 637,152
--------------- ----------------- --------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold........ 18,945,250 10,698,100 11,422,347
Payment for shares redeemed...... (607,089) (301,318) (238,257)
--------------- ----------------- --------------
Net increase in net assets
resulting from capital share
transactions.................. 18,338,161 10,396,782 11,184,090
--------------- ----------------- --------------
Total increase in net assets... 20,142,005 11,064,228 11,821,242
NET ASSETS
Beginning of period.............. -- -- --
--------------- ----------------- --------------
END OF PERIOD.................... $20,142,005 $11,064,228 $ 11,821,242
--------------- ----------------- --------------
--------------- ----------------- --------------
Undistributed (overdistributed) net
investment income................. $ 35,347 $ 16,688 $ (10,945)
--------------- ----------------- --------------
--------------- ----------------- --------------
SHARE TRANSACTIONS
Shares sold...................... 1,533,925 993,514 862,079
Shares redeemed.................. (50,264) (28,253) (18,013)
--------------- ----------------- --------------
Net increase..................... 1,483,661 965,261 844,066
--------------- ----------------- --------------
--------------- ----------------- --------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-102
<PAGE>
MENTOR VARIABLE INVESTMENT PORTFOLIOS
- --------------------------------------------------------------------------------
MENTOR VIP CAPITAL GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1999 PERIOD ENDED
(UNAUDITED) DECEMBER 31, 1998(A)
----------------- ------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.... $ 13.58 $ 12.50
------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income................. (0.03) 0.03
Net realized and unrealized gains on
securities........................... 1.31 1.05
------- -------
Total from investment operations...... 1.28 1.08
------- -------
NET ASSET VALUE, END OF PERIOD.......... $ 14.86 $ 13.58
------- -------
------- -------
TOTAL RETURN*......................... 9.43% 8.64%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
(thousands).......................... $26,330 $20,142
Ratios to average net assets
Expenses**.......................... 1.71%+ 1.05%+
Net investment income............... (0.46)%+ 0.50%+
Portfolio turnover rate............... 39% 54%
- ------------------------
</TABLE>
(a) For the period from March 3, 1998 (commencement of operations) to December
31, 1998.
* Total return does not reflect charges of the separate accounts.
** The ratio of expenses to average net assets includes fee waivers and
excludes fee credits.
+ Annualized.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-103
<PAGE>
MENTOR VARIABLE INVESTMENT PORTFOLIOS
- --------------------------------------------------------------------------------
MENTOR VIP GROWTH PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1999 PERIOD ENDED
(UNAUDITED) DECEMBER 31, 1998(A)
----------------- ------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.... $ 11.46 $ 12.50
------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income................. (0.05) 0.02
Net realized and unrealized losses on
securities........................... (0.57) (1.06)
------- -------
Total from investment operations...... (0.62) (1.04)
------- -------
NET ASSET VALUE, END OF PERIOD.......... $ 10.84 $ 11.46
------- -------
------- -------
TOTAL RETURN*......................... (5.41)% (8.32)%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
(thousands).......................... $11,156 $11,064
Ratios to average net assets
Expenses**.......................... 1.56%+ 0.97%+
Net investment income............... (1.05)%+ 0.44%+
Portfolio turnover rate............... 74% 62%
- ------------------------
</TABLE>
(a) For the period from March 3, 1998 (commencement of operations) to December
31, 1998.
* Total return does not reflect charges of the separate accounts.
** The ratio of expenses to average net assets includes fee waivers and
excludes fee credits.
+ Annualized.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-104
<PAGE>
MENTOR VARIABLE INVESTMENT PORTFOLIOS
- --------------------------------------------------------------------------------
MENTOR VIP PERPETUAL INTERNATIONAL PORTFOLIO
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1999 PERIOD ENDED
(UNAUDITED) DECEMBER 31, 1998(A)
----------------- ------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.... $ 14.01 $ 12.50
------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income................. 0.04 0.02
Net realized and unrealized gains on
securities and foreign currency
related transactions................. 1.60 1.49
------- -------
Total from investment operations...... 1.64 1.51
------- -------
NET ASSET VALUE, END OF PERIOD.......... $ 15.65 $ 14.01
------- -------
------- -------
TOTAL RETURN*......................... 11.71% 12.08%
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period
(thousands).......................... $17,124 $11,821
Ratios to average net assets
Expenses**.......................... 2.51%+ 1.60%+
Net investment income............... 0.59%+ 0.34%+
Portfolio turnover rate............... 50% 95%
- ------------------------
</TABLE>
(a) For the period from March 3, 1998 (commencement of operations) to December
31, 1998.
* Total return does not reflect charges of the separate accounts.
** The ratio of expenses to average net assets includes fee waivers and
excludes fee credits.
