HARTFORD INTERNATIONAL ADVISERS FUND INC, 485BPOS, 1997-04-10

HARTFORD INTERNATIONAL ADVISERS FUND INC
485BPOS, 1997-04-10

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<PAGE>

As filed with the Securities and Exchange Commission April 10, 1997

File No. 33-84950

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
-----
Pre-Effective Amendment No. / /
-----

Post-Effective Amendment No. 2 / X /
-------- -----

and/or

REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / X /
-----

Amendment No. 2 / X /
----- -----

HARTFORD INTERNATIONAL ADVISERS FUND, INC.

(Exact Name of Registrant as Specified in Charter)

P. O. Box 2999, Hartford, Connecticut 06104-2999
(Address of Principal Executive Offices)

Registrant's Telephone Number including Area Code: (203) 547-5000

C. Michael O'Halloran, Esquire
690 Asylum Avenue, Hartford, Connecticut 06115
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering:

Upon this amendment to the Registration Statement being declared effective.

It is proposed that this filing will become effective (check appropriate box)

immediately upon filing pursuant to paragraph (b) of Rule 485
------

X on May 1, 1997 pursuant to paragraph (b) of Rule 485
------

60 days after filing pursuant to paragraph (a)(1) of Rule 485
------
on May 1, 1997 pursuant to paragraph (a)(1) of Rule 485
------
75 days after filing pursuant to paragraph (a)(2) of Rule 485
------
on pursuant to paragraph (a)(2) of Rule 485
------ ----------------

<PAGE>

Pursuant to Rule 24f-2 under the Investment Company Act of 1940, Registrant has
previously elected to register an indefinite number of shares of its Common
Stock.

The Rule 24f-2 Notice for the Registrant's most recent fiscal year will be filed
February 26, 1997.

<PAGE>

HARTFORD MUTUAL FUNDS
CROSS REFERENCE SHEET
PURSUANT TO RULE 481(A)
<TABLE>
<CAPTION>

N-1A ITEM NO. PROSPECTUS LOCATION
<S> <C> <C>
PART A
1. Cover Page Cover Page
2. Synopsis Not applicable
3. Condensed Financial Information Fund Expenses; Financial Highlights
4. General Description of Registrant The Funds; Investment Objectives and Policies of the
Funds; Common Investment Policies and Risk Factors
5. Management of the Fund Management of the Funds; Administrative Services for the
Funds; Expenses of the Funds
5A. Management's Discussion of Fund Performance Annual Report to Shareholders
6. Capital Stock and Other Securities Ownership and Capitalization of the Funds; Dividends;
Federal Income Taxes; General Information
7. Purchase of Securities Being Offered Net Asset Value; Purchase of Fund Shares
8. Redemption or Repurchase Sale and Redemption of Shares
9. Pending Legal Proceedings General Information-Pending Legal Proceedings

PART B STATEMENT OF ADDITIONAL INFORMATION LOCATION
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Not applicable
13. Investment Objectives and Policies Investment Objectives of the Funds; Investment
Restrictions of the Funds
14. Management of the Fund Management of the Fund
15. Control Persons and Principal Holders of Securities Control Persons and Principal Holders of Securities
16. Investment Advisory and Other Services Management of the Fund
17. Brokerage Allocation and Other Practices Portfolio Brokerage
18. Capital Stock and Other Securities Ownership and Capitalization of the Funds (Prospectus)
19. Purchase, Redemption and Pricing of Securities Being Offered Purchase of Fund Shares (Prospectus)
20. Tax Status Federal Income Taxes (Prospectus)
21. Underwriters Sale and Redemption of Fund Shares (Prospectus)
22. Calculation of Performance Data Performance Comparisons
23. Financial Statements Financial Statements

PART C

Information required to be set forth in PART C is set forth under the appropriate item, so numbered, in Part C of the Registration
Statement.
</TABLE>

<PAGE>

Hartford Mutual Funds
P.O. BOX 2999
HARTFORD, CT 06104-2999
PROSPECTUS -- MAY 1, 1997

The Hartford Mutual Funds is a family of funds comprised of twelve separate
diversified open-end management investment companies (each a "Fund" and together
the "Funds"). The Funds serve as the underlying investment vehicles for certain
variable annuity and variable life insur-

ance separate accounts of Hartford Life Insurance Company and ITT Hartford Life
and Annuity Insurance Company (collectively, the "The Hartford Life Insurance
Companies"). The Funds, which have different investment objectives and policies,
are described below.

<TABLE>
<CAPTION>
STOCK FUNDS GOAL
- ------------------------------- ------------------------------
<S> <C> <C>
Capital Appreciation Growth of capital
Dividend and Growth High level of income, growth
of capital
Index To track general stock market
performance
International Opportunities Growth of capital
Small Company Growth of capital
Stock Growth of capital, income is
secondary

ASSET ALLOCATION FUNDS GOAL
- ------------------------------- ------------------------------
<S> <C> <C>
Advisers Long-term total return
International Advisers Long-term total return
<CAPTION>

BOND FUNDS GOAL
- ------------------------------- ------------------------------
<S> <C> <C>
Bond High level of income, total
return
Mortgage Securities Maximum current income
consistent with preservation
of principal
<CAPTION>

MONEY MARKET FUNDS GOAL
- ------------------------------- ------------------------------
<S> <C> <C>
Money Market Maximum current income
consistent with preservation
of capital
U.S. Government Maximum current income
Money Market consistent with preservation
of capital

<CAPTION>
STOCK FUNDS INVESTMENT STYLE
- ------------------------------- ----------------------------------------------------------------------
<S> <C>
Capital Appreciation Equity: Invests in small, medium, and large companies; portfolio is
comprised primarily of a blend of growth and value stocks and is
broadly diversified across industries.
Dividend and Growth Equity: Invests primarily in large, well-known U.S. companies that
have historically paid above average dividends and have the ability to
sustain and potentially increase dividends; portfolio is broadly
diversified across industries.
Index Equity: Seeks investment results which approximate the price and yield
performance of publicly-traded common stocks in the aggregate;
attempts to approximate the capital performance and the dividend
income of the Standard & Poor's 500 Composite Stock Index.
International Opportunities International Equity: Invests primarily in large, high-quality non-
U.S. companies in established markets, and on a limited basis, in
smaller companies and emerging markets; portfolio is broadly
diversified across industries and countries.
Small Company Equity: Invests primarily in stocks of companies with market
capitalizations of less than $2 billion; portfolio is broadly
diversified across industries.
Stock Equity: Invests primarily in large, high quality U.S. companies;
portfolio is broadly diversified across industries which are expected
to grow faster than the overall economy.
ASSET ALLOCATION FUNDS INVESTMENT STYLE
- ------------------------------- ----------------------------------------------------------------------
<S> <C>
Advisers Asset Allocation: Invests in a mix of stocks, bonds and money market
instruments; portfolio assets are allocated gradually among the asset
classes based upon the portfolio manager's view of the economy and
valuation of the market sectors; short-term market timing is not used.
International Advisers International Asset Allocation: Invests in a mix of stocks, bonds and
money market instruments; portfolio assets are diversified among at
least five countries and are allocated gradually among the asset
classes based upon the portfolio manager's view of the economy and
valuation of the market sectors; short term market timing is not used.
BOND FUNDS INVESTMENT STYLE
- ------------------------------- ----------------------------------------------------------------------
<S> <C>
Bond Bond: Invests primarily in investment grade bonds; up to 20% may be
invested in the highest quality tier of the high yield rating
category.
Mortgage Securities Mortgage-Related Securities: Invests primarily in high quality
mortgage-related securities, including securities issued or guaranteed
by government agencies, instrumentalities or sponsored corporations.
MONEY MARKET FUNDS INVESTMENT STYLE
- ------------------------------- ----------------------------------------------------------------------
<S> <C>
Money Market Money Market: Invests in short-term money market instruments.
U.S. Government Money Market: Invests in short-term money market instruments issued or
Money Market guaranteed by U.S. government agencies or instrumentalities.
</TABLE>

<PAGE>

AN INVESTMENT IN EITHER OF THE MONEY MARKET FUNDS IS NEITHER INSURED NOR
GUARANTEED BY THE U.S. GOVERNMENT. WHILE EACH MONEY MARKET FUND SEEKS TO
MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE, THERE CAN BE NO ASSURANCE
THAT EITHER OF THE MONEY MARKET FUNDS WILL ACHIEVE THIS GOAL.

- --------------------------------------------------------------------------------

THIS PROSPECTUS SETS FORTH CONCISELY THE INFORMATION ABOUT A FUND THAT A
PROSPECTIVE INVESTOR SHOULD KNOW BEFORE INVESTING. PLEASE READ AND RETAIN THIS
PROSPECTUS FOR FUTURE REFERENCE. ADDITIONAL INFORMATION ABOUT THE FUNDS HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IN A STATEMENT OF ADDITIONAL
INFORMATION DATED MAY 1, 1997 ("SAI"), WHICH HAS BEEN INCORPORATED BY REFERENCE
INTO THIS PROSPECTUS. TO OBTAIN A COPY WITHOUT CHARGE CALL 1-800-862-6668 OR
WRITE TO "HARTFORD FAMILY OF FUNDS, C/O INDIVIDUAL ANNUITY OPERATIONS," P.O. BOX
2999, HARTFORD, CT 06104-2999.

- --------------------------------------------------------------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

- --------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE FUNDS. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER BY THE FUNDS TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL FOR THE FUNDS TO MAKE SUCH OFFER.

- --------------------------------------------------------------------------------
<PAGE>
2 HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
HARTFORD MUTUAL FUNDS
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Financial Highlights.................................................. 3
Introduction to the Hartford Mutual Funds............................. 5
Investment Objectives and Styles of the Funds......................... 5
Common Investment Policies and Risk Factors........................... 20
Management of the Funds............................................... 26
Administrative Services for the Funds................................. 28
Expenses of the Funds................................................. 28
Performance Related Information....................................... 29
Dividends............................................................. 29
Determination of Net Asset Value...................................... 29
Purchase of Fund Shares............................................... 30
Sale and Redemption of Shares......................................... 30
Federal Income Taxes.................................................. 30
Ownership and Capitalization of the Funds............................. 30
General Information................................................... 31
Appendix A: Description of Securities Ratings......................... 32
Appendix B: Credit Quality Distribution............................... 34
</TABLE>

There is the possibility that an individual Fund may be held liable for a
misstatement, inaccuracy or incomplete disclosure in this Prospectus concerning
the other Fund(s).

Additional information about the performance of each Fund, including
Management's Discussion and Analysis of Results, is contained in the Funds'
annual and semi-annual reports to shareholders, which may be obtained without
charge by calling 1-800-862-6668.

