<PAGE>
Nations Variable Annuity
ISSUED BY:
Hartford Life
Insurance Company
A tax-deferred
variable annuity
[PICTURES]
Build a Better Financial Future
SEMI-ANNUAL REPORT
June 30, 1999
- -- Annuities are not FDIC insured.
[LOGO]
- -- Annuities are not obligations or deposits
of, and are not underwritten or guaranteed
by NationsBank Corporation or any of its [LOGO]
affiliates.
- -- Neither NationsBank Corporation nor its
affiliates guarantee performance by the
annuity issuer.
- -- Annuities involve investment risks, including
interest-rate risk. The market value of the
investment may fluctuate, causing possible
loss of the principal amount invested.
- -- Annuities are unrelated to and not a
condition of the provision or term of
any banking service or activity.
[LOGO]
<PAGE>
Hartford
SMALL COMPANY HLS FUND
PORTFOLIO MANAGER
[picture]
MARK S. WATERHOUSE
Vice President
Wellington Management Company, LLP
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 21.9% 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.
[GRAPHIC]
PERFORMANCE OVERVIEW
8/9/96- 6/30/99
GROWTH OF A $10,000 INVESTMENT.
$17,188
$14,526
- --Small Company Fund IB --Russell 2000
Q. WHAT IS YOUR OUTLOOK FOR THE REST OF 1999?
We are well positioned well 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.
<TABLE>
<CAPTION>
Returns as of 6/30/99
YTD* 1 YEAR SINCE INCEPT.**
------ ------ ---------------
<S> <C> <C> <C>
SMALL COMPANY IB 21.93% 24.88% 20.60%
RUSSELL 2000 9.28% 1.50% 13.79%
</TABLE>
* Cumulative Returns **Annualized Returns
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE SMALL COMPANY HLS FUND
CLASS IB SHARES. (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.
<PAGE>
Hartford
CAPITAL APPRECIATION HLS FUND
PORTFOLIO MANAGER
[Picture]
SAUL J. PANNELL, CFA
Senior Vice President and Partner
Wellington Management Company, LLP
Q. HOW DID THE FUND PERFORM?
The Hartford Capital Appreciation HLS Fund returned 17.0% 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.
[GRAPHIC]
PERFORMANCE OVERVIEW
1/1/89 - 6/30/99
GROWTH OF A $10,000 INVESTMENT.
$65,101
$62,907
- --Capital Appreciation Fund IB --S&P 500
Q. WHAT IS YOUR OUTLOOK FOR THE REST 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.
<TABLE>
<CAPTION>
Returns as of 6/30/99
YTD* 1 YEAR 5 YEAR** 10 YEAR**
----- ------ -------- ---------
<S> <C> <C> <C> <C>
CAPITAL APPRECIATION IB 16.99% 20.71% 22.95% 18.45%
S&P 500 12.38% 22.77% 27.87% 18.78%
</TABLE>
*Cumulative Returns **Annualized Returns
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE CAPITAL APPRECIATION HLS
FUND CLASS IB SHARES. (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.
<PAGE>
Hartford
INTERNATIONAL OPPORTUNITIES HLS FUND
Lead Portfolio Manager
[Picture]
TROND SKRAMSTAD
Senior Vice President and Partner
Wellington Management Company, LLP
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
10.7% 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.
[GRAPHIC]
Performance Overview
7/2/90 - 6/30/99
GROWTH OF A $10,000 INVESTMENT.
$20,670
$19,901
- --International Opportunities --EAFE GDP
Fund IB
Q. WHAT IS YOUR OUTLOOK FOR THE REST 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.
<TABLE>
<CAPTION>
Returns as of 6/30/99
YTD* 1 YEAR 5 YEAR** SINCE INCEPT.**
----- ------ -------- ---------------
<S> <C> <C> <C> <C>
INT'L OPPORT. IB 10.70% 7.22% 9.99% 7.95%
EAFE GDP* 5.65% 9.84% 11.03% 8.40%
</TABLE>
*Cumulative Returns **Annualized Returns
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE INTERNATIONAL
OPPORTUNITIES HLS FUND CLASS IB SHARES. (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
<PAGE>
Hartford
STOCK HLSFUND
Portfolio Manager
[Picture]
RAND L. ALEXANDER, CFA
Senior Vice President and Partner
Wellington Management Company, LLP
Q. HOW DID THE FUND PERFORM?
The Hartford Stock HLS Fund returned 13.0% 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.
[GRAPHIC]
PERFORMANCE OVERVIEW
1/1/89 - 6/30/99
GROWTH OF A $10,000 INVESTMENT.
$65,101
$60,634
- --Stock Fund IB --S&P 500
Q. WHAT IS YOUR OUTLOOK FOR THE REST 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.
<TABLE>
<CAPTION>
Returns as of 6/30/99
YTD* 1 YEAR 5 YEAR** 10 YEAR**
------ ------ -------- ---------
<S> <C> <C> <C> <C>
STOCK IB 12.96% 24.12% 27.47% 18.10%
S&P 500 12.38% 22.77% 27.87% 18.78%
</TABLE>
*Cumulative Returns **Annualized Returns
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE STOCK HLS FUND CLASS IB
SHARES. (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.
<PAGE>
Hartford
DIVIDEND AND GROWTH HLS FUND
Portfolio Manager
[Picture]
LAURIE A. GABRIEL, CFA
Senior Vice President and Partner
Wellington Management Company, LLP
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 7.1%
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.
[GRAPHIC]
PERFORMANCE OVERVIEW
3/9/94 - 6/30/99
GROWTH OF A $10,000 INVESTMENT.
$32,824
$27,866
- --Dividend & Growth Fund IB --S&P 500
Q. WHAT IS YOUR OUTLOOK FOR THE REST OF 1999?
We will continue to look for value plays across all industries. This is a key
feature 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 light of slower global growth and benign inflation trends, we are
well positioned going into 1999 as we have limited our exposure to cyclical
companies (commodities, manufacturing) while maximizing holdings in more
promising areas such as health care and consumer products. In our stock
selection, we will continue identifying stocks with above average yields and
below average price/earnings ratios.
<TABLE>
Returns as of 6/30/99
YTD* 1 YEAR 5 YEAR** SINCE INCEPT.**
------ ------ -------- ---------------
<S> <C> <C> <C> <C>
DIVIDEND
& GROWTH IB 7.12% 12.32% 22.92% 21.28%
S&P 500 12.38% 22.77% 27.87% 25.07%
</TABLE>
*Cumulative Returns **Annualized Returns
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE DIVIDEND AND GROWTH HLS
FUND CLASS IB SHARES. (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.
<PAGE>
Hartford
ADVISERS HLS FUND
Portfolio Managers
[Picture]
RAND L. ALEXANDER, CFA
Senior Vice President
and Partner
Wellington Management Company, LLP
[Picture]
PAUL D. KAPLAN
Senior Vice President and Partner
Wellington Management Company, LLP
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 6.8%
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.
[GRAPHIC]
Performance Overview
1/1/89 - 6/30/99
GROWTH OF A $10,000 INVESTMENT.
- --Advisers Fund IB --S&P 500
- --Lehman Govt/Corp
Q. WHAT IS YOUR OUTLOOK FOR THE REST 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.
$65,101
$42,725
$23,853
<TABLE>
<CAPTION>
Returns as of 6/30/99
YTD* 1 YEAR 5 YEAR** 10 YEAR**
------ ------ -------- ---------
<S> <C> <C> <C> <C>
ADVISERS IB 6.81% 15.23% 20.15% 14.24%
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 CLASS IB
SHARES. (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.
<PAGE>
Hartford
BOND HLS FUND
Portfolio Manager
[Picture]
ALISON D. GRANGER, CFA
Senior Vice President
The Hartford Investment
Management Company (HIMCO)
Q. HOW DID THE FUND PERFORM?
The Hartford Bond HLS Fund Class IB shares placed in the 79th percentile of its
Lipper peer group for the quarter ended June 30, 1999, producing a total return
of --3.25% versus the --2.61% return of Lipper's Corporate Debt "BBB" rated
Variable Annuity Underlying Fund Universe.
Q. WHY DID THE FUND PERFORM THIS WAY?
[cad 238]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.
[GRAPHIC]
Performance Overview
1/1/89 - 6/30/99
GROWTH OF A $10,000 INVESTMENT.
$23,853
$22,348
- --Bond Fund IB --Lehman Govt/Corp
Q. WHAT IS YOUR OUTLOOK FOR THE REST 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.
<TABLE>
<CAPTION>
Returns as of 6/30/99
YTD* 1 YEAR 5 YEAR** 10 YEAR**
------ ------ -------- ---------
<S> <C> <C> <C> <C>
BOND IB -2.65% 0.87% 7.49% 7.60%
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 CLASS IB
SHARES. (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.
<PAGE>
Nations
BALANCED ASSETS PORTFOLIO
PORTFOLIO MANAGERS
Value Management Team,
TradeStreet Investment Associates, Inc.
SHARON M. HERRMANN, CFA
MICHAEL J. FULGINITI, CFA
MARCUS V. GRIFFIN, CFA
TIMOTHY C. ESCOTT, CFA
TIMOTHY P. BEYER, CFA
Q. HOW DID THE PORTFOLIO PERFORM?
For the period ended June 30, 1999, the Portfolio provided shareholders with
a return of 4.55%. The Portfolio's asset allocation is biased in favor of
equities (65%), which helped performance as stocks generated positive
returns. However, the bond portion of the Portfolio (35%) experienced a price
decline as fixed income securities had a difficult time in the rising
interest rate environment of the first half of the year.
Q. WHY DID THE PORTFOLIO PERFORM THIS WAY?
After a lackluster start during the first quarter of the year, the value
stocks in which the portfolio invests emerged from their slumber during the
second quarter, producing gains greater than the equity market average. The
Standard & Poor's 500 Composite Stock Price Index* advanced by over 7% during
the second quarter broadening considerably to encompass value stocks. Rising
corporate profit expectations served to boost returns in many cyclical
sectors of the market. Investor confidence was driven by the improving
economic conditions in many key international markets. As a result of rising
corporate earnings expectations, the basic materials, capital goods and
energy sectors led the market's advance during the second quarter.
While the equity portion of the Portfolio remains slightly behind the market
on a year-to-date basis, relative performance during the second quarter, as
suggested, showed a dramatic improvement. Year-to-date, gains in the
technology sector enhanced performance including portfolio holdings, with Sun
Microsystems, Inc., up 61%, and International Business Machines Corporation,
rising 40%. These have been focus stocks in the Portfolio. The Portfolio's
purchase of Honeywell, Inc. was also timely, as Honeywell announced
intentions to merge with Allied Signal, giving investors a 35% price increase
year to date.
The fixed income portion of the Portfolio detracted from overall performance.
The return on the Portfolio's fixed income portion of -1.45% was in line with
the benchmark, the Lehman Aggregate Bond Index's return of --1.38%. The
first six months of 1999 proved to be a very difficult period for fixed
income portfolio managers. Throughout the period, yields on U.S. Treasury
bonds rose steadily due to continued strength in the domestic economy and
increasing expectations by fixed income investors of imminent Federal Reserve
rate hikes. Thirty-year Treasury yields rose almost 90 basis points, and
five-and ten-year yields rose more than 110 basis points. Validating the
market's interest rate concerns, the Federal Open Market Committee raised the
federal funds rate 25 basis points to 5% on the last day of June.
[GRAPHIC]
Performance Overview
3/27/98 - 6/30/99
GROWTH OF A $10,000 INVESTMENT.
$12,683
$10,539
$10,221
- --Nations Balanced S&P 500 --Lehman Aggregate
Assets Portfolio
<TABLE>
<CAPTION>
Returns as of 6/30/99
YTD* 1 YEAR SINCE INCEPT.**
------ ------ ---------------
<S> <C> <C> <C>
NATIONS BALANCED ASSETS 4.55% 4.41% 1.75%
S&P 500 12.38% 22.77% 20.94%
LEHMAN AGGREGATE
BOND INDEX** -1.38% 2.70% 4.28%
</TABLE>
*Cumulative Returns **Annualized Returns
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN NATIONS BALANCED ASSETS
PORTFOLIO. (THE RETURNS INCLUDE THE PORTFOLIO 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.
<PAGE>
Nations
BALANCED ASSETS PORTFOLIO
Q. WHAT IS YOUR OUTLOOK FOR THE REST OF 1999?
We anticipate some slowing in the U.S. economy during the last half of 1999,
which could lead to lower interest rates and better overall returns for the
fixed portion of the Portfolio.
The Portfolio continues to be well positioned, in our view, to capture the
positive effect of improving foreign economies as well as strong consumer
confidence in the United States. The major overweight position in the
Portfolio is in the financial services sector, which we believe should
benefit from a continuation of strong domestic economic growth as well as a
modest level of interest rates. Particularly attractive companies are
Citigroup, Chase Manhattan Corporation and Mellon Bank Corporation. Also, we
think the insurance companies Lincoln National Corporation, Ltd. and Hartford
Financial Services Group, Inc. are attractive due to the strong growth of
their annuity businesses. Insurance companies' shareholders are also poised
to benefit from merger and consolidation trends within the industry, much as
banks have done over the last 10 years. The Portfolio is also overweight in
energy and basic materials companies. This positioning should allow the
Portfolio to benefit from the recent strength in commodity prices brought
about by stronger global demand. A 9% weighting in energy companies should
continue to add to performance as energy companies, BPAmoco plc, Exxon
Corporation, Mobil Corporation, and Royal Dutch Petroleum Company gain
momentum as oil prices continue to rise to $20/ barrel compared to $10/barrel
just one year ago. Conversely, the consumer staples and health-care sectors
are most underweight given the high degree of overvaluation of companies in
these sectors, the high level of global competition, and their inability to
raise prices, leading to declining margins and growth rates.
*The Standard & Poor's 500 Composite Stock Price Index is a
market-capitalization weighted index that measures the value of 400
industrial stocks, 60 transportation and utility company stocks and 40
financial issues. It is unmanaged and unavailable for investment.
**The Lehman Aggregate Bond Index is an unmanaged index composed of the
Government Corporate Bond Index, the Asset-Backed Securities Index and the
Mortgage-Backed Securities Index and includes U.S. Treasury issues, agency
issues, corporate bond issues and mortgage-backed issues. It includes
reinvestment of dividends and is unavailable for investment. Portfolio
holdings are subject to change and may not be representative of current
holdings. The outlook for this Portfolio may differ from that presented for
other Nations Funds Portfolios.
<PAGE>
Nations
DISCIPLINED EQUITY PORTFOLIO
PORTFOLIO MANAGER
Structured Products
Management Team,
TradeStreet Investment Associates, Inc.
MICHAEL J. FULGINITI, CFA
JOE E. TANNEHILL, CFA
DANIEL R. SKUBIZ
MATTHEW W. WRIGHT, CFA
JUDY Y. YANG
Q. HOW DID THE PORTFOLIO PERFORM?
For the reporting period, January 1, 1999 through June 30, 1999, the
Portfolio provided shareholders with a return of 11.68%, slightly
underperforming its benchmark, the Standard & Poor's 500 Composite Stock
Price Index, which returned 12.38%.*
Q. WHY DID THE PORTFOLIO PERFORM THIS WAY?
While 1998 was a year of global financial turmoil and slowing corporate
profits, 1999 has begun to produce evidence of a directional shift as
Asia-Pacific economies experienced an uptick and Latin American economies
bottomed in response to the unprecedented fiscal easing by the monetary
authorities of some 150 nations. The resulting modest increase in global
demand coupled with capacity reductions appears to be leading to better
relative performance among sectors that lagged in 1998 -- basic materials,
energy and capital goods in particular.
The Disciplined Equity investment process uses multi-factor screening to help
select stocks which are thought to have with the best combination of earnings
characteristics and reasonable valuation. Early in the second quarter, the
model began to show positive earnings and valuation characteristics in the
more cyclical sectors of the market. As a result of these model rankings,
modest shifts in the Portfolio were initiated, reducing (not eliminating) the
considerable portfolio overweighting in the consumer cyclical sector while
increasing weightings in basic materials and energy. The modest rise in
interest rates over the period was reflected in the model's deteriorating
rankings for financial services stocks. (Financials tend to do poorly in a
rising interest rate environment.) As a result the least favorably ranked
financial holdings were eliminated.
Q. WHAT IS YOUR OUTLOOK FOR THE REST OF 1999?
We believe the modest uptick in global demand will continue into the second
half of 1999, leading to better relative performance of the more economically
sensitive sectors of the market. Despite the uptick, inflation is expected to
remain subdued and the American economy robust. Stocks that meet our buy
criteria --attractively ranked securities based on earnings characteristics
and valuation-- are being identified in a broader swath of the market than in
1998. As a result, we will continue to follow the quantitative model and
analytical process, investing accordingly.
[GRAPHIC]
Performance Overview
3/27/98 - 6/30/99
GROWTH OF A $10,000 INVESTMENT.
$12,683
$11,887
- --Nations Disciplined --S&P 500
Equity Portfolio
<TABLE>
<CAPTION>
Returns as of 6/30/99
YTD* 1 YEAR SINCE INCEPT.**
------ ------ ---------------
<S> <C> <C> <C>
NATIONS DISCIPLINED
EQUITY 11.68% 17.11% 14.67%
S&P 500 12.38% 22.77% 20.94%
</TABLE>
* Cumulative Returns **Annualized Returns
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN NATIONS DISCIPLINED EQUITY
PORTFOLIO. (THE RETURNS INCLUDE THE PORTFOLIO 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 Standard & Poor's 500 Composite Stock Price Index is a
market-capitalization weighted index that measures the value of 400
industrial stocks, 60 transportation and utility company stocks and 40
financial issues. It is unmanaged and unavailable for investment.
Portfolio characteristics are subject to change and may not be representative
of current characteristics. The outlook for this Portfolio may differ from
that presented for other Nations Funds Portfolios.
<PAGE>
Nations
INTERNATIONAL GROWTH PORTFOLIO
Portfolio Manager
BRIAN O'NEILL,
Gartmore Global Partners
Q. HOW DID THE PORTFOLIO PERFORM?
The Portfolio rose by 6.4% in the first six months of the year, outperforming
its benchmark, the MSCI EAFE Index,* which returned 4.1%.
Q. WHY DID THE PORTFOLIO PERFORM THIS WAY?
Although investors showed a distinct preference for cyclical companies over
traditional growth stocks during the first half of the year, a number of
stocks in the latter category identified through the Portfolio's 'bottom up'
selection process defied the general trend. For example, several technology
and telecommunications holdings performed with distinction. Wharf Holdings, a
Hong Kong property company with a strong interest in cable and
telecommunications, rose 113.8% in U.S. dollar terms, while Japan's Fujitsu
Support and Service, Inc., which provides computer support, rose by 109.5% in
U.S. dollar terms. There were other attractive 'bottom up' stories, such as
the U.K. computer games manufacturer EIDOS Ord., which rose 110.1% in U.S.
dollar terms. The strong showing of these and other select growth stocks more
than offset a weak showing from financials and pharmaceuticals, such as
Novartis AG and the Bank of Ireland Ord., where the effects of the rotation
to cyclical companies were clearly apparent.
[GRAPHIC]
Performance Overview
3/27/98 - 6/30/99
GROWTH OF A $10,000 INVESTMENT.
$10,937
$10,914
- --Nations International Growth --EAFE
Q. WHAT IS YOUR OUTLOOK FOR THE REST OF 1999?
While growth in the U.S. is expected to slow, elsewhere -- in developed and
emerging economies alike -- it is picking up. This means that equities in a
number of sectors outside the U.S. should continue to do likewise, providing
opportunities for U.S. investors seeking to increase returns and reduce risk.
The Portfolio will continue to emphasize Europe, where we believe a pick-up
in economic activity should benefit many companies within the portfolio.
However, we also anticipate increasing the Portfolio's exposure to the
emerging markets (particularly Asia) and possibly Japan where the list of
companies with prospects for unexpected earnings growth is expanding, albeit
at different rates.
<TABLE>
<CAPTION>
Returns as of 6/30/99
YTD* 1 YEAR SINCE INCEPT.**
------ ------ ---------------
<S> <C> <C> <C>
NATIONS
INTERNATIONAL GROWTH 6.42% 7.69% 7.63%
EAFE 4.11% 7.92% 7.25%
</TABLE>
*Cumulative Returns **Annualized Returns
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN NATIONS INTERNATIONAL
GROWTH PORTFOLIO. (THE RETURNS INCLUDE THE PORTFOLIO 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 Capital International EAFE Index is an unmanaged index
consisting of securities listed on exchanges in European, Australasian and
Far Eastern markets and includes dividends and distributions, but does not
reflect fees, brokerage commissions or other expenses of investing.
Portfolio holdings are subject to change and may not be representative of
current holdings. The outlook for this Portfolio may differ from that
presented for other Nations Funds Portfolios.
INVESTING IN INTERNATIONAL INVESTMENTS MAY INVOLVE SPECIAL RISKS, INCLUDING
FOREIGN TAXATION, CURRENCY RISKS, RISKS ASSOCIATED WITH POSSIBLE DIFFERENCES
IN FINANCIAL STANDARDS, AND OTHER MONETARY AND POLITICAL RISKS ASSOCIATED
WITH FUTURE POLITICAL AND ECONOMIC DEVELOPMENTS.
<PAGE>
Nations
MANAGED INDEX PORTFOLIO
PORTFOLIO MANAGERS
Structured Products
Management Team,
TradeStreet Investment Associates, Inc.
MICHAEL J. FULGINITI, CFA
JOE E. TANNEHILL, CFA
DANIEL R. SKUBIZ
MATTHEW W. WRIGHT, CFA
JUDY Y. YANG
Q. HOW DID THE PORTFOLIO PERFORM?
For the first half of the year, the Portfolio underperformed the Standard &
Poor's 500 Composite Stock Price (S&P 500) Index,* returning 11.29% versus
the S&P 500's return of 12.38%. Although this performance does not meet our
long-term expectations, it is improving, we note that the Portfolio
outperformed the S&P 500 in the second quarter. In the later part of the
period, we started to see broadening across styles with all of the Standard &
Poor's and Russell value benchmarks outperforming their growth counterparts
during the second quarter.
Q. WHY DID THE PORTFOLIO PERFORM THIS WAY?
As part of our investment process, we try to identify and avoid companies
that are overpriced. Unfortunately, as happened in 1998, the market
continued to downplay valuation during the first quarter of 1999 and drove up
the prices of already expensive growth stocks.
Capital goods and technology were two of the best performing sectors for the
Portfolio on both an absolute and relative basis. In technology, the
Portfolio benefited from the risk control aspect of the Managed Index
process, which causes the Portfolio to have some exposure to large companies
such as International Business Machines Corporation. In the capital goods
sector, stock selection was very strong. For example, Navistar International
Corporation has a good outlook, is overweighted in the Portfolio, and
delivered good performance during the first half.
The consumer staples sector was the worst performing sector during the first
half, however, the Portfolio's relative performance benefited from being
underweighted in the sector. Financial services stocks detracted the most
from the Portfolio's performance largely due to poor stock selection. For
example, Charles Schwab Corporation was unfavorably rated by our process, and
consequently was underweighted in the portfolio relative to the S&P 500.
This weighting kept the Portfolio from fully participating in the good
performance turned in by Schwab for the period.
Q. WHAT IS YOUR OUTLOOK FOR THE REST OF 1999?
We believe that the economic environment will continue to be favorable for
equity investors. In addition we think, trends in market sentiment and
factor performance are favorable, and the Portfolio is well positioned to
take advantage of improvements in the performance of our stock selection
process.
[GRAPHIC]
Performance Overview
3/27/98 - 6/30/99
GROWTH OF A $10,000 INVESTMENT.
$12,683
$12,397
- --Nations Managed --S&P 500
Index Portfolio
<TABLE>
<CAPTION>
Returns as of 6/30/99
YTD* 1 YEAR SINCE INCEPT.**
------ ------ --------------
<S> <C> <C> <C>
NATIONS MANAGED
INDEX 11.29% 20.12% 18.54%
S&P 500 12.38% 22.77% 20.94%
</TABLE>
*Cumulative Returns **Annualized Returns
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN NATIONS MANAGED INDEX
PORTFOLIO. (THE RETURNS INCLUDE THE PORTFOLIO 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 Standard & Poor's 500 Composite Stock Price Index is a
market-capitalization weighted index that measures the value of 400
industrial stocks, 60 transportation and utility company stocks and 40
financial issues. It is unmanaged and unavailable for investment. Portfolio
holdings are subject to change and may not be representative of current
holdings. The outlook for this Portfolio may differ from that presented for
other Nations Funds Portfolios.
<PAGE>
Nations
MANAGED SMALLCAP INDEX PORTFOLIO
Portfolio Manager
Structured Products
Management Team,
TradeStreet Investment Associates, Inc.
MICHAEL J. FULGINITI, CFA
JOE E. TANNEHILL, CFA
DANIEL R. SKUBIZ
MATTHEW W. WRIGHT, CFA
JUDY Y. YANG
Q. HOW DID THE PORTFOLIO PERFORM?
The Portfolio provided shareholders with a return of 3.3% for the period,
ending June 30, 1999 underperforming its benchmark, the Standard & Poor's
SmallCap 600 (S&P 600) Index,* which returned 5%.
Small-capitalization stocks remained unpopular with investors as the year
began, but the market began to broaden in the second quarter and small
company stocks came roaring back. The S&P 600 Index was down 9% after the
first quarter of 1999, but a 15.5% return in the second quarter brought the
year-to-date return to a respectable 5%. Despite the Portfolio's
disappointing return versus the Index, the market's broadening improved the
performance of our stock selection models and the Portfolio regained some
lost ground in the second quarter.