+ Annualized.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-105
<PAGE>
MENTOR VARIABLE INVESTMENT PORTFOLIOS
- --------------------------------------------------------------------------------
MENTOR VIP CAPITAL GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- -----------
<C> <S> <C>
COMMON STOCKS -- 94.8%
ADVERTISING & RELATED SERVICES -- 3.9%
11,860 Interpublic Group of Companies, Inc..... $ 1,027,372
-----------
BANKS -- 7.0%
21,550 SouthTrust Corp......................... 826,981
24,080 Wells Fargo Co.......................... 1,029,420
-----------
1,856,401
-----------
BUILDING, CONSTRUCTION &
FURNISHINGS -- 3.3%
30,900 Sherwin Williams Co..................... 857,475
-----------
BUSINESS EQUIPMENT &
SERVICES -- 16.3%
23,000 Automatic Data Processing, Inc.......... 1,012,000
18,620 Computer Sciences Corp.*................ 1,288,271
22,350 First Data Corp......................... 1,093,753
26,150 SunGard Data Systems, Inc.*............. 902,175
-----------
4,296,199
-----------
COMMUNICATION SYSTEMS &
SERVICES -- 2.8%
8,440 MCI WorldCom, Inc.*..................... 726,368
-----------
CONSUMER PRODUCTS & SERVICES -- 3.8%
21,316 Newell Rubbermaid, Inc.................. 991,194
-----------
DIVERSIFIED COMPANIES -- 4.7%
12,940 Tyco International Ltd.................. 1,226,065
-----------
ENVIRONMENTAL SERVICES -- 3.3%
16,150 Waste Management, Inc................... 868,063
-----------
FINANCE & INSURANCE -- 13.6%
7,000 American Express Co..................... 910,875
10,460 Federal National Mortgage Assoc......... 715,203
20,950 UnumProvident Corp...................... 1,147,012
23,248 Washington Mutual, Inc.................. 822,398
-----------
3,595,488
-----------
HEALTHCARE PRODUCTS &
SERVICES -- 10.8%
14,760 Bristol-Myers Squibb Co................. 1,039,658
10,680 Johnson & Johnson....................... 1,046,640
40,310 Tenet Healthcare Corp.*................. 748,254
-----------
2,834,552
-----------
<CAPTION>
SHARES VALUE
- ---------- -----------
<C> <S> <C>
</TABLE>
<TABLE>
<C> <S> <C>
INDUSTRIAL SPECIALTY PRODUCTS & SERVICES
-- 3.8%
12,360 Illinois Tool Works, Inc................ $ 1,013,520
-----------
INFORMATION SERVICES &
TECHNOLOGY -- 7.6%
15,760 Sun Microsystems, Inc.*................. 1,085,470
15,500 Xerox Corp.............................. 915,469
-----------
2,000,939
-----------
LEISURE & TOURISM -- 2.6%
15,900 Royal Caribbean Cruises Ltd............. 695,625
-----------
MANUFACTURING-DISTRIBUTING -- 4.0%
35,290 Sysco Corp.............................. 1,052,083
-----------
PRINTING, PUBLISHING, BROADCASTING &
ENTERTAINMENT -- 3.6%
17,180 Chancellor Media Corp.*................. 947,047
-----------
RETAILING & WHOLESALE -- 2.2%
11,010 W.W. Grainger, Inc...................... 592,476
-----------
TRANSPORTATION -- 1.5%
19,000 Werner Enterprises, Inc................. 394,250
-----------
Total Common Stocks (cost 24,975,117
$21,230,643)............................
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
- ----------
<C> <S> <C>
SHORT-TERM INVESTMENTS -- 6.0%
REPURCHASE AGREEMENT -- 6.0%
$1,575,201 Goldman Sachs Repurchase Agreement, 1,575,201
purchased 6/30/1999, 4.85%, maturing
7/1/1999, maturity value $1,575,413
(cost $1,575,201)(a)....................
-----------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Total Investments -- (cost
$22,805,844)........................... 100.8% 26,550,318
Other Assets and Liabilities -- net..... (0.8) (219,949)
------ -----------
Net Assets.............................. 100.0% $26,330,369
------ -----------
------ -----------
</TABLE>
- ------------------------------
* Non-income producing security.
(a) At June 30, 1999, the repurchase agreement was fully collateralized by:
$1,523,013 FNMA, 6.00%, 1/1/2029; value including accrued interest --
$1,681,429.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-106
<PAGE>
MENTOR VARIABLE INVESTMENT PORTFOLIOS
- --------------------------------------------------------------------------------
MENTOR VIP GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
- -------- -----------
<C> <S> <C>
COMMON STOCKS -- 93.6%
ADVERTISING & RELATED SERVICES -- 2.1%
1,750 Lamar Advertising Co., Cl. A*........... $ 71,641
4,350 Outdoor Systems, Inc.*.................. 158,775
-----------
230,416
-----------
BANKS -- 2.8%
1,850 Commerce Bancorp, Inc................... 79,087
8,450 National Commerce Bancorp............... 184,844
500 U.S. Trust Corp......................... 46,250
-----------
310,181
-----------
BUILDING, CONSTRUCTION &
FURNISHINGS -- 0.8%
4,600 Conrad Industries, Inc.................. 23,000
1,150 Dycom Industries, Inc................... 64,400
-----------
87,400
-----------
BUSINESS EQUIPMENT & SERVICES -- 8.6%
4,500 AHL Services, Inc....................... 112,219
5,900 Butler International, Inc............... 78,912
2,200 C&D Technologies........................ 67,375
2,525 Concord EPS, Inc........................ 106,839
1,850 Circle International Group, Inc......... 40,469
1,600 Corporate Executive Board Co............ 56,900
5,100 Heidrick & Struggles International, 96,900
Inc.....................................