<PAGE>
HARTFORD CAPITAL APPRECIATION FUND, INC. 3
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
(FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
----------------------------------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87
---------- ---------- --------- --------- --------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE
AT BEGINNING
OF PERIOD...... $ 3.490 $ 2.860 $ 3.052 $ 2.634 $ 2.607 $ 1.709 $ 2.020 $ 1.678 $ 1.341 $ 1.482
NET INVESTMENT
INCOME......... 0.022 0.030 0.011 0.003 0.008 $ 0.021 $ 0.029 $ 0.023 $ 0.015 $ 0.025
NET REALIZED AND
UNREALIZED
GAINS (LOSSES)
ON
INVESTMENTS.... 0.655 0.785 0.070 0.526 0.388 0.898 (0.246) 0.376 0.337 (0.075)
---------- ---------- --------- --------- --------- -------- -------- -------- -------- --------
TOTAL FROM
INVESTMENT
OPERATIONS..... 0.677 0.815 0.081 0.529 0.396 0.919 (0.217) 0.399 0.352 (0.050)
DIVIDENDS FROM
NET INVESTMENT
INCOME......... (0.025) (0.030) (0.011) (0.003) (0.008) (0.021) (0.029) (0.023) (0.015) (0.025)
DISTRIBUTION
FROM NET
REALIZED GAINS
ON
SECURITIES..... (0.228) (0.155) (0.262) (0.108) (0.361) 0.000 (0.065) (0.034) 0.000 (0.066)
RETURN OF
CAPITAL........ 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
---------- ---------- --------- --------- --------- -------- -------- -------- -------- --------
TOTAL FROM
DISTRIBUTIONS... (0.253) (0.185) (0.273) (0.111) (0.369) (0.021) (0.094) (0.057) (0.015) (0.091)
---------- ---------- --------- --------- --------- -------- -------- -------- -------- --------
NET INCREASE
(DECREASE) IN
NET ASSETS..... 0.424 0.630 (0.192) 0.418 0.027 0.898 (0.311) 0.342 0.337 (0.141)
NET ASSET VALUE
AT END OF
PERIOD......... $ 3.914 $ 3.490 $ 2.860 $ 3.052 $ 2.634 $ 2.607 $ 1.709 $ 2.020 $ 1.678 $ 1.341
---------- ---------- --------- --------- --------- -------- -------- -------- -------- --------
---------- ---------- --------- --------- --------- -------- -------- -------- -------- --------
TOTAL RETURN.... 20.70% 30.25% 2.50% 20.80% 16.98% 53.99% (10.90)% 24.11% 26.37% (4.31)%
NET ASSETS (IN
THOUSANDS)..... 3,386,670 2,157,892 1,158,644 778,904 300,373 158,046 56,032 59,922 34,226 26,123
RATIO OF
OPERATING
EXPENSES TO
AVERAGE NET
ASSETS......... 0.65% 0.68% 0.72% 0.76% 0.87% 0.92% 0.96% 0.94% 0.97% 1.01%
RATIO OF NET
INVESTMENT
INCOME TO
AVERAGE NET
ASSETS......... 0.60% 0.95% 0.40% 0.12% 0.36% 0.92% 1.58% 1.25% 0.91% 1.27%
PORTFOLIO
TURNOVER
RATE........... 85.4% 78.6% 73.3% 91.4% 100.3% 107.2% 51.8% 35.0% 48.9% 68.7%
AVERAGE
COMMISSION
RATE*.......... 0.06650
</TABLE>

- ------------------------
* Not required for years prior to 1996.
<PAGE>
4 HARTFORD DIVIDEND & GROWTH FUND, INC.
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS

The following information has been audited by Arthur Andersen LLP,
independent public accountants, whose report thereon is included in the
Statement of Additional Information, which is incorporated by reference to this
prospectus.

<TABLE>
<CAPTION>
(FOR A SHARE OUTSTANDING
THROUGHOUT THE INDICATED PERIOD)
-----------------------------------
YEAR YEAR
ENDED ENDED 03/08/94-
12/31/96 12/31/95 12/31/94(A)
--------- --------- -----------
<S> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD............ $ 1.371 $ 0.994 $ 1.000
NET INVESTMENT INCOME............................. 0.034 0.033 0.024
NET REALIZED AND UNREALIZED GAINS (LOSSES) ON
INVESTMENTS...................................... 0.258 0.323 (0.005)
--------- --------- -----------
TOTAL FROM INVESTMENT OPERATIONS.................. 0.292 0.356 0.019
DIVIDENDS FROM NET INVESTMENT INCOME.............. (0.034) (0.033) (0.024)
DISTRIBUTION FROM NET REALIZED GAINS ON
SECURITIES....................................... (0.028) 0.000 (0.001)
RETURN OF CAPITAL................................. 0.000 0.000 0.000
--------- --------- -----------
TOTAL FROM DISTRIBUTIONS.......................... (0.062) (0.033) (0.025)
--------- --------- -----------
NET INCREASE (DECREASE) IN NET ASSETS............. 0.230 0.323 (0.006)
NET ASSET VALUE AT END OF PERIOD.................. $ 1.547 $ 1.817 $ 0.994
--------- --------- -----------
--------- --------- -----------
TOTAL RETURN...................................... 22.91% 36.37% 1.96%
NET ASSETS (IN THOUSANDS)......................... 879,980 265,070 55,066
RATIO OF OPERATING EXPENSES TO AVERAGE NET
ASSETS........................................... 0.73% 0.77% 0.83%*
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET
ASSETS........................................... 2.52% 2.91% 3.52%*
PORTFOLIO TURNOVER RATE........................... 56.9% 41.4% 27.8%
AVERAGE COMMISSION RATE**......................... 0.07150
</TABLE>

- ------------------------
(a) The Fund was declared effective by the Securities and Exchange Commission
on March 8, 1994.

* Annualized. Management fees were waived until assets (excluding assets
contributed by companies affiliated with HL Advisors) reached $20 million.
The ratio of operating expenses to average net assets would have been higher
if management fees were not waived. The ratio of net investment income to
average net assets would have been lower if management fees were not waived.

** Not required for years prior to 1996.
<PAGE>
HARTFORD INDEX FUND, INC. 5
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS

The following information, insofar as it relates to each of the five years
in the period ended December 31, 1996, has been audited by Arthur Andersen LLP,
independent public accountants, whose report thereon is included in the
Statement of Additional Information, which is incorporated by reference to this
prospectus.
<TABLE>
<CAPTION>
(FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
----------------------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88
--------- --------- --------- --------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE AT
BEGINNING
OF PERIOD............... $ 2.028 $ 1.522 $ 1.546 $ 1.450 $ 1.390 $ 1.134 $ 1.220 $ 0.960 $ 0.854
NET INVESTMENT INCOME.... 0.044 0.044 0.038 0.035 0.033 0.036 0.037 0.029 0.030
NET REALIZED AND
UNREALIZED GAINS
(LOSSES) ON
INVESTMENTS............. 0.393 0.507 (0.024) 0.096 0.060 0.294 (0.086) 0.260 0.106
--------- --------- --------- --------- -------- -------- -------- -------- --------
TOTAL FROM INVESTMENT
OPERATIONS.............. 0.437 0.551 0.014 0.131 0.093 0.330 (0.049) 0.289 0.136
DIVIDENDS FROM NET
INVESTMENT INCOME....... (0.044) (0.044) (0.038) (0.035) (0.033) (0.036) (0.037) (0.029) (0.030)
DISTRIBUTION FROM NET
REALIZED GAINS ON
SECURITIES.............. (0.039) (0.001) 0.000 0.000 0.000 (0.038) 0.000 0.000 0.000
RETURN OF CAPITAL........ 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
--------- --------- --------- --------- -------- -------- -------- -------- --------
TOTAL FROM
DISTRIBUTIONS........... (0.083) (0.045) (0.038) (0.035) (0.033) (0.074) (0.037) (0.029) (0.030)
--------- --------- --------- --------- -------- -------- -------- -------- --------
NET INCREASE (DECREASE)
IN NET ASSETS........... 0.354 0.506 (0.024) 0.096 0.060 0.256 (0.086) 0.260 0.106
NET ASSET VALUE AT END
OF PERIOD............... $ 2.382 $ 2.028 $ 1.522 $ 1.546 $ 1.450 $ 1.390 $ 1.134 $ 1.220 $ 0.960
--------- --------- --------- --------- -------- -------- -------- -------- --------
--------- --------- --------- --------- -------- -------- -------- -------- --------

TOTAL RETURN............. 22.09% 36.55% 0.94% 9.12% 6.82% 29.53% (3.99)% 30.47% 16.35%
NET ASSETS (IN
THOUSANDS).............. 621,065 318,253 157,660 140,396 82,335 47,770 26,641 19,456 10,050
RATIO OF OPERATING
EXPENSES TO AVERAGE NET
ASSETS.................. 0.39% 0.39% 0.45% 0.49% 0.60% 0.67% 0.91% 1.10% 1.23%
RATIO OF NET INVESTMENT
INCOME TO AVERAGE NET
ASSETS.................. 2.07% 2.46% 2.50% 2.36% 2.48% 2.89% 3.27% 2.60% 3.29%
PORTFOLIO TURNOVER
RATE.................... 19.3% 1.5% 1.8% 0.8% 1.2% 6.7% 25.5% 12.9% 20.9%
AVERAGE COMMISSION
RATE**.................. 0.05000

<CAPTION>
05/01/87-
12/31/87(A)
-----------
<S> <C>
NET ASSET VALUE AT
BEGINNING
OF PERIOD............... $ 1.000
NET INVESTMENT INCOME.... 0.016
NET REALIZED AND
UNREALIZED GAINS
(LOSSES) ON
INVESTMENTS............. (0.144)
-----------
TOTAL FROM INVESTMENT
OPERATIONS.............. (0.128)
DIVIDENDS FROM NET
INVESTMENT INCOME....... (0.016)
DISTRIBUTION FROM NET
REALIZED GAINS ON
SECURITIES.............. (0.002)
RETURN OF CAPITAL........ 0.000
-----------
TOTAL FROM
DISTRIBUTIONS........... (0.018)
-----------
NET INCREASE (DECREASE)
IN NET ASSETS........... (0.146)
NET ASSET VALUE AT END
OF PERIOD............... $ 0.854
-----------
-----------
TOTAL RETURN............. (12.91)%
NET ASSETS (IN
THOUSANDS).............. 7,212
RATIO OF OPERATING
EXPENSES TO AVERAGE NET
ASSETS.................. 1.35%*
RATIO OF NET INVESTMENT
INCOME TO AVERAGE NET
ASSETS.................. 2.39%*
PORTFOLIO TURNOVER
RATE.................... 1.9%
AVERAGE COMMISSION
RATE**..................
</TABLE>

- ------------------------------
(a) The Fund was declared effective by the Securities and Exchange Commission
on May 1, 1987.

* Annualized.

** Not required for years prior to 1996.
<PAGE>
6 HARTFORD INTERNATIONAL OPPORTUNITIES FUND, INC.
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
(FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
---------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED 07/02/90-
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90(A)
--------- --------- --------- --------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING
OF PERIOD.................... $ 1.306 $ 1.176 $ 1.215 $ 0.917 $ 0.973 $ 0.871 $ 1.000
NET INVESTMENT INCOME......... 0.023 0.020 0.016 0.009 0.013 0.011 0.015
NET REALIZED AND UNREALIZED
GAINS (LOSSES) ON
INVESTMENTS.................. 0.140 0.141 (0.039) 0.298 (0.056) 0.102 (0.129)
--------- --------- --------- --------- -------- -------- -----------
TOTAL FROM INVESTMENT
OPERATIONS................... 0.163 0.161 (0.023) 0.307 (0.043) 0.113 (0.114)
DIVIDENDS FROM NET INVESTMENT
INCOME....................... (0.025) (0.020) (0.016) (0.009) (0.013) (0.011) (0.015)
DISTRIBUTION FROM NET REALIZED
GAINS ON SECURITIES.......... (0.037) (0.011) 0.000 0.000 0.000 0.000 0.000
RETURN OF CAPITAL............. 0.000 0.000 0.000 0.000 0.000 0.000 0.000
--------- --------- --------- --------- -------- -------- -----------
TOTAL FROM DISTRIBUTIONS...... (0.062) (0.031) (0.016) (0.009) (0.013) (0.011) (0.015)
--------- --------- --------- --------- -------- -------- -----------
NET INCREASE (DECREASE) IN NET
ASSETS....................... 0.101 0.130 (0.039) 0.298 (0.056) 0.102 (0.129)
NET ASSET VALUE AT END OF
PERIOD....................... $ 1.407 $ 1.306 $ 1.176 $ 1.215 $ 0.917 $ 0.973 $ 0.871
--------- --------- --------- --------- -------- -------- -----------
--------- --------- --------- --------- -------- -------- -----------
TOTAL RETURN.................. 12.91% 13.93% (1.94)% 33.73% (4.43)% 13.00% (11.76)%
NET ASSETS (IN THOUSANDS)..... 996,543 686,475 563,765 281,608 47,560 22,854 9,352
RATIO OF OPERATING EXPENSES TO
AVERAGE NET ASSETS........... 0.79% 0.86% 0.85% 1.00% 1.23% 1.24% 1.04%*
RATIO OF NET INVESTMENT INCOME
TO AVERAGE NET ASSETS........ 1.74% 1.60% 1.42% 0.84% 1.40% 1.17% 2.65%*
PORTFOLIO TURNOVER RATE....... 70.0% 55.6% 46.4% 31.8% 25.1% 24.7% 3.0%
AVERAGE COMMISSION RATE**..... n/a
</TABLE>

- ------------------------------
(a) The Fund was declared effective by the Securities and Exchange Commission
on July 2, 1990.

