<PAGE>
SOLD THROUGH:
BANC OF AMERICA
INVESTMENT SERVICES, INC.-TM-
AND ITS SUBSIDIARIES AND AGENCIES
NATIONS VARIABLE ANNUITY
A TAX-DEFERRED VARIABLE ANNUITY
SEMI-ANNUAL REPORT
JUNE 30, 2000
[HARTFORD LIFE LOGO]
Issued by: Hartford Life Insurance Company
<PAGE>
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-- Annuities are insurance products and are not insured by the FDIC or any
other federal entity.
[LOGO]
-- Annuities are not deposits or other obligations of, and are not
underwritten or guaranteed by Bank of America Corporation or any
of its affiliates. [LOGO]
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of principal. The market value of the investment may fluctuate,
causing possible loss of the principal amount invested.
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of any banking service or activity.
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not be purchased from Bank of America Corporation, its subsidiaries or
affiliates, or any particular unaffiliated third party.
-- Neither Bank or America Corporation not its affiliates are obligated to
provide benefits under any annuity contract.
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Neither Hartford Life Insurance Company, Banc or America Investment Services,
Inc., nor their agents or affiliated provide financial, tax, legal or
accounting advice.
We recommend that you consult with your professional advisers in these areas
before taking action.
Annuity products are offered through: Banc or America Investment Services,
Inc. in AZ, AR, CA, FL, GA, ID, IL, IA, KS, MO, NC, OR, SC, TN, VA, and WA;
Banc of America Agency, LLC in DC and MD; Banc of America Agency or Nevada,
Inc. in NV; BA Agency, Inc. in NM; Banc or America Agency of Texas, Inc. in
TX; and IFMG of Oklahoma, Inc. in OK.
<PAGE>
HARTFORD SMALL COMPANY HLS FUND
PORTFOLIO MANAGER
[PHOTO]
STEVEN C. ANGELI, CFA
Vice President
Wellington Management Company, LLP
PERFORMANCE OVERVIEW
8/9/96 - 6/30/00
GROWTH OF A $10,000 INVESTMENT.
[LINE CHART]
<TABLE>
<S> <C>
Small Company Fund IB $24,160
Russell 2000 $16,608
</TABLE>
RETURNS as of 6/30/00
<TABLE>
<CAPTION>
1 YEAR SINCE INCEPT.*
------ -------------
<S> <C> <C>
SMALL COMPANY IB 40.57% 25.43%
RUSSELL 2000 14.32% 13.92%
</TABLE>
*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.
HOW DID THE FUND PERFORM?
Hartford Small Company HLS Fund returned 3.5% for the 6-month period ending June
30, 2000, underperforming the Lipper Small Cap VA-UF Average 7.1% but
outperforming the Russell 2000 Index 3.0% over the period.
WHY DID THE FUND PERFORM THIS WAY?
The first 6-months of this year have been extremely volatile for investors.
Until halfway through March it looked as though we were headed for a down first
quarter in the market in spite of excellent earnings prospects and continued low
inflation. The only game in town seemed to be technology with little or no
attention paid to any other sector of the market. While we had been "cautious
about excessive and unprecedented valuations," the market initially pushed
higher even into the headwind of a tight monetary policy. But in April,
investors woke up to the reality of rising rates, escalating inflation and the
bursting technology bubble that sent stocks spiraling downward.
While we reduced the Fund's exposure by trimming positions in the technology
sector, we could not escape the market's turmoil. The Portfolio was
negatively impacted by a correction in technology stocks combined with a few
fundamental disappointments. During the correction we took advantage of
cheaper valuations by increasing or establishing positions in fundamentally
sound companies. The Portfolio benefited from an overweight position in the
energy sector resulting from a sustainable rise in oil and natural gas
prices. Our underweight position in retail, relative to the Russell 2000,
benefited the Portfolio as the Fed's rate increases had a damaging effect on
consumer spending and retail stocks.
WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 2000?
We believe the major rate increases are history, that consumer spending should
stabilize, and most retail stocks are at attractive entry points. In such an
environment we would expect consistent growth companies found in such sectors as
consumer staples, financial services and technology to perform quite well.
Cyclicals, both consumer and industrial, may continue to struggle with little
pricing power and continued excess capacity. We remain cautiously optimistic
about the outlook for the equity markets.
<PAGE>
HARTFORD CAPITAL APPRECIATION HLS FUND
PORTFOLIO MANAGER
[PHOTO]
SAUL J. PANNELL, CFA
Senior Vice President and Partner
Wellington Management Company, LLP
PERFORMANCE OVERVIEW
1/1/89 - 6/30/00
GROWTH OF A $10,000 INVESTMENT.
[LINE CHART]
<TABLE>
<S> <C>
Capital Appreciation Fund IB $63,062
S&P 500 $51,394
</TABLE>
RETURNS as of 6/30/00
<TABLE>
<CAPTION>
1 YEAR 5 YEAR* 10 YEAR*
------ ------- --------
<S> <C> <C> <C>
CAPITAL APPRECIATION IB 32.10% 23.51% 20.22%
S&P 500 7.24% 23.80% 17.79%
</TABLE>
*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.
HOW DID THE FUND PERFORM?
The Hartford Capital Appreciation HLS Fund returned 12.6% for the 6-month
period ending June 30, 2000, versus a return of 3.2% for the Lipper Capital
Appreciation Average.
WHY DID THE FUND PERFORM THIS WAY?
The first half of 2000 has proven to be interesting for investors in equities
as the market rotated out of what had been working in the past into some
laggard sectors. We used the overall turmoil in the market to upgrade the
portfolio, which led to strong returns in June. The Fund's performance was
helped primarily by a diverse group of companies within several macroeconomic
sectors.
WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 2000?
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 will continue to roam off the beaten path where we believe
the most upside potential resides. This approach, if executed well, should
provide positive absolute and relative results over a reasonable time frame.
<PAGE>
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND
PORTFOLIO MANAGER
[PHOTO]
TROND SKRAMSTAD
Senior Vice President and Partner
Wellington Management Company, LLP
PERFORMANCE OVERVIEW
7/2/90 - 6/30/00
GROWTH OF A $10,000 INVESTMENT.
[LINE CHART]
<TABLE>
<S> <C>
International Opportunities Fund IB $23,723
EAFE GDP $24,758
</TABLE>
RETURNS as of 6/30/00
<TABLE>
<CAPTION>
1 YEAR 5 YEAR* SINCE INCEPT.*
------ ------- -------------
<S> <C> <C> <C>
INT'L OPPORT. IB 18.87% 12.99% 9.02%
EAFE GDP** 19.76% 14.28% 9.49%
</TABLE>
*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
HOW DID THE FUND PERFORM?
Hartford International Opportunities HLS Fund returned -5.7% for the first half
of 2000 versus a return of -3.5% for the Lipper VA-UF International Average over
the same time period.
WHY DID THE FUND PERFORM THIS WAY?
We believe that global economic growth will slow down somewhat as financial
markets are more interested in the directions and rate of change in the economy
rather than its level. Throughout the first half of 2000, we increased our
position in the UK, which is now close to showing an upward inflection point in
its economy. We also consistently added to our holdings in technology and health
care. In the beginning of 2000, we were more optimistic about the prospects of
the Japanese economy and had increased our exposure in that region. However, we
have become a bit more cautious in this area and have reduced our weightings
accordingly.
WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 2000?
As global economic growth is expected to slow from its current pace, we view
health care, as the largest sector overweight, a good defensive play during the
next several months as valuations are still attractive relative to expected
earnings growth rates. In contrast, we expect economically sensitive consumer
areas to fare poorly as economic growth slows, and we thus have our largest
underweight in the consumer discretionary sector. In Europe, the continent is
experiencing a volatile market environment and we increased our exposure to the
UK market, as we believe it to be less exposed to this current environment. In
addition, we expect UK profits to grow better relative to most other markets
over the next year.
<PAGE>
HARTFORD STOCK HLS FUND
PORTFOLIO MANAGER
[PHOTO]
RAND L. ALEXANDER, CFA
Senior Vice President and Partner
Wellington Management Company, LLP
PERFORMANCE OVERVIEW
1/1/89 - 6/30/00
GROWTH OF A $10,000 INVESTMENT.
[LINE CHART]
<TABLE>
<S> <C>
Stock Fund IB $48,109
S&P 500 $51,394
</TABLE>
RETURNS as of 6/30/00
<TABLE>
<CAPTION>
1 YEAR 5 YEAR* 10 YEAR*
------ ------- -------
<S> <C> <C> <C>
STOCK IB 4.74% 23.79% 17.01%
S&P 500 7.24% 23.80% 17.79%
</TABLE>
*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.
HOW DID THE FUND PERFORM?
The Hartford Stock HLS Fund returned -1.1% for the 6-month period ended June 30,
2000. The Fund's return underperformed the S&P 500 Index return of -0.4% and the
Lipper Growth Average return of 3.2%.
WHY DID THE FUND PERFORM THIS WAY?
Federal Reserve tightening has been a source of volatility and recurrent
corrections in the US equity market over the last year. Many equity sectors
underperformed during this period with the exception of health care, energy and
technology. The Fund's performance was enhanced through accurate sector
weighting, overweights in health care and energy, and above average stock
selection, particularly in the finance sector. Finally, decreased exposure to
the consumer discretionary spending sector in line with the slowing economy and
increased exposure to consumer staples, financials and technology benefited the
portfolio.
WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 2000?
With expectations for a soft economic landing and continued S&P 500 profit
growth, our outlook on the market overall remains positive. The slowing economy,
and possible end of Federal interest rate hikes bode well for interest
sensitive stock and consistent growth companies. Continued robust growth in
technology investment has favorable consequences for the US economy that will be
enduring.
<PAGE>
HARTFORD DIVIDEND & GROWTH HLS FUND
PORTFOLIO MANAGER
LAURIE A. GABRIEL, CFA
Senior Vice President and Managing Partner
Wellington Management Company, LLP
PERFORMANCE OVERVIEW
3/9/94 - 6/30/00
GROWTH OF A $10,000 INVESTMENT.
[LINE CHART]
<TABLE>
<S> <C>
Dividend & Growth Fund IB $26,909
S&P 500 $35,200
</TABLE>
RETURNS as of 6/30/00
<TABLE>
<CAPTION>
1 YEAR 5 YEAR* SINCE INCEPT.*
------ ------- -------------
<S> <C> <C> <C>
DIVIDEND & GROWTH IB -3.43% 17.92% 16.97%
S&P 500 7.24% 23.80% 22.05%
</TABLE>
*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.
HOW DID THE FUND PERFORM?
Hartford Dividend and Growth HLS Fund returned -1.6% for the first half of 2000.
The Fund's return exceeded that of the Lipper Equity Income VA-UF Average of
-1.7% over the same time period.
WHY DID THE FUND PERFORM THIS WAY?
Federal Reserve tightening has been a source of volatility and recurrent
corrections in the US equity market over the last year with continued robust
growth in technology investment. In line with our dividend-oriented value style,
we continue to be underweight in the information technology sector. Strong stock
selection, particularly in the health care sector, was the key to outperforming
the benchmark for the first half of 2000.
WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 2000?
Going forward, we expect a deceleration in economic growth and an end to
interest rate tightening. Strong technology spending and gains in productivity
will continue to provide support in the US, moderating the impact of such rate
increases. We continue to search for investment opportunities that produce a
high level of current income coupled with growth of capital to maintain
reasonable investment risk.
<PAGE>
HARTFORD ADVISERS HLS FUND
PORTFOLIO MANAGER
[PHOTO]
RAND L. ALEXANDER, CFA
Senior Vice President and Partner
Wellington Management Company, LLP
[PHOTO]
PAUL D. KAPLAN
Senior Vice President and Partner
Wellington Management Company, LLP
PERFORMANCE OVERVIEW
1/1/89 - 6/30/00
GROWTH OF A $10,000 INVESTMENT.
[LINE CHART]
<TABLE>
<S> <C>
Advisers Fund IB $35,415
Lehman Govt/Corp $21,271
S&P 500 $51,394
</TABLE>
RETURNS as of 6/30/00
<TABLE>
<CAPTION>
1 YEAR 5 YEAR* 10 YEAR*
------ ------- -------
<S> <C> <C> <C>
ADVISERS IB 3.79% 17.21% 13.48%
S&P 500 7.24% 23.80% 17.79%
LEHMAN GOVT/CORP 4.32% 6.10% 7.84%
</TABLE>
*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.
HOW DID THE FUND PERFORM?
The Hartford Advisers HLS Fund returned 0.4%, underperforming the Lipper
Flexible VA- UF Average return of 1.9%. Since inception (7/31/1984), the Fund
has returned 14.5% versus the 12.8% return of its Lipper peer group.
WHY DID THE FUND PERFORM THIS WAY?
Relative performance has been below the historical trend reflecting substantial
turmoil in the equity markets. Interest rate fears and continuing valuation
concerns, particularly in growth stocks, hampered most equity markets. The
equity portion of the Fund's performance benefited from sector weightings and
stock selection, through increased exposure to consumer staples, finan-cials and
technology. In the bond market, we continued to find bond yields attractive
given our outlook for economic growth and inflation.
WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 2000?
Federal Reserve tightening has been a source of volatility and recurrent
corrections in the US equity market over the last year. The rise in short-term
interest rates that began one year ago is expected to bring some slowing in US
economic activity during the remainder of 2000. We believe that the Fed rate
cycle and the prospect for stable interest rates will bring improved equity
market performance in the year ahead. From a cyclical standpoint, the end of Fed
tightening, slower US growth and receding inflation pressures should also
provide a positive underpinning to the US bond market.
<PAGE>
HARTFORD BOND HLS FUND
PORTFOLIO MANAGER
[PHOTO]
ALISON D. GRANGER, CFA
Senior Vice President Hartford Investment
Management Company
PERFORMANCE OVERVIEW
1/1/89 - 6/30/00
GROWTH OF A $10,000 INVESTMENT.
[LINE CHART]
<TABLE>
<S> <C>
Bond Fund IB $20,534
Lehman Govt/Corp $21,271
</TABLE>
RETURNS as of 6/30/00
<TABLE>
<CAPTION>
1 YEAR 5 YEAR* 10 YEAR*
------ ------- -------
<S> <C> <C> <C>
BOND IB 5.22% 6.19% 7.46%
LEHMAN GOVT/CORP 4.32% 6.10% 7.84%
</TABLE>
*Annualized Returns
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE BOND HLS FUND CLASS IB
SHARES. (THE RETURNS INCLUDE THE FUND LEVEL EXPENS-ES, 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.
HOW DID THE FUND PERFORM?
The Hartford Bond HLS Fund Class IA shares placed in the 7th percentile of its
Lipper peer group for the six-months ended June 2000, producing a total return
of 4.82% versus the 3.08% return of the Lipper Corporate Debt "BBB" rated
Variable Annuity Underlying Fund Universe.
WHY DID THE FUND PERFORM THIS WAY
There were three major factors that contributed to the Fund's performance in
the first half of the year. The first factor was the Fund's position in U.S.
Treasury securities where we continued to benefit from positive supply/demand
factors. Our holdings in Treasury-Inflation-Protected Securities also
performed well during the early spring. The second contributor to positive
performance was the Fund's overweight in mortgage passthroughs, particularly
in GNMA issues. This sector provided a positive contribution relative to its
peer group that we enjoyed throughout the first half of the year. Lastly, we
were allowed to invest in non-US denominated securities as of May 1, 2000. We
quickly established the Fund's positions in German and French government
short-term obligations denominated in Euro (established in mid-May) which
contributed to Fund returns as the Euro rallied off its lows relative to the
dollar.
WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 2000?
Given that the Fed has raised interest rates six times in the last 13 months,
we expect to see signs of slowdown in the economy over the coming months. We
are not convinced, however, that the Fed is entirely done with its rate
increases and will remain watchful for signs that indicate the need to slow
the economy further.
Looking ahead, we expect to maintain an overweight in mortgage passthrough
securities for two reasons: the large percentage of the market which is
trading at a discount to par value and the favorable supply/demand balance
which our traders forecast. We favor GNMA issues, as they carry the full
faith and credit of the U.S. government.
While Treasuries do not yield much relative to other fixed income alternatives,
we continue to see opportunity in the Treasury market securities due to the U.S.
government's positive fiscal position and continued focus on debt reduction. We
also expect to be active investors in Treasury-Inflation-Protected Securities,
as we believe that these securities offer attractive real return potential
relative to other U.S. fixed income alternatives. Although yields on corporate
issues are historically high relative to Treasuries, we remain cautious and
selective in our holdings. On average, we favor investment grade over high
yield issues, as we believe that the yield compensation for investing in
fundamentally stable high yield issues is insufficient relative to that offered
in higher-quality issues. We will monitor market offerings for attractive
purchase candidates among stable, large investment-grade companies. Among
specific industries, we favor energy and the acute care providers within the
healthcare sector.
<PAGE>
NATIONS INTERNATIONAL GROWTH PORTFOLIO
PORTFOLIO MANAGER
BRIAN O'NEILL,
Gartmore Global Partners
PERFORMANCE OVERVIEW
3/27/98 - 6/30/00
GROWTH OF A $10,000 INVESTMENT.
[LINE CHART]
<TABLE>
<S> <C>
Nations International Growth $14,483
MSCI EAFE $12,802
</TABLE>
RETURNS as of 6/30/00
<TABLE>
<CAPTION>
1 YEAR SINCE INCEPT.*
------ -------------
<S> <C> <C>
NATIONS INTERNATIONAL GROWTH 31.99% 17.78%
MSCI EAFE 17.16% 11.37%
</TABLE>
*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.
HOW DID THE PORTFOLIO PERFORM?
The Portfolio declined 1.8% in the first six months of 2000, compared to a 4.1%
decrease in the MSCI EAFE Index(1) (the "Index") in U.S. dollar terms, thereby
outperforming the Index by 2.3%.
WHY DID THE PORTFOLIO PERFORM THIS WAY?(2)
The outperformance was almost entirely attributable to stock selection. A mix
of pharmaceuticals, telecom, technology and financial stocks primarily in
Europe registered strong rises in comparison to the Index. These stocks were
identified using the Portfolio's "bottom-up" selection process. For example,
Elan Corporation, the Ireland-based drug delivery company which has expanded
into the U.S. market, rose by 72.2% in U.S. dollar terms relative to the
Index. The stock rose on the back of plans to become a full-fledged
pharmaceutical company, as well as the likely approval by the U.S. Food &
Drug Administration of its painkiller Ziconotide. Amvescap, the U.K.-based
asset management company, outperformed the Index by 45.0% in U.S. dollar
terms, buoyed by rising stock markets, a strong 401(k) market in the U.S. and
its value as a potential takeover candidate. Canada's Nortel Networks
Corporation, a leading manufacturer of optical fiber equipment for the
telecom industry, outperformed the Index by 44.6% in U.S. dollar terms.
Sweden's LM Ericsson AB continued to outperform (+30.3% in U.S. dollar terms
relative to the Index) on the strength of its leading position in
third-generation mobile telecom infrastructure equipment. The strong showing
of these and other select growth stocks during the first half more than
offset a weak showing from other companies. Notably, telecom companies such
as U.K.-based Vodafone AirTouch plc fell relative to the Index, partly
because it is still digesting recent acquisitions and because of concerns
that it paid too much for its new mobile licenses in the U.K. Spain's
Telefonica SA also suffered a setback on share flow-back stemming from
recent Latin American acquisitions, as well as questions about its
acquisition policy.
WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 2000?(3)
Looking forward, we think economic growth outside the U.S. will continue to
bolster the performance of international equity markets. Valuations are
comparatively attractive and currencies have recently appreciated to the
advantage of U.S. investors in international markets as the U.S. economy slows
and interest rates level off. The recent volatility of technology and telecom
stocks does not alter our view that these sectors collectively offer opportunity
for substantial earnings growth over the longer term. However, we are focused
on companies with strong franchises, earnings track records and forward-looking
management offering the best prospect for unexpected earnings growth, which we
believe is the key to share price outperformance. The Portfolio remains focused
in Europe, although we continue to seek growth opportunities in Japan, the
Pacific ex-Japan region and emerging markets.
INVESTMENTS 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.
(1) 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.
(2) Portfolio characteristics are subject to change and may not be
representative of current characteristics.
(3) 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
PERFORMANCE OVERVIEW
3/27/98 - 6/30/00
GROWTH OF A $10,000 INVESTMENT.
[LINE CHART]
<TABLE>
<S> <C>
Nations Marsico Focused Equities $18,473
S&P 500 $13,601
</TABLE>
RETURNS as of 6/30/00
<TABLE>
<CAPTION>
1 YEAR SINCE INCEPT.*
------ -------------
<S> <C> <C>
NATIONS MARSICO FOCUSED EQUITIES 23.01% 31.15%
S&P 500 7.24% 14.64%
</TABLE>
*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.
HOW DID THE PORTFOLIO PERFORM?
The first half of 2000 was one of the most volatile in history. During the
first quarter, nearly half of all trading days resulted in a price change of
at least 1% in the Standard & Poor's 500 Composite Stock Price (S&P 500)
Index.(1) Volatility continued in the second quarter with the S&P 500 posting
only its third negative quarterly return in the past five years. Nations
Marsico Focused Equities Portfolio declined 7.41% during the first half of
2000. The S&P 500 declined 0.42% for the same period of time.
WHY DID THE PORTFOLIO PERFORM THIS WAY?(2)
The Portfolio was adversely affected going into 2000 by its large technology
weighting. The market in the first half was primarily affected, in our opinion,
by macroeconomic factors--such as the outlook for U.S. economic growth, interest
rates and inflation--as opposed to company-specific earnings-related
information. The Federal Reserve Board (the "Fed") raised interest rates in the
second quarter by 0.50%, its sixth increase over the past 12 months. This higher
interest rate environment, we believe, had an adverse effect on high P/E stocks
like the technology names we owned at the beginning of the year.
Portfolio holdings which performed poorly during the first half included
Lucent Technologies, UAL Corporation, QUALCOMM, 3Com Corporation and Sony
Corporation. All of these stocks have been sold from the Portfolio. On the
positive side, positions in EMC Corporation, Corning Inc., Oracle Corporation
and Four Seasons Hotels Inc. produced strong gains.
In late May, we began to implement several changes to the Portfolio. These were
geared at increasing sector and industry diversification, with an eye toward
positioning the Portfolio for the possibility of a slower-growth economic
environment. The Portfolio's overall weighting in technology has been reduced,
although it remains well represented in this sector. Portfolio assets have been
allocated to areas that we believe are attractive in terms of valuation and
earnings growth potential. These include, but are not limited to, financial
services and retail companies.
(1) The Standard & Poor's 500 Composite Stock Price Index (S&P 500) is an
unmanaged index of 500 widely held common stocks. It is unavailable for
investment.
(2) Portfolio characteristics are subject to change and may not be
representative of current characterisitics.
<PAGE>
NATIONS MARSICO FOCUSED EQUITIES PORTFOLIO
WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 2000?(3)
We continue to believe that the long-term prospects for U.S. equity markets
remain quite strong. The basis for this opinion, as highlighted in previous
shareholder communications, is our positive macroeconomic outlook. This
outlook is anchored by a number of premises. In our view, the U.S. is in a
longer-term lower interest rate and lower inflationary environment. While
interest rates have no doubt been volatile, and generally biased higher so
far this year due to the Fed's tightening policy, in our opinion there is
evidence that the Fed has been successful at slowing U.S. economic growth.
Inflation, despite an increase in oil prices, has not increased dramatically;
prices for raw materials such as lumber and gypsum have either remained
relatively stable or declined somewhat. Neither automobile sales nor housing
starts have shown year-over-year growth in the past year. At this time, based
on this evidence, we believe that future interest rate increases by the Fed
are unlikely. Therefore, our view is that the interest rate environment
should improve going forward. That, in our opinion, augurs well for company
valuations and earnings. We believe the continued high federal budget
surpluses (which thus far have primarily been earmarked for reducing
government debt) are a positive factor. We continue to feel that productivity
gains and enhanced communications have created a more efficient economy and
should help keep inflation relatively low.
(3) The outlook for this Portfolio may differ from that presented for other
Nations Funds Portfolios.
<PAGE>
NATIONS SMALLCAP INDEX PORTFOLIO
PORTFOLIO MANAGER
Quantitative Strategies Team,
Banc of America Capital Management, Inc.
PERFORMANCE OVERVIEW
3/27/98 - 6/30/00
GROWTH OF A $10,000 INVESTMENT.
[LINE CHART]
<TABLE>
<S> <C>
Nations SmallCap Index $10,285
S&P 600 $10,676
</TABLE>
RETURNS as of 6/30/00
<TABLE>
<CAPTION>
1 YEAR SINCE INCEPT.*
------ -------------
<S> <C> <C>
NATIONS SMALLCAP INDEX 9.81% 1.25%
S&P 600 14.40% 2.95%
</TABLE>
*Annualized Returns
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN NATIONS 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.
HOW DID THE PORTFOLIO PERFORM?
During the first half of 2000, the Portfolio advanced 7.12% versus the Standard
& Poor's SmallCap 600 (S&P 600) Index(1) return of 6.89%. Over the
six months, the Portfolio's consumer cyclicals, technology and basic industry
holdings performed well while those in healthcare, capital goods and
communications proved problematic.(2)
WHY DID THE PORTFOLIO PERFORM THIS WAY?(3)
In terms of market performance, the negative impacts of higher energy prices
and short-term interest rates finally surfaced in waning economic strength,
earnings pressure and stock price volatility. The best performing S&P 600
sectors during the first six months - health care (+55%) and energy (+41%)
were characterized by more stable earnings. The worst performing sectors -
communications (-14%) and basic industry (-9%) were characterized by economic
sensitivity or high price earnings multiples.
Technology proved to be the strongest contributor to performance in the first
half of the year. Within consumer cyclicals, the Portfolio's housing and
furnishing industry stocks performed well, providing essentially a flat
return, while the holdings in the Index declined over 10%. Within basic
industry, the specialty chemicals holdings in the Index declined close to 10%
while the Portfolio's stocks declined about 6%.
The Portfolio's capital goods holdings suffered as the Portfolio's
diversified manufacturing and conglomerate stocks failed to keep pace with
the Index's sector performance. Healthcare proved the most difficult sector
of the Portfolio as a somewhat underweighted posture towards pharmaceutical
companies hurt when the group advanced over 70%.
WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 2000?(4)
Looking forward, if the Federal Reserve Board ends its tightening process soon
enough to achieve the more moderate growth we expect, stocks should perform
better in the second half of 2000. As such, we look for the S&P 600 to achieve
roughly a 9% return in terms of total return for the year. Expect technology and
pharmaceuticals to lead the rally, as concerns about the extent of any economic
slowdown may persist. Financial services should also generally improve with the
anticipated leveling off in interest rates.
BECAUSE SMALL COMPANIES HAVE NARROWER MARKETS AND LIMITED FINANCIAL RESOURCES
AND THEIR STOCKS ARE NOT AS WIDELY TRADED AS LARGE COMPANY STOCKS, THEIR SHARE
PRICE MAY BE MORE VOLATILE.
(1) The Standard & Poor's SmallCap 600 Index is an unmanaged
market-capitalization-weighted index consisting of 600 common stocks. It is
unavailable for investment.
(2) On May 1, 2000, the Portfolio changed its investment objective to one that
seeks investment results that (before fees and expenses) correspond to the
total return of the S&P 600. Its principal investment objectives and name
were also changed at the same time.
(3) The Portfolio characteristics are subject to change and may not be
representative of current characteristics.
(4) The outlook for this Portfolio may differ from that presented for other
Nations Funds Portfolios.
<PAGE>
NATIONS AGGRESSIVE GROWTH PORTFOLIO
PORTFOLIO MANAGER
Growth Strategies Team,
Banc of America Capital Management, Inc.
PERFORMANCE OVERVIEW
3/27/98 - 6/30/00
GROWTH OF A $10,000 INVESTMENT.
[LINE CHART]
<TABLE>
<S> <C>
Nations Aggressive Growth $13,652
Russell 1000 Growth $10,959
</TABLE>
RETURNS as of 6/30/00
<TABLE>
<CAPTION>
1 YEAR SINCE INCEPT.*
------ -------------
<S> <C> <C>
NATIONS AGGRESSIVE GROWTH -7.81% 4.13%
RUSSELL 1000 GROWTH 9.24% 14.83%
</TABLE>
*Annualized Returns
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN NATIONS AGGRESSIVE 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.
HOW DID THE PORTFOLIO PERFORM?
For the first half of 2000, Nations Aggressive Growth Portfolio returned -5.97%,
and its return for the second quarter of 2000 was -0.62%. Throughout this year's
first half, the Portfolio underwent a significant transition in its investment
style. Prior to May 1, 2000, the Portfolio was structured with a bias toward
value-oriented companies. However, since that time, the Portfolio has been
structured as an aggressive growth offering that is benchmarked against the
Russell 1000 Growth Index.(1) (The official date of the change in investment
objective, investment style and name change from Disciplined Equity to
Aggressive Growth was May 1, 2000, the Russell 1000 Growth Index's return for
the first half and second quarter 2000 were 4.23% and -2.70%, respectively).
The relative underperformance of value-oriented stocks compared to
growth-oriented stocks continued from 1999 to early March of 2000, which
negatively impacted the Portfolio's performance during the first two months of
this year. Additionally, as the Portfolio's transition to an aggressive growth
portfolio began, many growth-oriented sectors (particularly technology)
experienced a material correction, which further hindered the Portfolio's
performance.
WHY DID THE PORTFOLIO PERFORM THIS WAY?(2)
Throughout the Portfolio's transition, we strived to gradually rebalance the
Portfolio toward sector weightings that are in line with those of the
benchmark index. Accordingly, we favored those sectors offering higher growth
potential--e.g., technology and health care--while reducing the Portfolio's
exposure to industries with slower growth characteristics--e.g., energy and
financial services. Also, we reduced or eliminated the Portfolio's exposure
to individual stocks where we felt the weighting was too high, or where the
growth prospects of a particular firm were not as favorable as those of
another company. The Portfolio's second quarter performance relative to its
new benchmark showed marked improvement. We attribute its outperformance
mainly to its gradual migration to an aggressive growth offering, and by
materially increasing its overall diversification. We now feel the transition
phase is complete, and look forward to seeking those companies that we
believe have superior growth characteristics and competitive positions
relative to their peers.
(1) The Russell 1000 Growth Index is an unmanaged index which measures the
performance of the largest U.S. companies based on total market
capitalization, with high price-to-book ratios and forecasted growth
relative to the Russell 1000 index as a whole.
(2) Portfolio characteristics are subject to change and may not be
representative of current characteristics.
<PAGE>
NATIONS AGGRESSIVE GROWTH PORTFOLIO
WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 2000?(3)
For the balance of this year investors are likely to remain more discriminating,
especially when buying growth stocks and considering Initial Public Offerings
(IPOs) of such companies. Specifically, investors have become more sensitive to
metrics such as real cash flow and earnings when buying stocks, compared to only
the prospect of reaching such milestones. Additionally, the equity markets have
undergone a broadening in terms of money flow, as other sectors, such as
healthcare, have assumed a leadership role. In other words, this has not been a
market solely driven by technology stocks, and we anticipate this market
broadening to continue. Going forward, we feel investors will be focused on the
Federal Reserve Board's (the "Fed") view of the economy at its next session in
August, and will react negatively toward any company that issues profit
warnings. Firms that do not report financial results in line with the market's
expectations are likely to undergo severe declines in their share prices. Such
profit reactions are likely to be the primary catalyst for near-term market
volatility. Our view is that the Fed is likely finished with its tightening
stance and that its recent actions to slow the economy will lead successfully
to a "soft landing." This should provide a favorable backdrop for the financial
markets throughout this year's second half. During this time, investors will
likely gravitate toward those industries offering superior growth potential.
Within the Portfolio we will continue to emphasize companies having
above-average growth prospects. Consequently, we will continue to seek out
companies in sectors exhibiting accelerating earnings and revenue growth
relative to their peers. Other vital traits we will look for include smart
management teams, unique business models and strong unit-volume growth.
(3) The outlook for the 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
PERFORMANCE OVERVIEW
3/27/98 - 6/30/00
GROWTH OF A $10,000 INVESTMENT.
[LINE CHART]
<TABLE>
<S> <C>
Nations Marsico Growth & Income $18,300
S&P 500 $13,601
</TABLE>
RETURNS as of 6/30/00
<TABLE>
<CAPTION>
1 YEAR SINCE INCEPT.*
------ -------------
<S> <C> <C>
NATIONS MARSICO GROWTH & INCOME 31.16% 30.61%
S&P 500 7.24% 14.64%
</TABLE>
*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.
HOW DID THE PORTFOLIO PERFORM?
The first half of 2000 was one of the most volatile in history. During the first
quarter, nearly half of all trading days resulted in a price change of at least
1% in the Standard & Poor's 500 Composite Stock Price (S&P 500) Index.(1)
Volatility continued in the second quarter with the S&P 500 posting only its
third negative quarterly return in the past five years. Nations Marsico Growth &
Income Portfolio declined 3.13% during the first half of 2000. The S&P 500
declined 0.42% for the same period of time.
WHY DID THE PORTFOLIO PERFORM THIS WAY?(2)
The Portfolio was adversely affected going into 2000 by its large technology
weighting. The market in the first half was primarily affected, in our opinion,
by macroeconomic factors--such as the outlook for U.S. economic growth, interest
rates and inflation--as opposed to company-specific earnings-related
information. The Federal Reserve Board (the "Fed") raised interest rates in the
second quarter by 0.50%, its sixth increase over the past 12 months. This higher
interest environment, we believe, had an adverse effect on high P/E stocks like
the technology names we owned at the beginning of the year.
Portfolio holdings which performed poorly during the first half included Lucent
Technologies, UAL Corporation, QUALCOMM, and 3Com Corporation. All of these
stocks have been sold from the Portfolio. On the positive side, positions in EMC
Corporation, Corning Inc., Oracle Corporation and Four Seasons Hotel Inc.
produced strong gains.
In late May, we began to implement several changes to the Portfolio. These were
geared at increasing sector and industry diversification, with an eye toward
positioning the Portfolio for the possibility of a slower-growth economic
environment. The Portfolio's overall weighting in technology has been reduced,
although it remains well represented in this sector. Portfolio assets have been
allocated to areas, we believe, are attractive in terms of valuation and
earnings growth potential. These include, but are not limited to, financial
services and retail companies.
(1) The Standard & Poor's 500 Composite Stock Price Index is an unmanaged index
of 500 widely held common stocks. It is unavailable for investment.
(2) Portfolio characteristics are subject to change and may not be
representative of current characteristics.
<PAGE>
NATIONS MARSICO GROWTH & INCOME PORTFOLIO
WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 2000?(3)
We continue to believe that the long-term prospects for U.S. equity markets
remain quite strong. The basis for this opinion, as highlighted in previous
shareholder communications, is our positive macroeconomic outlook. This outlook
is anchored by a number of premises. In our view, the U.S. is in a longer-term
lower interest rate and lower inflationary environment. While interest rates
have no doubt been volatile, and generally biased higher so far this year due to
the Fed's tightening policy, in our opinion there is evidence that the Fed has
been successful at slowing U.S. economic growth. Inflation, despite an increase
in oil prices, has not increased dramatically; prices for raw materials such as
lumber and gypsum have either remained relatively stable or declined somewhat.
Neither automobile sales nor housing starts have shown year-over-year growth in
the past year. At this time, based on this evidence, we believe that future
interest rate increases by the Fed are unlikely. Therefore, our view is that the
interest rate environment should improve going forward. That, in our opinion,
augurs well for company valuations and earnings. We believe the continued
high federal budget surpluses (which thus far have primarily been earmarked
for reducing government debt) are a positive factor. We continue to feel that
productivity gains and enhanced communications have created a more efficient
economy and should help keep inflation relatively low.
(3) The outlook for this Portfolio may differ from that presented for other
Nations Funds Portfolios.
<PAGE>
NATIONS MANAGED INDEX PORTFOLIO
PORTFOLIO MANAGER
Quantitative Strategies Team,
Banc of America Capital Management, Inc.
PERFORMANCE OVERVIEW
3/27/98 - 6/30/00
GROWTH OF A $10,000 INVESTMENT.
[LINE CHART]
<TABLE>
<S> <C>
Nations Managed Index $13,033
S&P 500 $13,601
</TABLE>
RETURNS as of 6/30/00
<TABLE>
<CAPTION>
1 YEAR SINCE INCEPT.*
------ -------------
<S> <C> <C>
NATIONS MANAGED INDEX 5.13% 12.42%
S&P 500 7.24% 14.64%
</TABLE>
*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.
HOW DID THE PORTFOLIO PERFORM?
During the first six months of the year, the Portfolio declined 1.07% versus the
Standard & Poor's 500 Composite Stock Price (S&P 500) Index(1) decline of 0.42%.
Over this period, the Portfolio's consumer staples, capital goods and finance
holdings performed well while those in retailing, energy and technology proved
problematic.
WHY DID THE PORTFOLIO PERFORM THIS WAY?(2)
In terms of market performance, the negative impacts of higher energy prices
and short-term interest rates finally surfaced in waning economic strength,
earnings pressure and stock price volatility. The best performing S&P 500
sectors during the first six months of 2000, -- health care (+25%), energy
(+8%) and utilities (+7%) were characterized by more stable earnings. The
worst performing sectors -- communications (-10%), retailing (-15%), consumer
cyclicals (-19%) and basic materials (-26%) were characterized by economic
sensitivity or high price earnings multiples.
The Portfolio's performance the first half of 2000 benefited from its
underweighted position in consumer staples companies such as Proctor & Gamble
Company and Gillette Company since both companies posted disappointing
results. Capital goods performance was enhanced by avoiding Honeywell
International Inc. and Raytheon Corporation while overweighting a rebounding
Tyco International Ltd. The performance of the Portfolio's financial holdings
was enhanced by stock selection within the commercial bank industry group.
Leading contributors were Mellon Financial Corporation, Bank One Corporation,
Golden West Financial Corporation and Citigroup Inc.
The Portfolio's retail holdings suffered as fears of softening economic
conditions negatively impacted Federated Department Stores, Inc. and Target
Corporation. A somewhat underweighted position in the natural gas pipeline
industry took a toll on the Portfolio's returns as gas prices were surprisingly
strong in the first half of the year. The Portfolio's technology holdings
trailed the Index sector during the six month period. An underweighted posture
with respect to semiconductor holdings was notable as the group soared well over
50%. Software company Citrix Systems, Inc. plummeted more than 65% on
deteriorating fundamentals and computer hardware producer Gateway declined while
underweighted Hewlett-Packard Company soared.
WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 2000?(3)
Looking forward, if the Federal Reserve Board ends its tightening process soon
enough to achieve the more moderate growth we expect, stocks should perform
better in the second half of 2000. As such, we look for the S&P 500 to achieve
roughly a 9% return in terms of total return for the year. We expect technology
and pharmaceuticals to lead the rally, as concerns about the extent of any
economic slowdown may persist. Financial services should also generally improve
with the anticipated leveling off in interest rates.
(1) The Standard & Poor's 500 Composite Stock Price Index is an unmanaged index
of 500 widely held common stocks. It is unavailable for investment.
(2) Portfolio characteristics are subject to change and may not be
representative of current characteristics.
(3) The outlook for this Portfolio may differ from that presented for other
Nations Funds Portfolios.
<PAGE>
NATIONS VALUE PORTFOLIO
PORTFOLIO MANAGER
Value Strategies Team,
Banc of America Capital Management, Inc.
PERFORMANCE OVERVIEW
3/27/98 - 6/30/00
GROWTH OF A $10,000 INVESTMENT.
[LINE CHART]
<TABLE>
<S> <C>
Nations Value $10,366
S&P 500 $13,601
</TABLE>
RETURNS as of 6/30/00
<TABLE>
<CAPTION>
1 YEAR SINCE INCEPT.*
------ -------------
<S> <C> <C>
NATIONS VALUE -7.53% 1.60%
S&P 500 7.24% 14.64%
</TABLE>
*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.
HOW DID THE PORTFOLIO PERFORM?
The equity market was most influenced by the Federal Reserve Board (the "Fed")
watchers during the first half of the year. Each major piece of economic data
was scrutinized for any clues of Federal Open Market Committee actions.
Investors were divided in their concerns over whether the economy would be
slowing too much to sustain future earnings growth or whether it was speeding
along too fast and would ignite inflationary fires and lead to still more
interest rate increases. Either case did not give investors much to cheer about
in the first half of the year. The Standard & Poor's 500 Composite Stock Price
(S&P 500) Index(1) declined 0.42%, and the value oriented S&P/BARRA Value Index
declined 4.07%(2). The sectors that declined the most during the period were
closely tied to the economic cycle--consumer cyclicals, basic materials and
capital goods. The communication services sector felt the strong force of
deregulated competition with limited pricing power and also declined more than
the market.
Within this environment, Nations Value Portfolio, which has a cyclical bias,
declined 3.2%. This performance was better than the comparable S&P/BARRA
Value Index, but less than the S&P 500 which has a heavier growth stock tilt
with less cyclical stock exposure. The Portfolio's technology sector
performed quite well, and the decision to reduce the sector weighting
relative to the market in order to lock in the gains of many highly valued
technology stocks is expected to enhance performance going forward. Consumer
staples companies were also positive contributors to performance providing
positive returns compared to negative returns for the comparable S&P 500
sector. The overweight in the energy sector also added performance due mainly
to the Portfolio's exposure to natural gas stocks(3).
WHY DID THE PORTFOLIO PERFORM THIS WAY?
Cyclical stocks came under enormous pressure during the period, as investors
sought the safety of more stable earnings companies. Investors' concerns that
higher interest rates would stifle economic growth or at least reduce consumer
confidence, were cited as reasons. The retail and auto groups were hit
particularly hard, as were many commodity companies in the basic materials
sector.
As many "dot com" issues have come unglued (many with no earnings to report
or much less than expected), we could be witnessing the end of the unbridled
enthusiasm for these companies experienced over the last several years in the
markets. From a value perspective, this is not all bad, as it may encourage
investors to place a higher value on traditional "old economy" companies,
with solid fundamentals, selling at greatly reduced valuations.
(1) The Standard & Poor's 500 Composite Stock Price Index is an unmanaged index
of 500 widely held common stocks. It is unavailable for investment.
(2) The S&P BARRA/Value Index is a subset of stocks in the S&P 500 Index with
low price-to-book ratios relative to the S&P 500 as a whole. It is unmanaged
and unavailable for investment.
(3) Portfolio characteristics are subject to change and may not be
representative of current characteristics.
<PAGE>
NATIONS VALUE PORTFOLIO
WHAT IS YOUR OUTLOOK FOR THE REMAINDER OF 2000?(4)
Earlier in the year, we thought the tremendous increase in technology stocks
would dissipate over the coming year and we began to see evidence of this,
particularly in April and May. We continue to underweight the technology sector,
relative to the S&P 500 weighting, due to what we believe are high valuations
relative to technology companies' ability to maintain high sustainable earnings
growth rates.
Second, we have overweighted the finance sector. When viewed from a demographic,
long-term perspective, or from a "bottom-up" valuation approach, this group is
undervalued, in our opinion, and should respond well once interest rates
stabilize.
Third, we expect improvement in the economies of our global trading partners,
Europe, Latin America and Asia (ex-Japan) in the year 2000 and beyond. This
should enhance profits of commodity companies such as those in basic materials
and energy. Multi-national conglomerates should generate strong earnings gains
as they are able to benefit from positive economic globalization trends in
third-world countries as well. The Portfolio has a major presence in these
areas.
The beneficiaries of the productivity enhancements in telecommunications and
technology are many old, traditional "value" companies. Their competitive
advantages include brand recognition, global marketing capabilities and
financial strength. Yet, we believe many of these stocks are now selling
substantially below their intrinsic value given their potential earnings
power and dividend-paying capabilities.
Finally, from a volatility perspective, the Portfolio should hold up well
relative to the market during a major market decline, given its more
conservative structure, higher yield, lower average price to earnings multiple
and lower beta. We believe that economic growth will slow during the second half
of this year to a more sustainable level and that inflation will remain subdued.
This should be a positive environment for owning value equities.
(4) The outlook for this Portfolio may differ from that presented for other
Nations Funds Portfolios.
<PAGE>
NATIONS BALANCED ASSETS PORTFOLIO
PORTFOLIO MANAGER
Investment Strategies Team,
Banc of America Capital Management, Inc.
PERFORMANCE OVERVIEW
3/27/98 - 6/30/00
GROWTH OF A $10,000 INVESTMENT.
[LINE CHART]
<TABLE>
<S> <C>
Nations Balanced Assets $ 9,836
S&P 500 $13,601
Lehman Aggregate Bond Index $11,037
</TABLE>
RETURNS as of 6/30/00
<TABLE>
<CAPTION>
1 YEAR SINCE INCEPT.*
------ -------------
<S> <C> <C>
NATIONS BALANCED ASSETS -3.78% -0.73%
S&P 500 7.24% 14.64%
LEHMAN AGGREGATE BOND INDEX 4.56% 4.48%
</TABLE>
*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.
HOW DID THE PORTFOLIO PERFORM?
For the period ended June 30, 2000, the Portfolio provided shareholders with a
return of -3.2%. The Portfolio underperformed the S&P 500 Composite Stock Price
(S&P 500) Index(1) which declined 0.42%, but outperformed the value oriented
S & P/BARRA Value Index(2) which returned -4.07%. The Portfolio's asset
allocation is slightly biased to equities. At period end, equities made up 53%
of the Portfolio with 45% of assets invested in bonds and the remaining 2%
invested in cash. The bond allocation contributed positively to performance as
it outperformed its benchmark in a difficult market environment.
WHY DID THE PORTFOLIO PERFORM THIS WAY?(3)
The first half of 2000 was one of the most volatile periods in recent history.
The Federal Reserve Open Market Committee ("FOMC") continued to tighten interest
rates citing outsized growth, tight labor markets and their perpetual fear of
inflation.
The equity market was most influenced by Federal Reserve Board ("Fed") watchers
during the first half of the year. Each major piece of economic data was
scrutinized for any clues to future FOMC actions. Investors were divided in
their concerns over whether the economy would be slowed too much to sustain
future earnings growth or whether it was speeding along too fast and would
ignite inflationary fires and lead to still more interest rate increases. Either
case did not give investors much to cheer about in the first half of the year.
Cyclical stocks came under enormous pressure during the period, as investors
sought the safety of more stable earnings companies. Investors concerns over
higher interest rates that could stifle economic growth, or, at least reduce
consumer confidence were cited as reasons. The retail and auto groups were hit
particularly hard, as were many commodity companies in the basic materials
sector.
The Portfolio's technology holdings performed quite well, and the decision to
reduce the sector weighting relative to the market in order to lock in the gains
of many highly valued technology stocks is expected to enhance performance going
forward. Consumer staples companies were also positive contributors to the
Portfolio's performance, providing positive returns, compared to negative
returns for the comparable S & P 500 sector. The Portfolio's overweight
position in the energy sector added to performance due mainly to the position
in natural gas stocks.
(1) The Standard & Poor's 500 Composite Stock Price Index is an unmanaged index
of 500 widely held common stocks. It is unavailable for investment.
(2) The S&P 500/BARRA Value Index is a market-capitalization weighted index
comprised of a subset of stocks of the Standard & Poor's 500 Index with low
price-to-book ratios relative to the S&P 500 as a whole. It is unmanaged and
not available for investment.
(3) Portfolio characteristics are subject to change and may not be
representative of current characteristics.
<PAGE>
NATIONS BALANCED ASSETS PORTFOLIO
Fixed income markets were extremely volatile during the reporting period.
Counteracting the increase in short rates; the U.S. Treasury announced their
intention to repurchase long-term U.S. Treasury securities with the proceeds
from the budget surplus. The Federal Funds Rate, which began the year at
5.50%, increased 100 basis points (100 basis points is equivalent to 1%) to
end the first half of the year at 6.50% while the 30-year U.S. Treasury bond
yield actually declined to yield only 5.90%.
This difficult environment created opportunities for the bond portion of the
Portfolio. At the beginning of the year, the Portfolio's bond holdings consisted
solely of U.S. Treasury securities. As spreads widened, we were able to
purchase corporate, mortgage and other fixed income sectors at very attractive
prices. These purchases enabled us to increase the yield of the portfolio. Since
the first quarter, spreads have tightened substantially. The strong performance
of the bond portion of the Portfolio is attributable to the additional yield as
well as to the tightening of spreads.
WHAT IS YOUR OUTLOOK FOR THE REST OF 2000?(4)
Looking forward to the second half of 2000, we believe that economic growth will
continue to show signs of moderation and that inflation will remain subdued.
This scenario should be a positive environment for the Portfolio.
In the bond portion of the Portfolio, our strategy over the second half will be
to reduce our exposure to U.S. Treasury securities and increase our exposure to
AAA commercial and agency mortgage-backed securities. Despite the recent
volatility, we continue to believe that higher yielding sectors generally
produce higher total returns than U.S. Treasury securities over the long term.
On the equity side, we continue to underweight the technology sector, relative
to the S & P 500 weighting, due to what we believe are high valuations relative
to technology companies' ability to maintain high sustainable earnings growth
rates.
Second, we have overweighted the finance sector. When viewed from a
demographic, long-term perspective, or from a "bottom up" valuation approach,
this group is undervalued, in our opinion, and should respond well once interest
rates stabilize.
Third, we expect improvement in the economies of our global trading partners,
Europe, Latin America and Asia (ex-Japan), in the year 2000 and beyond. This
should enhance profits of commodity companies such as those in basic materials
and energy. Multinational conglomerates should generate strong earnings gains as
they are able to benefit from positive economic globalization trends in
third-world countries as well. The Portfolio has a major presence in these
areas.
(4) The outlook for this Portfolio may differ from that for other Nations Funds
Portfolios.
<PAGE>
NATIONS BALANCED ASSETS PORTFOLIO
As the enthusiasm for highly priced technology companies may be dissipating
somewhat, the beneficiaries of the productivity enhancements in
telecommunications and technology are many old, traditional value companies.
Their competitive advantages include brand recognition, global marketing
capabilities and financial strength. Yet, many of these stocks are now
selling substantially below what we believe their intrinsic value to be given
their potential earnings power and dividend-paying capabilities.
Finally, from a volatility perspective, the Portfolio should hold up well
relative to the market during a major market decline, given its more
conservative structure, higher yield, lower average price to earnings
multiple and lower beta.
<PAGE>
Nations Funds
NATIONS ANNUITY TRUST -- INTERNATIONAL GROWTH PORTFOLIO
STATEMENT OF NET ASSETS JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
-----------------------------------------------------------------------
COMMON STOCKS - 90.9%
AUSTRALIA - 12.1%
15,000 Australia and New Zealand
Banking Group................. $ 115,364
3,000 Brambles Industries Ltd....... 92,464
40,000 Cable and Wireless Optus+..... 119,597
70,000 Cellnet Telecommunications.... 100,865
5,281 Commonwealth Bank of
Australia..................... 87,795
150,000 ISIS Communications+.......... 75,648
4,000 Lend Lease Corporation........ 51,172
15,000 News Corporation.............. 207,133
150,000 Novus Petroleum Limited+...... 158,592
100,000 Sausage Software Limited+..... 151,777
25,000 Southern Pacific Petroleum+... 28,518
70,000 TAB Queensland+............... 85,861
25,000 Woolworths Ltd................ 92,534
-----------
1,367,320
-----------
BRAZIL - 0.7%
3,351 Tele Norte Leste
Participacoes, ADR............ 79,167
-----------
CANADA - 3.3%
5,000 Canada Life Financial
Corporation................... 101,572
2,000 Nortel Networks Corporation... 138,625
6,000 Suncor Energy, Inc............ 138,490
-----------
378,687
-----------
FINLAND - 3.8%
4,000 Nokia Oyj..................... 204,926
5,000 Sonera YHTYMA Oyj............. 228,840
-----------
433,766
-----------
FRANCE - 8.3%
2,000 Accor SA...................... 82,297
1,275 Aventis....................... 93,428
541 Axa........................... 85,560
700 Canal Plus.................... 118,087
2,000 Carrefour SA.................. 137,257
200 L'Oreal....................... 173,871
2,000 Sanofi-Synthelabo............. 95,658
1,000 Total Fina.................... 153,935
-----------
940,093
-----------
GERMANY - 5.9%
5,000 Bayersche Motoren Werke AG.... 152,880
700 Deutsch Pfandbrief-Und
Hypothekenbank AG
(DePfa-Bank).................. 70,785
2,000 Henkel Kgaa NON VTG PRF....... 115,978
690 SAP AG........................ 103,503
<CAPTION>
SHARES VALUE
<C> <S> <C>
-----------------------------------------------------------------------
GERMANY (CONTINUED)
1,500 Siemens AG.................... $ 226,446
-----------
669,592
-----------
HONG KONG - 0.4%
62 i-CABLE Communications
Limited+...................... 24
25,000 Wharf (Holdings) Limited...... 44,739
-----------
44,763
-----------
IRELAND - 4.6%
6,044 Bank of Ireland............... 37,974
8,956 Bank of Ireland............... 56,656
5,000 CRH plc Ord................... 90,578
10,000 Dcc ord....................... 88,853
5,000 Elan Corporation, ADR+........ 242,187
-----------
516,248
-----------
ITALY - 3.9%
10,000 ENI SpA (REGD)................ 57,989
1,500 Gucci Group NV................ 141,690
25,000 Olivetti SpA.................. 91,297
15,000 Telecom Italia Mobile......... 153,839
-----------
444,815
-----------
JAPAN - 13.6%
7,000 Daiwa Securities.............. 92,623
20 DDI Corporation............... 192,808
10 East Japan Railway............ 58,220
4,000 Fujitsu....................... 138,746
6,000 Hitachi....................... 86,763
1,000 Kyocera Corporation........... 170,030
4,000 Matsushita Electric
Industrial.................... 103,965
500 Nintendo Company, Ltd......... 87,519
10 Nippon Telegraph & Telephone
Company....................... 133,264
4,000 Sharp Corporation............. 70,885
2,000 Taiyo Yuden Company........... 125,514
1,000 Toppan Printing Company....... 10,604
1,000 Trend Micro, Inc.+............ 165,400
2,000 Yamanouchi Pharmaceutical..... 109,447
-----------
1,545,788
-----------
MEXICO - 2.8%
15,000 Grupo Carso SA de CV.......... 105,148
2,000 Grupo Televisa, GDR+.......... 137,875
3,000 Walmart de Mexico SA de CV,
ADR+.......................... 70,404
-----------
313,427
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
1
<PAGE>
Nations Funds
NATIONS ANNUITY TRUST -- INTERNATIONAL GROWTH PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
-----------------------------------------------------------------------
NETHERLANDS - 2.9%
3,556 ASM Lithography Holding NV+... $ 153,447
3,000 Getronics NV.................. 46,439
1,600 Koninklijke Kpn NV............ 71,849
2,000 United Pan-Europe
Communications NV+............ 52,506
-----------
324,241
-----------
PORTUGAL - 0.7%
7,500 Portugal Telecom SA (REGD).... 84,539
-----------
SINGAPORE - 0.7%
5,815 DBS Group Holding Ltd......... 74,663
-----------
SOUTH AFRICA - 0.4%
35,000 Sanlam........................ 41,350
-----------
SPAIN - 2.1%
1,500 Gas Natural SDG, SA........... 27,030
5,000 Repsol SA..................... 99,923
5,000 Telefonica SA+................ 107,831
-----------
234,784
-----------
SWEDEN - 3.6%
5,000 Atlas Copco AB, Series "A".... 96,910
10,000 LM Ericsson AB................ 198,950
2,000 SBS Broadcasting SA+.......... 109,000
-----------
404,860
-----------
SWITZERLAND - 5.4%
25 Kudelski SA+.................. 315,479
100 Nestle SA (REGD).............. 200,787
60 Novartis AG (REGD)............ 95,345
-----------
611,611
-----------
UNITED KINGDOM - 15.7%
7,500 Amvescap...................... 120,345
24,000 Azlan Group Ord.+............. 57,766
10,000 Bank of Scotland Ord.......... 95,141
20,000 BG Group plc.................. 129,276
15,000 BP Amoco...................... 143,960
4,500 Glaxo Wellcome Ord............ 131,266
20,000 Granada Group plc............. 199,818
5,000 Logica........................ 118,377
15,000 Sage Group plc................ 121,480
35,000 Securicor plc................. 72,321
5,000 Smithkline Beecham Ord........ 65,471
20,000 Thus plc+..................... 83,863
25,000 Unilever...................... 151,378
29,482 Vodafone AirTouch plc......... 119,160
<CAPTION>
SHARES VALUE
<C> <S> <C>
-----------------------------------------------------------------------
UNITED KINGDOM (CONTINUED)
12,000 WPP Group Ord................. $ 175,296
-----------
1,784,918
-----------
TOTAL COMMON STOCKS
(Cost $9,265,330)........... 10,294,632
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
TOTAL INVESTMENTS
(Cost $9,265,330*).......... 90.9%
OTHER ASSETS AND
LIABILITIES (NET)........... 9.1%
Cash..........................................
Receivable for investment securities sold.....
Receivable for Fund shares sold...............
Dividends receivable..........................
Receivable from investment advisor............
Unamortized organization costs................
Administration fee payable....................
Payable for investment securities purchased...
Accrued Trustees' fees and expenses...........
Accrued expenses and other liabilities........
TOTAL OTHER ASSETS AND LIABILITIES (NET)......
NET ASSETS.................... 100.0%
===========
NET ASSETS CONSIST OF:
Undistributed net investment income...........
Accumulated net realized gain on investments
sold........................................
Net unrealized appreciation of investments....
Paid-in capital...............................
NET ASSETS....................................
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SHARE ($11,322,506 DIVIDED BY 803,247
shares outstanding).........................
</TABLE>
-----------------
<TABLE>
<S> <C>
* Federal Income Tax Information: Net unrealized
appreciation of $1,029,302 on investment securities was
comprised of gross appreciation of $1,554,337 and gross
depreciation of $525,035 for Federal income tax purposes.
At June 30, 2000, the aggregate cost of securities for
Federal income tax purposes was $9,265,330.
+ Non-income producing security.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
2
<PAGE>
Nations Funds
NATIONS ANNUITY TRUST -- INTERNATIONAL GROWTH PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
At June 30, 2000, sector diversification was as follows:
<TABLE>
<CAPTION>
% OF
SECTOR DIVERSIFICATION NET ASSETS VALUE
<S> <C> <C>
------------------------------------------------------------------------------------------
COMMON STOCKS:
Telecommunications services................................. 15.6% $ 1,771,869
Pharmaceuticals............................................. 7.4 832,802
Diversified electronics..................................... 6.8 768,671
Intergrated oil............................................. 6.6 752,091
Broadcasting and cable...................................... 6.2 700,249
Diversified manufacturing................................... 5.2 587,805
Software.................................................... 4.8 542,160
Commercial banking.......................................... 4.8 538,378
Networking and telecommunications equipment................. 3.5 395,341
Food products............................................... 3.1 352,165
Consumer services........................................... 2.4 272,139
Lodging and recreation...................................... 2.3 255,677
Conglomerates............................................... 2.1 238,740
Food and drug stores........................................ 2.0 229,791
Insurance................................................... 2.0 228,482
Investment services......................................... 1.9 212,968
Publishing and advertising.................................. 1.6 185,900
Computer services........................................... 1.5 164,816
Exploration and production.................................. 1.4 158,592
Semiconductors.............................................. 1.4 153,447
Other....................................................... 8.3 952,549
----- -----------
TOTAL COMMON STOCKS......................................... 90.9 10,294,632
----- -----------
TOTAL INVESTMENTS........................................... 90.9 10,294,632
OTHER ASSETS AND LIABILITIES (NET).......................... 9.1 1,027,874
----- -----------
NET ASSETS.................................................. 100.0% $11,322,506
===== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
3
<PAGE>
Nations Funds
NATIONS ANNUITY TRUST -- MARSICO FOCUSED EQUITIES PORTFOLIO
STATEMENT OF NET ASSETS JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
-------------------------------------------------------------------
COMMON STOCKS - 88.4%
AEROSPACE AND DEFENSE -
1.4%
36,947 General Dynamics
Corporation.............. $ 1,930,481
------------
AUTOMOTIVE - 0.1%
2,987 Ford Motor Company....... 128,441
391 Visteon Corporation+..... 4,741
------------
133,182
------------
BEVERAGES - 0.8%
19,742 Coca-Cola Company........ 1,133,931
------------
BROADCASTING AND CABLE -
4.2%
18,898 Clear Channel
Communications, Inc.+.... 1,417,350
13,707 Comcast Corporation,
Class A+................. 555,134
51,770 Time Warner Inc.......... 3,934,520
------------
5,907,004
------------
COMMERCIAL BANKING - 0.4%
14,277 Wells Fargo Company...... 553,234
------------
COMPUTER SERVICES - 2.1%
56,840 America Online Inc.+..... 2,998,310
------------
COMPUTERS AND OFFICE
EQUIPMENT - 8.4%
106,152 EMC Corporation+......... 8,167,070
41,481 Sun
Microsystems, Inc.+...... 3,772,178
------------
11,939,248
------------
CONSUMER SERVICES - 1.0%
43,658 Costco Wholesale
Corporation.............. 1,440,714
------------
DEPARTMENT AND DISCOUNT
STORES - 3.2%
79,311 Wal-Mart Stores, Inc..... 4,570,296
------------
DIVERSIFIED
MANUFACTURING - 9.3%
34,898 Corning Inc.............. 9,418,098
48,383 General Electric
Company.................. 2,564,299
22,162 Kimberly-Clark
Corporation.............. 1,271,545
------------
13,253,942
------------
<CAPTION>
SHARES VALUE
<C> <S> <C>
-------------------------------------------------------------------
FINANCE -
MISCELLANEOUS - 11.1%
78,963 Citigroup Inc............ $ 4,757,520
82,618 Fannie Mae............... 4,311,626
23,282 Merrill Lynch & Company
Inc...................... 2,677,430
50,310 Morgan Stanley Dean
Witter & Company......... 4,188,308
------------
15,934,884
------------
INTERGRATED OIL - 1.7%
43,218 BP Amoco plc, ADR........ 2,444,518
------------
LODGING AND RECREATION -
1.7%
38,855 Four Seasons Hotels
Inc...................... 2,416,295
------------
MEDICAL DEVICES AND
SUPPLIES - 7.1%
58,394 Genentech, Inc.+......... 10,043,768
------------
NETWORKING AND
TELECOMMUNICATIONS
EQUIPMENT - 2.8%
62,357 Cisco Systems, Inc.+..... 3,963,567
------------
OILFIELD SERVICES - 1.0%
31,427 Halliburton Company...... 1,482,962
------------
SEMICONDUCTORS - 5.9%
53,349 Applied
Materials, Inc.+......... 4,834,753
51,321 Texas Instruments Inc.... 3,525,111
------------
8,359,864
------------
SOFTWARE - 9.5%
30,994 Adobe Systems Inc........ 4,029,220
17,675 Microsoft Corporation+... 1,414,000
96,626 Oracle Corporation+...... 8,122,622
------------
13,565,842
------------
SPECIALTY STORES - 6.1%
112,568 Home Depot Inc........... 5,621,365
44,788 Tiffany & Company........ 3,023,190
------------
8,644,555
------------
TELECOMMUNICATIONS
SERVICES - 7.0%
34,372 General Motors
Corporation, Class H+.... 3,016,143
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
4
<PAGE>
Nations Funds
NATIONS ANNUITY TRUST -- MARSICO FOCUSED EQUITIES PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
-------------------------------------------------------------------
TELECOMMUNICATIONS
SERVICES (CONTINUED)
59,644 Nortel Networks
Corporation.............. $ 4,070,703
68,293 Vodafone AirTouch plc,
ADR...................... 2,829,891
------------
9,916,737
------------
UTILITIES - MISCELLANEOUS - 3.6%
54,477 Ericsson (L.M.) Telephone
Company, Class B, ADR.... 1,089,540
67,610 Sprint Corporation (PCS
Group)+.................. 4,022,795
------------
5,112,335
------------
TOTAL COMMON STOCKS
(Cost $98,848,885)..... 125,745,669
------------
<CAPTION>
PRINCIPAL
AMOUNT
------
<C> <S> <C>
U.S. GOVERNMENT AND
AGENCY
OBLIGATIONS - 11.2%
(Cost $15,994,311)
FEDERAL HOME LOAN BANK
(FHLB) - 11.2%
$16,000,000 Discount note 07/03/00... 15,991,467
------------
<CAPTION>
SHARES
------
<C> <S> <C>
INVESTMENT COMPANIES -
2.4%
(Cost $3,351,546)
3,351,546 Nations Cash Reserves#... 3,351,546
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
------
<C> <S> <C>
TOTAL INVESTMENTS
(Cost $118,194,742*).... 102.0%
</TABLE>
<TABLE>
<CAPTION>
VALUE
----------------------------------------------------------
<C> <S> <C> <C>
OTHER ASSETS AND
LIABILITIES (NET).... (2.0)%
Cash............................ $ 71
Receivable for investment
securities sold............... 16,454,797
Receivable for Fund shares
sold.......................... 48,798
Dividends receivable............ 37,001
Interest receivable............. 693
Unamortized organization
costs......................... 10,986
Collateral on securities
loaned........................ (3,326,546)
Investment advisory fee
payable....................... (62,435)
Administration fee payable...... (25,891)
Payable for investment
securities purchased.......... (15,991,467)
Accrued Trustees' fees and
expenses...................... (8,858)
Accrued expenses and other
liabilities................... (46,558)
------------
TOTAL OTHER ASSETS AND
LIABILITIES (NET)............. (2,909,409)
------------
NET ASSETS............. 100.0% $142,179,273
===== ============
NET ASSETS CONSIST OF:
Accumulated net investment
loss.......................... $ (105,500)
Accumulated net realized loss on
investments sold.............. (2,698,935)
Net unrealized appreciation of
investments................... 26,893,940
Paid-in capital................. 118,089,768
------------
NET ASSETS...................... $142,179,273
============
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE
($142,179,273 DIVIDED BY
7,790,717 shares
outstanding).................. $ 18.25
============
</TABLE>
-----------------
<TABLE>
<S> <C>
* Federal Income Tax Information: Net unrealized
appreciation of $26,893,940 on investment securities was
comprised of gross appreciation of $30,416,535 and gross
depreciation of $3,522,595 for Federal income tax
purposes. At June 30, 2000, the aggregate cost of
securities for Federal income tax purposes was
$118,194,742.
+ Non-income producing security.