Q. WHY DID THE PORTFOLIO PERFORM THIS WAY?
The consumer cyclical and technology sectors added the most to the
Portfolio's absolute performance. These sectors are also the heaviest
weighted sectors in the Portfolio. Energy was the best performing sector in
the first half with a 36% return, but with only 2% of the Portfolio in this
sector, the contribution was not as great. On a relative basis, the
Portfolio was rewarded for stock selection and overweighting of the consumer
cyclical and health-care sectors, but penalized for poor stock selection in
the financial services sector and underweighting the energy sector.
Health-care stock Summit Technology, Inc. (up 402%), technology stocks Zebra
Technologies Corporation (up 34%) and Kronos, Inc. (up 54%), and cyclical
stocks CommScope, Inc. (up 83%) and Manitowoc Company, Inc. (up 42%) were
some of the individual names that added significant value to the Portfolio in
the first half. On the other end of the scale, financial sevices stock First
American Financial Corporation (down 44%), technology stocks Brightpoint,
Inc. (down 56%) and Ciber Inc. (down 31%), and cyclical stock CKE Restaurant,
Inc. (down 64%) were overweighted in the Portfolio and therefore negatively
impacted its return.
Q. WHAT IS YOUR OUTLOOK FOR THE REST OF 1999?
We anticipate a continued rebound in the performance of small company stocks
as investors realize how undervalued they have become relative to the
large-capitalization growth stocks, which have been the market's focus. The
Portfolio remains poised, in our view, to take part in any positive moves in
the small company universe.
[GRAPHIC]
Performance Overview
3/27/98 - 6/30/99
GROWTH OF A $10,000 INVESTMENT.
$9,367
$9,334
Nations Managed S&P 600
Index Portfolio
- --NATIONS MANAGED --S&P 600
SMALLCAP INDEX
<TABLE>
<CAPTION>
Returns as of 06/30/99
YTD* 1 YEAR SINCE INCEPT.**
----- ------ ---------------
<S> <C> <C> <C>
NATIONS MANAGED
SMALLCAP 3.32% -3.49% -5.05%
S&P 600 5.04% -2.30% -5.37%
</TABLE>
*Cumulative Returns **Annualized Returns
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN NATIONS MANAGED SMALLCAP
INDEX PORTFOLIO. (THE RETURNS INCLUDE THE PORTFOLIO 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 Standard & Poor's SmallCap 600 Index is a market-capitalization weighted
index company stock performance. It is unmanaged and unavailable for
investment.
Portfolio holdings are subject to change and may not be representative of
current holdings. The outlook for this Portfolio may differ from that
presented for other Nations Funds Portfolios.
Because small companies often have narrower markets, limited financial
resources and stocks that are not as actively traded as large company stocks,
their share prices will be more volatile.
<PAGE>
Nations
VALUE PORTFOLIO
Portfolio Manager
Value Management Team,
TradeStreet Investment Associates, Inc.
SHARON M. HERRMANN, CFA
MICHAEL J. FULGINITI, CFA
MARCUS V. GRIFFIN, CFA
TIMOTHY C. ESCOTT, CFA
TIMOTHY P. BEYER, CFA
Q. HOW DID THE PORTFOLIO PERFORM?
The Portfolio lagged the equity market average during the first quarter of
1999, a period which saw continued dominance by a narrow group of growth
stocks. However, the decision at the beginning of the year to position the
Portfolio more heavily in basic materials, energy and financial companies
(giving the Portfolio an even stronger "value" bias) was rewarded during
the second quarter as Nations Value Portfolio outperformed the Standard &
Poor's 500 Composite Stock (S&P 500) Index* during the second quarter. For
the reporting period, January 1, 1999 through June 30, 1999, the Portfolio
returned 7.30%.
Q. WHY DID THE PORTFOLIO PERFORM THIS WAY?
After a lackluster start during the first quarter of the year, the value
stocks in which the portfolio invests emerged from their slumber during the
second quarter, producing gains greater than the equity market average. The
S&P 500 advanced by over 7% during the second quarter broadening considerably
to encompass value stocks. Rising corporate profit expectations served to
boost returns in many cyclical sectors of the market. Investor confidence
was driven by the improving economic conditions in many key international
markets. As a result of rising corporate earnings expectations, the basic
materials, capital goods and energy sectors led the market's advance during
the second quarter.
While the Portfolio remains slightly behind the market on a year-to-date
basis, relative performance during the second quarter, as suggested, showed a
dramatic improvement. Year-to-date, gains in the technology sector enhanced
performance, including portfolio holdings, with Sun Microsystems, Inc. up
61%, and International Business Machines Corporation, rising 40%. These have
been focus stocks in the Portfolio. Citigroup, Inc. advanced 43%, Bank
Boston Corporation, 31% due to the reporting of strong first quarter earnings
gains. The Portfolio's purchase of Honeywell, Inc. was also timely, as
Honeywell announced intentions to merge with Allied Signal, giving investors
a 35% price increase year-to-date.
[GRAPHIC]
Performance Overview
3/27/98 - 6/30/99
GROWTH OF A $10,000 INVESTMENT.
$12,683
$11,211
- --Nations Value Portfolio --S&P 500
<TABLE>
<CAPTION>
Returns as of 6/30/99
YTD* 1 YEAR SINCE INCEPT.**
------ ------ ---------------
<S> <C> <C> <C>
NATIONS VALUE
PORTFOLIO 7.30% 12.79% 9.47%
S&P 500 12.38% 22.77% 20.94%
</TABLE>
*Cumulative Returns **Annualized Returns
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN NATIONS VALUE PORTFOLIO.
(THE RETURNS INCLUDE THE PORTFOLIO 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.
<PAGE>
Nations
VALUE PORTFOLIO
Q. WHAT IS YOUR OUTLOOK FOR THE REST OF 1999?
The Portfolio continues to be well positioned, in our view, to capture the
positive effect of improving foreign economies as well as strong consumer
confidence in the United States. The major overweight sector in the
Portfolio is in the financial services sector, which we believe should
benefit from a continuation of strong domestic economic growth as well as a
modest level of interest rates. Particularly attractive companies are
Citigroup, Chase Manhattan Corporation and Mellon Bank Corporation. Also, we
think the insurance companies Lincoln National Corporation Ltd. and Hartford
Financial Services Group, Inc. are attractive due to the strong growth of
their annuity businesses. Insurance companies' shareholders are also poised
to benefit from merger and consolidation trends within the industry, much as
banks have done over the last 10 years. The Portfolio is also overweight in
energy and basic materials companies. This positioning should allow the
Portfolio to benefit from the recent strength in commodity prices brought
about by stronger global demand. A 9% weighting in energy companies should
continue to add to performance as energy companies, BP Amoco plc, Exxon
Corporation, Mobil Corporation and Royal Dutch Petroleum Company gain
momentum as oil prices continue to rise to $20/ barrel compared to $10/
barrel just one year ago. Conversely, the consumer staples and health-care
sectors are most underweight given the high degree of overvaluation of
companies in these sectors, the high level of global competition, and their
inability to raise prices, leading to declining margins and growth rates.
The Portfolio's relatively low weighted average price-to-earnings multiple
and price-to-book value reflect the undervaluation of the companies held and
we believe represent an attractive investment opportunity for the long-term
equity investor.
*The Standard & Poor's 500 Composite Stock Price Index is a
market-capitalization weighted index that measures the value of 400
industrial stocks, 60 transportation and utility company stocks and 40
financial issues. It is unmanaged and unavailable for investment.
Portfolio holdings are subject to change and may not be representative of
current holdings.
The outlook for this Portfolio may differ from that presented for other
Nations Funds Portfolios.
<PAGE>
Nations Marsico
GROWTH & INCOME PORTFOLIO
Portfolio Manager
THOMAS F. MARSICO,
Marsico Capital Management, LLC
Q. HOW DID THE PORTFOLIO PERFORM?
The first half of 1999 provided a number of challenges to investors,
particularly in the large capitalization equity arena. For the reporting
period, Nations Marsico Growth & Income Portfolio handily outperformed its
benchmark, providing investors with a return of 14.56% compared with the
12.38% return of the Standard & Poor's 500 Composite Stock Price (S&P 500)
Index.*
Q. WHY DID THE PORTFOLIO PERFORM THIS WAY?
Although capital markets were buffeted by a variety of factors during the
first half of 1999, the period ended on a high note following the
announcement by the Federal Reserve Board of an interest rate neutral stance
after their 25 basis point tightening. This reduced investors' fears of
further imminent rate hikes. The June 30 announcement capped months of
speculation about the direction of interest rates.
The second quarter was particularly volatile. In April, investors became
increasingly concerned over valuations of large capitalization "growth"
stocks. For several weeks, economically sensitive and "value" stocks were
in favor. Beginning in mid-May, markets suffered broad declines as a sharp
increase in the Consumer Price Index ("CPI") spurred concerns about the
prospect for higher interest rates. Later in the month, the Federal Reserve
Board (the "Fed") confirmed investors' fears when it announced that the
Federal Open Market Committee ("FOMC") had adopted a tightening bias. The
combination of a higher-than-expected CPI and a potential hike in interest
rates sparked a broad sell-off in equity securities. Few sectors were
spared; large capitalization stocks (as measured by the S&P 500) fell 2.3% in
May, while international equities (as measured by the Morgan Stanley Capital
International EAFE Index)** declined by 5.3%. Fixed-income securities (as
measured by the Lehman Aggregate Bond Index),*** which are vulnerable in a
rising interest rate environment, lost nearly 1.0% in May.
During June, overall market sentiment seemed to improve, culminating with the
Fed announcement described above. Updated CPI data, which indicated that
core inflation was near zero, suggested that the April reading was an
aberration. Interest rates began to stabilize somewhat, and investors were
cheered by the prospect that the FOMC would not move aggressively to tighten
monetary policy. Large capitalization equities began to reassert themselves,
with "growth" stocks showing signs of regaining the ground lost earlier in
the quarter.
[GRAPHIC]
Performance Overview
3/27/98 - 6/30/99
GROWTH OF A $10,000 INVESTMENT.
$13,953
$12,683
- --Nations Marsico --S&P 500
Growth & Income Portfolio
<TABLE>
<CAPTION>
Returns as of 6/30/99
YTD* 1 YEAR SINCE INCEPT.**
----- ------ ---------------
<S> <C> <C> <C>
NATIONS MARSICO
GROWTH & INCOME 14.56% 23.81% 30.18%
S&P 500 12.38% 22.77% 20.94%
</TABLE>
*Cumulative Returns **Annualized Returns
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN NATIONS MARSICO GROWTH &
INCOME PORTFOLIO. (THE RETURNS INCLUDE THE PORTFOLIO 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.
<PAGE>
Nations Marsico
GROWTH & INCOME PORTFOLIO
During the second quarter, stocks in such diverse industries as autos,
airlines, financial services, drugs and the consumer sector were battered.
Much of this resulted from interest rate fears. On the whole, we believe
that interest rates will stabilize and earnings of large capitalization
companies will continue to grow. As a result, the industries that suffered
during the quarter should offer compelling investment opportunities going
forward. However, in situations where a company's ability to execute its
plans comes into doubt, we have eliminated or reduced our position. This was
particularly true for certain auto and airline companies during the first
half of 1999. Technology-related stocks have comprised a substantial portion
of the Portfolios assets and, therefore, have a strong influence on
investment results. During the first half, QUALCOMM, Inc. and Lucent
Technologies, Inc. were standout performers. Sun Microsystems, Inc. also
posted a solid gain. However, EMC Corporation, which has been among the
Portfolio's top holdings since inception, experienced a difficult second
quarter due to potential competitive pressure. We continue to have conviction
in EMC's high-end data storage product and its management, as well as the
company's earnings growth potential.
Q. WHAT IS YOUR OUTLOOK FOR THE REST OF 1999?
Our overall investment outlook continues to be generally positive. We expect
that market volatility will persist and that short-term setbacks, such as we
experienced last quarter, may occur. We believe that important macroeconomic
underpinnings--including low inflation, productivity enhancements, a strong
U.S. consumer, Federal budget surpluses and signs of improvement in Asian
economies--should create a favorable long-term environment for equity
returns. While interest rates rose last quarter, our feeling is that they
should stabilize going forward based on our view that there are no visible
signs of higher inflation.
On balance, we are not anticipating any major changes in the Portfolio's
overall investment posture. We are continually reassessing all of our
investment themes. We generally remain positive on the technology sector,
and we would expect that the Portfolio continue to be well represented in
this area. We are sensitive to valuations, particularly with respect to
companies whose earnings growth, in our opinion, may be vulnerable. As a
result, we likely will not emphasize investments in "pure" Internet
companies. Instead, we will (as always) focus on companies that, in our
opinion, have a competitive product advantage, durable franchises, potential
for above-average earnings growth, improving margins, excellent management,
and reasonable valuations.
*The Standard & Poor's 500 Composite Stock Price Index is a
market-capitalization weighted index that measures the value of 400
industrial stocks, 60 transportation and utility company stocks and 40
financial issues. It is unmanaged and unavailable for investment.
**The Morgan Stanley Capital International EAFE Index is an unmanaged index
consisting of securities listed on exchanges in European, Australasian and
Far Eastern markets and includes dividends and distributions, but does not
reflect fees, brokerage commissions or other expenses of investing.
***The Lehman Aggregate Bond Index is an unmanaged index composed of the
Government Corporate Bond Index, the Asset-Backed Securities Index and the
Mortgage-Backed Securities Index and includes U.S. Treasury issues, agency
issues, corporate bond issues and mortgage-backed issues. It includes
reinvestment of dividends and is unavailable for investment.
Portfolio holdings are subject to change and may not be representative of
current holdings.
The outlook for this Portfolio may differ from that presented for other
Nations Funds Portfolios.
<PAGE>
Nations Marsico
FOCUSED EQUITIES PORTFOLIO
Portfolio Manager
THOMAS F. MARSICO,
Marsico Capital Management, LLC
Q. HOW DID THE PORTFOLIO PERFORM?
The first half of 1999 provided a number of challenges to investors,
particularly in the large capitalization equity arena. For the reporting
period, Nations Marsico Focused Equities Portfolio handily outperformed its
benchmark, providing investors with a return of 15.38% compared with the
12.38% return of the Standard & Poor's 500 Composite Stock Price (S&P 500)
Index.*
Q. WHY DID THE PORTFOLIO PERFORM THIS WAY?
Although capital markets were buffeted by a variety of factors during the
first half of 1999, the period ended on a high note following the
announcement by the Federal Reserve Board of an interest rate neutral stance
after their 25 basis point tightening. This reduced investors' fears of
further imminent rate hikes. The June 30 announcement capped months of
speculation about the direction of interest rates.
The second quarter was particularly volatile. In April, investors became
increasingly concerned over valuations of large capitalization "growth"
stocks. For several weeks, economically sensitive and "value" stocks were
in favor. Beginning in mid-May, markets suffered broad declines as a sharp
increase in the Consumer Price Index ("CPI") spurred concerns about the
prospect for higher interest rates. Later in the month, the Federal Reserve
Board (the "Fed") confirmed investors' fears when it announced that the
Federal Open Market Committee ("FOMC") had adopted a tightening bias. The
combination of a higher-than-expected CPI and a potential hike in interest
rates sparked a broad sell-off in equity securities. Few sectors were
spared; large capitalization stocks (as measured by the S&P 500) fell 2.3% in
May, while international equities (as measured by the Morgan Stanley Capital
International EAFE Index)** declined by 5.3%. Fixed-income securities (as
measured by the Lehman Aggregate Bond Index),*** which are vulnerable in a
rising interest rate environment, lost nearly 1.0% in May.
During June, overall market sentiment seemed to improve, culminating with the
Fed announcement described above. Updated CPI data, which indicated that
core inflation was near zero, suggested that the April reading was an
aberration. Interest rates began to stabilize somewhat, and investors were
cheered by the prospect that the FOMC would not move aggressively to tighten
monetary policy. Large capitalization equities began to reassert themselves,
with "growth" stocks showing signs of regaining the ground lost earlier in
the quarter.
[GRAPHIC]
Performance Overview
3/27/98 - 6/30/99
GROWTH OF A $10,000 INVESTMENT.
$15,019
$12,683
- --Nations Focused --S&P 500
Equities Portfolio
<TABLE>
<CAPTION>
Returns as of 6/30/99
YTD* 1 YEAR SINCE INCEPT.**
------ ------- ---------------
<S> <C> <C> <C>
NATIONS
FOCUSED EQUITIES 15.38% 30.94% 37.99%
S&P 500 12.38% 22.77% 20.94%
</TABLE>
*Cumulative Returns **Annualized Returns
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN NATIONS MARSICO FOCUSED
EQUITIES PORTFOLIO. (THE RETURNS INCLUDE THE PORTFOLIO 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.
<PAGE>
Nations Marsico
FOCUSED EQUITIES PORTFOLIO
During the second quarter, stocks in such diverse industries as autos,
airlines, financial services, drugs and the consumer sector were battered.
Much of this resulted from interest rate fears. On the whole, we believe
that interest rates will stabilize and earnings of large capitalization
companies will continue to grow. As a result, the industries that suffered
during the quarter should offer compelling investment opportunities going
forward. However in situations where a company's ability to execute its
plans comes into doubt, we have eliminated or reduced our position. This was
particularly true for certain auto and airline companies during the first
half of 1999. Technology-related stocks have comprised a substantial portion
of the Portfolios' assets and, therefore, have a strong influence on
investment results. During the first half, QUALCOMM, Inc. and Lucent
Technologies Inc. were standout performers. Sun Microsystems, Inc. also
posted a solid gain. However, EMC Corporation, which has been among the
Portfolio's top holdings since inception, experienced a difficult second
quarter due to potential competitive pressure. We continue to have
conviction in EMC's high-end data storage product and its management, as well
as the company's earnings growth potential.
Q. WHAT IS YOUR OUTLOOK FOR THE REST OF 1999?
Our overall investment outlook continues to be generally positive. We expect
that market volatility will persist and that short-term setbacks, such as we
experienced last quarter, may occur. We believe that important macroeconomic
underpinnings--including low inflation, productivity enhancements, a strong
U.S. consumer, Federal budget surpluses and signs of improvement in Asian
economies--should create a favorable long-term environment for equity
returns. While interest rates rose last quarter, our feeling is that they
should stabilize going forward based on our view that there are no visible
signs of higher inflation.
On balance, we are not anticipating any major changes in the Portfolio's
overall investment posture. We are continually reassessing all of our
investment themes. We generally remain positive on the technology sector,
and we would expect that the Portfolio continue to be well represented in
this area. We are sensitive to valuations, particularly with respect to
companies whose earnings growth, in our opinion, may be vulnerable. As a
result, we likely will not emphasize investments in "pure" Internet
companies. Instead, we will (as always) focus on companies that, in our
opinion, have a competitive product advantage, durable franchises, potential
for above-average earnings growth, improving margins, excellent management,
and reasonable valuations.
*The Standard & Poor's 500 Composite Stock Price Index is a
market-capitalization weighted index that measures the value of 400
industrial stocks, 60 transportation and utility company stocks and 40
financial issues. It is unmanaged and unavailable for investment.
**The Morgan Stanley Capital International EAFE Index is an unmanaged index
consisting of securities listed on exchanges in European, Australasian and
Far Eastern markets and includes dividends and distributions, but does not
reflect fees, brokerage commissions or other expenses of investing.
*** The Lehman Aggregate Bond Index is an unmanaged index composed of the
Government Corporate Bond Index, the Asset-Backed Securities Index and the
Mortgage-Backed Securities Index and includes U.S. Treasury issues, agency
issues, corporate bond issues and mortgage-backed issues. It includes
reinvestment of dividends and is unavailable for investment.
Portfolio holdings are subject to change and may not be representative of
current holdings.
<PAGE>
Nations Funds
NATIONS INTERNATIONAL GROWTH PORTFOLIO
STATEMENT OF NET ASSETS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
COMMON STOCKS - 86.5%
AUSTRALIA - 6.0%
1,251 AMP, Ltd.............................................. $ 13,676
4,000 Australia and New Zealand Banking Group............... 29,412
1,000 Brambles Industries Ltd............................... 26,344
10,000 Cable and Wireless Optus.............................. 22,769
6,000 Colonial, Ltd......................................... 21,247
2,112 News Corporation...................................... 18,020
450 Telstra Corporation ADS Rep 20 Ord. NPV............... 51,975
5,000 Woolworths Ltd........................................ 16,630
-----------
200,073
-----------
BRAZIL - 1.8%
200 Centrais Eletricas Brasileiras SA..................... 2,014
15 Centrais Geradoras do Sul do Brasil SA................ 60
230 Petroleo Brasileiro SA................................ 3,542
3,000 Tele Norte Leste Participacoes SA, ADR................ 55,688
-----------
61,304
-----------
CANADA - 0.8%
1,500 Biochem Pharma, Inc.+................................. 27,870
-----------
FINLAND - 2.0%
750 Nokia AB Oy........................................... 65,741
-----------
FRANCE - 9.4%
250 Accor SA+............................................. 62,777
200 AXA+.................................................. 24,399
210 Elf Aquitaine......................................... 30,817
500 Equant NV+............................................ 46,097
60 L'Oreal............................................... 40,559
100 Promodes.............................................. 65,639
1,040 Sanofi-Synthelabo..................................... 44,133
-----------
314,421
-----------
GERMANY - 9.5%
50 Bayer Motoren Werk.................................... 34,392
280 Deutsch Pfandbrief-Und Hypothekenbank AG
(DePfa-Bank).......................................... 25,410
480 Henkel Kgaa NON VTG PRF............................... 32,769
1,500 Hoechst Ag............................................ 67,598
600 Mannesmann AG Ord..................................... 89,532
200 SAP AG................................................ 67,650
-----------
317,351
-----------
HONG KONG - 1.9%
20,000 Wharf Holdings........................................ 62,380
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
1
<PAGE>
Nations Funds
NATIONS INTERNATIONAL GROWTH PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
IRELAND - 5.1%
3,000 Bank of Ireland Ord................................... $ 50,428
2,790 CRH plc Ord........................................... 49,487
1,000 Elan Corporation ADR+................................. 27,750
1,000 ESAT Telecom Group ADS................................ 43,875
-----------
171,540
-----------
ITALY - 0.7%
3,000 ENI SpA (REGD)........................................ 17,913
2,220 Tecnost SpA+.......................................... 5,472
-----------
23,385
-----------
JAPAN - 8.5%
4,000 Daiwa Securities...................................... 26,438
1,000 Fujitsu Support and Service, Inc...................... 151,355
3,000 Hitachi............................................... 28,131
1,000 Matsushita Electric Industrial Company................ 19,415
2,000 Sharp Corporation..................................... 23,629
1,000 Shimano, Inc.......................................... 23,670
1,000 Toppan Printing Company............................... 11,162
-----------
283,800
-----------
MEXICO - 1.6%
1,000 Cifra SA, ADR+........................................ 20,000
280 Grupo Carso SA de CV ADR+............................. 2,625
170 Grupo Televisa SA GDR................................. 7,618
1,000 Panamerican Beverages, Inc............................ 23,813
-----------
54,056
-----------
NETHERLANDS - 6.1%
840 Getronics NV.......................................... 32,311
750 Internationale Nederlanden Groep NV................... 40,605
1,000 Koninklijke Kpn NV.................................... 46,922
1,000 Numico (Koninklijke) NV............................... 35,423
300 United Pan-Europe Communications+..................... 16,273
804 Wolters Kluwer-Cva.................................... 32,004
-----------
203,538
-----------
PORTUGAL - 0.7%
600 Portugal Telecom+..................................... 24,410
-----------
SINGAPORE - 1.8%
5,000 Development Bank Singapore (Alien Mkt)................ 61,087
-----------
SOUTH AFRICA - 0.5%
15,000 Sanlam................................................ 17,773
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
2
<PAGE>
Nations Funds
NATIONS INTERNATIONAL GROWTH PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
SPAIN - 4.1%
1,120 Endessa............................................... $ 23,885
500 Gas Natural SDG....................................... 36,351
1,350 Repsol SA............................................. 27,565
1,020 Telefonica SA+........................................ 49,133
-----------
136,934
-----------
SWEDEN - 3.1%
1,300 Atlas Copco AB, Series A.............................. 35,398
2,090 Ericsson (L.M.) Telephone Company, Series B........... 66,986
-----------
102,384
-----------
SWITZERLAND - 2.9%
25 Nestle SA (REGD)...................................... 45,044
35 Novartis AG (REGD).................................... 51,106
-----------
96,150
-----------
UNITED KINGDOM - 20.0%
6,000 Amvescap Ord.......................................... 53,389
20,000 Azlan Group Ord.+..................................... 25,221
5,000 Bank of Scotland Ord.................................. 66,203
3,200 BG Ord................................................ 19,546
3,000 BP Amoco Ord.......................................... 53,767
3,000 British Telecommunications Ord........................ 50,268
1,500 EIDOS Ord............................................. 49,299
2,000 Glaxo Wellcome Ord.................................... 55,580
3,021 Granada Group Ord..................................... 56,048
1,500 Hyder Ord............................................. 17,852
5,000 Securicor Ord......................................... 43,860
2,760 Smithkline Beecham Ord................................ 35,870
4,000 Standard Chartered Bank Ord........................... 65,322
2,232 Unilever plc.......................................... 20,213
7,000 WPP Group Ord......................................... 59,198
-----------
671,636
-----------
TOTAL COMMON STOCKS (Cost $2,556,271)................. 2,895,833
-----------
<CAPTION>
PRINCIPAL
AMOUNT
- -----------
<C> <S> <C>
CORPORATE BONDS AND NOTES - 0.3% (Cost $11,101)
NETHERLANDS - 0.3%
$ 10,730 Tecnost International NV,
4.487% 06/23/04....................................... 11,261
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
3
<PAGE>
Nations Funds
NATIONS INTERNATIONAL GROWTH PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES
- -----------
<C> <S> <C>
- --------------------------------------------------------------------------------
RIGHTS - 0.0%+ (Cost $0)
PORTUGAL - 0.0%+
600 Portugal Telecom SA................................... $ 6
-----------
</TABLE>
<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS (Cost $2,567,372*)........ 86.8% 2,907,100
-----------
OTHER ASSETS AND LIABILITIES (NET).......... 13.2%
Cash................................................. $ 397,247
Receivable for Fund shares sold...................... 84,811
Dividends receivable................................. 7,665
Interest receivable.................................. 1,265
Receivable from investment advisor................... 1,939
Unamortized organization costs....................... 14,802
Administration fee payable........................... (566)
Payable for investment securities purchased.......... (28,734)
Accrued Trustees' fees and expenses.................. (10,203)
Accrued expenses and other liabilities............... (25,967)
-----------
TOTAL OTHER ASSETS AND LIABILITIES (NET)............. 442,259
-----------
NET ASSETS.................................. 100.0% $3,349,359
------- -----------
------- -----------
NET ASSETS CONSIST OF:
Undistributed net investment income.................. $ 13,800
Accumulated net realized loss on investments sold.... (76,880)
Net unrealized appreciation of investments, foreign
currency and net
other assets......................................... 339,819
Paid-in capital...................................... 3,072,620
-----------
NET ASSETS........................................... $3,349,359
-----------
-----------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER
SHARE ($3,349,359 DIVIDED BY 306,257 shares
outstanding)......................................... $ 10.94
-----------
-----------
</TABLE>
- -----------------
* Federal Income Tax Information: Net unrealized appreciation of investment
securities was comprised of gross appreciation of $448,521 and gross
depreciation of $108,793 for Federal income tax purposes. At June 30, 1999,
the aggregate cost of securities for Federal income tax purposes was
$2,567,372.