* Annualized.

** Not required for years prior to 1996.
<PAGE>
HARTFORD SMALL COMPANY FUND, INC. 7
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
(FOR A SHARE
OUTSTANDING THROUGHOUT
THE INDICATED PERIOD)
----------------------
08/09/96-
12/31/96(A)
----------------------
<S> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD............ $ 1.000
NET INVESTMENT INCOME............................. 0.002
NET REALIZED AND UNREALIZED GAINS (LOSSES) ON
INVESTMENTS...................................... 0.069
-------
TOTAL FROM INVESTMENT OPERATIONS.................. 0.071
DIVIDENDS FROM NET INVESTMENT INCOME.............. (0.002)
DISTRIBUTION FROM NET REALIZED GAINS ON
SECURITIES....................................... 0.000
RETURN OF CAPITAL................................. 0.000
-------
TOTAL FROM DISTRIBUTIONS.......................... (0.002)
-------
NET INCREASE (DECREASE) IN NET ASSETS............. 0.069
NET ASSET VALUE AT END OF PERIOD.................. $ 1.069
-------
-------
TOTAL RETURN...................................... 18.12%*
NET ASSETS (IN THOUSANDS)......................... 42,812
RATIO OF OPERATING EXPENSES TO AVERAGE NET
ASSETS........................................... 0.72%*
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET
ASSETS........................................... 0.31%*
PORTFOLIO TURNOVER RATE........................... 31.8%
AVERAGE COMMISSION RATE........................... 0.02900
</TABLE>

- ------------------------------
(a) The Fund was declared effective by the Securities and Exchange Commission
on August 9, 1996.

- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
(FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
--------------------------------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87
---------- ---------- ----------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE
AT BEGINNING
OF PERIOD..... $ 3.527 $ 2.801 $ 3.099 $ 2.965 $ 2.927 $ 2.452 $ 2.775 $ 2.304 $ 1.977 $ 2.177
NET INVESTMENT
INCOME........ 0.060 0.070 0.061 0.053 0.051 $ 0.059 $ 0.070 $ 0.065 $ 0.045 $ 0.045
NET REALIZED
AND UNREALIZED
GAINS (LOSSES)
ON
INVESTMENTS... 0.763 0.840 (0.111) 0.339 0.219 0.532 (0.179) 0.522 0.327 0.084
---------- ---------- ----------- --------- --------- --------- --------- --------- --------- ---------
TOTAL FROM
INVESTMENT
OPERATIONS.... 0.823 0.910 (0.050) 0.392 0.270 0.591 (0.109) 0.587 0.372 0.129
DIVIDENDS FROM
NET INVESTMENT
INCOME........ (0.059) (0.070) (0.061) (0.053) (0.051) (0.059) (0.070) (0.065) (0.045) (0.045)
DISTRIBUTION
FROM NET
REALIZED GAINS
ON
SECURITIES.... (0.148) (0.114) (0.187) (0.205) (0.181) (0.057) (0.144) (0.051) 0.000 (0.284)
RETURN OF
CAPITAL....... 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
---------- ---------- ----------- --------- --------- --------- --------- --------- --------- ---------
TOTAL FROM
DISTRIBUTIONS... (0.207) (0.184) (0.248) (0.258) (0.232) (0.116) (0.214) (0.116) (0.045) (0.329)
---------- ---------- ----------- --------- --------- --------- --------- --------- --------- ---------
NET INCREASE
(DECREASE) IN
NET ASSETS.... 0.616 0.726 (0.298) 0.134 0.038 0.475 (0.323) 0.471 0.327 (0.200)
NET ASSET VALUE
AT END OF
PERIOD........ $ 4.143 $ 3.527 $ 2.801 $ 3.099 $ 2.965 $ 2.927 $ 2.452 $ 2.775 $ 2.304 $ 1.977
---------- ---------- ----------- --------- --------- --------- --------- --------- --------- ---------
---------- ---------- ----------- --------- --------- --------- --------- --------- --------- ---------

TOTAL RETURN... 24.33% 34.10% (1.89)% 14.34% 10.04% 24.58% (3.87)% 26.02% 19.00% 5.41%
NET ASSETS (IN
THOUSANDS).... 2,994,209 1,876,884 1,163,158 968,425 569,903 406,489 257,553 266,756 187,511 170,319
RATIO OF
OPERATING
EXPENSES TO
AVERAGE NET
ASSETS........ 0.46% 0.48% 0.50% 0.53% 0.57% 0.60% 0.66% 0.64% 0.65% 0.65%
RATIO OF NET
INVESTMENT
INCOME TO
AVERAGE NET
ASSETS........ 1.59% 2.23% 2.17% 1.86% 1.90% 2.14% 2.76% 2.31% 2.08% 1.83%
PORTFOLIO
TURNOVER
RATE.......... 42.3% 52.9% 63.8% 69.0% 69.8% 24.3% 20.2% 24.4% 22.9% 27.0%
AVERAGE
COMMISSION
RATE*......... 0.04900
</TABLE>

- ------------------------------
* Not required for years prior to 1996.
<PAGE>
HARTFORD ADVISERS FUND, INC. 9
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
(FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
------------------------------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87
---------- ---------- ---------- ---------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE
AT BEGINNING
OF PERIOD..... $ 1.958 $ 1.600 $ 1.752 $ 1.676 $ 1.649 $ 1.436 $ 1.543 $ 1.332 $ 1.213 $ 1.227
NET INVESTMENT
INCOME........ 0.059 0.064 0.054 0.050 0.059 $ 0.063 $ 0.074 $ 0.062 $ 0.051 $ 0.051
NET REALIZED
AND UNREALIZED
GAINS (LOSSES)
ON
INVESTMENTS... 0.255 0.377 (0.100) 0.145 0.070 0.223 (0.059) 0.221 0.119 0.025
---------- ---------- ---------- ---------- --------- --------- --------- --------- --------- ---------
TOTAL FROM
INVESTMENT
OPERATIONS.... 0.314 0.441 (0.046) 0.195 0.129 0.286 0.015 0.283 0.170 0.076
DIVIDENDS FROM
NET INVESTMENT
INCOME........ (0.059) (0.064) (0.054) (0.050) (0.059) (0.063) (0.074) (0.062) (0.051) (0.051)
DISTRIBUTION
FROM NET
REALIZED GAINS
ON
SECURITIES.... (0.044) (0.019) (0.052) (0.069) (0.043) (0.010) (0.048) (0.010) 0.000 (0.039)
RETURN OF
CAPITAL....... 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
---------- ---------- ---------- ---------- --------- --------- --------- --------- --------- ---------
TOTAL FROM
DISTRIBUTIONS... (0.103) (0.083) (0.106) (0.119) (0.102) (0.073) (0.122) (0.072) (0.051) (0.090)
---------- ---------- ---------- ---------- --------- --------- --------- --------- --------- ---------
NET INCREASE
(DECREASE) IN
NET ASSETS.... 0.211 0.358 (0.152) 0.076 0.027 0.213 (0.107) 0.211 0.119 (0.014)
NET ASSET VALUE
AT END OF
PERIOD........ $ 2.169 $ 1.958 $ 1.600 $ 1.752 $ 1.676 $ 1.649 $ 1.436 $ 1.543 $ 1.332 $ 1.213
---------- ---------- ---------- ---------- --------- --------- --------- --------- --------- ---------
---------- ---------- ---------- ---------- --------- --------- --------- --------- --------- ---------
TOTAL RETURN... 16.62% 28.34% (2.74)% 12.25% 8.30% 20.33% 1.26% 21.72% 14.24% 6.08%
NET ASSETS (IN
THOUSANDS).... 5,879,529 4,262,769 3,034,034 2,426,550 985,747 631,424 416,839 371,917 264,750 239,704
RATIO OF
OPERATING
EXPENSES TO
AVERAGE NET
ASSETS........ 0.63% 0.65% 0.65% 0.69% 0.78% 0.81% 0.89% 0.89% 0.90% 0.91%
RATIO OF NET
INVESTMENT
INCOME TO
AVERAGE NET
ASSETS........ 2.92% 3.57% 3.34% 3.07% 3.55% 4.13% 4.65% 4.14% 3.93% 4.00%
PORTFOLIO
TURNOVER
RATE.......... 53.8% 63.5% 60.0% 55.3% 72.8% 42.1% 35.7% 33.5% 30.9% 28.3%
AVERAGE
COMMISSION
RATE*......... 0.04870
</TABLE>

- ----------------------------------
* Not required for years prior to 1996.
<PAGE>
10 HARTFORD INTERNATIONAL ADVISERS FUND, INC.
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
(FOR A SHARE
OUTSTANDING THROUGHOUT
THE INDICATED PERIOD)
---------------------------
YEAR
ENDED 03/01/95-
12/31/96 12/31/95(A)
---------- ------------
<S> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD............ $ 1.109 $ 1.000
NET INVESTMENT INCOME............................. 0.040 0.030
NET REALIZED AND UNREALIZED GAINS (LOSSES) ON
INVESTMENTS...................................... 0.093 0.126
-------- -------
TOTAL FROM INVESTMENT OPERATIONS.................. 0.133 0.156
DIVIDENDS FROM NET INVESTMENT INCOME.............. (0.051) (0.030)
DISTRIBUTION FROM NET REALIZED GAINS ON
SECURITIES....................................... (0.024) (0.017)
RETURN OF CAPITAL................................. 0.000 0.000
-------- -------
TOTAL FROM DISTRIBUTIONS.......................... (0.075) (0.047)
-------- -------
NET INCREASE (DECREASE) IN NET ASSETS............. 0.058 0.109
NET ASSET VALUE AT END OF PERIOD.................. $ 1.167 $ 1.109
-------- -------
-------- -------
TOTAL RETURN...................................... 12.25% 15.84%
NET ASSETS (IN THOUSANDS)......................... 104,486 31,264
RATIO OF OPERATING EXPENSES TO AVERAGE NET
ASSETS........................................... 0.96% 0.65%*
RATIO OF NET INVESTMENT INCOME TO AVERAGE NET
ASSETS........................................... 3.24% 3.36%*
PORTFOLIO TURNOVER RATE........................... 95.2% 47.2%
AVERAGE COMMISSION RATE**......................... 0.00640
</TABLE>

- ------------------------------
(a) The Fund was declared effective by the Securities and Exchange Commission
on March 1, 1995.