# Money market mutual fund registered under the Investment
Company Act of 1940, as amended, and sub-advised by Banc
of America Capital Management, Inc. A portion of this
amount represents cash collateral received from
securities lending activity (Note 8). The portion that
represents cash collateral is $3,326,546.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
Nations Funds
NATIONS ANNUITY TRUST -- SMALLCAP INDEX PORTFOLIO
STATEMENT OF NET ASSETS JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
------------------------------------------------------------------
COMMON STOCKS - 95.5%
AEROSPACE AND DEFENSE - 0.6%
550 AAR Corporation......................... $ 6,600
200 Alliant Techsystems Inc.+............... 13,488
525 BE Aerospace, Inc.+..................... 3,609
875 GenCorp Inc............................. 7,000
775 Orbital Sciences Corporation+........... 9,445
550 Teledyne Technologies Inc.+............. 9,213
----------
49,355
----------
AIRLINES - 0.5%
375 Atlantic Coast Airlines
Holdings, Inc.+......................... 11,906
675 Mesa Air Group, Inc.+................... 3,734
300 Midwest Express Holdings, Inc.+......... 6,450
500 SkyWest, Inc............................ 18,531
----------
40,621
----------
APPAREL AND TEXTILES - 1.5%
275 Ashworth Inc.+.......................... 1,229
375 Brown Shoe Company, Inc................. 4,875
525 Cone Mills Corporation+................. 3,248
400 Footstar Inc.+.......................... 13,299
425 G & K Services, Inc., Class A........... 10,652
400 Guilford Mills, Inc..................... 1,700
125 Haggar Corporation...................... 1,469
375 Hancock Fabrics Inc..................... 1,594
600 Hartmarx Corporation+................... 1,538
300 J. Baker Inc............................ 1,744
225 K-Swiss Inc............................. 3,586
500 Kellwood Company........................ 10,563
725 Nautica Enterprises Inc.+............... 7,748
250 Oshkosh B'Gosh Inc...................... 4,094
150 Oxford Industries Inc................... 2,700
575 Phillips-Van Heusen Corporation......... 5,463
300 Pillowtex Corporation+.................. 1,275
475 Quiksilver, Inc.+....................... 7,392
900 Stride Rite Corporation................. 5,513
425 Timberland Company, Class A+............ 30,094
275 Wet Seal, Inc.+......................... 3,609
----------
123,385
----------
AUTOMOTIVE - 1.2%
400 Aaron Rents, Inc........................ 5,025
1,125 Copart, Inc.+........................... 17,999
<CAPTION>
SHARES VALUE
<C> <S> <C>
------------------------------------------------------------------
AUTOMOTIVE (CONTINUED)
475 Group 1 Automotive, Inc.+............... $ 5,700
525 Intermet Corporation.................... 3,609
925 Mascotech, Inc.......................... 10,002
325 Midas, Inc.............................. 6,500
400 Myers Industries Inc.................... 4,300
350 Oshkosh Truck Corporation............... 12,513
375 Simpson Industries...................... 2,824
250 Spartan Motors Inc...................... 1,047
250 Standard Motor Products, Inc............ 2,125
450 TBC Corporation+........................ 2,081
700 Tenneco Automotive Inc.................. 3,675
425 Titan International Inc................. 2,258
975 Tower Automotive Inc.+.................. 12,188
375 Wynn's International, Inc............... 8,508
----------
100,354
----------
BEVERAGES - 0.5%
400 Beringer Wine Estates
Holdings, Inc.+......................... 14,125
375 Canandaigua Brands Inc., Class A+....... 18,914
175 Coca-Cola Bottling Company.............. 7,963
----------
41,002
----------
CHEMICALS - BASIC - 0.4%
525 Cambrex Corporation..................... 23,625
500 Geon Company............................ 9,250
550 Mississippi Chemical Corporation........ 2,613
----------
35,488
----------
CHEMICALS - SPECIALTY - 1.5%
375 American Italian Pasta Company.......... 7,758
450 Arch Chemicals Inc...................... 9,844
200 Chemed Corporation...................... 5,638
325 ChemFirst Inc........................... 7,841
475 Lilly Industries Inc., Class A.......... 14,280
650 MacDermid, Inc.......................... 15,274
500 OM Group, Inc........................... 21,999
825 Omnova Solutions Inc.................... 5,156
150 Penford Corporation..................... 3,225
175 Quaker Chemical Corporation............. 3,041
575 Scotts Company, Class A+................ 20,987
275 TETRA Technologies Inc.+................ 3,902
----------
118,945
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
Nations Funds
NATIONS ANNUITY TRUST -- SMALLCAP INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
------------------------------------------------------------------
COMMERCIAL BANKING - 4.6%
825 Centura Banks Inc....................... $ 27,998
600 Chittenden Corporation.................. 14,663
625 Commerce Bancorp, Inc................... 28,750
1,175 Commercial Federal Corporation.......... 18,286
1,000 Community First Bankshares, Inc......... 16,313
1,075 Cullen Frost Bankers Inc................ 28,286
850 First Midwest Bancorp, Inc.............. 19,763
550 Firstbank Corporation................... 10,209
1,050 Hudson United Bancorp................... 23,559
600 Investors Financial Services
Corporation............................. 23,813
475 MAF Bancorp Inc......................... 8,639
550 Provident Bankshares Corporation........ 7,425
425 Queens County Bancorp Inc............... 7,836
575 Riggs National Corporation.............. 7,259
950 Silicon Valley Bancshares+.............. 40,494
900 South Financial Group, Inc.............. 13,050
575 Southwest Bancorp of Texas+............. 11,931
750 Staten Island Bancorp, Inc.............. 13,219
825 Susquehanna Bancshares Inc.............. 11,756
1,100 TrustCo Bank Corporation NY............. 13,750
875 United Bankshares Inc................... 15,914
475 Whitney Holding Corporation............. 16,239
----------
379,152
----------
COMMERCIAL SERVICES - 6.6%
475 ABM Industries Incorporated............. 10,925
275 Administaff, Inc.+...................... 17,463
1,150 Brightpoint, Inc.+...................... 9,955
125 Butler Manufacturing Company............ 2,125
375 Catalina Marketing Corporation+......... 38,249
400 CDI Corporation+........................ 8,150
750 Central Parking Corporation............. 17,766
825 ChoicePoint Inc.+....................... 36,712
425 Computer Task Group Inc................. 2,152
800 Dendrite International, Inc.+........... 26,649
1,025 eLoyalty Corporation+................... 13,069
300 F.Y.I. Incorporated+.................... 10,106
675 Factset Research Systems Inc............ 19,069
375 Florida Rock Industries................. 13,359
425 Franklin Covey Company+................. 2,948
400 Heidrick & Struggles
International, Inc.+.................... 25,250
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COMMERCIAL SERVICES (CONTINUED)
325 IMCO Recycling Inc...................... $ 1,767
525 Insituform Technologies Inc.,
Class A+................................ 14,241
250 Insurance Auto Auctions Inc.+........... 5,281
1,325 Interim Services Inc.+.................. 23,519
875 Labor Ready, Inc.+...................... 5,797
400 Lason, Inc.+............................ 1,000
425 MAXIMUS, Inc.+.......................... 9,403
325 Memberworks Incorporated+............... 10,928
1,075 Morrison Knudsen Corporation+........... 7,794
675 National Data Corporation............... 15,525
500 Pegasus Solutions Inc.+................. 5,438
475 Prepaid Legal Services Inc.+............ 14,191
337 SCP Pool Corporation.................... 7,920
1,125 SEI Investment Company.................. 44,788
600 StaffMark, Inc.+........................ 4,013
300 Startek, Inc.+.......................... 15,113
800 Tetra Tech Inc.+........................ 18,300
1,025 The Profit Recovery Group
International, Inc.+.................... 17,041
1,025 True North Communications++............. 45,099
325 URS Corporation+........................ 4,956
300 Volt Information Sciences Inc.+......... 9,881
550 Watsco Inc.............................. 6,875
----------
542,817
----------
COMPUTER SERVICES - 1.0%
475 Analysts International Corporation...... 4,423
300 Fair, Issac and Company Inc............. 13,200
450 Gerber Scientific Inc................... 5,175
425 Primark Corporation+.................... 15,831
325 QRS Corporation+........................ 7,983
350 Radisys Corporation+.................... 19,863
350 Zixit Corporation+...................... 16,122
----------
82,597
----------
COMPUTERS AND OFFICE EQUIPMENT - 3.2%
475 Brady Corporation....................... 15,438
400 Cybex Computer Products Corporation..... 17,200
475 Exabyte Corporation+.................... 2,138
525 Hutchinson Technology, Inc.+............ 7,481
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
7
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NATIONS ANNUITY TRUST -- SMALLCAP INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 2000 (UNAUDITED)
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COMPUTERS AND OFFICE EQUIPMENT
(CONTINUED)
600 Information Resources, Inc.+............ $ 2,363
850 Jack Henry & Associates................. 42,605
575 John H. Harland Company................. 8,589
1,150 Komag, Incorporated+.................... 2,013
250 Kronos Inc.+............................ 6,500
350 Micros Systems, Inc.+................... 6,497
125 Nashua Corporation...................... 1,031
1,025 Pinnacle Systems, Inc.+................. 23,046
375 Plexus Corporation+..................... 42,375
1,900 S3 Inc.+................................ 28,025
325 Standard Microsystems Corporation+...... 4,997
425 Three-Five Systems, Inc................. 25,075
650 Zebra Technologies Corporation+......... 28,803
----------
264,176
----------
CONGLOMERATES - 0.3%
575 Apogee Enterprises, Inc................. 2,030
325 The Shaw Group Inc.+.................... 15,316
500 Triarc Companies........................ 10,250
----------
27,596
----------
CONSUMER SERVICES - 1.8%
425 ADVO Inc.+.............................. 17,850
175 Angelica Corporation.................... 1,400
275 Building Materials Holding
Corporation+............................ 2,423
725 Fedders Corporation..................... 4,214
350 Harman International Industries......... 21,351
475 Kaman Corporation....................... 5,077
1,275 La-Z-Boy Inc............................ 17,850
275 New England Business Service, Inc....... 4,469
975 Oakwood Homes Corporation............... 1,767
450 On Assignment, Inc.+.................... 13,725
325 Royal Appliance Manufacturing
Company+................................ 1,848
425 Russ Berrie & Company Inc............... 8,181
1,175 Smithfield Foods Inc.+.................. 32,974
175 Swiss Army Brands, Inc.+................ 897
450 The Kroll-O'Gara Company+............... 3,009
325 Thomas Industries Inc................... 5,748
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CONSUMER SERVICES (CONTINUED)
850 Wolverine World Wide.................... $ 8,394
----------
151,177
----------
DEPARTMENT AND DISCOUNT
STORES - 0.5%
600 Ames Department Stores+................. 4,650
1,050 Casey's General Stores, Inc............. 10,894
525 Cash America Investments Inc............ 3,872
850 Regis Corporation....................... 10,625
600 ShopKo Stores, Inc.+.................... 9,225
----------
39,266
----------
DIVERSIFIED ELECTRONICS - 4.2%
450 Aeroflex, Inc.+......................... 22,359
275 Analogic Corporation.................... 11,000
750 Anixter International Inc.+............. 19,875
775 Artesyn Technologies, Inc.+............. 21,555
475 Audiovox Corporation+................... 10,480
325 Benchmark Electronics Inc.+............. 11,883
575 BMC Industries, Inc..................... 2,336
625 Checkpoint Systems Inc.+................ 4,688
575 CTS Corporation++....................... 25,875
1,250 Dallas Semiconductor Corporation........ 50,937
450 Dionex Corporation+..................... 12,038
350 Esterline Technologies Corporation+..... 5,206
1,525 Gentex Corporation+..................... 38,316
225 Harmon Industries Inc................... 2,981
300 Itron Inc.+............................. 2,475
575 Kent Electronics Corporation+........... 17,142
725 Methode Electronics Inc................. 28,003
575 Pioneer Standard Electronics............ 8,481
350 Technitrol Inc.......................... 33,906
700 Valence Technology, Inc.+............... 12,906
----------
342,442
----------
DIVERSIFIED MANUFACTURING - 3.9%
475 A. O. Smith Corporation................. 9,945
375 Barnes Group Inc........................ 6,117
500 Belden Inc.............................. 12,813
650 Birmingham Steel Corporation+........... 2,519
500 CLARCOR Inc............................. 9,938
900 Cognex Corporation+++................... 46,574
350 Cross (A.T.) Company+................... 1,728
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
8
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Nations Funds
NATIONS ANNUITY TRUST -- SMALLCAP INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 2000 (UNAUDITED)
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DIVERSIFIED MANUFACTURING (CONTINUED)
350 CUNO Incorporated+...................... $ 8,094
800 Delta and Pine Land Company............. 20,049
250 Dixie Group Inc.+....................... 969
400 Elcor Corporation....................... 9,200
625 Griffon Corporation+.................... 3,477
300 Innovex Inc.+........................... 2,925
175 Insteel Industries, Inc................. 1,083
325 Ionics Inc.+............................ 9,953
400 JAKKS Pacific, Inc...................... 5,900
525 Justin Industries, Inc.................. 11,484
200 Lawson Products......................... 4,925
1,200 Lennox International Inc................ 15,900
325 Libbey Inc.............................. 10,441
325 Lydall Inc.+............................ 3,453
250 Republic Group Incorporated............. 2,250
625 Roper Industries, Inc................... 16,016
350 Scott Technologies, Inc.+............... 6,016
250 Simpson Manufacturing Company, Inc.+.... 11,953
400 Specialty Equipment Companies, Inc.+.... 10,850
250 SPS Technologies Inc.+.................. 10,266
250 Standex International Corporation....... 3,969
550 Sturm, Ruger & Company Inc.............. 4,881
775 Tredegar Industries, Inc................ 14,725
875 Vicor Corporation+...................... 30,460
550 Watts Industries, Inc................... 6,944
----------
315,817
----------
ELECTRIC POWER -
NON NUCLEAR - 0.5%
150 Bangor Hydro-Electric Company........... 3,516
225 Central Vermont Public Services......... 2,475
350 CH Energy Group, Inc.................... 11,878
125 Green Mountain Power Corporation........ 1,031
675 UniSource Energy Corporation............ 10,125
300 United Illuminating Company............. 13,125
----------
42,150
----------
ELECTRICAL EQUIPMENT - 1.1%
550 C&D Technologies, Inc................... 31,075
425 Cohu, Inc............................... 11,462
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ELECTRICAL EQUIPMENT (CONTINUED)
775 General Semiconductor, Inc.+............ $ 11,431
275 Intermagnetics General Corporation+..... 5,208
225 Park Electrochemical Corporation........ 8,114
475 Trimble Navigation Limited+............. 23,186
----------
90,476
----------
ENERGY - MISCELLANEOUS - 0.6%
675 Barrett Resources Corporation+.......... 20,545
675 Systems & Computer Technology
Corporation+............................ 13,500
550 UGI Corporation......................... 11,275
----------
45,320
----------
EXPLORATION AND PRODUCTION - 0.4%
375 Nuevo Energy Company+................... 7,078
525 Southwestern Energy Company............. 3,281
375 Stone Energy Corporation+............... 22,407
----------
32,766
----------
FINANCE - MISCELLANEOUS - 0.7%
1,575 AmeriCredit Corporation+................ 26,775
525 Anchor Bancorp Wisconsin Inc............ 8,039
1,075 Washington Federal, Inc................. 19,619
----------
54,433
----------
FOOD AND DRUG STORES - 0.7%
800 Fleming Companies Inc................... 10,450
600 Hain Celestial Group, Inc.+............. 22,013
225 Nash-Finch Company...................... 1,856
550 Whole Foods Market Inc.+................ 22,722
----------
57,041
----------
FOOD PRODUCTS - 1.1%
200 Agribrands International, Inc.+......... 8,388
1,375 Chiquita Brands International Inc.+..... 5,414
725 Corn Products International Inc......... 19,212
875 Earthgrains Company..................... 17,008
175 J & J Snack Foods Corporation+.......... 3,128
400 Michael Foods Inc....................... 9,800
200 Morrison Management
Specialists, Inc........................ 5,638
250 Panera Bread Company, Class A+.......... 2,531
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
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NATIONS ANNUITY TRUST -- SMALLCAP INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 2000 (UNAUDITED)
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FOOD PRODUCTS (CONTINUED)
275 Performance Food Group Company+......... $ 8,800
625 Ralcorp Holdings, Inc.+................. 7,656
375 United Natural Foods, Inc.+............. 5,156
----------
92,731
----------
HEALTH SERVICES - 3.0%
425 ADAC Laboratories Designs+.............. 10,200
450 Advance Paradigm, Inc.+................. 9,225
1,250 Advanced Tissue Sciences, Inc.+......... 10,039
700 Cerner Corporation+..................... 19,075
550 COR Therapeutics, Inc.+................. 46,923
1,200 Coventry Health Care Inc.+.............. 15,994
175 Curative Health Services, Inc.+......... 1,055
575 Immune Response Corporation+............ 6,253
625 Invacare Corporation.................... 16,406
525 Laser Vision Centers, Inc.+............. 3,248
1,000 Orthodontic Centers of America+......... 22,625
525 PAREXEL International Corporation+...... 5,020
325 Pediatrix Medical Group Inc.+........... 3,778
925 Renal Care Group, Inc.+................. 22,619
625 Universal Health Services Inc.,
Class B+................................ 40,938
1,875 US Oncology, Inc.+...................... 9,375
----------
242,773
----------
HEAVY MACHINERY - 2.5%
425 Applied Industrial
Technologies, Inc....................... 6,959
800 Applied Power, Inc., Class A............ 26,800
400 Astec Industries Inc.+.................. 10,150
700 Baldor Electric Company................. 13,038
175 CPI Corporation......................... 3,697
300 Flow International Corporation+......... 3,000
850 Foster Wheeler Corporation.............. 7,331
325 Gardner Denver Machinery Inc.+.......... 5,809
425 Graco Inc............................... 13,813
475 Helix Technology Corporation............ 18,525
475 Hughes Supply Inc....................... 9,381
625 IDEX Corporation........................ 19,727
925 JLG Industries Inc...................... 10,984
250 Lindsay Manufacturing Company........... 4,906
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HEAVY MACHINERY (CONTINUED)
500 Manitowoc Company, Inc.................. $ 13,375
950 Paxar Corporation+...................... 11,341
425 Regal Beloit............................ 6,827
225 Robbins & Myers, Inc.................... 5,133
625 SpeedFam-IPEC, Inc.+.................... 11,367
450 X-Rite, Inc............................. 4,106
----------
206,269
----------
HOUSEHOLD PRODUCTS - 0.3%
475 Applica Incorporated+................... 5,373
150 National Presto Industries, Inc......... 4,613
350 Natures Sunshine Products Inc........... 2,450
700 SLI, Inc................................ 8,487
----------
20,923
----------
HOUSING AND FURNISHING - 1.4%
250 Bassett Furniture Industries, Inc....... 3,156
975 Champion Enterprises Inc.+.............. 4,753
325 Coachmen Industries Inc................. 3,738
1,275 D.R. Horton Inc......................... 17,292
825 Ethan Allen Interiors, Inc.............. 19,801
1,075 Interface Inc........................... 4,098
450 M.D.C. Holdings, Inc.................... 8,381
400 Monaco Coach Corporation+............... 5,450
200 NVR, Inc.+.............................. 11,400
225 Salton, Inc.+........................... 8,297
175 Skyline Corporation..................... 3,763
600 Standard Pacific Corporation............ 6,000
275 The Ryland Group, Inc................... 6,084
750 Toll Brothers, Inc.+.................... 15,375
----------
117,588
----------
INSURANCE - 2.6%
775 Arthur J. Gallagher & Company........... 32,550
425 Delphi Financial Group Inc.,
Class A+................................ 14,423
275 E.W. Blanch Holdings, Inc............... 5,586
800 Enhance Financial Services Group Inc.... 11,500
1,375 Fidelity National Financial, Inc........ 25,180
1,300 First American Financial Corporation.... 18,606
1,450 Fremont General Corporation............. 5,709
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
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NATIONS ANNUITY TRUST -- SMALLCAP INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 2000 (UNAUDITED)
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INSURANCE (CONTINUED)
275 Hilb, Rogal and Hamilton Company........ $ 9,539
850 Mutual Risk Management Ltd.............. 14,716
775 Radian Group Inc.++..................... 40,106
200 RLI Corporation......................... 6,950
200 SCPIE Holdings Inc...................... 4,100
550 Selective Insurance Group............... 10,450
550 Sierra Health Services, Inc.+........... 1,753
375 Trenwick Group, Inc..................... 5,461
350 Zenith National Insurance CP............ 7,438
----------
214,067
----------
INTERGRATED OIL - 2.7%
575 Cabot Oil & Gas Corporation............. 12,183
400 HS Resources, Inc.+..................... 12,000
1,050 Input/Output, Inc.+..................... 8,859
850 Louis Dreyfus Natural Gas
Corporation+............................ 26,616
375 New Jersey Resources Corporation........ 14,273
875 Newfield Exploration Company+........... 34,234
475 Oceaneering International Inc.+......... 9,025
375 Plains Resources Inc.+.................. 6,000
825 Pogo Producing Company.................. 18,253
1,350 Pride International Inc.+............... 33,413
450 Remington Oil & Gas Corporation+........ 3,375
500 Seitel Inc.+............................ 4,063
225 St. Mary Land & Exploration Company..... 9,464
1,300 Vintage Petroleum, Inc.................. 29,331
----------
221,089
----------
INVESTMENT SERVICES - 1.8%
275 Dain Rauscher Corporation............... 18,150
575 Downey Financial Corporation............ 16,675
725 Eaton Vance Corporation................. 33,531
500 Jefferies Group, Inc.................... 10,094
600 Morgan Keegan, Inc...................... 8,850
375 National Discount Brokers
Group, Inc.+............................ 11,953
950 Raymond James Financial, Inc............ 21,375
550 The Pioneer Group, Inc.+................ 23,306
----------
143,934
----------
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LODGING AND RECREATION - 1.2%
250 Anchor Gaming+.......................... $ 11,984
525 Arctic Cat Inc.......................... 6,234
850 Aztar Corporation+...................... 13,175
225 Carmike Cinemas Inc., Class A+.......... 872
675 Fleetwood Enterprises Inc............... 9,619
150 GC Companies Inc.+...................... 3,356
200 Huffy Corporation+...................... 863
375 K2 Inc.+................................ 3,117
550 Pinnacle Entertainment, Inc.+........... 10,691
500 Polaris Industries Inc.................. 16,000
925 Prime Hospitality Corporation+.......... 8,730
250 Thor Industries Inc..................... 5,250
450 Winnebago Industries.................... 5,878
----------
95,769
----------
MEDICAL DEVICES AND SUPPLIES - 6.1%
975 Alliance Pharmaceutical Corporation+.... 10,969
68 Baxter International Inc.+.............. 4,781
475 Biomatrix, Inc.+........................ 10,747
700 Cephalon, Inc.+......................... 41,913
525 Coherent Inc.+.......................... 44,034
325 CONMED Corporation+..................... 8,409
300 Cooper Companies Inc.................... 10,913
300 Datascope Corporation................... 10,800
275 Diagnostic Products Corporation......... 8,800
400 Hanger Orthopedic Group, Inc.+.......... 1,975
325 Hologic, Inc.+.......................... 2,194
1,375 Hooper Holmes, Inc...................... 11,000
725 IDEXX Laboratories Inc.+................ 16,584
500 Mentor Corporation...................... 13,594
700 Organogenesis Inc.+..................... 8,006
300 Osteotech, Inc.+........................ 3,150
675 Owens & Minor, Inc...................... 11,602
700 Patterson Dental Company+............... 35,700
450 Priority Healthcare Corporation+........ 33,441
625 ResMed Inc.+............................ 16,719
600 Respironics, Inc.+...................... 10,800
525 Sola International Inc.+................ 2,559
200 SpaceLabs Medical Inc.+................. 2,250
975 Summit Technology Inc.+................. 18,403
450 Sunrise Medical Inc.+................... 2,194
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
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NATIONS ANNUITY TRUST -- SMALLCAP INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 2000 (UNAUDITED)
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MEDICAL DEVICES AND SUPPLIES (CONTINUED)
425 Techne Corporation+..................... $ 55,250
600 Theragenics Corporation+................ 5,138
650 Varian Medical Systems, Inc............. 25,431
550 Vertex Pharmaceuticals, Inc.+........... 57,955
250 Vital Signs Inc......................... 4,531
375 Wesley Jessen Visioncare, Inc.+......... 14,086
----------
503,928
----------
METALS AND MINING - 1.7%
300 A. M. Castle & Company.................. 2,494
175 Amcast Industrial Corporation........... 1,531
550 AMCOL International Corporation......... 9,075
350 Brush Wellman Inc....................... 5,469
800 Coeur D'alene Mines Corporation+........ 1,950
300 Commercial Metals Company............... 8,250
350 Commonwealth Industries, Inc............ 2,056
325 Material Sciences Corporation+.......... 3,250
725 Mueller Industries Inc.+................ 20,300
475 Northwestern Corporation................ 10,984
300 Quanex Corporation...................... 4,463
575 Reliance Steel & Aluminum Company....... 10,997
425 RTI International Metals, Inc.+......... 4,834
1,000 Steel Dynamics, Inc.+................... 9,063
225 Steel Technologies Inc.................. 1,603
800 Stillwater Mining Company+.............. 22,300
425 Texas Industries Inc.................... 12,272
300 WHX Corporation+........................ 1,650
250 Wolverine Tube Inc.+.................... 4,250
----------
136,791
----------
NATURAL GAS DISTRIBUTION - 1.3%
650 Atmos Energy Corporation................ 11,375
225 Cascade Natural Gas Corporation......... 3,755
625 Energen Corporation..................... 13,633
400 Laclede Gas Company..................... 7,700
525 Northwest Natural Gas Company........... 11,747
650 Piedmont Natural Gas Company, Inc....... 17,265
1,075 Southern Union Company.................. 16,998
650 Southwest Gas Corporation............... 11,375
<CAPTION>
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NATURAL GAS DISTRIBUTION (CONTINUED)
475 Valmont Industries Inc.................. $ 9,441
----------
103,289
----------
NETWORKING AND TELECOMMUNICATIONS
EQUIPMENT - 1.9%
625 Auspex Systems, Inc.+................... 3,086
600 Cable Design Technologies
Corporation+............................ 20,100
325 Concord Communications, Inc.+........... 12,959
1,450 Digital Microwave Corporation+.......... 55,282
800 Dycom Industries, Inc.++................ 36,800
1,600 P-Com, Inc.+............................ 9,100
325 Telxon Corporation+..................... 5,809
500 Visual Networks, Inc.+.................. 14,250
----------
157,386
----------
OIL REFINING AND MARKETING - 0.1%
325 WD-40 Company........................... 6,744
----------
OILFIELD SERVICES - 1.1%
275 Atwood Oceanics, Inc.+.................. 12,203
325 Cal Dive International Inc.+............ 17,611
950 Cross Timbers Oil Company............... 21,019
350 Dril-Quip+.............................. 16,363
825 Friede Goldman Halter, Inc.+............ 7,373
425 Offshore Logistics Inc.+................ 6,109
337 Seacor Smit, Inc........................ 13,038
----------
93,716
----------
PACKAGING AND CONTAINERS - 0.2%
750 AptarGroup Inc.......................... 20,250
----------
PAPER AND FOREST PRODUCTS - 0.8%
725 Buckeye Technologies Inc.+.............. 15,904
525 Caraustar Industries, Inc............... 7,941
250 Deltic Lumber........................... 5,344
300 Pope & Talbot Inc....................... 4,800
325 Schweitzer-Mauduit International Inc.... 4,063
700 United Stationers Inc.+................. 22,662
425 Universal Forest Products............... 5,844
----------
66,558
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
Nations Funds
NATIONS ANNUITY TRUST -- SMALLCAP INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 2000 (UNAUDITED)
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<TABLE>
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PHARMACEUTICALS - 4.8%
725 Alpharma Inc., Class A.................. $ 45,131
712 Barr Laboratories, Inc.................. 31,929
700 Bindley Western Industries.............. 18,506
1,125 Bio-Technology General Corporation+..... 14,836
525 Cygnus, Inc.+........................... 7,481
925 Dura Pharmaceuticals Inc.+.............. 13,297
525 Enzo Biochem, Inc.+..................... 36,225
1,350 Jones Pharma Incorporated++............. 53,916
600 Medicis Pharmaceutical Corporation,
Class A+................................ 34,200
1,400 NBTY, Inc.+............................. 8,925
450 Noven Pharmaceuticals, Inc.+............ 13,528
525 Pharmaceutical Product
Development, Inc.+...................... 11,025
400 Protein Design Labs, Inc.+.............. 65,981
725 Regeneron Pharmaceuticals, Inc.+........ 21,614
250 Syncor International Corporation+....... 18,000
1 Watson Pharmaceutical, Inc.+............ 54
----------
394,648
----------
PUBLISHING AND ADVERTISING - 0.7%
775 Bowne & Company Inc..................... 7,798
300 Consolidated Graphics Inc.+............. 2,813
325 Cyrk, Inc.+............................. 1,625
1,325 HA-LO Industries, Inc.+................. 7,453
1,475 Snyder Communications, Inc.+............ 35,031
300 Thomas Nelson, Inc...................... 2,569
----------
57,289
----------
RAILROADS, TRUCKING AND SHIPPING - 2.3%
675 American Freightways Corporation+....... 9,788
400 Arkansas Best Corporation+.............. 3,975
375 Circle International Group, Inc......... 9,422
600 EGL, Inc.+.............................. 18,450
1,050 Expeditors International of
Washington, Inc......................... 49,876
750 Fritz Companies, Inc.+.................. 7,734
350 Frozen Food Express
Industries, Inc.+....................... 1,050
525 Heartland Express Inc.+................. 8,761
<CAPTION>
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<C> <S> <C>
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RAILROADS, TRUCKING AND SHIPPING
(CONTINUED)
500 Kirby Corporation+...................... $ 10,625
175 Landstar System Inc.+................... 10,423
250 M.S. Carriers Inc.+..................... 4,406
400 Roadway Express, Inc.................... 9,375
1,200 Rollins Truck Leasing Corporation....... 8,325
550 U.S. Freightways Corporation............ 13,509
475 Wabash National Corporation............. 5,670
975 Werner Enterprises Inc.................. 11,273
525 Yellow Corporation+..................... 7,744
----------
190,406
----------
RESTAURANTS - 1.6%
550 Applebees International Inc.+........... 16,672
550 CEC Entertainment Inc.+................. 14,094
1,050 CKE Restaurant Inc...................... 3,150
600 Consolidated Products, Inc.+............ 5,400
400 IHOP Corporation+....................... 6,700
800 Jack in the Box Inc.+................... 19,699
525 Landry's Seafood Restaurants Inc........ 4,463
475 Luby's Inc.............................. 3,800
600 Marcus Corporation...................... 7,275
1,275 Ruby Tuesday Inc........................ 16,017
675 Ryan's Family Steak Houses Inc.+........ 5,695
375 Sonic Corporation+...................... 11,016
250 Taco Cabana Inc., Class A+.............. 1,656
625 The Cheesecake Factory.................. 17,188
----------
132,825
----------
SEMICONDUCTORS - 5.1%
475 Actel Corporation+...................... 21,672
825 Alpha Industries, Inc.+++............... 36,352
400 American Xtal Technology, Inc.+......... 17,300
2,525 C-Cube Micosystems Inc.+................ 49,553
550 Electro Scientific Industries, Inc.+.... 24,217
425 Electroglas, Inc.+...................... 9,138
1,275 International Rectifier
Corporation+++.......................... 71,399
1,800 KEMET Corporation+++.................... 45,113
500 Kulicke & Soffa Industries Inc.+++...... 29,688
1,025 Lattice Semiconductor Corporation+++.... 70,852
600 Photronics, Inc.+....................... 17,025
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
Nations Funds
NATIONS ANNUITY TRUST -- SMALLCAP INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 2000 (UNAUDITED)
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<TABLE>
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<C> <S> <C>
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SEMICONDUCTORS (CONTINUED)
700 Silicon Valley Group, Inc.+............. $ 18,113
425 Ultratech Stepper, Inc.+................ 6,322
----------
416,744
----------
SOFTWARE - 6.7%
875 Alliance Semiconductor Corporation+..... 21,492
850 American Management Systems+............ 27,904
550 Aspen Technology, Inc.+................. 21,175
500 Avid Technology, Inc.+.................. 6,000
650 Avt Corporation+........................ 4,794
300 BARRA, Inc.+............................ 14,869
875 Billing Concepts Corporation+........... 3,883
1,225 Ciber Inc.+............................. 16,231
850 Epicor Software Corporation+............ 2,125
475 ePresence, Inc.+........................ 3,444
875 ESS Technolgy, Inc.+.................... 12,688
700 FileNET Corporation+.................... 12,863
400 Great Plains Software, Inc.+............ 7,850
550 HNC Software Inc.+...................... 33,963
675 Hyperion Solutions Corporation+......... 21,895
450 Mercury Computer Systems, Inc.+......... 14,541
775 Midway Games Inc.+...................... 6,248
650 National Computer Systems Inc........... 32,013
1,050 National Instruments Corporation+....... 45,805
650 Penton Media Inc........................ 22,750
525 Phoenix Technologies Ltd.+.............. 8,564
750 Progress Software Corporation+.......... 13,453
450 Project Software &
Development, Inc.+...................... 8,100
1,025 Read-Rite Corporation+.................. 2,274
650 Remedy Corporation+..................... 36,237
825 RSA Security Inc.+...................... 57,130
600 Saga Systems, Inc.+..................... 7,463
575 The BISYS Group, Inc.+.................. 35,362
400 THQ Inc.+............................... 4,875
525 Veritas Dgc Inc.+....................... 13,650
650 Verity, Inc.+........................... 24,700
----------
544,341
----------
SPECIALTY STORES - 3.9%
700 99 Cents Only Stores.................... 27,913
<CAPTION>
SHARES VALUE
<C> <S> <C>
------------------------------------------------------------------
SPECIALTY STORES (CONTINUED)
350 Action Performance Companies, Inc.+..... $ 2,538
650 AnnTaylor Stores Corporation+........... 21,531
375 Books-A-Million Inc.+................... 1,734
550 Cato Corporation........................ 6,394
425 Cost Plus, Inc.+........................ 12,192
125 Damark International, Inc.+............. 2,688
300 Department 56, Inc.+.................... 3,300
350 Discount Auto Parts Inc.+............... 3,500
375 Dress Barn Inc.+........................ 8,297
275 Enesco Group, Inc....................... 1,306
675 Fossil, Inc.+........................... 13,120
675 Goody's Family Clothing Inc.+........... 3,713
250 Gottschalks Inc.+....................... 1,578
500 Gymboree Corporation+................... 1,500
550 Insight Enterprises Inc.+............... 32,621
475 Jan Bell Marketing Inc.+................ 1,128
375 Jo-Ann Stores Inc.+..................... 2,625
175 Lillian Vernon Corporation.............. 1,838
825 Linens 'N Things Inc.+.................. 22,378
650 Michaels Stores Inc.+................... 29,778
1,050 O'Reilly Automotive Inc.+............... 14,569
650 Pacific Sunwear of California+.......... 12,188
1,100 PEP Boys - Manny, Moe & Jack............ 6,600
1,975 Pier 1 Imports Inc...................... 19,256
900 Stein Mart Inc.+........................ 9,225
750 The Bombay Company Inc.+................ 2,203
875 The Men's Wearhouse Inc.+............... 19,523
675 The Sports Authority Inc.+.............. 759
275 Toro Company............................ 9,058
725 Zale Corporation+....................... 26,463
----------
321,516
----------
TELECOMMUNICATIONS SERVICES - 3.7%
775 Adaptive Broadband Corporation+......... 28,481
575 Allen Telecom Inc.+..................... 10,170
450 Apex Inc.+.............................. 19,688
1,050 Aspect Communications Corporation+...... 41,278
400 Black Box Corporation+.................. 31,669
700 C-COR Electronics+...................... 18,900
125 Centigram Communications Corporation+... 3,195
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
Nations Funds
NATIONS ANNUITY TRUST -- SMALLCAP INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
------------------------------------------------------------------
TELECOMMUNICATIONS SERVICES (CONTINUED)
275 Davox Corporation+...................... $ 3,558
300 Digi International Inc.+................ 1,950
1,050 General Communication, Inc.,
Class A+................................ 5,381
407 Harmonic Lightwaves, Inc.+.............. 10,073
550 Inter-Tel Inc........................... 8,834
675 Intervoice Inc.+........................ 4,430
450 Network Equipment Technologies Inc.+.... 4,528
325 Plantronics Inc.+....................... 37,538
250 Proxim, Inc.+........................... 24,742
325 SymmetriCom Inc.+....................... 8,206
1,350 TALK.com, Inc.+......................... 7,847
625 Xircom Inc.+++.......................... 29,688
----------
300,156
----------
TOBACCO - 0.0%+
925 DiMon Inc............................... 1,966
----------
UTILITIES - MISCELLANEOUS - 0.6%
175 American States Water Company........... 5,206
850 Philadelphia Suburban Corporation....... 17,425
800 United Water Resources Inc.............. 27,900
----------
50,531
----------
TOTAL COMMON STOCKS
(Cost $6,892,446)....................... 7,830,603
----------
<CAPTION>
PRINCIPAL
AMOUNT
------
<C> <S> <C>
SHORT TERM INVESTMENTS - 0.5%
(Cost $39,494)
U.S. TREASURY BILLS - 0.5%
$ 40,000 5.995%** 09/21/00++..................... 39,494
----------
<CAPTION>
SHARES
---------
INVESTMENT COMPANIES - 6.6%
<C> <S> <C>
(Cost $543,758)
543,758 Nations Cash Reserves#.................. 543,758
----------
<CAPTION>
VALUE
<C> <S> <C>
-------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
VALUE
----------------------------------------------------------------------------------------------
<C> <S> <C> <C>
TOTAL INVESTMENTS
(Cost $7,475,698*)........................................ 102.6% $8,413,855
----------
OTHER ASSETS AND LIABILITIES (NET).......................... (2.6)%
Cash................................................................. $ 26,028
Receivable for investment securities sold............................ 200,164
Receivable for Fund shares sold...................................... 1,010
Dividends receivable................................................. 4,374
Interest receivable.................................................. 1,530
Unamortized organization costs....................................... 10,986
Variation margin/due to broker....................................... (4,619)
Collateral on securities loaned...................................... (279,758)
Investment advisory fee payable...................................... (69,758)
Administration fee payable........................................... (1,523)
Shareholder servicing and distribution fees payable..................
(35,329)
Payable for investment securities purchased.......................... (10,125)
Accrued Trustees' fees and expenses.................................. (8,924)
Accrued expenses and other liabilities............................... (48,604)
----------
TOTAL OTHER ASSETS AND LIABILITIES (NET)............................. (214,548)
----------
NET ASSETS.................................................. 100.0% $8,199,307
===== ==========
NET ASSETS CONSIST OF:
Undistributed net investment income.................................. $ 8,143
Accumulated net realized loss on investments sold and futures
contracts.......................................................... (508,169)
Net unrealized appreciation of investments and futures contracts.....
933,980
Paid-in capital...................................................... 7,765,353
----------
NET ASSETS........................................................... $8,199,307
==========
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE PER SHARE ($8,199,307
DIVIDED BY 801,304 shares outstanding)............................ $ 10.23
==========
</TABLE>
-----------------
* Federal Income Tax Information: Net unrealized appreciation of $938,157 on
investment securities was comprised of gross appreciation of $1,563,937 and
gross depreciation of $625,780 for Federal income tax purposes. At
June 30, 2000, the aggregate cost of securities for Federal income tax
purposes was $7,475,698.
** Rate represents annualized yield at date of purchase.
+ Non-income producing security.
+ Amount represents less than 0.1%.
++ All or a portion of security segregated as collateral for futures
contracts.
# Money market mutual fund registered under the Investment Company Act of
1940, as amended, and sub-advised by Banc of America Capital
Management, Inc. A portion of this amount represents cash collateral
received from securities lending activity (Note 8). The portion that
represents cash collateral is $279,758.
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
Nations Funds
NATIONS ANNUITY TRUST -- AGGRESSIVE GROWTH PORTFOLIO
STATEMENT OF NET ASSETS JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
----------------------------------------------------------------------
COMMON STOCKS - 97.6%
BEVERAGES - 2.1%
1,500 Coca-Cola Company............. $ 86,157
1,025 PepsiCo, Inc.................. 45,548
----------
131,705
----------
BROADCASTING AND CABLE - 1.1%
925 Clear Channel
Communications, Inc.+......... 69,375
----------
COMPUTER SERVICES - 3.1%
2,214 America Online Inc.+.......... 116,789
450 VeriSign, Inc................. 79,425
----------
196,214
----------
COMPUTERS AND OFFICE
EQUIPMENT - 6.2%
1,975 Dell Computer Corporation+.... 97,392
1,625 EMC Corporation+.............. 125,023
800 Lexmark International
Group, Inc., Class A+......... 53,800
1,300 Sun Microsystems, Inc.+....... 118,219
----------
394,434
----------
CONGLOMERATES - 2.1%
225 Tyco International Ltd........ 10,659
2,100 United Technologies
Corporation................... 123,638
----------
134,297
----------
DEPARTMENT AND DISCOUNT
STORES - 3.1%
2,000 Dollar General Corporation.... 39,000
375 Target Corporation............ 21,750
2,350 Wal-Mart Stores, Inc.......... 135,419
----------
196,169
----------
DIVERSIFIED MANUFACTURING -
6.0%
1,630 Estee Lauder Companies Inc.... 80,583
4,925 General Electric Company...... 261,025
600 Kimberly-Clark Corporation.... 34,425
----------
376,033
----------
ELECTRIC POWER -
NON NUCLEAR - 0.4%
500 AES Corporation............... 22,813
----------
<CAPTION>
SHARES VALUE
<C> <S> <C>
----------------------------------------------------------------------
ENERGY - MISCELLANEOUS - 2.8%
2,225 Coastal Corporation........... $ 135,447
625 Columbia Energy Group......... 41,016
----------
176,463
----------
FINANCE - MISCELLANEOUS - 3.3%
225 Citigroup Inc................. 13,556
2,475 MBNA Corporation.............. 67,134
1,567 Morgan Stanley Dean Witter &
Company....................... 130,453
----------
211,143
----------
FOOD PRODUCTS - 0.7%
600 Quaker Oats Company........... 45,075
----------
HEAVY MACHINERY - 1.0%
1,100 Illinois Tool Works, Inc...... 62,700
----------
INSURANCE - 1.0%
525 American International
Group, Inc.................... 61,688
----------
INVESTMENT SERVICES - 1.5%
1,912 Charles Schwab Corporation.... 64,291
725 Paine Webber Group, Inc....... 32,988
----------
97,279
----------
MEDICAL DEVICES AND
SUPPLIES - 11.4%
2,150 Allergan, Inc................. 160,174
625 Cardinal Health, Inc.......... 46,250
675 Genentech, Inc.+.............. 116,100
1,900 Guidant Corporation+.......... 94,050
1,525 Johnson & Johnson............. 155,359
1,725 Medtronic, Inc................ 85,927
950 PE Corp-PE Biosystems Group... 62,581
----------
720,441
----------
NETWORKING AND
TELECOMMUNICATIONS
EQUIPMENT - 12.0%
1,825 3Com Corporation+............. 105,166
725 CIENA Corporation+............ 120,848
4,575 Cisco Systems, Inc.+.......... 290,798
2,775 Lucent Technologies, Inc...... 164,419
1,500 Nokia Corporation, Class A,
ADR........................... 74,906
----------
756,137
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
Nations Funds
NATIONS ANNUITY TRUST -- AGGRESSIVE GROWTH PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
----------------------------------------------------------------------
PHARMACEUTICALS - 4.9%
800 American Home Products
Corporation................... $ 47,000
1,050 Eli Lilly and Company......... 104,869
3,281 Pfizer Inc.................... 157,488
----------
309,357
----------
SEMICONDUCTORS - 10.8%
1,650 Altera Corporation............ 168,196
925 Analog Devices, Inc.+......... 70,300
2,150 Intel Corporation............. 287,427
2,650 Motorola, Inc................. 77,016
1,150 Texas Instruments Inc......... 78,991
----------
681,930
----------
SOFTWARE - 10.4%
1,025 Electronic Arts Inc.+......... 74,761
1,875 First Data Corporation........ 93,047
3,500 Microsoft Corporation+........ 280,000
2,000 Oracle Corporation+........... 168,125
610 Phone.com, Inc.+.............. 39,726
----------
655,659
----------
SPECIALTY STORES - 4.2%
2,325 Best Buy Company, Inc.+....... 147,057
1,050 Circuit City Stores - Circuit
City Group.................... 34,847
1,385 Home Depot Inc................ 69,163
275 Lowe's Companies Inc.......... 11,292
----------
262,359
----------
TELECOMMUNICATIONS SERVICES -
5.9%
1,650 Global Crossing, Ltd.+........ 43,416
1,575 Nortel Networks Corporation... 107,493
1,257 QUALCOMM Inc.+................ 75,420
625 Voicestream Wireless
Corporation................... 72,686
1,350 Western Wireless
Corporation+.................. 73,575
----------
372,590
----------
UTILITIES - MISCELLANEOUS -
3.6%
1,750 BellSouth Corporation......... 74,594
1,250 Sprint Corporation (FON
Group)........................ 63,750
1,050 Sprint Corporation (PCS
Group)+....................... 62,475
325 U.S. West Inc................. 27,869
----------
228,688
----------
TOTAL COMMON STOCKS
(Cost $5,297,267)......... 6,162,549
----------
<CAPTION>
SHARES VALUE
<C> <S> <C>
----------------------------------------------------------------------
INVESTMENT COMPANIES - 2.3%
(Cost $147,000)
147,000 Nations Cash Reserves#........ $ 147,000
----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
-----------------------------------------------------------
<C> <S> <C> <C>
TOTAL INVESTMENTS
(Cost $5,444,267*)...... 99.9% 6,309,549
----------
OTHER ASSETS AND
LIABILITIES (NET)....... 0.1%
Cash............................... $ 128
Receivable for investment
securities sold.................. 185,785
Dividends receivable............... 1,946
Interest receivable................ 1,043
Receivable from investment
advisor.......................... 2,229
Unamortized organization costs..... 10,986
Administration fee payable......... (1,177)
Payable for investment securities
purchased........................ (171,330)
Accrued Trustees' fees and
expenses......................... (8,923)
Accrued expenses and other
liabilities...................... (14,757)
----------
TOTAL OTHER ASSETS AND LIABILITIES
(NET)............................ 5,930
----------
NET ASSETS................ 100.0% $6,315,479
===== ==========
NET ASSETS CONSIST OF:
Undistributed net investment
income........................... $ 2,470
Accumulated net realized loss on
investments sold and futures
contracts........................ (461,915)
Net unrealized appreciation of
investments...................... 865,282
Paid-in capital.................... 5,909,642
----------
NET ASSETS......................... $6,315,479
==========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE
($6,315,479 DIVIDED BY 578,923
shares outstanding).............. $ 10.91
==========
</TABLE>
-----------------
<TABLE>
<S> <C>
* Federal Income Tax Information: Net unrealized
appreciation of $865,282 on investment securities was
comprised of gross appreciation of $1,107,970 and gross
depreciation of $242,688 for Federal income tax purposes.
At June 30, 2000, the aggregate cost of securities for
Federal income tax purposes was $5,444,267.
+ Non-income producing security.
# Money market mutual fund registered under the Investment
Company Act of 1940, as amended, and sub-advised by Banc
of America Capital Management, Inc.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
17
<PAGE>
Nations Funds
NATIONS ANNUITY TRUST -- MARSICO GROWTH & INCOME PORTFOLIO
STATEMENT OF NET ASSETS JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
--------------------------------------------------------------------
COMMON STOCKS - 93.3%
AEROSPACE AND DEFENSE -
1.4%
21,051 General Dynamics
Corporation................ $ 1,099,915
2,465 The Titan Corporation+..... 110,309
-----------
1,210,224
-----------
AUTOMOTIVE - 1.3%
14,623 Delphi Automotive Systems
Corporation................ 212,947
19,396 Ford Motor Company......... 834,029
2,539 Visteon Corporation+....... 30,785
-----------
1,077,761
-----------
BEVERAGES - 3.0%
14,813 Anheuser-Busch
Companies, Inc............. 1,106,345
13,583 Coca-Cola Company.......... 780,174
18,592 Coca-Cola Enterprises
Inc........................ 303,282
12,202 Pepsi Bottling
Group, Inc................. 356,146
-----------
2,545,947
-----------
BROADCASTING AND CABLE -
6.4%
15,127 Clear Channel
Communications, Inc.+...... 1,134,525
40,397 Comcast Corporation,
Class A+................... 1,636,079
30,396 Time Warner Inc............ 2,310,095
5,797 UnitedGlobalCom Inc.+...... 271,010
-----------
5,351,709
-----------
COMMERCIAL BANKING - 0.6%
7,163 Northern Trust
Corporation................ 466,043
-----------
COMMERCIAL SERVICES - 0.8%
7,677 Omnicom Group Inc.......... 683,733
-----------
COMPUTER SERVICES - 2.1%
32,913 America Online Inc.+....... 1,736,161
-----------
COMPUTERS AND OFFICE
EQUIPMENT - 8.0%
58,406 EMC Corporation+........... 4,493,611
24,680 Sun Microsystems, Inc.+.... 2,244,338
-----------
6,737,949
-----------
CONSUMER CREDIT AND
MORTGAGES - 0.4%
6,855 American Express Company... 357,317
-----------
CONSUMER SERVICES - 1.0%
25,907 Costco Wholesale
Corporation................ 854,931
-----------
DEPARTMENT AND DISCOUNT
STORES - 3.2%
46,554 Wal-Mart Stores, Inc....... 2,682,674
-----------
<CAPTION>
SHARES VALUE
<C> <S> <C>
--------------------------------------------------------------------
DIVERSIFIED ELECTRONICS -
7.0%
14,209 Agilent Technologies
Inc.+...................... $ 1,047,914
70,000 Flextronics International
Ltd.+...................... 4,808,125
-----------
5,856,039
-----------
DIVERSIFIED MANUFACTURING -
8.3%
12,236 Corning Inc................ 3,302,190
3,703 Estee Lauder Companies
Inc........................ 183,067
49,957 General Electric Company... 2,647,721
14,446 Kimberly-Clark
Corporation................ 828,839
-----------
6,961,817
-----------
ELECTRICAL EQUIPMENT - 1.5%
12,934 Sony Corporation, ADR...... 1,219,838
-----------
FINANCE - MISCELLANEOUS -
8.5%
38,147 Citigroup Inc.............. 2,298,357
48,919 Fannie Mae................. 2,552,959
26,982 Morgan Stanley Dean
Witter & Company........... 2,246,252
-----------
7,097,568
-----------
HOUSING AND FURNISHING -
0.2%
8,056 M.D.C. Holdings, Inc....... 150,043
-----------
INTERGRATED OIL - 1.8%
27,477 BP Amoco plc, ADR.......... 1,554,168
-----------
LODGING AND RECREATION -
1.5%
20,592 Four Seasons Hotels Inc.... 1,280,565
-----------
MEDICAL DEVICES AND
SUPPLIES - 5.8%
24,461 Genentech, Inc.+........... 4,207,292
8,673 Priority Healthcare
Corporation+............... 644,512
-----------
4,851,804
-----------
NETWORKING AND
TELECOMMUNICATIONS
EQUIPMENT - 1.8%
24,006 Cisco Systems, Inc.+....... 1,525,881
-----------
OILFIELD SERVICES - 2.4%
11,690 Halliburton Company........ 551,622
19,723 Schlumberger Ltd........... 1,471,829
-----------
2,023,451
-----------
PUBLISHING AND
ADVERTISING - 0.5%
11,531 New York Times Company,
Class A.................... 455,475
-----------
RAILROADS, TRUCKING AND
SHIPPING - 0.3%
4,557 United Parcel
Service, Inc............... 268,863
-----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
18
<PAGE>
Nations Funds
NATIONS ANNUITY TRUST -- MARSICO GROWTH & INCOME PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
--------------------------------------------------------------------
SEMICONDUCTORS - 5.6%
27,873 Applied
Materials, Inc.+........... $ 2,525,990
794 Chartered Semiconductor
Manufacturing Limitied,
ADR+....................... 71,460
30,311 Texas Instruments Inc...... 2,081,987
-----------
4,679,437
-----------
SOFTWARE - 6.8%
11,395 Adobe Systems Inc.......... 1,481,350
10,489 Microsoft Corporation+..... 839,120
38,298 Oracle Corporation+........ 3,219,425
1,312 VERITAS Software
Corporation................ 148,277
-----------
5,688,172
-----------
SPECIALTY STORES - 4.3%
45,812 Home Depot Inc............. 2,287,737
19,974 Tiffany & Company.......... 1,348,245
-----------
3,635,982
-----------
TELECOMMUNICATIONS
SERVICES - 4.8%
16,540 General Motors Corporation,
Class H+................... 1,451,385
22,898 Nortel Networks
Corporation................ 1,562,789
25,345 Vodafone AirTouch plc,
ADR........................ 1,050,233
-----------
4,064,407
-----------
UTILITIES - MISCELLANEOUS - 4.0%
36,949 Ericsson (L.M.) Telephone
Company, Class B, ADR...... 738,980
8,775 SBC Communications Inc..... 379,519
37,278 Sprint Corporation (PCS
Group)+.................... 2,218,041
-----------
3,336,540
-----------
TOTAL COMMON STOCKS
(Cost $62,199,555)....... 78,354,499
-----------
<CAPTION>
PRINCIPAL
AMOUNT
------
<C> <S> <C>
CORPORATE BONDS AND NOTES - 0.1%
(Cost $97,155)
HOUSING AND FURNISHING -
0.1%
$ 100,000 M.D.C. Holdings, Inc.,
8.375% 02/01/08............ 88,500
-----------
U.S. GOVERNMENT AND AGENCY
OBLIGATIONS - 6.5%
(Cost $5,498,044)
FEDERAL HOME LOAN BANK
(FHLB) - 6.5%
5,500,000 Discount note due
07/03/00................... 5,497,067
-----------
<CAPTION>
SHARES VALUE
------ -----
<C> <S> <C>
<CAPTION>
---------------------------------------------------------------------
INVESTMENT COMPANIES - 5.5%
<C> <S> <C>
(Cost $4,658,861)
4,658,861 Nations Cash Reserves#..... $ 4,658,861
-----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
----------------------------------------------------------
<C> <S> <C> <C>
TOTAL INVESTMENTS
(Cost $72,453,615*)... 105.4% 88,598,927
-----------
OTHER ASSETS AND
LIABILITIES (NET)..... (5.4)%
Cash............................. $ 42
Receivable for investment
securities sold................ 5,607,880
Receivable for Fund shares
sold........................... 33,362
Dividends receivable............. 26,976
Interest receivable.............. 3,968
Unamortized organization costs... 10,986
Collateral on securities
loaned......................... (4,568,861)
Payable for Fund shares
redeemed....................... (1,135)
Investment advisory fee
payable........................ (39,423)
Administration fee payable....... (15,312)
Payable for investment securities
purchased...................... (5,586,067)
Accrued Trustees' fees and
expenses....................... (8,917)
Accrued expenses and other
liabilities.................... (31,758)
-----------
TOTAL OTHER ASSETS AND
LIABILITIES (NET).............. (4,568,259)
-----------
NET ASSETS.............. 100.0% $84,030,668
===== ===========
NET ASSETS CONSIST OF:
Accumulated net investment
loss........................... $ (54,323)
Accumulated net realized gain on
investments sold............... 1,816,405
Net unrealized appreciation of
investments.................... 16,145,312
Paid-in capital.................. 66,123,274
-----------
NET ASSETS....................... $84,030,668
===========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE
($84,030,668 DIVIDED BY
4,599,949 shares
outstanding)................... $ 18.27
===========
</TABLE>
-----------------
<TABLE>
<S> <C>
* Federal Income Tax Information: Net unrealized
appreciation of $16,145,312 on investment securities was
comprised of gross appreciation of $18,874,100 and gross
depreciation of $2,728,788 for Federal income tax
purposes. At June 30, 2000, the aggregate cost of
securities for Federal income tax purposes was
$72,453,615.
+ Non-income producing security.
# Money market mutual fund registered under the Investment
Company Act of 1940, as amended, and sub-advised by Banc
of America Capital Management, Inc. A portion of this
amount represents cash collateral received from securities
lending activity (Note 8). The portion that represents
cash collateral is $4,568,861.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
Nations Funds
NATIONS ANNUITY TRUST -- MANAGED INDEX PORTFOLIO
STATEMENT OF NET ASSETS JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
---------------------------------------------------------------------
COMMON STOCKS - 94.0%
AEROSPACE AND DEFENSE - 0.8%
4,000 Boeing Company.............. $ 167,250
1 Honeywell International
Inc......................... 34
200 Northrop Grumman
Corporation................. 13,250
-----------
180,534
-----------
AIRLINES - 0.1%
600 Delta Air Lines, Inc........ 30,338
-----------
APPAREL AND TEXTILES - 0.1%
300 Nike, Inc., Class B......... 11,944
100 Springs Industries Inc.,
Class A..................... 3,200
-----------
15,144
-----------
AUTOMOTIVE - 1.0%
2,900 Ford Motor Company.......... 124,699
800 General Motors
Corporation................. 46,450
600 Johnson Controls Inc........ 30,788
600 PACCAR, Inc................. 23,813
379 Visteon Corporation+........ 4,595
-----------
230,345
-----------
BEVERAGES - 1.9%
1,200 Anheuser-Busch
Companies, Inc.............. 89,625
3,000 Coca-Cola Company........... 172,312
1,400 Coca-Cola Enterprises
Inc......................... 22,838
2,600 PepsiCo, Inc................ 115,538
800 Seagram Company Ltd......... 46,400
-----------
446,713
-----------
BROADCASTING AND CABLE -
2.4%
1,700 Comcast Corporation,
Class A+.................... 68,850
2,300 Time Warner Inc............. 174,800
2,800 Viacom Inc., Class B+....... 190,925
3,600 Walt Disney Company+........ 139,725
-----------
574,300
-----------
CHEMICALS - BASIC - 1.1%
900 Dow Chemical Company........ 27,169
1,200 E.I. duPont de Nemours and
Company..................... 52,500
400 FMC Corporation+............ 23,200
1,400 Mallinckrodt Group Inc...... 60,813
<CAPTION>
SHARES VALUE
<C> <S> <C>
---------------------------------------------------------------------
CHEMICALS - BASIC
(CONTINUED)
1,800 Union Carbide Corporation... $ 89,099
-----------
252,781
-----------
COMMERCIAL BANKING - 2.0%
3,000 AmSouth Bancorporation...... 47,250
1,900 First Security
Corporation................. 25,769
1,200 Golden West Financial
Corporation................. 48,975
500 KeyCorp..................... 8,813
2,800 Mellon Financial
Corporation................. 102,025
800 Northern Trust
Corporation................. 52,050
700 SouthTrust Corporation...... 15,838
300 State Street Corporation.... 31,819
3,700 Wells Fargo Company......... 143,374
-----------
475,913
-----------
COMMERCIAL SERVICES - 0.5%
3,500 Allied Waste
Industries, Inc.+........... 35,000
500 Interpublic Group
Companies, Inc.............. 21,500
200 Omnicom Group Inc........... 17,813
600 Paychex, Inc................ 25,200
500 Waste Management, Inc.+..... 9,500
-----------
109,013
-----------
COMPUTER SERVICES - 1.1%
4,200 America Online Inc.+........ 221,550
500 Automatic Data Processing
Inc......................... 26,781
100 Computer Sciences
Corporation+................ 7,469
-----------
255,800
-----------
COMPUTERS AND OFFICE
EQUIPMENT - 7.8%
300 Adaptec, Inc.+.............. 6,825
1,600 Apple Computer Inc.+........ 83,800
5,400 Dell Computer
Corporation+................ 266,287
3,800 EMC Corporation+............ 292,362
1,800 Hewlett-Packard Company..... 224,775
3,500 International Business
Machines Corporation........ 383,468
400 Lexmark International
Group, Inc., Class A+....... 26,900
600 Network Appliance, Inc.+.... 48,300
1,900 Pitney Bowes, Inc........... 76,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
20
<PAGE>
Nations Funds
NATIONS ANNUITY TRUST -- MANAGED INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
---------------------------------------------------------------------
COMPUTERS AND OFFICE
EQUIPMENT (CONTINUED)
2,800 Seagate Technology Inc.+.... $ 154,000
1,100 Solectron Corporation+...... 46,063
2,900 Sun Microsystems, Inc.+..... 263,719
900 Unisys Corporation+......... 13,106
-----------
1,885,605
-----------
CONGLOMERATES - 1.5%
1,200 Dover Corporation........... 48,675
300 Rockwell International
Corporation................. 9,450
5,300 Tyco International Ltd...... 251,087
900 United Technologies
Corporation................. 52,988
-----------
362,200
-----------
CONSUMER CREDIT AND
MORTGAGES - 0.5%
300 American Express Company.... 15,638
500 Household
International, Inc.......... 20,781
900 Providian Financial
Corporation................. 81,000
-----------
117,419
-----------
CONSUMER SERVICES - 0.5%
2,700 SFX Entertainment, Inc.+.... 122,344
-----------
DEPARTMENT AND DISCOUNT
STORES - 2.7%
1,800 Federated Department
Stores, Inc.+............... 60,750
1,600 Target Corporation.......... 92,800
8,400 Wal-Mart Stores, Inc.++..... 484,050
-----------
637,600
-----------
DIVERSIFIED ELECTRONICS -
0.8%
686 Agilent Technologies
Inc.+....................... 50,593
500 KLA-Tencor Corporation+..... 29,281
500 LSI Logic Corporation+...... 27,063
1,100 Teradyne, Inc.+............. 80,849
-----------
187,786
-----------
DIVERSIFIED MANUFACTURING - 5.7%
200 Black & Decker
Corporation................. 7,863
500 Corning Inc................. 134,937
1,000 Eastman Kodak Company....... 59,500
700 Energizer Holdings Inc.+.... 12,775
<CAPTION>
SHARES VALUE
<C> <S> <C>
---------------------------------------------------------------------
DIVERSIFIED MANUFACTURING (CONTINUED)
18,100 General Electric
Company++................... $ 959,299
1,200 Kimberly-Clark
Corporation................. 68,850
1,200 Procter & Gamble Company.... 68,700
2,300 Sherwin-Williams Company.... 48,731
-----------
1,360,655
-----------
ELECTRIC POWER -
NON NUCLEAR - 1.7%
900 Constellation Energy........ 29,306
1,300 Duke Energy Corporation..... 73,287
600 Edison International........ 12,300
1,000 Entergy Corporation......... 27,188
3,000 FirstEnergy Corporation..... 70,125
1,600 PECO Energy Company......... 64,500
2,100 Public Service Enterprise
Group....................... 72,713
1,500 Unicom Corporation.......... 58,031
-----------
407,450
-----------
ELECTRICAL EQUIPMENT - 0.1%
600 Conexant Systems Inc.+...... 29,175
-----------
ENERGY - MISCELLANEOUS -
0.1%
500 Reliant Energy Inc.......... 14,781
-----------
FINANCE - MISCELLANEOUS -
5.3%
8,000 Citigroup Inc............... 482,000
3,100 Fannie Mae.................. 161,781
1,300 Freddie Mac................. 52,650
1,200 J.P. Morgan & Company
Inc......................... 132,150
900 MBNA Corporation............ 24,413
400 Merrill Lynch & Company
Inc......................... 46,000
3,300 Morgan Stanley Dean
Witter & Company............ 274,725
1,000 PNC Bank Corporation........ 46,875
1,100 SLM Holding Corporation..... 41,181
-----------
1,261,775
-----------
FOOD AND DRUG STORES - 0.7%
1,700 Safeway, Inc.+.............. 76,713
5,000 Supervalu Inc............... 95,312
-----------
172,025
-----------
FOOD PRODUCTS - 1.6%
1,200 Bestfoods................... 83,100
600 H.J. Heinz Company.......... 26,250
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
21
<PAGE>
Nations Funds
NATIONS ANNUITY TRUST -- MANAGED INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
---------------------------------------------------------------------
FOOD PRODUCTS (CONTINUED)
600 Kellogg Company............. $ 17,850
4,300 Ralston Purina Group........ 85,730
2,600 Sara Lee Corporation........ 50,213
1,300 SYSCO Corporation........... 54,763
1,500 Unilever NV................. 64,500
-----------
382,406
-----------
HEALTH SERVICES - 0.5%
1,500 UnitedHealth Group Inc...... 128,625
-----------
HEAVY MACHINERY - 0.1%
400 Deere & Company............. 14,800
200 Pall Corporation............ 3,700
-----------
18,500
-----------
HOUSEHOLD PRODUCTS - 0.6%
1,000 Alberto-Culver Company,
Class B..................... 30,563
300 Avon Products, Inc.......... 13,350
1,800 Colgate-Palmolive Company... 107,775
-----------
151,688
-----------
HOUSING AND FURNISHING -
0.2%
1,300 Pulte Corporation........... 28,113
600 Whirlpool Corporation....... 27,975
-----------
56,088
-----------
INSURANCE - 2.7%
100 Aetna Life and Casualty
Company..................... 6,419
700 Aflac, Inc.................. 32,156
2,100 American International
Group, Inc.................. 246,750
700 CIGNA Corporation........... 65,450
1,100 Conseco Inc................. 10,725
1,700 Lincoln National Corporation
Ltd......................... 61,413
2,200 Loews Corporation........... 132,000
400 Marsh & McLennan Companies
Inc......................... 41,775
900 MGIC Investment
Corporation................. 40,950
-----------
637,638
-----------
INTERGRATED OIL - 5.2%
100 Amerada Hess Corporation.... 6,175
<CAPTION>
SHARES VALUE
<C> <S> <C>
---------------------------------------------------------------------
INTERGRATED OIL (CONTINUED)
200 Apache Corporation.......... $ 11,763
1,000 BP Amoco plc, ADR........... 56,563
1,400 Chevron Corporation......... 118,737
5,700 Exxon Mobil Corporation++... 447,449
1,400 Kerr-McGee Corporation...... 82,513
2,500 Occidental Petroleum
Corporation................. 52,656
1,000 Phillips Petroleum
Company..................... 50,688
4,500 Royal Dutch Petroleum
Company..................... 277,030
600 Texaco Inc.................. 31,950
1,000 Transocean Sedco Forex
Inc......................... 53,438
2,700 USX-Marathon Group Inc...... 67,669
-----------
1,256,631
-----------
INVESTMENT SERVICES - 1.9%
2,250 Charles Schwab
Corporation................. 75,656
4,200 Chase Manhattan
Corporation................. 193,463
4,700 FleetBoston Financial
Corporation................. 159,800
100 Lehman Brothers Holdings
Inc......................... 9,456
200 Paine Webber Group, Inc..... 9,100
-----------
447,475
-----------
LODGING AND RECREATION -
0.8%
400 Brunswick Corporation....... 6,625
700 Carnival Corporation........ 13,650
2,900 Cendant Corporation+........ 40,600
2,000 Darden Restaurants Inc...... 32,500
600 Harley-Davidson Inc......... 23,100
700 Hilton Hotels Corporation... 6,563
2,200 Tricon Global Restaurants
Inc.+....................... 62,150
-----------
185,188
-----------
MEDICAL DEVICES AND
SUPPLIES - 2.7%
2,800 Abbott Laboratories......... 124,775
400 Allergan, Inc............... 29,800
2,200 Baxter International
Inc.+....................... 154,688
500 Becton Dickinson &
Company..................... 14,344
600 Cardinal Health, Inc........ 44,400
1,900 Johnson & Johnson........... 193,562
900 Medtronic, Inc.............. 44,831
400 PE Corp-PE Biosystems
Group....................... 26,350
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
22
<PAGE>
Nations Funds
NATIONS ANNUITY TRUST -- MANAGED INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
---------------------------------------------------------------------
MEDICAL DEVICES AND
SUPPLIES (CONTINUED)
500 Pharmacia Corporation....... $ 25,844
-----------
658,594
-----------
METALS AND MINING - 1.2%
700 Alcan Aluminium Ltd......... 21,700
2,600 Alcoa Inc................... 75,400
700 Barrick Gold Corporation.... 12,731
500 Homestake Mining Company+... 3,438
500 Inco Limited+............... 7,688
2,000 Minnesota Mining &
Manufacturing Company....... 164,999
300 Newmont Mining
Corporation................. 6,488
-----------
292,444
-----------
NATURAL GAS DISTRIBUTION -
0.2%
200 Enron Corporation........... 12,900
200 Peoples Energy
Corporation................. 6,475
200 Sempra Energy............... 3,400
800 Williams Companies, Inc..... 33,350
-----------
56,125
-----------
NETWORKING AND
TELECOMMUNICATIONS
EQUIPMENT - 5.2%
600 3Com Corporation+........... 34,575
1,935 ADC
Telecommunications, Inc.+.... 162,298
12,275 Cisco Systems, Inc.+++...... 780,230
300 Comverse
Technology, Inc.+........... 27,900
4,200 Lucent
Technologies, Inc........... 248,850
-----------
1,253,853
-----------
OILFIELD SERVICES - 0.4%
600 Baker Hughes Inc............ 19,200
1,000 Schlumberger Ltd............ 74,625
-----------
93,825
-----------
PACKAGING AND CONTAINERS - 0.2%
300 Sealed Air Corporation+..... 15,713
1,000 Tupperware Corporation...... 22,000
-----------
37,713
-----------
PAPER AND FOREST PRODUCTS - 0.3%
100 Georgia-Pacific
Corporation................. 2,625
500 Temple-Inland Inc........... 21,000
<CAPTION>
SHARES VALUE
<C> <S> <C>
---------------------------------------------------------------------
PAPER AND FOREST PRODUCTS (CONTINUED)
1,400 Weyerhaeuser Company........ $ 60,200
-----------
83,825
-----------
PHARMACEUTICALS - 7.2%
500 American Home Products
Corporation................. 29,375
1,900 Amgen Inc.+................. 133,475
3,800 Bristol-Myers Squibb
Company..................... 221,350
600 Eli Lilly and Company....... 59,925
5,300 Merck & Company, Inc........ 406,113
15,625 Pfizer Inc.................. 749,999
3,200 Schering-Plough
Corporation................. 161,600
-----------
1,761,837
-----------
PUBLISHING AND
ADVERTISING - 0.4%
1,200 Dow Jones & Company Inc..... 87,900
-----------
RAILROADS, TRUCKING AND
SHIPPING - 0.4%
700 Burlington Northern Santa Fe
Inc......................... 16,056
200 FedEx Corporation+.......... 7,600
600 Ryder System Inc............ 11,363
1,500 Union Pacific Corporation... 55,781
-----------
90,800
-----------
SEMICONDUCTORS - 6.6%
600 Analog Devices, Inc.+....... 45,600
1,200 Applied Materials, Inc.+.... 108,750
6,200 Intel Corporation++......... 828,862
1,800 Micron Technology, Inc...... 158,512
5,400 Motorola, Inc............... 156,938
1,000 National Semiconductor
Corporation+................ 56,750
3,000 Texas Instruments Inc.++.... 206,062
600 Xilinx, Inc.+............... 49,538
-----------
1,611,012
-----------
SOFTWARE - 6.5%
200 Adobe Systems Inc........... 26,000
400 Cabletron Systems, Inc.+.... 10,100
800 Citrix Systems, Inc.+....... 15,150
1,500 Computer Associates
International Inc........... 76,781
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
23
<PAGE>
Nations Funds
NATIONS ANNUITY TRUST -- MANAGED INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
---------------------------------------------------------------------
SOFTWARE (CONTINUED)
2,300 Electronic Data Systems
Corporation................. $ 94,875
1,000 First Data Corporation...... 49,625
9,400 Microsoft Corporation+++.... 751,999
600 Novell Inc.+................ 5,550
5,100 Oracle Corporation+......... 428,719
500 Peoplesoft, Inc.+........... 8,375
1,000 Yahoo! Inc.+................ 123,875
-----------
1,591,049
-----------
SPECIALTY STORES - 2.1%
400 Bed Bath & Beyond, Inc.+.... 14,500
1,300 Best Buy Company, Inc.+..... 82,225
900 Circuit City Stores -
Circuit City Group.......... 29,869
1,800 Gap Inc..................... 56,250
4,100 Home Depot Inc.............. 204,743
800 Limited Inc................. 17,300
1,000 Lowe's Companies Inc........ 41,063
1,300 Office Depot, Inc.+......... 8,125
600 TJX Companies Inc........... 11,250
1,000 Walgreen Company............ 32,188
-----------
497,513
-----------
TELECOMMUNICATIONS
SERVICES - 3.0%
1,755 Global Crossing, Ltd.+...... 46,178
5,200 Nortel Networks
Corporation................. 354,900
1,300 QUALCOMM Inc.+.............. 78,000
300 Scientific-Atlanta, Inc..... 22,350
4,900 WorldCom, Inc.+............. 224,788
-----------
726,216
-----------
TOBACCO - 0.6%
5,100 Philip Morris Companies
Inc......................... 135,469
-----------
UTILITIES - MISCELLANEOUS -
5.0%
100 ALLTEL Corporation.......... 6,194
4,845 AT&T Corporation............ 153,223
700 Bell Atlantic Corporation... 35,569
5,800 BellSouth Corporation....... 247,224
3,300 GTE Corporation............. 205,425
1,400 Nextel
Communications, Inc.+....... 85,663
5,400 SBC Communications Inc...... $ 233,550
<CAPTION>
SHARES VALUE
<C> <S> <C>
---------------------------------------------------------------------
UTILITIES - MISCELLANEOUS
(CONTINUED)
2,500 Sprint Corporation (FON
Group)...................... 127,500
1,600 Sprint Corporation (PCS
Group)+..................... 95,200
-----------
1,189,548
-----------
TOTAL COMMON STOCKS
(Cost $18,838,304)........ 22,561,658
-----------
<CAPTION>
PRINCIPAL
AMOUNT
---------------------
SHORT TERM INVESTMENTS - 0.4%
<C> <S> <C>
(Cost $88,851)
U.S. TREASURY BILLS - 0.4%
$ 90,000 5.995%** 09/21/00++.......... 88,862
-----------
<CAPTION>
SHARES
---------------------
INVESTMENT COMPANIES - 5.8%
<C> <S> <C>
(Cost $1,396,000)
1,396,000 Nations Cash Reserves#....... 1,396,000
-----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
----------------------------------------------------------
<C> <S> <C> <C>
TOTAL INVESTMENTS
(Cost $20,323,155*)... 100.2% 24,046,520
-----------
OTHER ASSETS AND
LIABILITIES
(NET)................. (0.2)%
Receivable for investment
securities
sold........................... $ 68,094
Receivable for Fund shares
sold........................... 7,398
Dividends receivable............. 21,110
Interest receivable.............. 6,357
Receivable from investment
advisor........................ 2,202
Unamortized organization costs... 10,986
Variation margin/due to broker... (3,255)
Administration fee payable....... (4,513)
Shareholder servicing and
distribution
fees payable................... (76,994)
Due to custodian................. (19,945)
Accrued Trustees' fees and
expenses....................... (9,001)
Accrued expenses and other
liabilities.................... (47,096)
-----------
TOTAL OTHER ASSETS AND
LIABILITIES
(NET).......................... (44,657)
-----------
NET ASSETS.............. 100.0% $24,001,863
===== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
24
<PAGE>
Nations Funds
NATIONS ANNUITY TRUST -- MANAGED INDEX PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<C> <S> <C> <C>
NET ASSETS CONSIST OF:
Undistributed net investment
income......................... $ 60,804
Accumulated net realized loss on
investments sold and futures
contracts...................... (507,081)
Net unrealized appreciation of
investments and futures
contracts...................... 3,709,802
Paid-in capital.................. 20,738,338
-----------
NET ASSETS....................... $24,001,863
===========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE
($24,001,863 DIVIDED BY
1,862,469 shares
outstanding)................... $ 12.89
===========
</TABLE>
-----------------------------------------------------
<TABLE>
<S> <C>
* Federal Income Tax Information: Net unrealized
appreciation of $3,723,365 on investment securities was
comprised of gross appreciation of $4,718,876 and gross
depreciation of $995,511 for Federal income tax purposes.