+ Non-income producing security.
+ Amount represents less than 0.1%.
ABBREVIATIONS:
<TABLE>
<C> <S>
ADR American Depository Receipt
ADS American Depository Shares
GDR Global Depository Receipt
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
4
<PAGE>
Nations Funds
NATIONS INTERNATIONAL GROWTH PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
At June 30, 1999, sector diversification was as follows:
<TABLE>
<CAPTION>
% OF
SECTOR DIVERSIFICATION NET ASSETS VALUE
<S> <C> <C>
- -------------------------------------------------------------------
COMMON STOCKS:
Telecommunications...................... 14.8% $ 496,476
Banking................................. 9.2 309,055
Drugs................................... 7.2 242,309
Computer Services....................... 5.5 183,666
Oil and Gas............................. 4.0 133,604
Financial Services...................... 3.9 130,486
Leisure and Recreation Products......... 3.9 129,017
Machinery and Equipment................. 3.7 124,930
Food Producers.......................... 2.4 80,467
Computer Software....................... 2.0 67,650
Chemicals - Diversified................. 2.0 67,598
Retail - Specialty...................... 2.0 65,639
Distribution and Wholesale.............. 1.9 63,406
Restaurants and Lodging................. 1.9 62,777
Real Estate Development................. 1.9 62,380
Advertising and Marketing Services...... 1.8 59,198
Insurance............................... 1.7 55,848
Electronics............................. 1.5 51,760
Construction............................ 1.5 49,487
Utilities - Telephone................... 1.5 49,133
Other................................... 12.2 410,947
----- ------------
TOTAL COMMON STOCKS..................... 86.5 2,895,833
CORPORATE BONDS AND NOTES............... 0.3 11,261
RIGHTS.................................. 0.0 6
----- ------------
TOTAL INVESTMENTS....................... 86.8 2,907,100
OTHER ASSETS AND LIABILITIES (NET)...... 13.2 442,259
----- ------------
NET ASSETS.............................. 100.0% $3,349,359
----- ------------
----- ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
Nations Funds
NATIONS MARSICO FOCUSED EQUITIES PORTFOLIO
STATEMENT OF NET ASSETS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
COMMON STOCKS - 88.8%
AUTOMOBILES AND TRUCKS - 1.7%
16,709 Ford Motor Company................................... $ 943,014
------------
BANKING - 8.4%
12,055 Chase Manhattan Corporation.......................... 1,044,264
75,633 Citigroup, Inc....................................... 3,592,568
------------
4,636,832
------------
BEVERAGES - 4.5%
24,523 Anheuser-Busch Companies, Inc........................ 1,739,600
25,830 Coca-Cola Enterprises, Inc........................... 768,443
------------
2,508,043
------------
CHEMICALS - DIVERSIFIED - 1.1%
14,850 Monsanto Company..................................... 585,647
------------
COMPUTER RELATED - 16.8%
76,376 EMC Corporation+..................................... 4,200,679
21,011 International Business Machines Corporation.......... 2,715,672
34,461 Sun Microsystems, Inc.+.............................. 2,373,501
------------
9,289,852
------------
DRUGS - 4.7%
16,314 American Home Products Corporation................... 938,055
15,301 Pfizer, Inc.......................................... 1,679,285
------------
2,617,340
------------
ELECTRICAL EQUIPMENT - 2.8%
13,670 General Electric Company............................. 1,544,710
------------
ELECTRONICS - 1.3%
7,723 Motorola, Inc........................................ 731,754
------------
FINANCIAL SERVICES - 6.3%
21,410 Associates First Capital Corporation................. 948,731
5,704 Charles Schwab Corporation........................... 626,727
27,923 Fannie Mae........................................... 1,909,235
------------
3,484,693
------------
MEDIA - 9.3%
10,862 Comcast Corporation, Class A......................... 417,508
25,702 MediaOne Group, Inc.+................................ 1,911,586
38,534 Time Warner, Inc..................................... 2,832,249
------------
5,161,343
------------
NETWORKING EQUIPMENT AND PRODUCTS - 1.7%
15,080 Cisco Systems, Inc.+................................. 969,833
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
Nations Funds
NATIONS MARSICO FOCUSED EQUITIES PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
OIL FIELD SERVICES & EQUIPMENT - 2.2%
19,101 Schlumberger Ltd..................................... $ 1,216,495
------------
RECREATION - 0.7%
7,890 Carnival Corporation................................. 382,665
------------
RENTAL AUTO AND EQUIPMENT - 2.2%
19,839 Hertz Corporation, Class A........................... 1,230,018
------------
RESTAURANTS AND LODGING - 2.2%
29,900 McDonald's Corporation............................... 1,235,244
------------
RETAIL - SPECIALTY - 4.4%
12,740 Best Buy Company, Inc.+.............................. 859,950
24,562 Home Depot, Inc...................................... 1,582,714
------------
2,442,664
------------
TELECOMMUNICATIONS - 11.1%
31,794 Lucent Technologies, Inc............................. 2,144,108
28,153 QUALCOMM, Inc.+...................................... 4,039,955
------------
6,184,063
------------
TRANSPORTATION - 7.4%
8,059 Delta Air Lines, Inc................................. 464,400
56,020 Southwest Airlines Company........................... 1,743,623
28,961 UAL Corporation+..................................... 1,882,464
------------
4,090,487
------------
TOTAL COMMON STOCKS (Cost $41,124,795)............... 49,254,697
------------
<CAPTION>
PRINCIPAL
AMOUNT
- -----------
<C> <S> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 13.1% (Cost $7,300,000)
FEDERAL HOME LOAN BANK (FHLB) - 13.1%
$7,300,000 Discount note 07/01/99............................... 7,299,094
------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
Nations Funds
NATIONS MARSICO FOCUSED EQUITIES PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
INVESTMENT COMPANIES - 1.3% (Cost $737,115)
737,115 Nations Cash Reserves#............................... $ 737,115
------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS (Cost $49,161,910*)...... 103.2% 57,290,906
------------
OTHER ASSETS AND LIABILITIES (NET)......... (3.2)%
Cash................................................ $ 41
Receivable for investment securities sold........... 6,905,000
Receivable for Fund shares sold..................... 394,114
Dividends receivable................................ 2,383
Interest receivable................................. 251
Unamortized organization costs...................... 14,802
Collateral on securities loaned..................... (675,115)
Investment advisory fee payable..................... (37,395)
Administration fee payable.......................... (9,490)
Payable for investment securities purchased......... (8,328,925)
Accrued Trustees' fees and expenses................. (10,203)
Accrued expenses and other liabilities.............. (33,281)
------------
TOTAL OTHER ASSETS AND LIABILITIES (NET)............ (1,777,818)
------------
NET ASSETS................................. 100.0% $55,513,088
------- ------------
------- ------------
NET ASSETS CONSIST OF:
Net investment loss................................. $ (25,674)
Accumulated net realized gain on investments sold... 522,318
Net unrealized appreciation of investments.......... 8,128,996
Paid-in capital..................................... 46,887,448
------------
NET ASSETS.......................................... $55,513,088
------------
------------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER
SHARE ($55,513,088 DIVIDED BY 3,700,194 shares
outstanding)........................................ $ 15.00
------------
------------
</TABLE>
- -----------------
* Federal Income Tax Information: Net unrealized appreciation of investment
securities was comprised of gross appreciation of $8,607,455 and gross
depreciation of $478,459 for Federal income tax purposes. At June 30, 1999,
the aggregate cost of securities for Federal income tax purposes was
$49,161,910.
+ Non-income producing security.
# Money market mutual fund registered under the Investment Company Act of
1940, as amended, and sub-advised by TradeStreet Investment Associates,
Inc. A portion of this amount represents cash collateral received from
securities lending activity (Note 8). The portion that represents cash
collateral is $675,115.
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
Nations Funds
NATIONS MANAGED SMALLCAP INDEX PORTFOLIO
STATEMENT OF NET ASSETS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
COMMON STOCKS - 100.8%
ADVERTISING AND MARKETING SERVICES - 0.8%
200 Catalina Marketing Corporation+....................... $ 18,400
1,400 HA-LO Industries, Inc.+............................... 13,825
750 True North Communications............................. 22,500
-----------
54,725
-----------
AEROSPACE AND DEFENSE - 0.9%
800 AAR Corporation....................................... 18,150
300 Alliant Techsystems, Inc.+............................ 25,950
850 BE Aerospace, Inc.+................................... 15,884
-----------
59,984
-----------
APPAREL AND TEXTILES - 4.4%
500 Authentic Fitness Corporation......................... 8,750
400 Brown Shoe Company, Inc............................... 8,700
950 Cone Mills Corporation+............................... 5,700
1,450 Delta Woodside Industries, Inc........................ 8,700
450 Footstar, Inc.+....................................... 16,734
450 Guilford Mills, Inc................................... 4,669
400 Haggar Corporation.................................... 5,250
1,000 Hartmarx Corporation+................................. 4,188
1,100 J. Baker, Inc......................................... 9,488
650 K-Swiss, Inc.......................................... 30,224
650 Linens 'N Things, Inc.+............................... 28,437
950 Nautica Enterprises, Inc.+............................ 16,031
850 Oshkosh B'Gosh, Inc................................... 17,956
350 Oxford Industries, Inc................................ 9,909
975 Pacific Sunwear of California+........................ 23,765
1,100 Phillips-Van Heusen Corporation....................... 10,863
500 Pillowtex Corporation................................. 8,156
450 Quiksilver, Inc.+..................................... 11,728
250 St. John Knits, Inc................................... 7,313
1,650 Stride Rite Corporation............................... 17,016
850 The Men's Wearhouse, Inc.+............................ 21,675
300 Timberland Company, Class A+.......................... 20,419
-----------
295,671
-----------
AUTOMOBILE PARTS MANUFACTURERS - 1.6%
650 Intermet Corporation.................................. 9,831
650 Myers Industries, Inc................................. 13,000
500 Simpson Industries.................................... 5,125
250 Spartan Motors, Inc................................... 1,438
900 Standard Motor Products, Inc.......................... 22,050
300 Standard Products Company............................. 7,688
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
Nations Funds
NATIONS MANAGED SMALLCAP INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
AUTOMOBILE PARTS MANUFACTURERS (CONTINUED)
950 TBC Corporation+...................................... $ 6,709
350 Titan International, Inc.............................. 4,156
1,350 Tower Automotive, Inc.+............................... 34,341
400 Wynn's International, Inc............................. 7,375
-----------
111,713
-----------
BANKING - 4.6%
600 Anchor Bancorp Wisconsin, Inc......................... 10,688
550 BankNorth Group, Inc.................................. 18,150
300 Carolina First Corporation............................ 7,313
300 Commerce Bancorp, Inc................................. 12,825
750 Community First Bankshares, Inc....................... 17,906
1,000 Cullen Frost Bankers, Inc............................. 27,562
400 Downey Financial Corporation.......................... 8,775
750 Firstbank Corporation................................. 16,922
1,250 Firstmerit Corporation................................ 35,077
750 Hudson United Bancorp................................. 22,969
800 MAF Bancorp, Inc...................................... 19,400
500 Provident Bankshares Corporation...................... 11,625
350 Queens County Bancorp, Inc............................ 11,331
700 Silicon Valley Bancshares+............................ 17,325
550 Susquehanna Bancshares, Inc........................... 9,728
200 U.S. Trust Corporation................................ 18,500
750 United Bankshares, Inc................................ 19,875
950 UST Corporation....................................... 28,737
-----------
314,708
-----------
BEVERAGES - 0.5%
650 Canandaigua Brands Inc., Class A+..................... 34,084
-----------
BUILDING MATERIALS - 3.2%
1,900 Building Materials Holding Corporation+............... 21,850
100 Butler Manufacturing Company.......................... 2,794
1,150 Champion Enterprises, Inc.+........................... 21,419
300 Coachmen Industries, Inc.............................. 6,975
525 Florida Rock Industries, Inc.......................... 23,887
650 Hughes Supply, Inc.................................... 19,297
1,050 Insteel Industries, Inc............................... 9,450
850 Lone Star Industries.................................. 31,927
300 Republic Group, Inc................................... 5,400
350 Service Experts, Inc.+................................ 7,678
250 Simpson Manufacturing Company, Inc.+.................. 11,875
200 Skyline Corporation................................... 5,863
400 Texas Industries, Inc................................. 15,500
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
Nations Funds
NATIONS MANAGED SMALLCAP INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
BUILDING MATERIALS (CONTINUED)
1,000 Universal Forest Products............................. $ 21,500
650 Watsco, Inc........................................... 10,644
-----------
216,059
-----------
BUSINESS SERVICES - 0.2%
400 Fair, Issac and Company, Inc.......................... 14,025
-----------
CHEMICALS - BASIC - 0.4%
500 Cambrex Corporation................................... 13,125
350 Scotts Company, Class A+.............................. 16,669
-----------
29,794
-----------
CHEMICALS - SPECIALTY - 0.6%
150 Chemed Corporation.................................... 4,988
400 Lilly Industries Inc., Class A........................ 7,425
200 McWhorter Technologies, Inc.+......................... 2,888
500 OM Group, Inc......................................... 17,249
150 Penford Corporation................................... 2,438
500 Quaker Chemical Corporation........................... 8,125
-----------
43,113
-----------
COMMERCIAL SERVICES - 2.1%
550 Central Parking Corporation........................... 18,838
1,150 Computer Task Group, Inc.............................. 19,550
1,500 Insurance Auto Auctions, Inc.+........................ 24,188
1,700 Interim Services, Inc.+............................... 35,062
300 Lason, Inc.+.......................................... 14,888
350 NFO Worldwide, Inc.+.................................. 4,900
1,050 Prepaid Legal Services, Inc.+......................... 28,546
-----------
145,972
-----------
COMPUTER RELATED - 2.5%
1,300 American Management Systems+.......................... 41,680
500 BancTec, Inc.+........................................ 8,969
650 Exabyte Corporation+.................................. 2,519
700 Hutchinson Technology, Inc.+.......................... 19,425
550 Jack Henry & Associates, Inc.......................... 21,588
700 Kronos, Inc.+......................................... 31,850
250 Micros Systems, Inc.+................................. 8,500
650 National Computer Systems, Inc........................ 21,938
1,300 Standard Microsystems Corporation+.................... 9,831
200 Wall Data, Inc.+...................................... 1,913
-----------
168,213
-----------
COMPUTER SERVICES - 2.1%
1,450 Acxiom Corporation+................................... 36,158
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
Nations Funds
NATIONS MANAGED SMALLCAP INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
COMPUTER SERVICES (CONTINUED)
1,500 Ciber Inc.+........................................... $ 28,688
650 Gerber Scientific, Inc................................ 14,341
650 Primark Corporation+.................................. 18,241
300 The BISYS Group, Inc.+................................ 17,550
950 Whittman-Hart, Inc.+.................................. 30,163
-----------
145,141
-----------
COMPUTER SOFTWARE - 1.9%
1,350 Avid Technology, Inc.+................................ 21,769
1,600 Epicor Software Corporation+.......................... 11,900
1,050 Hyperion Solutions Corporation+....................... 18,703
750 Macromedia, Inc.+..................................... 26,437
650 Mercury Interactive Corporation+...................... 22,993
550 Midway Games, Inc.+................................... 7,116
500 National Instruments Corporation+..................... 20,188
-----------
129,106
-----------
CONSTRUCTION - 3.2%
450 Apogee Enterprises, Inc............................... 6,047
1,700 D.R. Horton, Inc...................................... 28,263
400 Dycom Industries, Inc.+............................... 22,400
250 Elcor Corporation..................................... 10,922
450 Halter Marine Group, Inc.+............................ 2,981
1,350 Insituform Technologies Inc., Class A+................ 29,193
750 M.D.C. Holdings, Inc.................................. 16,125
1,350 Morrison Knudsen Corporation+......................... 13,922
600 Ryland Group, Inc..................................... 17,813
500 Southern Energy Homes, Inc.+.......................... 2,656
1,250 Standard Pacific Corporation.......................... 16,172
650 TJ International, Inc................................. 20,150
850 Toll Brothers, Inc.+.................................. 18,222
400 U.S. Home Corporation+................................ 14,200
-----------
219,066
-----------
CONSUMER GOODS AND SERVICES - 3.2%
400 ABM Industries, Inc................................... 12,275
500 ADVO, Inc.+........................................... 10,375
300 Angelica Corporation.................................. 5,288
750 Fedders Corporation................................... 5,016
300 Gibson Greetings, Inc.+............................... 1,903
400 Harman International Industries....................... 17,600
750 Kaman Corporation..................................... 11,766
550 Kellwood Company...................................... 14,919
1,700 La-Z-Boy, Inc......................................... 39,099
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
Nations Funds
NATIONS MANAGED SMALLCAP INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
CONSUMER GOODS AND SERVICES (CONTINUED)
850 Oakwood Homes Corporation............................. $ 11,156
750 Richfood Holdings, Inc................................ 13,219
400 Royal Appliance Manufacturing Company+................ 2,775
450 Russ Berrie & Company, Inc............................ 11,138
950 Smithfield Foods, Inc.+............................... 31,765
750 Thomas Industries, Inc................................ 15,375
850 Wolverine World Wide.................................. 11,900
-----------
215,569
-----------
CONTAINERS - 0.3%
750 AptarGroup, Inc....................................... 22,500
-----------
CONTAINERS AND PACKAGING - 0.2%
600 Shorewood Packaging Corporation+...................... 11,063
-----------
COSMETICS AND TOILETRIES - 0.4%
1,550 Natures Sunshine Products, Inc........................ 16,275
1,500 NBTY, Inc.+........................................... 9,750
-----------
26,025
-----------
DISTRIBUTION AND WHOLESALE - 0.4%
200 Aviation Sales Company+............................... 7,900
2,000 Brightpoint, Inc.+.................................... 12,125
200 Lawson Products....................................... 5,038
-----------
25,063
-----------
DIVERSIFIED - 1.0%
750 Justin Industries, Inc................................ 10,453
700 Mascotech, Inc........................................ 11,856
650 Sierra Pacific Resources.............................. 23,644
400 SPS Technologies, Inc.+............................... 15,000
300 Standex International Corporation..................... 8,213
-----------
69,166
-----------
DRUGS - 3.2%
650 Alpharma Inc., Class A................................ 23,116
850 Barr Laboratories, Inc.+.............................. 33,894
1,000 Bindley Western Industries, Inc....................... 23,063
1,950 Bio-Technology General Corporation+................... 12,675
1,150 Jones Pharma, Inc..................................... 45,280
400 Pharmaceutical Product Development, Inc.+............. 10,950
800 Regeneron Pharmaceuticals, Inc.+...................... 6,250
1,400 Roberts Pharmaceutical Corporation+................... 33,950
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
Nations Funds
NATIONS MANAGED SMALLCAP INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
DRUGS (CONTINUED)
750 Syncor International Corporation+..................... $ 27,000
1 Watson Pharmaceutical, Inc.+.......................... 35
-----------
216,213
-----------
EDUCATION - 0.3%
850 DeVry, Inc.+.......................................... 19,019
-----------
ELECTRIC POWER - 1.4%
500 Bangor Hydro-Electric Company......................... 8,063
400 Central Vermont Public Services....................... 5,125
350 CILCORP, Inc.......................................... 21,874
400 Commonwealth Energy System Companies.................. 16,800
300 Eastern Utilities Association......................... 8,738
100 Green Mountain Power Corporation...................... 1,125
400 TNP Enterprises, Inc.................................. 14,500
400 United Illuminating Company........................... 16,975
-----------
93,200
-----------
ELECTRICAL EQUIPMENT - 0.9%
250 C&D Technologies, Inc................................. 7,656
400 C-COR Electronics+.................................... 11,150
950 General Semiconductor, Inc.+.......................... 8,669
800 Intermagnetics General Corporation+................... 6,200
500 KEMET Corporation+.................................... 11,469
200 Micrel, Inc.+......................................... 14,799
150 Park Electrochemical Corporation...................... 4,313
-----------
64,256
-----------
ELECTRONICS - 3.9%
200 Analogic Corporation.................................. 6,219
200 Benchmark Electronics, Inc.+.......................... 7,188
600 Burr-Brown Corporation+............................... 21,975
800 C-Cube Microsystems, Inc.+............................ 25,350
650 Checkpoint Systems, Inc.+............................. 5,809
400 CTS Corporation....................................... 28,000
350 Dallas Semiconductor Corporation...................... 17,675
50 Electro Scientific Industries, Inc.+.................. 2,089
250 Esterline Technologies Corporation+................... 3,594
1,000 Gentex Corporation+................................... 28,000
200 Hadco Corporation+.................................... 7,950
200 Harmon Industries, Inc................................ 3,963
2,000 Intervoice, Inc.+..................................... 28,874
250 Itron, Inc.+.......................................... 2,141
350 Kulicke & Soffa Industries, Inc.+..................... 9,384
550 Methode Electronics, Inc.............................. 12,581
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
Nations Funds
NATIONS MANAGED SMALLCAP INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
ELECTRONICS (CONTINUED)
300 Oak Industries, Inc.+................................. $ 13,106
850 Pioneer Standard Electronics.......................... 10,200
300 Technitrol, Inc....................................... 9,675
700 Unitrode Corporation+................................. 20,081
-----------
263,854
-----------
ENERGY - 0.7%
800 Barrett Resources Corporation+........................ 30,700
1,050 Tuboscope, Inc.+...................................... 14,372
-----------
45,072
-----------
ENTERTAINMENT - 0.1%
200 Anchor Gaming+........................................ 9,613
-----------
ENVIRONMENTAL - 0.5%
250 American States Water Company......................... 7,094
400 Clarcor, Inc.......................................... 7,675
350 IMCO Recycling, Inc................................... 5,994
625 Tetra Tech, Inc.+..................................... 10,312
-----------
31,075
-----------
EXPLORATION AND DRILLING - 0.5%
800 Energen Corporation................................... 14,900
500 Northwest Natural Gas Company......................... 12,063
500 Southwestern Energy Company........................... 5,281
-----------
32,244
-----------
FINANCIAL SERVICES - 5.0%
1,700 Americredit Corporation+.............................. 27,200
400 Centura Banks, Inc.................................... 22,550
1,100 Commercial Federal Corporation........................ 25,506
400 Dain Rauscher Corporation............................. 21,650
550 Eaton Vance Corporation............................... 18,941
850 Enhance Financial Services Group, Inc................. 16,788
900 Hambrecht & Quist Group+.............................. 33,412
250 JSB Financial, Inc.................................... 12,719
950 Legg Mason, Inc....................................... 36,574
450 Mutual Risk Management Ltd............................ 15,019
1,150 Raymond James Financial, Inc.......................... 27,528
650 Riggs National Corporation............................ 13,366
400 SEI Investment Company................................ 35,299
650 St. Paul Bancorp, Inc................................. 16,575
300 Whitney Holding Corporation........................... 11,925
-----------
335,052
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
Nations Funds
NATIONS MANAGED SMALLCAP INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
FOOD PRODUCERS - 1.0%
1,550 Chiquita Brands International, Inc.................... $ 13,950
700 Corn Products International, Inc...................... 21,306
300 J & J Snack Foods Corporation+........................ 7,200
400 Michael Foods, Inc.................................... 9,400
200 Panera Bread Company, Class A+........................ 1,275
850 Ralcorp Holdings, Inc.+............................... 13,653
-----------
66,784
-----------
FOREST AND PAPER PRODUCTS - 0.3%
250 Buckeye Technologies, Inc.+........................... 3,797
400 Caraustar Industries, Inc............................. 9,875
250 Pope & Talbot, Inc.................................... 3,016
250 Schweitzer-Mauduit International, Inc................. 3,750
-----------
20,438
-----------
FURNITURE AND APPLIANCES - 0.7%
200 Bassett Furniture Industries, Inc..................... 4,575
800 Ethan Allen Interiors, Inc............................ 30,200
1,350 Interface, Inc........................................ 11,644
-----------
46,419
-----------
GAS AND ELECTRIC - 0.4%
300 Central Hudson Gas & Electric......................... 12,600
200 Orange & Rockland Utilities, Inc...................... 11,688
-----------
24,288
-----------
HEALTHCARE - 0.8%
1,150 Coventry Health Care, Inc.+........................... 12,578
600 Magellan Health Services, Inc.+....................... 6,000
200 MedQuist, Inc.+....................................... 8,750
850 Orthodontic Centers of America+....................... 12,006
300 Pediatrix Medical Group, Inc.+........................ 6,375
750 US Oncology, Inc.+.................................... 9,000
-----------
54,709
-----------
HOUSEHOLD PRODUCTS - 0.4%
100 National Presto Industries, Inc....................... 3,825
600 SLI, Inc.+............................................ 16,200
1,400 USA Detergents, Inc.+................................. 8,488
-----------
28,513
-----------
INDUSTRIAL - BASIC - 0.2%
450 Geon Company.......................................... 14,513
-----------
INSURANCE - 3.8%