** Not required for years prior to 1996.
<PAGE>
HARTFORD BOND FUND, INC. 11
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
(FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
------------------------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87
--------- --------- --------- --------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE AT
BEGINNING
OF PERIOD............... $ 1.028 $ 0.926 $ 1.044 $ 1.024 $ 1.061 $ 0.979 $ 0.976 $ 0.945 $ 0.952 $ 1.033
NET INVESTMENT INCOME.... 0.064 0.064 0.060 0.062 0.074 $ 0.072 $ 0.075 $ 0.079 $ 0.077 $ 0.080
NET REALIZED AND
UNREALIZED GAINS
(LOSSES) ON
INVESTMENTS............. (0.029) 0.102 (0.100) 0.039 (0.019) 0.082 0.003 0.031 (0.007) (0.081)
--------- --------- --------- --------- -------- -------- -------- -------- -------- --------
TOTAL FROM INVESTMENT
OPERATIONS.............. 0.035 0.166 (0.040) 0.101 0.055 0.154 0.078 0.110 0.070 (0.001)
DIVIDENDS FROM NET
INVESTMENT
INCOME.................. (0.063) (0.064) (0.060) (0.062) (0.074) (0.072) (0.075) (0.079) (0.077) (0.080)
DISTRIBUTION FROM NET
REALIZED GAINS ON
SECURITIES.............. 0.000 0.000 (0.018) (0.019) (0.018) 0.000 0.000 0.000 0.000 0.000
RETURN OF CAPITAL........ 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
--------- --------- --------- --------- -------- -------- -------- -------- -------- --------
TOTAL FROM
DISTRIBUTIONS........... (0.063) (0.064) (0.078) (0.081) (0.092) (0.072) (0.075) (0.079) (0.077) (0.080)
--------- --------- --------- --------- -------- -------- -------- -------- -------- --------
NET INCREASE (DECREASE)
IN NET ASSETS........... (0.028) 0.102 (0.118) 0.020 (0.037) 0.082 0.003 0.031 (0.007) (0.081)
NET ASSET VALUE AT END OF
PERIOD.................. $ 1.000 $ 1.028 $ 0.926 $ 1.044 $ 1.024 $ 1.061 $ 0.979 $ 0.976 $ 0.945 $ 0.952
--------- --------- --------- --------- -------- -------- -------- -------- -------- --------
--------- --------- --------- --------- -------- -------- -------- -------- -------- --------

TOTAL RETURN............. 3.54% 18.49% (3.95)% 10.24% 5.53% 16.43% 8.39% 12.10% 7.60% (0.01)%
NET ASSETS (IN
THOUSANDS).............. 402,548 342,495 247,458 239,602 128,538 97,377 70,915 61,602 54,215 50,037
RATIO OF OPERATING
EXPENSES TO AVERAGE NET
ASSETS.................. 0.52% 0.53% 0.55% 0.57% 0.64% 0.66% 0.67% 0.67% 0.69% 0.69%
RATIO OF NET INVESTMENT
INCOME TO AVERAGE NET
ASSETS.................. 6.37% 6.51% 6.23% 5.93% 7.21% 7.29% 7.82% 8.09% 8.12% 8.15%
PORTFOLIO TURNOVER
RATE.................... 212.0% 215.0% 328.8% 494.3% 434.1% 337.0% 161.6% 225.0% 230.3% 53.3%
CURRENT YIELD*........... 6.25% 6.46% 7.19% 4.93% 6.48% 6.62% 8.17% 7.92% 9.15% 8.67%
</TABLE>

- ------------------------------
* The yield information will fluctuate and publication of yield may not provide
a basis for comparison with bank deposits, other investments which are insured
and/or pay a fixed yield for a stated period of time, or other investment
companies. In addition, information may be of limited use for comparative
purposes because it does not reflect charges imposed at the Separate Account
level which, if included, would decrease the yield.
<PAGE>
12 HARTFORD MORTGAGE SECURITIES FUND, INC.
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
(FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
---------------------------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87
--------- --------- --------- --------- --------- --------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE AT
BEGINNING
OF PERIOD.............. $ 1.071 $ 0.984 $ 1.075 $ 1.079 $ 1.115 $ 1.054 $ 1.045 $ 1.006 $ 1.011 $ 1.087
NET INVESTMENT INCOME... 0.069 0.068 0.068 0.071 0.086 $ 0.088 $ 0.087 $ 0.088 $ 0.087 $ 0.093
NET REALIZED AND
UNREALIZED GAINS
(LOSSES) ON
INVESTMENTS............ (0.018) 0.087 (0.086) (0.004) (0.036) 0.061 0.009 0.039 (0.005) (0.067)
--------- --------- --------- --------- --------- --------- -------- -------- -------- ---------
TOTAL FROM INVESTMENT
OPERATIONS............. 0.051 0.155 (0.018) 0.067 0.050 0.149 0.096 0.127 0.082 0.026
DIVIDENDS FROM NET
INVESTMENT INCOME...... (0.066) (0.068) (0.068) (0.071) (0.086) (0.088) (0.087) (0.088) (0.087) (0.093)
DISTRIBUTION FROM NET
REALIZED GAINS ON
SECURITIES............. 0.000 0.000 (0.005) 0.000 0.000 0.000 0.000 0.000 0.000 (0.009)
RETURN OF CAPITAL....... 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
--------- --------- --------- --------- --------- --------- -------- -------- -------- ---------
TOTAL FROM
DISTRIBUTIONS.......... (0.066) (0.068) (0.073) (0.071) (0.086) (0.088) (0.087) (0.088) (0.087) (0.102)
--------- --------- --------- --------- --------- --------- -------- -------- -------- ---------
NET INCREASE (DECREASE)
IN NET ASSETS.......... (0.015) 0.087 (0.091) (0.004) (0.036) 0.061 0.009 0.039 (0.005) (0.076)
NET ASSET VALUE AT END
OF PERIOD.............. $ 1.056 $ 1.071 $ 0.984 $ 1.075 $ 1.079 $ 1.115 $ 1.054 $ 1.045 $ 1.006 $ 1.011
--------- --------- --------- --------- --------- --------- -------- -------- -------- ---------
--------- --------- --------- --------- --------- --------- -------- -------- -------- ---------

TOTAL RETURN............ 4.99% 16.17% (1.61)% 6.31% 4.64% 14.71% 9.70% 13.13% 8.38% 2.64%
NET ASSETS (IN
THOUSANDS)............. 325,495 327,565 304,147 365,198 258,711 162,484 105,620 85,908 85,075 84,075
RATIO OF OPERATING
EXPENSES TO AVERAGE NET
ASSETS................. 0.45% 0.47% 0.48% 0.49% 0.56% 0.58% 0.58% 0.58% 0.60% 0.61%
RATIO OF NET INVESTMENT
INCOME TO AVERAGE NET
ASSETS................. 6.67% 6.50% 6.65% 6.49% 7.96% 8.25% 8.42% 8.64% 8.56% 9.02%
PORTFOLIO TURNOVER
RATE................... 200.0% 489.4% 365.7% 183.4% 277.2% 152.2% 85.6% 91.3% 185.0% 143.6%
CURRENT YIELD*.......... 6.67% 6.90% 7.84% 5.73% 7.51% 8.16% 8.21% 8.28% 9.12% 9.41%
</TABLE>

- ------------------------------

* The yield information will fluctuate and publication of yield may not provide
a basis for comparison with bank deposits, other investments which are
insured and/or pay a fixed yield for a stated period of time, or other
investment companies. In addition, information may be of limited use for
comparative purposes because it does not reflect charges imposed at the
Separate Account level which, if included, would decrease the yield.
<PAGE>
HVA MONEY MARKET FUND, INC. 13
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
(FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
------------------------------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE AT
BEGINNING OF
PERIOD............... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
NET INVESTMENT
INCOME............... 0.050 0.056 0.039 0.029 0.036 $ 0.059 $ 0.078 $ 0.088 $ 0.071 $ 0.063
NET REALIZED AND
UNREALIZED GAINS
(LOSSES) ON
INVESTMENTS.......... 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
TOTAL FROM INVESTMENT
OPERATIONS........... 0.050 0.056 0.039 0.029 0.036 0.059 0.078 0.088 0.071 0.063
DIVIDENDS FROM NET
INVESTMENT INCOME.... (0.050) (0.056) (0.039) (0.029) (0.036) (0.059) (0.078) (0.088) (0.071) (0.063)
DISTRIBUTION FROM NET
REALIZED GAINS ON
SECURITIES........... 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
RETURN OF CAPITAL..... 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
TOTAL FROM
DISTRIBUTIONS........ (0.050) (0.056) (0.039) (0.029) (0.036) (0.059) (0.078) (0.088) (0.071) (0.063)
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
NET INCREASE
(DECREASE) IN NET
ASSETS............... 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
NET ASSET VALUE AT END
OF
PERIOD............... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
TOTAL RETURN.......... 5.09% 5.74% 3.95% 2.94% 3.63% 6.01% 8.09% 9.10% 7.40% 6.49%

NET ASSETS (IN
THOUSANDS)........... 542,586 339,709 321,465 234,088 190,246 177,483 194,462 129,808 127,346 104,002
RATIO OF OPERATING
EXPENSES TO AVERAGE
NET ASSETS........... 0.44% 0.45% 0.47% 0.48% 0.53% 0.54% 0.57% 0.58% 0.58% 0.58%
RATIO OF NET
INVESTMENT INCOME TO
AVERAGE NET ASSETS... 5.04% 5.57% 3.99% 2.91% 3.60% 5.88% 7.80% 8.75% 7.19% 6.36%
PORTFOLIO TURNOVER
RATE................. -- -- -- -- -- -- -- -- -- --
CURRENT YIELD*........ 5.1% 5.40% 5.43% 2.89% 3.09% 4.66% 7.73% 8.21% 8.49% 7.17%
EFFECTIVE YIELD*...... 5.23% 5.54% 5.58% 2.93% 3.14% 4.79% 8.03% 8.55% 8.85% 7.43%
</TABLE>

- ------------------------------

* The yield information will fluctuate and publication of yield may not provide
a basis for comparison with bank deposits, other investments which are
insured and/or pay a fixed yield for a stated period of time, or other
investment companies. In addition, information may be of limited use for
comparative purposes because it does not reflect charges imposed at the
Separate Account level which, if included, would decrease the yield.
<PAGE>
14 HARTFORD U.S. GOVERNMENT MONEY MARKET FUND, INC.
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
(FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
--------------------------------------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
12/31/96 12/31/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87
----------- -------- ----------- ----------- -------- -------- -------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET
VALUE AT
BEGINNING OF
PERIOD....... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
NET INVESTMENT
INCOME....... 0.048 0.054 0.036 0.027 0.032 $ 0.055 $ 0.073 $ 0.081 $ 0.067 $ 0.056
NET REALIZED
AND
UNREALIZED
GAINS
(LOSSES) ON
INVESTMENTS... 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
----------- -------- ----------- ----------- -------- -------- -------- ----------- ----------- -----------
TOTAL FROM
INVESTMENT
OPERATIONS... 0.048 0.054 0.036 0.027 0.032 0.055 0.073 0.081 0.067 0.056
DIVIDENDS FROM
NET
INVESTMENT
INCOME....... (0.048) (0.054) (0.036) (0.027) (0.032) (0.055) (0.073) (0.081) (0.067) (0.056)
DISTRIBUTION
FROM NET
REALIZED
GAINS ON
SECURITIES... 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
RETURN OF
CAPITAL...... 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
----------- -------- ----------- ----------- -------- -------- -------- ----------- ----------- -----------
TOTAL FROM
DISTRI
BUTIONS...... (0.048) (0.054) (0.036) (0.027) (0.032) (0.055) (0.073) (0.081) (0.067) (0.056)
----------- -------- ----------- ----------- -------- -------- -------- ----------- ----------- -----------
NET INCREASE
(DECREASE) IN
NET ASSETS... 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
NET ASSET
VALUE AT END
OF
PERIOD....... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
----------- -------- ----------- ----------- -------- -------- -------- ----------- ----------- -----------
----------- -------- ----------- ----------- -------- -------- -------- ----------- ----------- -----------

TOTAL
RETURN....... 4.87% 5.52% 3.67% 2.68% 3.22% 5.61% 7.52% 8.43% 6.92% 5.75%
NET ASSETS (IN
THOUSANDS)... 11.730 10,070 9,619 9,449 10,525 11,257 10,496 7,814 7,262 5,688
RATIO OF
OPERATING
EXPENSES TO
AVERAGE NET
ASSETS....... 0.58% 0.57% 0.58% 0.58% 0.75% 0.73% 0.73% 0.77% 0.75% 0.66%
RATIO OF NET
INVESTMENT
INCOME TO
AVERAGE NET
ASSETS....... 4.77% 5.38% 3.63% 2.65% 3.19% 5.48% 7.29% 8.14% 6.76% 5.57%
PORTFOLIO
TURNOVER
RATE......... -- -- -- -- -- -- -- -- -- --
CURRENT
YIELD*....... 4.88% 5.47% 5.14% 2.67% 2.69% 4.24% 7.59% 7.53% 8.27% 6.17%
EFFECTIVE
YIELD*....... 4.995% 5.62% 5.27% 2.71% 2.72% 4.31% 7.88% 7.82% 8.62% 6.36%
</TABLE>

- ------------------------------

* The yield information will fluctuate and publication of yield may not provide
a basis for comparison with bank deposits, other investments which are
insured and/or pay a fixed yield for a stated period of time, or other
investment companies. In addition, information may be of limited use for
comparative purposes because it does not reflect charges imposed at the
Separate Account level which, if included, would decrease the yield.
<PAGE>
HARTFORD MUTUAL FUNDS 15
- --------------------------------------------------------------------------------

- -------------------------------------------

INTRODUCTION TO THE
HARTFORD MUTUAL FUNDS

The Funds are made available to serve as the underlying investment vehicles
for certain variable annuity and variable life insurance separate accounts of
The Hartford Life Insurance Companies. Each Fund is an open-end management
investment company, commonly known as a mutual fund, organized as a Maryland
corporation. Each Fund has different investment objectives, styles and policies.
These differences affect the types of securities in which each fund may invest
and, therefore, the potential return of each Fund and the associated risks.
There is no assurance, however, that any Fund will meet its investment goals.
Whether an investment in a particular Fund is appropriate for you depends on
your investment goals, including the return you seek, the expected duration of
your investment and the level of risk you are willing to bear.