5,166 Nova Corp............................... 129,150
3,000 Imax Corp............................... 67,500
2,200 Personnel Group of America, Inc......... 22,000
1,650 Polycom, Inc............................ 64,350
8,050 Sensormatic Electronics Corp............ 112,197
-----------
954,811
-----------
COMMUNICATION SYSTEMS &
SERVICES -- 3.7%
2,200 Kemet Corp.............................. 50,462
250 Macrovision Corp........................ 18,719
3,000 Nielsen Media Research, Inc............. 87,750
4,150 Pinnacle Holdings, Inc.*................ 101,675
3,750 Powerwave Technologies, Inc............. 120,937
1,450 Research In Motion Ltd.................. 29,363
-----------
408,906
-----------
CONSUMER PRODUCTS & SERVICES -- 6.9%
2,500 Action Performance Companies, Inc.*..... 82,500
3,950 Avis Rent-A-Car, Inc.*.................. 115,044
3,550 Chattem, Inc............................ 112,934
2,400 CSG System International, Inc.*......... 62,850
2,800 Jakks Pacific, Inc...................... 83,475
1,900 Rental A Center, Inc.................... 45,600
3,400 Rental Way, Inc......................... 83,725
7,200 SCP Pool Corp........................... 186,300
-----------
772,428
-----------
ELECTRICAL EQUIPMENT & SERVICES -- 8.6%
2,800 Asyst Technologies, Inc................. 83,825
3,500 Atmel Corp.*............................ 91,656
2,850 Atmi, Inc............................... 84,788
4,650 Benchmark Electronics, Inc.*............ 167,109
1,400 Black Box Corp.*........................ 70,175
3,600 Cypress Semiconductor Corp.............. 59,400
<CAPTION>
SHARES VALUE
- -------- -----------
<C> <S> <C>
</TABLE>
COMMON STOCKS -- (CONTINUED)
ELECTRICAL EQUIPMENT & SERVICES -- (CONTINUED)
<TABLE>
<C> <S> <C>
6,200 Parlex Corp.*........................... $ 97,650
3,600 Photronic, Inc.......................... 88,200
3,300 Power One, Inc.......................... 81,263
1,500 PRI Automation, Inc.*................... 54,375
4,250 Sipex Corp.*............................ 87,125
-----------
965,566
-----------
ELECTRONIC EQUIPMENT & SERVICES -- 4.2%
1,400 Alpha Inds, Inc......................... 66,675
9,150 Cerprobe Corp........................... 91,500
750 CTS Corp................................ 52,500
1,600 Kulicke & Soffa Industries, Inc.*....... 42,900
1,400 L-3 Communications Holding Corp......... 67,637
1,450 Micrel, Inc............................. 107,300
3,550 Pcd, Inc................................ 39,050
-----------
467,563
-----------
FINANCE & INSURANCE -- 1.8%
1,050 Markel Corp............................. 196,350
-----------
FOOD & BEVERAGE PRODUCTS -- 1.7%
2,750 United States Foodservice*.............. 117,219
2,600 Wild Oats Mkts, Inc..................... 78,894
-----------
196,113
-----------
HEALTHCARE PRODUCTS & SERVICES -- 16.2%
2,867 Bindley Western Inds, Inc............... 66,113
850 Biomatrix, Inc.......................... 18,381
6,050 Brookdale Living Communities, Inc.*..... 89,616
2,400 Carematrix Corp.*....................... 29,850
2,500 Chirex, Inc.*........................... 80,313
2,500 Dendrite International, Inc............. 90,313
2,600 Express Scripts, Inc., Cl. A*........... 156,487
2,825 Health Management Associates, Cl. A*.... 31,781
1,900 *Henry Schein, Inc...................... 60,206
3,500 MedQuist, Inc.*......................... 153,125
4,450 Molecular Devices Corp.................. 166,875
4,950 Omnicare, Inc........................... 62,494
4,750 Pharmaceutical Product Development, 130,031
Inc.....................................
941 Priority Healthcare Corp., Cl. A........ 32,447
4,200 Priority Healthcare Corp., Cl. B........ 144,900
7,900 Province Healthcare Co.................. 154,050
450 PSS World Med, Inc.*.................... 5,034
2,050 Renal Care Group, Inc.*................. 53,044
600 Sunrise Assisted Living, Inc.*.......... 20,925
5,250 United Payors & United Providers........ 121,734
2,000 Wesley Jessen Visioncare, Inc.*......... 64,750
1,450 Xomed Surgical Products, Inc............ 70,597
-----------
1,803,066
-----------
INDUSTRIAL SPECIALTY PRODUCTS &
SERVICES -- 0.3%
750 Dionex Corp.*........................... 30,375
-----------
INFORMATION SERVICES &
TECHNOLOGY -- 9.1%
1,150 Applied Micro Circuits Corp.*........... 94,587
3,100 Bea Systems, Inc........................ 88,544
2,350 Burr-Brown Corp......................... 86,069
700 Clarify, Inc............................ 28,875
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-107
<PAGE>
MENTOR VARIABLE INVESTMENT PORTFOLIOS
- --------------------------------------------------------------------------------
MENTOR VIP GROWTH PORTFOLIO
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
- -------- -----------
<C> <S> <C>
</TABLE>
COMMON STOCKS -- (CONTINUED)
INFORMATION SERVICES &
TECHNOLOGY -- (CONTINUED)
<TABLE>
<C> <S> <C>
1,350 Condor Technology Solutions............. $ 6,328
2,550 Datastream Systems, Inc................. 40,800
2,000 Galileo Technology Ltd.................. 90,625
4,250 Mecon, Inc.*............................ 31,875
1,900 Network Appliance, Inc.*................ 106,162
4,100 Newgen Results Corp..................... 49,200
6,300 Peerless Systems Corp................... 66,150
2,950 Remedy Corp............................. 79,281
2,050 Sandisk Corp.*.......................... 92,250
1,000 Smith Gardner & Associates, Inc......... 8,063
2,750 Softworks, Inc.......................... 30,250
1,300 Verity, Inc............................. 70,444
1,550 Visual Networks, Inc.................... 49,600
-----------
1,019,103
-----------
OIL/ENERGY -- 0.9%
3,150 Basin Exploration, Inc.................. 63,197
1,550 Evergreen Resources..................... 39,041
-----------
102,238
-----------
OIL FIELD SERVICES -- 3.1%
8,300 Global Industries Ltd.*................. 106,344
3,900 Gulf Islands Fabrication, Inc........... 46,556
4,050 Hanover Compressor Co................... 130,106
6,400 Pride International, Inc................ 67,600
-----------
350,606
-----------
PRINTING, PUBLISHING, BROADCASTING &
ENTERTAINMENT -- 7.1%
4,800 Cadmus Communications Corp.............. 66,000
1,000 Chancellor Media Corp.*................. 55,125
2,500 Citadel Communications Corp............. 90,469
2,050 Cox Radio, Inc., Cl. A.................. 111,212
3,900 Cumulus Media, Inc...................... 85,313
1,700 Emmis Broadcasting Corp., Cl. A*........ 83,938
2,350 Ensign Resource Group, Inc.............. 47,319
1,500 Entercom Communications Corp.*.......... 64,125
5,150 Medialink Worldwide, Inc................ 82,400
1,950 Metro Networks, Inc..................... 104,081
-----------
789,982
-----------
RETAILING & WHOLESALE -- 8.3%
2,550 Aviation Sales Co....................... 100,725
2,000 Buckle, Inc............................. 57,500
4,900 Copart, Inc............................. 104,125
<CAPTION>
SHARES VALUE
- -------- -----------
<C> <S> <C>
</TABLE>
COMMON STOCKS -- (CONTINUED)
RETAILING & WHOLESALE -- (CONTINUED)
<TABLE>
<C> <S> <C>
1,078 Dollar General Corp..................... $ 31,248
3,950 Dollar Tree Stores, Inc................. 173,800
7,700 Family Dollar Stores, Inc............... 184,800
2,500 Guitar Center, Inc...................... 26,094
3,200 Men's Wearhouse, Inc.*.................. 81,600
3,650 Papa Johns International, Inc........... 163,109
-----------
923,001
-----------
TELECOMMUNICATION SERVICES &
EQUIPMENT -- 3.4%
1,550 CapRock Communications Corp.*........... 62,775
6,750 Digital Microwave Corp.................. 86,062
5,350 ITC DeltaCom, Inc.*..................... 149,800
1,650 Winstar Communications, Inc.*........... 80,438
-----------
379,075
-----------
TRANSPORTATION -- 4.0%
3,000 Carey International, Inc................ 73,875
1,650 Expeditores International Washington, 44,962
Inc.....................................