At June 30, 2000, the aggregate cost of securities for
Federal income tax purposes was $20,323,155.
** Rate represents annualized yield at date of purchase.
+ Non-income producing security.
++ All or a portion of security segregated as collateral for
futures contracts.
# Money market mutual fund registered under the Investment
Company Act of 1940, as amended, and sub-advised by Banc
of America Capital Management, Inc.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
25
<PAGE>
Nations Funds
NATIONS ANNUITY TRUST -- VALUE PORTFOLIO
STATEMENT OF NET ASSETS JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
-------------------------------------------------------------------
COMMON STOCKS - 93.9%
AEROSPACE AND DEFENSE -
1.2%
3,631 Honeywell International
Inc........................ $ 122,319
----------
AUTOMOTIVE - 3.3%
5,320 Ford Motor Company......... 228,760
1,650 Johnson Controls Inc....... 84,666
696 Visteon Corporation+....... 8,439
----------
321,865
----------
BEVERAGES - 1.2%
2,630 PepsiCo, Inc............... 116,871
----------
CHEMICALS - BASIC - 2.6%
3,900 Dow Chemical Company....... 117,731
3,116 E.I. duPont de Nemours and
Company.................... 136,325
----------
254,056
----------
COMMERCIAL BANKING - 2.3%
6,125 Mellon Financial
Corporation................ 223,180
----------
COMPUTERS AND OFFICE
EQUIPMENT - 4.5%
1,675 Adaptec, Inc.+............. 38,106
1,775 International Business
Machines Corporation....... 194,473
2,350 Pitney Bowes, Inc.......... 94,000
5,725 Xerox Corporation.......... 118,794
----------
445,373
----------
CONGLOMERATES - 2.3%
1,250 Rockwell International
Corporation................ 39,375
3,125 United Technologies
Corporation................ 183,984
----------
223,359
----------
DEPARTMENT AND DISCOUNT
STORES - 1.4%
2,400 Target Corporation......... 139,200
----------
DIVERSIFIED ELECTRONICS -
1.9%
800 CTS Corporation............ 36,000
2,725 LSI Logic Corporation+..... 147,491
----------
183,491
----------
<CAPTION>
SHARES VALUE
<C> <S> <C>
-------------------------------------------------------------------
DIVERSIFIED
MANUFACTURING - 1.8%
2,275 Eastman Kodak Company...... $ 135,362
700 Textron Inc................ 38,019
----------
173,381
----------
ELECTRIC POWER -
NON NUCLEAR - 0.9%
2,775 Ameren Corporation......... 93,656
----------
ELECTRICAL EQUIPMENT - 2.0%
3,275 Emerson Electric Company... 197,728
----------
ENERGY - MISCELLANEOUS - 2.4%
4,625 Energy East Corporation.... 88,164
7,300 TECO Energy, Inc........... 146,456
----------
234,620
----------
FINANCE - MISCELLANEOUS - 8.8%
2,900 Associates First Capital
Corporation................ 64,706
4,397 Citigroup Inc.............. 264,919
3,250 Freddie Mac................ 131,625
850 J.P. Morgan & Company
Inc........................ 93,606
5,300 MBNA Corporation........... 143,763
1,525 Merrill Lynch & Company
Inc........................ 175,375
----------
873,994
----------
FOOD AND DRUG STORES - 1.1%
3,150 Albertson's Inc............ 104,738
----------
FOOD PRODUCTS - 3.6%
6,775 ConAgra Inc................ 129,148
3,450 H.J. Heinz Company......... 150,938
2,525 Kellogg Company............ 75,119
----------
355,205
----------
HEAVY MACHINERY - 2.4%
3,450 Caterpillar Inc............ 116,869
3,525 Parker Hannifin
Corporation................ 120,731
----------
237,600
----------
HOUSEHOLD PRODUCTS - 1.5%
3,275 Avon Products, Inc......... 145,738
----------
HOUSING AND FURNISHING - 0.4%
1,675 Stanley Works.............. 39,781
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
26
<PAGE>
Nations Funds
NATIONS ANNUITY TRUST -- VALUE PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
-------------------------------------------------------------------
INSURANCE - 1.8%
1,475 CIGNA Corporation.......... $ 137,912
1,150 Lincoln National
Corporation Ltd............ 41,544
----------
179,456
----------
INTERGRATED OIL - 9.8%
1,900 BP Amoco plc, ADR.......... 107,469
1,350 Chevron Corporation........ 114,497
6,314 Conoco, Inc................ 155,088
3,720 Exxon Mobil Corporation.... 292,019
3,315 Royal Dutch Petroleum
Company.................... 204,079
3,125 Unocal Corporation......... 103,516
----------
976,668
----------
INVESTMENT SERVICES - 3.6%
3,612 Chase Manhattan
Corporation................ 166,378
4,180 Paine Webber
Group, Inc................. 190,190
----------
356,568
----------
MEDICAL DEVICES AND
SUPPLIES - 4.3%
5,075 Abbott Laboratories........ 226,155
2,650 Cardinal Health, Inc....... 196,100
----------
422,255
----------
METALS AND MINING - 3.4%
4,400 Alcoa Inc.................. 127,600
1,625 Minnesota Mining &
Manufacturing Company...... 134,063
2,240 Nucor Corporation.......... 74,340
----------
336,003
----------
PAPER AND FOREST
PRODUCTS - 0.4%
1,025 Weyerhaeuser Company....... 44,075
----------
PHARMACEUTICALS - 5.0%
3,825 Bristol-Myers Squibb
Company.................... 222,806
5,350 Schering-Plough
Corporation................ 270,175
----------
492,981
----------
PUBLISHING AND
ADVERTISING - 1.1%
2,075 Knight-Ridder Inc.......... 110,364
----------
<CAPTION>
SHARES VALUE
<C> <S> <C>
-------------------------------------------------------------------
RAILROADS, TRUCKING AND
SHIPPING - 1.1%
2,875 FedEx Corporation+......... $ 109,250
----------
SEMICONDUCTORS - 1.3%
2,225 Intergrated Device
Technology, Inc.+.......... 133,222
----------
SOFTWARE - 2.3%
1,850 Computer Associates
International Inc.......... 94,697
2,725 First Data Corporation..... 135,228
----------
229,925
----------
SPECIALTY STORES - 1.9%
3,250 Barnes & Noble, Inc.+...... 72,313
2,775 Lowe's Companies Inc....... 113,948
----------
186,261
----------
TELECOMMUNICATIONS
SERVICES - 2.3%
3,525 American Power Conversion
Corporation+............... 143,864
1,802 WorldCom, Inc.+............ 82,667
----------
226,531
----------
TOBACCO - 0.9%
5,975 UST Inc.................... 87,758
----------
UTILITIES - MISCELLANEOUS -
9.1%
4,425 American Water Works
Company, Inc............... 110,625
3,802 AT&T Corporation........... 120,238
1,225 Bell Atlantic
Corporation................ 62,245
2,775 BellSouth Corporation...... 118,284
3,200 DTE Energy Company......... 97,800
1,075 GTE Corporation............ 66,919
5,200 NICOR Inc.................. 169,651
3,545 SBC Communications Inc..... 153,321
----------
899,083
----------
TOTAL COMMON STOCKS
(Cost $8,955,304)........ 9,276,555
----------
INVESTMENT COMPANIES - 1.0%
(Cost $101,000)
101,000 Nations Cash Reserves#..... 101,000
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
27
<PAGE>
Nations Funds
NATIONS ANNUITY TRUST -- VALUE PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
<C> <S> <C>
-------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
VALUE
-----------------------------------------------------------
<C> <S> <C> <C>
TOTAL INVESTMENTS
(Cost $9,056,304*)...... 94.9% $9,377,555
----------
OTHER ASSETS AND
LIABILITIES (NET)....... 5.1%
Cash............................... $ 871
Receivable for investment
securities sold.................. 571,409
Dividends receivable............... 16,119
Interest receivable................ 1,197
Receivable from investment
advisor.......................... 2,757
Unamortized organization costs..... 10,986
Payable for Fund shares redeemed... (449)
Administration fee payable......... (1,931)
Payable for investment securities
purchased........................ (67,248)
Accrued Trustees' fees and
expenses......................... (8,214)
Accrued expenses and other
liabilities...................... (19,985)
----------
TOTAL OTHER ASSETS AND LIABILITIES
(NET)............................ 505,512
----------
NET ASSETS................ 100.0% $9,883,067
===== ==========
NET ASSETS CONSIST OF:
Undistributed net investment
income........................... $ 48,044
Accumulated net realized loss on
investments sold................. (296,134)
Net unrealized appreciation of
investments...................... 321,251
Paid-in capital.................... 9,809,906
----------
NET ASSETS......................... $9,883,067
==========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE
($9,883,067 DIVIDED BY 962,045
shares outstanding).............. $ 10.27
==========
</TABLE>
-----------------------------------------------------
<TABLE>
<S> <C>
* Federal Income Tax Information: Net unrealized
appreciation of $321,251 on investment securities was
comprised of gross appreciation of $971,438 and gross
depreciation of $650,187 for Federal income tax purposes.
At June 30, 2000, the aggregate cost of securities for
Federal income tax purposes was $9,056,304.
+ Non-income producing security.
# Money market mutual fund registered under the Investment
Company Act of 1940, as amended, and sub-advised by Banc
of America Capital Management, Inc.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
28
<PAGE>
Nations Funds
NATIONS ANNUITY TRUST -- BALANCED ASSETS PORTFOLIO
STATEMENT OF NET ASSETS JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
-------------------------------------------------------------------
COMMON STOCKS - 53.0%
AEROSPACE AND DEFENSE -
0.7%
1,309 Honeywell International
Inc........................ $ 44,097
----------
AUTOMOTIVE - 2.5%
1,855 Ford Motor Company......... 79,766
625 General Motors
Corporation................ 36,289
750 Johnson Controls Inc....... 38,484
242 Visteon Corporation+....... 2,934
----------
157,473
----------
CHEMICALS - BASIC - 1.4%
1,200 Dow Chemical Company....... 36,225
1,187 E.I. duPont de Nemours and
Company.................... 51,931
----------
88,156
----------
COMPUTERS AND OFFICE
EQUIPMENT - 2.5%
600 Adaptec, Inc.+............. 13,650
625 International Business
Machines Corporation....... 68,477
900 Pitney Bowes, Inc.......... 36,000
2,000 Xerox Corporation.......... 41,500
----------
159,627
----------
CONGLOMERATES - 1.4%
1,175 Rockwell International
Corporation................ 37,013
860 United Technologies
Corporation................ 50,632
----------
87,645
----------
DEPARTMENT AND DISCOUNT
STORES - 2.2%
700 Federated Department
Stores, Inc.+.............. 23,625
1,275 May Department Stores
Company.................... 30,600
1,150 Sears, Roebuck and
Company.................... 37,519
775 Target Corporation......... 44,950
----------
136,694
----------
DIVERSIFIED
MANUFACTURING - 1.5%
825 Eastman Kodak Company...... 49,087
<CAPTION>
SHARES VALUE
<C> <S> <C>
-------------------------------------------------------------------
DIVERSIFIED MANUFACTURING
(CONTINUED)
575 Kimberly-Clark
Corporation................ $ 32,991
225 Procter & Gamble Company... 12,881
----------
94,959
----------
ELECTRIC POWER - NON
NUCLEAR - 0.5%
1,000 Ameren Corporation......... 33,750
----------
ELECTRICAL EQUIPMENT - 1.1%
1,175 Emerson Electric Company... 70,941
----------
ENERGY - MISCELLANEOUS - 0.8%
2,625 TECO Energy, Inc........... 52,664
----------
FINANCE - MISCELLANEOUS - 4.8%
1,760 Citigroup Inc.............. 106,039
1,175 Freddie Mac................ 47,588
275 J.P. Morgan & Company
Inc........................ 30,284
1,850 MBNA Corporation........... 50,181
575 Merrill Lynch & Company
Inc........................ 66,125
----------
300,217
----------
FOOD AND DRUG STORES - 0.6%
1,050 Albertson's Inc............ 34,913
----------
FOOD PRODUCTS - 3.5%
2,450 ConAgra Inc................ 46,703
740 General Mills Inc.......... 28,305
1,250 H.J. Heinz Company......... 54,688
1,700 Kellogg Company............ 50,575
505 Quaker Oats Company........ 37,938
----------
218,209
----------
HEALTH SERVICES - 0.6%
550 Wellpoint Health Networks
Inc.+...................... 39,841
----------
HEAVY MACHINERY - 1.6%
1,175 Caterpillar Inc............ 39,803
1,875 Parker Hannifin
Corporation................ 64,219
----------
104,022
----------
HOUSEHOLD PRODUCTS - 0.8%
1,175 Avon Products, Inc......... 52,288
----------
HOUSING AND FURNISHING - 0.9%
1,350 Stanley Works.............. 32,063
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
29
<PAGE>
Nations Funds
NATIONS ANNUITY TRUST -- BALANCED ASSETS PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
-------------------------------------------------------------------
HOUSING AND FURNISHING (CONTINUED)
525 Whirlpool Corporation...... $ 24,478
----------
56,541
----------
INSURANCE - 1.9%
540 CIGNA Corporation.......... 50,490
1,955 Lincoln National
Corporation Ltd............ 70,624
----------
121,114
----------
INTERGRATED OIL - 5.2%
500 BP Amoco plc, ADR.......... 28,281
450 Chevron Corporation........ 38,166
2,267 Conoco, Inc................ 55,683
1,286 Exxon Mobil Corporation.... 100,950
1,155 Royal Dutch Petroleum
Company.................... 71,105
375 Ultramar Diamond Shamrock
Corporation................ 9,305
850 Unocal Corporation......... 28,156
----------
331,646
----------
INVESTMENT SERVICES - 1.6%
1,635 Chase Manhattan
Corporation................ 75,312
510 Paine Webber
Group, Inc................. 23,205
----------
98,517
----------
MEDICAL DEVICES AND
SUPPLIES - 1.4%
1,950 Abbott Laboratories........ 86,897
----------
METALS AND MINING - 1.6%
1,500 Alcoa Inc.................. 43,500
575 Minnesota Mining &
Manufacturing Company...... 47,437
350 Phelps Dodge Corporation... 13,016
----------
103,953
----------
OILFIELD SERVICES - 0.3%
675 Tosco Corporation.......... 19,111
----------
PAPER AND FOREST
PRODUCTS - 0.9%
625 International Paper
Company.................... 18,633
825 Weyerhaeuser Company....... 35,475
----------
54,108
----------
<CAPTION>
SHARES VALUE
<C> <S> <C>
-------------------------------------------------------------------
PHARMACEUTICALS - 2.4%
1,250 Bristol-Myers Squibb
Company.................... $ 72,813
1,585 Schering-Plough
Corporation................ 80,042
----------
152,855
----------
PUBLISHING AND ADVERTISING - 0.9%
750 Knight-Ridder Inc.......... 39,891
300 McGraw-Hill
Companies, Inc............. 16,200
----------
56,091
----------
RAILROADS, TRUCKING AND
SHIPPING - 0.6%
1,025 FedEx Corporation+......... 38,950
----------
SEMICONDUCTORS - 0.8%
800 Intergrated Device
Technology, Inc.+.......... 47,900
----------
SOFTWARE - 1.5%
650 Computer Associates
International Inc.......... 33,272
1,250 First Data Corporation..... 62,031
----------
95,303
----------
SPECIALTY STORES - 0.9%
1,175 Barnes & Noble, Inc.+...... 26,144
800 Lowe's Companies Inc....... 32,850
----------
58,994
----------
TELECOMMUNICATIONS
SERVICES - 0.5%
655 WorldCom, Inc.+............ 30,048
----------
TOBACCO - 0.5%
2,150 UST Inc.................... 31,578
----------
UTILITIES - MISCELLANEOUS - 4.6%
1,775 American Water Works
Company, Inc............... 44,375
1,367 AT&T Corporation........... 43,231
450 Bell Atlantic
Corporation................ 22,866
1,150 DTE Energy Company......... 35,147
415 GTE Corporation............ 25,834
1,875 NICOR Inc.................. 61,171
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
30
<PAGE>
Nations Funds
NATIONS ANNUITY TRUST -- BALANCED ASSETS PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
-------------------------------------------------------------------
UTILITIES - MISCELLANEOUS (CONTINUED)
1,275 SBC Communications Inc..... $ 55,144
----------
287,768
----------
TOTAL COMMON STOCKS
(Cost $3,342,765)........ 3,346,870
----------
<CAPTION>
PRINCIPAL
AMOUNT
------
<C> <S> <C>
CORPORATE BONDS AND NOTES - 16.4%
AEROSPACE AND DEFENSE -
0.4%
$ 25,000 Raytheon Company,
7.900% 03/01/03.......... 25,119
----------
BEVERAGES - 0.8%
25,000 J. Seagram & Sons, Inc.,
6.625% 12/15/05.......... 23,928
30,000 Pepsi Bottling
Holdings, Inc.,
5.375% 02/17/04.......... 28,316
----------
52,244
----------
BROADCASTING AND CABLE - 0.9%
30,000 Clear Channel
Communications, Inc.,
7.875% 06/15/05.......... 30,086
25,000 Time Warner Inc.,
8.110% 08/15/06.......... 25,505
----------
55,591
----------
CHEMICALS - SPECIALTY -
0.4%
25,000 Rohm and Haas Company,
7.850% 07/15/29.......... 25,272
----------
COMMERCIAL BANKING - 2.1%
25,000 Abbey National plc,
6.690% 10/17/05.......... 23,973
30,000 Chase Manhattan
Corporation,
5.750% 04/15/04.......... 28,235
25,000 First Union Corporation,
7.700% 02/15/05.......... 24,867
30,000 PNC Funding Corporation,
7.000% 09/01/04.......... 29,336
30,000 Wells Fargo & Company,
6.625% 07/15/04.......... 29,263
----------
135,674
----------
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
-------------------------------------------------------------------
COMPUTER SERVICES - 0.5%
$ 30,000 Electronic Data Systems
Corporation,
6.850% 10/15/04.......... $ 29,338
----------
CONSUMER CREDIT AND
MORTGAGES - 0.5%
30,000 Capital One Bank,
8.250% 06/15/05.......... 29,941
----------
CONSUMER SERVICES - 0.5%
30,000 Union Tank Car Company,
6.680% 01/15/08.......... 28,758
----------
ENERGY - MISCELLANEOUS - 0.5%
30,000 USX Corporation,
6.650% 02/01/06.......... 28,503
----------
FINANCE - MISCELLANEOUS - 4.9%
30,000 Bear Stearns Companies
Inc.,
7.625% 02/01/05.......... 29,538
30,000 Case Credit Corporation,
6.150% 03/01/02.......... 28,664
30,000 Caterpillar Financial
Services
Corporation,
6.875% 08/01/04.......... 29,498
25,000 CIT Group, Inc.,
7.375% 03/15/03.......... 24,851
25,000 Finova Capital Corporation,
7.250% 11/08/04.......... 22,022
25,000 Ford Motor Credit Company,
7.500% 03/15/05.......... 24,876
25,000 Heller Financial, Inc.,
6.000% 03/19/04.......... 23,396
30,000 Household Finance
Corporation,
8.000% 05/09/05.......... 30,236
30,000 National Rural Utilities
Cooperative Finance
Corporation,
6.125% 05/15/05.......... 28,474
25,000 Paine Webber Group, Inc.,
6.375% 05/15/04.......... 23,605
30,000 Toyota Motor Credit
Corporation,
5.625% 11/13/03.......... 28,684
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
31
<PAGE>
Nations Funds
NATIONS ANNUITY TRUST -- BALANCED ASSETS PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
-------------------------------------------------------------------
FINANCE - MISCELLANEOUS (CONTINUED)
$ 25,000 Washington Mutual, Inc.,
7.500% 08/15/06.......... $ 24,277
----------
318,121
----------
FOOD AND DRUG STORES - 0.4%
25,000 Safeway Inc.,
7.250% 09/15/04.......... 24,733
----------
INSURANCE - 0.4%
25,000 American General Finance
Corporation,
7.450% 01/15/05.......... 24,945
----------
INTERGRATED OIL - 0.4%
25,000 Conoco Inc., Class A,
5.900% 04/15/04.......... 23,815
----------
INVESTMENT SERVICES - 1.6%
25,000 Goldman Sachs Group, LP,
6.625% 12/01/04^......... 24,141
30,000 Lehman Brothers Holdings
Inc.,
6.625% 04/01/04.......... 28,635
25,000 Merrill Lynch &
Company, Inc.,
6.000% 07/15/05.......... 23,398
25,000 Morgan Stanley Dean Witter
and Company,
5.625% 01/20/04.......... 23,469
----------
99,643
----------
MEDICAL DEVICES AND
SUPPLIES - 0.5%
30,000 Pharmacia Corporation,
5.375% 12/01/01.......... 29,195
----------
NATURAL GAS PIPELINES -
0.9%
30,000 KN Energy, Inc.,
6.450% 03/01/03.......... 29,104
30,000 Williams Companies, Inc.,
6.500% 08/01/06.......... 28,284
----------
57,388
----------
TELECOMMUNICATIONS
SERVICES - 0.7%
25,000 Sprint Capital Corporation,
6.875% 11/15/28.......... 21,689
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
-------------------------------------------------------------------
TELECOMMUNICATIONS
SERVICES (CONTINUED)
$ 25,000 Vodafone AirTouch plc,
7.625% 02/15/05.......... $ 25,034
----------
46,723
----------
TOTAL CORPORATE BONDS AND
NOTES
(Cost $1,035,353)........ 1,035,003
----------
FOREIGN BONDS AND
NOTES - 1.2%
25,000 AT&T Canada Inc.,
7.650% 09/15/06.......... 25,164
30,000 Corp Andina de Fomento,
8.875% 06/01/05.......... 31,003
25,000 Tyco International Group
SA,
6.875% 01/15/29.......... 21,378
----------
TOTAL FOREIGN BONDS AND
NOTES
(Cost $76,246)........... 77,545
----------
MORTGAGE-BACKED
SECURITIES - 19.2%
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (FNMA)
CERTIFICATES - 17.2%
268,000 6.625% 09/15/09............ 258,912
299,096 8.000% 04/01/30............ 300,433
561,360 6.500% 05/01/30............ 529,784
----------
1,089,129
----------
GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION
(GNMA) CERTIFICATES -
2.0%
123,000 8.000% 07/01/30............ 124,307
----------
TOTAL MORTGAGE-BACKED
SECURITIES
(Cost $1,210,997)........ 1,213,436
----------
U.S. TREASURY OBLIGATIONS - 7.9%
U.S. TREASURY NOTES - 3.5%
90,000 5.000% 04/30/01............ 88,931
30,000 6.625% 04/30/02............ 30,094
105,000 6.500% 05/31/02............ 105,131
----------
224,156
----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
32
<PAGE>
Nations Funds
NATIONS ANNUITY TRUST -- BALANCED ASSETS PORTFOLIO
STATEMENT OF NET ASSETS (CONTINUED) JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
-------------------------------------------------------------------
U.S. TREASURY STRIPS - 4.4%
$ 280,000 Interest only .000%
08/15/09................... $ 160,179
30,000 Principal only .000%
05/15/20................... 8,850
330,000 Principal only .000%
11/15/21................... 89,334
15,000 Principal only .000%
08/15/26................... 3,146
60,000 Principal only .000%
02/15/27................... 12,278
----------
273,787
----------
TOTAL U.S. TREASURY
OBLIGATIONS
(Cost $485,396).......... 497,943
----------
<CAPTION>
SHARES
------
<C> <S> <C>
INVESTMENT COMPANIES - 8.1%
(Cost $510,194)
510,194 Nations Cash Reserves#..... 510,194
----------
</TABLE>
<TABLE>
<CAPTION>
VALUE
-----------------------------------------------------------
<C> <S> <C> <C>
TOTAL INVESTMENTS
(Cost $6,660,951*)...... 105.8% 6,680,991
----------
OTHER ASSETS AND
LIABILITIES (NET)....... (5.8)%
Cash............................... $ 173
Receivable for investment
securities sold.................. 37,218
Dividends receivable............... 5,692
Interest receivable................ 35,830
Receivable from investment
advisor.......................... 4,827
Unamortized organization costs..... 10,986
Collateral on securities loaned.... (246,894)
Administration fee payable......... (1,214)
Payable for investment securities
purchased........................ (182,167)
Accrued Trustees' fees and
expenses......................... (8,924)
Accrued expenses and other
liabilities...................... (22,140)
----------
TOTAL OTHER ASSETS AND LIABILITIES
(NET)............................ (366,613)
----------
NET ASSETS................ 100.0% $6,314,378
===== ==========
NET ASSETS CONSIST OF:
Undistributed net investment
income........................... $ 95,424
Accumulated net realized loss on
investments sold................. (201,764)
Net unrealized appreciation of
investments...................... 20,040
Paid-in capital.................... 6,400,678
----------
NET ASSETS......................... $6,314,378
==========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE
($6,314,378 DIVIDED BY 660,008
shares outstanding).............. $ 9.57
==========
</TABLE>
-----------------
<TABLE>
<S> <C>
* Federal Income Tax Information: Net unrealized
appreciation of $20,040 on investment securities was
comprised of gross appreciation of $321,972 and gross
depreciation of $301,932 for Federal income tax purposes.
At June 30, 2000, the aggregate cost of securities for
Federal income tax purposes was $6,660,951.
^ 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.
+ Non-income producing security.
# Money market mutual fund registered under the Investment
Company Act of 1940, as amended, and sub-advised by Banc
of America Capital Management, Inc. A portion of this
amount represents cash collateral received from securities
lending activity (Note 8). The portion that represents
cash collateral is $246,894.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
33
<PAGE>
[Intentionally left blank page]
SEE NOTES TO FINANCIAL STATEMENTS.
34
<PAGE>
Nations Funds
STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
FOR THE SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
INTERNATIONAL FOCUSED
GROWTH EQUITIES
PORTFOLIO PORTFOLIO
------------- ---------
<S> <C> <C>
INVESTMENT INCOME:
Dividends (Net of foreign withholding taxes of $6,654,
$2,192, $7, $4, $434, $618, $359 and $105, respectively).. $ 45,234 $ 210,643
Interest.................................................... 27,578 345,324
Securities lending.......................................... -- 19,200
--------- -----------
Total investment income................................. 72,812 575,167
--------- -----------
EXPENSES:
Investment advisory fee..................................... 32,732 466,667
Custodian fees.............................................. 10,348 3,617
Transfer agent fees......................................... 1,130 17,124
Trustees' fees and expenses................................. 6,916 6,924
Administration fee.......................................... 9,001 143,111
Shareholder servicing and distribution fees................. 10,229 155,653
Legal and audit fees........................................ 15,468 37,880
Printing fee................................................ 3,332 2,666
Amortization of organization costs.......................... 1,496 1,496
Interest expense............................................ -- 495
Other....................................................... 2,648 3,228
--------- -----------
Total expenses.......................................... 93,300 838,861
Fees waived and expenses reimbursed by investment adviser,
administrator and/or distributor.......................... (42,156) (157,629)
Fees reduced by credits allowed by the custodian............ -- (565)
--------- -----------
Net expenses............................................ 51,144 680,667
--------- -----------
NET INVESTMENT INCOME/(LOSS)................................ 21,668 (105,500)
--------- -----------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS:
Net realized gain/(loss) from:
Security transactions..................................... 318,430 (4,600,959)
Futures contracts......................................... -- --
Foreign currency and net other assets..................... 1,723 --
--------- -----------
Net realized gain/(loss) on investments..................... 320,153 (4,600,959)
--------- -----------
Change in unrealized appreciation/(depreciation) of
Securities................................................ (454,791) (4,836,874)
Futures contracts......................................... -- --
Foreign currency and net other assets..................... 71 --
--------- -----------
Net change in unrealized appreciation/(depreciation) of
investments............................................... (454,720) (4,836,874)
--------- -----------
Net realized and unrealized gain/(loss) on investments...... (134,567) (9,437,833)
--------- -----------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS................................................ $(112,899) $(9,543,333)
========= ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
35
<PAGE>
Nations Funds
STATEMENTS OF OPERATIONS (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALLCAP AGGRESSIVE GROWTH & MANAGED BALANCED
INDEX GROWTH 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
$6,654, $2,192, $7, $4, $434, $618, $359 and $105,
respectively)...................................... $ 24,650 $ 24,140 $ 118,500 $ 117,728 $ 88,008 $ 32,558
Interest............................................. 11,035 9,358 212,022 25,111 8,907 92,989
Securities lending................................... 497 -- 10,835 -- 139 627
-------- --------- ----------- --------- --------- ---------
Total investment income.......................... 36,182 33,498 341,357 142,839 97,054 126,174
-------- --------- ----------- --------- --------- ---------
EXPENSES:
Investment advisory fee.............................. 14,967 20,168 269,512 43,751 31,724 19,889
Custodian fees....................................... 762 1,041 3,306 1,383 1,483 1,019
Transfer agent fees.................................. 2,094 1,908 9,876 4,462 2,626 1,750
Trustees' fees and expenses.......................... 6,916 6,916 6,916 6,918 7,572 6,916
Administration fee................................... 8,606 7,136 82,650 25,157 11,226 7,038
Shareholder servicing and distribution fees.......... 9,354 7,757 89,925 27,345 12,202 7,650
Legal and audit fees................................. 16,678 16,426 27,528 20,180 17,378 16,088
Printing fee......................................... 12,104 2,598 2,598 9,736 3,332 4,008
Amortization of organization costs................... 1,496 1,496 1,496 1,496 1,496 1,496
Interest expense..................................... -- -- 531 -- 202 --
Other................................................ 654 587 1,928 944 606 586
-------- --------- ----------- --------- --------- ---------
Total expenses................................... 73,631 66,033 496,266 141,372 89,847 66,440
Fees waived and expenses reimbursed by investment
adviser, administrator and/or distributor.......... (45,589) (34,910) (99,198) (59,310) (40,441) (35,561)
Fees reduced by credits allowed by the custodian..... (3) (95) (1,388) (27) (396) (129)
-------- --------- ----------- --------- --------- ---------
Net expenses..................................... 28,039 31,028 395,680 82,035 49,010 30,750
-------- --------- ----------- --------- --------- ---------
NET INVESTMENT INCOME/(LOSS)......................... 8,143 2,470 (54,323) 60,804 48,044 95,424
-------- --------- ----------- --------- --------- ---------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS:
Net realized gain/(loss) from:
Security transactions.............................. 238,936 (299,958) 1,096,855 (16,276) 96,428 88,052
Futures contracts.................................. (9,872) (66,526) -- 43,948 -- --
Foreign currency and net other assets.............. -- -- -- -- -- --
-------- --------- ----------- --------- --------- ---------
Net realized gain/(loss) on investments.............. 229,064 (366,484) 1,096,855 27,672 96,428 88,052
-------- --------- ----------- --------- --------- ---------
Change in unrealized appreciation/(depreciation) of
Securities......................................... 300,549 (117,876) (3,617,808) (227,269) (542,892) (280,867)
Futures contracts.................................. (4,177) (239) -- (15,136) -- --
Foreign currency and net other assets.............. -- -- -- -- -- --
-------- --------- ----------- --------- --------- ---------
Net change in unrealized appreciation/(depreciation)
of investments..................................... 296,372 (118,115) (3,617,808) (242,405) (542,892) (280,867)
-------- --------- ----------- --------- --------- ---------
Net realized and unrealized gain/(loss) on
investments........................................ 525,436 (484,599) (2,520,953) (214,733) (446,464) (192,815)
-------- --------- ----------- --------- --------- ---------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS......................................... $533,579 $(482,129) $(2,575,276) $(153,929) $(398,420) $ (97,391)
======== ========= =========== ========= ========= =========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
36
<PAGE>
Nations Funds
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH PORTFOLIO
------------------------------------
SIX MONTHS ENDED
6/30/00 YEAR ENDED
(UNAUDITED) 12/31/99
---------------- ----------
<S> <C> <C>
Net investment income/(loss)................................ $ 21,668 $ 14,751
Net realized gain/(loss) on investments, futures contracts,
written options and foreign currency transactions......... 320,153 225,389
Net change in unrealized appreciation/(depreciation) of
investments and assets and liabilities in foreign
currencies................................................ (454,720) 1,291,854
----------- ----------
Net increase/(decrease) in net assets resulting from
operations................................................ (112,899) 1,531,994
Distributions to shareholders from net investment income.... -- (19,866)
Distributions to shareholders in excess of net investment
income.................................................... -- --
Distributions to shareholders from net realized gain on
investments............................................... -- (111,940)
Net increase/(decrease) in net assets from Fund share
transactions.............................................. 5,537,199 2,188,381
----------- ----------
Net increase/(decrease) in net assets....................... 5,424,300 3,588,569
NET ASSETS:
Beginning of period......................................... 5,898,206 2,309,637
----------- ----------
End of period............................................... $11,322,506 $5,898,206
=========== ==========
Undistributed net investment income/(net investment loss) at
end of period............................................. $ 20,578 $ (1,090)
=========== ==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
37
<PAGE>
Nations Funds
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOCUSED EQUITIES PORTFOLIO SMALLCAP INDEX PORTFOLIO
-------------------------------- ------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED
6/30/00 YEAR ENDED 6/30/00 YEAR ENDED
(UNAUDITED) 12/31/99 (UNAUDITED) 12/31/99
---------------- ---------- ---------------- ----------
<S> <C> <C> <C> <C>
Net investment income/(loss)......................... $ (105,500) $ (93,837) $ 8,143 $ 8,742
Net realized gain/(loss) on investments, futures
contracts, written options and foreign currency
transactions....................................... (4,600,959) 2,605,756 229,064 (459,781)
Net change in unrealized appreciation/(depreciation)
of investments and assets and liabilities in
foreign currencies................................. (4,836,874) 28,089,522 296,372 886,856
------------ ------------ ---------- ----------
Net increase/(decrease) in net assets resulting from
operations......................................... (9,543,333) 30,601,441 533,579 435,817
Distributions to shareholders from net investment
income............................................. -- -- -- (8,742)
Distributions to shareholders in excess of net
investment income.................................. -- -- -- (1,765)
Distributions to shareholders from net realized gain
on investments..................................... -- (727,438) -- --
Net increase/(decrease) in net assets from Fund share
transactions....................................... 38,607,161 58,720,835 478,799 664,101
------------ ------------ ---------- ----------
Net increase/(decrease) in net assets................ 29,063,828 88,594,838 1,012,378 1,089,411
NET ASSETS:
Beginning of period.................................. 113,115,445 24,520,607 7,186,929 6,097,518
------------ ------------ ---------- ----------
End of period........................................ $142,179,273 $113,115,445 $8,199,307 $7,186,929
============ ============ ========== ==========
Undistributed net investment income/(net investment
loss) at end of period............................. $ (105,500) $ -- $ 8,143 $ --
============ ============ ========== ==========
<CAPTION>
AGGRESSIVE GROWTH PORTFOLIO
------------------------------
SIX MONTHS ENDED
6/30/00 YEAR ENDED
(UNAUDITED) 12/31/99
---------------- ----------
<S> <C> <C>
Net investment income/(loss)......................... $ 2,470 $ 13,544
Net realized gain/(loss) on investments, futures
contracts, written options and foreign currency
transactions....................................... (366,484) 124,855
Net change in unrealized appreciation/(depreciation)
of investments and assets and liabilities in
foreign currencies................................. (118,115) 385,285
----------- ----------
Net increase/(decrease) in net assets resulting from
operations......................................... (482,129) 523,684
Distributions to shareholders from net investment
income............................................. -- (13,544)
Distributions to shareholders in excess of net
investment income.................................. -- (2,847)
Distributions to shareholders from net realized gain
on investments..................................... -- --
Net increase/(decrease) in net assets from Fund share
transactions....................................... (886,420) 2,380,410
----------- ----------
Net increase/(decrease) in net assets................ (1,368,549) 2,887,703
NET ASSETS:
Beginning of period.................................. 7,684,028 4,796,325
----------- ----------
End of period........................................ $ 6,315,479 $7,684,028
=========== ==========
Undistributed net investment income/(net investment
loss) at end of period............................. $ 2,470 $ --
=========== ==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
38
<PAGE>
Nations Funds
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH & INCOME PORTFOLIO
-----------------------------------
SIX MONTHS ENDED
6/30/00 YEAR ENDED
(UNAUDITED) 12/31/99
---------------- ----------
<S> <C> <C>
Net investment income/(loss)................................ $ (54,323) $ (64,883)
Net realized gain/(loss) on investments, futures contracts,
written options and foreign currency transactions......... 1,096,855 1,047,722
Net change in unrealized appreciation/(depreciation) of
investments and assets and liabilities in foreign
currencies................................................ (3,617,808) 17,460,976
----------- -----------
Net increase/(decrease) in net assets resulting from
operations................................................ (2,575,276) 18,443,815
Distributions to shareholders from net investment income.... -- --
Distributions to shareholders in excess of net investment
income.................................................... -- --
Distributions to shareholders from net realized gain on
investments............................................... -- --
Net increase/(decrease) in net assets from Fund share
transactions.............................................. 22,557,410 30,029,023
----------- -----------
Net increase/(decrease) in net assets....................... 19,982,134 48,472,838
NET ASSETS:
Beginning of period......................................... 64,048,534 15,575,696
----------- -----------
End of period............................................... $84,030,668 $64,048,534
=========== ===========
Undistributed net investment income/(net investment loss) at
end of period............................................. $ (54,323) $ --
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
39
<PAGE>
Nations Funds
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MANAGED INDEX PORTFOLIO VALUE PORTFOLIO
------------------------------- -------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED
6/30/00 YEAR ENDED 6/30/00 YEAR ENDED
(UNAUDITED) 12/31/99 (UNAUDITED) 12/31/99
---------------- ---------- ---------------- ----------
<S> <C> <C> <C> <C>
Net investment income/(loss)......................... $ 60,804 $ 92,544 $ 48,044 $ 55,114
Net realized gain/(loss) on investments, futures
contracts, written options and foreign currency
transactions....................................... 27,672 (431,265) 96,428 (252,307)
Net change in unrealized appreciation/(depreciation)
of investments and assets and liabilities in
foreign currencies................................. (242,405) 2,937,980 (542,892) 366,501
----------- ----------- ----------- -----------
Net increase/(decrease) in net assets resulting from
operations......................................... (153,929) 2,599,259 (398,420) 169,308
Distributions to shareholders from net investment
income............................................. -- (92,544) -- (55,114)
Distributions to shareholders in excess of net
investment income.................................. -- (2,553) -- (3,387)
Distributions to shareholders from net realized gain
on investments..................................... -- -- -- --
Net increase/(decrease) in net assets from Fund share
transactions....................................... 3,476,258 8,244,288 (363,286) 4,888,909
----------- ----------- ----------- -----------
Net increase/(decrease) in net assets................ 3,322,329 10,748,450 (761,706) 4,999,716
NET ASSETS:
Beginning of period.................................. 20,679,534 9,931,084 10,644,773 5,645,057
----------- ----------- ----------- -----------
End of period........................................ $24,001,863 $20,679,534 $ 9,883,067 $10,644,773
=========== =========== =========== ===========
Undistributed net investment income/(net investment
loss) at end of period............................. $ 60,804 $ -- $ 48,044 $ --
=========== =========== =========== ===========
<CAPTION>
BALANCED ASSETS PORTFOLIO
------------------------------
SIX MONTHS ENDED
6/30/00 YEAR ENDED
(UNAUDITED) 12/31/99
---------------- ----------
<S> <C> <C>
Net investment income/(loss)......................... $ 95,424 $ 107,963
Net realized gain/(loss) on investments, futures
contracts, written options and foreign currency
transactions....................................... 88,052 (74,908)
Net change in unrealized appreciation/(depreciation)
of investments and assets and liabilities in
foreign currencies................................. (280,867) 42,469
---------- ----------
Net increase/(decrease) in net assets resulting from
operations......................................... (97,391) 75,524
Distributions to shareholders from net investment
income............................................. -- (107,963)
Distributions to shareholders in excess of net
investment income.................................. -- (2,124)
Distributions to shareholders from net realized gain
on investments..................................... -- --
Net increase/(decrease) in net assets from Fund share
transactions....................................... (136,677) 2,760,168
---------- ----------
Net increase/(decrease) in net assets................ (234,068) 2,725,605
NET ASSETS:
Beginning of period.................................. 6,548,446 3,822,841
---------- ----------
End of period........................................ $6,314,378 $6,548,446
========== ==========
Undistributed net investment income/(net investment
loss) at end of period............................. $ 95,424 $ --
========== ==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
40
<PAGE>
Nations Funds
SCHEDULES OF CAPITAL STOCK ACTIVITY
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH PORTFOLIO SMALLCAP INDEX PORTFOLIO
---------------------------------------- ---------------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 2000 YEAR ENDED JUNE 30, 2000 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1999 (UNAUDITED) DECEMBER 31, 1999
------------------- ------------------- ------------------ -------------------
SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS
------ ------- ------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sold..................... 398,572 $5,621,408 201,958 $2,334,605 72,879 $ 712,178 115,662 $1,007,940
Issued as reinvestment of
dividends.............. -- -- 9,469 131,806 -- -- 1,150 10,507
Repurchased.............. (6,247) (84,209) (25,273) (278,030) (24,088) (233,379) (39,780) (354,346)
------- ---------- ------- ---------- ------- --------- ------- ----------
Net
increase/(decrease).... 392,325 $5,537,199 186,154 $2,188,381 48,791 $ 478,799 77,032 $ 664,101
======= ========== ======= ========== ======= ========= ======= ==========
</TABLE>
<TABLE>
<CAPTION>
FOCUSED EQUITIES PORTFOLIO AGGRESSIVE GROWTH PORTFOLIO
---------------------------------------------- ------------------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED YEAR ENDED
JUNE 30, 2000 YEAR ENDED JUNE 30, 2000 DECEMBER 31,
(UNAUDITED) DECEMBER 31, 1999 (UNAUDITED) 1999
---------------------- ---------------------- --------------------- -------------------
SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS
------ ------- ------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sold..................... 2,355,378 $43,950,471 3,946,905 $59,984,099 84,116 $ 896,454 280,139 $3,169,471
Issued as reinvestment of
dividends.............. -- -- 48,789 727,437 -- -- 1,458 16,391
Repurchased.............. (303,911) (5,343,310) (142,964) (1,990,701) (165,667) (1,782,874) (72,663) (805,452)
--------- ----------- --------- ----------- -------- ----------- ------- ----------
Net
increase/(decrease).... 2,051,467 $38,607,161 3,852,730 $58,720,835 (81,551) $ (886,420) 208,934 $2,380,410
========= =========== ========= =========== ======== =========== ======= ==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
41
<PAGE>
Nations Funds
SCHEDULES OF CAPITAL STOCK ACTIVITY (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH & INCOME PORTFOLIO VALUE PORTFOLIO
---------------------------------------------- ------------------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 2000 YEAR ENDED JUNE 30, 2000 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1999 (UNAUDITED) DECEMBER 31, 1999
---------------------- ---------------------- --------------------- -------------------
SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS
------ ------- ------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sold..................... 1,504,003 $27,795,502 2,153,251 $30,512,813 129,776 $ 1,340,474 500,921 $5,318,789
Issued as reinvestment of
dividends.............. -- -- -- -- -- -- 5,658 58,501
Repurchased.............. (300,492) (5,238,092) (37,540) (483,790) (170,887) (1,703,760) (45,764) (488,381)
--------- ----------- --------- ----------- -------- ----------- ------- ----------
Net
increase/(decrease).... 1,203,511 $22,557,410 2,115,711 $30,029,023 (41,111) $ (363,286) 460,815 $4,888,909
========= =========== ========= =========== ======== =========== ======= ==========
</TABLE>
<TABLE>
<CAPTION>
MANAGED INDEX PORTFOLIO BALANCED ASSETS PORTFOLIO
---------------------------------------- ------------------------------------------
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 2000 YEAR ENDED JUNE 30, 2000 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1999 (UNAUDITED) DECEMBER 31, 1999
------------------- ------------------- --------------------- -------------------
SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS SHARES DOLLARS
------ ------- ------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sold..................... 307,532 $3,877,521 714,740 $8,529,730 107,466 $ 1,031,286 320,303 $3,129,437
Issued as reinvestment of
dividends.............. -- -- 7,482 95,097 -- -- 11,625 110,087
Repurchased.............. (31,534) (401,263) (33,590) (380,539) (126,119) (1,167,963) (48,355) (479,356)
------- ---------- ------- ---------- -------- ----------- ------- ----------
Net
increase/(decrease).... 275,998 $3,476,258 688,632 $8,244,288 (18,653) $ (136,677) 283,573 $2,760,168
======= ========== ======= ========== ======== =========== ======= ==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
42
<PAGE>
Nations Funds
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
NET REALIZED
NET ASSET AND NET INCREASE/ DIVIDENDS
VALUE NET UNREALIZED (DECREASE) IN FROM NET
BEGINNING INVESTMENT GAIN/(LOSS) ON NET ASSET VALUE INVESTMENT
OF PERIOD INCOME/(LOSS) INVESTMENTS FROM OPERATIONS INCOME
--------- ------------- -------------- --------------- ----------
<S> <C> <C> <C> <C> <C>
INTERNATIONAL GROWTH PORTFOLIO
Six months ended 6/30/00** (unaudited).......... $14.35 $ 0.04 $(0.29) $(0.25) --
Year ended 12/31/99**........................... 10.28 0.06 4.35 4.41 $(0.05)
Period ended 12/31/98*.......................... 10.00 0.06 0.25 0.31 (0.03)(a)
FOCUSED EQUITIES PORTFOLIO
Six months ended 6/30/00** (unaudited).......... $19.71 $(0.02) $(1.44) $(1.46) --
Year ended 12/31/99**........................... 13.00 (0.03) 6.90 6.87 --
Period ended 12/31/98*.......................... 10.00 0.02 3.00 3.02 $(0.02)(a)
SMALLCAP INDEX PORTFOLIO
Six months ended 6/30/00 ** (unaudited)......... $ 9.55 $ 0.01 $ 0.67 $ 0.68 --
Year ended 12/31/99**........................... 9.03 0.01 0.52 0.53 $(0.01)
Period ended 12/31/98*.......................... 10.00 0.03 (0.97) (0.94) (0.03)(a)
AGGRESSIVE GROWTH PORTFOLIO
Six months ended 6/30/00** (unaudited).......... $11.63 $ 0.00(d) $(0.72) $(0.72) --
Year ended 12/31/99**........................... 10.62 0.02 1.02 1.04 $(0.03)
Period ended 12/31/98*.......................... 10.00 0.02 0.62 0.64 (0.02)(a)
GROWTH & INCOME PORTFOLIO
Six months ended 6/30/00** (unaudited).......... $18.86 $(0.01) $(0.58) $(0.59) --
Year ended 12/31/99**........................... 12.16 (0.03) 6.73 6.70 --
Period ended 12/31/98*.......................... 10.00 0.02 2.16 2.18 $(0.02)(a)
MANAGED INDEX PORTFOLIO
Six months ended 6/30/00** (unaudited).......... $13.03 $ 0.03 $(0.17) $(0.14) --
Year ended 12/31/99**........................... 11.06 0.08 1.95 2.03 $(0.06)
Period ended 12/31/98*.......................... 10.00 0.06 1.07 1.13 (0.07)(a)
VALUE PORTFOLIO
Six months ended 6/30/00** (unaudited).......... $10.61 $ 0.05 $(0.39) $(0.34) --
Year ended 12/31/99**........................... 10.41 0.07 0.19 0.26 $(0.06)
Period ended 12/31/98*.......................... 10.00 0.04 0.41 0.45 (0.04)(a)
BALANCED ASSETS PORTFOLIO
Six months ended 6/30/00** (unaudited).......... $ 9.65 $ 0.15 $(0.23) $(0.08) --
Year ended 12/31/99**........................... 9.68 0.20 (0.06) 0.14 $(0.17)
Period ended 12/31/98*.......................... 10.00 0.09 (0.31) (0.22) (0.10)(a)
</TABLE>
-------------------
<TABLE>
<S> <C>
* Portfolio commenced operations on March 27, 1998. Shares
were offered to the public on April 6, 1998.
** Per share net investment income has been calculated using
the monthly average shares method.
+ 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 custodial expense offset 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.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
43
<PAGE>
Nations Funds
FINANCIAL HIGHLIGHTS (CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIO OF RATIO OF
DISTRIBUTIONS TOTAL NET ASSET NET ASSETS OPERATING NET INVESTMENT
FROM NET DIVIDENDS VALUE END OF EXPENSES TO INCOME TO
REALIZED AND END OF TOTAL PERIOD AVERAGE AVERAGE
CAPITAL GAINS DISTRIBUTIONS PERIOD RETURN+ (000) NET ASSETS NET ASSETS
------------- ------------- --------- ------- ---------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
INTERNATIONAL GROWTH
PORTFOLIO
Six months ended
6/30/00**
(unaudited)........... -- -- $14.10 (1.81)% $ 11,323 1.25%++ 0.53%++
Year ended 12/31/99**... $(0.29) $(0.34) 14.35 43.05 5,898 1.25 0.43
Period ended
12/31/98*............. -- -- 10.28 3.11 2,310 1.25++ 1.09++
FOCUSED EQUITIES
PORTFOLIO
Six months ended
6/30/00**
(unaudited)........... -- -- $18.25 (7.41)% $142,179 1.09%++(b)(c) (0.17)%++
Year ended 12/31/99**... $(0.16) $(0.16) 19.71 53.28 113,115 1.10(b) (0.17)
Period ended
12/31/98*............. -- -- 13.00 30.16 24,521 1.10++(b) 0.33++
SMALLCAP INDEX PORTFOLIO
Six months ended 6/30/00
** (unaudited)........ -- -- $10.23 7.12% $ 8,199 0.75%++(b) 0.22%++
Year ended 12/31/99**... -- $(0.01) 9.55 5.92 7,187 0.75 0.14
Period ended
12/31/98*............. -- -- 9.03 (9.35) 6,098 0.75++(b) 0.49++
AGGRESSIVE GROWTH
PORTFOLIO
Six months ended
6/30/00**
(unaudited)........... -- -- $10.91 (6.19)% $ 6,315 1.00%++(b) 0.08%++
Year ended 12/31/99**... -- $(0.03) 11.63 9.75 7,684 1.00(b)(c) 0.22
Period ended
12/31/98*............. -- -- 10.62 6.44 4,796 1.00++(b) 0.44++
GROWTH & INCOME
PORTFOLIO
Six months ended
6/30/00**
(unaudited)........... -- -- $18.27 (3.13)% $ 84,031 1.10%++(b)(c) (0.15)%++
Year ended 12/31/99**... -- -- 18.86 55.10 64,049 1.10(b) (0.20)
Period ended
12/31/98*............. -- -- 12.16 21.80 15,576 1.10++(b) 0.40++
MANAGED INDEX PORTFOLIO
Six months ended
6/30/00**
(unaudited)........... -- -- $12.89 (1.07)% $ 24,002 0.75%++(b) 0.56%++
Year ended 12/31/99**... -- $(0.06) 13.03 18.27 20,680 0.75(b) 0.64
Period ended
12/31/98*............. -- -- 11.06 11.39 9,931 0.75++(b) 1.04++
VALUE PORTFOLIO
Six months ended
6/30/00**
(unaudited)........... -- -- $10.27 (3.20)% $ 9,883 1.00%++(b)(c) 0.99%++
Year ended 12/31/99**... -- $(0.06) 10.61 2.50 10,645 1.00(b) 0.67
Period ended
12/31/98*............. -- -- 10.41 4.48 5,645 1.00++(b) 0.83++
BALANCED ASSETS
PORTFOLIO
Six months ended
6/30/00**
(unaudited)........... -- -- $ 9.57 (0.83)% $ 6,314 1.00%++(b) 3.12%++
Year ended 12/31/99**... -- $(0.17) 9.65 1.44 6,548 1.00(b) 2.01
Period ended
12/31/98*............. -- -- 9.68 (2.23) 3,823 1.00++(b) 2.36++
<CAPTION>
WITHOUT WAIVERS
AND/OR EXPENSE
REIMBURSEMENTS
---------------
RATIO OF
OPERATING
PORTFOLIO EXPENSES TO
TURNOVER AVERAGE
RATE NET ASSETS
--------- -----------
<S> <C> <C>
INTERNATIONAL GROWTH
PORTFOLIO
Six months ended
6/30/00**
(unaudited)........... 19% 2.28%++
Year ended 12/31/99**... 24 2.64
Period ended
12/31/98*............. 16 4.09++
FOCUSED EQUITIES
PORTFOLIO
Six months ended
6/30/00**
(unaudited)........... 85% 1.34%++(b)
Year ended 12/31/99**... 134 1.38(b)
Period ended
12/31/98*............. 236 1.94++(b)
SMALLCAP INDEX PORTFOLIO
Six months ended 6/30/00
** (unaudited)........ 68% 1.97%++(b)
Year ended 12/31/99**... 55 1.21
Period ended
12/31/98*............. 44 1.70++(b)
AGGRESSIVE GROWTH
PORTFOLIO
Six months ended
6/30/00**
(unaudited)........... 77% 2.13%++(b)
Year ended 12/31/99**... 50 1.81(b)
Period ended
12/31/98*............. 40 2.41++(b)
GROWTH & INCOME
PORTFOLIO
Six months ended
6/30/00**
(unaudited)........... 68% 1.38%++(b)
Year ended 12/31/99**... 110 1.41(b)
Period ended
12/31/98*............. 184 1.99++(b)
MANAGED INDEX PORTFOLIO
Six months ended
6/30/00**
(unaudited)........... 38% 1.29%++(b)
Year ended 12/31/99**... 76 1.07(b)
Period ended
12/31/98*............. 16 1.62++(b)
VALUE PORTFOLIO
Six months ended
6/30/00**
(unaudited)........... 69% 1.83%++(b)
Year ended 12/31/99**... 82 1.68(b)
Period ended
12/31/98*............. 27 2.32++(b)
BALANCED ASSETS
PORTFOLIO
Six months ended
6/30/00**
(unaudited)........... 106% 2.17%++(b)
Year ended 12/31/99**... 75 1.79(b)
Period ended
12/31/98*............. 94 2.71++(b)
</TABLE>
-------------------
<TABLE>
<S> <C>
* Portfolio commenced operations on March 27, 1998. Shares
were offered to the public on April 6, 1998.
** Per share net investment income has been calculated using
the monthly average shares method.
+ 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 custodial expense offset 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.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
44
<PAGE>
Nations Funds
NOTES TO FINANCIAL STATEMENTS (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 a
diversified open-end management investment company whose shares are offered in
the following eight portfolios: Nations International Growth Portfolio, Nations
Marsico Focused Equities Portfolio, Nations SmallCap Index Portfolio (formerly
Managed SmallCap Index Portfolio), Nations Aggressive Growth Portfolio (formerly
Disciplined Equity Portfolio), Nations Marsico 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.
SmallCap Index -- Seeks investment results that (before fees and expenses)
correspond to the total return of the Standard & Poor's
SmallCap 600 Index.
Aggressive Growth -- Seeks capital appreciation.
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 that
(before fees and expenses) exceeds the total return of the
Standard & Poor's 500 Composite Stock Price Index.
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. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make certain 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.
SECURITIES VALUATION: Securities which are traded on a recognized exchange or
on NASDAQ are valued at the last sale price on the exchange or market on which
such securities are primarily traded. Securities traded only over-the-counter
are valued at the last sale price, or if no sale occurred on such day, at the
mean of the current bid and asked prices. Certain securities may be valued using
broker quotations or on the basis of prices provided by pricing services.
Restricted securities, securities for which market quotations are not readily
available, and certain other assets may be valued under procedures adopted by
the Board of Trustees. Short-term investments that mature in 60 days or less are
valued at amortized cost, which approximates current value.
45
<PAGE>
Nations Funds
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
FUTURES CONTRACTS: All Portfolios may invest in futures contracts. Upon
entering into a futures contract, a Portfolio is required to deposit with the
broker an amount of cash or cash equivalents equal to a specified percentage of
the contract amount. This is known as the "initial margin." Subsequent payments
("variation margin") are made or received by the Portfolio each day, depending
on the daily fluctuation of the value of the contract.
During the period the futures contract is open, changes in the value of the
contract are recognized as unrealized gains or losses by "marking-to-market" on
a daily basis to reflect the market value of the contract. A Portfolio
recognizes a realized gain or loss when the contract is closed, equal to the
difference between the proceeds from (or cost of) the closing transaction and
the Portfolio's basis in the contract.
Risks of investments in futures contracts include the possible movement of the
securities or indices underlying the contracts, the possibility that there may
not be a liquid secondary market for the contracts, that a change in the value
of the contract may not correlate with changes in the value of the underlying
securities, or that the counterparty to a contract may default on its obligation
to perform.
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 current exchange rates.
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
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 securities are not separately stated 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 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 currency
contracts does not eliminate fluctuations in the underlying prices of the
Portfolio's 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 contracts are unable to
46
<PAGE>
Nations Funds
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
meet the terms of their contracts. The counterparty risk exposure is, therefore,
closely monitored and contracts are only executed with high credit quality
financial institutions. The Portfolios had no forward foreign currency contracts
outstanding at June 30, 2000.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
accounted for on trade date. Realized gains and losses are computed based on the
specific identification of securities sold. Interest income, adjusted for
accretion of discounts and amortization of premiums, is earned from settlement
date and recorded on an accrual basis. Dividend income is recorded on
ex-dividend date, except that if the ex-dividend date has passed, 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 which 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 applicable requirements of
the Internal Revenue Code of 1986, as amended, and by distributing substantially
all of its earnings to its shareholders. Therefore, no provision is made for
Federal income or excise taxes.
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. The Portfolios bear all costs in connection with
their organization, including the fees and expenses of registering and
qualifying their shares for distribution under Federal and state securities
regulations. All such costs are being amortized on a straight line basis over a
period of five years from commencement of operations.