750 American Bankers Insurance Group, Inc................. 40,827
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
Nations Funds
NATIONS MANAGED SMALLCAP INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
INSURANCE (CONTINUED)
300 Arthur J. Gallagher & Company......................... $ 14,850
900 Capital Re Corporation................................ 14,456
700 Delphi Financial Group Inc., Class A+................. 25,113
850 Fidelity National Financial, Inc...................... 17,850
1,450 First American Financial Corporation.................. 25,919
1,700 Fremont General Corporation........................... 32,088
750 Frontier Insurance Group, Inc......................... 11,531
650 Orion Capital Corporation............................. 23,319
700 Radin Group, Inc...................................... 34,169
500 Selective Insurance Group............................. 9,531
650 Sierra Health Services, Inc.+......................... 9,384
-----------
259,037
-----------
MACHINERY AND EQUIPMENT - 3.2%
350 Applied Industrial Technologies, Inc.................. 6,650
950 Applied Power, Inc., Class A.......................... 25,947
750 Astec Industries, Inc.+............................... 30,563
400 CPI Corporation....................................... 13,200
500 Gardner Denver Machinery, Inc.+....................... 8,063
500 Global Industries Technologies, Inc.+................. 6,031
300 Graco, Inc............................................ 8,813
1,050 JLG Industries, Inc................................... 21,394
850 Manitowoc Company, Inc................................ 35,381
750 Paxar Corporation+.................................... 6,750
350 Regal Beloit.......................................... 8,269
150 Robbins & Myers, Inc.................................. 3,347
350 X-Rite, Inc........................................... 2,253
1,150 Zebra Technologies Corporation+....................... 44,202
-----------
220,863
-----------
MANUFACTURING - 1.8%
750 A. O. Smith Corporation............................... 20,999
400 Belden, Inc........................................... 9,575
600 Dixie Group, Inc...................................... 5,091
450 Griffon Corporation+.................................. 3,516
250 Libbey, Inc........................................... 7,250
300 Lydall, Inc.+......................................... 3,450
400 O'Sullivan Corporation................................ 4,875
450 Roper Industries, Inc................................. 14,400
300 Scott Technologies, Inc.+............................. 5,775
400 Sturm, Ruger & Company, Inc........................... 4,275
850 Tredegar Industries, Inc.............................. 18,487
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
17
<PAGE>
Nations Funds
NATIONS MANAGED SMALLCAP INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
MANUFACTURING (CONTINUED)
750 Vicor Corporation+.................................... $ 15,891
200 Whittaker Corporation................................. 5,600
-----------
119,184
-----------
MEDIA - 0.5%
1,200 Xircom, Inc.+......................................... 36,075
-----------
MEDICAL PRODUCTS AND SUPPLIES - 3.5%
350 Ballard Medical Products.............................. 8,159
500 Cooper Companies, Inc................................. 12,469
300 Datascope Corporation+................................ 9,638
200 Diagnostic Products Corporation....................... 5,525
850 Dura Pharmaceuticals, Inc.+........................... 10,147
300 Hanger Orthopedic Group, Inc.+........................ 4,256
200 Idec Pharmaceuticals Corp+............................ 15,413
1,050 IDEXX Laboratories, Inc.+............................. 24,477
600 Liposome Company, Inc.+............................... 11,475
300 Maxxim Medical, Inc.+................................. 6,994
600 Molecular Biosystems, Inc.+........................... 1,463
550 Owens & Minor, Inc.................................... 6,050
500 Patterson Dental Company+............................. 17,375
450 Priority Healthcare Corporation+...................... 15,525
500 Respironics, Inc.+.................................... 7,563
950 Safeskin Corporation+................................. 11,400
800 Sola International, Inc.+............................. 15,550
200 SpaceLabs Medical, Inc.+.............................. 3,775
1,150 Summit Technology, Inc.+.............................. 25,299
450 Varian Medical Systems, Inc........................... 11,363
250 Vital Signs, Inc...................................... 4,984
250 Wesley Jessen Visioncare, Inc.+....................... 8,094
-----------
236,994
-----------
MEDICAL SERVICES - 2.7%
1,250 ADAC Laboratories Designs+............................ 9,063
1,000 Cerner Corporation+................................... 20,969
650 Coherent, Inc.+....................................... 12,106
250 Curative Health Services, Inc.+....................... 1,375
500 Express Scripts Inc., Class A+........................ 30,094
1,050 Genesis Health Ventures, Inc.+........................ 3,150
1,350 Integrated Health Services, Inc.+..................... 10,800
500 Invacare Corporation.................................. 13,375
1,250 NCS Healthcare Inc., Class A+......................... 6,797
2,300 PhyCor, Inc.+......................................... 17,034
250 Protein Design Labs, Inc.+............................ 5,547
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
18
<PAGE>
Nations Funds
NATIONS MANAGED SMALLCAP INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
MEDICAL SERVICES (CONTINUED)
750 Renal Care Group, Inc.+............................... $ 19,406
700 Universal Health Services Inc., Class B+.............. 33,425
-----------
183,141
-----------
METALS AND MINING - 2.3%
300 Amcast Industrial Corporation......................... 4,894
850 AMCOL International Corporation....................... 12,219
250 Brush Wellman, Inc.................................... 4,531
400 Commercial Metals Company............................. 11,400
300 Commonwealth Industries, Inc.......................... 3,750
1,050 Hecla Mining Company+................................. 2,166
300 Material Sciences Corporation+........................ 4,500
800 Mueller Industries, Inc.+............................. 27,149
600 Quanex Corporation.................................... 17,100
500 Reliance Steel & Aluminum Company..................... 19,500
600 RTI International Metals, Inc.+....................... 8,813
700 Steel Technologies, Inc............................... 6,606
650 Stillwater Mining Company+............................ 21,247
450 WHX Corporation+...................................... 2,953
300 Wolverine Tube, Inc.+................................. 7,538
-----------
154,366
-----------
OFFICE EQUIPMENT - 0.5%
450 Brady Corporation..................................... 14,625
850 John H. Harland Company............................... 16,946
300 Nashua Corporation+................................... 2,963
-----------
34,534
-----------
OIL AND GAS - 1.8%
400 Cabot Oil & Gas Corporation........................... 7,450
300 Devon Energy Corporation.............................. 10,725
300 HS Resources, Inc.+................................... 4,425
300 New Jersey Resources Corporation...................... 11,231
950 Oceaneering International, Inc.+...................... 15,319
150 Pennsylvania Enterprises, Inc......................... 4,603
900 Pool Energy Services Company+......................... 18,281
1,600 Pride International, Inc.+............................ 16,900
950 Seitel, Inc.+......................................... 15,378
750 Wicor, Inc............................................ 20,954
-----------
125,266
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
Nations Funds
NATIONS MANAGED SMALLCAP INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
OIL FIELD SERVICES & EQUIPMENT - 0.2%
51 Eagle Geophysical, Inc.+.............................. $ 38
200 Seacor Smit, Inc.+.................................... 10,700
-----------
10,738
-----------
PRINTING AND PUBLISHING - 1.6%
1,100 Bowne & Company, Inc.................................. 14,300
200 Consolidated Graphics, Inc.+.......................... 10,000
500 Merrill Corporation................................... 7,250
500 Thomas Nelson, Inc.................................... 5,563
1,150 Valassis Communications, Inc.......................... 42,118
1,050 World Color Press, Inc.+.............................. 28,875
-----------
108,106
-----------
PROFESSIONAL SERVICES - 1.4%
550 CDI Corporation+...................................... 18,734
700 Franklin Covey Company+............................... 5,163
700 InaCom Corporation+................................... 8,838
500 National Data Corporation............................. 21,374
850 Norrell Corporation................................... 15,991
850 Offshore Logistics, Inc.+............................. 9,456
400 URS Corporation+...................................... 11,725
300 Volt Information Sciences, Inc.+...................... 6,863
-----------
98,144
-----------
PROTECTION AND SAFETY SERVICES - 0.1%
450 Rural/Metro Corporation+.............................. 4,331
-----------
RECREATION - 1.6%
650 Arctic Cat, Inc....................................... 5,809
1,550 Aztar Corporation+.................................... 14,241
200 Carmike Cinemas Inc., Class A+........................ 3,188
500 Family Golf Centers, Inc.+............................ 3,844
100 GC Companies, Inc.+................................... 3,575
1,000 Hollywood Park, Inc.+................................. 17,000
650 Huffy Corporation..................................... 9,100
250 K2, Inc............................................... 2,234
1,350 Players International, Inc.+.......................... 9,703
400 Polaris Industries, Inc............................... 17,399
300 Thor Industries, Inc.................................. 8,513
650 Winnebago Industries.................................. 14,625
-----------
109,231
-----------
RESTAURANTS AND LODGING - 3.5%
650 Applebees International, Inc.......................... 19,581
700 CEC Entertainment, Inc.+.............................. 29,575
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
20
<PAGE>
Nations Funds
NATIONS MANAGED SMALLCAP INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
RESTAURANTS AND LODGING (CONTINUED)
1,050 CKE Restaurant, Inc................................... $ 17,063
1,250 Foodmaker, Inc.+...................................... 35,468
600 IHOP Corporation+..................................... 14,438
900 Landry's Seafood Restaurants, Inc.+................... 7,200
1,400 Luby's, Inc........................................... 21,000
550 Marcus Corporation.................................... 6,772
1,200 Prime Hospitality Corporation+........................ 14,400
950 Ruby Tuesday, Inc..................................... 18,050
1,250 Ryan's Family Steak Houses, Inc.+..................... 14,531
400 Sonic Corporation+.................................... 13,050
1,050 Taco Cabana, Inc., Class A+........................... 10,697
750 TCBY Enterprises, Inc................................. 4,547
300 The Cheesecake Factory+............................... 9,150
-----------
235,522
-----------
RETAIL - FOOD - 0.9%
1,250 Earthgrains Company................................... 32,265
600 Fleming Companies, Inc................................ 6,975
550 Nash-Finch Company.................................... 5,552
400 Whole Foods Market, Inc.+............................. 19,225
-----------
64,017
-----------
RETAIL - GENERAL - 1.2%
550 Ames Department Stores+............................... 25,094
1,150 Casey's General Stores, Inc........................... 17,250
450 Cash America Investments, Inc......................... 5,794
400 MicroAge, Inc.+....................................... 1,525
800 Regis Corporation..................................... 15,350
500 ShopKo Stores, Inc.+.................................. 18,125
-----------
83,138
-----------
RETAIL - SPECIALTY - 4.9%
250 Action Performance Companies, Inc.+................... 8,250
850 AnnTaylor Stores Corporation+......................... 38,250
350 Books-A-Million, Inc.+................................ 2,636
2,000 Cato Corporation...................................... 23,250
150 Damark International, Inc.+........................... 1,256
250 Discount Auto Parts, Inc.+............................ 6,031
500 Dress Barn, Inc.+..................................... 8,000
650 Goody's Family Clothing, Inc.+........................ 7,434
400 Gottschalks, Inc.+.................................... 3,650
400 Gymboree Corporation+................................. 4,200
1,000 Insight Enterprises, Inc.+............................ 24,750
1,050 Jan Bell Marketing, Inc.+............................. 3,675
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
21
<PAGE>
Nations Funds
NATIONS MANAGED SMALLCAP INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
RETAIL - SPECIALTY (CONTINUED)
500 Jo-Ann Stores, Inc.+.................................. $ 7,500
750 Just For Feet, Inc.+.................................. 4,828
150 Lillian Vernon Corporation............................ 1,950
750 Michaels Stores, Inc.+................................ 22,969
400 O'Reilly Automotive, Inc.+............................ 20,150
2,000 Pier 1 Imports, Inc................................... 22,500
650 Stein Mart, Inc.+..................................... 6,094
1,100 The Bombay Company, Inc.+............................. 8,456
750 Toro Company.......................................... 29,531
750 Williams-Sonoma, Inc.+................................ 26,109
1,250 Zale Corporation+..................................... 50,000
-----------
331,469
-----------
SEMICONDUCTORS - 1.5%
350 Alpha Industries, Inc.+............................... 16,669
800 International Rectifier Corporation+.................. 10,650
500 Lattice Semiconductor Corporation+.................... 31,125
500 Novellus Systems, Inc.+............................... 34,124
300 Plexus Corporation+................................... 9,038
100 Watkins-Johnson Company............................... 2,950
-----------
104,556
-----------
STEEL - 0.0% +
450 Birmingham Steel Corporation.......................... 1,856
-----------
TECHNOLOGY - 0.8%
350 Marshall Industries+.................................. 12,578
850 Progress Software Corporation+........................ 24,013
1,400 S3, Inc.+............................................. 12,731
700 Telxon Corporation.................................... 5,556
-----------
54,878
-----------
TELECOMMUNICATIONS - 1.2%
850 CommScope, Inc.+...................................... 26,137
550 Digi International, Inc.+............................. 5,741
950 Inter-Tel, Inc........................................ 17,338
500 Plantronics, Inc.+.................................... 32,562
300 SymmetriCom, Inc.+.................................... 2,438
-----------
84,216
-----------
TRANSPORTATION - 2.1%
550 Air Express International Corporation................. 13,956
1,450 American Freightways Corporation+..................... 28,366
600 Expeditors International of Washington, Inc........... 16,350
1,100 Fritz Companies, Inc.+................................ 11,825
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
22
<PAGE>
Nations Funds
NATIONS MANAGED SMALLCAP INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
TRANSPORTATION (CONTINUED)
400 Kirby Corporation+.................................... $ 8,475
650 Mesa Air Group, Inc.+................................. 4,885
400 Pittston BAX Group.................................... 3,800
500 Railtex, Inc.+........................................ 6,938
500 Skywest, Inc.......................................... 12,469
700 U.S. Freightways Corporation.......................... 32,418
-----------
139,482
-----------
TRUCKING AND SHIPPING - 2.4%
950 Arkansas Best Corporation+............................ 9,441
350 Frozen Food Express Industries, Inc................... 2,669
300 Heartland Express, Inc.+.............................. 4,913
600 Landstar System, Inc.+................................ 21,656
600 M.S. Carriers, Inc.+.................................. 17,794
2,450 Rollins Truck Leasing Corporation..................... 27,255
700 Wabash National Corporation........................... 13,563
1,950 Werner Enterprises, Inc............................... 40,462
1,400 Yellow Corporation+................................... 24,850
-----------
162,603
-----------
UTILITIES - NATURAL GAS - 1.0%
50 Atmos Energy Corporation.............................. 1,250
550 Cascade Natural Gas Corporation....................... 10,450
300 Connecticut Energy Corporation........................ 11,569
500 Piedmont Natural Gas Company, Inc..................... 15,563
750 Southwest Gas Corporation............................. 21,468
400 Valmont Industries, Inc............................... 6,813
-----------
67,113
-----------
UTILITIES - WATER - 0.6%
300 Aquarion Company...................................... 10,425
300 Philadelphia Suburban Corporation..................... 6,919
1,050 United Water Resources, Inc........................... 23,822
-----------
41,166
-----------
WASTE MANAGEMENT - 0.2%
500 Superior Services, Inc.+.............................. 13,344
-----------
WIRE AND CABLE PRODUCTS - 0.7%
1,200 Anixter International, Inc.+.......................... 21,899
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
23
<PAGE>
Nations Funds
NATIONS MANAGED SMALLCAP INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
WIRE AND CABLE PRODUCTS (CONTINUED)
650 Barnes Group, Inc..................................... $ 14,138
850 Cable Design Technologies Corporation+................ 13,122
-----------
49,159
-----------
TOTAL COMMON STOCKS (Cost $6,810,857)................. 6,848,551
-----------
RIGHTS - 0.0%+ (Cost $0)
5 Tel-Save.Com, Inc.+................................... 0
-----------
INVESTMENT COMPANIES - 0.5% (Cost $35,000)
35,000 Nations Cash Reserves#................................ 35,000
-----------
</TABLE>
<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS (Cost $6,845,857*)........ 101.3% 6,883,551
-----------
OTHER ASSETS AND LIABILITIES (NET).......... (1.3)%
Cash................................................. $ 5,656
Receivable for investment securities sold............ 18,462
Receivable for Fund shares sold...................... 12,370
Dividends receivable................................. 3,906
Interest receivable.................................. 141
Receivable from investment advisor................... 3,957
Unamortized organization costs....................... 14,802
Administration fee payable........................... (1,228)
Shareholder servicing and distribution fees
payable.............................................. (21,422)
Payable for investment securities purchased.......... (17,916)
Accrued Trustees' fees and expenses.................. (10,203)
Accrued expenses and other liabilities............... (95,649)
-----------
TOTAL OTHER ASSETS AND LIABILITIES (NET)............. (87,124)
-----------
NET ASSETS.................................. 100.0% $6,796,427
------- -----------
------- -----------
NET ASSETS CONSIST OF:
Undistributed net investment income.................. $ 4,377
Accumulated net realized loss on investments sold.... (325,607)
Net unrealized appreciation of investments........... 37,694
Paid-in capital...................................... 7,079,963
-----------
NET ASSETS........................................... $6,796,427
-----------
-----------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER
SHARE ($6,796,427 DIVIDED BY 728,807 shares
outstanding)......................................... $ 9.33
-----------
-----------
</TABLE>
- -----------------
* Federal Income Tax Information: Net unrealized appreciation of investment
securities was comprised of gross appreciation of $817,942 and gross
depreciation of $780,248 for Federal income tax purposes. At June 30, 1999,
the aggregate cost of securities for Federal income tax purposes was
$6,845,857.
+ Non-income producing security.
+ Amount represents less than 0.1%.
# Money market mutual fund registered under the Investment Company Act of
1940, as amended, and sub-advised by TradeStreet Investment Associates,
Inc.
SEE NOTES TO FINANCIAL STATEMENTS.
24
<PAGE>
Nations Funds
NATIONS DISCIPLINED EQUITY PORTFOLIO
STATEMENT OF NET ASSETS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
COMMON STOCKS - 97.4%
AEROSPACE AND DEFENSE - 3.6%
1,775 General Dynamics Corporation.......................... $ 121,587
1,800 Northrop Grumman Corporation.......................... 119,363
-----------
240,950
-----------
APPAREL AND TEXTILES - 1.2%
4,800 Shaw Industries, Inc.+................................ 79,200
-----------
AUTOMOBILES AND TRUCKS - 1.7%
2,025 Ford Motor Company.................................... 114,286
-----------
BANKING - 2.0%
1,525 Chase Manhattan Corporation........................... 132,103
-----------
COMPUTER RELATED - 2.5%
4,700 Adaptec Incorporated+................................. 165,969
-----------
COMPUTER SERVICES - 1.8%
1,725 Computer Sciences Corporation+........................ 119,348
-----------
COMPUTER SOFTWARE - 6.1%
3,875 Compuware Corporation+................................ 123,273
1,850 Microsoft Corporation+................................ 166,847
2,250 NCR Corporation+...................................... 109,828
-----------
399,948
-----------
CONGLOMERATE - 2.6%
2,412 United Technologies Corporation....................... 172,910
-----------
CONSTRUCTION - 3.5%
4,125 Sherwin-Williams Company.............................. 114,469
2,125 USG Corporation....................................... 119,000
-----------
233,469
-----------
COSMETICS AND TOILETRIES - 1.8%
2,100 Kimberly-Clark Corporation............................ 119,700
-----------
DRUGS - 1.5%
3,800 Mylan Laboratories, Inc............................... 100,700
-----------
ELECTRIC POWER - 3.4%
2,650 DTE Energy Company.................................... 106,000
2,775 PECO Energy Company................................... 116,203
-----------
222,203
-----------
FINANCIAL SERVICES - 5.3%
2,850 Greenpoint Financial Corporation...................... 93,516
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
25
<PAGE>
Nations Funds
NATIONS DISCIPLINED EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
FINANCIAL SERVICES (CONTINUED)
1,425 Morgan Stanley Dean Witter & Company.................. $ 146,062
2,350 Paine Webber Group, Inc............................... 109,863
-----------
349,441
-----------
FOREST AND PAPER PRODUCTS - 2.1%
3,000 Georgia-Pacific Corporation........................... 142,125
-----------
FURNITURE AND APPLIANCES - 2.3%
2,175 Maytag Corporation.................................... 151,570
-----------
HOUSEHOLD CARE PRODUCERS - 1.9%
3,400 Premark International, Inc............................ 127,500
-----------
INSURANCE - 6.7%
2,325 Allstate Corporation.................................. 83,409
1,097 American International Group, Inc..................... 128,418
1,625 Equitable Companies, Inc.............................. 108,875
2,325 MGIC Investment Corporation........................... 113,053
-----------
433,755
-----------
MACHINERY AND EQUIPMENT - 4.3%
2,250 Cummins Engine Company, Inc........................... 128,531
2,375 Ingersoll-Rand Company................................ 153,485
-----------
282,016
-----------
MEDICAL PRODUCTS AND SUPPLIES - 5.0%
1,800 Allergan, Inc......................................... 199,800
2,500 Guidant Corporation................................... 128,594
-----------
328,394
-----------
MEDICAL SERVICES - 1.7%
5,000 Columbia/HCA Healthcare Corporation................... 114,063
-----------
OFFICE EQUIPMENT - 2.7%
2,700 Lexmark International Group, Inc., Class A+........... 178,369
-----------
OIL - DOMESTIC - 9.2%
2,000 Amerada Hess Corporation.............................. 119,000
2,300 Ashland, Inc.......................................... 92,288
3,400 Coastal Corporation................................... 135,999
1,925 Columbia Energy Group................................. 120,673
4,150 USX-Marathon Group, Inc............................... 135,134
-----------
603,094
-----------
PRINTING AND PUBLISHING - 1.6%
1,975 Knight-Ridder, Inc.................................... 108,502
-----------
RETAIL - FOOD - 1.9%
5,025 Supervalu, Inc........................................ 129,080
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
26
<PAGE>
Nations Funds
NATIONS DISCIPLINED EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
RETAIL - GENERAL - 3.9%
2,325 Dayton Hudson Corporation............................. $ 151,125
2,075 Federated Department Stores, Inc...................... 109,845
-----------
260,970
-----------
RETAIL - SPECIALTY - 5.4%
3,100 Best Buy Company, Inc.+............................... 209,250
4,500 TJX Companies, Inc.................................... 149,906
-----------
359,156
-----------
SEMICONDUCTORS - 2.0%
3,600 Altera Corporation+................................... 132,525
-----------
TELECOMMUNICATIONS - 2.4%
2,400 Lucent Technologies, Inc.............................. 161,850
-----------
UTILITIES - TELEPHONE - 5.3%
2,150 AT&T Corporation...................................... 119,997
2,700 BellSouth Corporation................................. 126,562
1,800 U.S. West, Inc........................................ 105,750
-----------
352,309
-----------
UTILITIES - WATER - 2.0%
3,250 CenturyTel, Inc....................................... 129,188
-----------
TOTAL COMMON STOCKS (Cost $5,413,326)................. 6,444,693
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
27
<PAGE>
Nations Funds
NATIONS DISCIPLINED EQUITY PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
INVESTMENT COMPANIES - 2.8% (Cost $188,000)
188,000 Nations Cash Reserves#................................ $ 188,000
-----------
</TABLE>
<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS (Cost $5,601,326*)........ 100.2% 6,632,693
-----------
OTHER ASSETS AND LIABILITIES (NET).......... (0.2)%
Cash................................................. $ 417
Receivable for Fund shares sold...................... 72,458
Dividends receivable................................. 4,471
Interest receivable.................................. 1,009
Receivable from investment advisor................... 1,312
Unamortized organization costs....................... 14,802
Payable for Fund shares redeemed..................... (3)
Administration fee payable........................... (1,173)
Payable for investment securities purchased.......... (73,000)
Accrued Trustees' fees and expenses.................. (10,203)
Accrued expenses and other liabilities............... (23,167)
-----------
TOTAL OTHER ASSETS AND LIABILITIES (NET)............. (13,077)
-----------
NET ASSETS.................................. 100.0% $6,619,616
------- -----------
------- -----------
NET ASSETS CONSIST OF:
Undistributed net investment income.................. $ 3,004
Accumulated net realized loss on investments sold.... (54,283)
Net unrealized appreciation of investments........... 1,031,367
Paid-in capital...................................... 5,639,528
-----------
NET ASSETS........................................... $6,619,616
-----------
-----------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER
SHARE ($6,619,616 DIVIDED BY 558,246 shares
outstanding)......................................... $ 11.86
-----------
-----------
</TABLE>
- -----------------
* Federal Income Tax Information: Net unrealized appreciation of investment
securities was comprised of gross appreciation of $1,127,627 and gross
depreciation of $96,260 for Federal income tax purposes. At June 30, 1999,
the aggregate cost of securities for Federal income tax purposes was
$5,601,326.
+ Non-income producing security.
# Money market mutual fund registered under the Investment Company Act of
1940, as amended, and sub-advised by TradeStreet Investment Associates,
Inc.
SEE NOTES TO FINANCIAL STATEMENTS.