2,350 MS Carriers, Inc........................ 69,692
7,725 Mesaba Holdings, Inc.*.................. 98,494
9,200 Motivepower Industries, Inc.*........... 165,600
-----------
452,623
-----------
Total Common Stocks (cost $9,085,735)... 10,439,802
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
- ----------
<C> <S> <C>
SHORT-TERM INVESTMENTS -- 7.0%
REPURCHASE AGREEMENT -- 7.0%
$ 782,085 Goldman Sachs Repurchase Agreement, 782,085
purchased 6/30/1999, 4.85%, maturing
7/1/1999, maturity value $782,190
(cost $782,085)(a)......................
-----------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Total Investments -- (cost
$9,867,820)............................ 100.6% 11,221,887
Other Assets and Liabilities -- net..... (0.6) (65,933)
------ -----------
Net Assets.............................. 100.0% $11,155,954
------ -----------
------ -----------
</TABLE>
- ------------------------------
* Non-income producing security.
(a) The repurchase agreement is fully collaterized by: $1,790,346 FNMA, 6.00%,
maturing 1/1/2029; value including accrued interest -- $1,976,537.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-108
<PAGE>
MENTOR VARIABLE INVESTMENT PORTFOLIOS
- --------------------------------------------------------------------------------
MENTOR VIP INTERNATIONAL PORTFOLIO
SCHEDULE OF INVESTMENTS
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
- -------- ----------
<C> <S> <C>
COMMON STOCKS -- 97.4%
ARGENTINA -- 0.1%
390 Telefonica de Argentina, Cl. B, ADR..... $ 12,236
----------
BERMUDA -- 0.1%
2,000 Taiwan Opportunities Fund LT............ 23,900
----------
BRAZIL -- 0.3%
410 Companhia Energetica de Minas Gerais, 8,556
ADR.....................................
630 Companhia Vale do Rio Doce, ADR......... 12,508
670 Petroleo Brasileiro SA, ADR 10,317
(Petrobras).............................
145 Telecomunicacoes Brasileiras SA, ADR, 9
(Telebras)*.............................
145 Telecomunicacoes Brasileiras SA, ADR, 13,077
Preference Shares (Telebras)*...........
----------
44,467
----------
CHINA -- 0.2%
100,000 Yizheng Chemical Fibre Co., Ltd......... 26,100
----------
DENMARK -- 0.4%
674 Novo Nordisk AS, Ser. B................. 72,565
----------
FINLAND -- 3.0%
1,160 Huhtamaki Group......................... 42,199
4,740 Metra AB Oyj............................ 100,139
2,638 Nokia AB Oyj............................ 231,080
5,115 UPM-Kymmene Oyj......................... 146,541
----------
519,959
----------
FRANCE -- 13.8%
2,400 Alstom.................................. 75,436
1,960 Atos SA................................. 199,968
849 Banque Nationale de Paris*.............. 70,695
960 Banque Paribas.......................... 107,540
960 Casino Guichard-Perrachon SA............ 84,093
274 Christian Dior SA....................... 44,615
775 Coflexip SA............................. 66,490
1,120 Compagnie de Saint Gobain............... 178,326
2,570 Entrelec Groupe SA...................... 99,319
2,950 Eramet SLN.............................. 117,653
1,260 Imetal SA............................... 186,983
2,483 Pechiney SA............................. 106,653
1,773 Schneider SA............................ 99,489
400 Serp Recyclage SA....................... 61,050
1,265 Societe Generale d'Enterprises SA*...... 61,271
1,350 Societe Nationale Elf Aquitaine SA...... 197,974
1,980 Total SA, Cl. B......................... 255,265
10,036 Usinor SA............................... 149,450
2,573 Vivendi................................. 208,283
----------
2,370,553
----------
ITALY -- 2.1%
101,000 Finmeccanica SpA........................ 92,948
10,500 Grupo Editoriale L'Espresso............. 169,886
22,600 Istituto Nationale delle Assicurazioni 52,404
SpA (Ina)...............................
6,053 Rinascente SpA.......................... 45,786
----------
361,024
----------
GERMANY -- 4.7%
110 AVA Allg Handels der Verbraucher AG*.... 38,543
2,540 BASF AG................................. 112,444
10,700 Elexis AG............................... 78,291
<CAPTION>
SHARES VALUE
- -------- ----------
<C> <S> <C>
</TABLE>
COMMON STOCKS -- (CONTINUED)
GERMANY -- (CONTINUED)
<TABLE>
<C> <S> <C>
2,490 Global TeleSystems Group, Inc.*......... $ 201,690
1,000 Hawesko Holdings AG, Bearer Shares...... 34,008
4,675 Lufthansa AG............................ 84,697
1,395 Siemens AG.............................. 107,534
2,550 Veba AG................................. 149,790
----------
806,997
----------
HONG KONG -- 4.4%
44,000 Aeon Credit Service Co., Ltd............ 12,760
50,000 Amoy Properties, Ltd.................... 47,044
16,000 Asia Satellite Telecommunications 37,635
Holdings, Ltd...........................