HL Investment Advisors, Inc. ("HL Advisors") is the investment manager to
each Fund. In addition, under HL Advisors' general management, Wellington
Management Company, LLP ("Wellington Management") serves as sub-adviser to the
Capital Appreciation Fund, Dividend and Growth Fund, International Advisers
Fund, International Opportunities Fund, Small Company Fund, Stock Fund, and
Advisers Fund. In addition, under HL Advisors' general management, the Hartford
Investment Management Company ("HIMCO") provides investment management services
for the Index Fund, Bond Fund, Mortgage Securities Fund, U.S. Government Money
Market Fund and HVA Money Market Fund.

HL Advisors was incorporated in Connecticut in 1981 and is a majority-owned
indirect subsidiary of The Hartford Financial Services Group, Inc. ("The
Hartford"), a Connecticut insurance holding company with over $100 billion in
assets. Wellington Management, a Massachusetts limited liability partnership, is
a professional investment counseling firm that provides services to investment
companies, employee benefit plans, endowments, foundations and other
institutions and individuals. Wellington Management and its predecessor
organizations have provided investment advisory services since 1928. HIMCO is a
professional money management firm that provides services to investment
companies, employee benefit plans and its affiliated insurance companies. HIMCO
was incorporated in 1996 and is a wholly-owned subsidiary of The Hartford. As of
December 31, 1996, HL Advisors, HIMCO and their affiliates had investment
management authority with respect to approximately $47 billion of assets for
various clients. As of the same date, Wellington Management had investment
management authority with respect to approximately $133 billion of assets for
various clients.

- ---------------------------------------------------

INVESTMENT OBJECTIVES AND
STYLES OF THE FUNDS

The Funds have different investment objectives and policies, as described
below. The differences in objectives and policies among the Funds can be
expected to affect the return of each Fund and the degree of market and
financial risk to which each Fund is subject. For more information about the
investment strategies employed by the Funds, see "Common Investment Policies and
Risk Factors." The investment objective of each Fund and certain other
investment restrictions enumerated in detail in the SAI are considered
fundamental and cannot be changed without the affirmative vote of a majority of
the outstanding voting securities of the particular Fund. All other policies not
specifically designated as fundamental are nonfundamental and may be changed by
the Board of Directors of the particular Fund. See the SAI for a complete
listing of investment restrictions. Stated below is the investment objective and
investment style for each Fund. For a description of each Fund's investment
policies and risk factors, see "Common Investment Policies and Risk Factors."

- ---------------------------------------------------
HARTFORD CAPITAL APPRECIATION FUND, INC.

Hartford Capital Appreciation Fund, Inc. (the "Capital Appreciation Fund")
was incorporated in 1983 under Maryland law.

INVESTMENT OBJECTIVE.

The Capital Appreciation Fund seeks growth of capital by investing in
securities selected solely on the basis of potential for capital appreciation;
income, if any, is an incidental consideration.

INVESTMENT STYLE.

The Capital Appreciation Fund invests in a diversified portfolio of
primarily equity securities. Wellington Management identifies, through
fundamental analysis, companies that it believes have substantial near-term
capital appreciation potential regardless of company size or industry sector.
This approach is sometimes referred to as a "stock picking" approach and results
in having all market capitalization sectors (i.e., small, medium, and large
companies) represented. Small and medium sized companies are selected primarily
on the basis of dynamic earnings growth potential. Larger companies are selected
primarily based on the expectation for a catalyst event that will trigger stock
price appreciation. Fundamental analysis involves the assessment of a company
through such factors as its business environment, management, balance sheet,
income statement, anticipated earnings, revenues, dividends, and other related
measures of value. Up to 20% of the Capital Appreciation

<PAGE>
16 HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------

Fund's total assets may be invested in securities of non-U.S. companies.

- ---------------------------------------------------
HARTFORD DIVIDEND AND GROWTH FUND, INC.

Hartford Dividend and Growth Fund, Inc. (the "Dividend and Growth Fund") was
incorporated in 1993 under Maryland law.

INVESTMENT OBJECTIVE.

The Dividend and Growth Fund seeks a high level of current income consistent
with growth of capital and reasonable investment risk.

INVESTMENT STYLE.

The Dividend and Growth Fund invests in a diversified portfolio of primarily
equity securities that typically have above average income yield and whose
prospects for capital appreciation are considered favorable by Wellington
Management. Under normal market and economic conditions at least 65% of the
Dividend and Growth Fund's total assets are invested in dividend paying equity
securities. Wellington Management uses fundamental analysis to evaluate a
security for purchase or sale by the Dividend and Growth Fund. Fundamental
analysis involves the assessment of a company through such factors as its
business environment, management, balance sheet, income statement, anticipated
earnings, revenues, dividends, and other related measures of value. As a key
component of the fundamental analysis done for the Dividend and Growth Fund,
Wellington Management evaluates a company's ability to sustain and potentially
increase its dividend. The Dividend and Growth Fund's portfolio is broadly
diversified by industry and company. Up to 20% of the Dividend and Growth Fund's
total assets may be invested in securities of non-U.S. companies.

- ---------------------------------------------------
HARTFORD INDEX FUND, INC.

Hartford Index Fund, Inc. (the "Index Fund") was incorporated in 1983 under
Maryland law.

INVESTMENT OBJECTIVE.

The Index Fund seeks to provide investment results which approximate the
price and yield performance of publicly-traded common stocks in the aggregate.

INVESTMENT STYLE.

The Index Fund uses the Standard & Poor's 500 Composite Stock Price Index
(the "Index") as its standard performance comparison because it represents a
significant proportion of the total market value of all common stocks, is well
known to investors and, in the opinion of the management of the Index Fund, is
representative of the performance of publicly-traded common stocks. Therefore,
the Index Fund attempts to approximate the capital performance and dividend
income of the Index.

The Index Fund generally invests in no fewer than 499 stocks. HIMCO selects
stocks for the Index Fund's portfolio after taking into account their individual
weights in the Index. Temporary cash balances, normally not expected to exceed
2% of the Index Fund's net assets, may be invested in short-term money market
instruments.

The Index is comprised of 500 selected common stocks, most of which are
listed on the New York Stock Exchange. Standard & Poor's Corporation ("S&P")
chooses the stocks to be included in the Index on a proprietary basis. The
weightings of stocks in the Index are based on each stock's relative total
market value, that is, its market price per share times the number of shares
outstanding. Because of this weighting, as of December 31, 1996, approximately
fifty percent of the Index was composed of the fifty-six largest companies, the
five largest being General Electric Co., Coca-Cola Company, Exxon Corp., Intel
Corp. and Microsoft Corp.

No attempt is made to "manage" the Index Fund's portfolio in the traditional
sense, using economic, financial and market analysis, nor will the adverse
financial situation of a company directly result in its elimination from the
Index Fund's portfolio unless, of course, the company is removed from the Index.
From time to time administrative adjustments may be made in the Index Fund's
portfolio because of mergers, changes in the composition of the Index and
similar reasons.

The Index Fund's ability to approximate the performance of the Index will
depend to some extent on the size of cash flows into and out of the Index Fund.
Investment changes to accommodate these cash flows will be made to maintain the
similarity of the Index Fund's portfolio to the Index, to the maximum
practicable extent.

"Standard & Poor's-Registered Trademark-", "S&P-Registered Trademark-", "S&P
500-Registered Trademark-", "Standard & Poor's 500", and "500" are trademarks of
The McGraw-Hill Companies, Inc. and have been licensed for use by Hartford Life
Insurance Company. The Index Fund is not sponsored, endorsed, sold or promoted
by S&P. S&P makes no representation or warranty, express or implied, to the
shareholders of the Index Fund regarding the advisability of investing in
securities generally or in the Index Fund particularly or the ability of the S&P
500 Index to track general stock market performance. S&P's only relationship to
Hartford Life Insurance Company is the licensing of certain trademarks and trade
names of S&P and of the S&P 500 Index which is determined, composed and
calculated by S&P without regard to the Index Fund or Hartford Life Insurance
Company. S&P has no obligation to take the needs of the Index Fund or its
shareholders, or Hartford Life Insurance Company, into consideration in
determining, composing or calculating the S&P 500 Index. S&P is not responsible
for and has not participated in the determination of the net asset value of the
Index Fund or the timing of the issuance or sale of shares in the Index Fund.
S&P has

<PAGE>
HARTFORD MUTUAL FUNDS 17
- --------------------------------------------------------------------------------

no obligation or liability in connection with the administration, marketing or
trading of the Index Fund.

In addition, S&P does not guarantee the accuracy and/ or the completeness of
the S&P 500 Index or any data included therein and S&P shall have no liability
for any errors, omissions, or interruptions therein. S&P makes no warranty,
express or implied, as to results to be obtained by the Index Fund, its
shareholders or any other person or entity from the use of the S&P 500 Index or
any data included therein. S&P makes no express or implied warranties, and
expressly disclaims all warranties of merchantability or fitness for a
particular purpose or use with respect to the S&P 500 Index or any data included
therein. Without limiting any of the foregoing, in no event shall S&P have any
liability for any special, punitive, indirect, or consequential damages
(including lost profits), even if notified of the possibility of such damages.

- ---------------------------------------------------
HARTFORD INTERNATIONAL OPPORTUNITIES
FUND, INC.

Hartford International Opportunities Fund, Inc. (the "International
Opportunities Fund") was incorporated in 1990 under Maryland law.

INVESTMENT OBJECTIVE.

The International Opportunities Fund seeks long-term total rate of return
consistent with prudent investment risk through investment primarily in equity
securities issued by non-U.S. companies.

INVESTMENT STYLE.

The International Opportunities Fund invests in a diversified portfolio of
primarily equity securities covering a broad range of countries, industries, and
companies. Securities in which the International Opportunities Fund invests are
denominated in both U.S. dollars and non-U.S. currencies (including the European
Currency Unit) and generally are traded in non-U.S. markets. Under normal market
conditions, at least 65% of the International Opportunities Fund's total assets
are invested in equity securities issued by non-U.S. companies. Wellington
Management uses a three-pronged approach. First, Wellington Management
determines the relative attractiveness of the many countries in which the
International Opportunities Fund may invest based upon the economic and
political environment of each country. Second, Wellington Management evaluates
industries on a global basis to determine which industries offer the most value
and potential for capital appreciation given current and projected global and
local economic and market conditions. Finally, Wellington Management conducts
fundamental research on individual companies and considers companies for
inclusion in the International Opportunities Fund's portfolio that are typically
larger, high quality companies that operate in established markets. Fundamental
analysis involves the assessment of a company through such factors as its
business environment, management, balance sheet, income statement, anticipated
earnings, revenues, dividends, and other related measures of value. In analyzing
companies for investment, Wellington Management looks for, among other things, a
strong balance sheet, attractive industry dynamics, strong competitive
advantages and attractive relative value within the context of a security's
primary trading market. The International Opportunities Fund may also invest on
a limited basis in smaller companies and less developed markets. The
International Opportunities Fund anticipates that, under normal market
conditions, it will diversify its investments in at least three countries other
than the United States. The International Opportunities Fund will be subject to
certain risks because it invests primarily in securities issued by non-U.S.
companies.

- ---------------------------------------------------
HARTFORD SMALL COMPANY FUND, INC.

Hartford Small Company Fund, Inc. (the "Small Company Fund") was
incorporated in 1996 under Maryland law.

INVESTMENT OBJECTIVE.

The Small Company Fund seeks growth of capital by investing primarily in
equity securities selected on the basis of potential for capital appreciation.

INVESTMENT STYLE.