28
<PAGE>
Nations Funds
NATIONS MARSICO GROWTH & INCOME PORTFOLIO
STATEMENT OF NET ASSETS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
COMMON STOCKS - 88.9%:
ADVERTISING AND MARKETING SERVICES - 0.9%:
6,047 Young & Rubicam, Inc.................................. $ 274,761
-----------
AUTOMOBILE PARTS MANUFACTURERS - 1.0%:
16,097 Delphi Automotive Systems Corporation................. 298,801
-----------
AUTOMOBILES AND TRUCKS - 4.5%:
8,930 Ford Motor Company.................................... 503,987
13,248 General Motors Corporation............................ 874,368
-----------
1,378,355
-----------
BANKING - 8.6%:
6,979 Chase Manhattan Corporation........................... 604,556
36,015 Citigroup, Inc........................................ 1,710,712
3,511 Northern Trust Corporation............................ 340,567
-----------
2,655,835
-----------
BEVERAGES - 3.7%:
11,746 Anheuser-Busch Companies, Inc......................... 833,232
10,576 Coca-Cola Enterprises, Inc............................ 314,636
-----------
1,147,868
-----------
CHEMICALS - DIVERSIFIED - 1.1%:
8,647 Monsanto Company...................................... 341,016
-----------
COMPUTER RELATED - 8.6%:
26,251 EMC Corporation+...................................... 1,443,805
7,119 International Business Machines Corporation........... 920,131
4,016 Sun Microsystems, Inc.+............................... 276,602
-----------
2,640,538
-----------
CONSTRUCTION - 0.6%:
8,056 M.D.C. Holdings, Inc.................................. 173,204
-----------
COSMETICS AND TOILETRIES - 0.5%:
2,986 Estee Lauder Companies, Class A....................... 149,673
-----------
DRUGS - 3.8%:
9,171 American Home Products Corporation.................... 527,333
5,699 Pfizer, Inc........................................... 625,465
-----------
1,152,798
-----------
ELECTRICAL EQUIPMENT - 2.7%:
7,332 General Electric Company.............................. 828,516
-----------
FINANCIAL SERVICES - 6.5%:
13,105 Associates First Capital Corporation.................. 580,715
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
29
<PAGE>
Nations Funds
NATIONS MARSICO GROWTH & INCOME PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
FINANCIAL SERVICES (CONTINUED)
15,360 Fannie Mae............................................ $1,050,240
6,453 Freddie Mac........................................... 374,274
-----------
2,005,229
-----------
MEDIA - 10.3%:
1,157 Clear Channel Communications, Inc.+................... 79,761
6,866 Comcast Corporation, Class A.......................... 263,912
13,957 MediaOne Group, Inc.+................................. 1,038,052
21,015 Time Warner, Inc...................................... 1,544,602
3,750 United Global Com, Class A+........................... 253,594
-----------
3,179,921
-----------
NETWORKING EQUIPMENT AND PRODUCTS - 2.0%:
9,438 Cisco Systems, Inc.+.................................. 606,981
-----------
OIL - INTERNATIONAL - 1.6%:
8,108 Royal Dutch Petroleum Company......................... 488,507
-----------
OIL FIELD SERVICES & EQUIPMENT - 1.3%:
6,160 Schlumberger Ltd...................................... 392,315
-----------
PRINTING AND PUBLISHING - 1.0%:
6,800 Houghton Mifflin Company.............................. 320,025
-----------
RENTAL AUTO AND EQUIPMENT - 3.8%:
18,747 Hertz Corporation, Class A............................ 1,162,314
-----------
RESTAURANTS AND LODGING - 4.1%:
10,430 Four Seasons Hotels, Inc.............................. 459,572
12,319 McDonald's Corporation................................ 508,928
7,784 Starbucks Corporation+................................ 292,387
-----------
1,260,887
-----------
RETAIL - GENERAL - 0.9%:
5,749 Wal-Mart Stores, Inc.................................. 277,389
-----------
RETAIL - SPECIALTY - 5.1%:
4,812 Best Buy Company, Inc.+............................... 324,810
5,042 CVS Corporation....................................... 255,882
13,511 Home Depot, Inc....................................... 870,614
1,241 Tiffany & Company..................................... 119,757
-----------
1,571,063
-----------
TECHNOLOGY - 0.8%:
1,509 Uniphase Corporation+................................. 250,494
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
30
<PAGE>
Nations Funds
NATIONS MARSICO GROWTH & INCOME PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS - 8.8%:
9,832 Lucent Technologies, Inc.............................. $ 663,046
14,185 QUALCOMM, Inc.+....................................... 2,035,547
-----------
2,698,593
-----------
TRANSPORTATION - 5.5%:
9,222 Delta Air Lines, Inc.................................. 531,418
20,832 Southwest Airlines Company............................ 648,396
8,066 UAL Corporation+...................................... 524,290
-----------
1,704,104
-----------
UTILITIES - TELEPHONE - 1.2%:
4,445 Ericsson (L.M.) Telephone Company, Class B, ADR....... 146,407
3,819 Sprint Corporation (PCS Group)+....................... 218,161
-----------
364,568
-----------
TOTAL COMMON STOCKS (Cost $22,374,002)................ 27,323,755
-----------
<CAPTION>
PRINCIPAL
AMOUNT
- -----------
<C> <S> <C>
CORPORATE BONDS AND NOTES - 0.7%:
CONSTRUCTION - 0.3%:
$ 100,000 M.D.C. Holdings, Inc.,
8.375% 02/01/08....................................... 95,750
-----------
ENTERTAINMENT - 0.4%:
100,000 Premier Parks,
12.000% 08/15/03...................................... 107,500
-----------
TOTAL CORPORATE BONDS AND NOTES (Cost $204,954)....... 203,250
-----------
<CAPTION>
SHARES
- -----------
<C> <S> <C>
PREFERRED STOCKS - 0.9%: (Cost $287,000)
1,435 Adelphia Communications+.............................. 288,435
-----------
<CAPTION>
PRINCIPAL
AMOUNT
- -----------
<C> <S> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 9.8%: (Cost $2,999,627)
FEDERAL HOME LOAN BANK (FHLB) - 9.8%:
$3,000,000 Discount note 07/01/99................................ 2,999,627
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
31
<PAGE>
Nations Funds
NATIONS MARSICO GROWTH & INCOME PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
- --------------------------------------------------------------------------------
<C> <S> <C>
INVESTMENT COMPANIES - 3.2%: (Cost $970,072)
970,072 Nations Cash Reserves#................................ $ 970,072
-----------
</TABLE>
<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS (Cost $26,835,655*)....... 103.5% 31,785,139
-----------
OTHER ASSETS AND LIABILITIES (NET).......... (3.5)%
Cash................................................. $ 759
Receivable for investment securities sold............ 2,848,874
Receivable for Fund shares sold...................... 194,322
Dividends receivable................................. 12,903
Interest receivable.................................. 8,147
Unamortized organization costs....................... 14,802
Collateral on securities loaned...................... (845,072)
Payable for Fund shares redeemed..................... (244)
Investment advisory fee payable...................... (14,634)
Administration fee payable........................... (5,265)
Payable for investment securities purchased.......... (3,240,632)
Accrued Trustees' fees and expenses.................. (10,203)
Accrued expenses and other liabilities............... (33,402)
-----------
TOTAL OTHER ASSETS AND LIABILITIES (NET)............. (1,069,645)
-----------
NET ASSETS.................................. 100.0% $30,715,494
------- -----------
------- -----------
NET ASSETS CONSIST OF:
Undistributed net investment income.................. $ 7,269
Accumulated net realized gain on investments sold.... 22,752
Net unrealized appreciation of investments, foreign
currency and net
other assets......................................... 4,953,461
Paid-in capital...................................... 25,732,012
-----------
NET ASSETS........................................... $30,715,494
-----------
-----------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER
SHARE ($30,715,494 DIVIDED BY 2,204,833 shares
outstanding)......................................... $ 13.93
-----------
-----------
</TABLE>
- -----------------
* Federal Income Tax Information: Net unrealized appreciation of investment
securities was comprised of gross appreciation of $5,214,426 and gross
depreciation of $264,942 for Federal income tax purposes. At June 30, 1999,
the aggregate cost of securities for Federal income tax purposes was
$26,835,655.
+ Non-income producing security.
# Money market mutual fund registered under the Investment Company Act of
1940, as amended, and sub-advised by TradeStreet Investment Associates,
Inc. A portion of this amount represents cash collateral received from
securities lending activity (Note 8). The portion that represents cash
collateral is $845,072.
ABBREVIATION:
<TABLE>
<C> <S>
ADR American Depository Receipt
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
32
<PAGE>
Nations Funds
NATIONS MANAGED INDEX PORTFOLIO
STATEMENT OF NET ASSETS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
COMMON STOCKS - 99.6%:
AEROSPACE AND DEFENSE - 1.2%:
1,450 Boeing Company........................................ $ 64,072
500 EG&G, Inc............................................. 17,813
300 General Dynamics Corporation.......................... 20,550
650 Northrop Grumman Corporation.......................... 43,103
450 Raytheon Company, Class B............................. 31,669
150 TRW, Inc.............................................. 8,231
-----------
185,438
-----------
APPAREL AND TEXTILES - 0.3%:
150 Liz Claiborne, Inc.................................... 5,475
350 Russell Corporation................................... 6,825
850 V.F. Corporation...................................... 36,338
-----------
48,638
-----------
AUTOMOBILE PARTS MANUFACTURERS - 0.4%:
400 Cooper Tire & Rubber Company.......................... 9,450
350 Dana Corporation...................................... 16,122
650 Delphi Automotive Systems Corporation................. 12,066
100 Eaton Corporation..................................... 9,200
250 Genuine Parts Company................................. 8,750
-----------
55,588
-----------
AUTOMOBILES AND TRUCKS - 1.8%:
2,350 Ford Motor Company.................................... 132,628
950 General Motors Corporation............................ 62,700
300 ITT Industries, Inc................................... 11,438
900 Navistar International Corporation+................... 45,000
350 PACCAR, Inc........................................... 18,681
-----------
270,447
-----------
BANKING - 8.3%:
1,750 Banc One Corporation.................................. 104,234
1,150 Bank of New York, Inc................................. 42,191
400 BankBoston Corporation................................ 20,450
400 BB&T Corporation...................................... 14,675
1,600 Chase Manhattan Corporation........................... 138,599
5,150 Citigroup, Inc........................................ 244,624
500 Comerica, Inc......................................... 29,719
1,550 First Union Corporation............................... 72,850
900 Firstar Corporation................................... 25,200
1,800 Fleet Financial Group, Inc............................ 79,875
500 Golden West Financial Corporation..................... 49,000
500 J.P. Morgan & Company, Inc............................ 70,250
600 KeyCorp............................................... 19,275
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
33
<PAGE>
Nations Funds
NATIONS MANAGED INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
BANKING (CONTINUED)
700 Mellon Bank Corporation............................... $ 25,463
450 Mercantile Bancorporation............................. 25,706
450 National City Corporation............................. 29,475
500 PNC Bank Corporation.................................. 28,813
300 Regions Financial Corporation......................... 11,531
200 SouthTrust Corporation................................ 7,675
250 Summit Bancorp........................................ 10,453
250 SunTrust Banks, Inc................................... 17,359
1,400 U.S. Bancorp.......................................... 47,600
350 Wachovia Corporation.................................. 29,947
1,850 Wells Fargo Company................................... 79,088
-----------
1,224,052
-----------
BEVERAGES - 1.8%:
550 Adolph Coors Company, Class B......................... 27,225
650 Anheuser-Busch Companies, Inc......................... 46,109
2,950 Coca-Cola Company..................................... 184,376
450 PepsiCo, Inc.......................................... 17,409
-----------
275,119
-----------
CHEMICALS - BASIC - 1.5%:
300 Air Products & Chemicals, Inc......................... 12,075
500 B.F. Goodrich Company................................. 21,250
250 Dow Chemical Company.................................. 31,719
1,050 E.I. duPont de Nemours and Company.................... 71,727
450 FMC Corporation+...................................... 30,741
850 Mallinckrodt Group, Inc............................... 30,919
200 Praxair, Inc.......................................... 9,788
305 Rohm & Haas Company................................... 13,077
-----------
221,296
-----------
CHEMICALS - DIVERSIFIED - 0.1%:
450 Monsanto Company...................................... 17,747
-----------
CHEMICALS - SPECIALTY - 0.2%:
450 Engelhard Corporation................................. 10,181
200 Great Lakes Chemical Corporation...................... 9,213
400 W.R. Grace & Company+................................. 7,350
-----------
26,744
-----------
COMPUTER RELATED - 6.3%:
750 3Com Corporation+..................................... 20,016
800 Apple Computer, Inc.+................................. 37,050
1,800 Compaq Computer Corporation........................... 42,638
2,850 Dell Computer Corporation+............................ 105,449
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
34
<PAGE>
Nations Funds
NATIONS MANAGED INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
COMPUTER RELATED (CONTINUED)
1,000 EMC Corporation+...................................... $ 55,000
450 Gateway, Inc.+........................................ 26,550
1,400 Hewlett-Packard Company............................... 140,699
200 Honeywell, Inc........................................ 23,175
400 IMS Health, Inc....................................... 12,500
2,650 International Business Machines Corporation........... 342,512
1,150 Seagate Technology, Inc.+............................. 29,469
800 Sun Microsystems, Inc.+............................... 55,100
1,250 Unisys Corporation+................................... 48,672
-----------
938,830
-----------
COMPUTER SERVICES - 0.2%:
350 Automatic Data Processing, Inc........................ 15,400
200 Computer Sciences Corporation+........................ 13,838
-----------
29,238
-----------
COMPUTER SOFTWARE - 5.3%:
250 Adobe Systems, Inc.................................... 20,539
550 BMC Software, Inc.+................................... 29,700
800 Computer Associates International, Inc................ 44,000
600 Compuware Corporation+................................ 19,088
450 First Data Corporation................................ 22,022
6,300 Microsoft Corporation+................................ 568,180
1,050 Novell, Inc.+......................................... 27,825
1,550 Oracle Systems Corporation+........................... 57,543
-----------
788,897
-----------
CONGLOMERATE - 1.3%:
1,250 Tyco International Ltd................................ 118,438
950 United Technologies Corporation....................... 68,103
-----------
186,541
-----------
CONSTRUCTION - 0.8%:
150 Armstrong World Industries, Inc....................... 8,672
600 Centex Corporation.................................... 22,537
700 Crane Company......................................... 22,006
250 Fluor Corporation..................................... 10,125
600 Kaufman & Broad Home Corporation...................... 14,925
450 Masco Corporation..................................... 12,994
750 Pulte Corporation..................................... 17,297
200 Sherwin-Williams Company.............................. 5,550
-----------
114,106
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
35
<PAGE>
Nations Funds
NATIONS MANAGED INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
CONTAINERS - 0.1%:
400 Ball Corporation...................................... $ 16,900
150 Crown Cork & Seal Company, Inc........................ 4,275
-----------
21,175
-----------
COSMETICS AND TOILETRIES - 1.4%:
800 Gillette Company...................................... 32,800
700 Kimberly-Clark Corporation............................ 39,900
1,550 Procter & Gamble Company.............................. 138,338
-----------
211,038
-----------
DIVERSIFIED - 1.0%:
750 AlliedSignal, Inc..................................... 47,250
250 Corning, Inc.......................................... 17,531
200 Eastern Enterprises................................... 7,950
1,250 Fortune Brands, Inc................................... 51,718
250 Tenneco, Inc.......................................... 5,969
200 Textron, Inc.......................................... 16,463
-----------
146,881
-----------
DRUGS - 6.6%:
1,450 American Home Products Corporation.................... 83,375
1,000 Amgen, Inc.+.......................................... 60,875
2,400 Bristol-Myers Squibb Company.......................... 169,050
1,250 Eli Lilly and Company................................. 89,531
2,900 Merck & Company, Inc.................................. 214,599
1,650 Pfizer, Inc........................................... 181,087
550 Pharmacia & Upjohn, Inc............................... 31,247
1,700 Schering-Plough Corporation........................... 90,100
900 Warner-Lambert Company................................ 62,438
-----------
982,302
-----------
ELECTRIC POWER - 3.7%:
150 Ameren Corporation.................................... 5,756
200 American Electric Power, Inc.......................... 7,513
200 Carolina Power & Light Company........................ 8,563
350 Central & South West Corporation...................... 8,181
400 CINergy Corporation................................... 12,800
150 CMS Energy Corporation................................ 6,281
450 Consolidated Edison, Inc.............................. 20,363
250 Constell Energy....................................... 7,406
200 Dominion Resources, Inc............................... 8,663
1,150 DTE Energy Company.................................... 46,000
500 Duke Energy Corporation............................... 27,188
2,000 Edison International.................................. 53,499
600 Entergy Corporation................................... 18,750
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
36
<PAGE>
Nations Funds
NATIONS MANAGED INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
ELECTRIC POWER (CONTINUED)
250 FirstEnergy Corporation............................... $ 7,750
250 FPL Group, Inc........................................ 13,656
1,150 GPU, Inc.............................................. 48,516
500 Northern States Power Corporation..................... 12,094
700 P G & E Corporation................................... 22,750
950 PECO Energy Company................................... 39,781
1,650 PP&L Resources, Inc................................... 50,737
350 Public Service Enterprise Group....................... 14,306
400 Reliant Energy, Inc................................... 11,050
1,300 Southern Company...................................... 34,450
350 Texas Utilities Company............................... 14,438
1,300 Unicom Corporation.................................... 50,130
-----------
550,621
-----------
ELECTRICAL EQUIPMENT - 3.2%:
4,150 General Electric Company.............................. 468,950
200 Thomas & Betts Corporation............................ 9,450
-----------
478,400
-----------
ELECTRONICS - 1.1%:
300 Applied Materials, Inc.+.............................. 22,163
800 Motorola, Inc......................................... 75,799
850 Rockwell International Corporation.................... 51,638
250 Solectron Corporation+................................ 16,672
-----------
166,272
-----------
ENVIRONMENTAL - 0.3%:
400 Browning-Ferris Industries, Inc....................... 17,200
450 Johnson Controls, Inc................................. 31,191
-----------
48,391
-----------
EXPLORATION AND DRILLING - 0.1%:
400 McDermott International, Inc.......................... 11,300
-----------
FINANCIAL SERVICES - 5.6%:
600 American Express Company.............................. 78,074
350 American General Corporation.......................... 26,381
1,000 Associates First Capital Corporation.................. 44,313
450 Bear Stearns Companies, Inc........................... 21,038
550 Charles Schwab Corporation............................ 60,431
650 Countrywide Credit Industries, Inc.................... 27,788
1,400 Fannie Mae............................................ 95,724
950 Freddie Mac........................................... 55,100
600 Household International, Inc.......................... 28,425
400 Lehman Brothers Holdings, Inc......................... 24,900
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
37
<PAGE>
Nations Funds
NATIONS MANAGED INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
FINANCIAL SERVICES (CONTINUED)
500 Marsh & McLennan Companies, Inc....................... $ 37,750
1,550 MBNA Corporation...................................... 47,469
550 Merrill Lynch & Company, Inc.......................... 43,966
1,250 Morgan Stanley Dean Witter & Company.................. 128,124
1,000 Paine Webber Group, Inc............................... 46,750
200 Providian Financial Corporation....................... 18,700
250 Transamerica Corporation.............................. 18,750
1,050 Washington Mutual, Inc................................ 37,144
-----------
840,827
-----------
FOOD PRODUCERS - 0.6%:
650 ConAgra, Inc.......................................... 17,306
450 Nabisco Group Holdings Corporation.................... 8,803
150 Quaker Oats Company................................... 9,956
350 Ralston Purina Group.................................. 10,653
300 Sara Lee Corporation.................................. 6,806
500 Unilever NV, NY Shares................................ 34,876
-----------
88,400
-----------
FOREST AND PAPER PRODUCTS - 1.0%:
550 Boise Cascade Corporation............................. 23,581
100 Champion International Corporation.................... 4,788
200 Fort James Corporation................................ 7,575
600 Georgia-Pacific Corporation........................... 28,424
400 International Paper Company........................... 20,200
750 Louisiana Pacific Corporation......................... 17,813
150 Mead Corporation...................................... 6,263
50 Temple-Inland, Inc.................................... 3,413
350 Weyerhaeuser Company.................................. 24,062
150 Willamette Industries, Inc............................ 6,909
-----------
143,028
-----------
FURNITURE AND APPLIANCES - 0.5%:
250 Black & Decker Corporation............................ 15,781
400 Maytag Corporation.................................... 27,875
400 Whirlpool Corporation................................. 29,600
-----------
73,256
-----------
HOUSEHOLD PRODUCTS - 0.1%:
150 Clorox Company........................................ 16,022
-----------
INSURANCE - 3.8%:
300 Aetna Life and Casualty Company....................... 26,831
250 Aflac Inc............................................. 11,969
1,650 Allstate Corporation.................................. 59,193
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
38
<PAGE>
Nations Funds
NATIONS MANAGED INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
INSURANCE (CONTINUED)
1,500 American International Group, Inc..................... $ 175,593
500 AON Corporation....................................... 20,625
150 CIGNA Corporation..................................... 13,350
1,350 Conseco, Inc.......................................... 41,091
700 Hartford Financial Services Group, Inc................ 40,819
450 Jefferson-Pilot Corporation........................... 29,784
1,100 Lincoln National Corporation Ltd...................... 57,544
200 Loews Corporation..................................... 15,825
200 MBIA, Inc............................................. 12,950
500 MGIC Investment Corporation........................... 24,313
300 Provident Companies, Inc.............................. 12,000
200 Torchmark Corporation................................. 6,825
200 Unum Corporation+..................................... 10,950
-----------
559,662
-----------
INTERNET - 0.9%:
1,200 America Online, Inc.+................................. 132,600
-----------
MACHINERY AND EQUIPMENT - 1.0%:
450 Briggs & Stratton Corporation......................... 25,988
250 Caterpillar, Inc...................................... 15,000
200 Cooper Industries, Inc................................ 10,400
150 Cummins Engine Company, Inc........................... 8,569
450 Foster Wheeler Corporation............................ 6,356
850 Ingersoll-Rand Company................................ 54,931
350 Milacron, Inc......................................... 6,475
200 NACCO Industries Inc., Class A........................ 14,700
300 Parker Hannifin Corporation........................... 13,725
-----------
156,144
-----------
MANUFACTURING - 0.1%:
200 Danaher Corporation................................... 11,625
-----------
MEDIA - 1.3%:
900 CBS Corporation+...................................... 39,094
800 Comcast Corporation, Class A.......................... 30,750
450 MediaOne Group, Inc.+................................. 33,469
100 Omnicom Group......................................... 8,000
1,200 Time Warner, Inc...................................... 88,200
-----------
199,513
-----------
MEDICAL PRODUCTS AND SUPPLIES - 2.5%:
1,600 Abbott Laboratories................................... 72,800
200 Allergan, Inc......................................... 22,200
100 Bausch & Lomb, Inc.................................... 7,650
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
39
<PAGE>
Nations Funds
NATIONS MANAGED INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
MEDICAL PRODUCTS AND SUPPLIES (CONTINUED)
250 Baxter International, Inc............................. $ 15,156
150 Becton Dickinson & Company............................ 4,500
250 Cardinal Health, Inc.................................. 16,031
300 Guidant Corporation................................... 15,431
1,650 Johnson & Johnson..................................... 161,701
550 Medtronic, Inc........................................ 42,831
550 St. Jude Medical, Inc.+............................... 19,594
-----------
377,894
-----------
MEDICAL SERVICES - 0.8%:
850 Columbia/HCA Healthcare Corporation................... 19,391
200 HBO & Company, Inc.................................... 6,425
350 HCR Manor Care, Inc.+................................. 8,466
2,100 HEALTHSOUTH Corporation+.............................. 31,369
1,100 Humana, Inc.+......................................... 14,231
450 Tenet Healthcare Corporation+......................... 8,353
600 United Healthcare Corporation......................... 37,574
-----------
125,809
-----------
METALS AND MINING - 0.6%:
300 Alcan Aluminium Ltd................................... 9,581
450 Alcoa, Inc............................................ 27,844
450 Barrick Gold Corporation.............................. 8,719
1,300 Niagara Mohawk Holdings, Inc.+........................ 20,881
1,000 Placer Dome, Inc...................................... 11,813
100 Reynolds Metals Company............................... 5,900
-----------
84,738
-----------
NETWORKING EQUIPMENT AND PRODUCTS - 1.7%:
3,900 Cisco Systems, Inc.+.................................. 250,819
-----------
OFFICE EQUIPMENT - 0.3%:
250 Pitney Bowes, Inc..................................... 16,063
400 Xerox Corporation..................................... 23,625
-----------
39,688
-----------
OIL - DOMESTIC - 1.2%:
800 Amerada Hess Corporation.............................. 47,600
350 Atlantic Richfield Company............................ 29,247
1,250 Coastal Corporation................................... 50,000
100 Columbia Energy Group................................. 6,269
350 Occidental Petroleum Corporation...................... 7,394
700 Sunoco, Inc........................................... 21,131
750 USX-Marathon Group, Inc............................... 24,422
-----------
186,063
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
40
<PAGE>
Nations Funds
NATIONS MANAGED INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
OIL - INTERNATIONAL - 4.1%:
250 Apache Corporation.................................... $ 9,750
700 Chevron Corporation................................... 66,631
2,850 Exxon Corporation..................................... 219,805
750 Mobil Corporation..................................... 74,250
3,350 Royal Dutch Petroleum Company......................... 201,838
550 Texaco, Inc........................................... 34,375
-----------
606,649
-----------
OIL FIELD SERVICES & EQUIPMENT - 0.0%+:
300 Sempra Energy......................................... 6,788
-----------
PHOTO AND OPTICAL - 0.2%:
450 Eastman Kodak Company................................. 30,488
-----------
PRINTING AND PUBLISHING - 0.8%:
350 American Greetings Corporation, Class A............... 10,544
500 Deluxe Corporation.................................... 19,469
100 Dow Jones & Company, Inc.............................. 5,306
400 Gannett Company, Inc.................................. 28,550
550 Knight-Ridder, Inc.................................... 30,215
450 New York Times Company, Class A....................... 16,566
200 R.R. Donnelley & Sons Company......................... 7,413
-----------
118,063
-----------
PROFESSIONAL SERVICES - 0.1%:
100 H & R Block, Inc...................................... 5,000
200 Interpublic Group Companies, Inc...................... 17,325
-----------
22,325
-----------
RECREATION - 1.1%:
450 Brunswick Corporation................................. 12,544
350 Carnival Corporation.................................. 16,975
600 Fleetwood Enterprises, Inc............................ 15,863
450 Harrah's Entertainment, Inc.+......................... 9,900
200 Hasbro, Inc........................................... 5,588
300 King World Productions, Inc.+......................... 10,444
1,150 Viacom Inc., Class B+................................. 50,599
1,500 Walt Disney Company................................... 46,218
-----------
168,131
-----------
RESTAURANTS AND LODGING - 0.7%:
1,400 Darden Restaurants, Inc............................... 30,538
250 Marriott International Inc., Class A.................. 9,344
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
41
<PAGE>
Nations Funds
NATIONS MANAGED INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
RESTAURANTS AND LODGING (CONTINUED)
1,200 McDonald's Corporation................................ $ 49,574
150 Tricon Global Restaurants, Inc.+...................... 8,119
-----------
97,575
-----------
RETAIL - FOOD - 0.5%:
470 Albertson's, Inc...................................... 24,234
650 Safeway, Inc.+........................................ 32,175
700 Supervalu, Inc........................................ 17,981
-----------
74,390
-----------
RETAIL - GENERAL - 3.4%:
250 Costco Companies, Inc.+............................... 20,016
700 Dayton Hudson Corporation............................. 45,500
700 Dillards, Inc., Class A............................... 24,588
800 Federated Department Stores, Inc...................... 42,350
300 J.C. Penney Company, Inc.............................. 14,569
1,200 K Mart Corporation+................................... 19,725
350 May Department Stores Company......................... 14,306
500 Sears, Roebuck and Company............................ 22,281
1,050 Toys R US, Inc.+...................................... 21,722
5,950 Wal-Mart Stores, Inc.................................. 287,087
-----------
512,144
-----------
RETAIL - SPECIALTY - 2.3%:
150 Circuit City Stores - Circuit City Group.............. 13,950
500 CVS Corporation....................................... 25,375
1,275 Gap, Inc.............................................. 64,228
2,000 Home Depot, Inc....................................... 128,874
450 Limited, Inc.......................................... 20,419
250 Longs Drug Stores Corporation......................... 8,641
500 Lowe's Companies, Inc................................. 28,344
250 Staples, Inc.+........................................ 7,734
300 Tandy Corporation..................................... 14,663
1,100 TJX Companies, Inc.................................... 36,644
-----------
348,872
-----------
SEMICONDUCTORS - 2.2%:
4,250 Intel Corporation..................................... 252,875
500 Texas Instruments, Inc................................ 72,500
-----------
325,375
-----------
TELECOMMUNICATIONS - 2.0%:
200 General Instruments Corporation+...................... 8,500
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
42
<PAGE>
Nations Funds
NATIONS MANAGED INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS (CONTINUED)
3,812 Lucent Technologies, Inc.............................. $ 257,072
500 Tellabs, Inc.+........................................ 33,781
-----------
299,353
-----------
TOBACCO - 0.8%:
2,950 Philip Morris Companies, Inc.......................... 118,553
150 R.J. Reynolds Tobacco Holdings, Inc.+................. 4,725
-----------
123,278
-----------
TRANSPORTATION - 1.3%:
300 AMR Corporation+...................................... 20,475
1,350 Burlington Northern Santa Fe, Inc..................... 41,851
450 Delta Air Lines, Inc.................................. 25,931
500 FDX Corporation+...................................... 27,125
100 Kansas City Southern Industries....................... 6,381
1,100 Southwest Airlines Company............................ 34,238
500 Union Pacific Corporation............................. 29,156
100 US Airways Group Inc.+................................ 4,356
-----------
189,513
-----------
TRUCKING AND SHIPPING - 0.1%:
400 Ryder System, Inc..................................... 10,400
-----------
UNIT INVESTMENT TRUST - 2.1%:
2,250 Standard and Poor's Depositary Receipts............... 308,250
-----------
UTILITIES - NATURAL GAS - 0.1%:
150 Consolidated Natural Gas Company...................... 9,113
-----------
UTILITIES - TELEPHONE - 8.1%:
350 ALLTEL Corporation.................................... 25,025
1,500 Ameritech Corporation................................. 110,250
4,650 AT&T Corporation...................................... 259,527
2,050 Bell Atlantic Corporation............................. 134,019
2,750 BellSouth Corporation................................. 128,906
1,350 GTE Corporation....................................... 102,263
2,450 MCI Worldcom, Inc.+................................... 210,853
2,250 SBC Communications, Inc............................... 130,500
1,150 Sprint Corporation (FON Group)........................ 60,734
100 Sprint Corporation (PCS Group)+....................... 5,713
700 U.S. West, Inc........................................ 41,125
-----------
1,208,915
-----------
UTILITIES - WATER - 0.6%:
150 CenturyTel, Inc....................................... 5,963
900 Nortel Networks Corporation........................... 78,131
-----------
84,094
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
43
<PAGE>
Nations Funds
NATIONS MANAGED INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
WASTE MANAGEMENT - 0.1%:
350 Waste Management, Inc................................. $ 18,813
-----------
TOTAL COMMON STOCKS (Cost $12,506,028)................ 14,847,678
-----------
INVESTMENT COMPANIES - 0.9%: (Cost $130,000)
130,000 Nations Cash Reserves#................................ 130,000
-----------
</TABLE>
<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS (Cost $12,636,028*)....... 100.5% 14,977,678
-----------
OTHER ASSETS AND LIABILITIES (NET).......... (0.5)%
Cash................................................. $ 925
Receivable for investment securities sold............ 107,019
Receivable for Fund shares sold...................... 85,614
Dividends receivable................................. 16,133
Interest receivable.................................. 521
Receivable from investment advisor................... 4,862
Unamortized organization costs....................... 14,802
Administration fee payable........................... (2,649)
Shareholder servicing and distribution fees
payable.............................................. (35,698)
Payable for investment securities purchased.......... (188,702)
Accrued Trustees' fees and expenses.................. (10,203)
Accrued expenses and other liabilities............... (69,905)
-----------
TOTAL OTHER ASSETS AND LIABILITIES (NET)............. (77,281)
-----------
NET ASSETS.................................. 100.0% $14,900,397
------- -----------
------- -----------
NET ASSETS CONSIST OF:
Undistributed net investment income.................. $ 39,723
Accumulated net realized loss on investments sold.... (152,595)
Net unrealized appreciation of investments........... 2,341,650
Paid-in capital...................................... 12,671,619
-----------
NET ASSETS........................................... $14,900,397
-----------
-----------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER
SHARE ($14,900,397 DIVIDED BY 1,208,965 shares
outstanding)......................................... $ 12.32
-----------
-----------
</TABLE>
- -----------------
* Federal Income Tax Information: Net unrealized appreciation of investment
securities was comprised of gross appreciation of $2,584,788 and gross
depreciation of $243,138 for Federal income tax purposes. At June 30, 1999,
the aggregate cost of securities for Federal income tax purposes was
$12,636,028.