6,000 Cheung Kong Holdings, Ltd............... 53,359
4,000 Citic Pacific, Ltd...................... 12,760
31 Dah Sing Financial Group................ 118
100,000 First Tractor Co., Ltd.................. 29,644
70,000 Giordano International, Ltd............. 49,622
10,000 Henderson Land Development Co., Ltd..... 57,484
40,000 HKR International, Ltd.................. 34,542
21,000 Hong Kong Telecommunications, Ltd....... 54,539
3,053 HSBC Holdings Plc....................... 111,359
6,000 Hutchison Whampoa, Ltd.................. 54,326
344 Hysan Development Co., Ltd.............. 519
10,000 Jardine Strategic Holdings, Ltd......... 26,000
50,000 Legend Holdings, Ltd.................... 48,011
40,000 National Mutual Asia, Ltd............... 31,964
4,152 New World Develelopment Co., Ltd........ 12,442
30,000 Shui On Construction & Materials, 48,139
Ltd.....................................
100,000 Yanzhou Coal Mining Co., Ltd............ 35,766
----------
758,033
----------
INDIA -- 0.2%
2,000 BSES Ltd................................ 19,700
3,000 Mahindra & Mahindra Ltd................. 19,800
----------
39,500
----------
INDONESIA -- 0.9%
40,000 PT HM Sampoerna......................... 92,263
48,000 PT Indofood Sukses Makmur Tbk........... 65,868
----------
158,131
----------
IRELAND -- 1.6%
4,320 Bank Of Ireland......................... 72,893
8,930 CRH Plc, London Exchange................ 158,189
5,010 Irish Life & Permanent Plc.............. 51,726
----------
282,808
----------
JAPAN -- 24.9%
30,000 Asahi Glass Co., Ltd.................... 194,491
20,000 Chugai Pharmaceutical Co., Ltd.......... 215,386
35 DDI Corp................................ 217,657
30,000 Fuji Heavy Industries, Ltd.............. 231,408
1,500 Funai Electric Co., Ltd................. 297,312
50,000 Furukawa Electric Co., Ltd.............. 229,178
100,000 Kawasaki Heavy Industries, Ltd.......... 270,884
14,000 Kokusai Securities Co., Ltd............. 173,432
3,000 Murata Manufacturing Co., Ltd........... 197,217
33,000 Nippon Express Co., Ltd................. 197,588
45,000 Nippon Mining & Metals Co., Ltd......... 275,013
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-109
<PAGE>
MENTOR VARIABLE INVESTMENT PORTFOLIOS
- --------------------------------------------------------------------------------
MENTOR VIP INTERNATIONAL PORTFOLIO
SCHEDULE OF INVESTMENTS -- (CONTINUED)
JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
- -------- ----------
<C> <S> <C>
</TABLE>
COMMON STOCKS -- (CONTINUED)
JAPAN -- (CONTINUED)
<TABLE>
<C> <S> <C>
100,000 Nippon Steel Corp....................... $ 232,068
40,000 Oji Paper Co., Ltd...................... 231,243
17,000 Ricoh Co., Ltd.......................... 233,902
6,000 Shin Etsu Chemical Co., Ltd............. 200,686
80,000 Sumitomo Trust & Banking Co., Ltd....... 384,523
60,000 Teijin, Ltd............................. 242,805
45,000 Yasuda Fire & Marine Insurance Co., 238,221
Ltd.....................................
----------
4,263,014
----------
KOREA -- 1.2%
1,000 Korea Telecom Corp...................... 40,000
2,900 Pohang Iron & Steel Ltd., ADR........... 97,512
1,081 Samsung Electric Co..................... 28,917
2,000 Shinhan Bank............................ 44,600
----------
211,029
----------
MALAYSIA -- 0.5%
10,000 Industrial Oxygen Inc., Bhd............. 6,342
20,000 Telekom Malaysia, Bhd................... 74,737
----------
81,079
----------
MEXICO -- 0.6%
880 Coca-Cola Co. Femsa SA, ADR............. 17,050
500 Fomento Economico Mexicano, Ser. B, 19,937
ADR.....................................
1,400 Grupo Carso SA de CV, ADR............... 12,966
440 Grupo Televisa SA, ADR*................. 19,718
320 Telefonos de Mexico SA, ADR............. 25,860
----------
95,531
----------
NETHERLANDS -- 4.7%
3,350 Akzo Nobel NV........................... 140,855
1,138 DSM NV.................................. 121,968
1,092 Philips Electronics NV.................. 107,641
3,390 Royal Dutch Petroleum Co................ 198,434
3,200 Vendex International NV................. 85,412
3,690 VNU NV.................................. 147,356
----------
801,666
----------
NORWAY -- 0.7%
7,980 Petroleum Geo-Services.................. 120,160
----------
PHILIPPINES -- 0.1%
180,000 Filinvest Development Corp.............. 16,557
----------
PORTUGAL -- 0.8%
3,682 BPI Society Gestora, Registered 77,211
Shares..................................
1,657 Jeronimo Martins SGPS SA................ 54,695
----------
131,906
----------
SINGAPORE -- 1.6%
4,000 Bukit Sembawang Estates, Ltd............ 44,170
10,000 DBS Land, Ltd........................... 19,971
5,000 GP Batteries International, Ltd......... 9,574
20,000 Hong Leong Finance...................... 45,815
40,000 Singapore Computer...................... 62,261
1,000 Singapore Press Holdings, Ltd.*......... 17,034
10,000 United Overseas Bank.................... 69,897
----------
268,722
----------
<CAPTION>
SHARES VALUE
- -------- ----------
<C> <S> <C>
</TABLE>
COMMON STOCKS -- (CONTINUED)
<TABLE>
<C> <S> <C>
SPAIN -- 5.4%
675 Acciona SA.............................. $ 32,158
960 Banco Popular Espana SA................. 69,006
3,400 Baron de Ley SA*........................ 117,380
6,320 Centros Commerciales Continente SA...... 140,682
1,950 Corp. Fin. Reunida...................... 24,959
3,900 Empresa Nacional de Celulosas SA........ 69,531
4,757 Grupo Dragados SA....................... 55,739
9,750 Prosegur, CIA de Seguridad SA........... 108,718
6,560 Tabacalera, Ser. A...................... 132,504
3,173 Telefonica de Espana SA................. 152,739
1,966 Viscofan Envolturas Celuosicas SA....... 22,287
----------
925,703
----------
SWEDEN -- 3.1%
8,650 Celsius AB, Ser. B...................... 109,020
5,460 Ericsson LM Telephone, Ser B............ 175,252
1,901 Kinnevik Investments, Ser. B............ 35,827
14,555 Sparbanken Sverige AB, Ser. A........... 205,730
----------
525,829
----------
SWITZERLAND -- 2.1%
391 Geberit International AG................ 89,147
54 Jelmoli Holding AG...................... 50,011
745 UBS AG.................................. 222,324
----------
361,482
----------
THAILAND -- 0.5%
90,000 Bank Of Ayudhya Public Co., Ltd......... 61,552
10,000 Electricity Generating Public Co........ 19,095
----------
80,647
----------
UNITED KINGDOM -- 19.4%
4,225 Abbey National Bank Plc................. 79,350
3,500 Allied Domecq Plc....................... 33,653
4,800 Arcadia Group Plc....................... 15,964
3,920 Arriva Plc.............................. 23,109
3,750 BAA Plc................................. 36,134
3,216 Barclays Bank Plc....................... 93,527
4,575 Bass Plc................................ 66,344
3,541 BBA Group Plc........................... 27,126
5,500 BG Plc.................................. 33,550
5,502 Blue Circle Industries Plc.............. 36,685
2,250 Britannic Assurance Plc................. 34,118
10,000 British Aerospace Plc................... 65,099
7,400 British Airways Plc..................... 51,089
8,175 British America Tobacco Industries 77,122
Plc.....................................