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 Banc of America Advisors,
Inc. ("BAAI"), a wholly-owned subsidiary of Bank of America, N.A. ("Bank of
America"), which in turn is a wholly-owned banking subsidiary of Bank of America
Corporation, a bank holding company organized as a Delaware corporation,
pursuant to which BAAI provides investment advisory services to the Portfolios.
Under the terms of the Investment Advisory Agreement, BAAI is entitled to
receive an advisory fee, calculated daily and payable monthly, based on the
following annual rates multiplied by the average daily net assets of each
Portfolio:
<TABLE>
<CAPTION>
ANNUAL RATE
<S> <C>
-------------------------------------------------------------------------
International Growth........................................ 0.80%
Focused Equities, Growth & Income........................... 0.75%
Aggressive Growth, Value, Balanced Assets................... 0.65%
SmallCap Index, Managed Index............................... 0.40%
</TABLE>
47
<PAGE>
Nations Funds
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
The Trust has, on behalf of the Portfolios listed below, entered into a
sub-advisory agreement with BAAI and Banc of America Capital Management, Inc.
("BACAP") (formerly known as TradeStreet Investment Associates, Inc.), a wholly-
owned subsidiary of Bank of America, pursuant to which BACAP is entitled to
receive a sub-advisory fee from BAAI at the following maximum annual rate of
each Portfolio's average daily net assets:
<TABLE>
<CAPTION>
ANNUAL RATE
<S> <C>
-------------------------------------------------------------------------
SmallCap Index, Managed Index............................... 0.10%
Aggressive Growth, Value, Balanced Assets................... 0.25%
</TABLE>
The Trust has, on behalf of the Focused Equities and Growth & Income Portfolios,
entered into a sub-advisory agreement with Marsico Capital Management, LLC
("Marsico"), pursuant to which Marsico is entitled to receive a sub-advisory fee
from BAAI at the annual rate of 0.45% of each Portfolio's average daily net
assets. Marsico Management Holdings, LLC, a wholly-owned subsidiary of Bank of
America, owns 50% of the equity of Marsico.
On June 28, 2000, Bank of America announced its intention to purchase the
remaining 50% equity interest in Marsico. Under applicable law, the change in
ownership that would result from this purchase would terminate Marsico's
investment sub-advisory agreements with the Trust. Shareholders of the Focused
Equities and Growth & Income Portfolios must approve new investment sub-advisory
agreements in order for Marsico to continue to serve as investment sub-adviser
to the Portfolios. It is anticipated that special meetings of shareholders of
those Portfolios will be called in the spring of 2001 to seek these approvals.
The Trust has, on behalf of the International Growth Portfolio, entered into a
sub-advisory agreement with BAAI and Gartmore Global Partners ("Gartmore").
Gartmore is a general partnership which is an indirect wholly-owned subsidiary
of Nationwide Mutual Insurance Company. Under the Sub-Advisory Agreement,
Gartmore is entitled to receive a sub-advisory fee from BAAI at the annual rate
of 0.54% of the Portfolio's average daily net assets.
Stephens Inc. ("Stephens") and BAAI serve as co-administrators of the Trust.
Under the co-administration agreements, Stephens and BAAI are currently entitled
to receive a combined fee, computed daily and paid monthly, at the maximum
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 of
the Trust. The Bank of New York ("BNY") serves as sub-administrator of the Trust
pursuant to an agreement with BAAI. For the six months ended June 30, 2000,
Stephens and BAAI earned $75,933 and $140,714, respectively, from the Portfolios
for their co-administration services.
BAAI and Stephens may, from time to time, reduce their fees payable by each
Portfolio. For the six months ended June 30, 2000, BAAI and Stephens agreed to
reimburse expenses and/or waive fees 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 annual
rates: 1.00% for the Aggressive Growth Portfolio, Value Portfolio and Balanced
Assets Portfolio, 0.40% for the SmallCap Index Portfolio (prior to May 1, 2000
the effective annual rate was 0.50%), and 0.50% for the Managed Index Portfolio,
1.10% for the Focused Equities Portfolio and Growth & Income Portfolio and 1.25%
for the International Growth Portfolio.
48
<PAGE>
Nations Funds
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
BNY serves as the custodian for the Trust's assets. PFPC, Inc. ("PFPC") serves
as the transfer agent for the Portfolios' shares.
Stephens also serves as distributor of the Portfolios' shares.
The Trust's eligible Trustees may participate in non-qualified deferred
compensation and retirement plans which may be terminated at any time. All
benefits provided under these plans are unfunded and any payments to plan
participants are 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 portfolios are
selected, to the rate of return of Nations Treasury Fund, a portfolio of Nations
Fund, Inc., another registered investment company advised by BAAI. The expense
for the deferred compensation and retirement plans is included in "Trustees'
fees and expenses" in the Statements of Operations.
The Portfolios have made daily investments of cash balances in Nations Cash
Reserves, a portfolio of Nations Reserves, another registered investment company
in the Nations Funds family, pursuant to an exemptive order received from the
Securities and Exchange Commission. For the six months ended June 30, 2000, the
Portfolios earned $64,161 in the aggregate from such investments, which is
included in interest income.
3. SHAREHOLDER SERVICING AND DISTRIBUTION PLAN
The Trust has 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 selling
or servicing relationship. In the six months ended June 30, 2000, Stephens
agreed to voluntarily waive 100% of the Portfolios' shareholder servicing and
distribution fees except for the Managed Index Portfolio and the SmallCap Index
Portfolio, where there was no waiver of these fees.
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, 2000, were as follows:
<TABLE>
<CAPTION>
PORTFOLIO PURCHASES SALES
<S> <C> <C>
----------------------------------------------------------------------------------------------
International Growth........................................ $ 6,612,109 $ 1,380,876
Focused Equities............................................ 132,154,547 99,166,064
SmallCap Index.............................................. 5,142,069 5,002,150
Aggressive Growth........................................... 4,658,939 5,564,884
Growth & Income............................................. 62,137,200 44,255,216
Managed Index............................................... 9,741,244 7,018,434
Value....................................................... 6,548,674 7,149,441
Balanced Assets............................................. 3,385,443 2,859,684
</TABLE>
49
<PAGE>
Nations Funds
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
The aggregate cost of purchases and proceeds from sales of long-term U.S.
government securities for the six months ended June 30, 2000, were as follows:
<TABLE>
<CAPTION>
PORTFOLIO PURCHASES SALES
<S> <C> <C>
-------------------------------------------------------------------------------------------
Balanced Assets............................................. $3,018,595 $3,510,628
</TABLE>
5. FUTURES CONTRACTS
At June 30, 2000, the following Portfolios had futures contracts open:
<TABLE>
<CAPTION>
VALUE OF UNREALIZED
NUMBER OF CONTRACT MARKET VALUE APPRECIATION/
DESCRIPTION CONTRACTS WHEN OPENED OF CONTRACT (DEPRECIATION)
<S> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------------------
SMALLCAP INDEX:
Russell 2000 Futures (long position)
expiring September 2000 (a) 2 $ 526,777 $ 522,600 $ (4,177)
MANAGED INDEX:
S&P 500 Futures (long position)
expiring September 2000 (a) 21 1,555,068 1,541,505 (13,563)
</TABLE>
-----------------
(a) Securities have been segregated as collateral for the Aggressive Growth and
Managed Index Portfolios for open futures contracts.
6. SHARES OF BENEFICIAL INTEREST
At June 30, 2000, an unlimited number of shares of beneficial interest without
par value were authorized for the Trust. At June 30, 2000, Hartford Life
Insurance Company owned the following percentage of shares outstanding:
<TABLE>
<CAPTION>
PORTFOLIO % OF SHARES HELD
<S> <C> <C>
-------------------------------------------------------------------------------------------------
International Growth........................................ 12.8%
SmallCap Index.............................................. 62.9
Managed Index............................................... 27.2
</TABLE>
7. LINES OF CREDIT
The Trust participates with other Nations Funds 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 a
specified 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 amounts borrowed pursuant to the Agreement) to the aggregate amount of
indebtedness pursuant to the Agreement.
50
<PAGE>
Nations Funds
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
At June 30, 2000, there were no loans outstanding under this Agreement. For the
six months ended June 30, 2000, borrowings by the Portfolios under the Agreement
were as follows:
<TABLE>
<CAPTION>
AVERAGE AMOUNT AVERAGE
PORTFOLIO OUTSTANDING INTEREST RATE
<S> <C> <C>
--------------------------------------------------------------------------------------------------
Focused Equities............................................ $15,550 6.37%
Growth & Income............................................. 16,672 6.37
Value....................................................... 6,111 6.60
</TABLE>
The average amount outstanding was calculated based on daily balances in the
period.
The Trust also participates with other Nations Funds in a committed line of
credit provided by BNY. Interest on borrowings under the committed line is
payable at a specified Federal Funds rate plus 0.50% on an annualized basis. A
facility fee of 0.09% per annum of the total amounts available under the line of
credit is charged, of which each Portfolio pays its pro rata share. This fee is
paid quarterly in arrears. Each participating Portfolio is required to maintain
an asset coverage ratio of at least 300% under the terms of the arrangement. For
the six months ended June 30, 2000, there were no borrowings by the Portfolios
under the committed line of credit.
8. 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 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 the risk of loss with respect to the
investment of collateral.
At June 30, 2000, the following Portfolios had securities on loan:
<TABLE>
<CAPTION>
MARKET VALUE OF MARKET VALUE
PORTFOLIO LOANED SECURITIES OF COLLATERAL
<S> <C> <C>
---------------------------------------------------------------------------------------------------
Focused Equities............................................ $3,254,022 $3,326,546
Small Cap Index............................................. 262,722 279,758
Growth & Income............................................. 4,444,140 4,568,861
Balanced Assets............................................. 241,953 246,894
</TABLE>
51
<PAGE>
Nations Funds
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)
9. CAPITAL LOSS CARRYFORWARD
As of December 31, 1999, the following Portfolios had available for Federal
income tax purposes unused capital losses as follows:
<TABLE>
<CAPTION>
EXPIRING IN EXPIRING IN
PORTFOLIO 2006 2007
<S> <C> <C>
---------------------------------------------------------------------------------------------
SmallCap Index.............................................. $136,811 $218,448
Aggressive Growth........................................... 78,483 --
Managed Index............................................... 36,966 221,488
Value....................................................... 79,127 255,423
Balanced Assets............................................. 202,196 74,210
</TABLE>
As of December 31, 1999, the following Portfolios utilized capital losses during
the year as follows:
<TABLE>
<CAPTION>
CAPITAL
PORTFOLIO LOSSES UTILIZED
<S> <C>
-----------------------------------------------------------------------------
International Growth........................................ $ 81,556
Aggressive Growth........................................... 113,766
Growth & Income............................................. 104,248
</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, 1999, the following Portfolios have
elected to defer losses occurring between November 1, 1999 and December 31, 1999
under these rules, as follows:
<TABLE>
<CAPTION>
CAPITAL CURRENCY
PORTFOLIO LOSSES DEFERRED LOSSES DEFERRED
<S> <C> <C>
---------------------------------------------------------------------------------------------------
International Growth........................................ $ 18,985 $1,089
SmallCap Index.............................................. 373,042 --
Managed Index............................................... 248,778 --
</TABLE>
Such deferred losses will be treated as arising on the first day of the fiscal
year ending December 31, 2000.
10. SUBSEQUENT EVENT
On July 3, 2000, the Trust offered two new Portfolios: High Yield Bond
Portfolio, which has an investment objective of seeking maximum income by
investing in a diversified portfolio of high yield debt securities, and
International Value Portfolio, which has an investment objective of seeking
long-term capital appreciation by investing primarily in equity securities of
foreign issuers, including emerging market countries.
52
<PAGE>
HARTFORD SMALL COMPANY HLS FUND, INC.
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
--------------------- --------------
<C> <S> <C>
COMMON STOCKS -- 91.4%
APPAREL & TEXTILE -- 0.1%
*176,300 Steven Madden Ltd.................... $ 1,156,969
--------------
BUSINESS SERVICES -- 5.6%
*589,500 APAC Customer Services, Inc.......... 6,521,344
*706,500 Iron Mountain, Inc................... 24,021,000
516,700 Manpower, Inc........................ 16,534,400
*595,100 NCO Group, Inc....................... 13,761,688
*11,200 StorageNetworks, Inc................. 1,010,800
--------------
61,849,232
--------------
COMMUNICATIONS -- 12.0%
*297,200 AirGate PCS, Inc..................... 15,621,575
*493,400 Andrew Corp.......................... 16,559,738
*109,600 Carrier Access Corp.................. 5,795,100
*473,500 Digital Microwave Corp............... 18,052,188
*383,600 MGC Communications, Inc.............. 22,992,025
*304,100 Primus Telecommunications
Group, Inc.......................... 7,564,488
*171,900 Rural Cellular Corp., Class A........ 13,161,094
*127,300 SBA Communications Corp.............. 6,611,644
*67,000 SonicWall, Inc....................... 5,900,188
*372,900 Spectrasite Holdings, Inc............ 10,581,038
*-92,900 Tecnomen Oyj......................... 801,476
*600,800 US Unwired Inc., Class A............. 7,810,400
*18,600 Westell Technologies, Inc.,
Class A............................. 279,000
--------------
131,729,954
--------------
COMPUTERS & OFFICE
EQUIPMENT -- 1.4%
*836,000 Splash Technology Holdings, Inc...... 6,583,500
*291,200 Visual Networks, Inc................. 8,299,200
--------------
14,882,700
--------------
CONSTRUCTION -- 1.2%
*241,500 Quanta Services, Inc................. 13,282,500
--------------
DRUGS -- 3.1%
*249,503 Gilead Sciences, Inc................. 17,745,901
*122,700 Lynx Therapeutics, Inc............... 5,835,919
*8,340 MediGene AG.......................... 543,635
*50,100 Myriad Genetics, Inc................. 7,418,714
*45,200 Visible Genetics, Inc................ 2,039,650
--------------
33,583,819
--------------
ELECTRICAL EQUIPMENT -- 3.0%
*41,800 Capstone Turbine Corp................ 1,883,613
*112,000 Newport Corp......................... 12,026,000
257,600 Veeco Instruments, Inc............... 18,869,200
--------------
32,778,813
--------------
ELECTRONICS -- 11.2%
*74,800 Alliance Semiconductor Corp.......... 1,837,275
*376,000 ASM International N.V................ 9,964,000
*153,000 Burr-Brown Corp...................... 13,263,175
*164,600 Emcore Corp.......................... 19,752,000
*160,100 GSI Lumonics, Inc.................... 5,623,513
*310,000 International Rectifier Corp......... 17,360,000
210,500 Methode Electronics, Inc.,
Class A............................. 8,130,563
*177,700 Plexus Corp.......................... 20,080,100
*255,200 REMEC, Inc........................... 10,686,500
*154,900 Supertex, Inc........................ 7,783,725
<CAPTION>
MARKET
SHARES VALUE
--------------------- --------------
<C> <S> <C>
</TABLE>
ELECTRONICS -- (CONTINUED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
--------------------- --------------
<C> <S> <C>
*217,400 Telcom Semiconductors, Inc........... $ 8,709,588
--------------
123,190,439
--------------
ENERGY & SERVICES -- 4.0%
770,500 Cross Timbers Oil Co................. 17,047,313
*439,900 Hanover Compressor Co................ 16,716,200
*429,875 Varco International, Inc............. 9,994,594
--------------
43,758,107
--------------
FINANCIAL SERVICES -- 4.8%
393,200 Annuity & Life Re (Holdings), Ltd.... 9,633,400
*338,900 Investment Technology Group, Inc..... 13,386,550
313,400 Legg Mason, Inc...................... 15,670,000
302,700 People's Bank........................ 5,562,113
*156,500 Trigon Healthcare, Inc............... 8,069,531
--------------
52,321,594
--------------
HEALTH SERVICES -- 3.1%
*1,625,100 Caremark Rx, Inc..................... 11,070,994
*203,900 Express Scripts, Inc., Class A....... 12,667,288
*816,100 Foundation Health Systems, Inc.,
Class A............................. 10,609,300
--------------
34,347,582
--------------
MACHINERY -- 1.9%
*335,200 Brooks Automation, Inc............... 21,431,851
--------------
MEDIA & ENTERTAINMENT -- 2.2%
*503,300 Cumulus Media, Inc., Class A......... 4,592,613
248,000 Pegasus Communications Corp.,
Class A............................. 12,167,500
*839,100 Regent Communications, Inc........... 7,211,016
--------------
23,971,129
--------------
MEDICAL INSTRUMENTS &
SUPPLIES -- 0.2%
360,400 Omnicare, Inc........................ 3,266,125
--------------
METALS, MINERALS & MINING -- 2.6%
872,000 Minas Buenaventura ADR, Class B...... 15,096,500
*479,500 Stillwater Mining Co................. 13,366,063
--------------
28,462,563
--------------
REAL ESTATE -- 1.7%
365,600 Liberty Property Trust (REIT)........ 9,482,750
386,600 Reckson Associates Realty Corp.
(REIT).............................. 9,181,750
--------------
18,664,500
--------------
RESEARCH & TESTING FACILITIES -- 5.1%
*80,100 Aurora Biosciences Corp.............. 5,461,819
*297,600 Gene Logic, Inc...................... 10,620,600
*434,500 Quest Diagnostics, Inc............... 32,478,875
*159,600 Sequenom, Inc........................ 7,241,850
--------------
55,803,144
--------------
RETAIL -- 4.2%
321,600 Applebee's International, Inc........ 9,748,500
*397,050 Cheesecake Factory, Inc. (The)....... 10,918,875
*445,250 Pacific Sunwear of
California, Inc..................... 8,348,438
*257,500 Whole Foods Market, Inc.............. 10,637,969
*217,200 Williams-Sonoma, Inc................. 7,045,425
--------------
46,699,207
--------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
_____________________________________ MF-1 _____________________________________
<PAGE>
HARTFORD SMALL COMPANY HLS FUND, INC.
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
--------------------- --------------
<C> <S> <C>
</TABLE>
COMMON STOCKS -- (CONTINUED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
--------------------- --------------
<C> <S> <C>
SOFTWARE & SERVICES -- 17.4%
*551,900 Affiliated Computer Services, Inc.,
Class A............................. $ 18,247,194
*880,000 Brio Technology, Inc................. 18,645,000
*389,200 Cognos, Inc.......................... 16,103,150
*296,100 Documentum, Inc...................... 26,463,938
*230,000 Macromedia, Inc...................... 22,238,125
*317,200 Mercator Software, Inc............... 21,807,500
*483,000 Novadigm, Inc........................ 9,539,250
*531,800 Peregrine Systems, Inc............... 18,446,813
*336,300 Remedy Corp.......................... 18,748,725
*429,400 Verity, Inc.......................... 16,317,200
*88,700 WatchGuard Technologies, Inc......... 4,872,956
--------------
191,429,851
--------------
TRANSPORTATION -- 6.6%
*484,100 Atlas Air, Inc....................... 17,367,088
142,800 Robinson (C.H.) Worldwide, Inc....... 7,068,600
*379,300 Ryanair Holdings PLC ADR............. 13,844,450
506,700 SkyWest, Inc......................... 18,779,569
*1,134,000 Swift Transportation Co., Inc........ 15,876,000
--------------
72,935,707
--------------
Total common stocks.................. $1,005,545,786
==============
<CAPTION>
PRINCIPAL
AMOUNT
--------------------------------------------------------------------------------
SHORT-TERM SECURITIES -- 7.3%
<C> <S> <C>
REPURCHASE AGREEMENT -- 7.3%
$80,624,000 Interest in $2,066,447,000 joint
repurchase agreement dated 06/30/00
with State Street Bank, 6.598% due
07/03/00; maturity amount $80,668,330
(Collateralized by $125,835,832 U.S.
Treasury Notes 5.50% - 7.875% due
08/31/01 - 11/15/04, $1,943,730,718
U.S. Treasury Bonds 5.25% - 10.625%
due 08/15/15 - 02/15/29)............. $ 80,624,000
--------------
Total short-term securities.......... $ 80,624,000
--------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
DIVERSIFICATION OF NET ASSETS:
Total common stocks
(cost $892,170,011)...................... 91.4% $1,005,545,786
Total short-term securities
(cost $80,624,000)....................... 7.3 80,624,000
----- --------------
Total investment in securities
(total cost $972,794,011)................ 98.7 1,086,169,786
Cash, receivables and other assets........ 3.6 39,531,670
Securities lending collateral............. 18.2 199,894,731
Payable for securities purchased.......... (2.2) (24,290,926)
Payable for fund shares redeemed.......... (0.1) (544,307)
Securities lending collateral payable to
brokers.................................. (18.2) (199,894,731)
Other liabilities......................... (0.0) (1,807)
----- --------------
Net assets................................ 100.0% $1,100,864,416
===== ==============
</TABLE>
<TABLE>
<S> <C>
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share;
1,500,000,000 shares authorized; 547,503,658
shares outstanding............................... $ 54,750,366
Capital surplus................................... 844,745,938
Accumulated net investment loss................... (1,029,598)
Accumulated undistributed net realized gain on
investments...................................... 89,018,325
Unrealized appreciation of investments............ 113,375,766
Unrealized appreciation of forward foreign
currency contracts (See Note 2)w................. 17,873
Unrealized depreciation of other assets and
liabilities in foreign currencies................ (14,254)
--------------
Net assets........................................ $1,100,864,416
==============
</TABLE>
<TABLE>
<S> <C>
Class IA
Net asset value per share ($1,073,047,826 DIVIDED BY
533,648,115 shares outstanding) (1,125,000,000 shares
authorized).............................................. $2.01
=====
Class IB
Net asset value per share ($27,816,590 DIVIDED BY
13,855,543 shares outstanding) (375,000,000 shares
authorized).............................................. $2.01
=====
</TABLE>
<TABLE>
<C> <S>
* Non-income producing during the period.
- Securities 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, 2000, the market value of
these securities amounted to $801,476 or 0.1% of net assets.
</TABLE>
wFORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AT JUNE 30, 2000
<TABLE>
<CAPTION>
TOTAL CONTRACT DELIVERY UNREALIZED
DESCRIPTION MARKET VALUE AMOUNT DATE APPRECIATION
----------- ------------ -------- -------- -------------
<S> <C> <C> <C> <C>
EURO (Buy) $335,774 $334,475 07/03/00 $ 1,299
EURO (Buy) 756,949 740,375 07/03/00 16,574
-------
$17,873
=======
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
_____________________________________ MF-2 _____________________________________
<PAGE>
HARTFORD CAPITAL APPRECIATION HLS FUND, INC.
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------------ --------------
<C> <S> <C>
COMMON STOCKS -- 89.3%
APPAREL & TEXTILE -- 0.4%
374,200 Gucci Group NV...................... $ 35,455,450
--------------
BUSINESS SERVICES -- 2.6%
*1,390,750 Concord EFS, Inc.................... 36,159,500
*985,000 Critical Path, Inc.................. 57,437,813
*821,200 eBay, Inc........................... 44,601,425
2,550,000 Manpower, Inc....................... 81,600,000
*1,500,000 United Rentals (North
America), Inc...................... 25,687,500
--------------
245,486,238
--------------
CHEMICALS -- 3.6%
2,589,300 Dow Chemical Co. (The).............. 78,164,494
5,100,000 Pharmacia Corp...................... 263,606,250
--------------
341,770,744
--------------
COMMUNICATIONS -- 6.4%
*2,000,000 American Tower Corp., Class A....... 83,375,000
1,300,000 AT&T Corp........................... 41,112,500
2,225,600 Broadwing, Inc...................... 57,726,500
*825,000 Crown Castle International Corp..... 30,112,500
*2,534,800 Global Crossing Ltd................. 66,696,923
*2,000,000 Intermedia Communications, Inc...... 59,500,000
*1,617,500 Phone.com, Inc...................... 105,339,688
4,000,000 Portugal Telecom S.A. ADR........... 45,000,000
*1,000,000 Teligent, Inc., Class A............. 23,625,000
*1,900,000 Worldcom, Inc....................... 87,162,500
--------------
599,650,611
--------------
COMPUTERS & OFFICE
EQUIPMENT -- 3.6%
*900,000 Cisco Systems, Inc.................. 57,206,250
*3,000,000 Maxtor Corp......................... 31,687,500
*2,500,000 Solectron Corp...................... 104,687,500
2,700,000 Symbol Technologies, Inc............ 145,800,000
--------------
339,381,250
--------------
CONSUMER DURABLES -- 0.5%
1,650,000 Grainger (W.W.), Inc................ 50,840,625
--------------
CONSUMER NON-DURABLES -- 3.0%
4,100,000 McKesson HBOC, Inc.................. 85,843,750
2,314,100 Procter & Gamble Co. (The).......... 132,482,225
*5,100,000 Smurfit-Stone Container Corp........ 65,662,500
--------------
283,988,475
--------------
DRUGS -- 5.6%
1,600,000 American Home Products Corp......... 94,000,000
2,865,700 AstraZeneca Group PLC............... 133,882,428
37,000 Fujisawa Pharmaceutical Co.......... 1,500,262
*2,000,000 Genzyme Corp........................ 118,875,000
*990,000 Gilead Sciences, Inc................ 70,413,750
*2,130,800 Immunex Corp........................ 105,341,425
--------------
524,012,865
--------------
ELECTRICAL EQUIPMENT -- 1.2%
*1,500,000 Credence Systems Corp............... 82,781,250
*934,900 Ionics, Inc......................... 28,631,313
--------------
111,412,563
--------------
<CAPTION>
MARKET
SHARES VALUE
------------ --------------
<C> <S> <C>
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------------ --------------
<C> <S> <C>
ELECTRONICS -- 8.5%
*1,700,000 Analog Devices, Inc................. $ 129,200,000
*843,600 JDS Uniphase Corp................... 101,126,550
3,600,000 Koninklijke Philips Electronics N.V.
ADR, NY Shares..................... 171,000,000
*2,350,000 Micron Technology, Inc.............. 206,946,875
136,670 Samsung Electronics................. 45,230,280
550,000 Siemens AG.......................... 82,668,715
*1,600,000 UCAR International, Inc............. 20,900,000
*1,216,300 Vishay Intertechnology, Inc......... 46,143,381
--------------
803,215,801
--------------
ENERGY & SERVICES -- 5.0%
1,765,600 Exxon Mobil Corp.................... 138,599,600
*541,800 R&B Falcon Corp..................... 12,766,163
1,094,500 Repsol YPF S.A. ADR................. 21,684,781
6,200,000 Suncor Energy, Inc.................. 144,537,500
1,691,570 Transocean Sedco Forex, Inc......... 90,393,272
2,891,300 Union Pacific Resources
Group, Inc......................... 63,608,600
--------------
471,589,916
--------------
FINANCIAL SERVICES -- 9.5%
3,564,200 Ace Ltd............................. 99,797,600
1,500,000 Bank One Corp....................... 39,843,750
1,573,900 Citigroup, Inc...................... 94,827,475
1,436,440 Fleet Boston Financial Corp......... 48,838,960
2,900,000 Heller Financial, Inc., Class A..... 59,450,000
1,065,500 Legg Mason, Inc..................... 53,275,000
900,000 Marsh & McLennan Cos., Inc.......... 93,993,750
2,200,000 MBIA, Inc........................... 106,012,500
*2,645,900 MetLife, Inc........................ 55,729,269
1,700,000 Morgan Stanley Dean Witter & Co..... 141,525,000
1,300,000 UnitedHealth Group, Inc............. 111,475,000
--------------
904,768,304
--------------
FOOD, BEVERAGE & TOBACCO -- 2.0%
1,905,000 Philip Morris Co., Inc.............. 50,601,563
963,000 Reynolds (R.J) Tobacco
Holdings, Inc...................... 26,903,813
5,584,800 Sara Lee Corp....................... 107,856,450
--------------
185,361,826
--------------
HEALTH SERVICES -- 0.7%
2,100,000 HCA Healthcare Corp................. 63,787,500
--------------
HOTELS & GAMING -- 0.7%
2,028,100 Starwood Hotels & Resorts
Worldwide, Inc..................... 66,040,006
--------------
MACHINERY -- 0.3%
*2,000,000 Terex Corp.......................... 28,250,000
--------------
MEDIA & ENTERTAINMENT -- 4.5%
*1,000,000 AMFM, Inc........................... 69,000,000
*1,084,300 AT&T - Liberty Media Group,
Class A............................ 26,294,275
3,000,000 Dai Nippon Printing Co., Ltd........ 52,995,465
*4,084,300 Rogers Communications, Inc.,
Class B............................ 116,402,550
900,000 Seagram Company Ltd. (The).......... 52,200,000
*1,251,200 SFX Entertainment, Inc., Class A.... 56,695,000
*1,600,000 TV Guide, Inc....................... 54,800,000
--------------
428,387,290
--------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
_____________________________________ MF-3 _____________________________________
<PAGE>
HARTFORD CAPITAL APPRECIATION HLS FUND, INC.
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------------ --------------
<C> <S> <C>
</TABLE>
COMMON STOCKS -- (CONTINUED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------------ --------------
<C> <S> <C>
MEDICAL INSTRUMENTS &
SUPPLIES -- 2.5%
910,200 Bausch & Lomb, Inc.................. $ 70,426,725
4,500,000 Becton, Dickinson & Co.............. 129,093,750
*1,500,000 Boston Scientific Corp.............. 32,906,250
--------------
232,426,725
--------------
METALS, MINERALS &
MINING -- 3.1%
2,785,900 Alcan Aluminum Ltd.................. 86,362,900
2,501,000 AngloGold Ltd. ADR.................. 51,426,813
1,500,000 Engelhard Corp...................... 25,593,750
*4,600,000 Freeport-McMoRan Copper &
Gold, Inc., Class B................ 42,550,000
2,204,800 General Cable Corp.................. 17,914,000
1,550,200 Precision Castparts Corp............ 70,146,550
--------------
293,994,013
--------------
REAL ESTATE -- 1.1%
*1,315,000 Beacon Capital Partners, Inc.
(REIT)............................. 17,095,000
1,000,000 Boston Properties, Inc. (REIT)...... 38,625,000
*2,794,400 Security Capital Group, Inc.,
Class B............................ 47,504,800
--------------
103,224,800
--------------
RESEARCH & TESTING
FACILITIES -- 0.2%
*1,633,300 Quintiles Transnational Corp........ 23,070,363
--------------
RETAIL -- 0.8%
*1,500,000 Cheesecake Factory, Inc. (The)...... 41,250,000
1,853,190 Hennes & Mauritz AB................. 38,877,853
--------------
80,127,853
--------------
RUBBER & PLASTICS PRODUCTS -- 0.3%
711,500 NIKE, Inc., Class B................. 28,326,594
--------------
SOFTWARE & SERVICES -- 14.5%
*2,400,000 3Com Corp........................... 138,300,000
*1,850,000 America Online, Inc................. 97,587,500
*1,476,400 Avant! Corp......................... 27,659,431
*1,800,000 BMC Software, Inc................... 65,671,875
*2,500,000 Cabletron Systems, Inc.............. 63,125,000
*1,589,200 China Unicom Ltd. ADR............... 33,770,500
*1,055,000 Cognex Corp......................... 54,596,250
*2,000,000 Cognos, Inc......................... 82,750,000
1,200,300 Comdisco, Inc....................... 26,781,694
765,400 Electronic Data Systems Corp........ 31,572,750
2,300,000 First Data Corp..................... 114,137,500
*350,000 Genuity, Inc........................ 3,204,688
*420,000 Healtheon/WebMD Corp................ 6,221,250
*799,100 Intuit, Inc......................... 33,062,763
*1,300,000 LookSmart, Ltd...................... 24,050,000
*1,900,000 Rational Software Corp.............. 176,581,250
*1,476,400 VeriSign, Inc....................... 260,584,600
*2,599,400 Vignette Corp....................... 135,209,412
--------------
1,374,866,463
--------------
TRANSPORTATION -- 3.5%
*2,633,000 AMR Corp............................ 69,609,938
1,600,000 Canadian Pacific Ltd................ 41,900,000
3,000,000 Delphi Automotive Systems Corp...... 43,687,500
<CAPTION>
MARKET
SHARES VALUE
------------ --------------
<C> <S> <C>
</TABLE>
TRANSPORTATION -- (CONTINUED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------------ --------------
<C> <S> <C>
1,781,200 Northrop Grumman Corp............... $ 118,004,500
1,140,000 USFreightways Corp.................. 28,001,250
2,154,000 Werner Enterprises, Inc............. 24,905,625
--------------
326,108,813
--------------
UTILITIES -- 5.1%
*5,325,900 Calpine Corp........................ 350,177,925
2,091,900 CMS Energy Corp..................... 46,283,288
4,200,000 Waste Management, Inc............... 79,800,000
--------------
476,261,213
--------------
Total common stocks................. $8,421,806,301
==============
CONVERTIBLE PREFERRED STOCKS -- 0.1%
HOTELS & GAMING -- 0.1%
-62,427 Wyndham International, Inc.,
Class B............................ $ 6,116,315
--------------
Total convertible preferred
stocks.............................. $ 6,116,315
==============
VOTING TRUSTS -- 0.0%
COMMUNICATIONS -- 0.0%
*-234,525 Cypress Communications, Inc......... $ 1,530,273
--------------
SOFTWARE & SERVICES -- 0.0%
*-72,315 Internap Network Services Corp...... 2,701,978
--------------
Total voting trusts................. $ 4,232,251
==============
<CAPTION>
PRINCIPAL
AMOUNT
----------------------------------------------------------------------
SHORT-TERM SECURITIES -- 9.3%
<C> <S> <C>
REPURCHASE AGREEMENT -- 9.3%
$879,472,000 Interest in $2,066,447,000 joint
repurchase agreement dated 06/30/00
with State Street Bank, 6.598% due
07/03/00; maturity amount
$879,955,570 (Collateralized by
$125,835,832 U.S. Treasury Notes
5.50% - 7.875% due 08/31/01 -
11/15/04, $1,943,730,718 U.S.
Treasury Bonds 5.25% - 10.625% due
08/15/15 - 02/15/29)................ $ 879,472,000
--------------
Total short-term securities......... $ 879,472,000
==============
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
DIVERSIFICATION OF NET ASSETS:
Total common stocks (cost
$6,784,936,353).......................... 89.3% $8,421,806,301
Total convertible preferred stocks (cost
$5,711,961).............................. 0.1 6,116,315
Total voting trusts (cost $1,432,036)..... 0.0 4,232,251
Total short-term securities (cost
$879,472,000)............................ 9.3 879,472,000
----- --------------
Total investment in securities (total cost
$7,671,552,350).......................... 98.7 9,311,626,867
Cash, receivables and other assets........ 2.3 219,181,562
Securities lending collateral............. 8.4 790,421,193
Payable for securities purchased.......... (1.0) (99,323,694)
Payable for fund shares redeemed.......... (0.0) (1,679,031)
Securities lending collateral payable to
brokers.................................. (8.4) (790,421,193)
Other liabilities......................... (0.0) (301,766)
----- --------------
Net assets................................ 100.0% $9,429,503,938
===== ==============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
_____________________________________ MF-4 _____________________________________
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
</TABLE>
<TABLE>
<S> <C>
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share;
3,000,000,000 shares authorized; 1,587,054,220
shares outstanding............................... $ 158,705,422
Capital surplus................................... 6,086,243,577
Accumulated undistributed net investment income... 28,097,122
Accumulated undistributed net realized gain on
investments...................................... 1,516,523,055
Unrealized appreciation of investments............ 1,640,075,682
Unrealized appreciation of forward foreign
currency contracts (See Note 2)w................. 28,861
Unrealized depreciation of other assets and
liabilities in foreign currencies................ (169,781)
--------------
Net assets........................................ $9,429,503,938
==============
</TABLE>
<TABLE>
<S> <C>
Class IA
Net asset value per share ($9,370,818,719 DIVIDED BY
1,577,172,355 shares outstanding) (2,250,000,000 shares
authorized).............................................. $5.94
=====
Class IB
Net asset value per share ($58,685,219 DIVIDED BY
9,881,865 shares outstanding) (750,000,000 shares
authorized).............................................. $5.94
=====
</TABLE>
<TABLE>
<C> <S>
* Non-income producing during the period.
- Securities 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, 2000, the market value of
these securities amounted to $10,348,566 or 0.1% of net
assets.
</TABLE>
wFORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AT JUNE 30, 2000
<TABLE>
<CAPTION>
UNREALIZED
TOTAL CONTRACT DELIVERY APPRECIATION
DESCRIPTION MARKET VALUE AMOUNT DATE (DEPRECIATION)
----------- ------------ ---------- -------- --------------
<S> <C> <C> <C> <C>
Japanese Yen (Sell) $4,038,913 $4,072,497 07/05/00 $ 33,584
Japanese Yen (Sell) 7,101,489 7,083,012 07/05/00 (18,477)
Japanese Yen (Sell) 5,961,935 5,975,689 07/03/00 13,754
--------
$ 28,861
========
</TABLE>
_____________________________________ MF-5 _____________________________________
<PAGE>
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND, INC.
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
--------------------- --------------
<C> <S> <C>
COMMON STOCKS -- 91.8%
AUSTRALIA -- 1.0%
300,900 News Corp., Ltd. ADR (Media &
Entertainment)..................... $ 16,399,050
--------------
BELGIUM -- 1.0%
13,000 Compagnie Luxembourgeoise pour
l'Audio-Visuel et la Finance
(Audiofina) (Media &
Entertainment)..................... 1,682,324
303,600 Lernout & Hauspie Speech Products
N.V. (Electronics)................. 13,377,375
--------------
15,059,699
--------------
CANADA -- 2.0%
382,000 Alcan Aluminum Ltd. (Metals,
Minerals & Mining)................. 11,859,591
39,000 Nortel Networks Corp.
(Communications)................... 2,703,234
240,600 Nortel Networks Holdings Corp.
(Communications)................... 16,420,950
--------------
30,983,775
--------------
CHINA -- 1.3%
32,700 China Mobile (Hong Kong) Ltd.
(Communications)................... 5,814,469
367,300 China Unicom Ltd. ADR (Software &
Services).......................... 7,805,125
311,500 PetroChina Co., Ltd. (Energy &
Services).......................... 6,522,031
--------------
20,141,625
--------------
FINLAND -- 2.2%
521,588 Nokia Oyj (Communications).......... 26,724,386
291,934 UPM-Kymmene Group (Forest & Paper
Products).......................... 7,275,963
--------------
34,000,349
--------------
FRANCE -- 13.0%
93,940 Air Liquids S.A. (Chemicals)........ 12,300,810
314,300 Alcatel (Communications)............ 20,698,247
478,592 Aventis S.A. (Drugs)................ 35,073,198
134,300 AXA (Financial Services)............ 21,241,853
172,871 BNP Paribas (Financial Services).... 16,703,794
34,852 Canal Plus (Media &
Entertainment)..................... 5,879,939
32,200 Castorama Dubois Investissement S.A.
(Retail)........................... 7,994,441
47,600 France Telecom S.A.
(Communications)................... 6,680,062
10,100 L'Oreal (Consumer Non-Durables)..... 8,781,346
89,600 Pinault-Printemps - Redoute S.A.
(Retail)........................... 19,986,504
33,796 Thomson Multimedia (Media &
Entertainment)..................... 2,196,481
228,930 Total Fina S.A., B Shares (Energy &
Services).......................... 35,243,635
135,600 Vivendi S.A. (Media &
Entertainment)..................... 12,017,083
--------------
204,797,393
--------------
GERMANY -- 6.8%
363,369 BASF AG (Chemicals)................. 14,803,665
368,000 Bayerische Motoren Werke (BMW) AG
(Transportation)................... 11,253,068
<CAPTION>
MARKET
SHARES VALUE
--------------------- --------------
<C> <S> <C>
</TABLE>
GERMANY -- (CONTINUED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
--------------------- --------------
<C> <S> <C>
158,000 Deutsche Bank AG (Financial
Services).......................... $ 13,260,066
89,700 Infineon Technologies AG
(Software & Services).............. 7,343,156
163,192 Linde AG (Machinery)................ 6,617,161
340,600 RWE AG (Utilities).................. 11,606,912
15,234 SAP AG (Software & Services)........ 2,859,296
265,491 Siemens AG (Electronics)............ 39,905,091
--------------
107,648,415
--------------
HONG KONG -- 1.6%
1,099,000 Cheung Kong (Holdings) Ltd. (Real
Estate)............................ 12,160,147
3,240,000 Hong Kong Telecommunications
(Communications)................... 7,128,385
825,000 Sun Hung Kai Properties (Real
Estate)............................ 5,926,851
--------------
25,215,383
--------------
INDIA -- 0.6%
222,900 ICICI Ltd. (Financial Services)..... 4,179,375
-304,700 Videsh Sanchar Nigam Ltd.
(Communications)................... 4,760,938
--------------
8,940,313
--------------
IRELAND -- 0.3%
593,944 Allied Irish Banks PLC (Financial
Services).......................... 5,351,873
--------------
ITALY -- 3.1%
491,570 Mediaset S.p.A. (Media &
Entertainment)..................... 7,539,418
822,800 San Paolo - IMI S.p.A. (Financial
Services).......................... 14,662,435
1,788,600 Telecom Italia Mobile S.p.A.
(Communications)................... 18,345,495
570,700 Telecom Italia S.p.A.
(Communications)................... 7,877,761
--------------
48,425,109
--------------
JAPAN -- 18.7%
1,070,000 Asahi Glass Co., Ltd. (Consumer
Durables).......................... 11,984,234
260,000 Canon, Inc. (Computers & Office
Equipment)......................... 12,975,241
652,000 Dai Nippon Printing Co., Ltd.
(Media & Entertainment)............ 11,517,681
453,000 Fujisawa Pharmaceutical Co.
(Drugs)............................ 18,368,075
178,000 Hoya Corp. (Medical Instruments &
Supplies).......................... 15,982,750
170,500 Matsumotokiyoshi Co., Ltd.
(Retail)........................... 17,919,972
54,000 Matsushita Communication Industrial
Co., Ltd. (Communications)......... 6,318,625
504,000 Minebea Co., Ltd. (Electronics)..... 6,335,638
769,000 Mitsubishi Electric Corp.
(Electronics)...................... 8,344,040
33,000 Murata Manufacturing Co., Ltd.
(Electronics)...................... 4,747,191
586,000 NEC Corp. (Electronics)............. 18,443,783
843,000 Nikko Securities Co., Ltd.
(Financial Services)............... 8,366,138
1,588 Nippon Telegraph & Telephone Corp.
(Communications)................... 21,163,026
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
_____________________________________ MF-6 _____________________________________
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
--------------------- --------------
<C> <S> <C>
</TABLE>
COMMON STOCKS -- (CONTINUED)
JAPAN -- (CONTINUED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
--------------------- --------------
<C> <S> <C>
276 NTT Mobile Communication
Network, Inc. (Media &
Entertainment)..................... $ 7,486,850
540,000 Omron Corp. (Electrical
Equipment)......................... 14,699,224
122,900 Promise Co., Ltd. (Financial
Services).......................... 9,734,285
832,000 Ricoh Co., Ltd. (Media &
Entertainment)..................... 17,654,191
78,400 Softbank Corp. (Software &
Services).......................... 10,670,548
97,900 Sony Corp. (Media & Entertainment).. 9,160,645
343,000 Takeda Chemical Industries Ltd.
(Drugs)............................ 22,563,762
1,050,000 Tokyo Style Co., Ltd. (Apparel &
Textile)........................... 9,924,244
1,394,000 Toshiba Corp. (Computers & Office
Equipment)......................... 15,771,212
102,100 Uni-Charm Corp. (Consumer Non-
Durables).......................... 6,195,394
174,000 Yamanouchi Pharmaceuticals Co., Ltd.
(Drugs)............................ 9,522,171
--------------
295,848,920
--------------
MEXICO -- 1.2%
4,744,200 Cifra S.A. de CV (Retail)........... 11,133,694
158,300 Fomento Economico Mexicano S.A. de
C.V. (Food, Beverage & Tobacco).... 6,816,794
95,800 Grupo Financiero - Banacci
(Financial Services)............... 408,770
--------------
18,359,258
--------------
NETHERLANDS -- 6.6%
409,500 Aegon N.V. (Financial Services)..... 14,630,048
43,229 Heineken N.V. (Food, Beverage &
Tobacco)........................... 2,641,726
258,657 ING Groep N.V. (Financial
Services).......................... 17,554,559
99,200 Koninklijke KPN N.V.
(Communications)................... 4,455,062
525,204 Koninklijke Philips Electronics N.V.
(Electronics)...................... 24,870,666
59,800 Royal Dutch Petroleum Co. (NY)
(Energy & Services)................ 3,681,438
422,200 Royal Dutch Petroleum Co. (Energy &
Services).......................... 26,347,030
95,900 STMicroelectronics N.V.
(Electronics)...................... 6,067,293
150,000 United Pan-Europe Communications
N.V. (Media & Entertainment)....... 4,050,000
--------------
104,297,822
--------------
SINGAPORE -- 0.6%
894,600 Overseas-Chinese Banking Corp., Ltd.
(Financial Services)............... 6,157,244
722,886 Overseas Union Bank Ltd. (Financial
Services).......................... 2,801,271
--------------
8,958,515
--------------
SOUTH KOREA -- 2.0%
53,160 Korea Telecom Corp.
(Communications)................... 4,681,944
82,520 Korea Telecom Corp. ADR
(Communications)................... 3,991,905
<CAPTION>
MARKET
SHARES VALUE
--------------------- --------------
<C> <S> <C>
</TABLE>
SOUTH KOREA -- (CONTINUED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
--------------------- --------------
<C> <S> <C>
68,410 Samsung Electronics (Electronics)... $ 22,639,961
--------------
31,313,810
--------------
SPAIN -- 5.6%
353,500 Banco Popular Espanol S.A.
(Financial Services)............... 10,979,103
1,972,400 Banco Santander Central Hispano S.A.
(Financial Services)............... 20,892,466
999,100 Endesa S.A. (Utilities)............. 19,432,266
150,900 Endesa S.A. ADR (Utilities)......... 2,942,550
-35,961 Groupo Prisa S.A. (Media &
Entertainment)..................... 837,665
671,400 Repsol YPF S.A. (Energy &
Services).......................... 13,418,990
317,640 Telefonica S.A. (Communications).... 20,348,813
--------------
88,851,853
--------------
SWEDEN -- 2.5%
1,955,520 Skandinaviska Enskilda, Class A
(Financial Services)............... 23,299,310
811,440 Telefonaktiebolaet LM Ericsson AB
(Communications)................... 16,144,193
--------------
39,443,503
--------------
SWITZERLAND -- 3.1%
4,840 Holderbank Financiere Glarus AG
(Bearer) (Consumer Durables)....... 5,953,022
17,879 Nestle S.A. (Food, Beverage &
Tobacco)........................... 35,899,509
4,900 Novartis AG (Drugs)................. 7,786,651
--------------
49,639,182
--------------
THAILAND -- 0.4%
115,500 Siam Cement Co. (Consumer
Durables).......................... 2,167,260
5,249,567 Siam Commercial Bank (Financial
Services).......................... 615,479
3,303,400 Thai Farmers Bank (Financial
Services).......................... 2,779,241
--------------
5,561,980
--------------
UNITED KINGDOM -- 18.1%
984,800 Abbey National PLC (Financial
Services).......................... 11,778,014
549,300 AstraZeneca Group PLC ADR (Drugs)... 25,662,706
587,000 Barclays PLC (Financial Services)... 14,574,004
3,233,122 BP Amoco PLC (Energy & Services).... 31,031,894
3,248,311 British Airways PLC
(Transportation)................... 18,699,232
1,572,300 British American Tobacco PLC (Food,
Beverage & Tobacco)................ 10,520,942
1,045,827 Cable & Wireless PLC (Utilities).... 17,764,363
374,779 COLT Telecom Group PLC
(Communications)................... 12,453,938
371,000 III Group PLC (Financial
Services).......................... 7,616,063
2,303,000 Invensys PLC (Electrical
Equipment)......................... 8,637,828
402,672 Lloyds TSB Group PLC (Financial
Services).......................... 3,816,126
752,500 Marconi PLC (Communications)........ 9,780,110
1,091,946 Prudential Corp. PLC (Financial
Services).......................... 16,001,970
825,045 Psion PLC GBP (Software &
Services).......................... 7,950,107
</TABLE>
_____________________________________ MF-7 _____________________________________
<PAGE>
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND, INC.
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
--------------------- --------------
<C> <S> <C>
</TABLE>
COMMON STOCKS -- (CONTINUED)
UNITED KINGDOM -- (CONTINUED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
--------------------- --------------
<C> <S> <C>
4,005,500 Smith & Nephew PLC ADR (Medical
Instruments & Supplies)............ $ 14,553,415
455,700 SmithKline Beecham PLC (Drugs)...... 5,988,192
176,000 SmithKline Beecham PLC ADR, Class A
(Drugs)............................ 11,473,000
1,317,370 Standard Chartered PLC (Financial
Services).......................... 16,383,711
1,699,700 Tomkins PLC (Food, Beverage &
Tobacco)........................... 5,480,861
7,687,555 Vodafone AirTouch PLC
(Communications)................... 31,190,331
789,400 Williams PLC (Business Services).... 4,571,150
--------------
285,927,957
--------------
UNITED STATES OF AMERICA -- 0.3%
85,100 Telefonos de Mexico S.A. ADR
(Communications)................... 4,861,338
--------------
Total common stocks................. $1,450,027,122
==============
<CAPTION>
PRINCIPAL
AMOUNT
---------------------
<C> <S> <C>
FOREIGN/YANKEE BONDS & NOTES -- 2.4%
FOREIGN GOVERNMENTS -- 2.4%
$ 39,210,000 Bundesschatzanweisungen
3.25% due 09/15/00................. $ 37,482,912
--------------
Total foreign/yankee bonds &
notes............................... $ 37,482,912
==============
SHORT-TERM SECURITIES -- 6.5%
REPURCHASE AGREEMENT -- 6.5%
$102,711,000 Interest in $2,066,447,000 joint
repurchase agreement dated 06/30/00
with State Street Bank, 6.598% due
07/03/00; maturity amount
$102,767,475 (Collateralized by
$125,835,832 U.S. Treasury Notes
5.50% - 7.875% due 08/31/01 -
11/15/04, $1,943,730,718
U.S.Treasury Bonds 5.25% - 10.625%
due 08/15/15 - 02/15/29)............ $ 102,711,000
--------------
Total short-term securities......... $ 102,711,000
==============
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
DIVERSIFICATION OF NET ASSETS:
Total common stocks (cost
$1,284,826,807)......................... 91.8% $1,450,027,122
Total foreign/yankee bonds & notes (cost
$35,451,385)............................ 2.4 37,482,912
Total short-term securities (cost
$102,711,000)........................... 6.5 102,711,000
------ --------------
Total investment in securities (total
cost $1,422,989,192).................... 100.7 1,590,221,034
Cash, receivables and other assets....... 4.3 67,232,929
Securities lending collateral............ 9.1 144,256,076
Payable for securities purchased......... (1.8) (28,818,180)
Payable for fund shares redeemed......... (3.1) (48,790,923)
Securities lending collateral payable to
brokers................................. (9.1) (144,256,076)
Other liabilities........................ (0.1) (1,108,727)
------ --------------
Net assets............................... 100.0% $1,578,736,133
====== ==============
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
</TABLE>
<TABLE>
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share;
2,500,000,000 shares authorized; 1,009,100,177
shares outstanding............................... $ 100,910,018
<CAPTION>
<S> <C>
Capital surplus................................... 1,171,109,090
Accumulated undistributed net investment income... 6,140,661
Accumulated undistributed net realized gain on
investments...................................... 133,752,617
Unrealized appreciation of investments............ 167,231,842
Unrealized depreciation of forward foreign
currency contracts (See Note 2)w................. (313,270)
Unrealized depreciation of other assets and
liabilities in foreign currencies................ (94,825)
--------------
Net assets........................................ $1,578,736,133
==============
</TABLE>
<TABLE>
<S> <C>
Class IA
Net asset value per share ($1,567,313,276 DIVIDED BY
1,001,794,038 shares outstanding) (1,875,000,000 shares
authorized).............................................. $1.56
=====
Class IB
Net asset value per share ($11,422,857 DIVIDED BY
7,306,139 shares outstanding) (625,000,000 shares
authorized).............................................. $1.56
=====
</TABLE>
<TABLE>
<S> <C> <C>
DIVERSIFICATION BY INDUSTRY:
Apparel & Textile...................... 0.6% $ 9,924,244
Business Services...................... 0.3 4,571,150
Chemicals.............................. 1.7 27,104,474
Communications......................... 16.0 252,543,209
Computers & Office Equipment........... 1.8 28,746,453
Consumer Durables...................... 1.3 20,104,515
Consumer Non-Durables.................. 0.9 14,976,740
Drugs.................................. 8.6 136,437,754
Electrical Equipment................... 1.5 23,337,051
Electronics............................ 9.2 144,731,038
Energy & Services...................... 7.4 116,245,017
Financial Services..................... 16.7 263,787,199
Food, Beverage & Tobacco............... 3.9 61,359,832
Forest & Paper Products................ 0.5 7,275,963
Machinery.............................. 0.4 6,617,161
Media & Entertainment.................. 6.1 96,421,326
Medical Instruments & Supplies......... 1.9 30,536,174
Metals, Minerals & Mining.............. 0.8 11,859,591
Real Estate............................ 1.1 18,086,998
Retail................................. 3.6 57,034,610
Software & Services.................... 2.3 36,628,231
Transportation......................... 1.9 29,952,300
Utilities.............................. 3.3 51,746,092
------ --------------
Total common stocks.................... 91.8% $1,450,027,122
====== ==============
</TABLE>
<TABLE>
<C> <S>
- Securities 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, 2000, the market value of
these securities amounted to $5,598,603 or 0.3% of net
assets.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
_____________________________________ MF-8 _____________________________________
<PAGE>
wFORWARD FOREIGN CURRENCY CONTRACTS OUTSTANDING AT JUNE 30, 2000
<TABLE>
<CAPTION>
UNREALIZED
TOTAL CONTRACT DELIVERY APPRECIATION
DESCRIPTION MARKET VALUE AMOUNT DATE (DEPRECIATION)
----------- ------------ ---------- -------- --------------
<S> <C> <C> <C> <C>
British Pounds (Buy) $1,993,994 $1,992,086 07/05/00 $ 1,908
British Pounds (Buy) 9,301,903 9,335,702 07/06/00 (33,799)
British Pounds (Sell) 2,132,126 2,110,580 07/03/00 (21,546)
British Pounds (Sell) 1,684,549 1,687,843 07/07/00 3,294
EURO (Buy) 3,142,898 3,136,213 07/31/00 6,685
EURO (Sell) 5,962,716 5,834,646 07/31/00 (128,070)
EURO (Sell) 6,029,201 5,916,056 07/03/00 (113,145)
EURO (Sell) 5,945,596 5,909,814 07/05/00 (35,782)
Japanese Yen (Buy) 187,677 188,110 07/03/00 (433)
Japanese Yen (Sell) 7,500,255 7,562,622 07/05/00 62,367
Swedish Krona (Sell) 9,806,063 9,705,284 07/05/00 (100,779)
Swiss Franc (Buy) 8,321,477 8,276,002 07/03/00 45,475
Swiss Franc (Buy) 230,074 229,519 07/05/00 555
---------
$(313,270)
=========
</TABLE>
_____________________________________ MF-9 _____________________________________
<PAGE>
HARTFORD STOCK HLS FUND, INC.
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
--------------------- --------------
<C> <S> <C>
COMMON STOCKS -- 98.3%
AEROSPACE & DEFENSE -- 1.8%
*450,000 General Motors, Class H............. $ 39,487,500
629,000 Honeywell International, Inc........ 21,189,438
1,900,000 United Technologies Corp............ 111,862,500
--------------
172,539,438
--------------
BUSINESS SERVICES -- 0.2%
1,302,350 ServiceMaster Co. (The)............. 14,814,231
--------------
CHEMICALS -- 3.1%
2,700,000 Dow Chemical Co. (The).............. 81,506,250
384,700 du Pont (E.I.) de Nemours & Co...... 16,830,625
2,742,000 Pharmacia Corp...................... 141,727,125
1,550,000 Praxair, Inc........................ 58,028,125
--------------
298,092,125
--------------
COMMUNICATIONS -- 12.5%
2,810,000 AT&T Corp........................... 88,866,250
*50,000 COLT Telecom Group PLC.............. 1,661,504
*2,688,800 Global Crossing Ltd................. 70,749,050
2,600,000 Lucent Technologies, Inc............ 154,050,000
2,650,000 Motorola, Inc....................... 77,015,625
20,000 Nippon Telegraph & Telephone Corp.
ADR................................ 13,675,000
3,400,000 Nokia Corp. ADR..................... 169,787,500
500,000 Nortel Networks Holdings Corp....... 34,125,000
4,300,000 SBC Communications, Inc............. 185,975,000
*700,000 Sprint PCS Group.................... 41,650,000
*300,000 Tellabs, Inc........................ 20,531,250
2,300,000 Verizon Communications.............. 116,868,750
4,607,925 Worldcom, Inc....................... 211,388,558
--------------
1,186,343,487
--------------
COMPUTERS & OFFICE
EQUIPMENT -- 9.5%
*5,046,500 Cisco Systems, Inc.................. 320,768,156
*1,750,000 Dell Computer Corp.................. 86,296,875
*1,800,000 EMC Corp............................ 138,487,500
850,000 Hewlett-Packard Co.................. 106,143,750
1,500,000 International Business Machines
Corp............................... 164,343,750
*2,200,000 Solectron Corp...................... 92,125,000
--------------
908,165,031
--------------
CONSUMER NON-DURABLES -- 6.0%
2,200,000 Cardinal Health, Inc................ 162,800,000
1,600,000 Gillette Co. (The).................. 55,900,000
1,430,000 Procter & Gamble Co. (The).......... 81,867,500
*4,000,000 Safeway, Inc........................ 180,500,000
2,000,000 Tyco International Ltd.............. 94,750,000
--------------
575,817,500
--------------
DRUGS -- 7.6%
2,610,000 Abbott Laboratories................. 116,308,125
3,050,000 American Home Products Corp......... 179,187,500
1,150,000 Bristol-Myers Squibb Co............. 66,987,500
2,300,000 Merck & Co., Inc.................... 176,237,500
3,791,125 Pfizer, Inc......................... 181,974,000
--------------
720,694,625
--------------
<CAPTION>
MARKET
SHARES VALUE
--------------------- --------------
<C> <S> <C>
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
--------------------- --------------
<C> <S> <C>
ELECTRICAL EQUIPMENT -- 1.2%
*1,592,700 Teradyne, Inc....................... $ 117,063,450
--------------
ELECTRONICS -- 9.1%
6,090,000 General Electric Co................. 322,770,000
2,107,000 Intel Corp.......................... 281,679,563
*1,300,000 Micron Technology, Inc.............. 114,481,250
1,800,000 Texas Instruments, Inc.............. 123,637,500
*337,200 Vitesse Semiconductor Corp.......... 24,805,275
--------------
867,373,588
--------------
ENERGY & SERVICES -- 5.9%
100,000 Conoco, Inc., Class B............... 2,456,250
3,100,000 Exxon Mobil Corp.................... 243,350,000
1,500,000 Royal Dutch Petroleum Co............ 92,343,750
1,250,800 Schlumberger Ltd.................... 93,340,950
1,500,000 Texaco, Inc......................... 79,875,000
1,500,000 Unocal Corp......................... 49,687,500
--------------
561,053,450
--------------
FINANCIAL SERVICES -- 12.7%
1,381,250 American International
Group, Inc......................... 162,296,875
5,857,000 Associates First Capital Corp.,
Class A............................ 130,684,313
3,079,500 Citigroup, Inc...................... 185,539,875
1,900,000 Fleet Boston Financial Corp......... 64,600,000
3,050,000 Franklin Resources, Inc............. 92,643,750
250,000 Goldman Sachs Group, Inc. (The)..... 23,718,750
2,200,000 Marsh & McLennan Cos., Inc.......... 229,762,500
1,100,000 Merrill Lynch & Co., Inc............ 126,500,000
1,850,000 State Street Corp................... 196,215,625
--------------
1,211,961,688
--------------
FOOD, BEVERAGE & TOBACCO -- 2.0%
600,000 Coca-Cola Co. (The)................. 34,462,500
3,600,000 PepsiCo, Inc........................ 159,975,000
--------------
194,437,500
--------------
FOREST & PAPER PRODUCTS -- 2.1%
1,800,000 Kimberly-Clark Corp................. 103,275,000
2,150,000 Weyerhaeuser Co..................... 92,450,000
--------------
195,725,000
--------------
MACHINERY -- 0.7%
2,000,000 Caterpillar, Inc.................... 67,750,000
--------------
MEDIA & ENTERTAINMENT -- 4.6%
*5,446,000 AT&T - Liberty Media Group,
Class A............................ 132,065,500
2,838,900 Gannett Co., Inc.................... 169,801,706
*2,039,800 Viacom, Inc., Class B............... 139,088,863
--------------
440,956,069
--------------
MEDICAL INSTRUMENTS &
SUPPLIES -- 2.1%
1,000,000 Guidant Corp........................ 49,500,000
1,450,000 Johnson & Johnson Co................ 147,718,750
--------------
197,218,750
--------------
METALS, MINERALS &
MINING -- 1.9%
3,600,000 Alcoa, Inc.......................... 104,400,000
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
_____________________________________ MF-10 ____________________________________
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
--------------------- --------------
<C> <S> <C>
</TABLE>
COMMON STOCKS -- (CONTINUED)
METALS, MINERALS &
MINING -- (CONTINUED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
--------------------- --------------
<C> <S> <C>
1,350,000 Illinois Tool Works, Inc............ $ 76,950,000
--------------
181,350,000
--------------
REAL ESTATE -- 0.1%
*6,150 Security Capital Group, Inc.,
Class A............................ 5,082,975
--------------
RETAIL -- 5.9%
2,100,000 CVS Corp............................ 84,000,000
2,407,500 Home Depot, Inc. (The).............. 120,224,531
5,300,000 McDonald's Corp..................... 174,568,750
3,200,000 Wal-Mart Stores, Inc................ 184,400,000
--------------
563,193,281
--------------
SOFTWARE & SERVICES -- 9.0%
*350,000 3Com Corp........................... 20,168,750
*1,750,000 America Online, Inc................. 92,312,500
2,251,000 Automatic Data Processing, Inc...... 120,569,188
*1,638,400 China Unicom Ltd. ADR............... 34,816,000
*1,300,000 Computer Sciences Corp.............. 97,093,750
1,516,600 Electronic Data Systems Corp........ 62,559,750
*4,700,000 Microsoft Corp...................... 376,000,000
*289,150 VeriSign, Inc....................... 51,034,975
--------------
854,554,913
--------------
TRANSPORTATION -- 0.3%
*1,068,154 Sabre Group Corp.................... 30,442,389
--------------
Total common stocks................. $9,364,629,490
==============
<CAPTION>
PRINCIPAL
AMOUNT
---------------------
<C> <S> <C>
SHORT-TERM SECURITIES -- 1.5%
REPURCHASE AGREEMENT -- 1.5%
$138,497,000 Interest in $2,066,447,000 joint
repurchase agreement dated 06/30/00
with State Street Bank, 6.598% due
07/03/00; maturity amount
$138,573,151 (Collateralized by
$125,835,832 U.S. Treasury Notes
5.50% - 7.875% due 08/31/01 -
11/15/04, $1,943,730,718 U.S.
Treasury Bonds 5.25% - 10.625% due
08/15/15 - 02/15/29)................ $ 138,497,000
--------------
Total short-term securities......... $ 138,497,000
==============
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
<CAPTION>
DIVERSIFICATION OF NET ASSETS:
<S> <C> <C>
Total common stocks (cost
$6,860,642,369)......................... 98.3% $9,364,629,490
Total short-term securities (cost
$138,497,000)........................... 1.5 138,497,000
------ --------------
Total investment in securities (total
cost $6,999,139,369).................... 99.8 9,503,126,490
Cash, receivables and other assets....... 0.3 24,754,714
Securities lending collateral............ 1.9 178,727,476
Payable for fund shares redeemed......... (0.1) (1,751,210)
Securities lending collateral payable to
brokers................................. (1.9) (178,727,476)
------ --------------
Net assets............................... 100.0% $9,526,129,994
====== ==============
</TABLE>
<TABLE>
<S> <C>
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share;
3,000,000,000 shares authorized; 1,506,295,782
shares outstanding............................... $ 150,629,578
Capital surplus................................... 6,564,457,632
Accumulated undistributed net investment income... 31,316,736
Accumulated undistributed net realized gain on
investments...................................... 275,738,927
Unrealized appreciation of investments............ 2,503,987,121
--------------
Net assets........................................ $9,526,129,994
==============
</TABLE>
<TABLE>
<S> <C>
Class IA
Net asset value per share ($9,446,867,680 DIVIDED BY
1,493,757,418 shares outstanding) (2,250,000,000 shares
authorized).............................................. $6.32
=====
Class IB
Net asset value per share ($79,262,314 DIVIDED BY
12,538,364 shares outstanding) (750,000,000 shares
authorized).............................................. $6.32
=====
</TABLE>
<TABLE>
<C> <S>
* Non-income producing during the period.
</TABLE>
_____________________________________ MF-11 ____________________________________
<PAGE>
HARTFORD DIVIDEND AND GROWTH HLS FUND, INC.