Under normal market and economic conditions at least 65% of the Small
Company Fund's total assets are invested in equity securities of companies which
have less than $2 billion in market capitalization ("Small Capitalization
Securities"). Wellington Management identifies, through fundamental analysis,
companies that it believes have substantial near-term capital appreciation
potential regardless of industry sector. However, overall industry exposure is
monitored by Wellington Management so as to maintain broad industry
diversification. In selecting investments, Wellington Management considers
securities of companies that, in its opinion, have potential for above-average
earnings growth, are undervalued in relation to their investment potential, have
business and/or fundamental financial characteristics that are misunderstood by
investors, or are relatively obscure, i.e., undiscovered by the overall
investment community. Fundamental analysis involves the assessment of a company
through such factors as its business environment, management, balance sheet,
income statement, anticipated earnings, revenues, dividends, and other related
measures of value. Up to 20% of the Small Company Fund's total assets may be
invested in securities of non-U.S. companies. Investing in Small Capitalization
Securities involves special risks. See "Common Investment Policies and Risk
Factors -- Small Capitalization Securities."

<PAGE>
18 HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------

- ---------------------------------------------------
HARTFORD STOCK FUND, INC.

Hartford Stock Fund, Inc. (the "Stock Fund") was incorporated in 1976 under
Maryland law.

INVESTMENT OBJECTIVE.

The Stock Fund seeks long-term capital growth primarily through capital
appreciation, with income a secondary consideration, by investing in primarily
equity securities.

INVESTMENT STYLE.

Under normal market and economic conditions at least 65% of the Stock Fund's
total assets are invested in stocks. The Stock Fund invests in a diversified
portfolio of primarily equity securities using a two-tiered investment approach.
First, under what is sometimes referred to as a "top down" approach, Wellington
Management analyzes the macro economic and investment environment. This includes
an evaluation of economic conditions, U.S. fiscal and monetary policy,
demographic trends, and investor sentiment. Through top down analysis,
Wellington Management anticipates secular and cyclical changes and identifies
industries and economic sectors that are expected to grow faster than the
overall economy. Second, top down analysis is followed by what is sometimes
referred to as a "bottom up" approach, which is the use of fundamental analysis
to identify specific securities for purchase or sale. The Stock Fund's portfolio
emphasizes high-quality growth companies. The key characteristics of
high-quality growth companies include a leadership position within an industry,
a strong balance sheet, a high return on equity, sustainable or increasing
dividends, a strong management team, and a globally competitive position.
Fundamental analysis involves the assessment of a company through such factors
as its business environment, management, balance sheet, income statement,
anticipated earnings, revenues, dividends, and other related measures of value.
Up to 20% of the Stock Fund's total assets may be invested in securities of
non-U.S. companies.

- ---------------------------------------------------
HARTFORD ADVISERS FUND, INC.

Hartford Advisers Fund, Inc. (the "Advisers Fund") was incorporated in 1982
under Maryland law.

INVESTMENT OBJECTIVE.

The Advisers Fund seeks maximum long-term total rate of return consistent
with prudent investment risk by investing in common stock and other equity
securities, bonds and other debt securities, and money market instruments.

INVESTMENT STYLE.

The Advisers Fund seeks to achieve its objective through the active
allocation of its assets among the asset categories of equity securities, debt
securities and money market instruments based upon Wellington Management's
judgment of the projected investment environment for financial assets, relative
fundamental values and attractiveness of each asset category, and expected
future returns of each asset category. Wellington Management bases its asset
allocation decisions on fundamental analysis and does not attempt to make
short-term market timing decisions among asset categories. As a result, shifts
in asset allocation are expected to be gradual and continuous and the Advisers
Fund will normally have some portion of its assets invested in each asset
category. The Advisers Fund does not have percentage limitations on the amount
that may be allocated to each asset category. The Advisers Fund's investments in
equity securities and securities that are convertible into equity securities
will be substantially similar to the investments permitted for the Stock Fund.
See "Hartford Stock Fund." The debt securities in which the Advisers Fund may
invest include securities issued or guaranteed by the U.S. Government and its
agencies or instrumentalities, securities rated investment grade, or if unrated,
are deemed by Wellington Management to be of comparable quality, and with
respect to 5% of the Advisers Fund's assets, securities rated below investment
grade which are known as high yield-high risk securities or junk bonds. The
money market instruments in which the Adviser's Fund may invest are described
under "Common Investment Policies and Risk Factors -- Money Market Instruments
and Temporary Investment Strategies." Up to 20% of the Advisers Fund's total
assets may be invested in securities of non-U.S. companies.

- ---------------------------------------------------
HARTFORD INTERNATIONAL ADVISERS FUND, INC.

Hartford International Advisers Fund, Inc. (the "International Advisers
Fund") was incorporated in 1994 under Maryland law.

INVESTMENT OBJECTIVE.

The International Advisers Fund seeks maximum long-term total rate of return
consistent with prudent investment risk.

INVESTMENT STYLE.

The International Advisers Fund seeks to achieve its objective through the
active allocation of its assets among the asset categories of equity securities,
debt securities and money market instruments based upon Wellington Management's
judgment of the projected investment environment for financial assets, relative
fundamental values and attractiveness of each asset category, and expected
future returns of each asset category. Wellington Management bases its asset
allocation decisions on fundamental analysis and does not attempt to make
short-term market timing decisions among asset categories. As a result, shifts
in asset allocation are expected to be gradual and continuous and the
International Advisers Fund will normally have some portion of its assets
invested in each asset category. The International

<PAGE>
HARTFORD MUTUAL FUNDS 19
- --------------------------------------------------------------------------------

Advisers Fund does not have percentage limitations on the amount that may be
allocated to each asset category. The International Advisers Fund's investments
in equity securities are substantially similar to the equity securities
investments permitted for the International Opportunities Fund. See "Hartford
International Opportunities Fund, Inc. -- Investment Style."

The International Advisers Fund consists of a diversified portfolio of
securities covering a broad range of countries, industries, and companies. The
International Advisers Fund anticipates that, under normal market conditions, it
will diversify its investments in at least three countries other than the United
States.

Securities in which the International Advisers Fund invests are denominated
in both U.S. dollars and non-U.S. currencies (including the European Currency
Unit) and generally are traded on non-U.S. markets.

Debt securities in which the International Advisers Fund may invest include
investment grade, non-convertible debt securities assigned within the four
highest bond rating categories by Moody's Investors Service, Inc. ("Moody's") or
S&P, or, if unrated, which are determined by Wellington Management to be of
comparable quality. In addition, the International Advisers Fund may invest up
to 15% of its total assets in high yield-high risk securities, commonly known as
"junk bonds." Such securities may be rated as low as "C" by Moody's and by S&P,
or, if unrated, are of comparable quality as determined by Wellington
Management.

- ---------------------------------------------------
HARTFORD BOND FUND, INC.

Hartford Bond Fund, Inc. (the "Bond Fund") was incorporated in 1982 under
Maryland law.

INVESTMENT OBJECTIVE.

The Bond Fund seeks maximum current income consistent with preservation of
capital by investing primarily in fixed-income securities.

INVESTMENT STYLE.

The Bond Fund is comprised of a diversified portfolio of fixed-income
securities. Under normal circumstances at least 80% of the Bond Fund's portfolio
is invested in investment grade bond-type securities. Up to 20% of the Bond Fund
may be invested in securities rated in the highest category of below investment
grade bonds ("Ba" by Moody's or "BB" by S&P, or securities which, if unrated,
are determined by HIMCO to be of comparable quality. Securities rated below
investment grade are commonly referred to as "high yield-high risk securities"
or "junk bonds". No investments are made in debt securities rated below "Ba" and
"BB", or if unrated, determined to be of comparable quality by HIMCO.
Investments in securities rated in the highest category below investment grade
may offer an attractive risk/reward trade-off and investment in this sector may
enhance the current yield and total return of the bond fund over time. Investing
in securities within this rating category combined with the investment grade
portion of the portfolio is designed to provide investors with both a high level
of current income and attractive relative total returns.

The Bond Fund will invest at least 65% of its total assets in bonds and debt
securities with a maturity of at least one year. The Bond Fund may invest up to
15% of its total assets in preferred stocks, convertible securities, and
securities carrying warrants to purchase equity securities. The Bond Fund will
not invest in common stocks directly, but may retain, for reasonable periods of
time, common stocks acquired upon conversion of debt securities or upon exercise
of warrants acquired with debt securities. Under normal circumstances, up to 20%
of the Bond Fund's total assets may be invested in securities of non-U.S.
companies.

- ---------------------------------------------------
HARTFORD MORTGAGE SECURITIES FUND, INC.

Hartford Mortgage Securities Fund, Inc. (the "Mortgage Securities Fund") was
incorporated in 1984 under Maryland law.

INVESTMENT OBJECTIVE.

The Mortgage Securities Fund seeks maximum current income consistent with
safety of principal and maintenance of liquidity by investing primarily in
mortgage-related securities, including securities issued by the Government
National Mortgage Association.

INVESTMENT STYLE.

The Mortgage Securities Fund seeks to achieve its objective by investing,
under normal circumstances, at least 65% of its total assets in high quality
mortgage-related securities either (i) issued by U.S. Government agencies,
instrumentalities or sponsored corporations or (ii) rated A or better by Moody's
or S&P or, if not rated, which are of equivalent investment quality as
determined by HIMCO. At times the Mortgage Securities Fund may invest in
mortgage-related securities not meeting the foregoing investment quality
standards when HIMCO deems such investments to be consistent with the Fund's
investment objective; however, no such investments will be made in excess of 20%
of the value of the Fund's total assets. Such investments will be considered
mortgage-related securities for purposes of the policy that the Fund invest at
least 65% of the value of its total assets in mortgage-related securities,
including securities issued by the GNMA.

- ---------------------------------------------------

HARTFORD U.S. GOVERNMENT MONEY MARKET
FUND, INC.

Hartford U.S. Government Money Market Fund, Inc. (the "U.S. Government Money
Market Fund") was incorporated in 1982 under Maryland law.
<PAGE>
20 HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------

INVESTMENT OBJECTIVE.

The U.S. Government Money Market Fund seeks maximum current income
consistent with preservation of capital.

INVESTMENT STYLE.

The U.S. Government Money Market Fund seeks to maintain a stable net asset
value of $1.00 per share; however, there can be no assurance that the Fund will
achieve this goal. The U.S. Government Money Market Fund's portfolio will
consist entirely of cash, cash equivalents and high quality debt securities as
permitted under Rule 2a-7 of the Investment Company Act of 1940 (the "1940
Act"). Each investment will have an effective maturity date of 397 days or less
computed in accordance with Rule 2a-7. The average maturity of the portfolio
will vary according to HIMCO's appraisal of money market conditions and will not
exceed 90 days. All securities purchased by the U.S. Government Money Market
Fund will be U.S. dollar denominated.

The U.S. Government Money Market Fund seeks to achieve its objective by
investing in short-term, marketable obligations issued or guaranteed by the U.S.
Government or by agencies or instrumentalities of the U.S. Government, whether
or not they are guaranteed by the full faith and credit of the U.S. Government.

- ---------------------------------------------------
HVA MONEY MARKET FUND, INC.

HVA Money Market Fund, Inc. (the "Money Market Fund") was incorporated in
1982 under Maryland law.

INVESTMENT OBJECTIVE.

The Money Market Fund seeks maximum current income consistent with liquidity
and preservation of capital.

INVESTMENT STYLE.

The Money Market Fund seeks to maintain a stable net asset value of $1.00
per share; however, there can be no assurance that the Fund will achieve this
goal. The Money Market Fund's portfolio will consist entirely of cash, cash
equivalents and high quality debt securities as permitted under Rule 2a-7 of the
Investment Company Act of 1940 (the "1940 Act"). Each investment will have an
effective maturity date of 397 days or less computed in accordance with Rule
2a-7. The average maturity of the portfolio will vary according to HIMCO's
appraisal of money market conditions and will not exceed 90 days. All securities
purchased by the Money Market Fund will be U.S. dollar denominated.