8,000 British-Borneo Oil & Gas Plc............ 24,716
2,125 Burmah Castrol Plc...................... 40,295
2,800 Celltech Plc............................ 21,626
9,810 Centrica Plc............................ 23,040
4,500 Chelsfield Plc.......................... 21,208
11,000 Coats Viyella Plc....................... 8,843
4,500 Debenhams Retail Plc.................... 30,217
4,000 Diageo Plc.............................. 42,023
1,750 Dixons Group Plc........................ 32,825
3,942 Elan Corp Plc, ADR*..................... 109,391
4,060 EMAP Plc................................ 71,035
5,960 Enterprise Oil Plc...................... 38,035
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-110
<PAGE>
<TABLE>
<CAPTION>
SHARES VALUE
- -------- ----------
<C> <S> <C>
</TABLE>
COMMON STOCKS -- (CONTINUED)
UNITED KINGDOM -- (CONTINUED)
<TABLE>
<C> <S> <C>
6,400 Express Dairies Plc..................... $ 14,628
8,400 Fairview Holdings Plc................... 18,007
9,000 First Choice Holidays Plc............... 27,025
3,000 Frogmore Estates Plc.................... 22,414
6,000 Gallaher Group Plc...................... 36,979
1,365 Garban Plc.............................. 6,455
3,350 Granada Group Plc....................... 62,045
3,200 Great University Stores Plc............. 35,686
4,320 Greenalls Group Plc..................... 24,241
4,200 HSBC Holdings Plc....................... 148,492
5,900 Iceland Group Plc....................... 24,552
5,600 III Group Plc........................... 61,789
5,800 Imperial Chemical Industries Plc........ 57,276
6,000 Inchcape Plc............................ 6,526
9,132 Ladbroke Group Plc...................... 36,490
1,850 Land Securities Plc..................... 24,816
10,000 Lloyds TSB Group Plc.................... 135,794
15,000 Medeva Plc.............................. 24,353
9,100 Meggitt Plc............................. 27,971
2,022 Meggitt Plc............................. 1,147
4,500 National Westminster Bank Plc........... 95,403
4,428 Next Plc................................ 53,743
8,900 Northern Foods Plc...................... 18,307
5,200 Nycomed Amersham Plc.................... 36,372
2,000 P & O Finance BV........................ 29,996
3,231 PowderJect Pharmaceuticals Plc.......... 42,474
2,900 Powergen Plc............................ 31,221
5,510 Prudential Corp. Plc.................... 81,206
1,500 Railtrack Group Plc..................... 30,666
1,950 Rank Group.............................. 7,761
2,000 Reckitt & Colman Plc.................... 20,885
3,000 Reuters Group Plc....................... 39,461
2,825 Rio Tinto Plc........................... 47,334
14,820 Rolls-Royce Plc......................... 62,605
7,200 Sainsbury (J.) Plc...................... 45,396
1,500 Scot & Southern En...................... 15,321
4,800 Scotia Holdings Plc..................... 8,398
2,500 Scottish Power Plc, ADR................. 21,398
4,415 Securicor Plc........................... 38,867
9,250 Shell Transportation & Trading Co., 69,402
Plc.....................................
48,925 Signet Group Plc........................ 41,274
4,760 Smith (H.W.) Group Plc.................. 45,730
2,478 Smiths Industries Plc................... 32,888
<CAPTION>
SHARES VALUE
- -------- ----------
<C> <S> <C>
</TABLE>
COMMON STOCKS -- (CONTINUED)
UNITED KINGDOM -- (CONTINUED)
<TABLE>
<C> <S> <C>
3,000 Spirax-Sarco Engineering Plc............ $ 29,224
6,700 Standard Chartered Bank................. 109,094
4,733 Sun Life & Provincial Holdings Plc...... 33,796
5,100 Tate & Lyle Plc......................... 31,754
4,000 Telewest Communications Plc............. 17,922
15,200 Tesco Plc............................... 39,413
6,240 TI Group Plc............................ 41,901
5,206 Tomkins Plc............................. 22,566
2,500 Trinity Plc............................. 22,186
2,500 Unilever Plc............................ 22,186
4,700 United Assurance Group CNV.............. 30,597
2,600 United News & Media Plc................. 24,999
2,000 United Utilities Plc.................... 24,590
2,600 Vickers Group Plc....................... 6,680
1,707 Wolseley Plc............................ 12,861
----------
2,063,876
----------
Total Common Stocks (cost 16,678,285
$14,938,557)............................
----------
PREFERRED STOCKS -- 1.1%
BRAZIL -- 0.0%
500 Telesp Participacoes SA, ADR............ 11,438
----------
GERMANY -- 1.1%
80 Porsche AG.............................. 187,972
----------
Total Preferred Stocks (cost 199,410
$180,974)...............................