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
--------------------- --------------
<C> <S> <C>
COMMON STOCKS -- 96.8%
AEROSPACE & DEFENSE -- 4.2%
403,500 Honeywell International, Inc....... $ 13,592,906
1,878,200 United Technologies Corp........... 110,579,025
--------------
124,171,931
--------------
CHEMICALS -- 3.8%
165,400 Akzo Nobel N.V. ADR................ 6,957,138
450,928 du Pont (E.I.) de Nemours & Co..... 19,728,100
105,700 Eastman Chemical Co................ 5,047,175
1,289,363 Pharmacia Corp..................... 66,643,950
114,400 PPG Industries, Inc................ 5,069,350
223,500 Rohm & Haas Co..................... 7,710,750
--------------
111,156,463
--------------
COMMUNICATIONS -- 10.0%
2,549,800 AT&T Corp.......................... 80,637,425
470,300 Broadwing, Inc..................... 12,198,406
725,300 Lucent Technologies, Inc........... 42,974,025
728,526 SBC Communications, Inc............ 31,508,750
1,863,246 Verizon Communications............. 94,676,187
375,100 US West, Inc....................... 32,164,825
--------------
294,159,618
--------------
COMPUTERS & OFFICE
EQUIPMENT -- 1.1%
140,800 International Business Machines
Corp.............................. 15,426,400
218,400 Minnesota Mining &
Manufacturing Co.................. 18,018,000
--------------
33,444,400
--------------
CONSUMER DURABLES -- 2.6%
286,500 Corning, Inc....................... 77,319,188
--------------
CONSUMER NON-DURABLES -- 3.7%
412,000 Cardinal Health, Inc............... 30,488,000
328,400 Clorox Co. (The)................... 14,716,425
122,300 Eastman Kodak Co................... 7,276,850
415,600 Gillette Co. (The)................. 14,520,025
716,000 Procter & Gamble Co. (The)......... 40,991,000
--------------
107,992,300
--------------
DRUGS -- 7.0%
547,200 Abbott Laboratories................ 24,384,600
672,200 American Home Products Corp........ 39,491,750
867,300 AstraZeneca Group PLC ADR.......... 40,329,450
392,000 Bristol-Myers Squibb Co............ 22,834,000
373,500 Eli Lilly & Co..................... 37,303,313
524,900 Merck & Co., Inc................... 40,220,463
--------------
204,563,576
--------------
ELECTRICAL EQUIPMENT -- 0.2%
154,700 White Electronic Designs Corp...... 6,826,138
--------------
ELECTRONICS -- 5.4%
273,700 Eaton Corp......................... 18,337,900
2,126,580 General Electric Co................ 112,708,740
199,600 Intel Corp......................... 26,684,025
--------------
157,730,665
--------------
ENERGY & SERVICES -- 10.4%
463,000 Ashland, Inc....................... 16,233,938
866,817 Conoco, Inc., Class B.............. 21,291,193
394,100 Enron Corp......................... 25,419,450
1,339,983 Exxon Mobil Corp................... 105,188,666
3,780,000 Repsol YPF S.A. ADR................ 74,891,250
2,661,800 Suncor Energy, Inc................. 62,053,213
--------------
305,077,710
--------------
<CAPTION>
MARKET
SHARES VALUE
--------------------- --------------
<C> <S> <C>
</TABLE>
COMMON STOCKS -- (CONTINUED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
--------------------- --------------
<C> <S> <C>
FINANCIAL SERVICES -- 17.3%
888,000 Associates First Capital Corp.,
Class A........................... $ 19,813,500
202,500 CIGNA Corp......................... 18,933,750
1,423,050 Citigroup, Inc..................... 85,738,763
575,300 Fannie Mae......................... 30,023,469
578,650 Marsh & McLennan Cos., Inc......... 60,432,759
375,000 MBIA, Inc.......................... 18,070,302
439,600 Merrill Lynch & Co., Inc........... 50,554,000
184,800 Morgan Stanley Dean Witter & Co.... 15,384,600
149,000 National Commerce Bancorporation... 2,393,313
1,375,700 Pacific Century Financial Corp..... 20,119,613
1,323,700 People's Bank...................... 24,322,988
2,397,800 U.S. Bancorp....................... 46,157,650
522,200 UnionBanCal Corp................... 9,693,338
953,100 Wachovia Corp...................... 51,705,675
1,174,100 Washington Mutual, Inc............. 33,902,138
364,700 XL Capital Ltd., Class A........... 19,739,388
--------------
506,985,246
--------------
FOOD, BEVERAGE &
TOBACCO -- 7.2%
251,700 Coca-Cola Co. (The)................ 14,457,019
1,751,500 McCormick & Co., Inc............... 56,923,750
906,600 PepsiCo, Inc....................... 40,287,038
966,700 Philip Morris Co., Inc............. 25,677,969
486,900 Reynolds (R.J.) Tobacco
Holdings, Inc..................... 13,602,769
3,140,100 Sara Lee Corp...................... 60,643,181
--------------
211,591,726
--------------
FOREST & PAPER PRODUCTS -- 2.7%
852,600 Abitibi-Consolidated, Inc.......... 7,993,125
693,600 Kimberly-Clark Corp................ 39,795,300
339,300 Temple-Inland, Inc................. 14,250,600
367,000 Weyerhaeuser Co.................... 15,781,000
--------------
77,820,025
--------------
HOTELS & GAMING -- 0.3%
253,748 Starwood Hotels & Resorts
Worldwide, Inc.................... 8,262,669
--------------
MACHINERY -- 0.5%
367,100 Caterpillar, Inc................... 12,435,513
125,000 CNH Global N.V..................... 1,156,250
--------------
13,591,763
--------------
MEDIA & ENTERTAINMENT -- 1.8%
608,800 Gannett Co., Inc................... 36,413,850
285,100 Knight-Ridder, Inc................. 15,163,756
--------------
51,577,606
--------------
MEDICAL INSTRUMENTS &
SUPPLIES -- 1.8%
748,000 Baxter International, Inc.......... 52,593,750
--------------
METALS, MINERALS &
MINING -- 0.9%
862,000 Alcoa, Inc......................... 24,998,000
--------------
REAL ESTATE -- 2.6%
734,500 Archstone Communities Trust
(REIT)............................ 15,470,406
620,100 Equity Office Properties Trust
(REIT)............................ 17,091,506
375,700 Kimco Realty Corp. (REIT).......... 15,403,700
662,300 Liberty Property Trust (REIT)...... 17,178,406
231,100 Spieker Properties, Inc. (REIT).... 10,630,600
--------------
75,774,618
--------------
RETAIL -- 2.8%
883,900 Family Dollar Stores, Inc.......... 17,291,294
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
_____________________________________ MF-12 ____________________________________
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
--------------------- --------------
<C> <S> <C>
</TABLE>
COMMON STOCKS -- (CONTINUED)
RETAIL -- (CONTINUED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
--------------------- --------------
<C> <S> <C>
2,712,060 Intimate Brands, Inc., Class A..... $ 53,563,185
461,400 May Department Stores Co........... 11,073,600
--------------
81,928,079
--------------
SOFTWARE & SERVICES -- 1.9%
569,100 Electronic Data Systems Corp....... 23,475,375
552,500 First Data Corp.................... 27,417,813
*55,801 Microsoft Corp..................... 4,464,080
--------------
55,357,268
--------------
TRANSPORTATION -- 2.0%
569,500 Ford Motor Co...................... 24,488,500
612,000 Genuine Parts Co................... 12,240,000
186,100 TRW, Inc........................... 8,072,088
497,400 USFreightways Corp................. 12,217,388
*74,566 Visteon Corp....................... 904,117
--------------
57,922,093
--------------
UTILITIES -- 6.6%
279,400 Dominion Resources, Inc............ 11,979,275
718,600 DQE, Inc........................... 28,384,700
243,100 Duke Energy Corp................... 13,704,763
251,200 Edison International............... 5,149,600
694,100 El Paso Energy Corp................ 35,355,719
635,900 Endesa S.A......................... 12,400,050
410,400 Montana Power Co. (The)............ 14,492,250
487,600 PECO Energy Co..................... 19,656,375
766,300 Pinnacle West Capital Corp......... 25,958,413
647,900 Unicom Corp........................ 25,065,631
242,850 UtiliCorp United, Inc.............. 4,826,644
--------------
196,973,420
--------------
Total common stocks................ $2,837,818,252
==============
<CAPTION>
PRINCIPAL
AMOUNT
---------------------
<C> <S> <C>
CONVERTIBLE PREFERRED STOCKS -- 1.3%
COMMUNICATIONS -- 0.6%
$ -9,200,000 American Tower Corp.
9.25% due 08/16/02................ $ 16,939,500
--------------
MEDIA & ENTERTAINMENT -- 0.6%
160,000 Tribune Co.
2.00% due 05/15/29................ 18,440,000
--------------
UTILITIES -- 0.1%
65,400 Texas Utilities Co.
6.25% due 10/15/09................ 2,542,425
--------------
Total convertible preferred $ 37,921,925
stocks.............................
==============
<CAPTION>
MARKET
SHARES VALUE
--------------------- --------------
<C> <S> <C>
EQUITY LINKED SECURITIES -- 0.7%
FINANCIAL SERVICES -- 0.7%
160,000 Salomon Smith Barney Holdings, Inc.
(ELKS)
3.25% due 10/06/00.............. $ 21,073,600
--------------
Total equity linked securities..... $ 21,073,600
==============
<CAPTION>
PRINCIPAL
AMOUNT
---------------------
<C> <S> <C>
SHORT-TERM SECURITIES -- 1.5%
REPURCHASE AGREEMENT -- 1.5%
$ 43,043,000 Interest in $2,066,447,000 joint
repurchase agreement dated 06/30/00
with State Street Bank, 6.598% due
07/03/00; maturity amount
$43,066,667 (Collateralized by
$125,835,832 U.S. Treasury Notes
5.50% - 7.875% due 08/31/01 -
11/15/04, $1,943,730,718 U.S.
Treasury Bonds 5.25% - 10.625% due
08/15/15 - 02/15/29)............... $ 43,043,000
--------------
Total short-term securities........ $ 43,043,000
==============
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
DIVERSIFICATION OF NET ASSETS:
Total common stocks (cost
$2,653,056,046).......................... 96.7% $2,837,818,252
Total convertible preferred stocks (cost
$37,626,591)............................. 1.3 37,921,925
Total equity linked securities (cost
$15,272,800)............................. 0.7 21,073,600
Total short-term securities (cost
$43,043,000)............................. 1.5 43,043,000
----- --------------
Total investment in securities (total cost
$2,748,998,437).......................... 100.2 2,939,856,777
Cash, receivables and other assets........ 0.7 21,311,895
Securities lending collateral............. 5.4 158,547,001
Payable for securities purchased.......... (0.8) (24,960,032)
Payable for fund shares redeemed.......... (0.1) (2,094,969)
Securities lending collateral payable to
brokers.................................. (5.4) (158,547,001)
Other liabilities......................... (0.0) (416,520)
----- --------------
Net assets................................ 100.0% $2,933,697,151
===== ==============
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share;
4,000,000,000 shares authorized; 1,525,652,564
shares outstanding............................... $ 152,565,256
Capital surplus................................... 2,408,487,290
Accumulated undistributed net investment income... 23,091,974
Accumulated undistributed net realized gain on
investments...................................... 158,694,755
Unrealized appreciation of investments............ 190,858,340
Unrealized depreciation of other assets and
liabilities in foreign currencies................ (464)
--------------
Net assets........................................ $2,933,697,151
==============
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Class IA
Net asset value per share ($2,914,866,706 DIVIDED BY
1,515,860,716 shares outstanding) (3,500,000,000 shares
authorized).............................................. $1.92
=====
Class IB
Net asset value per share ($18,830,445 DIVIDED BY
9,791,848 shares outstanding) (500,000,000 shares
authorized).............................................. $1.92
=====
</TABLE>
<TABLE>
<C> <S>
* Non-income producing during the period.
- Securities 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, 2000, the market value of
these securities amounted to $16,939,500 or 0.6% of net
assets.
</TABLE>
_____________________________________ MF-13 ____________________________________
<PAGE>
HARTFORD ADVISERS HLS FUND, INC.
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------------------- --------------
<C> <S> <C>
ASSET-BACKED SECURITIES -- 0.3%
$ -43,000,000 AESOP Funding II LLC, Series
1998-1, Class A
6.14% due 05/20/06............... $ 40,739,920
--------------
Total asset-backed securities...... $ 40,739,920
==============
COMMERCIAL MORTGAGE BACKED SECURITIES -- 0.5%
18,000,000 Asset Securitization Corp.,
Series 1997-D4, Class A1D
7.49% due 04/14/29............... $ 18,016,272
10,000,000 Asset Securitization Corp.,
Series 1997-D5, Class A1E
6.93% due 02/14/41............... 9,368,660
25,000,000 Chase Commercial Mortgage
Securities Corp., Series 1997-1,
Class A2
7.37% due 02/19/07............... 24,967,075
17,225,000 First Union - Lehman Brothers
Commercial Mortgage Trust,
Series 1997-C1, Class A3
7.38% due 04/18/07............... 17,232,596
--------------
Total commercial mortgage backed
securities......................... $ 69,584,603
==============
<CAPTION>
SHARES
---------------------
<C> <S> <C>
COMMON STOCKS -- 61.0%
AEROSPACE & DEFENSE -- 1.0%
*450,000 General Motors, Class H............ $ 39,487,500
1,650,000 United Technologies Corp........... 97,143,750
--------------
136,631,250
--------------
BUSINESS SERVICES -- 0.1%
1,256,050 ServiceMaster Co. (The)............ 14,287,569
--------------
CHEMICALS -- 2.0%
2,550,000 Dow Chemical Co. (The)............. 76,978,125
520,500 du Pont (E.I.) de Nemours & Co..... 22,771,875
2,404,000 Pharmacia Corp..................... 124,256,750
1,400,000 Praxair, Inc....................... 52,412,500
--------------
276,419,250
--------------
COMMUNICATIONS -- 6.6%
2,780,000 AT&T Corp.......................... 87,917,500
*50,000 COLT Telecom Group PLC............. 1,661,504
*2,385,900 Global Crossing Ltd................ 62,778,994
2,400,000 Lucent Technologies, Inc........... 142,200,000
2,200,000 Motorola, Inc...................... 63,937,500
20,000 Nippon Telegraph & Telephone Corp.
ADR............................... 13,675,000
500,000 Nortel Networks Holdings Corp...... 34,125,000
4,125,000 SBC Communications, Inc............ 178,406,250
*400,000 Sprint PCS Group................... 23,800,000
*300,000 Tellabs, Inc....................... 20,531,250
1,800,000 Verizon Communications............. 91,462,500
*4,300,000 Worldcom, Inc...................... 197,262,500
--------------
917,757,998
--------------
COMPUTERS & OFFICE
EQUIPMENT -- 6.1%
*4,551,300 Cisco Systems, Inc................. 289,292,006
*1,750,000 Dell Computer Corp................. 86,296,875
<CAPTION>
MARKET
SHARES VALUE
--------------------- --------------
<C> <S> <C>
</TABLE>
COMMON STOCKS -- (CONTINUED)
COMPUTERS & OFFICE
EQUIPMENT -- (CONTINUED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
--------------------- --------------
<C> <S> <C>
*1,600,000 EMC Corp........................... $ 123,100,000
750,000 Hewlett-Packard Co................. 93,656,250
1,540,000 International Business Machines
Corp.............................. 168,726,250
*2,000,000 Solectron Corp..................... 83,750,000
--------------
844,821,381
--------------
CONSUMER NON-DURABLES -- 3.7%
1,700,000 Cardinal Health, Inc............... 125,800,000
1,400,000 Gillette Co. (The)................. 48,912,500
1,375,000 Procter & Gamble Co. (The)......... 78,718,750
*3,614,000 Safeway, Inc....................... 163,081,750
2,000,000 Tyco International Ltd............. 94,750,000
--------------
511,263,000
--------------
DRUGS -- 4.8%
2,410,000 Abbott Laboratories................ 107,395,625
3,100,000 American Home Products Corp........ 182,125,000
1,050,000 Bristol-Myers Squibb Co............ 61,162,500
2,320,000 Merck & Co., Inc................... 177,770,000
3,024,925 Pfizer, Inc........................ 145,196,400
--------------
673,649,525
--------------
ELECTRICAL EQUIPMENT -- 0.8%
*1,444,100 Teradyne, Inc...................... 106,141,350
--------------
ELECTRONICS -- 5.7%
5,400,000 General Electric Co................ 286,200,000
1,933,900 Intel Corp......................... 258,538,256
*1,100,000 Micron Technology, Inc............. 96,868,750
1,800,000 Texas Instruments, Inc............. 123,637,500
*305,800 Vitesse Semiconductor Corp......... 22,495,413
--------------
787,739,919
--------------
ENERGY & SERVICES -- 3.6%
100,000 Conoco, Inc., Class B.............. 2,456,250
2,700,000 Exxon Mobil Corp................... 211,950,000
1,300,000 Royal Dutch Petroleum Co........... 80,031,250
1,134,100 Schlumberger Ltd................... 84,632,213
1,550,000 Texaco, Inc........................ 82,537,500
1,375,000 Unocal Corp........................ 45,546,875
--------------
507,154,088
--------------
FINANCIAL SERVICES -- 8.4%
1,375,000 American International
Group, Inc........................ 161,562,500
5,305,400 Associates First Capital Corp.,
Class A........................... 118,376,737
2,700,000 Citigroup, Inc..................... 162,675,000
1,900,000 Fleet Boston Financial Corp........ 64,600,000
3,150,000 Franklin Resources, Inc............ 95,681,250
250,000 Goldman Sachs Group, Inc. (The).... 23,718,750
2,195,000 Marsh & McLennan Cos., Inc......... 229,240,313
1,100,000 Merrill Lynch & Co., Inc........... 126,500,000
1,750,000 State Street Corp.................. 185,609,375
--------------
1,167,963,925
--------------
FOOD, BEVERAGE &
TOBACCO -- 1.2%
600,000 Coca-Cola Co. (The)................ 34,462,500
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
_____________________________________ MF-14 ____________________________________
<PAGE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
--------------------- --------------
<C> <S> <C>
</TABLE>
COMMON STOCKS -- (CONTINUED)
FOOD, BEVERAGE &
TOBACCO -- (CONTINUED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
--------------------- --------------
<C> <S> <C>
3,100,000 PepsiCo, Inc....................... $ 137,756,250
--------------
172,218,750
--------------
FOREST & PAPER PRODUCTS -- 1.3%
1,700,000 Kimberly-Clark Corp................ 97,537,500
1,950,000 Weyerhaeuser Co.................... 83,850,000
--------------
181,387,500
--------------
MACHINERY -- 0.4%
1,700,000 Caterpillar, Inc................... 57,587,500
--------------
MEDIA & ENTERTAINMENT -- 3.1%
*5,546,000 AT&T - Liberty Media Group,
Class A........................... 134,490,500
2,700,000 Gannett Co., Inc................... 161,493,750
*1,953,000 Viacom, Inc., Class B.............. 133,170,188
--------------
429,154,438
--------------
MEDICAL INSTRUMENTS & SUPPLIES --
1.5%
900,000 Guidant Corp....................... 44,550,000
1,670,000 Johnson & Johnson Co............... 170,131,250
--------------
214,681,250
--------------
METALS, MINERALS &
MINING -- 1.1%
3,200,000 Alcoa, Inc......................... 92,800,000
1,050,000 Illinois Tool Works, Inc........... 59,850,000
--------------
152,650,000
--------------
REAL ESTATE -- 0.0%
*6,150 Security Capital Group, Inc.,
Class A........................... 5,082,974
--------------
RETAIL -- 3.9%
2,219,600 CVS Corp........................... 88,784,000
2,400,000 Home Depot, Inc. (The)............. 119,850,000
5,000,000 McDonald's Corp.................... 164,687,500
3,000,000 Wal-Mart Stores, Inc............... 172,875,000
--------------
546,196,500
--------------
SOFTWARE & SERVICES -- 5.5%
*350,000 3Com Corp.......................... 20,168,750
*1,450,000 America Online, Inc................ 76,487,500
2,000,000 Automatic Data Processing, Inc..... 107,125,000
*1,476,100 China Unicom Ltd. ADR.............. 31,367,125
*1,200,000 Computer Sciences Corp............. 89,625,000
1,483,400 Electronic Data Systems Corp....... 61,190,250
*4,200,000 Microsoft Corp..................... 336,000,000
*262,150 VeriSign, Inc...................... 46,269,475
--------------
768,233,100
--------------
TRANSPORTATION -- 0.2%
*1,181,436 Sabre Group Corp................... 33,670,926
--------------
Total common stocks................ $8,504,692,193
==============
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------------------- --------------
<C> <S> <C>
CORPORATE NOTES -- 16.8%
AEROSPACE & DEFENSE -- 0.1%
$ 13,135,000 Honeywell International, Inc.
6.60% due 04/15/01............... $ 13,084,613
--------------
CHEMICALS -- 0.6%
20,000,000 ICI Wilmington, Inc.
6.95% due 09/15/04............... 19,285,320
25,000,000 Praxair, Inc.
6.15% due 04/15/03............... 24,011,625
40,000,000 Rohm & Haas Co.
7.40% due 07/15/09............... 39,777,240
--------------
83,074,185
--------------
COMMUNICATIONS -- 0.2%
40,000,000 AT&T Corp.
6.50% due 03/15/29............... 33,500,360
--------------
COMPUTERS & OFFICE
EQUIPMENT -- 0.7%
50,000,000 Hewlett-Packard Co.
7.15% due 06/15/05............... 50,182,100
30,000,000 International Business Machines
Corp.
6.50% due 01/15/28............... 27,095,700
18,000,000 Pitney Bowes, Inc.
5.50% due 04/15/04............... 17,175,762
--------------
94,453,562
--------------
CONSUMER NON-DURABLES -- 0.5%
25,000,000 Alberto Culver Co.
8.25% due 11/01/05............... 25,205,450
18,000,000 Colgate-Palmolive Co.
5.58% due 11/06/08............... 16,242,282
-30,000,000 Tyco International Ltd.
6.875% due 09/05/02.............. 29,692,230
--------------
71,139,962
--------------
DRUGS -- 0.2%
26,000,000 American Home Products Corp.
7.25% due 03/01/23............... 24,792,040
10,000,000 Zeneca Wilmington, Inc.
6.30% due 06/15/03............... 9,889,820
--------------
34,681,860
--------------
EDUCATION -- 0.1%
10,900,000 Harvard University
8.125% due 04/15/2007............ 11,244,985
--------------
ELECTRICAL EQUIPMENT -- 0.2%
30,000,000 Danaher Corp.
6.00% due 10/15/08............... 26,998,860
--------------
ELECTRONICS -- 0.5%
50,000,000 Eaton Corp.
6.95% due 11/15/04............... 48,573,050
21,000,000 Motorola, Inc.
7.60% due 01/01/07............... 21,478,842
--------------
70,051,892
--------------
ENERGY & SERVICES -- 0.5%
12,250,000 BP Amoco PLC
6.50% due 08/01/07............... 11,782,650
</TABLE>
_____________________________________ MF-15 ____________________________________
<PAGE>
HARTFORD ADVISERS HLS FUND, INC.
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------------------- --------------
<C> <S> <C>
</TABLE>
CORPORATE NOTES -- (CONTINUED)
ENERGY & SERVICES -- (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------------------- --------------
<C> <S> <C>
$ 15,000,000 Husky Oil Ltd.
6.875% due 11/15/03.............. $ 14,480,955
15,000,000 Hydro-Quebec
7.375% due 02/01/03.............. 15,014,700
17,285,000 Northern Border Pipeline
7.75% due 09/01/09............... 16,596,245
10,000,000 Southern California Gas Co.
5.75% due 11/15/03............... 9,627,070
--------------
67,501,620
--------------
FINANCIAL SERVICES -- 8.0%
40,000,000 ACE INA Holdings
8.30% due 08/15/06............... 40,288,160
30,000,000 Allmerica Financial Corp.
7.625% due 10/15/25.............. 26,118,480
24,000,000 Allstate Corp. (The)
6.75% due 06/15/03............... 23,482,176
26,485,000 Amerus Life Holdings
6.95% due 06/15/05............... 24,234,358
21,670,000 Amvescap PLC
6.60% due 05/15/05............... 20,377,558
30,000,000 Apache Finance Property Ltd.
7.00% due 03/15/09............... 28,503,510
25,000,000 Associates Corp. of North America
6.00% due 07/15/05............... 23,219,675
15,000,000 Associates Corp. of North America
6.50% due 10/15/02............... 14,700,270
10,000,000 Bank of Boston Corp.
6.625% due 02/01/04.............. 9,700,020
40,000,000 Bank One Corp.
6.875% due 08/01/06.............. 38,333,160
20,000,000 BankAmerica Corp.
5.875% due 02/15/09.............. 17,664,220
14,825,000 Banponce Corp.
6.75% due 12/15/05............... 13,855,875
15,000,000 Bayerische Landesbank Girozentrale
(NY)
5.625% due 02/26/01.............. 14,853,045
25,000,000 Bayerische Landesbank Girozentrale
(NY)
5.65% due 02/01/09............... 22,052,875
10,000,000 Chase Manhattan Corp. (The)
8.50% due 02/15/02............... 10,166,800
15,740,000 CIGNA Corp.
7.40% due 05/15/07............... 14,968,047
30,000,000 Cincinnati Financial Corp.
6.90% due 05/15/28............... 25,311,870
20,000,000 CIT Group, Inc. (The)
6.75% due 05/14/01............... 19,906,260
20,000,000 Citigroup, Inc.
5.625% due 02/15/01.............. 19,809,240
10,000,000 Citigroup, Inc.
6.25% due 12/01/05............... 9,473,710
24,000,000 Credit National
7.00% due 11/14/05............... 23,169,504
-28,715,000 Development Bank of Singapore
7.875% due 08/10/09.............. 28,488,238
30,000,000 Equitable Cos., Inc.
7.00% due 04/01/28............... 26,311,890
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------------------- --------------
<C> <S> <C>
</TABLE>
FINANCIAL SERVICES -- (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------------------- --------------
<C> <S> <C>
$ 10,000,000 Fairfax Financial Holdings
7.75% due 12/15/03............... $ 9,425,620
100,000,000 Fannie Mae
7.25% due 01/15/10............... 100,816,400
18,000,000 Finova Capital Corp.
6.39% due 10/08/02............... 15,821,766
25,000,000 First Union National Bank
5.80% due 12/01/08............... 21,397,825
20,000,000 Fleet Financial Group, Inc.
6.875% due 01/15/28.............. 17,050,020
20,000,000 Heller Financial, Inc.
6.382% due 11/10/20.............. 19,954,180
15,000,000 Home Savings of America
6.00% due 11/01/00............... 14,937,600
-27,000,000 Jackson National Life Insurance Co.
8.15% due 03/15/27............... 24,951,969
36,745,000 Key Bank N.A.
5.80% due 04/01/04............... 34,778,959
11,400,000 Liberty Financial Co.
6.75% due 11/15/08............... 10,409,203
-30,000,000 Liberty Mutual Insurance
8.20% due 05/04/07............... 29,494,290
-10,000,000 Lumbermens Mutual Casualty
9.15% due 07/01/26............... 8,927,740
20,000,000 Nationsbank Corp.
7.80% due 09/15/16............... 19,387,580
-30,000,000 New England Mutual Life Insurance
7.875% due 02/15/24.............. 29,457,480
40,296,742 Postal Square LP
8.95% due 06/15/22............... 45,878,647
27,600,000 Torchmark Corp.
8.25% due 08/15/09............... 27,811,664
30,000,000 Toyota Motor Credit Corp.
5.50% due 12/15/08............... 26,401,140
25,000,000 Transamerica Financial Corp.
6.125% due 11/01/01.............. 24,596,625
10,000,000 Travelers Property & Casualty
6.75% due 04/15/01............... 9,970,070
43,000,000 TXU Eastern Funding Co.
6.45% due 05/15/05............... 40,091,265
-40,000,000 USAA Capital Corp.
6.90% due 11/01/02............... 39,450,560
50,000,000 Wells Fargo & Co.
6.50% due 09/03/02............... 49,284,500
--------------
1,115,284,044
--------------
FOOD, BEVERAGE &
TOBACCO -- 0.4%
30,000,000 Coca-Cola Enterprises, Inc.
6.75% due 09/15/28............... 25,783,770
35,000,000 Whitman Corp.
6.375% due 05/01/09.............. 32,208,400
--------------
57,992,170
--------------
FOREST & PAPER PRODUCTS -- 0.2%
25,000,000 Boise Cascade Office
7.05% due 05/15/05............... 23,730,600
--------------
</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>
CORPORATE NOTES -- (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------------------- --------------
<C> <S> <C>
HEALTH SERVICES -- 0.2%
$ 29,000,000 United Healthcare Corp.
6.60% due 12/01/03............... $ 27,672,380
--------------
MACHINERY -- 0.2%
25,000,000 Parker Hannifin Corp.
5.65% due 09/15/03............... 23,811,175
--------------
MEDIA & ENTERTAINMENT -- 0.4%
30,000,000 Rockwell International Corp.
6.70% due 01/15/28............... 26,320,170
19,420,000 Scripps (E.W.) Co. (The)
6.375% due 10/15/02.............. 19,173,793
10,400,000 Times Mirror Co.
7.50% due 07/01/23............... 9,753,588
--------------
55,247,551
--------------
MEDICAL INSTRUMENTS & SUPPLIES --
0.1%
22,000,000 Becton, Dickinson & Co.
6.70% due 08/01/28............... 19,265,994
--------------
METALS, MINERALS &
MINING -- 0.2%
30,000,000 Alcan Aluminum Ltd.
7.25% due 11/01/28............... 28,400,430
--------------
REAL ESTATE -- 0.1%
20,000,000 Liberty Property Trust (REIT)
7.25% due 08/15/07............... 18,535,420
--------------
RETAIL -- 1.1%
40,000,000 Albertson's, Inc.
6.55% due 08/01/04............... 38,662,040
20,200,000 Dayton Hudson Corp.
5.875% due 11/01/08.............. 17,912,855
50,000,000 Home Depot, Inc. (The)
6.50% due 09/15/04............... 49,532,150
50,000,000 Wal-Mart Stores, Inc.
6.875% due 08/10/09.............. 48,893,000
--------------
155,000,045
--------------
SOFTWARE & SERVICES -- 0.2%
25,000,000 Computer Associates
International, Inc.
6.50% due 04/15/08............... 22,540,950
--------------
TRANSPORTATION -- 1.0%
22,551,578 Continental Airlines
6.90% due 01/02/18............... 20,947,936
30,000,000 DaimlerChrysler North America
Holding Corp.
7.125% due 04/10/03.............. 29,857,860
30,000,000 DaimlerChrysler North America
Holding Corp.
7.75% due 05/27/03............... 30,222,810
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------------------- --------------
<C> <S> <C>
</TABLE>
TRANSPORTATION -- (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------------------- --------------
<C> <S> <C>
$ 35,000,000 Ford Motor Co.
6.625% due 10/01/28.............. $ 29,544,970
35,000,000 General Motors Corp.
6.75% due 05/01/28............... 30,385,145
--------------
140,958,721
--------------
UTILITIES -- 1.1%
45,000,000 Alabama Power Co.
7.125% due 08/15/04.............. 44,600,355
10,000,000 Bellsouth Telecommunications, Inc.
6.375% due 06/01/28.............. 8,250,840
21,350,000 Duke Energy Corp.
6.00% due 12/01/28............... 16,910,097
30,000,000 MCI WorldCom, Inc.
6.40% due 08/15/05............... 28,436,250
29,000,000 Monsanto Co.
6.85% due 12/01/28............... 25,662,187
11,000,000 Pacific Gas & Electric Co.
7.875% due 03/01/02.............. 11,117,579
20,000,000 Williams Cos., Inc. (The)
6.50% due 11/15/02............... 19,636,760
--------------
154,614,068
--------------
Total corporate notes.............. $2,348,785,447
==============
FOREIGN GOVERNMENT AGENCIES -- 0.1%
-20,000,000 Santiago Air
6.95% due 07/01/12............... $ 18,413,000
--------------
Total foreign government
agencies........................... $ 18,413,000
==============
FOREIGN GOVERNMENT BONDS -- 0.1%
13,000,000 City of Naples Italy
7.52% due 07/15/06............... $ 12,954,630
--------------
Total foreign government bonds..... $ 12,954,630
==============
MUNICIPAL BONDS -- 0.1%
7,000,000 Miami Beach, Florida
8.80% due 12/01/15............... $ 7,139,440
13,070,000 Mount Sinai School of Medicine NY
6.00% due 07/01/03............... 12,619,216
--------------
Total municipal bonds.............. $ 19,758,656
==============
<CAPTION>
SHARES
---------------------
<C> <S> <C>
PREFERRED STOCKS -- 1.2%
COMMUNICATIONS -- 1.2%
3,400,000 Nokia Corp......................... $ 169,787,500
--------------
Total preferred stocks............. $ 169,787,500
==============
</TABLE>
_____________________________________ MF-17 ____________________________________
<PAGE>
HARTFORD ADVISERS HLS FUND, INC.
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------------------------------------------------------------------------
U.S. TREASURIES & FEDERAL AGENCIES -- 17.4%
<C> <S> <C>
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION -- 3.3%
$ 242,859,824 6.00% due 06/15/24 - 08/15/29...... $ 223,681,521
170,963,720 6.50% due 03/15/26 - 08/15/29...... 162,243,827
70,931,648 7.00% due 11/15/23 - 11/15/24...... 69,222,441
759,967 9.00% due 06/20/16 - 07/20/16...... 784,079
--------------
455,931,868
--------------
U.S. GOVERNMENT
AGENCIES -- 0.3%
50,000,000 Tennesse Valley Authority
6.00% due 03/15/2013............. 44,910,050
--------------
U.S. TREASURY BONDS -- 9.9%
165,000,000 4.625% due 12/31/00.............. 163,504,770
350,000,000 5.75% due 10/31/02 - 04/30/03.... 344,703,300
531,750,000 6.25% due 08/15/23............... 535,073,438
132,000,000 6.375% due 08/15/02.............. 131,793,816
107,000,000 7.25% due 08/15/04............... 110,577,866
100,000,000 7.50% due 11/15/01............... 101,281,300
--------------
1,386,934,490
--------------
U.S. TREASURY NOTES -- 3.9%
268,000,000 5.75% due 06/30/01............... 266,073,884
275,000,000 5.875% due 10/31/01 - 11/30/01... 272,687,500
--------------
538,761,384
--------------
$2,426,537,792
Total U.S. treasuries & federal
agencies...........................
==============
SHORT-TERM SECURITIES -- 1.7%
REPURCHASE AGREEMENT -- 1.7%
237,926,000 Interest in $2,066,447,000 joint
repurchase agreement dated 06/30/00
with State Street Bank, 6.598% due
07/03/00; maturity amount
$238,056,821 (Collateralized by
$125,835,832 U.S. Treasury Notes
5.50% - 7.875% due 08/31/01 -
11/15/04, $1,943,730,718 U.S.
Treasury Bonds 5.25% - 10.625% due
08/15/15 - 02/15/29)............... $ 237,926,000
--------------
Total short-term securities........ $ 237,926,000
==============
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
<CAPTION>
DIVERSIFICATION OF NET ASSETS:
<S> <C> <C>
Total asset-backed securities
(cost $42,834,289)...................... 0.3% $ 40,739,920
Total commercial mortgage-backed
securities (cost $71,124,641)........... 0.5 69,584,603
Total common stocks (cost
$6,016,090,228)......................... 61.0 8,504,692,193
Total corporate notes (cost
$2,495,440,801)......................... 16.8 2,348,785,447
Total foreign government agencies
(cost $19,988,800)...................... 0.1 18,413,000
Total government bonds (cost
$13,000,000)............................ 0.1 12,954,630
Total municipal bonds (cost
$20,261,589)............................ 0.1 19,758,656
Total preferred stocks (cost
$63,971,370)............................ 1.2 169,787,500
Total U.S. treasuries & federal agencies
(cost $2,463,266,432)................... 17.4 2,426,537,792
Total short-term securities (cost
$237,926,000)........................... 1.7 237,926,000
----- ---------------
Total investment in securities (total
cost $11,443,904,150)................... 99.2 13,849,179,741
Cash, receivables and other assets....... 0.8 103,600,455
Securities lending collateral............ 4.6 647,144,941
Payable for fund shares redeemed......... (0.0) (10,646,763)
Securities lending collateral payable to
brokers................................. (4.6) (647,144,941)
Other liabilities........................ (0.0) (94,748)
----- ---------------
Net assets............................... 100.0% $13,942,038,685
===== ===============
</TABLE>
<TABLE>
<S> <C>
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share;
7,000,000,000 shares authorized; 5,134,852,908
shares outstanding.............................. $ 513,485,291
Capital surplus.................................. 10,598,575,260
Accumulated undistributed net investment
income.......................................... 175,123,306
Accumulated undistributed net realized gain on
investments..................................... 249,579,237
Unrealized appreciation of investments........... 2,405,275,591
---------------
Net assets....................................... $13,942,038,685
===============
</TABLE>
<TABLE>
<S> <C>
Class IA
Net asset value per share ($13,759,228,031 DIVIDED BY
5,067,501,214 shares outstanding) (6,500,000,000 shares
authorized).............................................. $2.72
=====
Class IB
Net asset value per share ($182,810,654 DIVIDED BY
67,351,694 shares outstanding) (500,000,000 shares
authorized).............................................. $2.71
=====
</TABLE>
<TABLE>
<C> <S>
* Non-income producing during the period.
- Securities 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, 2000, the market value of
these securities amounted to $249,615,427 or 1.8% of net
assets.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
_____________________________________ MF-18 ____________________________________
<PAGE>
HARTFORD BOND HLS FUND, INC.
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------------------- ------------
<C> <S> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS -- 4.4%
$ 2,565,136 California Infrastructure,
Series 1997-1, Class A3
6.17% due 03/25/03.................. $ 2,550,746
11,000,000 California Infrastructure,
Series 1997-1, Class A6
6.38% due 09/25/08.................. 10,662,520
4,394,817 Capital Lease Funding Securitization,
Series 1997-CTL1, Class A1
7.421% due 06/22/24................. 4,388,465
11,400,000 Chemical Master Credit Card Trust,
Series 1996-1, Class A
5.55% due 09/15/03.................. 11,308,230
7,600,000 Comed Transitional Funding Trust,
Series 1998-1, Class A5
5.44% due 03/25/07.................. 7,130,016
5,175,000 DLJ Commercial Mortgage Corp.,
Series 1998-CF1, Class B2
7.33% due 01/15/10.................. 4,591,301
2,232,001 NorthWest Airlines Trust,
Series 1994-2, Class C
11.30% due 06/21/14................. 2,628,583
128,496 Premier Auto Trust, Series 1998-5,
Class A2
5.07% due 04/09/01.................. 128,445
------------
Total collateralized mortgage
obligations........................... $ 43,388,306
============
CORPORATE NOTES -- 36.4%
CHEMICALS -- 0.6%
5,700,000 du Pont (E.I.) de Nemours & Co.
6.75% due 09/01/07.................. $ 5,533,503
------------
COMMUNICATIONS -- 1.9%
9,500,000 AT&T Corp.
6.50% due 03/15/29.................. 7,956,336
1,000,000 Lucent Technologies, Inc.
5.50% due 11/15/08.................. 891,093
5,000,000 US West Capital Funding, Inc.
6.875% due 08/15/01................. 4,975,865
5,000,000 Williams Communications Group, Inc.
10.875% due 10/01/09................ 4,887,500
------------
18,710,794
------------
CONSUMER DURABLES -- 0.6%
1,150,000 Federal-Mogul Corp.
7.375% due 01/15/06................. 836,346
1,000,000 Owens-Illinois, Inc.
8.10% due 05/15/07.................. 923,828
4,500,000 TRW, Inc.
8.75% due 05/15/06.................. 4,584,231
------------
6,344,405
------------
CONSUMER NON-DURABLES -- 0.1%
1,000,000 Tosco Corp.
8.125% due 02/15/30................. 1,008,229
------------
CONSUMER SERVICES -- 0.2%
4,000,000 Service Corp. International
7.875% due 02/01/13................. 2,000,000
------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------------------- ------------
<C> <S> <C>
</TABLE>
CORPORATE NOTES -- (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------------------- ------------
<C> <S> <C>
EDUCATION -- 1.1%
$ 7,700,000 Massachusetts Institute of Technology
7.25% due 11/02/2096................ $ 7,277,439
3,500,000 Yale University
7.375% due 04/15/2096............... 3,207,638
------------
10,485,077
------------
ENERGY & SERVICES -- 8.4%
8,250,000 Amoco Co.
6.00% due 06/09/08.................. 7,502,054
1,500,000 Chesapeake & Potomac Telephone Co.
8.30% due 08/01/31.................. 1,540,160
3,600,000 CMS Panhandle Holding Co.
6.125% due 03/15/04................. 3,371,850
6,500,000 Enterprise Oil PLC
6.50% due 05/01/05.................. 6,135,435
8,000,000 Enterprise Oil PLC
6.70% due 09/15/07.................. 7,510,032
1,000,000 Gulf Canada Resources Ltd.
8.25% due 03/15/17.................. 920,000
1,200,000 Gulf Canada Resources Ltd.
8.375% due 11/15/05................. 1,188,000
6,500,000 Noble Drilling Corp.
7.50% due 03/15/19.................. 6,148,422
6,800,000 Occidental Petroleum Corp.
7.375% due 11/15/08................. 6,575,770
3,500,000 Ocean Energy, Inc.
7.625% due 07/01/05................. 3,325,000
4,400,000 Phillips Petroleum Co.
9.00% due 06/01/01.................. 4,447,278
1,000,000 Pioneer Natural Resources Co.
6.50% due 01/15/08.................. 861,464
5,650,000 Pioneer Natural Resources Co.
7.20% due 01/15/28.................. 4,399,988
1,975,000 R&B Falcon Corp.
6.75% due 04/15/05.................. 1,777,500
2,000,000 R&B Falcon Corp.
7.375% due 04/15/18................. 1,620,000
2,500,000 R&B Falcon Corp.
11.375% due 03/15/09................ 2,712,500
9,511,000 Seagull Energy Corp.
7.50% due 09/15/27.................. 7,892,095
4,500,000 Sonat, Inc.
9.00% due 05/01/01.................. 4,552,821
1,000,000 Tesoro Petroleum Corp.
9.00% due 07/01/08.................. 950,000
2,850,000 Tuboscope, Inc.
7.50% due 02/15/08.................. 2,508,000
2,500,000 Union Oil Co. of California
9.375% due 02/15/11................. 2,762,820
4,500,000 Vaster Resources, Inc.
6.50% due 04/01/09.................. 4,280,391
------------
82,981,580
------------
FINANCIAL SERVICES -- 7.8%
7,650,000 Allstate Corp. (The)
7.875% due 05/01/05................. 7,712,019
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
_____________________________________ MF-19 ____________________________________
<PAGE>
HARTFORD BOND HLS FUND, INC.
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------------------- ------------
<C> <S> <C>
</TABLE>
CORPORATE NOTES -- (CONTINUED)
FINANCIAL SERVICES -- (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------------------- ------------
<C> <S> <C>
$ 7,000,000 Bayerische Landesbank Girozentrale
(NY)
6.20% due 02/09/06.................. $ 6,580,728
4,500,000 CIT Group, Inc. (The)
7.125% due 06/17/02................. 4,461,336
5,000,000 Ford Motor Credit Co.
5.75% due 02/23/04.................. 4,701,100
5,000,000 Ford Motor Credit Co.
7.375% due 10/28/09................. 4,837,600
13,000,000 Ford Motor Credit Co.
7.75% due 11/15/02.................. 13,084,136
3,800,000 General Motors Acceptance Corp.
6.19% due 08/18/03.................. 3,783,459
4,850,000 Golden State Holdings, Inc.
6.75% due 08/01/01.................. 4,711,702
7,900,000 Inter-American Development Bank
8.875% due 06/01/09................. 8,740,955
500,000 Interpool, Inc.
7.20% due 08/01/07.................. 403,850
4,300,000 Trenwick Group, Inc.
6.70% due 04/01/03.................. 4,170,819
15,000,000 TXU Eastern Funding Co.
6.15% due 05/15/02.................. 14,512,785
------------
77,700,489
------------
FOREST & PAPER PRODUCTS -- 0.9%
2,550,000 Domtar, Inc.
9.50% due 08/01/16.................. 2,655,187
6,300,000 Weyerhaeuser Co.
7.25% due 07/01/13.................. 5,983,249
------------
8,638,436
------------
HEALTH SERVICES -- 2.2%
2,250,000 Columbia/HCA Healthcare Corp.
7.05% due 12/01/27.................. 1,656,315
2,250,000 Columbia/HCA Healthcare Corp.
7.50% due 11/15/95.................. 1,693,062
1,675,000 Columbia/HCA Healthcare Corp.
7.50% due 12/15/23.................. 1,368,631
4,670,000 HEALTHSOUTH Corp.
6.875% due 06/15/05................. 4,002,153
3,870,000 HEALTHSOUTH Corp.
7.00% due 06/15/08.................. 3,129,359
5,640,000 Manor Care, Inc.
7.50% due 06/15/06.................. 4,592,020
6,000,000 Tenet Healthcare Corp.
8.00% due 01/15/05.................. 5,760,000
------------
22,201,540
------------
HOTELS & GAMING -- 0.0%
62,000 Harrah's Operating Co., Inc.
7.875% due 12/15/05................. 58,280
------------
MEDIA & ENTERTAINMENT -- 3.3%
1,000,000 Continental Cablevision, Inc.
9.50% due 08/01/13.................. 1,083,111
1,750,000 CSC Holdings, Inc.
7.25% due 07/15/08.................. 1,623,727
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------------------- ------------
<C> <S> <C>
</TABLE>
MEDIA & ENTERTAINMENT -- (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------------------- ------------
<C> <S> <C>
$ -12,000,000 Hughes Electronics Corp.
7.472% due 10/23/00................. $ 11,995,382
5,000,000 Liberty Media Group
8.25% due 02/01/30.................. 4,591,315
1,230,000 Rogers Cablesystems, Inc.
10.125% due 09/01/12................ 1,257,675
3,660,000 Shaw Communications, Inc.
8.25% due 04/11/10.................. 3,701,464
10,000,000 Time Warner, Inc.
6.625% due 05/15/29................. 8,409,460
------------
32,662,134
------------
METALS, MINERALS & MINING -- 1.0%
3,600,000 Placer Dome, Inc.
7.125% due 05/15/03................. 3,485,826
7,300,000 Placer Dome, Inc.
7.125% due 06/15/07................. 6,680,894
------------
10,166,720
------------
REAL ESTATE -- 0.5%
5,000,000 Duke Realty LP
7.25% due 09/22/02.................. 4,945,195
------------
RETAIL -- 1.3%
5,000,000 Kmart Corp.
8.96% due 12/10/19.................. 4,522,180
8,585,000 Stop & Shop Cos., Inc. (The)
9.75% due 02/01/02.................. 8,799,874
------------
13,322,054
------------
SOFTWARE & SERVICES -- 0.5%
5,500,000 Gartner Group, Inc., Class A
6.52% due 10/08/23 5,423,863...
------------
TRANSPORTATION -- 1.6%
10,000,000 DaimlerChrysler North America Holding
Corp.
7.75% due 06/15/05.................. 10,085,970
1,500,000 Norfolk Southern Corp.
6.875% due 05/01/01................. 1,495,130
4,512,067 US Airways Group, Inc.
6.76% due 04/15/08.................. 4,028,734
------------
15,609,834
------------
UTILITIES -- 4.4%
5,750,000 Browning-Ferris Industries, Inc.
7.40% due 09/15/35.................. 4,005,162
1,750,000 Cleveland Electric Illuminating Co.
7.13% due 07/01/07.................. 1,645,341
2,225,000 CMS Energy Corp.
6.75% due 01/15/04.................. 2,059,876
800,000 CMS Energy Corp.
7.50% due 01/15/09.................. 715,630
1,341,000 El Paso Electric Co.
9.40% due 05/01/11.................. 1,407,982
-10,000,000 Entergy Gulf States, Inc.
8.04% due 06/02/03.................. 9,997,930
7,250,000 Illinois Power Co.
6.25% due 07/15/02.................. 7,086,099
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
_____________________________________ MF-20 ____________________________________
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------------------- ------------
<C> <S> <C>
</TABLE>
CORPORATE NOTES -- (CONTINUED)
UTILITIES -- (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------------------- ------------
<C> <S> <C>
$ 4,725,000 Niagara Mohawk Power Corp.
6.875% due 03/01/01................. $ 4,699,036
5,179,270 Niagara Mohawk Power Corp.
7.25% due 10/01/02.................. 5,109,645
3,100,000 PacifiCorp
6.12% due 01/15/06.................. 2,874,999
4,000,000 Public Service Electric & Gas Co.
7.00% due 09/01/24.................. 3,551,968
475,000 Waste Management, Inc.
6.875% due 05/15/09................. 418,626
------------
43,572,294
------------
Total corporate notes................. $361,364,427
============
FOREIGN/YANKEE BONDS & NOTES -- 8.3%
FOREIGN CORPORATIONS -- 2.5%
17,000,000 Deutsche Telekom International
Finance AG
7.75% due 06/15/05.................. $ 17,116,025
1,800,000 Hydro-Quebec
8.40% due 01/15/22.................. 1,902,778
5,500,000 KFW International Finance, Inc.
9.50% due 12/15/00.................. 5,556,799
------------
24,575,602
------------
FOREIGN GOVERNMENTS -- 5.8%
49,500,000 Bundesobligation
5.125% due 11/21/00................. 47,530,821
8,850,000 Province of Quebec
5.75% due 02/15/09.................. 7,917,572
2,200,000 Province of Quebec
7.50% due 09/15/29.................. 2,157,294
------------
57,605,687
------------
Total foreign/yankee bonds & notes.... $ 82,181,289
============
<CAPTION>
SHARES
---------------------
<C> <S> <C>
PREFERRED STOCKS -- 0.2%
ENERGY & SERVICES - 0.2%
98,966 Coastal Finance Corp.................. $ 2,245,291
------------
Total preferred stocks................ $ 2,245,291
============
<CAPTION>
PRINCIPAL
AMOUNT
---------------------
<C> <S> <C>
U.S. TREASURIES & FEDERAL AGENCIES -- 42.5%
FEDERAL NATIONAL MORTGAGE ASSOCIATION
-- 7.9%
$ 61,944,088 6.00% due 07/01/12 - 08/01/14......... $ 58,679,652
5,119,961 6.50% due 10/01/12 - 09/01/28......... 4,906,076
12,534,062 7.50% due 08/01/29 - 05/01/30......... 12,353,584
2,855,872 FNMA Multifamily DUS
6.48% due 12/01/05.................. 2,747,663
------------
78,686,976
------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION -- 15.5%
166,877,949 6.00% due 01/15/29 - 10/15/29......... 153,513,920
------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------------------- ------------
<C> <S> <C>
</TABLE>
U.S. TREASURIES & FEDERAL AGENCIES -- (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------------------- ------------
<C> <S> <C>
U.S. TREASURY BONDS -- 12.9%
$ 4,400,000 6.375% due 08/15/27................... $ 4,525,127
24,970,000 6.875% due 08/15/25................... 27,147,084
2,150,000 7.625% due 02/15/25................... 2,535,656
26,770,000 8.75% due 05/15/20 - 08/15/20......... 34,313,998
16,595,000 8.75% due 08/15/17.................... 21,106,766
7,300,000 10.375% due 11/15/09.................. 8,365,347
10,000,000 10.625% due 08/15/15.................. 14,218,750
5,830,000 11.875% due 11/15/03.................. 6,790,131
6,460,000 13.875% due 05/15/11.................. 8,777,525
------------
127,780,385
------------
U.S. TREASURY INFLATION-INDEXED
SECURITIES -- 3.8%
6,537,691 3.375% due 01/15/07................... 6,274,143
27,235,318 3.625% due 01/15/08................... 26,409,761
5,088,000 4.25% due 01/15/10.................... 5,162,733
------------
37,846,637
------------
U.S. TREASURY NOTES -- 2.4%
23,700,000 6.125 due 12/31/01.................... 23,566,688
------------
Total U.S. treasuries & federal
agencies.............................. $421,394,605
============
SHORT-TERM SECURITIES -- 9.2%
REPURCHASE AGREEMENT -- 9.2%
90,912,000 Interest in $320,669,000 joint
repurchase agreement dated 06/30/00
with State Street Bank, 6.436% due
07/03/00; maturity amount $90,960,761
(Collateralized by $151,504,351 U.S.
Treasury Bonds 8.125% due 05/15/21,
$171,295,551 U.S. Treasury Inflation-
Indexed Securities 3.625% due
05/15/02)............................. $ 90,912,000
------------
Total short-term securities........... $ 90,912,000
============
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
DIVERSIFICATION OF NET ASSETS:
Total collateralized mortgage obligations
(cost $44,391,242)...................... 4.4% $ 43,388,306
Total corporate notes (cost
$374,162,065)........................... 36.4 361,364,427
Total foreign/yankee bonds & notes (cost
$79,524,563)............................ 8.3 82,181,289
Total preferred stocks (cost
$2,214,364)............................. 0.2 2,245,291
Total U.S. treasuries & federal agencies
(cost $417,963,322)..................... 42.5 421,394,605
Total short-term securities (cost
$90,912,000)............................ 9.2 90,912,000
----- ---------------
Total investment in securities (total
cost $1,009,167,556).................... 101.0 1,001,485,918
Cash, receivables and other assets....... 1.9 17,861,035
Securities lending collateral............ 4.0 39,882,246
Payable for securities purchased......... (2.8) (27,273,735)
Payable for fund shares redeemed......... (0.1) (1,285,013)
Securities lending collateral payable to
brokers................................. (4.0) (39,882,246)
Other liabilities........................ (0.0) (7,152)
----- ---------------
Net assets............................... 100.0% $ 990,781,053
===== ===============
</TABLE>
_____________________________________ MF-21 ____________________________________
<PAGE>
HARTFORD BOND HLS FUND, INC.
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
</TABLE>
<TABLE>
<S> <C>
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share;
2,000,000,000 shares authorized; 955,479,538
shares outstanding................................ $ 95,547,954
Capital surplus.................................... 904,108,458
Accumulated undistributed net investment income.... 31,000,048
Accumulated net realized loss on investments....... (31,138,530)
Unrealized depreciation of investments............. (9,062,226)
Unrealized appreciation of futures
contracts Section................................. 240,518
Unrealized appreciation of other assets and
liabilities in foreign currencies................. 84,831
------------
Net assets......................................... $990,781,053
============
</TABLE>
<TABLE>
<S> <C>
Class IA
Net asset value per share ($970,072,971 DIVIDED BY
935,504,589 shares outstanding) (1,600,000,000 shares
authorized).............................................. $1.04
=====
Class IB
Net asset value per share ($20,708,082 DIVIDED BY
19,974,949 shares outstanding) (400,000,000 shares
authorized).............................................. $1.04
=====
</TABLE>
<TABLE>
<C> <S>
- Securities 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, 2000, the market value of
these securities amounted to $21,993,312 or 2.2% of net
assets.
Section The Fund had 298 10 year U.S. Treasury Notes September 2000
Index Futures contracts open as of June 30, 2000. These
contracts had a value of $29,348,344 as of June 30, 2000 and
were collateralized by Entergy Gulf States, Inc., 8.04%
06/02/03 and Hughes Electronics Corp., 7.472% 10/23/00
Corporate Notes.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
_____________________________________ MF-22 ____________________________________
<PAGE>
HARTFORD MONEY MARKET HLS FUND, INC.
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS
JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------------------- --------------
<C> <S> <C>
COMMERCIAL PAPER -- 71.0%
$ 20,000,000 Abbey National North America PLC
6.58% due 09/12/00................. $ 19,740,457
11,000,000 American Honda Finance Corp.
6.19% due 07/12/00................. 10,982,978
12,110,000 American Honda Finance Corp.
6.19% due 07/24/00................. 12,066,273
10,000,000 ANZ (Delaware), Inc.
6.02% due 08/25/00................. 9,911,372
15,000,000 Associated Corp.
6.56% due 07/11/00................. 14,978,133
-20,000,000 AT&T Corp.
6.78% due 06/14/01................. 20,000,000
10,000,000 Bradford & Bingley Building Society
6.15% due 07/21/00................. 9,969,250
20,000,000 Bradford & Bingley Building Society
6.56% due 07/10/00................. 19,974,489
20,000,000 CAFCO
6.55% due 08/07/00................. 19,872,639
20,000,000 CAFCO
6.62% due 08/01/00................. 19,893,344
20,000,000 CIESCO L.P.
6.14% due 07/18/00................. 19,948,833
10,000,000 CIESCO L.P.
6.55% due 08/02/00................. 9,945,417
10,000,000 CIESCO L.P.
6.59% due 08/02/00................. 9,945,083
10,000,000 Coca-Cola Co. (The)
6.10% due 07/03/00................. 10,000,000
20,000,000 Coca-Cola Co. (The)
6.52% due 08/14/00................. 19,847,867
35,000,000 Countrywide Home Loan
7.13% due 07/05/00................. 34,986,136
30,000,000 DaimlerChrysler North America Holding
Corp.
6.15% due 07/25/00................. 29,887,250
15,000,000 du Pont (E.I.) de Nemours & Co.
6.09% due 07/07/00................. 14,989,850
17,800,000 Emerson Electric Co.
6.46% due 07/06/00................. 17,790,418
20,000,000 Ford Motor Credit Co.
6.59% due 08/03/00................. 19,886,506
20,000,000 General Electric Capital Corp.
5.98% due 07/10/00................. 19,976,744
10,000,000 General Electric Capital Corp.
6.00% due 08/21/00................. 9,918,333
10,000,000 General Electric Capital Corp.
6.59% due 09/18/00................. 9,859,047
10,000,000 General Motors Acceptance Corp.
6.00% due 08/14/00................. 9,930,000
35,000,000 Gillette Co. (The)
6.90% due 07/05/00................. 34,986,583
10,000,000 Goldman Sachs Group, Inc. (The)
6.03% due 08/14/00................. 9,929,650
10,000,000 Goldman Sachs Group, Inc. (The)
6.63% due 10/24/00................. 9,791,892
10,000,000 Market Street Funding Corp.
6.60% due 07/24/00................. 9,961,500
20,000,000 Market Street Funding Corp.
6.63% due 09/11/00................. 19,742,167
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------------------- --------------
<C> <S> <C>
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------------------- --------------
<C> <S> <C>
$ 20,000,000 Merita Bank North America, Inc.
6.14% due 12/04/00................. $ 19,474,689
10,000,000 Merrill Lynch & Co., Inc.
6.03% due 08/21/00................. 9,917,925
10,000,000 Merrill Lynch & Co., Inc.
6.14% due 07/17/00................. 9,976,122
10,000,000 Merrill Lynch & Co., Inc.
6.54% due 08/07/00................. 9,936,417
10,000,000 Morgan (J.P.) & Co.
6.12% due 11/15/00................. 9,770,500
20,000,000 Morgan Stanley Dean Witter & Co.
6.00% due 07/05/00................. 19,993,333
20,000,000 Morgan Stanley Dean Witter & Co.
6.55% due 09/18/00................. 19,719,806
20,000,000 Motorola, Inc.
6.57% due 07/26/00................. 19,916,050
15,000,000 Motorola, Inc.
6.60% due 09/27/00................. 14,763,500
20,000,000 National Rural Utilities Cooperative
Finance Corp.
6.14% due 11/06/00................. 19,570,200
20,000,000 Nationwide Building Society
6.59% due 10/18/00................. 19,608,261
10,000,000 Old Line Funding Corp.
6.56% due 07/20/00................. 9,969,022
18,435,000 Pfizer, Inc.
6.58% due 08/07/00................. 18,317,067
10,000,000 Salomon Smith Barney Holdings, Inc.
6.60% due 09/18/00................. 9,858,833
10,000,000 Salomon Smith Barney Holdings, Inc.
6.61% due 09/18/00................. 9,858,619
20,000,000 Sara Lee Corp.
6.49% due 07/06/00................. 19,989,183
10,000,000 SwedBank
5.97% due 07/10/00................. 9,988,392
10,000,000 SwedBank
6.19% due 11/28/00................. 9,745,522
10,000,000 SwedBank
6.19% due 12/05/00................. 9,733,486
30,000,000 Toronto-Dominion Holdings
6.24% due 10/23/00................. 29,417,600
20,000,000 Triple A One Funding Corp.
6.60% due 07/24/00................. 19,923,000
10,000,000 Wood Street Funding Corp.
6.55% due 07/14/00................. 9,979,986
--------------
Total commercial paper............... $ 808,139,724
==============
CORPORATE NOTES -- 15.9%
10,000,000 Citigroup, Inc.
5.625% due 02/15/01................ $ 9,934,274
10,000,000 First Union National Bank
6.80% due 02/22/01................. 10,000,000
20,000,000 Fleet Financial Group, Inc.
6.707% due 03/13/01................ 19,989,949
10,000,000 Fleet National Bank
6.91% due 03/27/01................. 10,008,797
20,000,000 General Mills, Inc.
6.161% due 07/17/00................ 19,999,254
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
_____________________________________ MF-23 ____________________________________
<PAGE>
HARTFORD MONEY MARKET HLS FUND, INC.
--------------------------------------------------------------------------------
STATEMENT OF NET ASSETS -- (CONTINUED)
JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------------------- --------------
<C> <S> <C>
</TABLE>
CORPORATE NOTES -- (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
--------------------- --------------
<C> <S> <C>
$ 10,000,000 General Mills, Inc.
6.68% due 02/09/01................. $ 9,997,283
-18,000,000 Goldman Sachs Group, Inc. (The)
6.713% due 01/16/01................ 18,038,751
20,000,000 Key Bank N.A.
6.76% due 05/25/01................. 19,993,562
13,000,000 Nationsbank Corp.
5.75% due 03/15/01................. 12,911,082
30,000,000 Toyota Motor Credit Corp.
6.181% due 01/09/01................ 29,989,225
20,000,000 Wachovia Bank
6.82% due 09/14/00................. 19,999,225
--------------
Total corporate notes................ $ 180,861,402
==============
REPURCHASE AGREEMENT -- 14.9%
169,259,000 Interest in $320,669,000 joint
repurchase agreement dated 06/30/00
with State Street Bank, 6.436% due
07/03/00; maturity amount
$169,349,783 (Collateralized by
$151,504,351 U.S. Treasury Bonds
8.125% due 05/15/21, $171,295,551
U.S. Treasury Inflation-Indexed
Securities 3.625% due 05/15/02).... $ 169,259,000
--------------
Total repurchase agreement........... $ 169,259,000
==============
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
<CAPTION>
DIVERSIFICATION OF NET ASSETS:
<S> <C> <C>
Total commercial paper
(cost $808,139,724)...................... 71.0% $ 808,139,724
Total corporate notes
(cost $108,861,402)...................... 15.9 180,861,402
Total repurchase agreement
(cost $169,259,000)...................... 14.9 169,259,000
----- --------------
Total investment in securities
(total cost $1,158,260,126).............. 101.8 1,158,260,126
Cash, receivables and other assets........ 0.9 10,107,975
Payable for fund shares redeemed.......... (2.2) (24,245,388)
Dividends payable......................... (0.5) (5,932,814)
Other liabilities......................... (0.0) (289,974)
----- --------------
Net assets................................ 100.0% $1,137,899,925
===== ==============
</TABLE>
<TABLE>
<S> <C>
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share;
3,000,000,000 shares authorized; 1,137,899,924
shares outstanding............................... $ 113,789,993
Capital surplus................................... 1,024,109,932
--------------
Net assets........................................ $1,137,899,925
==============
Class IA
Shares of benefical interest outstanding, $0.10
par value 2,475,000,000 shares authorized (Net
assets $1,122,864,964)........................... 1,122,864,964
==============
</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
$15,034,961)...................................... 15,034,961
=============
</TABLE>
<TABLE>
<S> <C>
Net asset value........................................... $1.00
=====
</TABLE>
<TABLE>
<C> <S>
- Securities 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, 2000, the market value of
these securities amounted to $38,038,751 or 3.3% of net
assets.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
_____________________________________ MF-24 ____________________________________
<PAGE>
[This page intentionally left blank]
<PAGE>
HARTFORD HLS MUTUAL FUNDS
--------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
HARTFORD HARTFORD
SMALL CAPITAL
COMPANY APPRECIATION
HLS FUND, INC. HLS FUND, INC.
-------------- --------------
<S> <C> <C>
INVESTMENT INCOME:....... $ 602,444 $ 39,415,449
Interest............... 1,961,587 19,044,897
Securities lending..... 20,674 103,914
Less foreign tax
withheld.............. -- (1,248,687)
------------ --------------
Total investment
income, net......... 2,584,705 57,315,573
------------ --------------
EXPENSES:
Investment advisory
fees.................. 2,509,852 19,479,789
Administrative services
fees.................. 980,718 8,959,915
Accounting services.... 73,554 671,994
Custodian fees gross... 12,018 184,293
Custodian fees expense
offset................ (8,309) (73,365)
Board of Directors
fees.................. 1,501 9,656
Distribution fees --
Class IB.............. 22,314 45,901
Other expenses......... 28,903 230,854
------------ --------------
Total expenses,
(before waivers).... 3,620,551 29,509,037
Distribution fees --
Class IB waived....... (6,248) (12,852)
------------ --------------
Total expenses,
net................. 3,614,303 29,496,185
------------ --------------
Net investment (loss)
income................ (1,029,598) 27,819,388
------------ --------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on
securities
transactions.......... 90,249,152 1,516,935,742
Net realized gain on
futures contracts..... -- --
Net realized gain
(loss) on forward
foreign currency
contracts............. 3,505 6,180,549
Net realized gain on
option contracts...... -- --
Net realized (loss)
gain on foreign
currency
transactions.......... (319) (5,630,570)
Net unrealized
(depreciation)
appreciation of
investments........... (67,807,033) (511,603,284)
Net unrealized
(depreciation)
appreciation of
futures contracts..... (9) 1,165
Net unrealized
appreciation
(depreciation) of
forward foreign
currency contracts.... 17,873 975,589
Net unrealized
(depreciation)
appreciation on
translation of other
assets and liabilities
in foreign
currencies............ (14,254) (150,003)
------------ --------------
Net realized and
unrealized gain (loss)
on investments........ 22,448,915 1,006,709,188
------------ --------------
Net increase (decrease)
in net assets
resulting from
operations............ $ 21,419,317 $1,034,528,576
============ ==============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
_____________________________________ MF-26 ____________________________________
<PAGE>
<TABLE>
<CAPTION>
HARTFORD HARTFORD
INTERNATIONAL HARTFORD DIVIDEND AND HARTFORD HARTFORD HARTFORD
OPPORTUNITIES STOCK GROWTH ADVISERS BOND MONEY MARKET
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: $ 14,237,320 $ 42,624,938 $ 33,062,547 $ 40,196,470 $ 103,605 $ --
Interest............... 3,581,627 11,476,898 1,927,815 180,965,848 33,464,352 35,250,992
Securities lending..... 113,325 38,495 20,677 67,353 5,741 --
Less foreign tax
withheld.............. (1,884,559) (336,046) (214,952) (305,934) -- --
------------- ------------- ------------- ------------- ------------ -----------
Total investment
income, net......... 16,047,713 53,804,285 34,796,087 220,923,737 33,573,698 35,250,992
------------- ------------- ------------- ------------- ------------ -----------
EXPENSES:
Investment advisory
fees.................. 3,857,193 11,985,452 6,878,180 30,134,618 1,451,414 1,430,921
Administrative services
fees.................. 1,608,104 9,412,373 3,029,746 13,973,950 987,006 1,144,737
Accounting services.... 120,608 705,928 227,231 1,048,046 74,025 85,855
Custodian fees gross... 425,505 22,323 12,654 41,337 23,359 4,285
Custodian fees expense
offset................ (28,394) (2,768) (4,883) (13,438) (3,069) (908)
Board of Directors
fees.................. 1,890 9,609 3,072 16,737 1,298 4,214
Distribution fees --
Class IB.............. 8,033 74,796 20,646 194,957 22,342 11,839
Other expenses......... 42,239 305,780 101,456 458,810 23,531 35,621
------------- ------------- ------------- ------------- ------------ -----------
Total expenses,
(before waivers).... 6,035,178 22,513,493 10,268,102 45,855,017 2,579,906 2,716,564
Distribution fees --
Class IB waived....... (2,249) (20,943) (5,781) (54,588) (6,256) (3,315)
------------- ------------- ------------- ------------- ------------ -----------
Total expenses,
net................. 6,032,929 22,492,550 10,262,321 45,800,429 2,573,650 2,713,249
------------- ------------- ------------- ------------- ------------ -----------
Net investment (loss)
income................ 10,014,784 31,311,735 24,533,766 175,123,308 31,000,048 32,537,743
------------- ------------- ------------- ------------- ------------ -----------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on
securities
transactions.......... 143,346,294 275,733,865 159,541,345 249,570,124 (11,801,915) (35,716)
Net realized gain on
futures contracts..... 110,369 -- -- -- (174,572) --
Net realized gain
(loss) on forward
foreign currency
contracts............. (1,392,592) 928 136,770 928 1,360,919 --
Net realized gain on
option contracts...... -- -- 28,665 -- -- --
Net realized (loss)
gain on foreign
currency
transactions.......... (893,655) 9,134 (157,391) 8,183 (1,030,323) --
Net unrealized
(depreciation)
appreciation of
investments........... (226,349,654) (395,863,520) (238,039,071) (357,178,395) 26,157,650 --
Net unrealized
(depreciation)
appreciation of
futures contracts..... (103,692) -- -- -- 471,924 --
Net unrealized
appreciation
(depreciation) of
forward foreign
currency contracts.... (317,887) -- -- -- -- --
Net unrealized
(depreciation)
appreciation on
translation of other
assets and liabilities
in foreign
currencies............ 176,077 -- (8,948) -- 84,831 --
------------- ------------- ------------- ------------- ------------ -----------
Net realized and
unrealized gain (loss)
on investments........ (85,424,740) (120,119,593) (78,498,630) (107,599,160) 15,068,514 (35,716)
------------- ------------- ------------- ------------- ------------ -----------
Net increase (decrease)
in net assets
resulting from
operations............ $ (75,409,956) $ (88,807,858) $ (53,964,864) $ 67,524,148 $ 46,068,562 $32,502,027
============= ============= ============= ============= ============ ===========
</TABLE>
_____________________________________ MF-27 ____________________________________
<PAGE>
HARTFORD HLS MUTUAL FUNDS
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
HARTFORD HARTFORD
SMALL CAPITAL
COMPANY APPRECIATION
HLS FUND, INC. HLS FUND, INC.