+ Non-income producing security.
+ Amount represents less than 0.1%.
# Money market mutual fund registered under the Investment Company Act of
1940, as amended, and sub-advised by TradeStreet Investment Associates,
Inc.
SEE NOTES TO FINANCIAL STATEMENTS.
44
<PAGE>
Nations Funds
NATIONS VALUE PORTFOLIO
STATEMENT OF NET ASSETS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
COMMON STOCKS - 96.4%:
AEROSPACE AND DEFENSE - 1.7%:
2,150 Raytheon Company, Class B............................. $ 151,306
-----------
AUTOMOBILE PARTS MANUFACTURERS - 1.8%:
1,152 Dana Corporation...................................... 53,064
2,875 Genuine Parts Company................................. 100,625
-----------
153,689
-----------
AUTOMOBILES AND TRUCKS - 2.0%:
1,007 DaimlerChrysler AG.................................... 89,497
1,520 Ford Motor Company.................................... 85,785
-----------
175,282
-----------
BANKING - 8.4%:
2,550 Banc One Corporation.................................. 151,884
2,150 Bank of New York, Inc................................. 78,878
1,050 BankBoston Corporation................................ 53,681
1,725 Chase Manhattan Corporation........................... 149,428
2,797 Citigroup, Inc........................................ 132,858
4,350 Mellon Bank Corporation............................... 158,232
-----------
724,961
-----------
BEVERAGES - 1.9%:
1,400 Anheuser-Busch Companies, Inc......................... 99,312
1,780 PepsiCo, Inc.......................................... 68,864
-----------
168,176
-----------
CHEMICALS - BASIC - 1.8%:
1,825 E.I. duPont de Nemours and Company.................... 124,670
600 Eastman Chemical Company.............................. 31,050
-----------
155,720
-----------
COMPUTER RELATED - 13.2%:
900 3Com Corporation+..................................... 24,019
4,425 Apple Computer, Inc.+................................. 204,932
1,275 Ceridian Corporation+................................. 41,677
1,850 Comverse Technology, Inc.+............................ 139,675
1,800 Gateway, Inc.+........................................ 106,200
1,700 Honeywell, Inc........................................ 196,987
1,530 International Business Machines Corporation........... 197,752
1,375 Sun Microsystems, Inc.+............................... 94,703
3,325 Unisys Corporation+................................... 129,467
-----------
1,135,412
-----------
CONGLOMERATE - 2.1%:
2,550 United Technologies Corporation....................... 182,803
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
45
<PAGE>
Nations Funds
NATIONS VALUE PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
CONSTRUCTION - 2.1%:
2,425 Centex Corporation.................................... $ 91,089
3,025 Masco Corporation..................................... 87,347
-----------
178,436
-----------
DRUGS - 4.9%:
725 American Home Products Corporation.................... 41,688
2,640 Bergen Brunswig Corporation........................... 45,540
2,675 Bristol-Myers Squibb Company.......................... 188,420
2,775 Schering-Plough Corporation........................... 147,075
-----------
422,723
-----------
ELECTRIC POWER - 3.2%:
5,575 Energy East Corporation............................... 144,950
1,300 Texas Utilities Company............................... 53,625
2,125 Unicom Corporation.................................... 81,945
-----------
280,520
-----------
FINANCIAL SERVICES - 2.4%:
2,605 Paine Webber Group, Inc............................... 121,784
2,529 Washington Mutual, Inc................................ 89,463
-----------
211,247
-----------
FOOD PRODUCERS - 3.0%:
650 General Mills, Inc.................................... 52,244
3,550 Nabisco Group Holdings Corporation.................... 69,447
1,025 Nabisco Holdings Corporation, Class A................. 44,331
950 Quaker Oats Company................................... 63,056
825 Suiza Foods Corporation+.............................. 34,547
-----------
263,625
-----------
FOREST AND PAPER PRODUCTS - 0.9%:
1,900 Boise Cascade Corporation............................. 81,463
-----------
FURNITURE AND APPLIANCES - 1.2%:
1,400 Whirlpool Corporation................................. 103,600
-----------
INSURANCE - 6.7%:
2,125 CIGNA Corporation..................................... 189,125
2,660 Hartford Financial Services Group, Inc................ 155,111
4,600 Lincoln National Corporation Ltd...................... 240,638
-----------
584,874
-----------
MANUFACTURING - 0.2%:
1,200 IMC Global, Inc....................................... 21,150
-----------
MEDICAL SERVICES - 3.2%:
2,900 HEALTHSOUTH Corporation+.............................. 43,319
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
46
<PAGE>
Nations Funds
NATIONS VALUE PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
MEDICAL SERVICES (CONTINUED)
4,050 Tenet Healthcare Corporation+......................... $ 75,178
1,850 Wellpoint Health Networks, Inc.+...................... 157,019
-----------
275,516
-----------
METALS AND MINING - 0.5%:
700 Phelps Dodge Corporation.............................. 43,356
-----------
OFFICE EQUIPMENT - 1.6%:
2,100 Lexmark International Group, Inc., Class A+........... 138,731
-----------
OIL - DOMESTIC - 1.0%:
1,350 Coastal Corporation................................... 54,000
1,100 USX-Marathon Group, Inc............................... 35,819
-----------
89,819
-----------
OIL - INTERNATIONAL - 6.0%:
1,500 BP Amoco plc, ADR..................................... 162,750
1,035 Exxon Corporation..................................... 79,824
1,775 Mobil Corporation..................................... 175,725
1,690 Royal Dutch Petroleum Company......................... 101,823
-----------
520,122
-----------
OIL FIELD SERVICES & EQUIPMENT - 0.9%:
800 Halliburton Company................................... 36,200
1,700 Transocean Offshore, Inc.............................. 44,625
-----------
80,825
-----------
PRINTING AND PUBLISHING - 0.7%:
1,650 Dun & Bradstreet Corporation.......................... 58,472
-----------
RECREATION - 1.2%:
3,752 Hasbro, Inc........................................... 104,822
-----------
RETAIL - FOOD - 0.8%:
2,600 Kroger Company+....................................... 72,638
-----------
RETAIL - GENERAL - 3.7%:
2,745 Federated Department Stores, Inc...................... 145,313
2,425 Saks, Inc.+........................................... 70,022
2,400 Sears, Roebuck and Company............................ 106,950
-----------
322,285
-----------
RETAIL - SPECIALTY - 2.6%:
500 AnnTaylor Stores Corporation+......................... 22,500
3,225 Rite Aid Corporation.................................. 79,416
3,675 TJX Companies, Inc.................................... 122,423
-----------
224,339
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
47
<PAGE>
Nations Funds
NATIONS VALUE PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
SEMICONDUCTORS - 2.0%:
2,935 Intel Corporation..................................... $ 174,633
-----------
STEEL - 2.0%:
2,900 Bethlehem Steel Corporation+.......................... 22,294
1,740 Nucor Corporation..................................... 82,541
2,495 USX - U.S. Steel Group, Inc........................... 67,365
-----------
172,200
-----------
TOBACCO - 0.4%:
1,050 R.J. Reynolds Tobacco Holdings, Inc.+................. 33,075
-----------
UTILITIES - NATURAL GAS - 0.5%:
1,100 Williams Companies, Inc............................... 46,819
-----------
UTILITIES - TELEPHONE - 10.9%:
900 ALLTEL Corporation.................................... 64,350
2,977 AT&T Corporation...................................... 166,154
2,875 BellSouth Corporation................................. 134,766
2,950 GTE Corporation....................................... 223,462
1,635 MCI Worldcom, Inc.+................................... 140,712
3,595 SBC Communications, Inc............................... 208,510
-----------
937,954
-----------
WASTE MANAGEMENT - 0.9%:
1,500 Waste Management, Inc................................. 80,625
-----------
TOTAL COMMON STOCKS (Cost $7,365,446)................. 8,371,218
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
48
<PAGE>
Nations Funds
NATIONS VALUE PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
INVESTMENT COMPANIES - 6.6%: (Cost $577,442)
577,442 Nations Cash Reserves#................................ $ 577,442
-----------
</TABLE>
<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS (Cost $7,942,888*)........ 103.0% 8,948,660
-----------
OTHER ASSETS AND LIABILITIES (NET).......... (3.0)%
Cash................................................. $ 856
Receivable for investment securities sold............ 59,079
Receivable for Fund shares sold...................... 64,949
Dividends receivable................................. 9,788
Interest receivable.................................. 1,496
Unamortized organization costs....................... 14,802
Collateral on securities loaned...................... (33,442)
Investment advisory fee payable...................... (723)
Administration fee payable........................... (1,552)
Payable for investment securities purchased.......... (348,310)
Accrued Trustees' fees and expenses.................. (10,203)
Accrued expenses and other liabilities............... (20,631)
-----------
TOTAL OTHER ASSETS AND LIABILITIES (NET)............. (263,891)
-----------
NET ASSETS.................................. 100.0% $8,684,769
------- -----------
------- -----------
NET ASSETS CONSIST OF:
Undistributed net investment income.................. $ 23,502
Accumulated net realized loss on investments sold.... (139,364)
Net unrealized appreciation of investments........... 1,005,772
Paid-in capital...................................... 7,794,859
-----------
NET ASSETS........................................... $8,684,769
-----------
-----------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER
SHARE ($8,684,769 DIVIDED BY 777,797 shares
outstanding)......................................... $ 11.17
-----------
-----------
</TABLE>
- -----------------
* Federal Income Tax Information: Net unrealized appreciation of investment
securities was comprised of gross appreciation of $1,163,411 and gross
depreciation of $157,639 for Federal income tax purposes. At June 30, 1999,
the aggregate cost of securities for Federal income tax purposes was
$7,942,888.
+ Non-income producing security.
# Money market mutual fund registered under the Investment Company Act of
1940, as amended, and sub-advised by TradeStreet Investment Associates,
Inc. A portion of this amount represents cash collateral received from
securities lending activity (Note 8). The portion that represents cash
collateral is $33,442.
ABBREVIATION:
<TABLE>
<C> <S>
ADR American Depository Receipt
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
49
<PAGE>
Nations Funds
NATIONS BALANCED ASSETS PORTFOLIO
STATEMENT OF NET ASSETS JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
COMMON STOCKS - 61.2%:
AEROSPACE AND DEFENSE - 1.1%:
855 Raytheon Company, Class B............................. $ 60,171
-----------
AUTOMOBILE PARTS MANUFACTURERS - 0.9%:
310 Dana Corporation...................................... 14,279
1,035 Genuine Parts Company................................. 36,225
-----------
50,504
-----------
AUTOMOBILES AND TRUCKS - 1.4%:
349 DaimlerChrysler AG.................................... 31,017
880 Ford Motor Company.................................... 49,665
-----------
80,682
-----------
BANKING - 6.3%:
1,275 Banc One Corporation.................................. 75,941
1,160 Bank of New York, Inc................................. 42,558
925 BankBoston Corporation................................ 47,291
865 Chase Manhattan Corporation........................... 74,930
1,210 Citigroup, Inc........................................ 57,475
1,580 Mellon Bank Corporation............................... 57,473
-----------
355,668
-----------
BEVERAGES - 1.2%:
575 Anheuser-Busch Companies, Inc......................... 40,789
715 PepsiCo, Inc.......................................... 27,662
-----------
68,451
-----------
CHEMICALS - BASIC - 1.2%:
790 E.I. duPont de Nemours and Company.................... 53,967
300 Eastman Chemical Company.............................. 15,525
-----------
69,492
-----------
COMPUTER RELATED - 8.4%:
480 3Com Corporation+..................................... 12,810
1,865 Apple Computer, Inc.+................................. 86,373
555 Ceridian Corporation+................................. 18,142
755 Comverse Technology, Inc.+............................ 57,003
720 Gateway, Inc.+........................................ 42,480
680 Honeywell, Inc........................................ 78,795
690 International Business Machines Corporation........... 89,182
575 Sun Microsystems, Inc.+............................... 39,603
1,175 Unisys Corporation+................................... 45,752
-----------
470,140
-----------
CONGLOMERATE - 1.3%:
1,060 United Technologies Corporation....................... 75,989
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
50
<PAGE>
Nations Funds
NATIONS BALANCED ASSETS PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
CONSTRUCTION - 1.3%:
1,085 Centex Corporation.................................... $ 40,755
1,160 Masco Corporation..................................... 33,495
-----------
74,250
-----------
DRUGS - 3.0%:
160 American Home Products Corporation.................... 9,200
1,160 Bergen Brunswig Corporation........................... 20,010
1,225 Bristol-Myers Squibb Company.......................... 86,286
1,085 Schering-Plough Corporation........................... 57,505
-----------
173,001
-----------
ELECTRIC POWER - 2.1%:
2,245 Energy East Corporation............................... 58,370
580 Texas Utilities Company............................... 23,925
975 Unicom Corporation.................................... 37,598
-----------
119,893
-----------
FINANCIAL SERVICES - 1.5%:
1,085 Paine Webber Group, Inc............................... 50,723
1,031 Washington Mutual, Inc................................ 36,472
-----------
87,195
-----------
FOOD PRODUCERS - 2.1%:
320 General Mills, Inc.................................... 25,720
1,400 Nabisco Group Holdings Corporation.................... 27,388
395 Nabisco Holdings Corporation, Class A................. 17,084
430 Quaker Oats Company................................... 28,540
475 Suiza Foods Corporation+.............................. 19,891
-----------
118,623
-----------
FOREST AND PAPER PRODUCTS - 0.6%:
800 Boise Cascade Corporation............................. 34,300
-----------
FURNITURE AND APPLIANCES - 0.5%:
400 Whirlpool Corporation................................. 29,600
-----------
INSURANCE - 3.7%:
765 CIGNA Corporation..................................... 68,085
900 Hartford Financial Services Group, Inc................ 52,481
1,680 Lincoln National Corporation Ltd...................... 87,885
-----------
208,451
-----------
MANUFACTURING - 0.2%:
500 IMC Global, Inc....................................... 8,813
-----------
MEDICAL SERVICES - 2.1%:
1,760 HEALTHSOUTH Corporation+.............................. 26,290
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
51
<PAGE>
Nations Funds
NATIONS BALANCED ASSETS PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
MEDICAL SERVICES (CONTINUED)
1,540 Tenet Healthcare Corporation+......................... $ 28,586
775 Wellpoint Health Networks, Inc.+...................... 65,778
-----------
120,654
-----------
METALS AND MINING - 0.3%:
300 Phelps Dodge Corporation.............................. 18,581
-----------
OFFICE EQUIPMENT - 1.3%:
1,140 Lexmark International Group, Inc., Class A+........... 75,311
-----------
OIL - DOMESTIC - 0.6%:
480 Coastal Corporation................................... 19,200
500 USX-Marathon Group, Inc............................... 16,281
-----------
35,481
-----------
OIL - INTERNATIONAL - 3.7%:
450 BP Amoco plc, ADR..................................... 48,825
505 Exxon Corporation..................................... 38,948
835 Mobil Corporation..................................... 82,665
680 Royal Dutch Petroleum Company......................... 40,970
-----------
211,408
-----------
OIL FIELD SERVICES & EQUIPMENT - 0.3%:
280 Halliburton Company................................... 12,670
200 Transocean Offshore, Inc.............................. 5,250
-----------
17,920
-----------
PRINTING AND PUBLISHING - 0.3%:
445 Dun & Bradstreet Corporation.......................... 15,770
-----------
RECREATION - 0.7%:
1,455 Hasbro, Inc........................................... 40,649
-----------
RETAIL - FOOD - 0.5%:
1,050 Kroger Company+....................................... 29,334
-----------
RETAIL - GENERAL - 2.5%:
1,190 Federated Department Stores, Inc...................... 62,995
1,160 Saks, Inc.+........................................... 33,495
1,000 Sears, Roebuck and Company............................ 44,563
-----------
141,053
-----------
RETAIL - SPECIALTY - 1.3%:
200 AnnTaylor Stores Corporation+......................... 9,000
700 Rite Aid Corporation.................................. 17,238
1,470 TJX Companies, Inc.................................... 48,969
-----------
75,207
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
52
<PAGE>
Nations Funds
NATIONS BALANCED ASSETS PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
SEMICONDUCTORS - 1.3%:
1,285 Intel Corporation..................................... $ 76,458
-----------
STEEL - 1.1%:
1,400 Bethlehem Steel Corporation+.......................... 10,763
690 Nucor Corporation..................................... 32,731
770 USX - U.S. Steel Group, Inc........................... 20,790
-----------
64,284
-----------
TOBACCO - 0.3%:
466 R.J. Reynolds Tobacco Holdings, Inc.+................. 14,679
-----------
UTILITIES - NATURAL GAS - 0.3%:
445 Williams Companies, Inc............................... 18,940
-----------
UTILITIES - TELEPHONE - 7.1%:
370 ALLTEL Corporation.................................... 26,455
1,217 AT&T Corporation...................................... 67,924
1,225 BellSouth Corporation................................. 57,422
1,215 GTE Corporation....................................... 92,037
770 MCI Worldcom, Inc.+................................... 66,268
1,475 SBC Communications, Inc............................... 85,550
-----------
395,656
-----------
WASTE MANAGEMENT - 0.7%:
690 Waste Management, Inc................................. 37,088
-----------
TOTAL COMMON STOCKS (Cost $3,000,699)................. 3,473,696
-----------
<CAPTION>
PRINCIPAL
AMOUNT
- -----------
<C> <S> <C>
U.S. TREASURY OBLIGATIONS - 32.9%:
U.S. TREASURY BONDS - 5.0%:
$ 286,000 6.125% 11/15/27....................................... 284,078
-----------
U.S. TREASURY NOTES - 27.9%:
400,000 7.500% 10/31/99....................................... 403,188
682,000 5.625% 12/31/02....................................... 681,257
510,000 5.625% 05/15/08....................................... 499,560
-----------
1,584,005
-----------
TOTAL U.S. TREASURY OBLIGATIONS (Cost $1,919,390)..... 1,868,083
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
53
<PAGE>
Nations Funds
NATIONS BALANCED ASSETS PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- --------------------------------------------------------------------------------
INVESTMENT COMPANIES - 7.4%: (Cost $420,300)
420,300 Nations Cash Reserves#................................ $ 420,300
-----------
</TABLE>
<TABLE>
<C> <S> <C> <C>
TOTAL INVESTMENTS (Cost $5,340,389*)........ 101.5% 5,762,079
-----------
OTHER ASSETS AND LIABILITIES (NET).......... (1.5)%
Cash................................................. $ 744
Receivable for investment securities sold............ 22,508
Receivable for Fund shares sold...................... 1,662
Dividends receivable................................. 4,163
Interest receivable.................................. 31,407
Receivable from investment advisor................... 867
Unamortized organization costs....................... 14,802
Administration fee payable........................... (1,032)
Payable for investment securities purchased.......... (122,418)
Accrued Trustees' fees and expenses.................. (10,203)
Accrued expenses and other liabilities............... (28,146)
-----------
OTHER ASSETS AND LIABILITIES (NET)................... (85,646)
-----------
NET ASSETS.................................. 100.0% $5,676,433
------- -----------
------- -----------
NET ASSETS CONSIST OF:
Undistributed net investment income.................. $ 47,535
Accumulated net realized loss on investments sold.... (195,786)
Net unrealized appreciation of investments........... 421,690
Paid-in capital...................................... 5,402,994
-----------
NET ASSETS........................................... $5,676,433
-----------
-----------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER
SHARE
($5,676,433 DIVIDED BY 560,788 shares
outstanding)......................................... $ 10.12
-----------
-----------
</TABLE>
- -----------------
* Federal Income Tax Information: Net unrealized appreciation of investment
securities was comprised of gross appreciation of $517,840 and gross
depreciation of $96,150 for Federal income tax purposes. At June 30, 1999,
the aggregate cost of securities for Federal income tax purposes was
$5,340,389.