----------
WARRANTS -- 0.3%
SINGAPORE -- 0.3%
65,000 Deutsche Bank AG, expire 3/28/2002 (cost 48,488
$33,491)................................
----------
RIGHTS -- 0.0%
SWEDEN -- 0.0%
1,901 Invik & Co. AB (cost $0)................ 1,114
----------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
Total Investments -- (cost
$15,153,022)........................... 98.8% 16,927,297
Other Assets and Liabilities -- net..... 1.2 196,952
------ -----------
Net Assets.............................. 100.0% $17,124,249
------ -----------
------ -----------
</TABLE>
- ------------------------------
* Non-income producing security.
SUMMARY OF ABBREVIATIONS
ADR American Depoistory Receipt
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
MF-111
<PAGE>
MENTOR VARIABLE INVESTMENT PORTFOLIOS
- --------------------------------------------------------------------------------
COMBINED NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1999
NOTE 1: ORGANIZATION
Mentor Variable Investment Portfolios (the "Trust") is registered under the
Investment Company Act of 1940, as amended (the "1940 Act") as an open-end
management investment company. The Trust consists of five separate
Portfolios (hereinafter each individually referred to as a "Portfolio" or
collectively as the "Portfolios") at June 30, 1999 as follows:
Mentor VIP Capital Growth Portfolio
("Capital Growth Portfolio")
Mentor VIP Growth Portfolio
("Growth Portfolio")
Mentor VIP Perpetual International Portfolio
("International Portfolio")
The Portfolios' shares are sold subject to a contingent deferred sales
charge payable upon redemption which decreases depending on when shares were
purchased and how long they have been held.
The Growth Portfolio's investment objective is to seek long-term
appreciation of capital through investments in a diversified portfolio of
securities.
The Capital Growth Portfolio's investment objective is to provide long-term
appreciation of capital by investing in a wide variety of securities which
the investment advisor believes offers the potential for capital
appreciation over both the intermediate and long-term.
The International Portfolio's investment objective is to seek long-term
appreciation of capital through investments in a diversified portfolio of
securities of issuers located outside the United States.
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Portfolios in the preparation of their financial statements.
The policies are in conformity with generally accepted accounting
principles, which require management to make estimates and assumptions that
effect amounts reported herein. Actual results could differ from these
estimates.
(a) VALUATION OF SECURITIES--Listed securities traded on national stock
exchanges and over-the-counter securities quoted on the Nasdaq National
Market System ("NMS") are valued at the last reported sales price on the
exchange where primarily traded or, lacking any sales, at the last
available bid price. Securities traded in the over-the-counter market,
other than those quoted on the NMS are valued at the last available bid
price. Short-term investments with remaining maturities of 60 days or
less are carried at amortized cost, which approximates market value.
Securities for which market quotations are not readily available are
valued at fair value as determined in good faith under procedures
established by the Board of Trustees.
(b) REPURCHASE AGREEMENTS--The Portfolios may invest in repurchase
agreements. Securities pledged as collateral for repurchase agreements
are held by the custodian on the Portfolio's behalf. The Portfolios
monitor the adequacy of the collateral daily and will require the seller
to provide additional collateral in the event the market value of the
securities pledged falls below the carrying value of the repurchased
agreement, including accrued interest. The Portfolios will only enter
into repurchase agreements with banks and other financial institutions,
which are deemed by the investment advisor to be creditworthy pursuant to
guidelines established by the Board of Trustees.
(c) FOREIGN CURRENCY--The books and records of the Portfolios are maintained
in United States (U.S.) dollars. Foreign currency amounts are translated
into U.S. dollars as follows: market value of investment securities,
other assets and liabilities at the daily rate of exchange; purchases and
sales of investment securities and income and expenses at the rate of
exchange prevailing on the respective dates of such transactions. Net
unrealized foreign exchange gains or losses resulting from changes in
foreign currency exchange rates are a component of net unrealized gains
or losses on securities and foreign currency related transactions. Net
realized foreign currency gains or losses on foreign currency related
transactions include: foreign currency gains or losses between trade date
and settlement date on investment securities transactions, foreign
currency related transactions and the difference between the amounts of
interest and dividends recorded on the books of the Portfolio and the
amounts that are actually received. The portion of foreign currency gains
or losses related to fluctuations in exchange rates between the initial
purchase trade date and subsequent sale trade date is included in
realized gains or losses on securities.
(d) FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS--The Portfolios may enter
into forward foreign currency exchange contracts (forward contracts) to
settle portfolio purchases and sales of securities denominated in a
foreign currency and to hedge certain foreign currency assets or
liabilities. Forward contracts are recorded at the forward rate and
marked-to-market daily. Realized gains and losses
____________________________________ MF-112 ____________________________________
<PAGE>
arising from such transactions are included in net realized gains or
losses on foreign currency related transactions. The Portfolios bear the
risk of an unfavorable change in the foreign currency exchange rate
underlying the forward contract and is subject to the credit risk that
the other party will not fulfill their obligations under the contract.
Forward contracts involve elements of market risk in excess of the amount
reflected in the Statements of Assets and Liabilities.
(e) SECURITY TRANSACTIONS AND INVESTMENT INCOME-- Securities transactions
are accounted for no later than one business day after the trade date.
Realized gains and losses are computed on the identified cost basis.
Interest income is recorded on the accrual basis and includes accretion
of discounts and amortization of premiums. Dividend income is recorded on
the ex-dividend date, or in the case of some foreign securities, on the
date thereafter when the Portfolio is made aware of the dividend. Foreign
income may be subject to foreign withholding taxes, which are accrued as
applicable. Capital gains realized on some foreign securities may be
subject to foreign taxes and are accrued as applicable.
(f) FEDERAL TAXES--The Portfolios have qualified and intend to continue to
qualify as a regulated investment company under the Internal Revenue Code
of 1986, as amended (the "Code"). Thus, the Portfolios will not incur any
federal income tax liability to the extent they distribute all of their
net investment company taxable income and net capital gains, if any, to
their shareholders. The Portfolios also intend to avoid excise tax
liability by making the required distributions under the Code.
Accordingly, no provisions for federal taxes are required.