-------------- ---------------
<S> <C> <C>
OPERATIONS:
Net investment (loss)
income................ $ (1,029,598) $ 27,819,388
Net realized gain
(loss) on
investments........... 90,252,338 1,517,485,721
Net unrealized
(depreciation)
appreciation of
investments........... (67,803,423) (510,776,533)
-------------- ---------------
Net increase (decrease)
in net assets
resulting from
operations............ 21,419,317 1,034,528,576
-------------- ---------------
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income
Class IA............. -- (3,805,460)
Class IB............. -- (22,902)
From realized gain on
investments
Class IA............. (117,754,046) (1,257,339,181)
Class IB............. (3,079,849) (7,712,912)
-------------- ---------------
Total
distributions....... (120,833,895) (1,268,880,455)
-------------- ---------------
CAPITAL SHARE
TRANSACTIONS:
Class IA............. 412,727,319 1,638,386,046
Class IB............. 20,049,442 39,473,394
-------------- ---------------
Net increase from
capital share
transactions...... 432,776,761 1,677,859,440
-------------- ---------------
Net increase
(decrease) in net
assets............ 333,362,183 1,443,507,561
NET ASSETS:
Beginning of period.... 767,502,233 7,985,996,377
-------------- ---------------
End of period.......... $1,100,864,416 $ 9,429,503,938
============== ===============
Accumulated
undistributed net
investment (loss)
income................ $ (1,029,598) $ 28,097,122
============== ===============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
_____________________________________ MF-28 ____________________________________
<PAGE>
<TABLE>
<CAPTION>
HARTFORD HARTFORD
INTERNATIONAL HARTFORD DIVIDEND AND HARTFORD HARTFORD HARTFORD
OPPORTUNITIES STOCK GROWTH ADVISERS BOND MONEY MARKET
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 (loss)
income................ $ 10,014,784 $ 31,311,735 $ 24,533,766 $ 175,123,308 $ 31,000,048 $ 32,537,743
Net realized gain
(loss) on
investments........... 141,170,416 275,743,927 159,549,389 249,579,235 (11,645,891) (35,716)
Net unrealized
(depreciation)
appreciation of
investments........... (226,595,156) (395,863,520) (238,048,019) (357,178,395) 26,714,405 --
-------------- --------------- -------------- --------------- ------------ --------------
Net increase (decrease)
in net assets
resulting from
operations............ (75,409,956) (88,807,858) (53,964,864) 67,524,148 46,068,562 32,502,027
-------------- --------------- -------------- --------------- ------------ --------------
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income
Class IA............. (10,708,194) (2,419,284) (2,426,419) (29,849,092) (4,426,549) (32,239,227)
Class IB............. (76,325) (19,101) (15,305) (389,528) (93,698) (262,798)
From realized gain on
investments
Class IA............. (171,516,585) (999,115,721) (266,487,174) (1,188,034,853) -- --
Class IB............. (1,223,514) (8,268,704) (1,715,211) (15,622,606) -- --
-------------- --------------- -------------- --------------- ------------ --------------
Total
distributions....... (183,524,618) (1,009,822,810) (270,644,109) (1,233,896,079) (4,520,247) (32,502,025)
-------------- --------------- -------------- --------------- ------------ --------------
CAPITAL SHARE
TRANSACTIONS:
Class IA............. 249,825,858 1,136,680,629 29,669,469 827,867,303 (49,574,084) (134,570,848)
Class IB............. 9,806,041 40,256,537 4,817,195 60,330,059 4,128,454 6,231,037
-------------- --------------- -------------- --------------- ------------ --------------
Net increase from
capital share
transactions...... 259,631,899 1,176,937,166 34,486,664 888,197,362 (45,445,630) (128,339,811)
-------------- --------------- -------------- --------------- ------------ --------------
Net increase
(decrease) in net
assets............ 697,325 78,306,498 (290,122,309) (278,174,569) (3,897,315) (128,339,809)
NET ASSETS:
Beginning of period.... 1,578,038,808 9,447,823,496 3,223,819,460 14,220,213,254 994,678,368 1,266,239,734
-------------- --------------- -------------- --------------- ------------ --------------
End of period.......... $1,578,736,133 $9,526,129,994 $2,933,697,151 $13,942,038,685 $990,781,053 $1,137,899,925
============== =============== ============== =============== ============ ==============
Accumulated
undistributed net
investment (loss)
income................ $ 6,140,661 $ 31,316,736 $ 23,091,974 $ 175,123,306 $ 31,000,048 $ --
============== =============== ============== =============== ============ ==============
</TABLE>
_____________________________________ MF-29 ____________________________________
<PAGE>
HARTFORD HLS MUTUAL FUNDS
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
HARTFORD HARTFORD
SMALL CAPITAL
COMPANY APPRECIATION
HLS FUND, INC. HLS FUND, INC.
---------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment (loss)
income..................... $ (1,976,601) $ 29,590,553
Net realized gain (loss) on
investments................ 147,233,369 1,275,672,031
Net unrealized appreciation
(depreciation) of
investments................ 121,502,066 843,016,317
------------ --------------
Net increase (decrease) in
net assets resulting from
operations................. 266,758,834 2,148,278,901
------------ --------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class IA.................. -- (24,013,346)
Class IB.................. -- (47,938)
From realized gain on
investments
Class IA.................. (986,389) (373,170,325)
Class IB.................. (13,611) (2,166,173)
------------ --------------
Total distributions....... (1,000,000) (399,397,782)
------------ --------------
CAPITAL SHARE TRANSACTIONS:
Class IA.................. 143,679,160 409,058,426
Class IB.................. 6,634,327 14,635,220
------------ --------------
Net increase from
capital share
transactions........... 150,313,487 423,693,646
------------ --------------
Net increase in net
assets................. 416,072,321 2,172,574,765
NET ASSETS:
Beginning of year........... 351,429,912 5,813,421,612
------------ --------------
End of year................. $767,502,233 $7,985,996,377
============ ==============
Accumulated undistributed
net investment income...... $ -- $ 4,106,096
============ ==============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
_____________________________________ MF-30 ____________________________________
<PAGE>
<TABLE>
<CAPTION>
HARTFORD HARTFORD
INTERNATIONAL HARTFORD DIVIDEND AND HARTFORD HARTFORD
OPPORTUNITIES STOCK GROWTH ADVISERS BOND
HLS FUND, INC. HLS FUND, INC. HLS FUND, INC. HLS FUND, INC. HLS FUND, INC.
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment (loss)
income..................... $ 15,471,910 $ 65,458,296 $ 50,807,217 $ 320,121,537 $ 58,520,227
Net realized gain (loss) on
investments................ 200,445,808 1,025,416,628 275,965,619 1,204,132,542 (18,936,883)
Net unrealized appreciation
(depreciation) of
investments................ 249,333,414 408,912,415 (162,877,806) (201,833,722) (58,549,134)
-------------- -------------- -------------- --------------- ------------
Net increase (decrease) in
net assets resulting from
operations................. 465,251,132 1,499,787,339 163,895,030 1,322,420,357 (18,965,790)
-------------- -------------- -------------- --------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class IA.................. (15,254,141) (64,230,258) (51,584,635) (294,114,825) (53,765,163)
Class IB.................. (26,724) (285,493) (240,626) (2,712,215) (835,869)
From realized gain on
investments
Class IA.................. -- (619,031,959) (120,723,195) (985,224,028) (6,264,409)
Class IB.................. -- (6,820,829) (820,318) (10,509,514) (48,164)
-------------- -------------- -------------- --------------- ------------
Total distributions....... (15,280,865) (690,368,539) (173,368,774) (1,292,560,582) (60,913,605)
-------------- -------------- -------------- --------------- ------------
CAPITAL SHARE TRANSACTIONS:
Class IA.................. (71,217,452) 1,405,976,600 185,464,195 2,243,273,127 155,218,570
Class IB.................. 1,929,411 39,214,926 7,935,212 106,955,218 11,573,774
-------------- -------------- -------------- --------------- ------------
Net increase from
capital share
transactions........... (69,288,041) 1,445,191,526 193,399,407 2,350,228,345 166,792,344
-------------- -------------- -------------- --------------- ------------
Net increase in net
assets................. 380,682,226 2,254,610,326 183,925,663 2,380,088,120 86,912,949
NET ASSETS:
Beginning of year........... 1,197,356,582 7,193,213,170 3,039,893,797 11,840,125,134 907,765,419
-------------- -------------- -------------- --------------- ------------
End of year................. $1,578,038,808 $9,447,823,496 $3,223,819,460 $14,220,213,254 $994,678,368
============== ============== ============== =============== ============
Accumulated undistributed
net investment income...... $ 6,910,396 $ 2,443,386 $ 999,932 $ 30,238,618 $ 4,520,247
============== ============== ============== =============== ============
<CAPTION>
HARTFORD
MONEY MARKET
HLS FUND, INC.
----------------
<S> <C>
OPERATIONS:
Net investment (loss)
income..................... $ 51,797,629
Net realized gain (loss) on
investments................ 22,249
Net unrealized appreciation
(depreciation) of
investments................ --
--------------
Net increase (decrease) in
net assets resulting from
operations................. 51,819,878
--------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class IA.................. (51,531,940)
Class IB.................. (265,689)
From realized gain on
investments
Class IA.................. (22,169)
Class IB.................. (80)
--------------
Total distributions....... (51,819,878)
--------------
CAPITAL SHARE TRANSACTIONS:
Class IA.................. 384,949,803
Class IB.................. 6,624,881
--------------
Net increase from
capital share
transactions........... 391,574,684
--------------
Net increase in net
assets................. 391,574,684
NET ASSETS:
Beginning of year........... 874,665,050
--------------
End of year................. $1,266,239,734
==============
Accumulated undistributed
net investment income...... $ --
==============
</TABLE>
_____________________________________ MF-31 ____________________________________
<PAGE>
HARTFORD HLS MUTUAL FUNDS
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
1. ORGANIZATION:
Hartford Small Company HLS Fund, Inc., Hartford Capital Appreciation HLS
Fund, Inc., Hartford International Opportunities HLS Fund, Inc., Hartford
Stock HLS Fund, Inc., Hartford Dividend and Growth HLS Fund, Inc., Hartford
Advisers Fund HLS Fund, Inc., Hartford Bond HLS Fund, Inc., and Hartford
Money Market HLS Fund, Inc. (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. These Funds are a component of The Hartford HLS Mutual Funds (The
Mutual Funds).
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 goals and policies, are described below.
<TABLE>
<S> <C>
Hartford Small Company HLS Seeks maximum capital appreciation by investing at least 65%
Fund, Inc. of its total assets in common stocks of companies with a
market capitalization within the range represented by the
Russell 2000 Index.
Hartford Capital Appreciation HLS Seeks growth of capital through investment in equity
Fund, Inc. securities of companies with high growth potential,
including small, medium and large companies.
Hartford International Opportunities Seeks growth of capital through investing primarily in
HLS Fund, Inc. foreign equity securities issues.
Hartford Stock HLS Fund, Inc. Seeks long-term capital growth through investment in a
diversified portfolio of equity securities.
Hartford Dividend and Growth HLS Seeks a high level of current income consistent with growth
Fund, Inc. of capital and moderate investment risk. Primary investments
are equity securities and securities convertible into equity
securities that typically have above average yield.
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 Bond HLS Fund, Inc. Seeks maximum current income consistent with preservation of
capital through investing primarily in debt securities.
Hartford Money Market HLS Fund, Inc. Seeks a high level of current income consistent with
liquidity and preservation of capital through investment in
money market securities.
</TABLE>
Each Fund is 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 12-b1 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--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
_____________________________________ MF-32 ____________________________________
<PAGE>
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.
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.
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 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. All
repurchase agreements are handled through the Fund's custodian, State
Street Bank.
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.
_____________________________________ MF-33 ____________________________________
<PAGE>
HARTFORD HLS MUTUAL FUNDS
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 2000
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 a
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 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, 2000:
HARTFORD DIVIDEND AND GROWTH HLS FUND, INC.
<TABLE>
<CAPTION>
<S> <C> <C>
OPTIONS CONTRACTS
WRITTEN
DURING THE PERIOD
------------------------
NUMBER
OF DOLLAR
WRITTEN CALLS CONTRACTS AMOUNTS
--------------------------------------------- -------- ---------
Beginning of Period.......................... -- --
During the Period............................ 1022 116,328
Expired during the period.................... -- --
Closed during the period..................... (1,022) (116,328)
Exercised during the period.................. -- --
------ ---------
Balanced at the end of period................ -- $ --
====== =========
</TABLE>
g) FORWARD FOREIGN CURRENCY CONTRACTS--As of June 30, 2000, Hartford Small
Company HLS Fund, Inc., Hartford Capital Appreciation HLS Fund, Inc. and
Hartford International Opportunities 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' costs 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 markets 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 counter-parties 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) SECURITIES LENDING--Hartford Small Company HLS Fund, Inc., Hartford
Capital Appreciation HLS Fund, Inc., Hartford International Opportunities
HLS Fund, Inc., Hartford Stock HLS Fund, Inc., Hartford Dividend and
Growth HLS Fund, Inc., Hartford Advisers HLS Fund, Inc. and Hartford Bond
HLS Fund, Inc. may lend their securities to certain qualified brokers who
pay these Funds negotiated lender fees. The loans are collateralized at
all times with cash or securities with a market value at least equal to
the market value of the securities on loan. As with
_____________________________________ MF-34 ____________________________________
<PAGE>
other extensions of credit, these Funds may bear the risk of delay of the
loaned securities in recovery or even loss of rights in the collateral
should the borrower of the securities fail financially. As of June 30,
2000, the market value of the securities loaned and the market value of
the collateral were as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
VALUE OF SECURITIES VALUE OF
LOANED COLLATERAL
------------ ------------
Hartford Small Company HLS Fund, Inc........................ 192,767,904 199,894,731
Hartford Capital Appreciation HLS Fund, Inc................. 765,019,281 790,421,193
Hartford International Opportunities HLS Fund, Inc.......... 138,837,303 144,256,076
Hartford Stock HLS Fund, Inc................................ 173,984,150 178,727,476
Hartford Dividend and Growth HLS Fund, Inc.................. 153,491,362 158,547,001
Hartford Advisers HLS Fund, Inc............................. 634,102,602 647,144,941
Hartford Bond HLS Fund, Inc................................. 39,059,323 39,882,246
</TABLE>
i) 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.
j) 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 dividend data 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 determined as of the close of the Exchange. Orders received after
the close of the Exchange, or on a day on which the Exchange and/ or the
Fund is not open for business, are priced at the next determined 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, at
least once a year.
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.
k) 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.
l) 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. As of
June 30, 2000 The Funds did not hold any restricted securities (excluding
144A issues).
_____________________________________ MF-35 ____________________________________
<PAGE>
HARTFORD HLS MUTUAL FUNDS
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 2000
3. EXPENSES:
a) INVESTMENT MANAGEMENT AND ADVISORY AGREEMENTS--HL Investment Advisors, LLC
(HL Advisors) an indirect wholly-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 Fund's Board of Directors and shareholders.
The schedule below reflects the rates of compensation paid to HL Advisors
for services rendered:
HARTFORD MONEY MARKET HLS FUND, INC.
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSETS ANNUAL RATE
------------------------ -----------
<S> <C>
All Assets 0.250%
</TABLE>
HARTFORD STOCK HLS FUND, INC.
AND HARTFORD BOND HLS FUND, INC.
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSETS ANNUAL RATE
------------------------ -----------
<S> <C>
On first $250 million 0.325%
On next $250 million 0.300
On next $500 million 0.275
Over $1 billion 0.250
</TABLE>
HARTFORD SMALL COMPANY HLS FUND, INC.,
HARTFORD CAPITAL APPRECIATION HLS FUND, INC.,
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND, INC.
HARTFORD DIVIDEND AND GROWTH HLS FUND, INC. AND
HARTFORD ADVISERS HLS FUND, INC.
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSETS ANNUAL RATE
------------------------ -----------
<S> <C>
On first $250 million 0.575%
On next $250 million 0.525
On next $500 million 0.475
Over $1 billion 0.425
</TABLE>
Pursuant to investment services agreements between HL Advisors and HIMCO,
HIMCO provides the day-to-day investment management services to th
Hartford Bond HLS Fund, Inc. and Hartford Money Market HLS Fund, Inc.
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 Small Company HLS Fund, Inc., Hartford Capital Appreciation HLS
Fund, Inc., Hartford International Opportunities HLS Fund, Inc., Hartford
Stock HLS Fund, Inc., Hartford Dividend and Growth HLS Fund, Inc. and
Hartford Advisers HLS Fund, Inc.
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 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 0.20% of each Fund's average
daily net assets. The Funds assume and pay certain other expenses
(including, but not limited to, accounting, custody, 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 Mutual Funds are charged to
each Fund based on the ratio of the net assets of each fund to the
combined net assets of The Mutual Funds. Non-allocable expenses are
charged to each fund based on specific identification.
_____________________________________ MF-36 ____________________________________
<PAGE>
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 Statement of Operations as
Custodian fees 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.
4. TAX COST AND UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS:
As of June 30, 2000, 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)
---- --------------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
Hartford Small Company HLS
Fund, Inc........................ $ 979,723,736 $ 176,891,514 $ (66,980,610) $ 109,630,905
Hartford Capital Appreciation HLS
Fund, Inc........................ 7,681,495,566 2,631,843,107 (1,001,710,643) 1,630,132,464
Hartford International
Opportunities HLS Fund, Inc...... 1,428,837,746 231,444,589 (70,061,301) 161,383,288
Hartford Stock HLS Fund, Inc....... 6,999,139,369 3,076,663,436 (572,696,314) 2,503,987,121
Hartford Dividend and Growth HLS
Fund, Inc........................ 2,749,226,589 487,891,888 (297,261,700) 190,630,188
Hartford Advisers HLS
Fund, Inc........................ 11,443,904,150 3,113,872,532 (708,596,941) 2,405,275,591
Hartford Bond HLS Fund, Inc........ 1,009,617,530 10,292,490 (19,804,690) (9,512,200)
</TABLE>
5. AFFILIATE HOLDINGS:
As of June 30, 2000, certain HL group pension contracts held direct
interests in shares as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
PERCENT
OF
TOTAL
FUND SHARES SHARES
------------------------------------------------------------ ------------ ---------
Hartford Small Company HLS Fund, Inc........................ 13,934,755 2.55%
Hartford Capital Appreciation HLS Fund, Inc................. 60,396,260 3.81%
Hartford International Opportunities HLS Fund, Inc.......... 17,758,736 1.76%
Hartford Stock HLS Fund, Inc................................ 61,396,110 4.08%
Hartford Dividend and Growth HLS Fund, Inc.................. 12,905,815 0.85%
Hartford Advisers HLS Fund, Inc............................. 110,556,823 2.15%
Hartford Bond HLS Fund, Inc................................. 41,490,053 4.34%
Hartford Money Market HLS Fund, Inc......................... 14,263,447 1.25%
</TABLE>
_____________________________________ MF-37 ____________________________________
<PAGE>
HARTFORD HLS MUTUAL FUNDS
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 2000
6. INVESTMENT TRANSACTIONS:
As of June 30, 2000, aggregate purchases and sales of investment securities
(excludes short-term investments) were as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
COST OF SALES AT
FUND PURCHASE PROCEEDS
------------------------------------------------------------ -------------- ---------------
Hartford Small Company HLS Fund, Inc........................ $1,118,998,637 $ 831,403,171
Hartford Capital Appreciation HLS Fund, Inc................. 4,323,654,820 4,116,689,919
Hartford International Opportunities HLS Fund, Inc.......... 1,227,065,118 1,176,320,843
Hartford Stock HLS Fund, Inc................................ 2,125,663,609 1,629,891,882
Hartford Dividend and Growth HLS Fund, Inc.................. 957,348,093 1,116,224,104
Hartford Advisers HLS Fund, Inc............................. 2,538,265,743 2,238,611,724
Hartford Bond HLS Fund, Inc................................. 848,279,072 889,541,199
</TABLE>
7. CAPITAL LOSS CARRY FORWARD:
At December 31, 1999 (tax year-end), the following Fund had capital loss
carry forwards for U.S. Federal Tax purposes:
<TABLE>
<CAPTION>
<S> <C> <C>
YEAR OF
FUND AMOUNT EXPIRATION
------------------------------------------------------------ ----------- -------------
Hartford Bond HLS Fund, Inc................................. $12,947,896 2007
</TABLE>
8. CAPITAL SHARE TRANSACTIONS:
The following information is as of June 30, 2000:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
HARTFORD
INTERNATIONAL
OPPORTUNITIES
HARTFORD SMALL COMPANY HARTFORD CAPITAL APPRECIATION HLS
HLS FUND, INC. HLS FUND, INC. FUND, INC.
-------------------------------- -------------------------------- --------------
SHARES AMOUNT SHARES AMOUNT SHARES
-------------- --------------- -------------- --------------- --------------
CLASS IA
Shares sold.......... 369,963,055 $ 846,191,291 127,529,830 $ 846,343,960 1,366,792,263
Shares issued on
reinvestment of
distributions....... 59,606,427 117,754,047 213,399,917 1,261,144,642 116,800,049
Shares redeemed...... (242,072,625) (551,218,019) (70,155,520) (469,102,556) (1,321,292,231)
-------------- --------------- -------------- --------------- --------------
Net Increase......... 187,496,857 $ 412,727,319 270,774,227 $ 1,638,386,046 162,300,081
============== =============== ============== =============== ==============
<CAPTION>
<S> <C>
---------------
AMOUNT
---------------
CLASS IA
Shares sold.......... $ 2,443,209,487
Shares issued on
reinvestment of
distributions....... 182,224,778
Shares redeemed...... (2,375,608,407)
---------------
Net Increase......... $ 249,825,858
===============
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
HARTFORD
HARTFORD DIVIDEND AND GROWTH ADVISERS HLS
HARTFORD STOCK HLS FUND, INC. HLS FUND, INC. FUND, INC.
-------------------------------- -------------------------------- --------------
SHARES AMOUNT SHARES AMOUNT SHARES
-------------- --------------- -------------- --------------- --------------
CLASS IA
Shares sold.......... 67,772,880 $ 473,573,095 93,122,239 $ 198,227,923 109,084,495
Shares issued on
reinvestment of
distributions....... 159,171,259 1,001,535,005 138,736,184 268,913,593 450,784,634
Shares redeemed...... (48,406,251) (338,427,471) (208,780,407) (437,472,047) (242,441,932)
-------------- --------------- -------------- --------------- --------------
Net Increase......... 178,537,888 $ 1,136,680,629 23,078,016 $ 29,669,469 317,427,197
============== =============== ============== =============== ==============
<CAPTION>
<S> <C>
---------------
AMOUNT
---------------
CLASS IA
Shares sold.......... $ 321,265,771
Shares issued on
reinvestment of
distributions....... 1,217,883,945
Shares redeemed...... (711,282,413)
---------------
Net Increase......... $ 827,867,303
===============
</TABLE>
_____________________________________ MF-38 ____________________________________
<PAGE>
<TABLE>
<CAPTION>
HARTFORD MONEY MARKET HLS
HARTFORD BOND HLS FUND, INC. FUND, INC.
-------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
CLASS
IA
Shares
sold... 85,859,198 $ 86,137,889 4,054,050,337 $ 4,054,050,337
Shares
issued
on
reinvestment
of
distributions... 4,294,267 4,426,547 32,239,220 32,239,220
Shares
redeemed... (139,554,833) (140,138,520) (4,220,860,405) (4,220,860,405)
-------------- --------------- -------------- ---------------
Net
Increase... (49,401,368) $ (49,574,084) (134,570,848) $ (134,570,848)
============== =============== ============== ===============
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
HARTFORD
INTERNATIONAL
OPPORTUNITIES
HARTFORD SMALL COMPANY HARTFORD CAPITAL APPRECIATION HLS
HLS FUND, INC. HLS FUND, INC. FUND, INC.
-------------------------------- -------------------------------- --------------
SHARES AMOUNT SHARES AMOUNT SHARES
-------------- --------------- -------------- --------------- --------------
CLASS IB
Shares sold.......... 8,381,764 $ 18,557,198 4,918,653 $ 32,529,240 5,453,812
Shares issued on
Reinvestment of
distributions....... 1,561,431 3,079,848 1,309,591 7,735,814 833,696
Shares redeemed...... (752,437) (1,587,604) (116,794) (791,660) (688,297)
-------------- --------------- -------------- --------------- --------------
Net Increase......... 9,190,758 $ 20,049,442 6,111,450 $ 39,473,394 5,599,211
============== =============== ============== =============== ==============
<CAPTION>
<S> <C>
---------------
AMOUNT
---------------
CLASS IB
Shares sold.......... $ 9,728,256
Shares issued on
Reinvestment of
distributions....... 1,299,839
Shares redeemed...... (1,222,054)
---------------
Net Increase......... $ 9,806,041
===============
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
HARTFORD
HARTFORD DIVIDEND AND GROWTH ADVISERS HLS
HARTFORD STOCK HLS FUND, INC. HLS FUND, INC. FUND, INC.
-------------------------------- -------------------------------- --------------
SHARES AMOUNT SHARES AMOUNT SHARES
-------------- --------------- -------------- --------------- --------------
CLASS IB
Shares sold.......... 4,734,785 $ 33,016,147 2,291,043 $ 4,896,578 15,816,181
Shares issued on
reinvestment of
distributions....... 1,317,685 8,287,805 892,705 1,730,516 5,928,589
Shares redeemed...... (147,893) (1,047,415) (870,977) (1,809,899) (682,911)
-------------- --------------- -------------- --------------- --------------
Net Increase......... 5,904,577 $ 40,256,537 2,312,771 $ 4,817,195 21,061,859
============== =============== ============== =============== ==============
<CAPTION>
<S> <C>
---------------
AMOUNT
---------------
CLASS IB
Shares sold.......... $ 46,321,799
Shares issued on
reinvestment of
distributions....... 16,012,134
Shares redeemed...... (2,003,874)
---------------
Net Increase......... $ 60,330,059
===============
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
HARTFORD MONEY MARKET
HARTFORD BOND HLS FUND, INC. HLS FUND, INC.
-------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- --------------- -------------- ---------------
CLASS
IB
Shares
sold... 5,075,024 $ 5,143,856 18,564,291 $ 18,564,291
Shares
issued
on
Reinvestment
of
distributions... 90,918 93,698 262,798 262,798
Shares
redeemed... (1,096,224) (1,109,100) (12,596,052) (12,596,052)
-------------- --------------- -------------- ---------------
Net
Increase... 4,069,718 $ 4,128,454 6,231,037 $ 6,231,037
============== =============== ============== ===============
</TABLE>
_____________________________________ MF-39 ____________________________________
<PAGE>
HARTFORD HLS MUTUAL FUNDS
--------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
JUNE 30, 2000
The following information is for the year ended December 31, 1999:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
HARTFORD
INTERNATIONAL
OPPORTUNITIES
HARTFORD SMALL COMPANY HARTFORD CAPITAL APPRECIATION HLS
HLS FUND, INC. HLS FUND, INC. FUND, INC.
-------------------------------- -------------------------------- --------------
SHARES SHARES SHARES AMOUNT SHARES
-------------- --------------- -------------- --------------- --------------
CLASS IA
Shares sold.......... 449,380,629 $ 730,073,657 271,404,748 $ 1,126,019,680 1,187,527,101
Shares issued on
reinvestment of
distributions....... 465,522 986,389 87,389,279 397,183,670 8,503,477
Shares redeemed...... (369,178,185) (587,380,886) (218,690,362) (1,114,144,924) (1,239,798,936)
-------------- --------------- -------------- --------------- --------------
Net Increase
(Decrease).......... 80,667,966 $ 143,679,160 86,103,665 $ 409,058,426 (43,768,358)
============== =============== ============== =============== ==============
<CAPTION>
<S> <C>
---------------
AMOUNT
---------------
CLASS IA
Shares sold.......... $ 1,833,047,660
Shares issued on
reinvestment of
distributions....... 15,254,141
Shares redeemed...... (1,919,519,253)
---------------
Net Increase
(Decrease).......... $ (71,217,452)
===============
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
HARTFORD
HARTFORD DIVIDEND AND GROWTH ADVISERS HLS
HARTFORD STOCK HLS FUND, INC. HLS FUND, INC. FUND, INC.
-------------------------------- -------------------------------- --------------
SHARES AMOUNT SHARES AMOUNT SHARES
-------------- --------------- -------------- --------------- --------------
CLASS IA
Shares sold.......... 235,050,891 $ 1,558,714,874 180,202,994 $ 388,544,304 614,913,572
Shares issued on
reinvestment of
distributions....... 110,768,543 683,262,216 83,476,813 172,307,830 460,621,368
Shares redeemed...... (125,298,498) (836,000,490) (173,958,180) (375,387,939) (280,036,788)
-------------- --------------- -------------- --------------- --------------
Net Increase......... 220,520,936 $ 1,405,976,600 89,721,627 $ 185,464,195 795,498,152
============== =============== ============== =============== ==============
<CAPTION>
<S> <C>
---------------
AMOUNT
---------------
CLASS IA
Shares sold.......... $ 1,778,189,829
Shares issued on
reinvestment of
distributions....... 1,279,338,852
Shares redeemed...... (814,255,554)
---------------
Net Increase......... $ 2,243,273,127
===============
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
HARTFORD MONEY MARKET
HARTFORD BOND HLS FUND, INC. HLS FUND, INC.
-------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- --------------- -------------- ---------------
CLASS
IA
Shares
sold... 277,049,634 $ 292,698,172 3,906,482,986 $ 3,906,482,986
Shares
issued
on
reinvestment
of
distributions... 60,010,055 60,029,553 51,555,581 51,555,581
Shares
redeemed... (187,269,736) (197,509,155) (3,573,088,764) (3,573,088,764)
-------------- --------------- -------------- ---------------
Net
Increase... 149,789,953 $ 155,218,570 384,949,803 $ 384,949,803
============== =============== ============== ===============
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
HARTFORD
INTERNATIONAL
OPPORTUNITIES
HARTFORD SMALL COMPANY HARTFORD CAPITAL APPRECIATION HLS
HLS FUND, INC. HLS FUND, INC. FUND, INC.
-------------------------------- -------------------------------- --------------
SHARES SHARES SHARES AMOUNT SHARES
-------------- --------------- -------------- --------------- --------------
CLASS IB
Shares sold.......... 4,416,848 $ 7,085,792 2,434,908 $ 12,891,538 1,364,850
Shares issued on
reinvestment of
distributions....... 6,427 13,611 492,766 2,214,111 14,727
Shares redeemed...... (284,642) (465,076) (80,356) (470,429) (160,935)
-------------- --------------- -------------- --------------- --------------
Net Increase......... 4,138,633 $ 6,634,327 2,847,318 $ 14,635,220 1,218,642
============== =============== ============== =============== ==============
<CAPTION>
<S> <C>
---------------
AMOUNT
---------------
CLASS IB
Shares sold.......... $ 2,144,186
Shares issued on
reinvestment of
distributions....... 26,724
Shares redeemed...... (241,499)
---------------
Net Increase......... $ 1,929,411
===============
</TABLE>
_____________________________________ MF-40 ____________________________________
<PAGE>
<TABLE>
<CAPTION>
HARTFORD DIVIDEND AND GROWTH
HARTFORD STOCK HLS FUND, INC. HLS FUND, INC.
-------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- --------------- --------------------------------
<S> <C> <C> <C> <C>
CLASS IB
Shares sold.......... 4,730,353 $ 33,043,242 3,660,327 $ 7,937,438
Shares issued on
reinvestment of
distributions....... 1,162,222 7,106,322 515,604 1,060,945
Shares redeemed...... (114,277) (934,638) (491,624) (1,063,171)
-------------- --------------- -------------- ---------------
Net Increase......... 5,778,298 $ 39,214,926 3,684,307 $ 7,935,212
============== =============== ============== ===============
<CAPTION>
HARTFORD ADVISERS HLS FUND, INC.
---------------------------------
AMOUNT SHARES
------------------------------------
<S> <C>
CLASS IB
Shares sold.......... 31,941,537
Shares issued on
reinvestment of
distributions....... 4,764,781
Shares redeemed...... (120,576)
--------------
Net Increase......... 36,585,742
==============
<CAPTION>
<S>
CLASS IB
Shares sold.......... $ 94,086,190
Shares issued on
reinvestment of
distributions....... 13,221,729
Shares redeemed...... (352,701)
---------------
Net Increase......... $ 106,955,218
===============
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
HARTFORD MONEY MARKET
HARTFORD BOND HLS FUND, INC. HLS FUND, INC.
-------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
-------------- --------------- -------------- ---------------
CLASS
IB
Shares
sold... 12,086,492 $ 12,742,994 13,572,465 $ 13,572,465
Shares
issued
on
reinvestment
of
distributions... 885,821 884,032 265,771 265,771
Shares
redeemed... (1,947,721) (2,053,252) (7,213,355) (7,213,355)
-------------- --------------- -------------- ---------------
Net
Increase... 11,024,592 $ 11,573,774 6,624,881 $ 6,624,881
============== =============== ============== ===============
</TABLE>
9. 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 six months ended June 30, 2000, the Funds
did not have any borrowings under this facility.
10. REVERSE STOCK SPLIT FOR CLASS B:
On September 17, 1999, a reverse stock split was declared for the Class B
shares of certain Funds, using the following reverse split percentages:
<TABLE>
<CAPTION>
REVERSE SPLIT
PERCENTAGE
-------------
<S> <C>
Hartford Small Company HLS Fund, Inc........................ 74.613827%
Hartford Capital Appreciation HLS Fund, Inc................. 15.418052%
Hartford International Opportunities HLS Fund, Inc.......... 71.625006%
Hartford Stock HLS Fund, Inc................................ 9.265642%
Hartford Dividend and Growth HLS Fund, Inc.................. 44.378756%
Hartford Advisers HLS Fund, Inc............................. 29.667722%
Hartford Bond HLS Fund, Inc................................. 93.065183%
</TABLE>
_____________________________________ MF-41 ____________________________________
<PAGE>
HARTFORD HLS MUTUAL FUNDS
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
-- SELECTED PER-SHARE DATA(4) --
----------------------------------------------------------------------------
NET REALIZED
AND
NET ASSET UNREALIZED DIVIDENDS DIVIDENDS
VALUE AT NET GAIN TOTAL FROM FROM NET IN EXCESS OF
BEGINNING INVESTMENT (LOSS) ON INVESTMENT INVESTMENT NET INVESTMENT
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME INCOME
--------- ---------- ------------ ---------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
HARTFORD SMALL COMPANY
HLS FUND, INC.
For the Six Months
Ended June 30, 2000
(Unaudited)
Class IA............... 2.188 0.001 0.072 0.073 -- --
Class IB............... 2.187 0.001 0.070 0.071 -- --
For the Year Ended
December 31, 1999
Class IA............... 1.321 (0.005) 0.875 0.870 -- --
Class IB............... 1.323(6) (0.004)(6) 0.871(6) 0.867(6) --(6) --(6)
For the Year Ended
December 31, 1998
Class IA............... 1.202 (0.002) 0.141 0.139 -- --
From inception
April 1, 1998, through
December 31, 1998
Class IB............... 1.340(6) (0.002)(6) (0.015)(6) (0.017)(6) --(6) --(6)
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 CAPITAL
APPRECIATION HLS
FUND, INC.
For the Six Months
Ended June 30, 2000
(Unaudited)
Class IA............... 6.095 0.010 0.762 0.772 (0.003) --
Class IB............... 6.098 (0.068) 0.834 0.766 (0.003) --
For the Year Ended
December 31, 1999
Class IA............... 4.759 0.023 1.643 1.666 (0.018) --
Class IB............... 6.437(6) 0.150(6) 1.503(6) 1.653(6) (0.013)(6) --(6)
For the Year Ended
December 31, 1998
Class IA............... 4.410 0.025 0.525 0.550 (0.026) --
From inception
April 1, 1998, through
December 31, 1998
Class IB............... 6.486(6) 0.013(6) 0.094(6) 0.107(6) (0.156)(6) --(6)
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) --
HARTFORD INTERNATIONAL
OPPORTUNITIES HLS
FUND, INC.
For the Six Months
Ended June 30, 2000
(Unaudited)
Class IA............... 1.876 0.010 (0.116) (0.106) (0.012) --
Class IB............... 1.876 0.018 (0.126) (0.108) (0.012) --
For the Year Ended
December 31, 1999
Class IA............... 1.355 0.019 0.520 0.539 (0.018) --
Class IB............... 1.357(6) 0.017(6) 0.519(6) 0.536(6) (0.017)(6) --(6)
For the Year Ended
December 31, 1998
Class IA............... 1.294 0.021 0.147 0.168 (0.019) --
From inception
April 1, 1998, through
December 31, 1998
Class IB............... 1.396(6) 0.004(6) (0.021)(6) 0.017(6) (0.022)(6) --(6)
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) --
HARTFORD STOCK HLS
FUND, INC.
For the Six Months
Ended June 30, 2000
(Unaudited)
Class IA............... 7.147 0.021 (0.094) (0.073) (0.002) --
Class IB............... 7.151 0.049 (0.128) (0.079) (0.002) --
For the Year Ended
December 31, 1999
Class IA............... 6.562 0.050 1.143 1.193 (0.049) --
Class IB............... 11.884(6) 0.021(6) 1.200(6) (10.687)(6) (0.056)(6) --(6)
For the Year Ended
December 31, 1998
Class IA............... 5.123 0.051 1.622 1.673 (0.050) --
From inception
April 1, 1998, through
December 31, 1998
Class IB............... 10.793(6) 0.043(6) 1.565(6) 1.608(6) (0.517)(6) --(6)
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) --
</TABLE>
(1) Annualized.
(2) Not annualized.
(3) Management fees were waived until assets (excluding assets contributed by
companies affiliated with The Hartford) 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.
(6) Per share amounts for Class IB have been restated to reflect a reverse
stock split effective September 17, 1999 (see note 10).
(7) Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
_____________________________________ MF-42 ____________________________________
<PAGE>
<TABLE>
<CAPTION>
-- SELECTED PER-SHARE DATA --
-- SELECTED PER-SHARE DATA --
--------------------------------------------------------------------------
DISTRIBUTIONS
FROM NET NET ASSET
REALIZED NET INCREASE VALUE AT
GAINS ON DISTRIBUTIONS TOTAL (DECREASE) IN END TOTAL
INVESTMENTS FROM CAPITAL DISTRIBUTIONS NET ASSET VALUE OF PERIOD RETURN
-------------- ------------- ------------- ----------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
HARTFORD SMALL COMPANY
HLS FUND, INC.
For the Six Months
Ended June 30, 2000
(Unaudited)
Class IA............... (0.250) -- (0.250) (0.177) 2.011 3.63%
Class IB............... (0.250) -- (0.250) (0.179) 2.008 3.54
For the Year Ended
December 31, 1999
Class IA............... (0.003) -- (0.003) 0.867 2.188 65.83
Class IB............... (0.003)(6) --(6) (0.003)(6) 0.864(6) 2.187(6) 65.54
For the Year Ended
December 31, 1998
Class IA............... (0.020) -- (0.020) 0.119 1.321 11.62
From inception
April 1, 1998, through
December 31, 1998
Class IB............... --(6) --(6) --(6) (0.017)(6) 1.323(6) (1.30)(2)
For the Year Ended
December 31
1997................... (0.062) -- (0.063) 0.133 1.202 18.38
From inception,
August 9, 1996 through
December 31, 1996..... -- -- (0.002) 0.069 1.069 7.15(2)
HARTFORD CAPITAL
APPRECIATION HLS
FUND, INC.
For the Six Months
Ended June 30, 2000
(Unaudited)
Class IA............... (0.922) -- (0.925) (0.153) 5.942 12.73
Class IB............... (0.922) -- (0.925) (0.159) 5.939 12.63
For the Year Ended
December 31, 1999
Class IA............... (0.312) -- (0.330) 1.336 6.095 37.46
Class IB............... (1.979)(6) --(6) (1.992)(6) (0.339)(6) 6.098(6) 37.21
For the Year Ended
December 31, 1998
Class IA............... (0.175) -- (0.201) 0.349 4.759 15.48(2)
From inception
April 1, 1998, through
December 31, 1998
Class IB............... --(6) --(6) (0.156)(6) (0.049)(6) 6.437(6) 1.65(2)
For the Year Ended
December 31
1997................... (0.296) -- (0.318) 0.496 4.410 22.34
1996................... (0.228) -- (0.253) 0.424 3.914 20.70
1995................... (0.155) -- (0.185) 0.630 3.490 30.25
HARTFORD INTERNATIONAL
OPPORTUNITIES HLS
FUND, INC.
For the Six Months
Ended June 30, 2000
(Unaudited)
Class IA............... (0.193) -- (0.205) (0.311) 1.565 (5.66)
Class IB............... (0.193) -- (0.205) (0.313) 1.563 (5.74)
For the Year Ended
December 31, 1999
Class IA............... -- -- (0.018) 0.521 1.876 39.86
Class IB............... --(6) --(6) (0.017)(6) 0.519(6) 1.876(6) 39.61
For the Year Ended
December 31, 1998
Class IA............... (0.088) -- (0.107) 0.061 1.355 13.16
From inception
April 1, 1998, through
December 31, 1998
Class IB............... --(6) --(6) (0.022)(6) (0.039)(6) 1.357(6) (1.13)(2)
For the Year Ended
December 31
1997................... (0.104) -- (0.116) (0.113) 1.294 0.34
1996................... (0.037) -- (0.062) 0.101 1.407 12.93
1995................... (0.011) -- (0.031) 0.130 1.306 13.93
HARTFORD STOCK HLS
FUND, INC.
For the Six Months
Ended June 30, 2000
(Unaudited)
Class IA............... (0.748) -- (0.750) (0.823) 6.324 (0.97)
Class IB............... (0.748) -- (0.750) (0.829) 6.322 (1.06)
For the Year Ended
December 31, 1999
Class IA............... (0.559) -- (0.608) 0.585 7.147 19.78
Class IB............... (5.898)(6) --(6) 5.954(6) (4.733)(6) 7.151(6) 19.57
For the Year Ended
December 31, 1998
Class IA............... (0.184) -- (0.234) 1.439 6.562 33.47(2)
From inception
April 1, 1998, through
December 31, 1998
Class IB............... --(6) --(6) (0.517)(6) 1.092(6) 11.884(6) 14.91(2)
For the Year Ended
December 31
1997................... (0.217) -- (0.266) 0.980 5.123 31.38
1996................... (0.148) -- (0.207) 0.616 4.143 24.37
1995................... (0.114) -- (0.184) 0.726 3.527 34.10
<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
PERIOD AFTER BEFORE TO AVERAGE TURNOVER
(IN THOUSANDS) WAIVERS WAIVERS NET ASSETS RATE(7)
-------------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
HARTFORD SMALL COMPANY
HLS FUND, INC.
For the Six Months
Ended June 30, 2000
(Unaudited)
Class IA............... 1,073,048 0.74(1) 0.74(1) (0.21) 92.12
Class IB............... 27,817 0.92(1) 0.99(1) (0.39) --
For the Year Ended
December 31, 1999
Class IA............... 757,302 0.78 0.78 (0.45) 181.34
Class IB............... 10,200 0.96 1.03 (0.63) --
For the Year Ended
December 31, 1998
Class IA............... 350,734 0.77 -- (0.24) 235.72
From inception
April 1, 1998, through
December 31, 1998
Class IB............... 696 0.95(1) -- (0.46)(1) --
For the Year Ended
December 31
1997................... 210,769 0.77 -- 0.08 222.20
From inception,
August 9, 1996 through
December 31, 1996..... 42,812 0.72(1) 0.88(1) 0.31(1)(3) 31.80
HARTFORD CAPITAL
APPRECIATION HLS
FUND, INC.
For the Six Months
Ended June 30, 2000
(Unaudited)
Class IA............... 9,370,819 0.66(1) 0.66(1) 0.62(1) 50.45
Class IB............... 58,685 0.84(1) 0.91(1) 0.44(1) --
For the Year Ended
December 31, 1999
Class IA............... 7,963,003 0.66 0.66 0.46 66.36
Class IB............... 22,993 0.84 0.91 0.28 --
For the Year Ended
December 31, 1998
Class IA............... 5,807,480 0.64 -- 0.59 51.15
From inception
April 1, 1998, through
December 31, 1998
Class IB............... 5,942 0.82(1) -- 0.30(1) --
For the Year Ended
December 31
1997................... 4,802,992 0.64 -- 0.44 57.60
1996................... 3,386,670 0.65 -- 0.60 85.40
1995................... 2,157,892 0.68 -- 0.95 78.60
HARTFORD INTERNATIONAL
OPPORTUNITIES HLS
FUND, INC.
For the Six Months
Ended June 30, 2000
(Unaudited)
Class IA............... 1,567,313 0.76(1) 0.76(1) 1.25(1) 79.39
Class IB............... 11,423 0.94(1) 1.01(1) 1.07(1) --
For the Year Ended
December 31, 1999
Class IA............... 1,574,836 0.78 0.78 1.20 133.20
Class IB............... 3,203 0.96 1.03 1.02 --
For the Year Ended
December 31, 1998
Class IA............... 1,196,694 0.77 -- 1.51 157.39
From inception
April 1, 1998, through
December 31, 1998
Class IB............... 663 0.94(1) -- 0.71(1) --
For the Year Ended
December 31
1997................... 1,092,946 0.77 -- 1.48 72.70
1996................... 996,543 0.79 -- 1.74 70.00
1995................... 686,475 0.86 -- 1.60 55.60
HARTFORD STOCK HLS
FUND, INC.
For the Six Months
Ended June 30, 2000
(Unaudited)
Class IA............... 9,446,868 0.48(1) 0.48(1) 0.67(1) 18.14
Class IB............... 79,262 0.66(1) 0.73(1) 0.49(1) --
For the Year Ended
December 31, 1999
Class IA............... 9,400,385 0.48 0.48 0.80 38.54
Class IB............... 47,439 0.66 0.73 0.62 --
For the Year Ended
December 31, 1998
Class IA............... 7,183,046 0.46 -- 0.95 27.13
From inception
April 1, 1998, through
December 31, 1998
Class IB............... 10,167 0.65(1) -- 0.73(1) --
For the Year Ended
December 31
1997................... 4,713,322 0.45 -- 1.11 31.60
1996................... 2,994,209 0.46 -- 1.59 42.30
1995................... 1,876,884 0.48 -- 2.23 52.90
</TABLE>
(1) Annualized.
(2) Not annualized.
(3) Management fees were waived until assets (excluding assets contributed by
companies affiliated with The Hartford) 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.
(6) Per share amounts for Class IB have been restated to reflect a reverse
stock split effective September 17, 1999 (see note 10).
(7) Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
_____________________________________ MF-43 ____________________________________
<PAGE>
HARTFORD MUTUAL FUNDS
--------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
-- SELECTED PER-SHARE DATA(4) --
---------------------------------------------------------------------------
NET REALIZED
AND
NET ASSET UNREALIZED DIVIDENDS DIVIDENDS
VALUE AT NET GAIN TOTAL FROM FROM NET IN EXCESS OF
BEGINNING INVESTMENT (LOSS) ON INVESTMENT INVESTMENT NET INVESTMENT
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME INCOME
--------- ---------- ------------ ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
HARTFORD DIVIDEND AND
GROWTH HLS FUND, INC.
For the Six Months
Ended June 30, 2000
(Unaudited)
Class IA............... 2.149 0.016 (0.047) (0.031) (0.002) --
Class IB............... 2.151 0.020 (0.053) (0.033) (0.002) --
For the Year Ended
December 31, 1999
Class IA............... 2.160 0.034 0.075 0.109 (0.035) --
Class IB............... 2.267(6) 0.024(6) 0.077(6) 0.101(6) (0.034)(6) --(6)
For the Year Ended
December 31, 1998
Class IA............... 1.952 0.033 0.280 0.313 (0.035) --
From inception
April 1, 1998, through
December 31, 1998
Class IB............... 2.253(6) 0.016(6) 0.068(6) 0.084(6) (0.070)(6) --(6)
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) --
HARTFORD ADVISERS HLS
FUND, INC.
For the Six Months
Ended June 30, 2000
(Unaudited)
Class IA............... 2.965 0.034 (0.021) 0.013 (0.006) --
Class IB............... 2.966 0.043 (0.032) 0.011 (0.006) --
For the Year Ended
December 31, 1999
Class IA............... 2.985 0.068 0.221 0.289 (0.063) --
Class IB............... 3.577(6) 0.061(6) 0.221(6) 0.282(6) (0.064)(6) --(6)
For the Year Ended
December 31, 1998
Class IA............... 2.527 0.061 0.546 0.607 (0.060) --
From inception
April 1, 1998, through
December 31, 1998
Class IB............... 3.371(6) 0.034(6) 0.367(6) 0.401(6) (0.195)(6) --(6)
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) --
HARTFORD BOND HLS
FUND, INC.
For the Six Months
Ended June 30, 2000
(Unaudited)
Class IA............... 0.994 0.033 0.015 0.048 (0.005) --
Class IB............... 0.995 0.033 0.014 0.047 (0.005) --
For the Year Ended
December 31, 1999
Class IA............... 1.081 0.062 (0.084) (0.022) (0.058) --
Class IB............... 1.083(6) 0.061(6) (0.084)(6) (0.023)(6) (0.057)(6) (0.008)(6)
For the Year Ended
December 31, 1998
Class IA............... 1.050 0.053 0.032 0.085 (0.054) --
From inception
April 1, 1998, through
December 31, 1998
Class IB............... 1.075(6) 0.023(6) 0.040(6) 0.063(6) (0.055)(6) --(6)
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) --
HARTFORD MONEY MARKET HLS
FUND, INC.
For the Six Months
Ended June 30, 2000
(Unaudited)
Class IA............... $ 1.000 $ 0.034 $-- $ 0.034 $(0.034) $ --
Class IB............... 1.000 0.033 -- 0.033 (0.033) --
For the Year Ended
December 31, 1999
Class IA............... 1.000 0.070 -- 0.070 (0.070) --
Class IB............... 1.000 0.068 -- 0.068 (0.068) --
For the Year Ended
December 31, 1998
Class IA............... 1.000 0.051 -- 0.051 (0.051) --
From inception
April 1, 1998, through
December 31, 1998
Class IB............... 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) --
</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.
(6) Per share amounts have been restated to reflect a reverse stock split for
Class B shares effective September 17, 1999 (see note 10).
(7) Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
_____________________________________ MF-44 ____________________________________
<PAGE>
<TABLE>
<CAPTION>
-- SELECTED PER-SHARE DATA --
-- SELECTED PER-SHARE DATA --
---------------------------------------------------------------------------
DISTRIBUTIONS
FROM NET NET ASSET
REALIZED NET INCREASE VALUE AT
GAINS ON DISTRIBUTIONS TOTAL (DECREASE) IN END TOTAL
INVESTMENTS FROM CAPITAL DISTRIBUTIONS NET ASSETS VALUE OF PERIOD RETURN
-------------- ------------- ------------- ------------------ --------- ------------
<S> <C> <C> <C> <C> <C> <C>
HARTFORD DIVIDEND AND
GROWTH HLS FUND, INC.
For the Six Months
Ended June 30, 2000
(Unaudited)
Class IA............... (0.193) -- (0.195) (0.226) 1.923 (1.51)
Class IB............... (0.193) -- (0.195) (0.228) 1.923 (1.60)
For the Year Ended
December 31, 1999
Class IA............... (0.085) -- (0.120) (0.011) 2.149 5.31
Class IB............... (0.183)(6) --(6) (0.217)(6) (0.116)(6) 2.151(6) 5.12
For the Year Ended
December 31, 1998
Class IA............... (0.070) -- (0.105) 0.208 2.160 16.42(2)
From inception
April 1, 1998, through
December 31, 1998
Class IB............... --(6) --(6) (0.070)(6) 0.014(6) 2.267(6) 3.67(2)
For the Year Ended
December 31
1997................... (0.044) -- (0.075) 0.405 1.952 31.89
1996................... (0.028) -- (0.062) 0.230 1.547 22.91
1995................... -- -- (0.033) 0.323 1.317 36.37
HARTFORD ADVISERS HLS
FUND, INC.
For the Six Months
Ended June 30, 2000
(Unaudited)
Class IA............... (0.257) -- (0.263) (0.250) 2.715 0.51
Class IB............... (0.257) -- (0.263) (0.252) 2.714 0.42
For the Year Ended
December 31, 1999
Class IA............... (0.246) -- (0.309) (0.020) 2.965 10.59
Class IB............... (0.829)(6) --(6) (0.893)(6) (0.611)(6) 2.966(6) 10.39
For the Year Ended
December 31, 1998
Class IA............... (0.089) -- (0.149) 0.458 2.985 24.66(2)
From inception
April 1, 1998, through
December 31, 1998
Class IB............... --(6) --(6) (0.195)(6) 0.206(6) 3.577(6) 11.96(2)
For the Year Ended
December 31
1997................... (0.098) -- (0.153) 0.358 2.527 24.51
1996................... (0.044) -- (0.103) 0.211 2.169 16.59
1995................... (0.019) -- (0.083) 0.358 1.958 28.34
HARTFORD BOND HLS
FUND, INC.
For the Six Months
Ended June 30, 2000
(Unaudited)
Class IA............... -- -- (0.005) 0.043 1.037 4.82
Class IB............... -- -- (0.005) 0.042 1.037 2.14
For the Year Ended
December 31, 1999
Class IA............... (0.007) -- (0.065) (0.087) 0.994 (2.02)
Class IB............... --(6) (0.065)(6) (0.088)(6) 0.995(6) (2.19) 15,818
For the Year Ended
December 31, 1998
Class IA............... -- -- (0.054) 0.031 1.081 8.15(2)
From inception
April 1, 1998, through
December 31, 1998
Class IB............... --(6) --(6) (0.055)(6) 0.008(6) 1.083(6) 5.89(2)
For the Year Ended
December 31
1997................... -- -- (0.060) 0.050 1.050 11.35
1996................... -- -- (0.063) (0.028) 1.000 3.52
1995................... -- -- (0.064) 0.102 1.028 18.49
HARTFORD MONEY MARKET HLS
FUND, INC.
For the Six Months
Ended June 30, 2000
(Unaudited)
Class IA............... $ -- $ -- $(0.034) -$- $1.000 2.86%
Class IB............... -- -- (0.033) -- 1.000 2.76
For the Year Ended
December 31, 1999
Class IA............... -- -- (0.070) -- 1.000 4.89
Class IB............... -- -- (0.068) -- 1.000 4.71
For the Year Ended
December 31, 1998
Class IA............... -- -- (0.051) -- 1.000 5.25(2)
From inception
April 1, 1998, through
December 31, 1998
Class IB............... -- -- (0.037) -- 1.000 3.76(2)
For the Year Ended
December 31
1997................... -- -- (0.049) -- 1.000 5.31
1996................... -- -- (0.050) -- 1.000 5.18
1995................... -- -- (0.056) -- 1.000 5.74
<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
PERIOD AFTER BEFORE TO AVERAGE TURNOVER
(IN THOUSANDS) WAIVERS WAIVERS NET ASSETS RATE(7)
-------------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
HARTFORD DIVIDEND AND
GROWTH HLS FUND, INC.
For the Six Months
Ended June 30, 2000
(Unaudited)
Class IA............... 2,914,867 0.68(1) 0.68(1) 1.63(1) 32.51
Class IB............... 18,830 0.86(1) 0.93(1) 1.45(1) --
For the Year Ended
December 31, 1999
Class IA............... 3,207,733 0.68 0.68 1.60 55.93
Class IB............... 16,087 0.86 0.93 1.42 --
For the Year Ended
December 31, 1998
Class IA............... 3,031,293 0.66 -- 1.81 48.21
From inception
April 1, 1998, through
December 31, 1998
Class IB............... 8,600 0.85(1) -- 1.57(1) --
For the Year Ended
December 31
1997................... 1,994,653 0.68 -- 2.21 34.20
1996................... 879,980 0.73 -- 2.52 56.90
1995................... 265,070 0.77 -- 2.91 41.40
HARTFORD ADVISERS HLS
FUND, INC.
For the Six Months
Ended June 30, 2000
(Unaudited)
Class IA............... 13,759,228 0.66(1) 0.66(1) 2.52(1) 16.86
Class IB............... 182,811 0.84(1) 0.91(1) 2.34(1) --
For the Year Ended
December 31, 1999
Class IA............... 14,082,895 0.65 0.66 2.46 38.38
Class IB............... 137,318 0.83 0.91 2.28 --
For the Year Ended
December 31, 1998
Class IA............... 11,805,411 0.63 -- 2.40 36.67
From inception
April 1, 1998, through
December 31, 1998
Class IB............... 34,714 0.83(1) -- 2.22(1) --
For the Year Ended
December 31
1997................... 8,283,912 0.63 -- 2.44 36.10
1996................... 5,879,529 0.63 -- 2.92 53.80
1995................... 4,262,769 0.65 -- 3.57 63.50
HARTFORD BOND HLS
FUND, INC.
For the Six Months
Ended June 30, 2000
(Unaudited)
Class IA............... 970,073 0.54(1) 0.54(1) 6.31(1) 94.56
Class IB............... 20,708 0.72(1) 0.79(1) --
For the Year Ended
December 31, 1999
Class IA............... 978,861 0.52 0.52 6.09 110.70
Class IB............... 0.70 0.77 5.91 --
For the Year Ended
December 31, 1998
Class IA............... 902,480 0.50 -- 5.86 122.33
From inception
April 1, 1998, through
December 31, 1998
Class IB............... 5,285 0.69(1) -- 5.54(1) --
For the Year Ended
December 31
1997................... 552,870 0.51 -- 6.58 112.90(5)
1996................... 402,548 0.52 -- 6.37 212.00
1995................... 342,495 0.53 -- 6.51 215.00
HARTFORD MONEY MARKET HLS
FUND, INC.
For the Six Months
Ended June 30, 2000
(Unaudited)
Class IA............... $ 1,122,865 0.48%(1) 0.48%(1) 5.72%(1) N/A
Class IB............... 15,035 0.66(1) 1.36(1) 5.54(1) --
For the Year Ended
December 31, 1999
Class IA............... 1,257,436 0.47 0.47 4.81 N/A
Class IB............... 8,804 0.65 0.72 4.63 --
For the Year Ended
December 31, 1998
Class IA............... 872,486 0.45 -- 5.12 N/A
From inception
April 1, 1998, through
December 31, 1998
Class IB............... 2,179 0.64(1) -- 4.81(1) --
For the Year Ended
December 31
1997................... 612,480 0.44 -- 5.21 N/A
1996................... 542,586 0.44 -- 5.04 N/A
1995................... 339,709 0.45 -- 5.57 N/A
</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.
(6) Per share amounts have been restated to reflect a reverse stock split for
Class B shares effective September 17, 1999 (see note 10).
(7) Portfolio turnover rate is calculated on the basis of the Fund as a whole
without distinguishing between the classes of shares issued.
_____________________________________ MF-45 ____________________________________
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
BY REGULAR MAIL: INVESTMENT MANAGERS:
IF YOU'D LIKE TO WRITE Hartford Life, Inc. -- HL Investment Advisor, Inc.
Attention: IPS P.O. Box 2999
US, PLEASE SEND YOUR P.O. Box, 5085 Hartford, CT 06104-2999
Hartford, CT 06102-5085
NOTE OR LETTER TO INVESTMENT SUB-ADVISERS:
BY E-MAIL ON THE INTERNET: Hartford Investment Management
ONE OF THE FOLLOWING [email protected] Company (HIMCO)
P.O. Box 1744
ADDRESSES: ISSUER: Hartford, CT 06114-1744
Hartford Life Insurance Company
P.O. Box 2999 Wellington Management Company, LLP
Hartford CT 06104-2999 75 State Street
Boston, MA 02109
PRINCIPAL UNDERWRITER:
Hartford Securities Distribution -- Banc of America Advisors, Inc.
Company, Inc. 101 S. Tryon Street, 33rd Floor
P.O. Box 2999 Charlotte, NC 28255
Hartford, CT 06104-2999
INVESTMENT SUB-ADVISERS:
Gartmore Global Partners
101 S. Tryon Street, 10th Floor
[HARTFORD LIFE LOGO] Charlotte, NC 28255
Marsico Capital Management, LLC
1200 17th Street
Denver, CO 80202
Banc of America
Capital Management, Inc.
The Nations Variable Annuity is a flexible premium variable annuity 101 s. Tryon Street, 9th Floor
issued by Hartford Life Insurance Company, Simsbury, CT (Countrywide: Charlotte, NC 28255
HL-VA99; FL: HL-VA99 FL; NY: HL-VACRT94NY, NC; HL-VA9920P, OR: HL-VA99OR;
TX: HL-VA99TX and HL-VA990DBTX). The Nations Variable Annuity is -- AIM Advisors, Inc.
underwritten and distributed by Hartford Securities Distribution 11 Greenway Plaza, Suite 100
Company, Inc. Houston, Texas 77046-1173
This material is authorized for distribution only preceded or accompanied
by a current prospectus and current Nations Variable Annuity performance
sheet. Please read the prospectus carefully before investing or sending money.
NATANN-8-00-1189 Printed in U.S.A. -C- 2000 The Hartford, Hartford, CT 06115
</TABLE>
Hartford Life Insurance Company
P.O. Box 5085
Hartford, CT 06102-5085
<PAGE>
SEMIANNUAL REPORT / JUNE 30 2000
AIM V.I. CAPITAL APPRECIATION FUND
AIM V.I. CAPITAL APPRECIATION FUND SEEKS CAPITAL GROWTH BY
INVESTING PRINCIPALLY IN COMMON STOCKS OF COMPANIES THE
PORTFOLIO MANAGERS BELIEVE ARE LIKELY TO BENEFIT FROM NEW OR
INNOVATIVE PRODUCTS, SERVICES OR PROCESSES AS WELL AS THOSE
THAT HAVE EXPERIENCED ABOVE-AVERAGE LONG-TERM GROWTH IN
EARNINGS AND HAVE EXCELLENT GROWTH PROSPECTS.
[LOGO]
<PAGE>
SEMIANNUAL REPORT / MANAGERS OVERVIEW
AIM V.I. CAPITAL APPRECIATION FUND
FUND RECORDS SOLID RETURNS
IN A VOLATILE MARKET ENVIRONMENT, MID- AND SMALL-CAP STOCKS OUTPERFORMED
LARGE-CAP STOCKS. HOW DID AIM V.I. CAPITAL APPRECIATION FUND PERFORM?
Despite a sharp market sell-off in April and May, the fund posted a solid 8.24%
cumulative total return for the six months ended June 30, 2000. The fund
outperformed the Lipper Multi-Cap Growth Fund Index, the Russell Midcap Index
and the S&P 500, which had total returns of 7.40%, 5.12% and -0.43%,
respectively, for the same period.
TOTAL RETURNS OF FUND VS. INDEXES
12/31/99-6/30/00
[LINE CHART]
<TABLE>
<S> <C>
AIM V.I. CAPITAL APPRECIATION FUND 8.24%
LIPPER MULTI-CAP GROWTH FUND INDEX 7.40%
RUSSELL MIDCAP INDEX 5.12%
S&P 500 INDEX -0.43%
</TABLE>
WHAT WERE THE KEY TRENDS IN THE STOCK MARKET?
Markets soared, then declined before staging a comeback as the reporting period
drew to a close. During the first three months of 2000, several key market
indexes rose to new heights, with the Dow setting a record in January and the
technology-dominated Nasdaq following suit in March. High-flying technology
stocks helped propel these advances. Toward the end of March, however, investors
became concerned that tech stocks might be overvalued, sparking a sharp sell-off
in this sector. In April, a federal court ruling against software giant
Microsoft (not a fund holding) helped perpetuate the sell-off. The stocks of
Internet companies with no earnings were particularly hard hit.
Investors were also concerned that the Federal Reserve Board (the Fed)
might continue to raise interest rates to slow torrid economic growth and to
contain inflation. On May 16, the Fed, which launched a monetary tightening
policy in June 1999, raised the key federal funds rate the rate banks charge one
another for overnight loans from 6.0% to 6.5%. Interest-rate concerns before and
after the Fed s action prompted a sell-off that affected nearly every
stock-market sector in April and May, causing markets to be extremely volatile.
Markets rallied in June as key economic data, such as housing starts and
retail sales, indicated that the economy might be slowing, diminishing the
possibility of further Fed rate hikes. At its June 28 meeting, the Fed left
interest rates unchanged. The June rally enabled the Nasdaq, which lost 37.3% of
its value between March 10 and May 23, to end the reporting period down only
2.54%.