- ---------------------------------------------------
COMMON INVESTMENT POLICIES
AND RISK FACTORS

- --------------------------------

MONEY MARKET INSTRUMENTS AND
TEMPORARY INVESTMENT STRATEGIES

In addition to the Money Market Fund and the U.S. Government Money Market
Fund, which may invest in cash, cash equivalents and money market instruments at
any time, all other Funds may hold cash or cash equivalents and invest in high
quality money market instruments under appropriate circumstances as determined
by HIMCO or Wellington Management. Such Funds may invest up to 100 % of their
assets in cash, cash equivalents or money market instruments only for temporary
defensive purposes.

Money market instruments include: (1) banker's acceptances; (2) obligations
of governments (whether U.S. or non-U.S.) and their agencies and
instrumentalities; (3) short-term corporate obligations, including commercial
paper, notes, and bonds; (4) other short-term debt obligations; (5) obligations
of U.S. banks, non-U.S. branches of U.S. banks (Eurodollars), U.S. branches and
agencies of non-U.S. banks (Yankee dollars), and non-U.S. branches of non-U.S.
banks; (6) asset-backed securities; and (7) repurchase agreements.

- ---------------------------------------------------

REPURCHASE AGREEMENTS

Each Fund is permitted to enter into fully collateralized repurchase
agreements. A repurchase agreement is an agreement by which the seller of a
security agrees to repurchase the security sold at a mutually agreed upon time
and price. It may also be viewed as the loan of money by a Fund to the seller.
The resale price would be in excess of the purchase price, reflecting an agreed
upon market interest rate. Delays or losses could result if the other party to
the agreement defaults or becomes insolvent. The Fund's Board of Directors has
established standards for evaluation of the creditworthiness of the banks and
securities dealers with which the Funds may engage in repurchase agreements and
monitors on a quarterly basis HIMCO'S and Wellington Management's compliance
with such standards. Presently, each Fund may enter into repurchase agreements
only with commercial banks with at least $500 million in capital and $1 billion
in assets or with recognized government securities dealers with a minimum net
capital of $100 million.

- ---------------------------------------------------

REVERSE REPURCHASE AGREEMENTS

<PAGE>
HARTFORD MUTUAL FUNDS 21
- --------------------------------------------------------------------------------

fixed price. Reverse repurchase agreements carry the risk that the market value
of the securities which a Fund is obligated to repurchase may decline below the
repurchase price. A reverse repurchase agreement is viewed as a collateralized
borrowing by a Fund. Borrowing magnifies the potential for gain or loss on the
portfolio securities of a Fund and, therefore, increases the possibility of
fluctuation in a Fund's net asset value. A Fund will establish a segregated
account with the Fund's custodian bank in which a Fund will maintain liquid
assets equal in value to a Fund's obligations in respect of reverse repurchase
agreements. As a non-fundamental policy, a Fund will not enter into reverse
repurchase transactions if the combination of all borrowings from banks and the
value of all reverse repurchase agreements for the particular Fund equals more
than 33 1/3% of the value of the Fund's total assets.

- ---------------------------------------------------

DEBT SECURITIES

Each Fund is permitted to invest in debt securities including: (1)
securities issued or guaranteed as to principal or interest by the U.S.
Government, its agencies or instrumentalities; (2) debt securities issued or
guaranteed by U.S. corporations or other issuers (including foreign governments
or corporations); (3) asset-backed securities (International Opportunities Fund,
International Advisers Fund, Advisers Fund, Bond Fund, Mortgage Securities Fund
and Money Market Fund only); (4) mortgage-related securities, including
collateralized mortgage obligations ("CMO's") (International Opportunities Fund,
International Advisers Fund, Advisers Fund, Bond Fund and Mortgage Securities
Fund only); and (5) securities issued or guaranteed as to principal or interest
by a sovereign government or one of its agencies or political subdivisions,
supranational entities such as development banks, non-U.S. corporations, banks
or bank holding companies, or other non-U.S. issuers.

- ---------------------------------------------------

INVESTMENT GRADE DEBT SECURITIES

Each Fund is permitted to invest in debt securities rated within the four
highest rating categories (i.e., Aaa, Aa, A or Baa by Moody's or AAA, AA, A or
BBB by S&P), or, if unrated, securities of comparable quality as determined by
HIMCO or Wellington Management. These securities are generally referred to as
"investment grade securities." Each rating category has within it different
gradations or sub-categories. If a Fund is authorized to invest in a certain
rating category, the Fund is also permitted to invest in any of the
sub-categories or gradations within that rating category. If a security is
downgraded to a rating category which does not qualify for investment, HIMCO or
Wellington Management will use its discretion on whether to hold or sell based
upon its opinion on the best method to maximize value for shareholders over the
long term. Debt securities carrying the fourth highest rating (i.e., "Baa" by
Moody's and "BBB" by S&P), and unrated securities of comparable quality (as
determined by HIMCO or Wellington Management) are viewed as having adequate
capacity for payment of principal and interest, but do involve a higher degree
of risk than that associated with investments in debt securities in the higher
rating categories.

- ---------------------------------------------------

HIGH YIELD-HIGH RISK DEBT SECURITIES

The Capital Appreciation Fund, Advisers Fund and International Opportunities
Fund may invest up to 5% of their assets and the International Advisers Fund may
invest up to 15% of its assets in high yield debt securities (i.e., rated as low
as "C" by Moody's or S&P, and unrated securities of comparable quality as
determined by Wellington Management). The Bond Fund may invest up to 20% of its
assets in securities rated in the highest level below investment grade ("Ba" by
Moody's or "BB" by S&P) or if unrated, determined to be of comparable quality by
HIMCO. Securities rated below investment grade are commonly referred to as "high
yield-high risk securities" or "junk bonds". Each rating category has within it
different gradations or sub-categories. If a Fund is authorized to invest in a
certain rating category, the Fund is also permitted to invest in any of the
sub-categories or gradations within that rating category. If a security is
downgraded to a rating category which does not qualify for investment, HIMCO or
Wellington Management will use its discretion on whether to hold or sell based
upon its opinion on the best method to maximize value for shareholders over the
long term. Securities in the rating categories below "Baa" as determined by
Moody's and "BBB" as determined by S&P are considered to be of poor standing and
predominantly speculative. The rating services' descriptions of securities are
set forth in Appendix A. High yield- high risk securities are considered
speculative with respect to the issuer's capacity to pay interest and repay
principal in accordance with the terms of the obligations. Accordingly, it is
possible that these types of factors could, in certain instances, reduce the
value of securities held by a Fund with a commensurate effect on the value of
the Fund's shares.

- ---------------------------------------------------

MORTGAGE-BACKED AND ASSET-BACKED SECURITIES

The Advisers Fund, International Advisers Fund, International Opportunities
Fund, Bond Fund and Mortgage Securities Fund may invest in mortgage-backed
securities and the Advisers Fund, International Advisers Fund, International
Opportunities Fund, Bond Fund, Mortgage Securities Fund and Money Market Fund
may invest in asset-backed securities. Mortgage-backed securities represent a
participation in, or are secured by, mortgage loans and include securities
issued or guaranteed by the U.S. Government or one of its agencies or
instrumentalities; securities issued by private issuers that represent an
interest in, or are collateralized by, mortgage-backed securities issued or
guaranteed by the U.S. Government or one or its agencies or instrumentalities;
or securities issued by private issuers that

<PAGE>
22 HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------

represent an interest in or are collateralized by mortgage loans or
mortgage-backed securities without a government guarantee but usually having
some form of private credit enhancement. Asset-backed securities are structured
like mortgage-backed securities, but instead of mortgage loans or interests in
mortgage loans, the underlying assets may include motor vehicle installment
sales or installment loan contracts, leases of various types of real and
personal property, and receivables from credit card agreements.

Due to the risk of prepayment, especially when interest rates decline,
mortgage-backed and asset-backed securities are less effective than other types
of securities as a means of "locking in" attractive long-term interest rates
and, as a result, may have less potential for capital appreciation during
periods of declining interest rates than other securities of comparable
maturities. The ability of an issuer of asset-backed securities to enforce its
security interest in the underlying assets may be limited.

- ---------------------------------------------------

EQUITY SECURITIES

All Funds except the Bond Fund, Mortgage Securities Fund, U.S. Government
Money Market Fund and Money Market Fund may invest in equity securities
including common stocks, preferred stocks, convertible preferred stock and
rights to acquire such securities. In addition, these Funds may invest in
securities such as bonds, debentures and corporate notes which are convertible
into common stock at the option of the holder. The Bond Fund may invest up to
15% of its total assets in preferred stocks, convertible securities, and
securities carrying warrants to purchase equity securities. The Bond Fund will
not invest in common stocks directly, but may retain, for reasonable periods of
time, common stocks acquired upon conversion of debt securities or upon exercise
of warrants acquired with debt securities.

- ---------------------------------------------------

SMALL CAPITALIZATION SECURITIES

All Funds except the Bond Fund, Mortgage Securities Fund, U.S. Government
Money Market Fund and Money Market Fund may invest in equity securities
(including securities issued in initial public offerings) of companies which
have less than $2 billion in market capitalization ("Small Capitalization
Securities"). Because the issuers of Small Capitalization Securities tend to be
smaller or less well-established companies, they may have limited product lines,
market share or financial resources and may have less historical data with
respect to operations and management. As a result, Small Capitalization
Securities are often less marketable and experience a higher level of price
volatility than securities of larger or more well-established companies. In
addition, companies whose securities are offered in initial public offerings may
be more dependant on a limited number of key employees. Because securities
issued in initial public offerings are being offered to the public for the first
time, the market for such securities may be inefficient and less liquid.

- ---------------------------------------------------

NON-U.S. SECURITIES

Under normal circumstances the International Opportunities Fund and
International Advisers Fund intend to invest at least 65% of their assets in
securities issued by non-U.S. companies ("non- U.S. securities"). In addition,
the International Opportunities Fund and International Advisers Fund may invest
in commingled pools offered by non-U.S. banks. Each other Fund, except the
Mortgage Securities Fund and the U.S. Government Money Market Fund, is permitted
to invest up to 20% of its assets, and the Money Market Fund is permitted to
invest up to 25% of its assets, in non-U.S. securities. The Bond Fund intends to
purchase securities denominated in U.S. dollars, or if not so denominated, to
use currency transactions to reflect U.S. dollar valuation at the time of
purchase or while the security is held by the Fund. Each Fund except the Bond
Fund, U.S. Government Money Market Fund and Money Market Fund may invest in
American Depositary Receipts ("ADRs") and Global Depositary Receipts ("GDRs").
ADRs are certificates issued by a U.S. bank or trust company and represent the
right to receive non-U.S. securities. ADRs are traded on a U.S. securities
exchange, or in an over-the-counter market, and are denominated in U.S. dollars.
GDRs are certificates issued globally and evidence a similar ownership
arrangement. GDRs are traded on non-U.S. securities exchanges and are
denominated in non-U.S. currencies. The value of an ADR or a GDR will fluctuate
with the value of the underlying security, will reflect any changes in exchange
rates and otherwise will involve risks associated with investing in non-U.S.
securities.

When selecting non-U.S. securities HIMCO or Wellington Management will
evaluate the economic and political climate and the principal securities markets
of the country in which the company is located. Investing in non-U.S. securities
involves considerations and potential risks not typically associated with
investing in securities issued by U.S. companies. Less information may be
available about non-U.S. companies than about U.S. companies and non-U.S.
companies generally are not subject to uniform accounting, auditing and
financial reporting standards or to other regulatory practices and requirements
comparable to those applicable to U.S. companies. The values of non-U.S.
securities are affected by changes in currency rates or exchange control
regulations, restrictions or prohibitions on the repatriation of non-U.S.
currencies, application of non-U.S. tax laws, including withholding taxes,
changes in governmental administration or economic or monetary policy (in the
U.S. or outside the U.S.) or changed circumstances in dealings between nations.
Costs are also incurred in connection with conversions between various
currencies. Although the International Opportunities Fund and International
Advisers Fund will focus on companies that operate

<PAGE>
HARTFORD MUTUAL FUNDS 23
- --------------------------------------------------------------------------------

in established markets, from time to time the Funds may invest up to 25% of
their assets in companies located in emerging countries. Compared to the United
States and other developed countries, developing countries may have relatively
unstable governments, economies based on only a few industries, and securities
markets that are less liquid and trade a small number of securities. Prices on
these exchanges tend to be volatile and, in the past, securities in these
countries have offered greater potential for gain (as well as loss) than
securities of companies located in developed countries. See the SAI for
additional risk disclosure concerning non-U.S. securities.