Additionally, the Portfolios intend to meet the diversification standards
on the underlying assets of a variable insurance contract under the Code.
Failure to meet these standards would cause the disqualification of the
variable insurance contract as an annuity contract or life insurance
contract and would result in the immediate imposition of federal income
tax on contract owners with respect to earnings allocable to the
contract.
(g) DISTRIBUTIONS--Distributions from net investment income and net realized
capital gains, if any, are declared and paid annually. Distributions to
shareholders are recorded at the close of business on the ex-dividend
date. Income and capital gains distributions to shareholders are
determined in accordance with income tax regulations, which may differ
from generally accepted accounting principles. The significant
differences between financial statement amounts available for
distributions and distributions made in accordance with income tax
regulations are primarily due to differing treatment for net operating
losses and the deferral of realized losses from wash sales.
(h) ORGANIZATION EXPENSES--Organization expenses are amortized to operations
over a five-year period on a straight-line basis. In the event any of the
initial shares of the Portfolios are redeemed by any holder during the
five-year amortization period, redemption proceeds will be reduced by any
unamortized organization expenses in the same proportion as the number of
initial shares being redeemed bears to the number of initial shares
outstanding at the time of the redemption.
NOTE 3: SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of investment securities
(excluding short-term securities) were as follows for the six months ended
June 30, 1999:
<TABLE>
<CAPTION>
COST OF PROCEEDS
PURCHASES FROM SALES
---------- -----------
<S> <C> <C>
Capital Growth Portfolio.......... $11,767,237 $8,727,914
Growth Portfolio.................. 6,754,463 6,280,507
International Portfolio........... 11,620,921 7,031,100
</TABLE>
At December 31, 1998 the Capital Growth Portfolio for federal tax purposes
had a capital loss carryforward of $429,186. Pursuant to the Internal
Revenue Code, such capital loss carryforward expires on 12/31/2005. To the
extent that realized capital gains can be offset by capital loss
carryforwards, it is each Portfolio's policy not to distribute such gains.
NOTE 4: INVESTMENT ADVISORY AGREEMENT AND OTHER
AFFILIATED TRANSACTIONS
Mentor Investment Advisors, LLC ("Mentor Advisors") serves as investment
advisor to the Capital Growth Portfolio and the Growth Portfolio. Mentor
Advisors is a wholly owned subsidiary of Mentor Investment Group, LLC
("Mentor") which is in turn a partially owned subsidiary of Wheat First
Union. EVEREN Capital Corporation ("EVEREN") owns 20% of the outstanding
interest in Mentor. Mentor Advisors receives for its services an annual fee
of 0.80% and 0.70% of average daily net assets of the Capital Growth
Portfolio and the Growth Portfolio, respectively.
____________________________________ MF-113 ____________________________________
<PAGE>
MENTOR VARIABLE INVESTMENT PORTFOLIOS
- --------------------------------------------------------------------------------
COMBINED NOTES TO FINANCIAL STATEMENTS (UNAUDITED) -- (CONTINUED)
JUNE 30, 1999
Mentor Perpetual Advisors, LLC ("Mentor Perpetual") serves as the investment
advisor to the International Portfolio. Mentor Perpetual is owned equally by
Mentor Investment Advisors, LLC and Perpetual Plc., a diversified financial
service holding company. Mentor Perpetual receives for its services an
annual fee of 1.00% of the average daily net assets of the International
Portfolio.
Prior to June 21, 1999, Mentor provided administrative personnel and
services to the Portfolios. The Portfolios paid Mentor a fee at the annual
rate of 0.10% of each Fund's average daily net assets, less the amount of
any management fees paid to Mentor Advisors.
Effective June 21, 1999, Evergreen Investment Services ("EIS"), a subsidiary
of First Union Corporation ("First Union"), became the administrator of the
Portfolios. As administrator, EIS provides the Portfolios with facilities,
equipment and personnel. The fees and rates paid to EIS for administrative
services have remained unchanged from the fees paid to Mentor.
Officers of the Portfolios and affiliated Trustees receive no compensation
directly from the Portfolios.
NOTE 5: DISTRIBUTION PLANS
The Portfolios have adopted a Distribution Plan (the "Plan") pursuant to
Rule 12b-1 under the Investment Company Act of 1940. Under a Distribution
Agreement between the Portfolios and Mentor Distributors, LLC ("Mentor
Distributors") a wholly-owned subsidiary of BISYS Fund Services, Inc.
("BISYS"), Mentor Distributors was appointed distributor of the Portfolios.
To compensate Mentor Distributors for the services it provides and for the
expenses it incurs under the Distribution Agreement, the Portfolios pay a
distribution fee, which is accrued daily and paid monthly at the annual rate
of 0.25% of each Portfolios' average daily net assets. For the six months
ended June 30, 1999, Mentor Distributors waived such fees in the amount of
$28,353, $12,846 and $18,046 for the Capital Growth Portfolio, Growth
Portfolio and International Portfolio, respectively.
NOTE 6: ADDITIONAL INFORMATION
On March 25, 1999 First Union and EVEREN announced an agreement to form an
asset management joint venture that would combine the Evergreen mutual fund
complex with the Mentor Investment Group.
Under the agreement, First Union will contribute its ownership interests in
Evergreen and Mentor and receive 95 percent ownership interest in the new
venture. EVEREN will contribute its ownership interest in Mentor and receive
a 5 percent ownership interest in the new venture.
The transaction is subject to regulatory and other approvals and is expected
to be completed by September 30, 1999.
NOTE 7: YEAR 2000
Like other investment companies, the Portfolios could be adversely affected
if the computer systems used by the Portfolio's investment advisors and the
Portfolio's other service providers are not able to perform their intended
functions effectively after 1999 because of the inability of computer
software to distinguish the year 2000 from the year 1900. The Portfolio's
investment advisors are taking steps to address this potential year 2000
problem with respect to the computer systems that they use and to obtain
satisfactory assurances that comparable steps are being taken by the
Portfolio's other major service providers. At this time, however, there can
be no assurance that these steps will be sufficient to avoid any adverse
impact on the Fund from this problem.
____________________________________ MF-114 ____________________________________