While the Dow, a barometer of the performance of large-cap stocks, was
down 8.44% for the six months ended June 30, mid- and small-cap stocks posted
positive returns for the period. Additionally, investors generally favored the
stocks of companies with tangible earnings. In the small-cap stock universe,
value stocks slightly outperformed growth stocks, while in the large- and
mid-cap stock categories, growth stocks were the better performers.
WAS THE FUND ABLE TO TAKE ADVANTAGE OF THESE MARKET TRENDS?
Yes, because even though large- and super-cap stocks made up the bulk of the
portfolio, mid-cap stocks, the market leaders, made up more than a quarter of
the fund s holdings. Investors gravitated to mid-cap stocks because of their
attractive valuations compared to large-cap stocks and the appealing earnings
prospects of mid-sized companies. We also took advantage of the market sell-off
in the spring to buy the stocks of quality companies at reduced prices.
HOW WAS THE FUND POSITIONED AS OF JUNE 30?
At the end of the reporting period, the fund had 136 equity holdings.
Technology stocks made up 45% of the portfolio. The fund s significant
exposure to the technology sector was a result of our stock-selection
process, which is based on earnings growth prospects, not macroeconomic
predictions. We continued to find many companies with excellent earnings
prospects in the technology sector. Moreover, we generally do not buy the
stocks of companies that have no earnings.
Industries within the technology sector that were prominently represented
in the portfolio included computer software and services, communications
equipment and semiconductors. These industries are benefiting from the steady
sales of personal computers, the proliferation of new communications devices and
the expansion of the Internet. We believe that the outlook is favorable for tech
companies, which stand to benefit from global economic expansion, mergers and
acquisitions and the growth of wireless communications and the Internet.
WHAT WERE A FEW OF THE TECH STOCKS IN THE PORTFOLIO AT THE END OF THE REPORTING
PERIOD?
Corning, the fund s largest holding, is the inventor and one of the world s top
manufacturers of fiber-optic cable.
VERITAS is the world s largest maker of storage-management software, which
protects networks against data loss from crashes and errors, expedites data
recovery and manages corporate storage.
AIM V.I. CAPITAL APPRECIATION FUND
<PAGE>
SEMIANNUAL REPORT / MANAGERS OVERVIEW
PORTFOLIO COMPOSITION
As of 6/30/00, based on total net assets
<TABLE>
<CAPTION>
TOP 10 EQUITY HOLDINGS
<S> <C>
1. Corning Inc. 3.10%
2. VERITAS Software Corp. 3.00
3. JDS Uniphase Corp. 2.99
4. ADC Telecommunications, Inc. 2.61
5. Analog Devices, Inc. 1.81
6. Scientific-Atlanta, Inc. 1.77
7. PMC-Sierra, Inc.-ADR (Canada) 1.54
8. Check Point Software Technologies, 1.47
Ltd.-ADR (Israel)
9. Comverse Technology, Inc. 1.29
10. Nortel Networks Corp.-- 1.26
ADR (Canada)
<CAPTION>
TOP 10 INDUSTRIES
<S> <C>
1. Communications Equipment 16.79%
2. Electronics (Semiconductors) 10.57
3. Computers (Software & Services) 8.94
4. Oil & Gas (Drilling & Equipment) 5.63
5. Investment Banking/Brokerage 3.85
6. Broadcasting (Television, Radio & Cable) 3.30
7. Telecommunications (Cellular/Wireless) 2.58
8. Computers (Peripherals) 2.32
9. Electrical Equipment 2.25
10. Computers (Networking) 2.18
</TABLE>
The fund's portfolio composition is subject to change, and there is no assurance
that the fund will continue to hold any particular security.
FUND PERFORMANCE
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
As of 6/30/00, including sales charges
<S> <C>
Inception (5/5/93) 21.98%
5 Years 22.36
1 Year 42.91
</TABLE>
RESULTS OF A $10,000 INVESTMENT
FUND VS. INDEXES
5/5/93-6/30/00*
[CHART]
<TABLE>
<S> <C>
AIM V.I. CAPITAL APPRECIATION FUND $41,416
RUSSELL MIDCAP INDEX $30,794
S&P 500 INDEX $38,261
</TABLE>
* Index performance is from 4/30/93--6/30/00
Past performance cannot guarantee comparable future results. MARKET VOLATILITY
CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS OF AN INVESTMENT MADE
TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE SHOWN.
The performance figures shown here, which represent AIM V.I. Capital
Appreciation Fund, are intended to reflect actual annuity values, and they do
not reflect charges at the separate-account level which (if applied) would lower
them. AIM V.I. Capital Appreciation Fund s performance figures are historical,
and they reflect the reinvestment of distributions and the changes in net asset
value. The fund s investment return and principal value will fluctuate, so an
investor s shares, when redeemed, may be worth more or less than their original
cost.
Investing in small and mid-sized companies may involve greater risk and
potential reward than investing in more established companies.
The unmanaged Dow Jones Industrial Average (the Dow) is a price-weighted
average of 30 actively traded primarily industrial stocks.
The unmanaged Lipper Multi-Cap Growth Fund Index represents an average of
the performance of the 30 largest multi-cap growth mutual funds tracked by
Lipper, Inc., an independent mutual fund performance monitor.
The unmanaged National Association of Securities Dealers Automated
Quotation System Composite Index (the Nasdaq) is a market-value-weighted index
comprising all domestic and non-U.S.-based common stocks listed on the Nasdaq
system. It includes more than 5,000 companies, and it is often considered
representative of the small and medium-sized company stock universe. While it
includes many small and mid-sized company stocks, large-capitalization
techno-logy companies tend to dominate the index.
The Russell Midcap Index represents the performance of the stocks of
mid-capitalization companies.
The unmanaged Standard & Poor s Composite Index of 500 Stocks (the S&P
500) represents the performance of the stock market.
An investment cannot be made in an index. Unless otherwise indicated,
index results include reinvested dividends.
JDS Uniphase is the world s leading supplier of parts for fiber-optic equipment.
Analog Devices is a leading maker of both analog and digital integrated
circuits, which translate such phenomena as pressure, temperature and sound
into digital signals.
ADC Telecommunications makes systems that speed up the rate at which voice, data
and video signals are transmitted.
Scientific-Atlanta makes set-top boxes for receiving cable-television
programming.
PMC-Sierra develops semiconductor components that improve Internet transmission.
WHAT OTHER STOCKS PERFORMED WELL FOR THE FUND?
Jones Pharma produces specialty drugs, including treatments for thyroid
disorders.
Kohl s operates about 300 department stores, primarily targeting middle-income
customers.
Cooper Cameron makes equipment for the oil and gas industry.
WHAT IS YOUR OUTLOOK FOR THE NEAR TERM?
The near-term outlook for stocks could depend to a large extent on the Fed s
ability to bring the economy to a soft landing. With increasing evidence that
economic growth could be slowing, the Fed may refrain from further interest-rate
increases. Moreover, a presidential election is looming in the fall. To appear
unbiased, the Fed has tended to leave interest rates unchanged in the months
immediately preceding a presidential election. If Fed policy ultimately succeeds
in slowing economic growth to a more sustainable rate and in keeping inflation
at bay, it could prolong the current record economic expansion. Such an
environment could help sustain corporate earnings growth and prove favorable for
stocks.
However, uncertainty over the Fed s actions and other factors could
perpetuate the volatility that has characterized markets in recent months. In
such an environment, investors would be well advised to take a long-term
perspective on their investment.
AIM V. I . CAPITAL APPRECIATION FUND
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS
JUNE 30, 2000
(UNAUDITED)
MARKET
SHARES VALUE
COMMON STOCKS & OTHER EQUITY
INTERESTS - 91.07%
<S> <C> <C>
AUTO PARTS & EQUIPMENT - 0.44%
Danaher Corp. 132,500 $ 6,550,469
----------------------------------------------------------------------------------------------
BANKS (MAJOR REGIONAL) - 0.84%
Northern Trust Corp. 122,600 7,976,662
State Street Corp. 43,300 4,592,506
----------------------------------------------------------------------------------------------
12,569,168
----------------------------------------------------------------------------------------------
BANKS (MONEY CENTER) - 0.51%
J.P. Morgan & Co., Inc. 70,000 7,708,750
----------------------------------------------------------------------------------------------
BIOTECHNOLOGY- 1.49%
Amgen Inc.(a) 107,500 7,551,875
Biogen, Inc.(a) 230,000 14,835,000
----------------------------------------------------------------------------------------------
22,386,875
----------------------------------------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE) - 3.30%
AMFM Inc.(a) 105,300 7,265,700
AT&T Corp. - Liberty Media Group - Class A(a) 416,400 10,097,700
Cox Communications, Inc. - Class A (a) 106,000 4,829,625
Hispanic Broadcasting Corp.(a) 220,000 7,287,500
Univision Communications, Inc. - Class A (a) 105,500 10,919,250
Westwood One, Inc.(a) 271,900 9,278,587
----------------------------------------------------------------------------------------------
49,678,362
----------------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 16.79%
ADC Telecommunications, Inc.(a) 468,400 39,287,050
Alcatel - ADR (France) 278,300 18,506,950
CIENA Corp.(a) 107,100 17,852,231
Comverse Technology, Inc.(a) 208,200 19,362,600
Corning Inc. 172,900 46,661,387
JDS Uniphase Corp.(a)(b) 374,700 44,917,162
Juniper Networks, Inc.(a) 66,200 9,636,237
Nokia Oyj - ADR (Finland) 212,800 10,626,700
Nortel Networks Corp. - ADR (Canada) 277,000 18,905,250
Scientific-Atlanta, Inc.(b) 357,400 26,626,300
----------------------------------------------------------------------------------------------
252,381,867
----------------------------------------------------------------------------------------------
COMPUTERS (HARDWARE) - 0.88%
Comdisco, Inc. 4,200 93,712
Dell Computer Corp.(a) 82,800 4,083,075
Sun Microsystems, Inc.(a) 99,400 9,039,187
----------------------------------------------------------------------------------------------
13,215,974
----------------------------------------------------------------------------------------------
COMPUTERS (NETWORKING) - 2.18%
Cisco Systems, Inc. (a) 138,800 $ 8,822,475
Exodus Communications, Inc.(a) 220,000 10,133,750
VeriSign, Inc.(a) 78,500 13,855,250
----------------------------------------------------------------------------------------------
32,811,475
----------------------------------------------------------------------------------------------
COMPUTERS (PERIPHERALS) - 2.32%
Brocade Communications Systems, Inc.(a) 88,400 16,220,019
EMC Corp.(a) 173,200 13,325,575
Network Appliance, Inc.(a) 66,300 5,337,150
----------------------------------------------------------------------------------------------
34,882,744
----------------------------------------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES) - 8.94%
BEA Systems, Inc.(a) 145,800 7,207,987
Business Objects S.A. - ADR (France)(a) 76,300 6,723,937
Check Point Software Technologies Ltd. - ADR
(Israel)(a) 104,100 22,043,175
Gemstar International Group Ltd.(a) 68,200 4,191,103
i2 Technologies, Inc.(a) 52,855 5,510,960
Oracle Corp.(a) 130,000 10,928,125
PeopleSoft, Inc.(a) 100,000 1,675,000
Portal Software, Inc.(a) 121,600 7,767,200
Rational Software Corp.(a) 49,700 4,618,994
Siebel Systems, Inc.(a) 86,900 14,213,581
VERITAS Software Corp.(a) 399,075 45,101,711
Yahoo! Inc.(a) 35,900 4,447,112
----------------------------------------------------------------------------------------------
134,428,885
----------------------------------------------------------------------------------------------
CONSUMER FINANCE - 1.16%
Capital One Financial Corp. 135,100 6,028,837
Providian Financial Corp. 126,600 11,394,000
----------------------------------------------------------------------------------------------
17,422,837
----------------------------------------------------------------------------------------------
ELECTRIC COMPANIES - 0.23%
Montana Power Co. (The) 100,000 3,531,250
----------------------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 2.25%
American Power Conversion Corp.(a)(b) 364,300 14,867,994
Sanmina Corp.(a)(b) 138,800 11,867,400
Vishay Intertechnology, Inc.(a) 186,600 7,079,137
----------------------------------------------------------------------------------------------
33,814,531
----------------------------------------------------------------------------------------------
ELECTRONICS (COMPONENT DISTRIBUTORS) - 0.34%
Agilent Technologies, Inc.(a) 70,000 5,162,500
----------------------------------------------------------------------------------------------
ELECTRONICS (DEFENSE) - 1.16%
General Motors Corp. - Class H(a) 199,200 17,479,800
----------------------------------------------------------------------------------------------
AIM V.I. CAPITAL APPRECIATION FUND
<PAGE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
ELECTRONICS (SEMICONDUCTORS) - 10.57%
Altera Corp.(a) 69,400 $ 7,074,462
Analog Devices, Inc.(a) 357,300 27,154,800
ASM Lithography Holding N.V. - ADR - New York
Shares (Netherlands)(a) 110,000 4,853,750
Celestica Inc. - ADR (Canada)(a) 265,900 13,195,287
Cypress Semiconductor Corp.(a) 87,100 3,679,975
Intel Corp. 53,000 7,085,438
Linear Technology Corp. 173,500 11,093,156
LSI Logic Corp.(a) 173,500 9,390,688
Maxim Integrated Products, Inc.(a) 146,200 9,932,463
Microchip Technology Inc.(a) 132,500 7,720,195
PMC-Sierra, Inc. - ADR (Canada)(a) 130,400 23,170,450
SDL, Inc.(a) 47,500 13,546,406
Vitesse Semiconductor Corp. (a) 120,000 8,827,500
Xilinx, Inc.(a) 147,300 12,161,456
----------------------------------------------------------------------------------------------
158,886,026
----------------------------------------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR) - 1.41%
Applied Materials, Inc.(a) 39,200 3,552,500
KLA-Tencor Corp.(a) 116,000 6,793,250
Novellus Systems, Inc.(a) 99,400 5,622,313
Teradyne, Inc.(a)(b) 70,600 5,189,100
----------------------------------------------------------------------------------------------
21,157,163
----------------------------------------------------------------------------------------------
FINANCIAL (DIVERSIFIED) - 0.53%
American Express Co. 152,500 7,949,063
----------------------------------------------------------------------------------------------
HEALTH CARE (DRUGS - GENERIC & OTHER) - 1.82%
Forest Laboratories, Inc.(a) 74,600 7,534,600
Jones Pharma Inc. 384,275 15,346,983
Medicis Pharmaceutical Corp. - Class A(a) 77,500 4,417,500
----------------------------------------------------------------------------------------------
27,299,083
----------------------------------------------------------------------------------------------
HEALTH CARE (DRUGS - MAJOR PHARMACEUTICALS) - 1.00%
Pfizer Inc. 312,300 14,990,400
----------------------------------------------------------------------------------------------
HEALTH CARE (HOSPITAL MANAGEMENT) - 1.14%
HCA-Healthcare Corp. (The) 208,200 6,324,075
Health Management Associates, Inc. - Class A(a) 565,200 7,382,925
Tenet Healthcare Corp.(a) 125,000 3,375,000
----------------------------------------------------------------------------------------------
17,082,000
----------------------------------------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES) - 2.05%
Biomet, Inc. 137,000 5,265,938
Medtronic, Inc. 240,000 11,955,000
PE Corp - PE Biosystems Group 205,700 13,550,488
----------------------------------------------------------------------------------------------
30,771,426
----------------------------------------------------------------------------------------------
HEALTH CARE (SPECIALIZED SERVICES) - 0.25%
Lincare Holdings, Inc.(a) 150,000 3,693,750
----------------------------------------------------------------------------------------------
INSURANCE (LIFE/HEALTH) - 0.63%
AFLAC, Inc. 206,800 $ 9,499,875
----------------------------------------------------------------------------------------------
INSURANCE BROKERS - 0.28%
Aon Corp. 137,600 4,274,200
----------------------------------------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE - 3.85%
Goldman Sachs Group, Inc. (The) 195,000 18,500,625
Merrill Lynch & Co., Inc. 60,700 6,980,500
Morgan Stanley Dean Witter & Co. 190,000 15,817,500
Schwab (Charles) Corp. (The) 494,450 16,625,881
----------------------------------------------------------------------------------------------
57,924,506
----------------------------------------------------------------------------------------------
INVESTMENT MANAGEMENT - 0.33%
Federated Investors, Inc. - Class B 142,700 5,003,419
----------------------------------------------------------------------------------------------
LEISURE TIME (PRODUCTS) - 0.88%
Harley-Davidson, Inc. 344,300 13,255,550
----------------------------------------------------------------------------------------------
MANUFACTURING (DIVERSIFIED) - 0.34%
Honeywell International 150,000 5,053,125
----------------------------------------------------------------------------------------------
MANUFACTURING (SPECIALIZED) - 0.50%
Millipore Corp. 100,000 7,537,500
----------------------------------------------------------------------------------------------
NATURAL GAS - 0.39%
Enron Corp.(b) 90,000 5,805,000
----------------------------------------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT) - 5.63%
BJ Services Co.(a)(b) 142,300 8,893,750
Cooper Cameron Corp.(a) 165,000 10,890,000
ENSCO International Inc. 165,700 5,934,131
Grant Prideco, Inc.(a) 179,000 4,475,000
Nabors Industries, Inc.(a) 269,600 11,205,250
R&B Falcon Corp.(a) 409,400 9,646,488
Rowan Cos., Inc.(a) 216,200 6,567,075
Smith International, Inc.(a) 135,400 9,858,813
Transocean Sedco Forex Inc. 227,700 12,167,719
Weatherford International, Inc.(a) 124,100 4,940,731
----------------------------------------------------------------------------------------------
84,578,957
----------------------------------------------------------------------------------------------
RAILROADS - 1.15%
Kansas City Southern Industries, Inc. 195,000 17,294,057
----------------------------------------------------------------------------------------------
RESTAURANTS - 0.62%
Brinker International, Inc.(a) 195,100 5,706,675
Outback Steakhouse, Inc.(a) 124,000 3,627,000
----------------------------------------------------------------------------------------------
9,333,675
----------------------------------------------------------------------------------------------
RETAIL (BUILDING SUPPLIES) - 0.68%
Lowe's Cos., Inc. 250,000 10,265,625
----------------------------------------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS) - 1.06%
Best Buy Co., Inc.(a) 104,200 6,590,650
CDW Computer Centers, Inc.(a) 149,700 9,356,250
----------------------------------------------------------------------------------------------
15,946,900
----------------------------------------------------------------------------------------------
AIM V.I. CAPITAL APPRECIATION FUND
<PAGE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (DEPARTMENT STORES) - 1.03%
Kohl's Corp.(a) 277,600 $ 15,441,500
----------------------------------------------------------------------------------------------
RETAIL (DISCOUNTERS) - 1.00%
Dollar Tree Stores, Inc.(a) 179,962 7,119,747
Family Dollar Stores, Inc. 197,800 3,869,463
Ross Stores, Inc. 236,400 4,033,575
----------------------------------------------------------------------------------------------
15,022,785
----------------------------------------------------------------------------------------------
RETAIL (SPECIALTY) - 1.58%
Bed Bath & Beyond, Inc.(a) 347,000 12,578,750
Staples, Inc.(a) 270,080 4,152,480
Tiffany & Co. 49,700 3,354,750
Zale Corp.(a) 99,400 3,628,100
----------------------------------------------------------------------------------------------
23,714,080
----------------------------------------------------------------------------------------------
RETAIL (SPECIALTY - APPAREL) - 1.56%
Gap, Inc. (The) 165,600 5,175,000
Intimate Brands, Inc. 198,800 3,926,300
Limited, Inc. (The) 257,800 5,574,925
Men's Wearhouse, Inc. (The)(a) 150,100 3,349,106
Talbots, Inc. (The) 99,400 5,460,788
----------------------------------------------------------------------------------------------
23,486,119
----------------------------------------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING) - 1.88%
Lamar Advertising Co.(a) 296,300 12,833,494
Omnicom Group Inc. 173,500 15,452,344
----------------------------------------------------------------------------------------------
28,285,838
----------------------------------------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER) - 0.37%
Ariba, Inc.(a) 56,300 5,520,039
----------------------------------------------------------------------------------------------
SERVICES (DATA PROCESSING) - 1.68%
CSG Systems International, Inc.(a) 66,400 3,722,550
Fiserv, Inc.(a) 281,775 12,186,769
Paychex, Inc.(b) 222,218 9,333,156
----------------------------------------------------------------------------------------------
25,242,475
----------------------------------------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 2.58%
Crown Castle International Corp.(a) 148,800 $ 5,431,200
Level 3 Communications, Inc.(a) 72,500 6,380,000
Metromedia Fiber Network, Inc. - Class A(a) 277,600 11,017,250
VoiceStream Wireless Corp.(a) 62,200 7,233,666
Western Wireless Corp. - Class A(a) 159,700 8,703,650
----------------------------------------------------------------------------------------------
38,765,766
----------------------------------------------------------------------------------------------
TELEPHONE - 1.41%
Broadwing Inc.(a) 198,800 5,156,375
NTL Inc.(a) 99,400 5,951,575
Qwest Communications International Inc.(a) 203,400 10,106,438
----------------------------------------------------------------------------------------------
21,214,388
----------------------------------------------------------------------------------------------
TEXTILES (APPAREL) - 0.04%
Jones Apparel Group, Inc.(a) 22,900 538,150
----------------------------------------------------------------------------------------------
Total Common Stocks & Other Equity
Interests (Cost $847,097,651) 1,368,857,927
----------------------------------------------------------------------------------------------
MONEY MARKET FUNDS - 7.66%
STIC Liquid Assets Portfolio(c) 57,623,628 57,623,628
STIC Prime Portfolio(c) 57,623,628 57,623,628
----------------------------------------------------------------------------------------------
Total Money Market Funds
(Cost $115,247,256) 115,247,256
----------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 98.73%
(Cost $962,344,907) 1,484,105,183
----------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 1.27% 19,024,422
----------------------------------------------------------------------------------------------
NET ASSETS - 100.00% $1,503,129,605
==============================================================================================
</TABLE>
Investment Abbreviations:
ADR - American Depositary Receipt
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) A portion of this security is subject to call options written. See Note 7.
(c) The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
AIM V.I. CAPITAL APPRECIATION FUND
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
(UNAUDITED)
<S> <C>
ASSETS:
Investments, at market value (cost $962,344,907) $1,484,105,183
Receivables for:
Investments sold 22,654,382
Fund shares sold 1,814,123
Dividends and interest 713,991
Investment for deferred compensation plan 35,519
Other assets 15,276
---------------------------------------------------------------------------------------------
Total assets 1,509,338,474
---------------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 1,707,302
Fund shares reacquired 579,043
Options written (premiums received $1,840,730) 2,429,631
Deferred compensation plan 35,519
Accrued advisory fees 733,965
Accrued administrative services fees 720,718
Accrued trustees' fees 2,691
---------------------------------------------------------------------------------------------
Total liabilities 6,208,869
---------------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $1,503,129,605
=============================================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Outstanding 39,031,436
---------------------------------------------------------------------------------------------
Net asset value, offering and redemption price per share $ 38.51
=============================================================================================
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(UNAUDITED)
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax $19,435) $ 3,487,058
Interest 63,534
-----------------------------------------------------------------------------------------------
Total investment income 3,550,592
-----------------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 4,022,439
Administrative services fee 978,279
Custodian fees 70,913
Trustees' fees 5,780
Other 152,901
-----------------------------------------------------------------------------------------------
Total expenses 5,230,312
-----------------------------------------------------------------------------------------------
Less: Expenses paid indirectly (6,275)
-----------------------------------------------------------------------------------------------
Net expenses 5,224,037
-----------------------------------------------------------------------------------------------
Net investment income (loss) (1,673,445)
-----------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT
SECURITIES, FOREIGN CURRENCIES AND OPTION CONTRACTS
Net realized gain from:
Investment securities 67,228,582
Option contracts written 3,379,266
-----------------------------------------------------------------------------------------------
70,607,848
-----------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of:
Investment securities 30,561,858
Foreign currencies (23)
Option contracts written (145,162)
-----------------------------------------------------------------------------------------------
30,416,673
-----------------------------------------------------------------------------------------------
Net gain on investment securities, foreign currencies and
option contracts 101,024,521
-----------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations $ 99,351,076
===============================================================================================
</TABLE>
See Notes to Financial Statements.
AIM V.I. CAPITAL APPRECIATION FUND
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND THE YEAR ENDED DECEMBER 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) $ (1,673,445) $ (442,132)
--------------------------------------------------------------------------------------------------------------------------------
Net realized gain from investment securities,
foreign currencies and option contracts 70,607,848 41,929,457
--------------------------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation of investment securities,
foreign currencies and option contracts 30,416,673 297,348,409
--------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 99,351,076 338,835,734
--------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income -- (738,724)
--------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains -- (23,048,204)
--------------------------------------------------------------------------------------------------------------------------------
Share transactions - net 272,561,069 168,920,651
--------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets 371,912,145 483,969,457
--------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 1,131,217,460 647,248,003
--------------------------------------------------------------------------------------------------------------------------------
End of period $1,503,129,605 $1,131,217,460
================================================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $ 872,548,982 $ 599,987,913
--------------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income (loss) (1,721,222) (47,777)
--------------------------------------------------------------------------------------------------------------------------------
Undistributed net realized gain from investment securities,
foreign currencies and option contracts 111,130,534 40,522,686
--------------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities,
foreign currencies and option contracts 521,171,311 490,754,638
--------------------------------------------------------------------------------------------------------------------------------
$1,503,129,605 $1,131,217,460
================================================================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
(UNAUDITED)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Capital Appreciation Fund (the "Fund") is a series portfolio of AIM
Variable Insurance Funds (the "Trust"). The Trust is a Delaware business
trust registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), as an open-end series management investment company consisting
of seventeen separate portfolios. At a meeting held on February 3, 2000, the
Board of Directors of AIM Variable Insurance Funds, Inc. approved an
Agreement and Plan of Reorganization which was approved by shareholders of
the Fund on April 10, 2000. Effective May 1, 2000, pursuant to the Agreement
and Plan of Reorganization, AIM Variable Insurance Funds, Inc. was
reorganized from a Maryland Corporation to a Delaware business trust.
Matters affecting each portfolio will be voted on exclusively by the
shareholders of such portfolio. The assets, liabilities and operations of
each portfolio are accounted for separately. Information presented in these
financial statements pertains only to the Fund. Currently, shares of the Fund
are sold only to insurance company separate accounts to fund the benefits of
variable annuity contracts and variable life insurance policies. The Fund's
investment objective is growth of capital.
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 at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates. The following is a summary of the significant accounting policies
followed by the Fund in the preparation of its financial statements.
A. Security Valuations - A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price as of the close of
the customary trading session on the exchange where the security is
principally traded, or lacking any sales on a particular day, the security
is valued at the closing bid price on that day. Each security reported on
the NASDAQ National Market System is valued at the last sales price as of
the close of the customary trading session on the valuation date or absent
a last sales price, at the closing bid price. Debt obligations (including
convertible bonds) are valued on the basis of prices provided by an
independent pricing service. Prices provided by the pricing service may be
determined without exclusive reliance on quoted prices, and may reflect
appropriate factors such as yield, type of issue, coupon rate and maturity
date. Securities for which market prices are not provided by any of the
above methods are valued based upon quotes furnished by independent
sources and are valued at the last bid price in the case of equity
securities and in the case of debt obligations, the mean between the last
bid and asked prices. Securities for which market quotations are not
readily available or are questionable are valued at fair value as
determined in good faith by or under the supervision of the Trust's
officers in a manner specifically authorized by the Board of Trustees.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value. For purposes of
determining net asset value per share, futures and option contracts
generally will be valued 15 minutes after the close of the customary
trading session of the New York Stock Exchange ("NYSE").
AIM V.I. CAPITAL APPRECIATION FUND
<PAGE>
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the customary
trading session of the NYSE which would not be reflected in the computation
of the Fund's net asset value. If events materially affecting the value of
such securities occur during such period, then these securities will be
valued at their fair value as determined in good faith by or under the
supervision of the Board of Trustees.
B. Securities Transactions and Investment Income - Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income is recorded on the accrual basis from settlement date.
Dividend income is recorded on the ex-dividend date.
C. Distributions - Distributions from income and net realized capital gains, if
any, are generally paid annually and recorded on ex-dividend date.
D. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements.
E. Covered Call Options - The Fund may write call options, on a covered basis;
that is, the Fund will own the underlying security. Options written by the
Fund normally will have expiration dates between three and nine months from
the date written. The exercise price of a call option may be below, equal
to, or above the current market value of the underlying security at the time
the option is written. When the Fund writes a covered call option, an
amount equal to the premium received by the Fund is recorded as an asset and
an equivalent liability. The amount of the liability is subsequently
"marked-to-market" to reflect the current market value of the option
written. The current market value of a written option is the mean between
the last bid and asked prices on that day. If a written call option expires
on the stipulated expiration date, or if the Fund enters into a closing
purchase transaction, the Fund realizes a gain (or a loss if the closing
purchase transaction exceeds the premium received when the option was
written) without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is extinguished. If a
written option is exercised, the Fund realizes a gain or a loss from the
sale of the underlying security and the proceeds of the sale are increased
by the premium originally received.
A call option gives the purchaser of such option the right to buy, and
the writer (the Fund) the obligation to sell, the underlying security at
the stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the
call option at any time during the option period. During the option period,
in return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has
retained the risk of loss should the price of the underlying security
decline. During the option period, the Fund may be required at any time to
deliver the underlying security against payment of the exercise price. This
obligation is terminated upon the expiration of the option period or at such
earlier time at which the Fund effects a closing purchase transaction by
purchasing (at a price which may be higher than that received when the call
option was written) a call option identical to the one originally written.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered intoa master investment advisory agreement with AIM
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.65%
of the first $250 million of the Fund's average daily net assets, plus 0.60%
of the Fund's average daily net assets in excess of $250 million.
Pursuant to a master administrative services agreement with AIM, the Fund
has agreed to pay AIM a fee for costs incurred in providing accounting
services and certain administrative services to the Fund and to reimburse AIM
for administrative services fees paid to insurance companies that have agreed
to provide administrative services to the Fund. For the six months ended
June 30, 2000, the Fund paid AIM $978,279 of which AIM retained $62,709 for
accounting services provided.
The Trust has entered into a master distribution agreement with AIM
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund.
Certain officers and trustees of the Trust are officers of AIM and AIM
Distributors.
During the six months ended June 30, 2000, the Fund paid legal fees of
$2,589 for services rendered by Kramer, Levin, Naftalis & Frankel LLP as
counsel to the Board of Trustees. A member of that firm is a trustee of the
Trust.
NOTE 3 - INDIRECT EXPENSES
For the six months ended June 30, 2000, the Fund received reductions in
custodian fees of $6,275 under an expense offset arrangement which resulted
in a reduction of the Fund's total expenses of $6,275.
NOTE 4 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected
by a trustee, in mutual fund shares in accordance with a deferred
compensation plan.
NOTE 5 - BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A.. The Fund may borrow up to the lesser
of (i) $1,000,000,000 or (ii) the limits set by its prospectus for
borrowings. The Fund and other funds advised by AIM which are parties to the
line of credit may borrow on a first come, first served basis. During the six
months ended June 30, 2000, the Fund did not borrow under the line of credit
agreement. The funds which are party to the line of credit are charged a
commitment fee of 0.09% on the unused balance of the committed line. The
commitment fee is allocated among the funds based on their respective average
net assets for the period.
AIM V.I. CAPITAL APPRECIATION FUND
<PAGE>
NOTE 6 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the six months ended June 30, 2000 was
$885,157,844 and $681,519,065, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of June 30, 2000 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $539,985,074
---------------------------------------------------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (18,808,708)
---------------------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation of investment securities $521,176,366
=================================================================================================================================
Cost of investments for tax purposes is $962,928,817.
NOTE 7 - CALL OPTION CONTRACTS
Transactions in call options written during the six months ended June 30, 2000 are summarized as follows:
<CAPTION>
CALL OPTION CONTRACTS
-------------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- -----------
<S> <C> <C>
Beginning of period 145 $ 59,230
-----------------------------------------------------------------------------------------------------------------------------
Written 14,489 7,253,020
-----------------------------------------------------------------------------------------------------------------------------
Closed (8,696) (5,264,617)
-----------------------------------------------------------------------------------------------------------------------------
Exercised (95) (18,199)
-----------------------------------------------------------------------------------------------------------------------------
Expired (424) (188,704)
-----------------------------------------------------------------------------------------------------------------------------
End of period 5,419 $ 1,840,730
=============================================================================================================================
Open call option contracts written as of June 30, 2000 were as follows:
<CAPTION>
JUNE 30,
2000 UNREALIZED
CONTRACT STRIKE NUMBER OF PREMIUMS MARKET APPRECIATION
ISSUE MONTH PRICE CONTRACTS RECEIVED VALUE (DEPRECIATION)
----- -------- ------ --------- --------- --------- --------------
<S> <C> <C> <C> <C> <C> <C>
American Power Conversion Corp. Jul-00 $40 1,390 $ 325,944 $ 338,812 $ (12,868)
--------------------------------------------------------------------------------------------------------------------------------
BJ Services Co. Aug-00 75 156 61,958 28,275 33,683
--------------------------------------------------------------------------------------------------------------------------------
Enron Corp. Aug-00 75 350 114,537 35,000 79,537
--------------------------------------------------------------------------------------------------------------------------------
JDS Uniphase Corp. Aug-00 170 749 230,654 121,712 108,942
--------------------------------------------------------------------------------------------------------------------------------
Paychex, Inc. Aug-00 40 1,111 232,747 451,344 (218,597)
--------------------------------------------------------------------------------------------------------------------------------
Sanmina Corp. Jul-00 80 265 121,114 218,625 (97,511)
--------------------------------------------------------------------------------------------------------------------------------
Scientific-Atlanta, Inc. Jul-00 60 692 298,654 1,072,600 (773,946)
--------------------------------------------------------------------------------------------------------------------------------
Teradyne, Inc. Jul-00 85 706 455,122 163,263 291,859
--------------------------------------------------------------------------------------------------------------------------------
5,419 $1,840,730 $2,429,631 $(588,901)
=================================================================================================================================
NOTE 8 - SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 2000 and the
year ended December 31, 1999 were as follows:
<CAPTION>
JUNE 30, 2000 DECEMBER 31, 1999
------------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- -------------
<S> <C> <C> <C> <C>
Sold 9,069,657 $340,915,246 10,987,866 $ 295,821,855
--------------------------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends -- -- 746,374 23,786,928
--------------------------------------------------------------------------------------------------------------------------------
Issued in connection with acquisitions * -- -- 1,111,610 29,381,435
--------------------------------------------------------------------------------------------------------------------------------
Reacquired (1,831,883) (68,354,177) (6,741,717) (180,069,567)
--------------------------------------------------------------------------------------------------------------------------------
7,237,774 $272,561,069 6,104,133 $ 168,920,651
================================================================================================================================
</TABLE>
* As of the close of business on October 15, 1999, the Fund acquired all the
net assets GT Global Variable America Fund ("Variable America Fund")
pursuant to a plan of reorganization approved by Variable America Fund's
shareholders on August 25, 1999. The acquisition was accomplished by a
tax-free exchange of 1,111,610 shares of the Fund for 1,874,912 shares of
Variable America Fund as of the close of business on October 15, 1999.
Variable America Fund's net assets at that date were $29,381,435,
including $3,238,580 of unrealized appreciation, were combined with those
of the Fund. The net assets of the Fund immediately before the acquisition
were $757,029,224.
AIM V.I. CAPITAL APPRECIATION FUND
<PAGE>
NOTE 9 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
ELEVEN
SIX MONTHS MONTHS
ENDED YEAR ENDED DECEMBER 31, ENDED YEAR ENDED
JUNE 30, ------------------------------------------ DECEMBER 31, JANUARY 31,
2000 1999 1998 1997 1996 1995 1995
---------- ---------- -------- -------- ------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 35.58 $ 25.20 $ 21.75 $ 19.43 $ 16.55 $ 12.05 $ 12.58
-------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income (loss) (0.04) (0.02) 0.02 0.03 0.02 0.04 0.05
-------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities
(both realized and unrealized) 2.97 11.17 4.12 2.58 2.89 4.46 (0.54)
-------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.93 11.15 4.14 2.61 2.91 4.50 (0.49)
-------------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income -- (0.02) (0.04) (0.02) (0.03) -- (0.04)
-------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (0.75) (0.65) (0.27) -- -- --
-------------------------------------------------------------------------------------------------------------------------------
Total distributions -- (0.77) (0.69) (0.29) (0.03) -- (0.04)
-------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 38.51 $ 35.58 $ 25.20 $ 21.75 $ 19.43 $ 16.55 $ 12.05
===============================================================================================================================
Total return(a) 8.24% 44.61% 19.30% 13.51% 17.58% 37.38% (3.91)%
===============================================================================================================================
Ratios/supplemental data:
Net assets, end of period
(000s omitted) $1,503,130 $1,131,217 $647,248 $522,642 $370,063 $212,152 $88,177
===============================================================================================================================
Ratio of expenses toaverage net assets 0.79%(b) 0.73% 0.67% 0.68% 0.73% 0.75%(c) 0.84%
===============================================================================================================================
Ratio of net investment income
(loss) to average net assets (0.25)%(b) (0.06)% 0.11% 0.18% 0.18% 0.39%(c) 0.46%
===============================================================================================================================
Portfolio turnover rate 55% 65% 83% 65% 59% 37% 81%
===============================================================================================================================
</TABLE>
(a) Total returns are not annualized for periods less than one year.
(b) Ratios are annualized and based on average net assets of $1,325,972,731.
(c) Annualized.
AIM V.I. CAPITAL APPRECIATION FUND
<PAGE>
PROXY RESULTS (UNAUDITED)
A Special Meeting of Shareholders of AIM V.I. Capital Appreciation Fund (the
"Fund"), a portfolio of AIM Variable Insurance Funds, Inc. (the "Company"),
reorganized as AIM Variable Insurance Funds, a Delaware business trust (the
"Trust"), was held on April 10, 2000. The meeting was held for the following
purposes:
(1)* To elect ten directors as follows: Charles T. Bauer, Bruce L. Crockett,
Owen Daly II, Edward K. Dunn, Jr., Jack M. Fields, Carl Frischling, Robert
H. Graham, Prema Mathai-Davis, Lewis F. Pennock and Louis S. Sklar.
(2)* To approve an Agreement and Plan of Reorganization which provided for the
reorganization of the company as a Delaware business trust.
(3) To approve a new Master Investment Advisory Agreement with AIM Advisors,
Inc.
(4) To approve changing the fundamental investment restrictions of the Fund.
(5) To approve changing the investment objective of the Fund and making it
non-fundamental.
(6) To ratify the selection of Tait, Weller & Baker as independent accountants
of the Fund for the fiscal year ending in 2000.
The results of the proxy solicitation on the above matters were as follows:
<TABLE>
<CAPTION>
VOTES VOTES WITHHELD/
DIRECTORS/MATTER FOR AGAINST ABSTENTIONS
---------------- ----------- ---------- -----------
<S> <C> <C> <C>
(1)* Charles T. Bauer ............................................................. 336,558,177 N/A 9,129,703
Bruce L. Crockett ............................................................ 337,513,648 N/A 8,174,232
Owen Daly II ................................................................. 336,754,219 N/A 8,933,661
Edward K. Dunn, Jr. ......................................................... 337,481,093 N/A 8,206,787
Jack M. Fields ............................................................... 337,574,973 N/A 8,112,907
Carl Frischling .............................................................. 337,177,860 N/A 8,510,020
Robert H. Graham .............................................................. 337,319,248 N/A 8,368,632
Prema Mathai-Davis ........................................................... 337,262,043 N/A 8,425,837
Lewis F. Pennock .............................................................. 337,440,897 N/A 8,246,983
Louis S. Sklar ................................................................ 337,447,894 N/A 8,239,986
(2)* Approval of an Agreement and Plan of Reorganization
which provided for the reorganization of AIM
Variable Insurance Funds, Inc. as a Delaware business trust ................. 318,213,444 8,412,798 19,061,638
(3) Approval of a new Investment Advisory Agreement ............................. 29,415,853 938,350 2,096,262
(4)(a) Change to Fundamental Restriction on Issuer Diversification ................. 28,614,744 1,413,249 2,422,472
(4)(b) Change to Fundamental Restriction on
Borrowing Money and Issuing Senior Securities ................................. 28,223,383 1,648,628 2,578,454
(4)(c) Change to Fundamental Restriction on Underwriting Securities ................. 28,844,720 1,272,527 2,333,218
(4)(d) Change to Fundamental Restriction on Industry Concentration ................. 28,834,951 1,292,286 2,323,228
(4)(e) Change to Fundamental Restriction on Purchasing or Selling Real Estate ....... 28,698,955 1,482,688 2,268,822
(4)(f) Change to Fundamental Restriction on Purchasing or Selling Commodities ....... 28,505,921 1,689,391 2,255,153
(4)(g) Change to Fundamental Restriction on Making Loans ........................... 28,370,569 1,739,600 2,340,296
(4)(h) Elimination of Fundamental Restriction on
Investing for the Purpose of Control .......................................... 28,259,990 1,535,516 2,654,959
(5) Approval of changing the Investment Objective and Making
it Non-Fundamental ............................................................ 28,050,345 1,720,172 2,679,948
(6) Ratification of the selection of Tait, Weller & Baker as Independent
Accountants of the Fund ....................................................... 30,050,872 471,598 1,927,995
</TABLE>
-----------
* Proposals 1 and 2 required approval by a combined vote of all of the
portfolios of AIM Variable Insurance Funds, Inc.
AIM V.I. CAPITAL APPRECIATION FUND
<PAGE>
<TABLE>
<S> <C> <C> <C>
[GRAPHIC]
TRUSTEES, OFFICERS, BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
AND OTHER SERVICE
PROVIDERS OF AIM Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
VARIABLE INSURANCE Director and Chairman Chairman Suite 100
FUNDS, INC. A I M Management Group Inc. Houston, TX 77046
Robert H. Graham (800) 347-1919
Bruce L. Crockett President
Director INVESTMENT ADVISOR
ACE Limited; Carol F. Relihan
Formerly Director, President, and Senior Vice President and A I M Advisors, Inc.
Chief Executive Officer Secretary 11 Greenway Plaza
COMSAT Corporation Suite 100
Gary T. Crum Houston, TX 77046
Owen Daly II Senior Vice President
Formerly Director TRANSFER AGENT AND CUSTODIAN
Cortland Trust Inc. Dana R. Sutton
Vice President and State Street Bank and Trust Company
Edward K. Dunn Jr. Treasurer 225 Franklin Street
Chairman, Mercantile Mortgage Corp.; Boston, MA 02110
Formerly Vice Chairman, President Robert G. Alley
and Chief Operating Officer, Vice President COUNSEL TO THE FUNDS
Mercantile-Safe Deposit & Trust Co.; and
President, Mercantile Bankshares Stuart W. Coco Freedman, Levy, Kroll &
Vice President Simonds
JackFields 1050 Conn. Avenue, N.W.
Chief Executive Officer Melville B. Cox Washington, D.C. 20036
Texana Global Inc. and Twenty First Vice President
Century Group, Inc.; COUNSEL TO THE TRUSTEES
Formerly, Member of the Karen Dunn Kelley
U.S. House of Representatives Vice President Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue
Carl Frischling Edgar M. Larsen New York, NY 10022
Partner Vice President
Kramer, Levin, Naftalis & Frankel LLP DISTRIBUTOR
Mary J. Benson
Robert H. Graham Assistant Vice President and A I M Distributors, Inc.
Director, President and Chief Executive Assistant Treasurer 11 Greenway Plaza
Officer Suite 100
A I M Management Group Inc. Sheri Morris Houston, TX 77046
Assistant Vice President and
Prema Mathai-Davis Assistant Treasurer
Formerly, Chief Executive Officer, YWCA of
the U.S.A. Renee A. Friedli
Assistant Secretary
Lewis F. Pennock
Attorney P. Michelle Grace
Assistant Secretary
Louis S. Sklar
Executive Vice President, Development and Nancy L. Martin
Operations, Assistant Secretary
Hines Interests
Limited Partnership Ofelia M. Mayo
Assistant Secretary
Lisa A. Moss
Assistant Secretary
Kathleen J. Pflueger
Assistant Secretary
Samuel D. Sirko
Assistant Secretary
</TABLE>
<PAGE>
SEMIANNUAL REPORT / JUNE 30 2000
AIM V.I. HIGH YIELD FUND
AIM V.I. HIGH YIELD FUND SEEKS A HIGH LEVEL OF CURRENT
INCOME BY INVESTING PRIMARILY IN PUBLICLY TRADED DEBT
SECURITIES OF LESS THAN INVESTMENT GRADE, I.E.,
"JUNK BONDS."
[LOGO]
<PAGE>
SEMIANNUAL REPORT / MANAGERS' OVERVIEW
AIM V.I. HIGH YIELD FUND
BOND MARKET CONTINUES TO STRUGGLE
THUS FAR, 2000 HAS BEEN ANOTHER CHALLENGING YEAR FOR CORPORATE BONDS. HOW DID
AIM V.I. HIGH YIELD FUND PERFORM?
Stock-market volatility, rising interest rates and large cash outflows from
high-yield mutual funds weighed heavily on the high-yield bond sector. AIM V.I.
High Yield Fund was not immune to this trend. For the six months ended June 30,
2000, the fund posted a return of -3.21%. While the high-yield market struggled
through much of the reporting period, the six-month return belies an improving
high-yield picture as the fund posted a return of 2.46% for June.
WHAT CONDITIONS INFLUENCED FIXED-INCOME MARKETS FOR THE FIRST HALF OF 2000?
A tight labor market, signs of rising inflation and persistently robust growth
led the Federal Reserve Board (the Fed) to raise interest rates three times in
the first two quarters of this year. The Fed hiked interest rates twice in the
first quarter for a total increase of 50 basis points (a basis point is one
one-hundredth of a percentage point) and raised rates another 50 basis points
again in May. The May
FUND PERFORMANCE
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
As of 6/30/00
<S> <C>
----------------------------------------------
Inception (5/1/98) -0.54%
----------------------------------------------
1 year 0.81
</TABLE>
Past performance cannot guarantee comparable future results. MARKET VOLATILITY
CAN SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS OF AN INVESTMENT MADE
TODAY MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE SHOWN.
IN JUNE, THE CORPORATE BOND SECTOR RECORDED ONE
OF THE BEST RETURNS OF ANY FIXED-INCOME SECTOR,
UP MORE THAN 2% FOR THE MONTH.
------------------------------------------------
increase was the sixth since last summer and the largest in more than five
years. Market observers, however, blew a collective sigh of relief when the Fed,
seeing signs that the economy was slowing, decided not to raise interest rates
again in June.
HOW DID FIXED-INCOME MARKETS REACT TO RISING INTEREST-RATE CONDITIONS?
U.S. Treasury issues handily outpaced corporate issues (particularly high-yield
bonds) on a total-return basis during the first quarter of the year and for the
reporting period. The 30-year Treasury bond in particular had a stellar first
quarter, providing one of the strongest total returns of any security.
Beyond investor flight from a volatile stock market, the government bond
market was buoyed by a unique situation. In January, the Treasury announced its
intention to buy back $30 billion in Treasury securities and perhaps to cease
issuing 30-year Treasury bonds in the not-too-distant future. This (among other
factors) literally turned the Treasury market upside-down, or in bond parlance,
inverted the Treasury yield curve. The yield curve--a graph of Treasury security
yields from three months to 30 years--under normal conditions slopes upward,
with short-term yields lower than longer-term yields. With an inverted curve,
however, short-term Treasuries actually yield more than longer-term ones.
While the Treasury market rallied, corporate bonds struggled at the
beginning of the year but returned to life near the end of the reporting period.
In June, the corporate bond sector recorded one of the best returns of any
fixed-income sector, up more than 2% for the month.
HOW DID HIGH-YIELD BONDS FARE IN THIS DIFFICULT MARKET?
Until nearly June, the high-yield bond market suffered from what could be
considered a difficult technical situation--more cash outflows than inflows and
poor liquidity. In fact, cash outflows from high-yield mutual funds thus far
this year have been higher than all cash inflows into high-yield funds for all
1999. Fortunately, a reversal of this trend began in June, as cash inflows
started averaging $145 million per week.
More outflows than inflows into a market is significant, as it means you
have more sellers than buyers. In most cases, this does not mean there is a
fundamental problem with the company issuing the debt. But when a market
experiences more sellers than buyers, securities' prices generally go down. In
the high-yield market, for instance, to get new issues into the market, they
must be priced attractively. This effectively reprices the rest of the market,
sending existing bond prices down and pushing their yields up.
And yields on high-yield bonds were at some of their highest levels in years
during the first half of 2000, yielding over 13% in May. One has to go back to
the 1990-91 period to find higher yields. Spreads (the difference between yields
on high-yield bonds and comparable maturity Treasuries) were also wide at well
over 600 basis points. Once again, that's probably not due to credit-quality
concerns as much
AIM V.I. HIGH YIELD FUND
<PAGE>
SEMIANNUAL REPORT / MANAGERS' OVERVIEW
PORTFOLIO COMPOSITION
As of 6/30/00, based on total net assets
<TABLE>
<CAPTION>
TOP 10 HOLDINGS
---------------------------------------------------
<S> <C>
1. Winslow Furniture, Inc.--Series B 3.50%
2. Tele1 Europe B.V. (Netherlands) 3.48
3. Alamosa PCS Holdings, Inc. 3.43
4. KMC Telecom Holdings, Inc. 3.05
5. Primus Telecom Group, Inc. 2.77
6. Equinix, Inc. 2.24
7. PTC International Finance II S.A.
(Luxembourg) 2.11
8. Destia Communications, Inc. 2.00
9. D J Orthopedics LLC 1.98
10. Ono Finance PLC
(United Kingdom) 1.87
</TABLE>
<TABLE>
<CAPTION>
TOP 10 INDUSTRIES
---------------------------------------------------
<S> <C>
1. Telephone 14.97%
2. Telecommunications (Long Distance) 13.22
3. Telecommunications
(Cellular/Wireless) 11.74
4. Broadcasting (Television, Radio & Cable) 6.26
5. Gaming, Lottery, & Parimutuel Cos 4.00
6. Manufacturing (Specialized) 3.98
7. Household Furniture & Appliances 3.54
8. Financial (Diversified) 3.09
9. Health Care (Drugs--Generic) 2.73
10. Computers (Peripherals) 2.24
</TABLE>
<TABLE>
[CHART]
<S> <C>
OTHER 7.43%
EQUITIES 2.85%
FOREIGN HIGH YIELD BONDS 2.70%
DOMESTIC HIGH YIELD-BONDS 87.02%
</TABLE>
The fund's portfolio composition is subject to change, and there is no assurance
that the fund will continue to hold any particular security.
as to comparatively rich prices in the Treasury market and rather low demand for
corporate bonds. But as investors return to the high-yield market, those spreads
have narrowed a bit.
HOW DID YOU MANAGE THE FUND?
The fund's relatively small size worked to its advantage as we were able to
pursue some attractive yield opportunities.
The single-B and CCC sectors of the high-yield market underperformed for
much of the year. With the majority of fund assets in single-B credits and a
number of holdings in the CCC sector, the fund suffered a bit. Overall, the fund
has an average credit quality of B, as measured by Standard & Poor's, a widely
known credit-rating agency.
WHAT IS YOUR OUTLOOK FOR THE BOND MARKET?
The near-term outlook for the fixed-income investor depends largely on what
the economy does in coming months. Has the Fed with its string of rate hikes
orchestrated the proverbial "soft landing"?
A string of recent statistical releases suggests that the pace of economic
activity is indeed slowing. If this continues, and if the Fed does not feel the
need to raise rates again in August, that could bring about a recovery in the
bond market.
For the high-yield investor, June provided a reversal of sorts. Attractive
yields enticed investors back into the high-yield sector. Although the past year
has been challenging for the high-yield market, increased demand is encouraging.
Although we cannot predict to what extent or for how long these increased cash
inflows will continue, we believe that high-yield bonds remain an attractive
option for investors looking for high income with some potential appreciation.
-----------------------------------
The performance figures shown here, which represent AIM V.I. High Yield
Fund, are not intended to reflect actual annuity values, and they do not reflect
changes at the separate-account level which (if applied) would lower them. AIM
V.I. High Yield Fund's performance figures are historical, and they reflect the
reinvestment of distributions and changes in net asset value. The fund's
investment return and principal value will fluctuate, so an investor's shares,
when redeemed, may be worth more or less than their original cost.
Government securities (such as U.S. Treasury bills, notes and bonds) offer
a high degree of safety, and they guarantee the timely payment of principal and
interest if held to maturity. Fund shares are not insured, and their value will
vary with market conditions. The fund invests in higher-yielding, lower-rated
corporate bonds, commonly known as junk bonds. These bonds have a greater risk
of price fluctuation and loss of principal than do U.S. government securities
(such as U.S. Treasury bills, notes and bonds) for which the government
guarantees the repayment of principal and interest if held to maturity.
An investment cannot be made in an index. Unless otherwise indicated, index
results include reinvested dividends.
AIM V.I. HIGH YIELD FUND
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE OF INVESTMENTS
JUNE 30, 2000
(UNAUDITED)
PRINCIPAL MARKET
AMOUNT VALUE
U.S. DOLLAR DENOMINATED BONDS & NOTES -
89.70%
<S> <C> <C>
AEROSPACE/DEFENSE - 1.01%
Precision Partners, Inc., Sr. Unsec. Sub. Notes,
12.00%, 03/15/09 $ 500,000 $ 292,500
-------------------------------------------------------------------------------------------
AIR FREIGHT - 0.66%
Atlas Air, Inc., Sr. Unsec. Notes, 10.75%, 08/01/05 185,000 190,550
-------------------------------------------------------------------------------------------
AIRLINES - 1.33%
Amtran, Inc., Sr. Unsec. Gtd. Notes,
10.50%, 08/01/04 205,000 189,113
Dunlop Standard Aerospace Holdings PLC (United
Kingdom), Sr. Unsec. Yankee Sub. Notes,
11.88%, 05/15/09 200,000 197,000
-------------------------------------------------------------------------------------------
386,113
-------------------------------------------------------------------------------------------
AUTO PARTS & EQUIPMENT - 0.77%
Exide Corp., Sr. Notes, 10.00%, 04/15/05 250,000 225,000
-------------------------------------------------------------------------------------------
BROADCASTING
(TELEVISION, RADIO & CABLE) - 6.26%
Adelphia Communications Corp., Sr. Unsec. Notes,
9.38%, 11/15/09 500,000 462,500
Charter Communications Holdings LLC,
Sr. Unsec. Notes, 10.25%, 01/15/10 400,000 390,000
Sr. Unsec. Disc. Notes, 9.92%, 04/01/11(a) 350,000 200,375
Fox Family Worldwide, Inc., Sr. Unsec. Disc. Notes,
10.25%, 11/01/07(a) 250,000 156,250
Knology Holdings, Inc., Sr. Disc. Notes,
11.88%, 10/15/07(a) 250,000 135,625
United Pan-Europe Communications N.V.
(Netherlands) - Series B, Sr. Unsec. Disc. Yankee
Notes, 13.38%, 02/01/10(a) 1,000,000 475,000
-------------------------------------------------------------------------------------------
1,819,750
-------------------------------------------------------------------------------------------
BUILDING MATERIALS - 1.63%
Blount Inc., Sr. Unsec. Gtd. Sub. Notes,
13.00%, 08/01/09 250,000 256,250
Dayton Superior Corp., Sr. Sub. Notes,
13.00%, 06/15/09 (Acquired 06/09/00;
Cost $214,364)(b)(c) 220,000 218,350
-------------------------------------------------------------------------------------------
474,600
-------------------------------------------------------------------------------------------
CHEMICALS (DIVERSIFIED) - 1.57%
Avecia Group PLC (United Kingdom), Sr. Unsec. Gtd.
Yankee Notes, 11.00%, 07/01/09 200,000 197,000
Sterling Chemicals, Inc. - Series B, Sr. Gtd. Sec. Sub.
Notes, 12.38%, 07/15/06 250,000 258,750
-------------------------------------------------------------------------------------------
455,750
-------------------------------------------------------------------------------------------
COMPUTERS (NETWORKING) - 0.51%
Convergent Communications - Series B, Sr. Unsec.
Notes, 13.00%, 04/01/08 210,000 147,525
-------------------------------------------------------------------------------------------
COMPUTERS (PERIPHERALS) - 2.24%
Equinix Inc., Sr. Notes, 13.00%, 12/01/07(b)(d) $ 630,000 $ 650,475
-------------------------------------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES) - 1.65%
Globix Corp., Sr. Unsec. Notes, 12.50%, 02/01/10 580,000 479,950
-------------------------------------------------------------------------------------------
ELECTRONICS (COMPONENT DISTRIBUTORS) - 1.49%
Cherokee International LCC - Series B, Sr. Unsec.
Sub. Notes, 10.50%, 05/01/09 500,000 432,500
-------------------------------------------------------------------------------------------
ENGINEERING & CONSTRUCTION - 0.86%
Morrison Knudsen Corp., Sr. Notes,
11.00%, 07/01/10 (Acquired 06/28/00;
Cost $248,155)(c) 250,000 249,375
-------------------------------------------------------------------------------------------
ENTERTAINMENT - 0.48%
Callahan Nordrhein Westfalen (Denmark), Sr. Yankee
Notes, 14.00%, 07/15/10 (Acquired 06/29/00;
Cost $140,000)(c) 140,000 140,175
-------------------------------------------------------------------------------------------
FINANCIAL (DIVERSIFIED) - 2.81%
Madison River Capital, Sr. Notes,
13.25%, 03/01/10(d) 300,000 274,500
ONO Finance PLC (United Kingdom), Sr. Gtd. Sub.
Euro Notes, 13.00%, 05/01/09 550,000 541,750
-------------------------------------------------------------------------------------------
816,250
-------------------------------------------------------------------------------------------
GAMING, LOTTERY &
PARIMUTUEL COMPANIES - 4.00%
MGM Grand, Inc., Sr. Unsec. Gtd. Sub. Notes,
9.75%, 06/01/07 250,000 255,000
Resort at Summerlin LP - Series B, Sr. Unsec. Sub.
Notes, 13.00%, 12/15/07 608,000 398,240
Venetian Casino Resort LLC, Sec. Gtd. Mortgage
Notes, 12.25%, 11/15/04 500,000 507,500
-------------------------------------------------------------------------------------------
1,160,740
-------------------------------------------------------------------------------------------
HEALTH CARE (DRUGS - GENERIC & OTHER) - 2.73%
King Pharmaceuticals, Inc., Sr. Unsec. Gtd. Sub.
Notes, 10.75%, 02/15/09 270,000 280,800
Warner Chilcott, Inc., Sr. Unsec. Gtd. Notes,
12.63%, 02/15/08(d) 500,000 512,500
-------------------------------------------------------------------------------------------
793,300
-------------------------------------------------------------------------------------------
HEALTH CARE
(MEDICAL PRODUCTS & SUPPLIES) - 1.98%
DJ Orthopedics, LLC, Sr. Unsec. Gtd. Sub. Notes,
12.63%, 06/15/09 600,000 574,500
-------------------------------------------------------------------------------------------
HOMEBUILDING - 0.76%
Lennar Corp., Sr. Notes, 9.95%, 05/01/10(d) 225,000 221,625
-------------------------------------------------------------------------------------------
HOUSEHOLD FURNISHING & APPLIANCES - 3.50%
Winsloew Furniture, Inc. - Series B, Sr. Gtd. Sub.
Notes, 12.75%, 08/15/07 1,100,000 1,017,500
-------------------------------------------------------------------------------------------
AIM V.I. HIGH YIELD FUND
<PAGE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
LEISURE TIME (PRODUCTS) - 1.86%
Marvel Enterprises, Inc., Sr. Unsec. Gtd. Sub. Notes,
12.00%, 06/15/09 $ 700,000 $ 540,750
--------------------------------------------------------------------------------------------
MANUFACTURING (SPECIALIZED) - 3.98%
Brand Scaffold Services, Inc., Sr. Unsec. Notes,
10.25%, 02/15/08 300,000 265,500
Flextronics International Ltd. (Singapore), Sr. Sub
Yankee Notes, 9.88%, 07/01/10 (Acquired
06/26/00; Cost $138,908)(c) 140,000 142,450
MMI Products Inc. - Series B, Sr. Unsec. Sub. Notes,
11.25%, 04/15/07 275,000 270,875
Omega Cabinets, Sr. Sub. Notes, 10.50%, 06/15/07 250,000 226,250
Tekni-Plex Inc., Sr. Sub. Notes, 12.75%, 06/15/10
(Acquired 06/15/00; Cost $246,575)(c) 250,000 250,625
--------------------------------------------------------------------------------------------
1,155,700
--------------------------------------------------------------------------------------------
METALS MINING - 1.16%
Bulong Operations PTV Ltd. (Australia), Sr. Sec.
Yankee Notes, 12.50%, 12/15/08(e) 700,000 337,750
--------------------------------------------------------------------------------------------
OIL & GAS
(EXPLORATION & PRODUCTION) - 2.23%
Comstock Resources, Inc., Sr. Unsec. Gtd. Sub. Notes,
11.25%, 05/01/07 250,000 255,000
Frontier Oil Corp., Sr. Unsec. Notes, 11.75%,
11/15/09 250,000 251,250
Pioneer Natural Resources Co., Sr. Unsec. Gtd. Notes,
9.63%, 04/01/10 135,000 140,400
--------------------------------------------------------------------------------------------
646,650
--------------------------------------------------------------------------------------------
OIL & GAS (REFINING & MARKETING) - 0.32%
Texas Petrochemical Corp., Sr. Unsec. Sub. Notes,
11.13%, 07/01/06 110,000 94,050
--------------------------------------------------------------------------------------------
PHOTOGRAPHY/IMAGING - 1.52%
Polaroid Corp., Sr. Unsec. Notes,
11.50%, 02/15/06 420,000 440,475
--------------------------------------------------------------------------------------------
RAILROADS - 0.83%
TFM S.A. de C.V. (Mexico), Sr. Yankee Gtd. Disc.
Notes, 11.75%, 06/15/09(a) 350,000 242,375
--------------------------------------------------------------------------------------------
RETAIL (SPECIALTY) - 0.48%
CSK Auto Inc. - Series A, Sr. Gtd. Sub. Deb., 11.00%,
11/01/06 150,000 138,750
--------------------------------------------------------------------------------------------
SERVICES (COMMERCIAL & CONSUMER) - 0.54%
Avis Group Holdings, Inc., Sr. Unsec. Gtd. Sub. Notes,
11.00%, 05/01/09 150,000 157,125
--------------------------------------------------------------------------------------------
SERVICES (EMPLOYMENT) - 0.74%
MSX International, Inc., Sr. Unsec. Gtd. Sub. Notes,
11.38%, 01/15/08 225,000 213,750
--------------------------------------------------------------------------------------------
TELECOMMUNICATIONS
(CELLULAR/WIRELESS) - 11.47%
AirGate PCS, Inc., Sr. Disc. Sub. Notes,
13.50%, 10/01/09(a)(b) $ 500,000 $ 297,500
Alamosa PCS Holdings, Inc., Sr. Unsec. Gtd. Disc.
Notes, 12.88%, 02/15/10(a) 1,900,000 997,500
Crown Castle International Corp.,
Sr. Notes, 10.75%, 08/01/11 100,000 102,000
Sr. Unsec. Disc. Notes, 10.63%, 11/15/07(a) 200,000 149,500
IPCS, Inc., Sr. Disc. Notes, 14.00%, 07/15/10(a)(b) 100,000 52,000
KMC Telecom Holdings, Inc., Sr. Unsec. Notes,
13.50%, 05/15/09 1,000,000 885,000
Metrocall, Inc., Sr. Sub. Notes, 11.88%, 06/15/05 350,000 250,250
Spectrasite Holdings, Inc.,
Sr. Disc. Notes, 12.00%, 07/15/08(a) 400,000 266,000
Sr. Unsec. Disc. Notes, 11.25%, 04/15/09(a) 270,000 157,950
UbiquiTel Operating Co., Sr. Gtd. Disc. Notes,
14.00%, 04/15/10(a)(b)(d) 300,000 175,125
--------------------------------------------------------------------------------------------
3,332,825
--------------------------------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 12.07%
360networks Inc. (Canada), Sr. Unsec. Yankee Notes,
12.00%, 08/01/09 500,000 477,500
Destia Communications, Inc., Sr. Unsec. Notes,
13.50%, 07/15/07 650,000 581,750
Primus Telecommunications Group, Inc., Sr. Unsec.
Notes, 12.75%, 10/15/09 1,000,000 805,000
RSL Communications PLC (United Kingdom), Sr.
Unsec. Gtd. Yankee Notes, 12.88%, 03/01/10
(Acquired 03/23/00; Cost $388,000)(c) 400,000 298,000
Tele1 Europe B.V. (Netherlands), Sr. Unsec. Yankee
Notes, 13.00%, 05/15/09(b) 1,000,000 1,010,000
Versatel Telecom International N.V. (Netherlands),
Sr. Unsec. Yankee Notes, 13.25%, 05/15/08 200,000 205,000
Sr. Yankee Notes, 13.25%, 05/15/08 100,000 102,500
Viatel, Inc., Sr. Unsec. Notes, 11.50%, 03/15/09 34,000 26,010
--------------------------------------------------------------------------------------------
3,505,760
--------------------------------------------------------------------------------------------
TELEPHONE - 13.90%
GT Group Telecom Inc. (Canada), Sr. Disc. Yankee
Notes, 13.25%, 02/01/10(a)(b)(d) 500,000 277,500
ICG Services, Inc., Sr. Unsec. Disc. Notes,
10.00%, 02/15/08(a) 600,000 333,624
IMPSAT Fiber Networks, Inc., Sr. Yankee Notes,
13.75%, 02/15/05 (Acquired 06/12/00;
Cost $239,594)(c) 275,000 248,875
Intermedia Communications, Inc. - Series B, Sr. Disc.
Notes, 11.25%, 07/15/07(a) 375,000 298,125
Jazztel PLC (United Kingdom), Sr. Unsec. Yankee
Notes, 14.00%, 04/01/09 500,000 467,500
Logix Communications Enterprises, Sr. Unsec. Notes,
12.25%, 06/15/08 550,000 193,875
AIM V.I. HIGH YIELD FUND
<PAGE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
<S> <C> <C>
TELEPHONE - (CONTINUED)
NEXTLINK Communications, Inc., Sr. Unsec. Disc.,
Notes, 12.25%, 06/01/09(a) $ 500,000 $ 312,500
NTL Communications Corp. - Series B, Sr. Unsec.
Notes, 12.38%, 10/01/08 750,000 487,500
PF.Net Communications Inc., Sr. Notes, 13.75%,
05/15/10 (Acquired 05/05/00;
Cost $300,000)(b)(c) 300,000 303,750
PTC International Finance II S.A. (Luxembourg), Sr.