+ Non-income producing security.
# Money market mutual fund registered under the Investment Company Act of
1940, as amended, and sub-advised by TradeStreet Investment Associates,
Inc.
ABBREVIATION:
<TABLE>
<C> <S>
ADR American Depository Receipt
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
54
<PAGE>
Nations Funds
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
INTERNATIONAL
GROWTH FOCUSED EQUITIES
PORTFOLIO PORTFOLIO
-------------- -----------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends (Net of foreign
withholding taxes of
$4,817, $68, $11, $0,
$544, $870, $533 and
$347, respectively).... $ 25,170 $ 102,162
Interest................. 5,538 75,520
Securities lending....... -- 1,494
-------------- -----------------
Total investment
income............. 30,708 179,176
-------------- -----------------
EXPENSES:
Investment advisory
fee.................... 11,803 154,256
Custodian fees........... 4,404 1,632
Transfer agent fees...... 419 6,722
Trustees' fees and
expenses............... 8,781 8,781
Administration fee....... 1,954 28,951
Shareholder servicing and
distribution fees...... 3,372 46,736
Legal and audit fees..... 8,264 9,407
Amortization of
organization costs..... 1,425 1,425
Interest expense......... -- --
Other.................... 2,874 --
-------------- -----------------
Total expenses....... 43,296 257,910
Fees waived and expenses
reimbursed by
investment adviser,
sub-adviser and/or
distributor............ (26,440) (53,029)
Fees reduced by credits
allowed by the
custodian.............. -- (31)
-------------- -----------------
Net expenses......... 16,856 204,850
-------------- -----------------
NET INVESTMENT
INCOME/(LOSS).......... 13,852 (25,674)
-------------- -----------------
NET REALIZED AND
UNREALIZED GAIN/(LOSS)
ON INVESTMENTS:
Net realized gain/(loss)
from:
Security
transactions......... 14,453 404,777
Foreign currency
contracts and foreign
currency
transactions......... (2,080) (2)
-------------- -----------------
Net realized gain/(loss)
on investments......... 12,373 404,775
-------------- -----------------
Change in unrealized
appreciation/(depreciation)
of:
Securities............. 147,784 4,487,704
Assets and liabilities
in foreign
currencies........... (133) --
-------------- -----------------
Net change in unrealized
appreciation/(depreciation)
of investments......... 147,651 4,487,704
-------------- -----------------
Net realized and
unrealized gain/(loss)
on investments......... 160,024 4,892,479
-------------- -----------------
NET INCREASE/(DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS........ $173,876 $4,866,805
-------------- -----------------
-------------- -----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
55
<PAGE>
Nations Funds
STATEMENTS OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
MANAGED DISCLIPLINED GROWTH & MANAGED BALANCED
SMALLCAP INDEX EQUITY INCOME INDEX VALUE ASSETS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------- ------------- ------------ ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends (Net of foreign
withholding taxes of
$4,817, $68, $11, $0,
$544, $870, $533 and
$347, respectively).... $ 23,653 $ 25,829 $ 78,342 $ 79,867 $ 51,559 $ 21,120
Interest................. 2,680 4,023 49,093 6,462 6,484 50,140
Securities lending....... -- -- 412 -- 122 --
--------------- ------------- ------------ ------------ ---------- ---------
Total investment
income............. 26,333 29,852 127,847 86,329 58,165 71,260
--------------- ------------- ------------ ------------ ---------- ---------
EXPENSES:
Investment advisory
fee.................... 14,004 19,403 90,256 28,053 25,050 17,136
Custodian fees........... 1,613 1,632 1,726 1,656 1,601 1,848
Transfer agent fees...... 883 831 3,729 1,877 1,099 730
Trustees' fees and
expenses............... 8,781 8,782 8,782 8,782 8,781 8,781
Administration fee....... 4,565 4,144 16,939 9,143 5,350 3,659
Shareholder servicing and
distribution fees...... 7,369 6,937 27,346 14,760 8,637 5,908
Legal and audit fees..... 8,496 8,465 9,860 8,974 8,593 8,415
Amortization of
organization costs..... 1,425 1,425 1,425 1,425 1,425 1,425
Interest expense......... -- 114 -- -- -- --
Other.................... 11,064 2,323 3,672 11,862 3,246 3,767
--------------- ------------- ------------ ------------ ---------- ---------
Total expenses....... 58,200 54,056 163,735 86,532 63,782 51,669
Fees waived and expenses
reimbursed by
investment adviser,
sub-adviser and/or
distributor............ (36,233) (27,178) (43,033) (39,872) (29,119) (27,698)
Fees reduced by credits
allowed by the
custodian.............. (11) (30) (124) (54) -- (246)
--------------- ------------- ------------ ------------ ---------- ---------
Net expenses......... 21,956 26,848 120,578 46,606 34,663 23,725
--------------- ------------- ------------ ------------ ---------- ---------
NET INVESTMENT
INCOME/(LOSS).......... 4,377 3,004 7,269 39,723 23,502 47,535
--------------- ------------- ------------ ------------ ---------- ---------
NET REALIZED AND
UNREALIZED GAIN/(LOSS)
ON INVESTMENTS:
Net realized gain/(loss)
from:
Security
transactions......... (48,155) 166,004 291,114 (49,107) 891 19,122
Foreign currency
contracts and foreign
currency
transactions......... -- -- (5,064) -- -- --
--------------- ------------- ------------ ------------ ---------- ---------
Net realized gain/(loss)
on investments......... (48,155) 166,004 286,050 (49,107) 891 19,122
--------------- ------------- ------------ ------------ ---------- ---------
Change in unrealized
appreciation/(depreciation)
of:
Securities............. 286,942 433,254 2,647,340 1,327,423 508,129 163,252
Assets and liabilities
in foreign
currencies........... -- -- 3,977 -- -- --
--------------- ------------- ------------ ------------ ---------- ---------
Net change in unrealized
appreciation/(depreciation)
of investments......... 286,942 433,254 2,651,317 1,327,423 508,129 163,252
--------------- ------------- ------------ ------------ ---------- ---------
Net realized and
unrealized gain/(loss)
on investments......... 238,787 599,258 2,937,367 1,278,316 509,020 182,374
--------------- ------------- ------------ ------------ ---------- ---------
NET INCREASE/(DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS........ $243,164 $602,262 $2,944,636 $1,318,039 $532,522 $229,909
--------------- ------------- ------------ ------------ ---------- ---------
--------------- ------------- ------------ ------------ ---------- ---------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
56
<PAGE>
Nations Funds
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH PORTFOLIO
---------------------------------
SIX MONTHS ENDED
6/30/99 PERIOD ENDED
(UNAUDITED) 12/31/98(a)
----------------- -------------
<S> <C> <C>
Net investment
income/(loss).......... $ 13,852 $ 13,160
Net realized gain/(loss)
on investments and
foreign currency
transactions........... 12,373 (95,792)
Net change in unrealized
appreciation/(depreciation)
of investments and assets
and liabilities in
foreign currencies..... 147,651 192,168
----------------- -------------
Net increase/(decrease)
in net assets resulting
from operations........ 173,876 109,536
Distributions to
shareholders from net
investment income...... -- (6,673)
Distributions to
shareholders in excess
of net investment
income................. -- (270)
Distributions to
shareholders from net
realized gains......... -- --
Net increase/(decrease)
in net assets from Fund
share transactions..... 865,846 2,197,044
----------------- -------------
Net increase/(decrease)
in net assets.......... 1,039,722 2,299,637
NET ASSETS:
Beginning of Period...... 2,309,637 10,000
----------------- -------------
End of Period............ $3,349,359 $2,309,637
----------------- -------------
----------------- -------------
Undistributed net
investment
income/(distributions
in excess of net
investment income) at
end of period.......... $ 13,800 $ (52)
----------------- -------------
----------------- -------------
</TABLE>
- -------------------
(a) Portfolio commenced operations on March 27, 1998. Shares were offered to
the public on April 6, 1998.
SEE NOTES TO FINANCIAL STATEMENTS.
57
<PAGE>
Nations Funds
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
MANAGED SMALLCAP INDEX PORTFOLIO
FOCUSED EQUITIES PORTFOLIO DISCIPLINED EQUITY PORTFOLIO
--------------------------------- --------------------------------- ---------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED SIX MONTHS ENDED
6/30/99 PERIOD ENDED 6/30/99 PERIOD ENDED 6/30/99 PERIOD ENDED
(UNAUDITED) 12/31/98(a) (UNAUDITED) 12/31/98(a) (UNAUDITED) 12/31/98(a)
----------------- ------------- ----------------- ------------- ----------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net investment
income/(loss).......... $ (25,674) $ 28,903 $ 4,377 $ 19,921 $ 3,004 $ 9,321
Net realized gain/(loss)
on investments and
foreign currency
transactions........... 404,775 118,670 (48,155) (277,452) 166,004 (220,287)
Net change in unrealized
appreciation/(depreciation)
of investments and assets
and liabilities in
foreign currencies..... 4,487,704 3,641,292 286,942 (249,248) 433,254 598,113
----------------- ------------- ----------------- ------------- ----------------- -------------
Net increase/(decrease)
in net assets resulting
from operations........ 4,866,805 3,788,865 243,164 (506,779) 602,262 387,147
Distributions to
shareholders from net
investment income...... -- (28,837) -- (19,921) -- (9,321)
Distributions to
shareholders in excess
of net investment
income................. -- -- -- (2,955) -- (1,477)
Distributions to
shareholders from net
realized gains......... -- (1,193) -- -- -- --
Net increase/(decrease)
in net assets from Fund
share transactions..... 26,125,676 20,751,772 455,745 6,607,173 1,221,029 4,409,976
----------------- ------------- ----------------- ------------- ----------------- -------------
Net increase/(decrease)
in net assets.......... 30,992,481 24,510,607 698,909 6,077,518 1,823,291 4,786,325
NET ASSETS:
Beginning of Period...... 24,520,607 10,000 6,097,518 20,000 4,796,325 10,000
----------------- ------------- ----------------- ------------- ----------------- -------------
End of Period............ $55,513,088 $24,520,607 $6,796,427 $6,097,518 $6,619,616 $4,796,325
----------------- ------------- ----------------- ------------- ----------------- -------------
----------------- ------------- ----------------- ------------- ----------------- -------------
Undistributed net
investment
income/(distributions
in excess of net
investment income) at
end of period.......... $ (25,674) $ -- $ 4,377 $ -- $ 3,004 $ --
----------------- ------------- ----------------- ------------- ----------------- -------------
----------------- ------------- ----------------- ------------- ----------------- -------------
</TABLE>
- -------------------
(a) Portfolio commenced operations on March 27, 1998. Shares were offered to
the public on April 6, 1998.
SEE NOTES TO FINANCIAL STATEMENTS.
58
<PAGE>
Nations Funds
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
GROWTH & INCOME PORTFOLIO
---------------------------------
SIX MONTHS ENDED
6/30/99 PERIOD ENDED
(UNAUDITED) 12/31/98(a)
----------------- -------------
<S> <C> <C>
Net investment
income/(loss).......... $ 7,269 $ 24,450
Net realized gain/(loss)
on investments and
foreign currency
transactions........... 286,050 (263,298)
Net change in unrealized
appreciation/(depreciation)
of investments and assets
and liabilities in
foreign currencies..... 2,651,317 2,302,144
----------------- -------------
Net increase/(decrease)
in net assets resulting
from operations........ 2,944,636 2,063,296
Distributions to
shareholders from net
investment income...... -- (24,450)
Distributions to
shareholders in excess
of net investment
income................. -- (1,078)
Distributions to
shareholders from net
realized gains......... -- --
Net increase/(decrease)
in net assets from Fund
share transactions..... 12,195,162 13,527,928
----------------- -------------
Net increase/(decrease)
in net assets.......... 15,139,798 15,565,696
NET ASSETS:
Beginning of Period...... 15,575,696 10,000
----------------- -------------
End of Period............ $30,715,494 $15,575,696
----------------- -------------
----------------- -------------
Undistributed net
investment
income/(distributions
in excess of net
investment income) at
end of period.......... $ 7,269 $ --
----------------- -------------
----------------- -------------
</TABLE>
- -------------------
(a) Portfolio commenced operations on March 27, 1998. Shares were offered to
the public on April 6, 1998.
SEE NOTES TO FINANCIAL STATEMENTS.
59
<PAGE>
Nations Funds
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
MANAGED INDEX PORTFOLIO VALUE PORTFOLIO BALANCED ASSETS PORTFOLIO
--------------------------------- --------------------------------- ---------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED SIX MONTHS ENDED
6/30/99 PERIOD ENDED 6/30/99 PERIOD ENDED 6/30/99 PERIOD ENDED
(UNAUDITED) 12/31/98(a) (UNAUDITED) 12/31/98(a) (UNAUDITED) 12/31/98(a)
----------------- ------------- ----------------- ------------- ----------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net investment
income/(loss).......... $ 39,723 $ 56,892 $ 23,502 $ 19,877 $ 47,535 $ 37,187
Net realized gain/(loss)
on investments and
foreign currency
transactions........... (49,107) (103,488) 891 (140,255) 19,122 (214,908)
Net change in unrealized
appreciation/(depreciation)
of investments and assets
and liabilities in
foreign currencies..... 1,327,423 1,014,227 508,129 497,643 163,252 258,438
----------------- ------------- ----------------- ------------- ----------------- -------------
Net increase/(decrease)
in net assets resulting
from operations........ 1,318,039 967,631 532,522 377,265 229,909 80,717
Distributions to
shareholders from net
investment income...... -- (56,892) -- (19,877) -- (37,187)
Distributions to
shareholders in excess
of net investment
income................. -- (4,633) -- (643) -- (649)
Distributions to
shareholders from net
realized gains......... -- -- -- -- -- --
Net increase/(decrease)
in net assets from Fund
share transactions..... 3,651,274 9,004,978 2,507,190 5,278,312 1,623,683 3,769,960
----------------- ------------- ----------------- ------------- ----------------- -------------
Net increase/(decrease)
in net assets.......... 4,969,313 9,911,084 3,039,712 5,635,057 1,853,592 3,812,841
NET ASSETS:
Beginning of Period...... 9,931,084 20,000 5,645,057 10,000 3,822,841 10,000
----------------- ------------- ----------------- ------------- ----------------- -------------
End of Period............ $14,900,397 $9,931,084 $8,684,769 $5,645,057 $5,676,433 $3,822,841
----------------- ------------- ----------------- ------------- ----------------- -------------
----------------- ------------- ----------------- ------------- ----------------- -------------
Undistributed net
investment
income/(distributions
in excess of net
investment income) at
end of period.......... $ 39,723 $ -- $ 23,502 $ -- $ 47,535 $ --
----------------- ------------- ----------------- ------------- ----------------- -------------
----------------- ------------- ----------------- ------------- ----------------- -------------
</TABLE>
- -------------------
(a) Portfolio commenced operations on March 27, 1998. Shares were offered to
the public on April 6, 1998.
SEE NOTES TO FINANCIAL STATEMENTS.
60
<PAGE>
Nations Funds
SCHEDULES OF CAPITAL STOCK ACTIVITY
<TABLE>
<CAPTION>
MANAGED SMALLCAP INDEX PORTFOLIO
INTERNATIONAL GROWTH PORTFOLIO
---------------------------------------------- ----------------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED PERIOD ENDED
JUNE 30, 1999 PERIOD ENDED JUNE 30, 1999 DECEMBER 31, 1998*
(UNAUDITED) DECEMBER 31, 1998* (UNAUDITED)
---------------------- ---------------------- ------------------- -------------------
SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS
--------- ----------- --------- ----------- ------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold.............. 95,983 $ 1,014,327 225,359 $ 2,210,795 71,330 $ 614,320 671,552 $6,589,984
Issued as reinvestment of
dividends.............. -- -- 678 6,943 -- -- 2,602 22,876
Shares repurchased....... (14,494) (148,481) (2,269) (20,694) (18,004) (158,575) (673) (5,687)
--------- ----------- --------- ----------- ------- ---------- ------- ----------
Net
increase/(decrease).... 81,489 $ 865,846 223,768 $ 2,197,044 53,326 $ 455,745 673,481 $6,607,173
--------- ----------- --------- ----------- ------- ---------- ------- ----------
--------- ----------- --------- ----------- ------- ---------- ------- ----------
</TABLE>
<TABLE>
<CAPTION>
FOCUSED EQUITIES PORTFOLIO DISCIPLINED EQUITY PORTFOLIO
---------------------------------------------- ----------------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED PERIOD ENDED
JUNE 30, 1999 PERIOD ENDED JUNE 30, 1999 DECEMBER 31, 1998*
(UNAUDITED) DECEMBER 31, 1998* (UNAUDITED)
---------------------- ---------------------- ------------------- -------------------
SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS
--------- ----------- --------- ----------- ------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold.............. 1,940,616 $27,872,756 1,889,080 $20,782,314 159,073 $1,794,135 454,328 $4,453,461
Issued as reinvestment of
dividends.............. -- -- 2,301 30,030 -- -- 1,027 10,798
Shares repurchased....... (126,942) (1,747,080) (5,861) (60,572) (52,367) (573,106) (4,815) (54,283)
--------- ----------- --------- ----------- ------- ---------- ------- ----------
Net
increase/(decrease).... 1,813,674 $26,125,676 1,885,520 $20,751,772 106,706 $1,221,029 450,540 $4,409,976
--------- ----------- --------- ----------- ------- ---------- ------- ----------
--------- ----------- --------- ----------- ------- ---------- ------- ----------
</TABLE>
- -------------------
* Portfolio commenced operations on March 27, 1998. Shares were offered to
the public on April 6, 1998.
SEE NOTES TO FINANCIAL STATEMENTS.
61
<PAGE>
Nations Funds
SCHEDULES OF CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
GROWTH & INCOME PORTFOLIO VALUE PORTFOLIO
-------------------------------------------- ----------------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED PERIOD ENDED
JUNE 30, 1999 PERIOD ENDED JUNE 30, 1999 DECEMBER 31, 1998*
(UNAUDITED) DECEMBER 31, 1998* (UNAUDITED)
-------------------- ---------------------- ------------------- -------------------
SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS
------- ----------- --------- ----------- ------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold.............. 961,646 $12,678,062 1,290,360 $13,629,359 244,682 $2,606,307 550,414 $5,358,737
Issued as reinvestment of
dividends.............. -- -- 2,092 25,519 -- -- 1,981 20,520
Shares repurchased....... (37,540) (482,900) (12,725) (126,950) (9,226) (99,117) (11,054) (100,945)
------- ----------- --------- ----------- ------- ---------- ------- ----------
Net
increase/(decrease).... 924,106 $12,195,162 1,279,727 $13,527,928 235,456 $2,507,190 541,341 $5,278,312
------- ----------- --------- ----------- ------- ---------- ------- ----------
------- ----------- --------- ----------- ------- ---------- ------- ----------
</TABLE>
<TABLE>
<CAPTION>
MANAGED INDEX PORTFOLIO BALANCED ASSETS PORTFOLIO
-------------------------------------------- ----------------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED PERIOD ENDED
JUNE 30, 1999 PERIOD ENDED JUNE 30, 1999 DECEMBER 31, 1998*
(UNAUDITED) DECEMBER 31, 1998* (UNAUDITED)
-------------------- ---------------------- ------------------- -------------------
SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS
------- ----------- --------- ----------- ------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Shares sold.............. 343,220 $ 4,014,141 892,094 $ 8,962,981 182,093 $1,783,993 400,013 $3,823,085
Issued as reinvestment of
dividends.............. -- -- 5,558 61,525 -- -- 3,917 37,836
Shares repurchased....... (32,094) (362,867) (1,813) (19,528) (16,393) (160,310) (9,842) (90,961)
------- ----------- --------- ----------- ------- ---------- ------- ----------
Net
increase/(decrease).... 311,126 $ 3,651,274 895,839 $ 9,004,978 165,700 $1,623,683 394,088 $3,769,960
------- ----------- --------- ----------- ------- ---------- ------- ----------
------- ----------- --------- ----------- ------- ---------- ------- ----------
</TABLE>
- -------------------
* Portfolio commenced operations on March 27, 1998. Shares were offered to
the public on April 6, 1998.
SEE NOTES TO FINANCIAL STATEMENTS.
62
<PAGE>
Nations Funds
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
NET ASSET NET REALIZED NET INCREASE/
VALUE NET AND UNREALIZED (DECREASE) IN
BEGINNING INVESTMENT GAIN/(LOSS) ON NET ASSET VALUE
OF PERIOD INCOME/(LOSS) INVESTMENTS FROM OPERATIONS
--------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
INTERNATIONAL GROWTH
PORTFOLIO
Six months ended 6/30/99
(unaudited)............ $ 10.28 $ 0.05 $ 0.61 $ 0.66
Period ended 12/31/98*... 10.00 0.06 0.25 0.31
FOCUSED EQUITIES
PORTFOLIO
Six months ended 6/30/99
(unaudited)............ $ 13.00 $ (0.01) $ 2.01 $ 2.00
Period ended 12/31/98*... 10.00 0.02 3.00 3.02
MANAGED SMALLCAP INDEX
PORTFOLIO
Six months ended 6/30/99
(unaudited)............ $ 9.03 $ 0.01 $ 0.29 $ 0.30
Period ended 12/31/98*... 10.00 0.03 (0.97) (0.94)
DISCIPLINED EQUITY
PORTFOLIO
Six months ended 6/30/99
(unaudited)............ $ 10.62 $ 0.01 $ 1.23 $ 1.24
Period ended 12/31/98*... 10.00 0.02 0.62 0.64
GROWTH & INCOME PORTFOLIO
Six months ended 6/30/99
(unaudited)............ $ 12.16 $ 0.00(d) $ 1.77 $ 1.77
Period ended 12/31/98*... 10.00 0.02 2.16 2.18
MANAGED INDEX PORTFOLIO
Six months ended 6/30/99
(unaudited)............ $ 11.06 $ 0.03 $ 1.23 $ 1.26
Period ended 12/31/98*... 10.00 0.06 1.07 1.13
VALUE PORTFOLIO
Six months ended 6/30/99
(unaudited)............ $ 10.41 $ 0.03 $ 0.73 $ 0.76
Period ended 12/31/98*... 10.00 0.04 0.41 0.45
BALANCED ASSETS PORTFOLIO
Six months ended 6/30/99
(unaudited)............ $ 9.68 $ 0.08 $ 0.36 $ 0.44
Period ended 12/31/98*... 10.00 0.09 (0.31) (0.22)
</TABLE>
- -------------------
* Portfolio commenced operations on March 27, 1998. Shares were offered to
the public on April 6, 1998.
+ Total return represents aggregate total return for the period indicated and
assumes reinvestment of all distributions.
++ Annualized.
(a) Includes distributions in excess of net investment income or from net
realized gains which amounted to less than $0.01 per share.
(b) The effect of the fees reduced by credits allowed by the custodian on the
operating expense ratio, with and without waivers and/ or expense
reimbursements, was less than 0.01%.
(c) The effect of interest expense on the operating expense ratio was less than
0.01%.
(d) Amount represents less than $0.01 per share.