Unsec. Gtd. Yankee Sub. Notes, 11.25%, 12/01/09 600,000 612,000
U.S. Xchange LLC, Sr. Unsec. Notes,
15.00%, 07/01/08 460,000 502,550
--------------------------------------------------------------------------------------------
4,037,799
--------------------------------------------------------------------------------------------
TRUCKERS - 0.81%
North American Van Lines Inc., Sr. Sub. Notes,
13.38%, 12/01/09(d) 250,000 236,250
--------------------------------------------------------------------------------------------
TRUCKS & PARTS - 0.55%
FleetPride Inc., Sr. Unsec. Gtd. Sub. Notes,
12.00%, 08/01/05 220,000 159,500
--------------------------------------------------------------------------------------------
WASTE MANAGEMENT - 1.00%
Allied Waste North America Inc. - Series B, Sr.
Unsec. Gtd. Sub. Notes, 10.00%, 08/01/09 345,000 289,800
--------------------------------------------------------------------------------------------
Total U.S. Dollar Denominated Bonds & Notes
(Cost $27,831,925) 26,057,487
--------------------------------------------------------------------------------------------
<CAPTION>
SHARES
STOCKS & OTHER EQUITY INTERESTS - 1.46%
<S> <C> <C>
SERVICES (COMPUTER SYSTEMS) - 0.04%
Convergent Communications, Inc.(f) 1,350 10,800
--------------------------------------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 0.27%
AirGate PCS, Inc.(f) 365 19,194
World Access, Inc. - Series D, Conv. Pfd. (Acquired
03/03/00; Cost $97,271)(c)(f) 93 59,752
--------------------------------------------------------------------------------------------
78,946
--------------------------------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 1.15%
FirstWorld Communications Inc. - Class B(f) 2,765 29,033
Tele1 Europe Holding A.B. - ADR (Netherlands)(f) 11,448 138,091
Versatel Telecom International N.V. - ADR
(Netherlands)(f) 3,868 166,808
--------------------------------------------------------------------------------------------
333,932
--------------------------------------------------------------------------------------------
Total Stocks & Other Equity Interests
(Cost $382,763) 423,678
--------------------------------------------------------------------------------------------
WARRANTS - 1.39%
COMPUTERS (PERIPHERALS) - 0.00%
Equinix Inc., expiring 12/01/07 (Acquired 05/30/00;
Cost $0)(c)(g) 630 0
--------------------------------------------------------------------------------------------
FINANCIAL (DIVERSIFIED) - 0.28%
ONO Finance PLC (United Kingdom), expiring
05/31/09(g) 550 $ 82,637
--------------------------------------------------------------------------------------------
GAMING, LOTTERY & PARIMUTUEL COMPANIES - 0.00%
Resort At Summerlin LP, expiring 12/15/07(g) 467 0
--------------------------------------------------------------------------------------------
HOUSEHOLD FURNISHING & APPLIANCES - 0.04%
Winsloew Furniture, Inc., expiring 08/15/07
(Acquired 12/06/99; Cost $0)(c)(g) 1,100 11,000
--------------------------------------------------------------------------------------------
METAL FABRICATORS - 0.00%
Gulf States Steel, Inc., expiring 04/15/03(g) 60 0
--------------------------------------------------------------------------------------------
SHIPPING - 0.00%
Millenium Seacarriers, expiring 07/15/03(g) 100 150
--------------------------------------------------------------------------------------------
TELECOMMUNICATIONS (LONG DISTANCE) - 0.00%
Long Distance International, Inc., expiring
04/13/08(g) 140 0
--------------------------------------------------------------------------------------------
TELEPHONE - 1.07%
Jazztel PLC (United Kingdom), expiring 04/01/09
(Acquired 03/31/99; Cost $0)(c)(g) 2,250 311,638
--------------------------------------------------------------------------------------------
Total Warrants (Cost $170) 405,425
--------------------------------------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C>
U.S. TREASURY NOTES - 3.51%
6.63%, 05/31/02 $ 300,000 301,329
6.75%, 05/15/05 500,000 511,955
6.50%, 02/15/10 200,000 206,876
--------------------------------------------------------------------------------------------
Total U.S. Treasury Notes
(Cost $1,014,948) 1,020,160
--------------------------------------------------------------------------------------------
<CAPTION>
SHARES
<S> <C> <C>
MONEY MARKET FUNDS - 3.20%
STIC Liquid Assets Portfolio(h) 465,240 465,240
STIC Prime Portfolio(h) 465,240 465,240
--------------------------------------------------------------------------------------------
Total Money Market Funds (Cost $930,480) 930,480
--------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 99.26%
(COST $30,160,286) 28,837,230
--------------------------------------------------------------------------------------------
OTHER ASSETS LESS LIABILITIES - 0.74% 213,539
--------------------------------------------------------------------------------------------
NET ASSETS - 100.00% $29,050,769
--------------------------------------------------------------------------------------------
</TABLE>
AIM V.I. HIGH YIELD FUND
<PAGE>
Investment Abbreviations:
ADR - American Depositary Receipt
Conv. - Convertible
Ctfs. - Certificates
Deb. - Debentures
Disc. - Discounted
Gtd. - Guaranteed
Pfd. - Preferred
Rts. - Rights
Sec. - Secured
Sr. - Senior
Sub. - Subordinated
Unsec. - Unsecured
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Discounted bond at purchase. The interest rate represents the coupon rate
at which the bond will accrue at a specified future date.
(b) Consists of more than one class of securities traded together as a unit. In
addition to the security listed, each unit contains warrants that enable
the holder to purchase shares of the issuer at a predetermined price.
(c) Restricted security. May be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1933, as amended. The valuation of these securities has been determined in
accordance with procedures established by the Board of Trustees. The
aggregate market value of these securities at 06/30/00 was $2,233,983 which
represented 7.69% of the Fund's net assets.
(d) Represents a security sold under Rule 144A, which is exempt from
registration and may be resold to qualified institutional buyers in
accordance with the provisions of Rule 144A under the Securities Act of
1993, as amended.
(e) Defaulted security. Currently, the issuer is in default with respect to
interest payments.
(f) Non-income producing security.
(g) Acquired as part of a unit with or in exchange for other securities.
(h) The money market fund has the same investment advisor as the Fund.
SEE NOTES TO FINANCIAL STATEMENTS.
AIM V.I. HIGH YIELD FUND
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments, at market value (cost $30,160,286) $28,837,230
------------------------------------------------------------------------------------------
Cash 43,750
------------------------------------------------------------------------------------------
Receivables for:
Investments sold 49,688
------------------------------------------------------------------------------------------
Fund shares sold 7,856
------------------------------------------------------------------------------------------
Dividends and interest 652,301
------------------------------------------------------------------------------------------
Investment for deferred compensation plan 9,946
------------------------------------------------------------------------------------------
Total assets 29,600,771
------------------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 488,563
------------------------------------------------------------------------------------------
Fund shares reacquired 49
------------------------------------------------------------------------------------------
Deferred compensation plan 9,946
------------------------------------------------------------------------------------------
Accrued advisory fees 6,786
------------------------------------------------------------------------------------------
Accrued administrative services fees 24,058
------------------------------------------------------------------------------------------
Accrued trustees' fees 1,727
------------------------------------------------------------------------------------------
Accrued operating expenses 18,873
------------------------------------------------------------------------------------------
Total liabilities 550,002
------------------------------------------------------------------------------------------
Net assets applicable to shares outstanding $29,050,769
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Outstanding 3,326,443
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
Net asset value, offering and redemption price per share $ 8.73
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
INVESTMENT INCOME:
<S> <C>
Interest $1,683,906
------------------------------------------------------------------------------------------
Dividends 54,520
------------------------------------------------------------------------------------------
Total investment income 1,738,426
------------------------------------------------------------------------------------------
EXPENSES:
Advisory fees 84,757
------------------------------------------------------------------------------------------
Administrative services fees 44,777
------------------------------------------------------------------------------------------
Custodian fees 6,940
------------------------------------------------------------------------------------------
Trustee's fees 3,017
------------------------------------------------------------------------------------------
Professional fees 17,347
------------------------------------------------------------------------------------------
Other 7,221
------------------------------------------------------------------------------------------
Total expenses 164,059
------------------------------------------------------------------------------------------
Less: Fees waived (10,805)
------------------------------------------------------------------------------------------
Expenses paid indirectly (3,131)
------------------------------------------------------------------------------------------
Net expenses 150,123
------------------------------------------------------------------------------------------
Net investment income 1,588,303
------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) FROM INVESTMENT
SECURITIES:
Net realized gain (loss) from investment securities (1,228,059)
------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of
investment securities (1,293,378)
------------------------------------------------------------------------------------------
Net gain (loss) from investment securities (2,521,437)
------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations $ (933,134)
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
AIM V.I. HIGH YIELD FUND
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND THE YEAR ENDED DECEMBER 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
----------- ------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 1,588,303 $ 1,834,622
-----------------------------------------------------------------------------------------------------------------------------
Net realized gain (loss) from investment securities (1,228,059) (517,194)
-----------------------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of investment securities (1,293,378) 296,072
-----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations (933,134) 1,613,500
-----------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income -- (1,900,359)
-----------------------------------------------------------------------------------------------------------------------------
Share transactions -- net 4,715,717 17,588,744
-----------------------------------------------------------------------------------------------------------------------------
Net increase in net assets 3,782,583 17,301,885
-----------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 25,268,186 7,966,301
-----------------------------------------------------------------------------------------------------------------------------
End of period $29,050,769 $25,268,186
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
Shares of beneficial interest $30,966,541 $26,250,824
-----------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income 1,525,667 (62,636)
-----------------------------------------------------------------------------------------------------------------------------
Undistributed net realized gain (loss) from investment securities (2,118,383) (890,324)
-----------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investment securities (1,323,056) (29,678)
-----------------------------------------------------------------------------------------------------------------------------
$29,050,769 $25,268,186
-----------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
(UNAUDITED)
NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. High Yield Fund (the "Fund") is a series portfolio of AIM Variable
Insurance Funds (the "Trust"). The Trust is a Delaware business trust registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end series management investment company consisting of seventeen separate
portfolios. At a meeting held on February 3, 2000, the Board of Directors of AIM
Variable Insurance Funds, Inc. approved an Agreement and Plan of Reorganization
which was approved by shareholders of the Fund on April 10, 2000. Effective May
1, 2000, pursuant to the Agreement and Plan of Reorganization, AIM Variable
Insurance Funds, Inc. was reorganized from a Maryland Corporation to a Delaware
business trust. Matters affecting each portfolio will be voted on exclusively by
the shareholders of such portfolio. The assets, liabilities and operations of
each portfolio are accounted for separately. Information presented in these
financial statements pertains only to the Fund. Currently, shares of the Fund
are sold only to insurance company separate accounts to fund the benefits of
variable annuity contracts and variable life insurance policies. The Fund's
investment objective is to achieve a high level of current income by investing
primarily in publicly traded non-investment grade debt securities. The Fund will
also consider the possibility of capital growth when it purchases and sells
securities. Debt securities of less than investment grade are considered
"high-risk" securities (commonly referred to as junk bonds). These bonds may
involve special risks in addition to the risks associated with investment higher
rated debt securities. High yield bonds may be more susceptible to real or
perceived adverse economic conditions than higher grade bonds. Also, the
secondary market in which high yield bonds are traded may be less liquid than
the market for higher grade bonds.
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 at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the preparation of its financial statements.
A. Security Valuations -- A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price as of the close of the
customary trading session on the exchange where the security is
principally traded, or lacking any sales on a particular day, the security
is valued at the closing bid price on that day. Each security reported on
the NASDAQ National Market System is valued at the last sales price as of
the close of the customary trading session on the valuation date or
absent a last sales price, at the closing bid price. Debt obligations
(including convertible bonds) are valued on the basis of prices provided
by an independent pricing service. Prices provided by the pricing service
may be determined without exclusive reliance on quoted prices, and may
reflect appropriate factors such as yield, type of issue, coupon rate and
maturity date. Securities for which market prices are not provided by
any of the above methods are valued based upon quotes furnished by
independent sources and are valued at the last bid price in the case of
equity securities and in the case of debt obligations, the mean between
the last bid and asked prices. Securities for which market quotations are
not readily available or are questionable are valued at fair value as
AIM V.I. HIGH YIELD FUND
<PAGE>
determined in good faith by or under the supervision of the Trust's officers
in a manner specifically authorized by the Board of Trustees. Short-term
obligations having 60 days or less to maturity are valued at amortized cost
which approximates market value. For purposes of determining net asset value
per share, futures and option contracts generally will be valued 15 minutes
after the close of the customary trading session of the New York Stock
Exchange ("NYSE").
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the
customary trading session of the NYSE which would not be reflected in the
computation of the Fund's net asset value. If events materially affecting
the value of such securities occur during such period, then these securities
will be valued at their fair value as determined in good faith by or under
the supervision of the Board of Trustees.
B. Securities Transactions and Investment Income -- Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income is recorded on the accrual basis from settlement date.
Dividend income is recorded on the ex-dividend date.
C. Distributions -- Distributions from income and net realized capital gains,
if any, are generally paid annually and recorded on ex-dividend date.
D. Federal Income Taxes -- The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income
taxes is recorded in the financial statements. The Fund has a capital loss
carryforward of $792,625 which may be carried forward to offset future
taxable gains, if any, which expires in varying increments, if not
previously utilized, in the year 2007.
NOTE 2 -- ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.625% on
the first $200 million of the Fund's average daily net assets, plus 0.55% on the
next $300 million of the Fund's average daily net assets, plus 0.50% on the next
$500 million of the Fund's average daily net assets, plus 0.45% on the Fund's
average daily net assets in excess of $1 billion. During the six months ended
June 30, 2000, AIM waived fees of $10,805.
Pursuant to a master administrative services agreement with AIM, the Fund has
agreed to pay AIM a fee for costs incurred in providing accounting services and
certain administrative services to the Fund and to reimburse AIM for
administrative services fees paid to insurance companies that have agreed to
provide administrative services to the Fund. For the six months ended June 30,
2000, the Fund paid AIM $44,777 of which AIM retained $25,000 for accounting
services provided.
The Trust has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund.
Certain officers and trustees of the Trust are officers of AIM and AIM
Distributors.
During the six months ended June 30, 2000, the Fund paid legal fees of $1,734
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Board of Trustees. A member of that firm is a trustee of the Trust.
NOTE 3 -- INDIRECT EXPENSES
For the six months ended June 30, 2000, the Fund received reductions in
custodian fees of $3,131 under an expense offset arrangement which resulted in a
reduction of the Fund's total expenses of $3,131.
NOTE 4 -- TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by a
trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 5 -- BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A.. The Fund may borrow up to the lesser
of (i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings.
The Fund and other funds advised by AIM which are parties to the line of credit
may borrow on a first come, first served basis. During the six months ended June
30, 2000, the Fund did not borrow under the line of credit agreement. The funds
which are party to the line of credit are charged a commitment fee of 0.09% on
the unused balance of the committed line. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 6 -- INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the six months ended June 30, 2000 was
$17,028,284 and $9,925,459, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of June 30, 2000 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $ 1,073,639
----------------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (2,396,695)
----------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investment securities $(1,323,056)
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
</TABLE>
Investments have the same cost for tax and financial statement purposes.
AIM V.I. HIGH YIELD FUND
<PAGE>
NOTE 7 -- SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 2000 and the
year ended December 31, 1999 were as follows:
<TABLE>
<CAPTION>
JUNE 30, 2000 DECEMBER 31, 1999
----------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Sold 838,406 $ 7,539,754 2,064,369 $19,155,692
-------------------------------------------------------------------------------------------------------------
Issued as reinvestment of dividends -- -- 211,621 1,900,359
-------------------------------------------------------------------------------------------------------------
Reacquired (312,008) (2,824,037) (377,620) (3,467,307)
-------------------------------------------------------------------------------------------------------------
526,398 $ 4,715,717 1,898,370 $17,588,744
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE 8 -- FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
MAY 1, 1998
(DATE OPERATIONS
SIX MONTHS ENDED YEAR ENDED COMMENCED) TO
JUNE 30, DECEMBER 31, DECEMBER 31,
2000(a) 1999(a) 1998
------------------- ------------ -----------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 9.02 $ 8.84 $10.00
----------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.52 1.03 0.39
----------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both realized and unrealized) (0.81) (0.10) (1.15)
----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (0.29) 0.93 (0.76)
----------------------------------------------------------------------------------------------------------------------------------
Less distributions from net investment income -- (0.75) (0.40)
----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 8.73 $ 9.02 $ 8.84
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
Total return(b) (3.21)% 10.52% (7.61)%
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
Ratios/supplemental data:
Net assets, end of period (000s omitted) $ 29,051 $ 25,268 $7,966
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets:
With fee waivers 1.13%(c) 1.14% 1.13%(d)
----------------------------------------------------------------------------------------------------------------------------------
Without fee waivers 1.21%(c) 1.42% 2.50%(d)
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets 11.74%(c) 11.07% 9.75%(d)
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate 40% 127% 39%
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Calculated using average shares outstanding.
(b) Total returns are not annualized for periods less than one year.
(c) Ratios are annualized and based on average net assets of $27,217,706.
(d) Annualized.
AIM V.I. HIGH YIELD FUND
<PAGE>
PROXY RESULTS (UNAUDITED)
A Special Meeting of Shareholders of AIM V.I. High Yield Fund (the "Fund"), a
portfolio of AIM Variable Insurance Funds, Inc. (the "Company"), reorganized as
AIM Variable Insurance Funds, a Delaware business trust (the "Trust"), was held
on April 10, 2000. The meeting was held for the following purposes:
(1)* To elect ten directors as follows: Charles T. Bauer, Bruce L. Crockett,
Owen Daly II, Edward K. Dunn, Jr., Jack M. Fields, Carl Frischling,
Robert H. Graham, Prema Mathai-Davis, Lewis F. Pennock and Louis S. Sklar.
(2)* To approve an Agreement and Plan of Reorganization which provided for the
reorganization of the company as a Delaware business trust.
(3) To approve a new Master Investment Advisory Agreement with A I M Advisors,
Inc.
(4) To approve changing the fundamental investment restrictions of the Fund.
(5) To approve changing the investment objective of the Fund and making it
non-fundamental.
(6) To ratify the selection of Tait, Weller & Baker as independent accountants
of the Fund for the fiscal year ending in 2000.
The results of the proxy solicitation on the above matters were as follows:
<TABLE>
<CAPTION>
VOTES VOTES WITHHELD/
DIRECTORS/MATTER FOR AGAINST ABSTENTIONS
---------------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
(1)* Charles T. Bauer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 336,558,177 N/A 9,129,703
Bruce L. Crockett . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337,513,648 N/A 8,174,232
Owen Daly II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 336,754,219 N/A 8,933,661
Edward K. Dunn, Jr. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337,481,093 N/A 8,206,787
Jack M. Fields . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337,574,973 N/A 8,112,907
Carl Frischling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337,177,860 N/A 8,510,020
Robert H. Graham . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337,319,248 N/A 8,368,632
Prema Mathai-Davis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337,262,043 N/A 8,425,837
Lewis F. Pennock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337,440,897 N/A 8,246,983
Louis S. Sklar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337,447,894 N/A 8,239,986
(2)* Approval of an Agreement and Plan of Reorganization
which provided for the reorganization of AIM Variable
Insurance Funds, Inc. as a Delaware business trust . . . . . . . . . . . . . . . 318,213,444 8,412,798 19,061,638
(3) Approval of a new Investment Advisory Agreement . . . . . . . . . . . . . . . . 2,367,341 31,701 221,664
(4)(a) Change to Fundamental Restriction on Issuer Diversification . . . . . . . . . . 2,177,795 70,631 372,280
(4)(b) Change to Fundamental Restriction on Borrowing Money
and Issuing Senior Securities . . . . . . . . . . . . . . . . . . . . . . . . . 2,244,360 81,853 294,493
(4)(c) Change to Fundamental Restriction on Underwriting Securities . . . . . . . . . 2,293,606 54,236 272,864
(4)(d) Change to Fundamental Restriction on Industry Concentration . . . . . . . . . . 2,262,427 92,811 265,468
(4)(e) Change to Fundamental Restriction on Purchasing or Selling Real Estate . . . . 2,254,266 100,855 265,585
(4)(f) Change to Fundamental Restriction on Purchasing or Selling Commodities . . . . 2,242,258 93,069 285,379
(4)(g) Change to Fundamental Restriction on Making Loans . . . . . . . . . . . . . . . 2,248,167 106,411 266,128
(4)(h) Elimination of Fundamental Restriction on
Investing for the Purpose of Control . . . . . . . . . . . . . . . . . . . . . . 2,215,992 132,393 272,321
(5) Ratification of the selection of Tait, Weller & Baker as Independent
Accountants of the Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,371,454 16,938 232,314
-----------
</TABLE>
* Proposals 1 and 2 required approval by a combined vote of all of the
portfolios of AIM Variable Insurance Funds, Inc.
AIM V.I. HIGH YIELD FUND
<PAGE>
<TABLE>
<S> <C> <C> <C>
[GRAPHIC]
TRUSTEES, OFFICERS, BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
AND OTHER SERVICE
PROVIDERS OF AIM Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
VARIABLE INSURANCE Director and Chairman Chairman Suite 100
FUNDS, INC. A I M Management Group Inc. Houston, TX 77046
Robert H. Graham (800) 347-1919
Bruce L. Crockett President
Director
ACE Limited; Carol F. Relihan INVESTMENT ADVISOR
Formerly Director, President, and Senior Vice President and
Chief Executive Officer Secretary A I M Advisors, Inc.
COMSAT Corporation 11 Greenway Plaza
Gary T. Crum Suite 100
Senior Vice President Houston, TX 77046
Owen Daly II
Formerly Director Dana R. Sutton
Cortland Trust Inc. Vice President and TRANSFER AGENT AND CUSTODIAN
Treasurer
Edward K. Dunn Jr. State Street Bank and Trust Company
Chairman, Mercantile Mortgage Corp.; Robert G. Alley 225 Franklin Street
Formerly Vice Chairman, President Vice President Boston, MA 02110
and Chief Operating Officer,
Mercantile-Safe Deposit & Trust Co.; and Stuart W. Coco
President, Mercantile Bankshares Vice President COUNSEL TO THE FUNDS
Melville B. Cox Freedman, Levy, Kroll &
Jack Fields Vice President Simonds
Chief Executive Officer 1050 Conn. Avenue, N.W.
Texana Global Inc. and Twenty First Karen Dunn Kelley Washington, D.C. 20036
Century Group, Inc.; Vice President
Formerly, Member of the
U.S. House of Representatives Edgar M. Larsen COUNSEL TO THE TRUSTEES
Vice President
Kramer, Levin, Naftalis & Frankel LLP
Carl Frischling 919 Third Avenue
Partner Mary J. Benson New York, NY 10022
Kramer, Levin, Naftalis & Frankel LLP Assistant Vice President and
Assistant Treasurer
Robert H. Graham DISTRIBUTOR
Director, President and Chief Executive Sheri Morris
Officer Assistant Vice President and A I M Distributors, Inc.
A I M Management Group Inc. Assistant Treasurer 11 Greenway Plaza
Suite 100
Prema Mathai-Davis Renee A. Friedli Houston, TX 77046
Formerly, Chief Executive Assistant Secretary
Officer, YWCA of the U.S.A.
P. Michelle Grace
Assistant Secretary
Lewis F. Pennock
Attorney Nancy L. Martin
Assistant Secretary
Louis S. Sklar
Executive Vice President, Ofelia M. Mayo
Development and Operations, Assistant Secretary
Hines Interests
Limited Partnership Lisa A. Moss
Assistant Secretary
Kathleen J. Pflueger
Assistant Secretary
Samuel D. Sirko
Assistant Secretary
</TABLE>
<PAGE>
SEMIANNUAL REPORT / JUNE 30 2000
AIM V.I. VALUE FUND
AIM V.I. VALUE FUND SEEKS LONG-TERM CAPITAL GROWTH BY
INVESTING PRIMARILY IN UNDERVALUED STOCKS. INCOME IS A
SECONDARY OBJECTIVE.
[LOGO]
<PAGE>
SEMIANNUAL REPORT / MANAGERS' OVERVIEW
AIM V.I. VALUE FUND
FUND WEATHERS VOLATILE MARKET
HOW DID AIM V.I. VALUE FUND PERFORM OVER THE REPORTING PERIOD?
AIM V.I. Value Fund reported flat results for the six months ended June 30,
2000, with a -0.27% return. The fund's performance was in line with that of its
benchmark, the S&P 500, which produced a return of -0.43% during the same time
frame.
While the fund and its benchmark were both relatively flat on a six-month
basis, AIM V.I. Value Fund beat the S&P 500's performance over the year ended
June 30, 2000. The fund reported average annual total returns of 13.20%,
compared to the 7.24% return of the S&P 500.
FUND PERFORMANCE
AVERAGE ANNUAL TOTAL RETURNS
As of 6/30/00
<TABLE>
<S> <C>
----------------------------------------------
Inception (5/5/93) 21.26%
----------------------------------------------
5 years 21.82
----------------------------------------------
1 year 13.20
----------------------------------------------
</TABLE>
RESULTS OF A $10,000 INVESTMENT
5/5/93-6/30/00
<TABLE>
<S> <C>
$39,718 $38,261
AIM S&P 500
V.I. VALUE INDEX
FUND
</TABLE>
Index's performance figures are for the period 4/30/93 through 6/30/00. Past
performance cannot guarantee comparable future results. MARKET VOLATILITY CAN
SIGNIFICANTLY IMPACT SHORT-TERM PERFORMANCE. RESULTS OF AN INVESTMENT MADE TODAY
MAY DIFFER SUBSTANTIALLY FROM THE HISTORICAL PERFORMANCE SHOWN.
IN THIS ENVIRONMENT,
WE TENDED TO FOCUS MORE ON
EARNINGS GROWTH.
-----------------------------------
WHAT WERE MARKET CONDITIONS LIKE DURING THE PAST SIX MONTHS?
The past six months saw extreme market volatility. During the first three months
of 2000, market indexes such as the Dow and the Nasdaq rose to new heights in a
rally dominated by technology stocks. But near the end of March, market
sentiment soured as investors worried whether tech stocks were overpriced. A
sharp sell-off in the technology sector ensued, particularly for Internet
companies with no earnings.
Interest-rate concerns also roiled the markets during the reporting period.
The Federal Reserve Board (the Fed) continued to raise interest rates in an
effort to slow the economy and prevent inflation. In May, the Fed raised the
federal funds rate to 6.50%, its highest level in nine years. Since June 1999,
the Fed has increased interest rates six times for a total of 1.75%. At its June
2000 meeting, the Fed chose to leave rates unchanged but hinted that more
increases may occur later in the summer.
For all the intense market activity of the past six months, the S&P 500
ended the period flat, with the Dow down 8.44% and the Nasdaq down 2.54%.
HOW DID YOU MANAGE THE FUND DURING THESE CONDITIONS?
Volatility hurt the fund's performance during the second quarter of 2000. The
fund invests in companies with strong earnings growth and reasonable stock
prices; however, good companies selling at good prices were difficult to find
over the past few months. In this environment, we tended to focus more on
earnings growth.
To concentrate on our best-performing companies, we kept the number of
holdings at about 50. The fund's major sectors continued to be broadcasting,
technology, retail and finance.
BESIDES MARKET VOLATILITY, WHAT OTHER FACTORS AFFECTED FUND PERFORMANCE?
Our holdings in cable TV hurt performance in the second quarter of 2000.
Cable-TV stocks such as fund holdings Comcast and Cox Communications took a hit
near the end of the reporting period because of concerns over cash-flow growth
and competition from satellite companies. Even though short-term performance
disappointed, we believe that the long-term prospects for these firms and cable
stocks in general are strong, especially as cable companies enter the telephone
business.
In addition, the fund was under-weighted in health-care stocks,
particularly drug manufacturers, an area that performed well during the past six
months. We were cautious about this industry because of political risks:
Congress and President Clinton continue to dicker over how to inject a Medicare
drug benefit into the current system. In addition, drug companies face
increasing pressure from consumers to lower costs.
WHAT STOCKS PERFORMED WELL FOR THE FUND?
Our semiconductor holdings such as Analog Devices and Applied Materials
benefited from strong demand for computer chips, increased earnings and rising
stock prices. Cellular-phone maker Nokia and mobile-phone service provider
Nextel also reported excellent earnings,
AIM V.I. VALUE FUND
<PAGE>
SEMIANNUAL REPORT / MANAGERS' OVERVIEW
PORTFOLIO COMPOSITION
As of 6/30/00, based on total net assets
<TABLE>
<CAPTION>
TOP 10 HOLDINGS
<S> <C>
-------------------------------------------------------------
1. Comcast Corp.-Class A 5.95%
-------------------------------------------------------------
2. Nextel Communications, Inc.-Class A 5.60
-------------------------------------------------------------
3. Nokia Oyj-ADR (Finland) 4.89
-------------------------------------------------------------
4. Target Corp. 4.38
-------------------------------------------------------------
5. Cox Communications, Inc.-Class A 4.21
-------------------------------------------------------------
6. Tyco International Ltd. (Bermuda) 3.89
-------------------------------------------------------------
7. Morgan Stanley Dean Witter & Co. 3.47
-------------------------------------------------------------
8. Apple Computer, Inc. 3.45
-------------------------------------------------------------
9. Analog Devices, Inc. 2.93
-------------------------------------------------------------
10. First Data Corp. 2.92
-------------------------------------------------------------
<CAPTION>
TOP 10 INDUSTRIES
<S> <C>
1. Broadcasting (Television, Radio & Cable) 10.16%
---------------------------------------------------------------
2. Computers (Hardware) 8.19
---------------------------------------------------------------
3. Communications Equipment 7.12
---------------------------------------------------------------
4. Retail (General Merchandise) 6.35
---------------------------------------------------------------
5. Telecommunications (Cellular/Wireless) 5.60
---------------------------------------------------------------
6. Electronics (Semiconductors) 4.61
---------------------------------------------------------------
7. Investment Banking/Brokerage 4.21
---------------------------------------------------------------
8. Equipment (Semiconductor) 4.03
---------------------------------------------------------------
9. Manufacturing (Diversified) 3.89
---------------------------------------------------------------
10. Services (Data Processing) 3.68
---------------------------------------------------------------
</TABLE>
The fund's portfolio composition is subject to change, and there is no assurance
that the fund will continue to hold any particular security.
THE NEAR-TERM OUTLOOK FOR STOCKS
COULD DEPEND TO A LARGE EXTENT
ON THE FED'S ABILITY TO BRING THE
ECONOMY TO A "SOFT LANDING."
-----------------------------------------
propelled by the explosive growth of the wireless-telecommunications market.
We also continued to hold Target because the company shows strong earnings
growth, and its stock is selling at a reasonable price. Formerly Dayton Hudson,
the company changed its name in January to Target. We anticipate that the name
change will benefit the stock as more investors connect the stock name with the
successful retailer.
Another long-time fund holding, Tyco International, continues to show
earnings growth. After the end of the reporting period, its stock price jumped
on news that the Securities and Exchange Commission had dropped its inquiry into
Tyco's accounting practices, essentially vindicating the company. The
diversified corporation has interests in electronics, plastics, valves and
pipes, and fire and security products.
WHAT IS YOUR OUTLOOK FOR THE NEAR TERM?
The near-term outlook for stocks could depend to a large extent on the Fed's
ability to bring the economy to a "soft landing." There are signs that the
economy could be slowing. Consequently, the Fed may wind down its tightening
cycle, although the central bank could approve one or two more rate hikes in the
months ahead. If the Fed succeeds in slowing economic growth to a more
sustainable rate and in keeping inflation under control, it could prolong the
current record economic expansion. Such an environment could prove favorable for
stocks.
However, uncertainty over the Fed's actions and other factors could
perpetuate the volatility that has characterized markets in recent months. In
such an environment, investors would be well advised to take a long-term
perspective on their investment.
--------------------------------------------------------------------------------
The performance figures shown represent AIM V.I. Value Fund; they are not
intended to reflect actual annuity values, and they do not reflect charges at
the separate-account level which (if applied) would lower the performance
results.
The fund's performance figures are historical, and they reflect the reinvestment
of distributions and changes in net asset value.
The fund's investment return and principal value will fluctuate, so fund shares,
when redeemed, may be worth more or less than their original cost.
The unmanaged Dow Jones Industrial Average (the Dow) is a price-weighted average
of 30 actively traded primarily industrial stocks.
The unmanaged National Association of Securities Dealers Automated Quotation
System Composite Index (the Nasdaq) is a market-value-weighted index comprising
all domestic and non-U.S. based common stocks listed on the Nasdaq system. It
includes more than 5,000 companies, and it is often considered representative of
the small and medium-sized company stock universe. While it includes many small
and mid-sized company stocks, large capitalization companies tend to dominate
the index.
The unmanaged Standard & Poor's Composite Index of 500 Stocks (the S&P 500)
represents the performance of the stock market.
An investment cannot be made in an index. Index results include reinvested
dividends.
AIM V.I. VALUE FUND
<PAGE>
SCHEDULE OF INVESTMENTS
JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
DOMESTIC COMMON STOCKS - 75.46%
BANKS (MONEY CENTER) - 1.73%
Chase Manhattan Corp. (The) 1,065,000 $ 49,056,562
----------------------------------------------------------------------------------
BROADCASTING (TELEVISION, RADIO & CABLE) - 10.16%
Comcast Corp. - Class A(a) 4,170,000 168,885,000
Cox Communications, Inc. - Class A(a) 2,624,000 119,556,000
----------------------------------------------------------------------------------
288,441,000
----------------------------------------------------------------------------------
COMPUTERS (HARDWARE) - 8.19%
Apple Computer, Inc.(a) 1,870,000 97,941,250
Dell Computer Corp.(a) 1,191,700 58,765,706
Gateway, Inc.(a) 693,100 39,333,425
Sun Microsystems, Inc.(a) 401,000 36,465,937
----------------------------------------------------------------------------------
232,506,318
----------------------------------------------------------------------------------
COMPUTERS (PERIPHERALS) - 2.35%
EMC Corp.(a) 107,000 8,232,312
Lexmark International Group, Inc. - Class A(a) 871,700 58,621,825
----------------------------------------------------------------------------------
66,854,137
----------------------------------------------------------------------------------
COMPUTERS (SOFTWARE & SERVICES) - 1.87%
At Home Corp. - Series A(a) 1,500,000 31,125,000
Citrix Systems, Inc.(a) 188,000 3,560,250
Oracle Corp.(a) 145,000 12,189,062
Unisys Corp.(a) 428,000 6,232,750
----------------------------------------------------------------------------------
53,107,062
----------------------------------------------------------------------------------
ELECTRICAL EQUIPMENT - 0.74%
Solectron Corp.(a) 505,000 21,146,875
----------------------------------------------------------------------------------
ELECTRONICS (SEMICONDUCTORS) - 3.39%
Analog Devices, Inc.(a) 1,096,200 83,311,200
Texas Instruments Inc. 187,000 12,844,562
----------------------------------------------------------------------------------
96,155,762
----------------------------------------------------------------------------------
ENTERTAINMENT - 0.12%
Time Warner Inc. 45,700 3,473,200
----------------------------------------------------------------------------------
EQUIPMENT (SEMICONDUCTOR) - 4.03%
Applied Materials, Inc.(a) 807,100 73,143,438
Teradyne, Inc.(a) 562,300 41,329,050
----------------------------------------------------------------------------------
114,472,488
----------------------------------------------------------------------------------
FINANCIAL (DIVERSIFIED) - 2.77%
American Express Co. 753,000 39,250,125
Citigroup Inc. 652,000 39,283,000
----------------------------------------------------------------------------------
78,533,125
----------------------------------------------------------------------------------
HEALTH CARE (DIVERSIFIED) - 1.41%
Johnson & Johnson 393,300 40,067,438
----------------------------------------------------------------------------------
HEALTH CARE (DRUGS - MAJOR
PHARMACEUTICALS) - 2.29%
Pfizer Inc. 1,356,600 65,116,800
----------------------------------------------------------------------------------
HEALTH CARE (MEDICAL PRODUCTS &
SUPPLIES) - 1.97%
Guidant Corp.(a) 1,133,000 56,083,500
----------------------------------------------------------------------------------
HOUSEHOLD PRODUCTS (NON-DURABLES) - 1.11%
Colgate-Palmolive Co. 110,000 6,586,250
Kimberly-Clark Corp. 434,000 24,900,750
----------------------------------------------------------------------------------
31,487,000
----------------------------------------------------------------------------------
INSURANCE (MULTI-LINE) - 2.78%
American International Group, Inc. 632,000 74,260,000
Hartford Financial Services Group, Inc. (The) 85,000 4,754,688
----------------------------------------------------------------------------------
79,014,688
----------------------------------------------------------------------------------
INVESTMENT BANKING/BROKERAGE - 4.21%
Merrill Lynch & Co., Inc. 184,000 21,160,000
Morgan Stanley Dean Witter & Co. 1,183,000 98,484,750
----------------------------------------------------------------------------------
119,644,750
----------------------------------------------------------------------------------
NATURAL GAS - 1.52%
Williams Cos., Inc. (The) 1,038,000 43,271,625
----------------------------------------------------------------------------------
OIL & GAS (DRILLING & EQUIPMENT) - 0.38%
Schlumberger Ltd. 145,000 10,820,625
----------------------------------------------------------------------------------
PAPER & FOREST PRODUCTS - 0.25%
Weyerhaeuser Co. 162,000 6,966,000
----------------------------------------------------------------------------------
PHOTOGRAPHY/IMAGING - 0.36%
Eastman Kodak Co. 172,600 10,269,700
----------------------------------------------------------------------------------
RETAIL (BUILDING SUPPLIES) - 0.06%
Lowe's Cos., Inc. 39,500 1,621,969
----------------------------------------------------------------------------------
RETAIL (COMPUTERS & ELECTRONICS) - 2.11%
Best Buy Co., Inc.(a) 946,000 59,834,500
----------------------------------------------------------------------------------
RETAIL (DRUG STORES) - 1.83%
Walgreen Co. 1,618,000 52,079,375
----------------------------------------------------------------------------------
RETAIL (FOOD CHAINS) - 2.38%
Kroger Co. (The)(a) 1,108,000 24,445,250
Safeway Inc.(a) 956,000 43,139,500
----------------------------------------------------------------------------------
67,584,750
----------------------------------------------------------------------------------
AIM V.I. VALUE FUND
<PAGE>
<CAPTION>
MARKET
SHARES VALUE
<S> <C> <C>
RETAIL (GENERAL MERCHANDISE) - 6.35%
Costco Wholesale Corp.(a) 1,700,000 $ 56,100,000
Target Corp. 2,144,000 124,352,000
----------------------------------------------------------------------------------
180,452,000
----------------------------------------------------------------------------------
SERVICES (ADVERTISING/MARKETING) - 1.82%
Omnicom Group Inc. 581,000 51,745,313
----------------------------------------------------------------------------------
SERVICES (DATA PROCESSING) - 3.68%
Automatic Data Processing, Inc. 400,000 21,425,000
First Data Corp. 1,672,000 82,973,000
----------------------------------------------------------------------------------
104,398,000
----------------------------------------------------------------------------------
TELECOMMUNICATIONS (CELLULAR/WIRELESS) - 5.60%
Nextel Communications, Inc. - Class A(a) 2,600,000 159,087,500
----------------------------------------------------------------------------------
Total Domestic Common Stocks
(Cost $1,742,846,294) 2,143,292,062
----------------------------------------------------------------------------------
FOREIGN STOCKS & OTHER
EQUITY INTERESTS - 12.32%
BERMUDA - 3.89%
Tyco International Ltd. (Manufacturing -
Diversified) 2,330,000 110,383,750
----------------------------------------------------------------------------------
CANADA - 3.54%
360networks Inc. (Telecommunications - Long
Distance)(a) 162,300 2,475,075
Celestica Inc. (Electronics - Semiconductors)(a) 701,000 34,787,125
Nortel Networks Corp. (Communications
Equipment) 927,500 63,301,875
----------------------------------------------------------------------------------
100,564,075
----------------------------------------------------------------------------------
FINLAND - 4.89%
Nokia Oyj - ADR (Communications Equipment) 2,783,000 138,976,063
----------------------------------------------------------------------------------
Total Foreign Stocks & Other Equity Interests
(Cost $195,746,424) 349,923,888
----------------------------------------------------------------------------------
MONEY MARKET FUNDS - 12.62%
STIC Liquid Assets Portfolio(b) 179,242,405 179,242,405
STIC Prime Portfolio(b) 179,242,405 179,242,405
----------------------------------------------------------------------------------
Total Money Market Funds
(Cost $358,484,810) 358,484,810
----------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.40%
(Cost $2,297,077,528) 2,851,700,760
----------------------------------------------------------------------------------
LIABILITIES LESS OTHER ASSETS - (0.40%) (11,533,376)
----------------------------------------------------------------------------------
NET ASSETS - 100.00% $ 2,840,167,384
==================================================================================
</TABLE>
Investment Abbreviation:
ADR - American Depositary Receipt
NOTES TO SCHEDULE OF INVESTMENTS:
(a) Non-income producing security.
(b) The money market fund has the same investment advisor as the Fund.
See Notes to Financial Statements.
AIM V.I. VALUE FUND
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments, at market value (cost $2,297,077,528) $2,851,700,760
--------------------------------------------------------------------------------
Receivables for:
Investments sold 50,005,091
--------------------------------------------------------------------------------
Fund shares sold 4,117,476
--------------------------------------------------------------------------------
Dividends 1,937,380
--------------------------------------------------------------------------------
Investment for deferred compensation plan 39,724
--------------------------------------------------------------------------------
Other assets 124,235
--------------------------------------------------------------------------------
Total assets 2,907,924,666
--------------------------------------------------------------------------------
LIABILITIES:
Payables for:
Investments purchased 60,570,394
--------------------------------------------------------------------------------
Fund shares reacquired 485,515
--------------------------------------------------------------------------------
Foreign currency contracts - closed 1,877,130
--------------------------------------------------------------------------------
Foreign currency contracts outstanding 1,519,487
--------------------------------------------------------------------------------
Deferred compensation plan 39,724
--------------------------------------------------------------------------------
Accrued advisory fees 1,394,233
--------------------------------------------------------------------------------
Accrued administrative services fees 1,782,203
--------------------------------------------------------------------------------
Accrued trustees' fees 3,119
--------------------------------------------------------------------------------
Accrued operating expenses 85,477
--------------------------------------------------------------------------------
Total liabilities 67,757,282
--------------------------------------------------------------------------------
Net assets applicable to shares outstanding $2,840,167,384
================================================================================
SHARES OUTSTANDING, $0.001 PAR VALUE PER SHARE:
Outstanding 85,000,452
--------------------------------------------------------------------------------
Net asset value, offering and redemption price per share $ 33.41
================================================================================
</TABLE>
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding tax of $103,785) $ 11,496,234
--------------------------------------------------------------------------------
EXPENSES:
Advisory fees 7,923,757
--------------------------------------------------------------------------------
Administrative services fee 2,581,721
--------------------------------------------------------------------------------
Custodian fees 119,068
--------------------------------------------------------------------------------
Trustees' fees 3,840
--------------------------------------------------------------------------------
Other 292,912
--------------------------------------------------------------------------------
Total expenses 10,921,298
--------------------------------------------------------------------------------
Less: Expenses paid indirectly (4,380)
--------------------------------------------------------------------------------
Net expenses 10,916,918
--------------------------------------------------------------------------------
Net investment income 579,316
--------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT
SECURITIES, FOREIGN CURRENCIES, FOREIGN CURRENCY
CONTRACTS AND OPTION CONTRACTS
Net realized gain from:
Investment securities 112,298,575
--------------------------------------------------------------------------------
Foreign currency contracts 14,369,233
--------------------------------------------------------------------------------
Option contracts written 184,917
--------------------------------------------------------------------------------
126,852,725
--------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of:
Investment securities (131,660,860)
--------------------------------------------------------------------------------
Foreign currencies (69)
--------------------------------------------------------------------------------
Foreign currency contracts (7,198,624)
--------------------------------------------------------------------------------
(138,859,553)
--------------------------------------------------------------------------------
Net gain (loss) on investment securities, foreign currencies,
foreign currency contracts and option contracts (12,006,828)
--------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from
operations $ (11,427,512)
================================================================================
</TABLE>
See Notes to Financial Statements.
AIM V.I. VALUE FUND
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND THE YEAR ENDED DECEMBER 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income $ 579,316 $ 3,440,737
------------------------------------------------------------------------------------------------------------------------------------
Net realized gain from investment securities, foreign currencies, foreign
currency contracts and option contracts 126,852,725 111,811,218
------------------------------------------------------------------------------------------------------------------------------------
Change in net unrealized appreciation (depreciation) of investment securities,
foreign currencies, foreign currency contracts and option contracts (138,859,553) 360,547,238
------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets resulting from operations (11,427,512) 475,799,193
------------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net investment income -- (6,235,364)
------------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gains -- (32,606,763)
------------------------------------------------------------------------------------------------------------------------------------
Share transactions - net 468,228,325 725,025,960
------------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets 456,800,813 1,161,983,026
------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS:
Beginning of period 2,383,366,571 1,221,383,545
------------------------------------------------------------------------------------------------------------------------------------
End of period $2,840,167,384 $2,383,366,571
====================================================================================================================================
NET ASSETS CONSIST OF:
Shares of beneficial interest $2,048,218,292 $1,579,989,967
------------------------------------------------------------------------------------------------------------------------------------
Undistributed net investment income 3,962,918 3,383,602
------------------------------------------------------------------------------------------------------------------------------------
Undistributed net realized gain from investment securities, foreign currencies,
foreign currency contracts and option contracts 234,882,834 108,030,109
------------------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation of investment securities, foreign currencies, foreign
currency contracts and option contracts 553,103,340 691,962,893
------------------------------------------------------------------------------------------------------------------------------------
$2,840,167,384 $2,383,366,571
====================================================================================================================================
</TABLE>
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 2000
(UNAUDITED)
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
AIM V.I. Value Fund (the "Fund") is a series portfolio of AIM Variable Insurance
Funds (the "Trust"). The Trust is a Delaware business trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
series management investment company consisting of seventeen separate
portfolios. At a meeting held on February 3, 2000, the Board of Directors of AIM
Variable Insurance Funds, Inc. approved an Agreement and Plan of Reorganization
which was approved by shareholders of the Fund on April 10, 2000. Effective May
1, 2000, pursuant to the Agreement and Plan of Reorganization, AIM Variable
Insurance Funds, Inc. was reorganized from a Maryland Corporation to a Delaware
business trust. Matters affecting each portfolio will be voted on exclusively by
the shareholders of such portfolio. The assets, liabilities and operations of
each portfolio are accounted for separately. Information presented in these
financial statements pertains only to the Fund. Currently, shares of the Fund
are sold only to insurance company separate accounts to fund the benefits of
variable annuity contracts and variable life insurance policies. The Fund's
investment objective is to achieve long-term growth of capital. Income is a
secondary objective.
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 at the date of the
financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. The
following is a summary of the significant accounting policies followed by the
Fund in the preparation of its financial statements.
A. Security Valuations - A security listed or traded on an exchange (except
convertible bonds) is valued at its last sales price as of the close of the
customary trading session on the exchange where the security is principally
traded, or lacking any sales on a particular day, the security is valued at
the closing bid price on that day. Each security reported on the NASDAQ
National Market System is valued at the last sales price as of the close of
the customary trading session on the valuation date or absent a last sales
price, at the closing bid price. Debt obligations (including convertible
bonds) are valued on the basis of prices provided by an independent pricing
service. Prices provided by the pricing service may be determined without
exclusive reliance on quoted prices, and may reflect appropriate factors such
as yield, type of issue, coupon rate and maturity date. Securities for which
market prices are not provided by any of the above methods are valued based
upon quotes furnished by independent sources and are valued at the last bid
price in the case of equity securities and in the case of debt obligations,
the mean between the last bid and asked prices. Securities for which market
quotations are not readily available or are questionable are valued at fair
value as determined in good faith by or under the supervision of the Trust's
officers in a manner specifically authorized by the Board of Trustees.
Short-term obligations having 60 days or less to maturity are valued at
amortized cost which approximates market value. For purposes of determining
net asset value per share, futures and option contracts generally will be
valued 15 minutes after the close of the customary trading session of the New
York Stock Exchange ("NYSE").
AIM V.I. VALUE FUND
<PAGE>
Generally, trading in foreign securities is substantially completed each
day at various times prior to the close of the NYSE. The values of such
securities used in computing the net asset value of the Fund's shares are
determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of the NYSE. Occasionally, events
affecting the values of such securities and such exchange rates may occur
between the times at which they are determined and the close of the customary
trading session of the NYSE which would not be reflected in the computation
of the Fund's net asset value. If events materially affecting the value of
such securities occur during such period, then these securities will be
valued at their fair value as determined in good faith by or under the
supervision of the Board of Trustees.
B. Securities Transactions and Investment Income - Securities transactions are
accounted for on a trade date basis. Realized gains or losses on sales are
computed on the basis of specific identification of the securities sold.
Interest income is recorded on the accrual basis from settlement date.
Dividend income is recorded on the ex-dividend date.
C. Distributions - Distributions from income and net realized capital gains, if
any, are generally paid annually and recorded on ex-dividend date.
D. Federal Income Taxes - The Fund intends to comply with the requirements of
the Internal Revenue Code necessary to qualify as a regulated investment
company and, as such, will not be subject to federal income taxes on
otherwise taxable income (including net realized capital gains) which is
distributed to shareholders. Therefore, no provision for federal income taxes
is recorded in the financial statements.
E. Foreign Currency Translations - Portfolio securities and other assets and
liabilities denominated in foreign currencies are translated into U.S. dollar
amounts at date of valuation. Purchases and sales of portfolio securities and
income items denominated in foreign currencies are translated into U.S.
dollar amounts on the respective dates of such transactions. The Fund does
not separately account for the portion of the results of operations resulting
from changes in foreign exchange rates on investments and the fluctuations
arising from changes in market prices of securities held. Such fluctuations
are included with the net realized and unrealized gain or loss from
investments.
F. Foreign Currency Contracts - A foreign currency contract is an obligation to
purchase or sell a specific currency for an agreed-upon price at a future
date. The Fund may enter into a foreign currency contract to attempt to
minimize the risk to the Fund from adverse changes in the relationshipbetween
currencies. The Fund may also enter into a foreign currency contract for the
purchase or sale of a security denominated in a foreign currency in order to
"lock in" the U.S. dollar price of that security. The Fund could be exposed
to risk if counterparties to the contracts are unable to meet the terms of
their contracts or if the value of the foreign currency changes unfavorably.
Outstanding foreign currency contracts at June 30, 2000 were as follows:
<TABLE>
<CAPTION>
UNREALIZED
SETTLEMENT CONTRACT TO APPRECIATION
DATE CURRENCY DELIVER RECEIVE VALUE (DEPRECIATION)
---------- -------- ------------ ------- ----- --------------
<S> <C> <C> <C> <C> <C>
09/29/00 CAD 92,300,000 $ 62,369,475 $ 62,542,020 $ (172,545)
08/28/00 EUR 97,850,000 92,326,752 93,583,251 (1,256,499)
10/03/00 EUR 54,500,000 52,148,700 52,239,143 (90,443)
--------------------------------------------------------------------------------------
244,650,000 $206,844,927 $208,364,414 $(1,519,487)
======================================================================================
</TABLE>
G. Covered Call Options - The Fund may write call options, on a covered basis;
that is, the Fund will own the underlying security. Options written by the
Fund normally will have expiration dates between three and nine months from
the date written. The exercise price of a call option may be below, equal to,
or above the current market value of the underlying security at the time the
option is written. When the Fund writes a covered call option, an amount
equal to the premium received by the Fund is recorded as an asset and an
equivalent liability. The amount of the liability is subsequently
"marked-to-market" to reflect the current market value of the option written.
The current market value of a written option is the mean between the last bid
and asked prices on that day. If a written call option expires on the
stipulated expiration date, or if the Fund enters into a closing purchase
transaction, the Fund realizes a gain (or a loss if the closing purchase
transaction exceeds the premium received when the option was written) without
regard to any unrealized gain or loss on the underlying security, and the
liability related to such option is extinguished. If a written option is
exercised, the Fund realizes a gain or a loss from the sale of the underlying
security and the proceeds of the sale are increased by the premium originally
received.
A call option gives the purchaser of such option the right to buy, and the
writer (the Fund) the obligation to sell, the underlying security at the
stated exercise price during the option period. The purchaser of a call
option has the right to acquire the security which is the subject of the call
option at any time during the option period. During the option period, in
return for the premium paid by the purchaser of the option, the Fund has
given up the opportunity for capital appreciation above the exercise price
should the market price of the underlying security increase, but has retained
the risk of loss should the price of the underlying security decline. During
the option period, the Fund may be required at any time to deliver the
underlying security against payment of the exercise price. This obligation is
terminated upon the expiration of the option period or at such earlier time
at which the Fund effects a closing purchase transaction by purchasing (at a
price which may be higher than that received when the call option was
written) a call option identical to the one originally written.
NOTE 2 - ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust has entered into a master investment advisory agreement with A I M
Advisors, Inc. ("AIM"). Under the terms of the master investment advisory
agreement, the Fund pays an advisory fee to AIM at the annual rate of 0.65% of
the first $250 million of the Fund's average daily net assets, plus 0.60% of the
Fund's average daily net assets in excess of $250 million.
Pursuant to a master administrative services agreement with AIM, the Fund has
agreed to pay AIM a fee for costs incurred in providing accounting services and
certain administrative services to the Fund and to reimburse AIM for
administrative services fees paid to insurance companies that have agreed to
provide administrative services to the Fund. For the six months ended June 30,
2000, the Fund paid AIM $2,581,721 of which AIM retained $81,468 for accounting
services provided.
The Trust has entered into a master distribution agreement with A I M
Distributors, Inc. ("AIM Distributors") to serve as the distributor for the
Fund.
Certain officers and trustees of the Trust are officers of AIM and AIM
Distributors.
During the six months ended June 30, 2000, the Fund paid legal fees of $3,464
for services rendered by Kramer, Levin, Naftalis & Frankel LLP as counsel to the
Board of Trustees. A member of that firm is a trustee of the Trust.
AIM V.I. VALUE FUND
<PAGE>
NOTE 3 - INDIRECT EXPENSES
For the six months ended June 30, 2000, the Fund received reductions in
custodian fees of $4,380 under an expense offset arrangement which resulted in a
reduction of the Fund's total expenses of $4,380.
NOTE 4 - TRUSTEES' FEES
Trustees' fees represent remuneration paid to trustees who are not an
"interested person" of AIM. The Trust invests trustees' fees, if so elected by a
trustee, in mutual fund shares in accordance with a deferred compensation plan.
NOTE 5 - BANK BORROWINGS
The Fund is a participant in a committed line of credit facility with a
syndicate administered by Citibank, N.A.. The Fund may borrow upto the lesser of
(i) $1,000,000,000 or (ii) the limits set by its prospectus for borrowings. The
Fund and other funds advised by AIM which are parties to the line of credit may
borrow on a first come, first served basis. During the six months ended June 30,
2000, the Fund did not borrow under the line of credit agreement. The funds
which are party to the line of credit are charged a commitment fee of 0.09% on
the unused balance of the committed line. The commitment fee is allocated among
the funds based on their respective average net assets for the period.
NOTE 6 - INVESTMENT SECURITIES
The aggregate amount of investment securities (other than short-term securities)
purchased and sold by the Fund during the six months ended June 30, 2000 was
$1,163,996,153 and $776,686,706, respectively.
The amount of unrealized appreciation (depreciation) of investment
securities, for tax purposes, as of June 30, 2000 is as follows:
<TABLE>
<S> <C>
Aggregate unrealized appreciation of investment securities $607,448,954
--------------------------------------------------------------------------------
Aggregate unrealized (depreciation) of investment securities (54,997,717)
--------------------------------------------------------------------------------
Net unrealized appreciation of investment securities $552,451,237
================================================================================
</TABLE>
Cost of investments for tax purposes is $2,299,249,523.
NOTE 7 - CALL OPTION CONTRACTS
Transactions in call options written during the six months ended June 30, 2000
are summarized as follows:
<TABLE>
<CAPTION>
CALL OPTIONS CONTRACTS
------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- --------
<S> <C> <C>
Beginning of period -- $ --
------------------------------------------------------------------------
Written 900 184,917
------------------------------------------------------------------------
Expired (900) (184,917)
------------------------------------------------------------------------
End of period -- $ --
========================================================================
</TABLE>
NOTE 8 - SHARE INFORMATION
Changes in shares outstanding during the six months ended June 30, 2000 and the
year ended December 31, 1999 were as follows:
<TABLE>
<CAPTION>
JUNE 30, 2000 DECEMBER 31, 1999
-------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Sold 17,185,455 $ 581,596,937 30,095,501 $ 884,324,432
-----------------------------------------------------------------------------------
Issued as
reinvestment of
dividends -- -- 1,227,239 38,842,126
-----------------------------------------------------------------------------------
Reacquired (3,330,806) (113,368,612) (6,712,560) (198,140,598)
-----------------------------------------------------------------------------------
13,854,649 $ 468,228,325 24,610,180 $ 725,025,960
===================================================================================
</TABLE>
NOTE 9 - FINANCIAL HIGHLIGHTS
The following schedule presents financial highlights for one share of the Fund
outstanding throughout the periods indicated.
<TABLE>
<CAPTION>
SIX MONTHS ELEVEN MONTHS
ENDED YEAR ENDED DECEMBER 31, ENDED YEAR ENDED
JUNE 30, ------------------------------------------------ DECEMBER 31, JANUARY 31,
2000(a) 1999(a) 1998 1997 1996 1995 1995
---------- ---------- ---------- --------- --------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 33.50 $ 26.25 $ 20.83 $ 17.48 $ 16.11 $ 11.83 $ 12.17
------------------------------------------------------------------------------------------------------------------------------------
Income from investment operations:
Net investment income 0.01 0. 06 0.09 0.08 0.30 0.11 0.10
------------------------------------------------------------------------------------------------------------------------------------
Net gains (losses) on securities (both
realized and unrealized) (0.10) 7.76 6.59 4.05 2.09 4.18 (0.35)
------------------------------------------------------------------------------------------------------------------------------------
Total from investment operations (0.09) 7.82 6.68 4.13 2.39 4.29 (0.25)
------------------------------------------------------------------------------------------------------------------------------------
Less distributions:
Dividends from net investment income -- (0.09) (0.13) (0.19) (0.10) (0.01) (0.09)
------------------------------------------------------------------------------------------------------------------------------------
Distributions from net realized gains -- (0.48) (1.13) (0.59) (0.92) -- --
------------------------------------------------------------------------------------------------------------------------------------
Total distributions -- (0.57) (1.26) (0.78) (1.02) (0.01) (0.09)
------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 33.41 $ 33.50 $ 26.25 $ 20.83 $ 17.48 $ 16.11 $ 11.83
====================================================================================================================================
Total return(b) (0.27)% 29.90% 32.41% 23.69% 15.02% 36.25% (2.03)%
====================================================================================================================================
Ratios/supplemental data:
Net assets, end of period (000s omitted) $2,840,167 $2,383,367 $1,221,384 $690,841 $369,735 $257,212 $109,257
====================================================================================================================================
Ratio of expenses to average net assets 0.84%(c) 0.76% 0.66% 0.70% 0.73% 0.75%(d) 0.82%
====================================================================================================================================
Ratio of net investment income to average
net assets 0.04%(c) 0.20% 0.68% 1.05% 2.00% 1.11%(d) 1.17%
====================================================================================================================================
Portfolio turnover rate 32% 62% 100% 127% 129% 145% 143%
====================================================================================================================================
</TABLE>
(a) Calculated using average shares outstanding.
(b) Total returns are not annualized for periods less than one year.
(c) Ratios are annualized and based on average net assets of $2,629,984,948.
(d) Annualized.
AIM V.I. VALUE FUND
<PAGE>
PROXY RESULTS (UNAUDITED)
A Special Meeting of Shareholders of AIM V.I. Value Fund (the "Fund"), a
portfolio of AIM Variable Insurance Funds, Inc. (the "Company"), reorganized as
AIM Variable Insurance Funds, a Delaware business trust (the "Trust"), was held
on April 10, 2000. The meeting was held for the following purposes:
(1)* To elect ten directors as follows: Charles T. Bauer, Bruce L. Crockett,
Owen Daly II, Edward K. Dunn, Jr., Jack M. Fields, Carl Frischling, Robert
H. Graham, Prema Mathai-Davis, Lewis F. Pennock and Louis S. Sklar.
(2)* To approve an Agreement and Plan of Reorganization which provided for the
reorganization of the company as a Delaware business trust.
(3) To approve a new Master Investment Advisory Agreement with A I M Advisors,
Inc.
(4) To approve changing the fundamental investment restrictions of the Fund.
(5) To approve changing the investment objective of the Fund and making it
non-fundamental.
(6) To ratify the selection of Tait, Weller & Baker as independent accountants
of the Fund for the fiscal year ending in 2000.
The results of the proxy solicitation on the above matters were as follows:
<TABLE>
<CAPTION>
VOTES VOTES WITHHELD/
DIRECTORS/MATTER FOR AGAINST ABSTENTIONS
---------------- ------------- ----------- -----------
<S> <C> <C> <C>
(1)* Charles T. Bauer ................................................................... 336,558,177 N/A 9,129,703
Bruce L. Crockett .................................................................. 337,513,648 N/A 8,174,232
Owen Daly II ....................................................................... 336,754,219 N/A 8,933,661
Edward K. Dunn, Jr. ................................................................ 337,481,093 N/A 8,206,787
Jack M. Fields ..................................................................... 337,574,973 N/A 8,112,907
Carl Frischling .................................................................... 337,177,860 N/A 8,510,020
Robert H. Graham ................................................................... 337,319,248 N/A 8,368,632
Prema Mathai-Davis ................................................................. 337,262,043 N/A 8,425,837
Lewis F. Pennock ................................................................... 337,440,897 N/A 8,246,983
Louis S. Sklar ..................................................................... 337,447,894 N/A 8,239,986
(2)* Approval of an Agreement and Plan of Reorganization which provided for
the reorganization of AIM Variable Insurance Funds, Inc. as a Delaware business
trust .............................................................................. 318,213,444 8,412,798 19,061,638
(3) Approval of a new Investment Advisory Agreement .................................... 64,733,758 2,205,729 5,113,810
(4)(a) Change to Fundamental Restriction on Issuer Diversification ........................ 62,782,614 2,813,455 6,457,228
(4)(b) Change to Fundamental Restriction on Borrowing Money and Issuing Senior
Securities ......................................................................... 62,191,461 3,539,461 6,322,375
(4)(c) Change to Fundamental Restriction on Underwriting Securities ....................... 63,471,362 2,702,293 5,879,642
(4)(d) Change to Fundamental Restriction on Industry Concentration ........................ 63,583,770 2,670,769 5,798,758
(4)(e) Change to Fundamental Restriction on Purchasing or Selling Real Estate ............. 62,652,287 3,322,826 6,078,184
(4)(f) Change to Fundamental Restriction on Purchasing or Selling Commodities ............. 62,555,004 3,535,659 5,962,634
(4)(g) Change to Fundamental Restriction on Making Loans .................................. 62,377,925 3,654,650 6,020,722
(4)(h) Elimination of Fundamental Restriction on Investing for the Purpose of Control ..... 62,190,684 3,602,146 6,260,467
(5) Approval of changing the Investment Objective and Making it Non-Fundamental ........ 61,885,484 3,747,177 6,420,636
(6) Ratification of the selection of Tait, Weller & Baker as Independent
Accountants of the Fund ............................................................ 66,486,391 986,590 4,580,316
</TABLE>
----------------
* Proposals 1 and 2 required approval by a combined vote of all of the
portfolios of AIM Variable Insurance Funds, Inc.
AIM V.I. VALUE FUND
<PAGE>
<TABLE>
<S> <C> <C> <C>
[GRAPHIC]
TRUSTEES, OFFICERS, BOARD OF TRUSTEES OFFICERS OFFICE OF THE FUND
AND OTHER SERVICE
PROVIDERS OF AIM Charles T. Bauer Charles T. Bauer 11 Greenway Plaza
VARIABLE INSURANCE Director and Chairman Chairman Suite 100
FUNDS, INC. A I M Management Group Inc. Houston, TX 77046
Robert H. Graham (800) 347-1919
Bruce L. Crockett President
Director INVESTMENT ADVISOR
ACE Limited; Carol F. Relihan
Formerly Director, President, and Senior Vice President and A I M Advisors, Inc.
Chief Executive Officer Secretary 11 Greenway Plaza
COMSAT Corporation Suite 100
Gary T. Crum Houston, TX 77046
Owen Daly II Senior Vice President
Formerly Director TRANSFER AGENT AND CUSTODIAN
Cortland Trust Inc. Dana R. Sutton
Vice President and State Street Bankand Trust Company
Edward K. Dunn Jr. Treasurer 225 Franklin Street
Chairman, Mercantile Mortgage Corp.; Boston, MA 02110
Formerly Vice Chairman, President Robert G. Alley
and Chief Operating Officer, Vice President COUNSEL TO THE FUNDS
Mercantile-Safe Deposit & Trust Co.;
and President, Mercantile Bankshares Stuart W. Coco Freedman, Levy, Kroll &
Vice President Simonds
JackFields 1050 Conn. Avenue, N.W.
Chief Executive Officer Melville B. Cox Washington, D.C. 20036
Texana Global Inc. and Twenty First Vice President
Century Group, Inc.; COUNSEL TO THE TRUSTEES
Formerly, Member of the Karen Dunn Kelley
U.S. House of Representatives Vice President Kramer, Levin, Naftalis & Frankel LLP
919 Third Avenue
Carl Frischling Edgar M. Larsen New York, NY 10022
Partner Vice President
Kramer, Levin, Naftalis & Frankel LLP DISTRIBUTOR
Mary J. Benson
Robert H. Graham Assistant Vice President and A I M Distributors, Inc.
Director, President and Chief Executive Assistant Treasurer 11 Greenway Plaza
Officer Suite 100
A I M Management Group Inc. Sheri Morris Houston, TX 77046
Assistant Vice President and
Prema Mathai-Davis Assistant Treasurer
Formerly, Chief Executive Officer,
YWCA of the U.S.A. Renee A. Friedli
Assistant Secretary
Lewis F. Pennock
Attorney P. Michelle Grace
Assistant Secretary
Louis S. Sklar
Executive Vice President, Development Nancy L. Martin
and Operations, Assistant Secretary
Hines Interests
Limited Partnership Ofelia M. Mayo
Assistant Secretary
Lisa A. Moss
Assistant Secretary
Kathleen J. Pflueger
Assistant Secretary
Samuel D. Sirko
Assistant Secretary
</TABLE>