63
<PAGE>
Nations Funds
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
RATIO OF
NET
RATIO OF INVESTMENT
DIVIDENDS NET ASSET NET ASSETS OPERATING INCOME TO
FROM NET VALUE END OF EXPENSES TO AVERAGE PORTFOLIO
INVESTMENT END OF TOTAL PERIOD AVERAGE NET TURNOVER
INCOME PERIOD RETURN+ (000) NET ASSETS++ ASSETS++ RATE
----------- ---------- -------- ----------- ------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
INTERNATIONAL GROWTH
PORTFOLIO
Six months ended 6/30/99
(unaudited)............ $ 0.00 $ 10.94 6.42% $ 3,349 1.25% 1.03% 5%
Period ended 12/31/98*... (0.03)(a) 10.28 3.11 2,310 1.25 1.09 16
FOCUSED EQUITIES
PORTFOLIO
Six months ended 6/30/99
(unaudited)............ $ 0.00 $ 15.00 15.38% $ 55,513 1.10%(b) (0.14)% 61%
Period ended 12/31/98*... (0.02)(a) 13.00 30.16 24,521 1.10(b) 0.33 236
MANAGED SMALLCAP INDEX
PORTFOLIO
Six months ended 6/30/99
(unaudited)............ $ 0.00 $ 9.33 3.32% $ 6,796 0.75%(b) 0.15% 25%
Period ended 12/31/98*... (0.03)(a) 9.03 (9.35) 6,098 0.75(b) 0.49 44
DISCIPLINED EQUITY
PORTFOLIO
Six months ended 6/30/99
(unaudited)............ $ 0.00 $ 11.86 11.68% $ 6,620 1.00%(b)(c) 0.11% 39%
Period ended 12/31/98*... (0.02)(a) 10.62 6.44 4,796 1.00(b) 0.44 40
GROWTH & INCOME PORTFOLIO
Six months ended 6/30/99
(unaudited)............ $ 0.00 $ 13.93 14.56% $ 30,715 1.10%(b) 0.07% 45%
Period ended 12/31/98*... (0.02)(a) 12.16 21.80 15,576 1.10(b) 0.40 184
MANAGED INDEX PORTFOLIO
Six months ended 6/30/99
(unaudited)............ $ 0.00 $ 12.32 11.29% $ 14,900 0.79%(b) 0.67% 34%
Period ended 12/31/98*... (0.07)(a) 11.06 11.39 9,931 0.75(b) 1.04 16
VALUE PORTFOLIO
Six months ended 6/30/99
(unaudited)............ $ 0.00 $ 11.17 7.30% $ 8,685 1.00% 0.68% 33%
Period ended 12/31/98*... (0.04)(a) 10.41 4.48 5,645 1.00(b) 0.83 27
BALANCED ASSETS PORTFOLIO
Six months ended 6/30/99
(unaudited)............ $ 0.00 $ 10.12 4.55% $ 5,676 1.00%(b) 2.01% 38%
Period ended 12/31/98*... (0.10)(a) 9.68 (2.23) 3,823 1.00(b) 2.36 94
<CAPTION>
WITHOUT WAIVERS
AND/OR EXPENSE
REIMBURSEMENTS
---------------
RATIO OF
OPERATING
EXPENSES TO
AVERAGE
NET ASSETS++
---------------
<S> <C>
INTERNATIONAL GROWTH
PORTFOLIO
Six months ended 6/30/99
(unaudited)............ 3.21%
Period ended 12/31/98*... 4.09
FOCUSED EQUITIES
PORTFOLIO
Six months ended 6/30/99
(unaudited)............ 1.38%(b)
Period ended 12/31/98*... 1.94(b)
MANAGED SMALLCAP INDEX
PORTFOLIO
Six months ended 6/30/99
(unaudited)............ 1.97%(b)
Period ended 12/31/98*... 1.70(b)
DISCIPLINED EQUITY
PORTFOLIO
Six months ended 6/30/99
(unaudited)............ 2.02%(b)
Period ended 12/31/98*... 2.41(b)
GROWTH & INCOME PORTFOLIO
Six months ended 6/30/99
(unaudited)............ 1.50%(b)
Period ended 12/31/98*... 1.99(b)
MANAGED INDEX PORTFOLIO
Six months ended 6/30/99
(unaudited)............ 1.50%(b)
Period ended 12/31/98*... 1.62(b)
VALUE PORTFOLIO
Six months ended 6/30/99
(unaudited)............ 1.85%
Period ended 12/31/98*... 2.32(b)
BALANCED ASSETS PORTFOLIO
Six months ended 6/30/99
(unaudited)............ 2.18%(b)
Period ended 12/31/98*... 2.71(b)
</TABLE>
- -------------------
* Portfolio commenced operations on March 27, 1998. Shares were offered to
the public on April 6, 1998.
+ Total return represents aggregate total return for the period indicated and
assumes reinvestment of all distributions.
++ Annualized.
(a) Includes distributions in excess of net investment income or from net
realized gains which amounted to less than $0.01 per share.
(b) The effect of the fees reduced by credits allowed by the custodian on the
operating expense ratio, with and without waivers and/or expense
reimbursements, was less than 0.01%.
(c) The effect of interest expense on the operating expense ratio was less than
0.01%.
(d) Amount represents less than $0.01 per share.
64
<PAGE>
Nations Funds
NOTES TO FINANCIAL STATEMENTS JUNE 30, 1999 (UNAUDITED)
Nations Annuity Trust (the "Trust"), was organized as a Delaware business trust
on February 5, 1998 and commenced operations March 27, 1998. The Trust is
registered under the Investment Company Act of 1940, as amended, as an open-end
management investment company whose shares are offered in the following eight
portfolios: Nations International Growth Portfolio, Nations Marisco Focused
Equities Portfolio, Nations Managed SmallCap Index Portfolio, Nations
Disciplined Equity Portfolio, Nations Marisco Growth & Income Portfolio, Nations
Managed Index Portfolio, Nations Value Portfolio and Nations Balanced Assets
Portfolio (individually, a "Portfolio", collectively the "Portfolios"). The
Portfolios are made available only to variable annuity and variable life
separate accounts issued by participating life insurance companies. Each
Portfolio has distinct investment objectives as follows:
<TABLE>
<S> <C> <C>
International Growth -- Seeks long-term capital growth by investing primarily in
equity securities of companies domiciled in countries
outside of the United States and listed on major stock
exchanges primarily in Europe and the Pacific Basin.
Focused Equities -- Seeks long-term growth of capital.
Managed SmallCap Index -- Seeks over the long-term to provide a total return which
(gross of fees and expenses) exceeds the total return of
the Standard & Poor's SmallCap 600 Index.(1)
Disciplined Equity -- Seeks growth of capital by investing in companies that are
expected to produce significant increases in earnings per
share.
Growth & Income -- Seeks long-term growth of capital with a limited emphasis
on income.
Managed Index -- Seeks over the long-term, to provide a total return which
(gross of fees and expenses) exceeds the total return of
the Standard & Poor's 500 Composite Stock Price Index.(2)
Value -- Seeks growth of capital by investing in companies that are
believed to be undervalued.
Balanced Assets -- Seeks total return by investing in equity and fixed income
securities.
</TABLE>
(1) Standard & Poor's SmallCap 600 Index is a registered service mark of
Standard & Poor's Corporation, a division of The McGraw-Hill Companies, Inc.
("S&P").
(2) Standard & Poor's 500 is a registered service mark of S&P.
1. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies followed by the Portfolios in the preparation of
their financial statements.
65
<PAGE>
Nations Funds
NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
SECURITIES VALUATION - The Portfolio's securities that are traded on a
recognized stock exchange or on the NASDAQ system are valued at the last sales
price on the securities exchange or market on which such securities are
primarily traded. Securities traded only on over-the-counter markets (other than
on the NASDAQ system) are valued at the mean of the last bid and asked prices.
Certain securities may be valued by one or more principal market makers.
Restricted securities, securities for which market quotations are not readily
available, and certain other assets are valued by the investment adviser under
the supervision of the Board of Trustees. Short-term investments that mature in
60 days or less are valued at amortized cost.
FOREIGN CURRENCY TRANSLATION - The books and records of the Portfolios are
maintained in U.S. dollars. Foreign currencies, investments and other assets and
liabilities are translated into U.S. dollars at the exchange rates prevailing at
the end of the period. Purchases and sales of investment securities and income
and expenses are translated on the respective dates of such transactions. Net
realized foreign currency gains and losses resulting from changes in exchange
rates include foreign currency gains and losses between trade date and
settlement date of investment securities transactions, foreign currency
transactions and the difference between the amounts of interest and dividends
recorded on the books of a Portfolio and the amounts actually received. The
effects of changes in foreign currency exchange rates on investments in
securities are not segregated in the Statements of Operations from the effects
of changes in market prices of those securities, but are included with the net
realized and unrealized gain or loss on investment securities.
FORWARD FOREIGN CURRENCY TRANSACTIONS - Generally, a Portfolio may enter into
forward currency exchange contracts only under two circumstances: (i) when the
Portfolio enters into a contract for the purchase or sale of a security
denominated in a foreign currency, to "lock" in the U.S. exchange rate of the
transaction, with such period being a short-dated contract covering the period
between transaction date and settlement date; and (ii) when the investment
adviser or sub-adviser believes that the currency of a particular foreign
country may experience a substantial movement against the U.S. dollar.
Forward foreign currency contracts are valued at the forward rate and are
marked-to-market daily. The change in market value is recorded by the Portfolio
as an unrealized gain or loss. When the contract is closed or offset with the
same counterparty, the Portfolio records a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and the
value at the time it was closed or offset. Forward foreign currency contracts
will be used primarily to protect the Portfolios from adverse currency movements
and will generally not be entered into for terms greater than one year. The use
of forward foreign contracts does not eliminate fluctuations in the underlying
prices of the Portfolios' investment securities, however, it does establish a
rate of exchange that can be achieved in the future.
The use of forward contracts involves the risk that anticipated currency
movements will not be accurately predicted. A forward contract would limit the
risk of loss due to decline in the value of a particular currency, however, it
also would limit any potential gain that might result should the value of the
currency increase instead of decrease. These contracts may involve market risk
in excess of the unrealized gain or loss reflected in the Statements of Net
Assets. In addition, the Portfolio could be exposed to risks if counterparties
to the contract are unable to meet the terms of their contract. The counterparty
risk exposure is, therefore, closely monitored and contracts are only executed
with high credit quality financial institutions.
66
<PAGE>
Nations Funds
NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
SECURITIES TRANSACTIONS AND INVESTMENT INCOME - Securities transactions are
accounted for on a trade date basis. Realized gains and losses are computed
based on the specific identification of the securities sold. Interest income,
adjusted for accretion of discounts and amortization of premiums, is earned from
settlement date and is recorded on an accrual basis. Dividend income is recorded
on the ex-dividend date, except that certain dividends from foreign securities
are recorded as soon as the Portfolios are informed of the ex-dividend date.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - Distributions from net investment
income are declared and paid annually by the Portfolios. Each Portfolio will
distribute net realized capital gains (including net short-term capital gains),
annually after the fiscal year in which the capital gains were earned, unless
offset by any available capital loss carryforward. Income distributions and
capital gain distributions are determined in accordance with Federal income tax
regulations that may differ from generally accepted accounting principles.
FEDERAL INCOME TAX - Each Portfolio intends to continue to qualify as a
regulated investment company by complying with the requirements of the Internal
Revenue Code of 1986, as amended, applicable to regulated investment companies
and by distributing substantially all of its earnings to its shareholders.
Therefore, no Federal income or excise tax provision is applicable. The
Portfolios may be subject to foreign taxes on income, gains on investments or
currency repatriation, a portion of which may be recoverable. The Portfolios
will accrue such taxes and recoveries as applicable, based upon their current
interpretation of tax rules and regulations that exist in the markets in which
they invest.
EXPENSES - General expenses of the Trust are allocated to the Portfolios based
upon relative net assets or other expense allocation methodologies determined by
the nature of the expense. Expenses directly attributable to a Portfolio are
charged to such Portfolio's operations. Costs incurred by the portfolios in
connection with their organization have been deferred and are being amortized
from the commencement of operations on a straight-line basis over a period not
to exceed sixty months.
2. INVESTMENT ADVISORY FEE, SUB-ADVISORY FEE, ADMINISTRATION FEE AND RELATED
PARTY TRANSACTIONS
The Trust has, on behalf of the Portfolios, entered into an investment advisory
agreement (the "Investment Advisory Agreement") with NationsBanc Advisors, Inc.
("NBAI"), a wholly-owned subsidiary of NationsBank, N.A. ("NationsBank"), which
in turn is an indirect wholly-owned banking subsidiary of Bank of America
Corporation, a bank holding company organized as a Delaware corporation,
pursuant to which NBAI provides investment advisory services to the Portfolios.
Under the Investment Advisory Agreement,
67
<PAGE>
Nations Funds
NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
NBAI is entitled to receive an advisory fee, calculated daily on the Portfolio's
average daily net assets and payable monthly. Effective May 14, 1999, the
maximum advisory fee payable by the Portfolios decreased by 0.10% of the
Portfolios' average daily net assets. The table below shows the change in the
annual rate:
<TABLE>
<CAPTION>
CURRENT RATE RATE IN EFFECT
EFFECTIVE MAY 14, THROUGH MAY 13,
PORTFOLIO 1999 1999
<S> <C> <C>
- -----------------------------------------------------------------------------------------------
International Growth..................................... 0.80% 0.90%
Focused Equities......................................... 0.75% 0.85%
Managed SmallCap Index................................... 0.40% 0.50%
Disciplined Equity....................................... 0.65% 0.75%
Growth & Income.......................................... 0.75% 0.85%
Managed Index............................................ 0.40% 0.50%
Value.................................................... 0.65% 0.75%
Balanced Assets.......................................... 0.65% 0.75%
</TABLE>
The Trust has, on behalf of the Portfolios listed below, entered into a
sub-advisory agreement with NBAI and TradeStreet Investment Associates, Inc.
("TradeStreet"), a wholly-owned subsidiary of NationsBank, pursuant to which
TradeStreet is entitled to receive a fee from NBAI at the following annual rates
of each Portfolio's average daily net assets.
<TABLE>
<CAPTION>
PORTFOLIO ANNUAL RATE
<S> <C>
- -----------------------------------------------------------------------------------------------
Managed Index, Managed SmallCap Index......................................... 0.10%
Value, Balanced Assets, Disciplined Equity.................................... 0.25%
</TABLE>
The Trust has, on behalf of the Focused Equities and Growth & Income Portfolios,
entered into a sub-advisory agreement with NBAI and Marsico Capital Management,
LLC ("Marsico"), pursuant to which Marsico is entitled to receive a fee from
NBAI at the annual rate of 0.45% of each Portfolio's average daily net assets.
Marsico Management Holdings LLC, a wholly-owned subsidiary of NationsBank, owns
50% of the equity of Marsico.
The Trust has, on behalf of the International Growth Portfolio, entered into a
sub-advisory agreement with NBAI and Gartmore Global Partners ("Gartmore"),
pursuant to which Gartmore is entitled to receive a fee from NBAI at the annual
rate of 0.70% of the Portfolio's average daily net assets. Gartmore is a joint
venture structured as a general partnership between NB Partner Corp., a
wholly-owned subsidiary of NationsBank and Gartmore U.S. Ltd., an indirect
wholly-owned subsidiary of Gartmore Investment Management PLC ("Gartmore PLC"),
which is a United Kingdom ("U.K.") holding company for a leading U.K. based
international fund management group of companies. National Westminster Bank PLC
and its affiliated entities own 100% of the equity of Gartmore PLC.
Stephens Inc. ("Stephens") serves as the distributor of the Portfolios' shares
and co-administrator of the Portfolios. On January 4, 1999, NBAI began serving
as co-administrator of the Portfolios with Stephens.
68
<PAGE>
Nations Funds
NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
Under the new arrangement, Stephens and NBAI are entitled to receive a combined
fee, computed daily and paid monthly, at the annual rate of 0.12% of the average
daily net assets of the International Growth Portfolio and 0.13% of the average
daily net assets of all other Portfolios of the Trust. Effective May 14, 1999,
the combined co-administration fees payable by the Portfolios to NBAI and
Stephens increased by 0.10% of the Portfolios' average daily net assets.
Currently, NBAI and Stephens receive a combined fee, computed daily and paid
monthly, at the annual rate of 0.22% of the average daily net assets of the
International Growth Portfolio and 0.23% of the average daily net assets of all
other Portfolios.
Prior to January 4, 1999, First Data Investor Services Group, Inc. ("First
Data"), a wholly-owned subsidiary of First Data Corporation, served as
co-administrator of the Portfolios. Stephens and First Data were entitled to
receive a combined fee, computed daily and paid monthly, at the annual rate of
0.10% of each Portfolio's average daily net assets. Effective January 4, 1999,
The Bank of New York ("BNY") began serving as sub-administrator of the
Portfolios pursuant to an agreement with NBAI, and NBAI ceased to serve as
sub-administrator.
The investment adviser, sub-advisers and distributor may, from time to time,
voluntarily reduce their fees payable by each Portfolio. For the six months
ended June 30, 1999, the investment adviser agreed to voluntarily reimburse
expenses and/or waive its advisory fee to the extent that total expenses
(excluding shareholder servicing and distribution fees), as a percentage of the
respective Portfolio's average daily net assets, exceeded the following: 1.00%
for the Balanced Assets Portfolio, Disciplined Equity Portfolio and Value
Portfolio, 0.54% for the Managed Index Portfolio, 0.50% for the Managed SmallCap
Index Portfolio, 1.10% for the Focused Equities Portfolio and Growth & Income
Portfolio and 1.25% for the International Growth Portfolio.
BNY serves as custodian for the assets of all the Portfolios, except Nations
International Growth Portfolio. BNY, Belgium serves as custodian for the assets
of the International Growth Portfolio.
The Trust pays each unaffiliated Trustee an annual fee of $1,000 ($3,000 for the
Chairman of the Board), plus $500 per Portfolio and an additional $1,000 for
each in-person board meeting, and $500 for each telephonic board meeting
attended. The Trust also reimburses expenses incurred by each unaffiliated
Trustee in attending such meetings.
The Trust's eligible Trustees may participate in non-qualified deferred
compensation and retirement plans that may be terminated at any time. All
benefits provided under these plans are unfunded and any payment to plan
participants is paid solely out of the Portfolios' assets. Income earned on each
plan participant's deferral account is tied to the rate of return of the
eligible mutual funds selected by the participants or, if no funds are selected,
to the rate of return of Nations Treasury Fund, a portfolio of Nations Fund,
Inc., another registered investment company advised by NBAI. The expense for the
deferred compensation and retirement plans is included in "Trustees' fees and
expenses" in the Statements of Operations.
69
<PAGE>
Nations Funds
NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
The Portfolios have made daily investments of cash balances in Nations Cash
Reserves, a portfolio of Nations Institutional Reserves, pursuant to an
exemptive order received from the Securities and Exchange Commission. For the
six months ended June 30, 1999, the Portfolios earned $30,859 in the aggregate
from such investments, which is included in interest income.
3. SHAREHOLDER SERVICING AND DISTRIBUTION PLAN
The Portfolios have adopted a Shareholder Servicing and Distribution Plan (the
"Servicing and Distribution Plan") pursuant to Rule 12b-1 under the 1940 Act.
Payments under the Servicing and Distribution Plan are calculated daily and paid
monthly at a rate not exceeding 0.25% (on an annualized basis) of the average
daily net asset value of the Shares beneficially owned through the ownership of
Contracts by customers with whom the Selling and Servicing Agents have a
relationship. In the six months ended June 30, 1999, the distributor agreed to
voluntarily waive 100% of the Portfolios' shareholder servicing and distribution
fees except for the Managed Index Portfolio and the Managed SmallCap Index
Portfolio.
4. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities, excluding
long-term U.S. government securities and short-term investments, for the six
months ended June 30, 1999, were as follows:
<TABLE>
<CAPTION>
PORTFOLIO PURCHASES SALES
<S> <C> <C>
- -----------------------------------------------------------------------------------------
International Growth............................................ $ 808,357 $ 110,459
Focused Equities................................................ 43,478,664 21,402,782
Managed SmallCap Index.......................................... 2,147,274 1,516,086
Disciplined Equity.............................................. 3,268,026 2,083,050
Growth & Income................................................. 19,488,185 9,309,107
Managed Index................................................... 7,858,266 4,049,674
Value........................................................... 4,609,417 2,233,692
Balanced Assets................................................. 2,752,125 1,146,485
</TABLE>
The aggregate cost of purchases and proceeds from sales of long-term U.S.
government securities for the six months ended June 30, 1999, were as follows:
<TABLE>
<CAPTION>
PORTFOLIO PURCHASES SALES
<S> <C> <C>
- -------------------------------------------------------------------------------------------
Balanced Assets.................................................... $ 769,395 $ 518,700
</TABLE>
70
<PAGE>
Nations Funds
NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
5. SHARES OF BENEFICIAL INTEREST
At June 30, 1999, an unlimited number of shares of beneficial interest without
par value were authorized for the Trust. At June 30, 1999, Hartford Life
Insurance Company owned the following percentage of shares outstanding:
<TABLE>
<CAPTION>
PORTFOLIO % OF SHARES HELD
<S> <C> <C>
- -----------------------------------------------------------------------------------------------
International Growth....................................... 33%
Focused Equities........................................... 8
Managed SmallCap Index..................................... 69
Disciplined Equity......................................... 18
Growth & Income............................................ 14
Managed Index.............................................. 42
Value...................................................... 13
Balanced Assets............................................ 18
</TABLE>
6. LINE OF CREDIT
The Trust participates in an uncommitted line of credit provided by BNY under a
line of credit agreement (the "Agreement"). Advances under the Agreement are
taken primarily for temporary or emergency purposes, including the meeting of
redemption requests that otherwise might require the untimely disposition of
securities. Interest on borrowings is payable at the Federal Funds Rate plus
0.50% on an annualized basis. Each participating Portfolio maintains a ratio of
no less than 4 to 1 net assets (not including funds borrowed pursuant to the
Agreement) to aggregate amount of indebtedness pursuant to the Agreement.
At June 30, 1999, there were no loans outstanding under this Agreement. For the
six months ended June 30, 1999, borrowings by the Portfolios under the Agreement
were as follows:
<TABLE>
<CAPTION>
AVERAGE AMOUNT AVERAGE
PORTFOLIO OUTSTANDING INTEREST RATE
<S> <C> <C>
- ----------------------------------------------------------------------------------------------
Disciplined Equity...................................... $ 4,260 5.34%
</TABLE>
The average amount outstanding was calculated based on daily balances in the
period.
7. SECURITIES LENDING
Under an agreement with BNY, the Portfolios can lend their securities to
approved brokers, dealers and other financial institutions. Loans are
collateralized by cash, in an amount at least equal to the market value of the
securities loaned. The cash collateral received is invested in Nations Cash
Reserves, a portfolio of Nations Institutional Reserves. A portion of the income
generated by the investment of the collateral, net of any rebates paid by BNY to
borrowers, is remitted to BNY as lending agent, and the remainder is paid to the
Portfolio. Generally, in the event of counterparty default, the Portfolio has
the right to use the collateral to offset losses incurred. There would be a
potential loss to the Portfolio in the event the Portfolio is delayed or
prevented from exercising its right to dispose of the collateral. The Portfolio
bears risk of loss with respect to the investment of collateral.
71
<PAGE>
Nations Funds
NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
At June 30, 1999, the following Portfolios had securities on loan:
<TABLE>
<CAPTION>
MARKET VALUE OF MARKET VALUE
PORTFOLIO LOANED SECURITIES OF COLLATERAL
<S> <C> <C>
- ------------------------------------------------------------------------------------------
Focused Equities....................................... $ 688,944 $ 675,115
Growth & Income........................................ 839,581 845,072
Value.................................................. 34,547 33,442
</TABLE>
8. CAPITAL LOSS CARRYFORWARDS
As of December 31, 1998, the following Portfolios had available for Federal
income tax purposes unused capital losses as follows:
<TABLE>
<CAPTION>
EXPIRING IN
PORTFOLIO 2006
<S> <C>
- --------------------------------------------------------------------------------------------
International Growth......................................................... $ 81,556
Managed SmallCap Index....................................................... 136,811
Disciplined Equity........................................................... 192,249
Growth & Income.............................................................. 104,248
Managed Index................................................................ 36,966
Value........................................................................ 79,127
Balanced Assets.............................................................. 202,196
</TABLE>
Under current tax law, capital losses realized after October 31 may be deferred
and treated as occurring on the first day of the following fiscal year.
For the fiscal year ended December 31, 1998, the following Portfolios have
elected to defer losses occurring between November 1, 1998 and December 31, 1998
under these rules, as follows:
<TABLE>
<CAPTION>
CAPITAL CURRENCY
PORTFOLIO LOSSES DEFERRED LOSSES DEFERRED
<S> <C> <C>
- -----------------------------------------------------------------------------------------------
International Growth................................. $ 7,697 $ 52
Managed SmallCap Index............................... 119,465 --
Disciplined Equity................................... 28,038 --
Managed Index........................................ 39,467 --
Value................................................ 39,551 --
Balanced Assets...................................... 6,601 --
</TABLE>
Such deferred losses will be treated as arising on the first day of the fiscal
year ending December 31, 1999.
72
<PAGE>
Nations Funds
NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 1999 (UNAUDITED)
9. SUBSEQUENT EVENTS
In July of 1999, NationsBank merged into Bank of America, N.A. Effective on or
about September 1, 1999, it is anticipated that NBAI will change its name to
Banc of America Advisors, Inc. Neither of these changes is expected to alter the
level or quality of advisory or other services provided to the Trust.
The Board of Trustees of the Trust along with the Boards of Directors/Trustees
of the other open-end registered investment companies in the Nations Funds
family approved a new compensation structure for the Board members, effective
July 1, 1999. The new structure compensates the Board members for their services
to the Nations Funds family on a flat rate basis, and not on a per registered
investment company or per fund basis. As of August 17, 1999, the Nations Funds
family consisted of the series or portfolios of Nations Fund Trust, Nations
Fund, Inc., Nations Fund Portfolios, Inc., Nations Reserves, Nations Annuity
Trust, Nations LifeGoal Funds, Inc. and Nations Master Investment Trust.
Under the new structure, each Board member would receive a base retainer fee in
the amount of $65,000 per year, in addition to $5,000 for each in-person meeting
attended and $1,000 for each telephonic meeting attended. Each Board member
would be compensated only for a maximum of six in-person meetings per calendar
year. In addition, the Chairman of the Boards would receive an additional fee of
20% of the base retainer fee; the Chairman of the Audit Committee would receive
an additional fee of 10% of the base retainer fee. The members of the Nominating
Committee will receive additional compensation at the rate of $1,000 per meeting
attended.
73
<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>
[LOGO]
Nations Variable Annuity is a flexible premium variable annuity issued by
Hartford Life Insurance Company, Simsbury, CT (countrywide: HLVA94;
FL: HLVA94FL; NY: HLVACRT94NY and NC: HLVA94NC). Nations Variable Annuity is
underwritten by Hartford Securities Distribution Company, Inc.
The Hartford Life Insurance Companies
P.O. Box 5085 BULK RATE
Hartford, CT 06102-5085 U.S. POSTAGE
PAID
PERMIT #20
HOLLISTON, MA
01746
NATANN-2-99-1041 Printed in U.S.A. (c) 1998 The Hartford, Hartford, CT 06115