- ---------------------------------------------------

CURRENCY TRANSACTIONS

Each Fund, except the Index Fund, Mortgage Securities Fund, U.S. Government
Money Market Fund and Money Market Fund, may engage in currency transactions to
hedge the value of portfolio securities denominated in particular currencies
against fluctuations in relative value. Currency transactions include forward
currency contracts, currency swaps, exchange-listed and over-the-counter ("OTC")
currency futures contracts and options thereon and exchange listed and OTC
options on currencies.

Forward currency contracts involve a privately negotiated obligation to
purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. Currency swaps are agreements to exchange
cash flows based on the notional difference between or among two or more
currencies. See "Swap Agreements."

The use of currency transactions to protect the value of a Fund's assets
against a decline in the value of a currency does not eliminate potential losses
arising from fluctuations in the value of the Fund's underlying securities.
Further, the Funds may enter into currency transactions only with counterparties
that HIMCO or Wellington Management deem to be creditworthy.

The Funds may also enter into options and futures contracts relative to
foreign currency to hedge against fluctuations in foreign currency rates. See
"Options and Futures Contracts" for a discussion of risk factors relating to
foreign currency transactions including related options and futures contracts.

- ---------------------------------------------------

OPTIONS AND FUTURES CONTRACTS

Each Fund, except the U.S. Government Money Market Fund and Money Market
Fund, may employ certain hedging, income enhancement and risk management
techniques involving options and futures contracts, though such techniques may
also result in losses to the Fund. The Funds may write covered call options or
purchase put and call options on individual securities, write covered put and
call options and purchase put and call options on foreign currencies, aggregates
of equity and debt securities, indices of prices of equity and debt securities
and other financial indices, and enter into futures contracts and options
thereon for the purchase or sale of aggregates of equity and debt securities,
indices of equity and debt securities and other financial indices.

A Fund may write covered options only. "Covered" means that, so long as a
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 not earlier than the expiration
date of the covered option and an exercise price equal to or less than the
exercise price of the covered option, or will establish or maintain with its
custodian for the term of the option a "segregated account" consisting of cash,
U.S. Government securities or other liquid, high grade debt obligations having a
value equal to the fluctuating market value of the optioned securities or
currencies. A 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.

To hedge against fluctuations in currency exchange rates, these Funds may
purchase or sell foreign currency futures contracts, and write put and call
options and purchase put and call options on such futures contracts. To the
extent that a Fund enters into futures contracts, options on futures contracts
and options on foreign currencies that are traded on an exchange regulated by
the Commodities Futures Trading Commission ("CFTC"), in each case that are not
for BONA FIDE hedging purposes (as defined by the CFTC), the aggregate initial
margin and premiums required to establish those non-hedging positions may not
exceed 5% of the liquidation value of Fund's portfolio, after taking into
account the unrealized profits and unrealized losses on any such contracts the
Fund has entered into.

A Fund's use of options, futures and options thereon and forward currency
contracts (as described under "Currency Transactions") would involve certain
investment risks and transaction costs to which it might not be subject were
such strategies not employed. Such risks include: (1) dependence on the ability
of HIMCO or Wellington Management to predict movements in the prices of
individual securities, fluctuations in the general securities markets or market
sections and movements in interest rates and currency markets; (2) imperfect
correlation between movements in the price of the securities or currencies
hedged or used for cover; (3) the fact that skills and techniques needed to
trade options, futures contracts and options thereon or to use forward currency
contracts are different from those needed to select the securities in which a
Fund invests; (4) lack of assurance that a liquid secondary market will exist
for any particular option, futures contract, option thereon or forward contract
at any particular time,

<PAGE>
24 HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------

which may affect a Fund's ability to establish or close out a position; (5)
possible impediments to effective portfolio management or the ability to meet
current obligations caused by the segregation of a large percentage of a Fund's
assets to cover its obligations; and (6) the possible need to defer closing out
certain options, futures contracts, options thereon and forward contracts in
order to continue to qualify for the beneficial tax treatment afforded
"regulated investment companies" under the Internal Revenue Code of 1986, as
amended (the "Code"). See the SAI for additional information on options and
futures contracts. Options and futures contracts are commonly known as
"derivative" securities.

- ---------------------------------------------------

SWAP AGREEMENTS

Each Fund, except the Index Fund, U.S. Government Money Market Fund and
Money Market Fund, may enter into interest rate swaps, currency swaps and other
types of swap agreements such as caps, collars, and floors. In a typical
interest rate swap, one party agrees to make regular payments equal to a
floating interest rate multiplied by a "notional principal amount," in return
for payments equal to a fixed rate multiplied by the same amount, for a
specified period of time. If a swap agreement provides for payments in different
currencies, the parties might agree to exchange the notional principal amount as
well. Swaps may also depend on other prices or rates, such as the value of an
index or mortgage prepayment rates.

In a typical cap or floor agreement, one party agrees to make payments only
under specified circumstances, usually in return for payment of a fee by the
other party. For example, the buyer of an interest rate cap obtains the right to
receive payments to the extent that a specified interest rate exceeds an
agreed-upon level, while the seller of an interest rate floor is obligated to
make payments to the extent that a specified interest rate falls below an
agreed-upon level. An interest rate collar combines elements of buying a cap and
selling a floor.

Swap agreements will tend to shift a Fund's investment exposure from one
type of investment to another. For example, if a Fund agreed to exchange
floating rate payments for fixed rate payments, the swap agreement would tend to
decrease the Fund's exposure to rising interest rates. Caps and floors have an
effect similar to buying or writing options. Depending on how they are used,
swap agreements may increase or decrease the overall volatility of a Fund's
investments and its share price and yield. Swap agreements are commonly known as
"derivative" securities.

The successful utilization of hedging and risk management transactions
requires skills different from those needed in the selection of a Fund's
portfolio securities and depends on HIMCO's or Wellington Management's ability
to predict correctly the direction and degree of movement in interest rates.
Although the Funds believe that the use of the hedging and risk management
techniques described above will benefit the Funds, if HIMCO's or Wellington
Management's judgment about the direction or extent of the movement in interest
rates is incorrect, a Fund's overall performance would be worse than if it had
not entered into any such transactions. These activities are commonly used when
managing derivative investments.

- ---------------------------------------------------

ILLIQUID SECURITIES

Each Fund is permitted to invest in illiquid securities. The maximum
percentage of illiquid securities which may be purchased by each Fund is 15%
except for the U.S. Government Money Market Fund and Money Market Fund for which
the limit is 10% of their net assets. "Illiquid Securities" are securities that
may not be sold or disposed of in the ordinary course of business within seven
days at approximately the price used to determine a Fund's net asset value. Each
Fund may purchase certain restricted securities commonly known as Rule 144A
securities that can be resold to institutions and which may be determined to be
liquid pursuant to policies and guidelines of the Board of Directors.

Under current interpretations of the Securities and Exchange Commission
("SEC") staff, the following securities may be considered illiquid: (1)
repurchase agreements maturing in more than seven days; (2) certain restricted
securities (securities whose public resale is subject to legal or contractual
restrictions); (3) options, with respect to specific securities, not traded on a
national securities exchange that are not readily marketable; and (4) any other
securities in which a Fund may invest that are not readily marketable.

- ---------------------------------------------------

WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES

Each Fund is permitted to purchase or sell securities on a when-issued or
delayed-delivery basis. When-issued or delayed-delivery transactions arise when
securities are purchased or sold with payment and delivery taking place in the
future in order to secure what is considered to be an advantageous price and
yield at the time of entering into the transaction. While the Funds generally
purchase securities on a when-issued basis with the intention of acquiring the
securities, the Funds may sell the securities before the settlement date if
HIMCO or Wellington Management deems it advisable. At the time a Fund makes the
commitment to purchase securities on a when-issued basis, the Fund will record
the transaction and thereafter reflect the value, each day, of such security in
determining net asset value. At the time of delivery of the securities, the
value may be more or less than the purchase price.

<PAGE>
HARTFORD MUTUAL FUNDS 25
- --------------------------------------------------------------------------------

- ---------------------------------------------------

OTHER INVESTMENT COMPANIES

Each Fund, except the Index Fund, U.S. Government Money Market Fund and
Money Market Fund, is permitted to invest in other investment companies.
Securities in certain countries are currently accessible to the Funds only
through such investments. The investment in other investment companies is
limited in amount by the 1940 Act, and will involve the indirect payment of a
portion of the expenses, including advisory fees, of such other investment
companies. A Fund will not purchase a security if, as a result, (1) more than
10% of the Fund's assets would be invested in securities of other investment
companies, (2) such purchase would result in more than 3% of the total
outstanding voting securities of any one such investment company being held by
the Fund or (3) more than 5% of the Fund's assets would be invested in any one
such investment company.

- ---------------------------------------------------

PORTFOLIO SECURITIES LENDING

Each Fund may lend its portfolio securities to broker/ dealers and other
institutions as a means of earning interest income. Delays or losses could
result if a borrower of portfolio securities becomes bankrupt or defaults on its
obligation to return the loaned securities. A Fund may lend securities only if:
(1) the loan is fully secured by appropriate collateral at all times as
determined by HL Advisors; and (2) the value of all loaned securities of the
Fund is not more than 33 1/3% of the Fund's total assets.

- ---------------------------------------------------

OTHER RISK FACTORS

As mutual funds that primarily invest in equity and/or debt securities, each
Fund is subject to market risk, i.e., the possibility that equity and/or debt
prices in general will decline over short or even extended periods of time. The
financial markets tend to be cyclical, with periods when security prices
generally rise and periods when security prices generally decline.

The value of the debt securities in which the Funds invest will tend to
increase when interest rates are falling and to decrease when interest rates are
rising.

No Fund should be considered to be a complete investment program in and of
itself. Each prospective purchaser should take into account his or her own
investment objectives as well as his or her other investments when considering
the purchase of shares of any investment company.

There can be no assurance that the investment objectives of the Funds will
be met. In addition, the risk inherent in investing in the Funds is common to
any security -- the net asset value will fluctuate in response to changes in
economic conditions, interest rates and the market's perception of the
underlying portfolio securities of each Fund.

In pursuit of a Fund's investment objective, HIMCO and Wellington Management
attempt to select appropriate individual securities for inclusion in a Fund's
portfolio. In addition, HIMCO and Wellington Management attempt to successfully
forecast market trends and increase investments in the types of securities best
suited to take advantage of such trends. Thus, the investor is dependent on
HIMCO's or Wellington Management's success not only in selecting individual
securities, but also in identifying the appropriate mix of securities consistent
with a Fund's investment objective.

- ---------------------------------------------------

INVESTMENT LIMITATIONS

The Funds have adopted certain limitations in an attempt to reduce their
exposure to specific situations. Some of these limitations are that each Fund
will not:

(a) invest more than 25% of its assets in any one industry;

(b) borrow money, except from banks, and then only in amounts not exceeding
33 1/3% of the value of a Fund's total assets (although for purposes of this
restriction reverse repurchase agreements are not considered borrowings, as
a non-fundamental operating policy, each Fund will limit combined borrowings
and reverse repurchase transactions to 33 1/3% of the value of a Fund's
total assets);

(c) with respect to 75% of the value of each Fund's total assets, purchase the
securities of any issuer (other than cash, cash items or securities issued
or guaranteed by the U.S. Government, its agencies, instrumentalities or
authorities) if:
(1) such purchase would cause more than 5% of the Fund's total assets taken
at market value to be invested in the securities of such issuer; or
(2) such purchase would at the time result in more than 10% of the
outstanding voting securities of such issuer being held by the Fund.

These investment restrictions are considered at the time investment
securities are purchased. The limitations described above, except as noted under
(b), and those listed under Fundamental Restrictions of the Funds in the SAI,
are considered fundamental and as such can only be changed with the approval of
a majority of each Fund's shareholders.

<PAGE>
26 HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------

- -------------------------------------------
MANAGEMENT OF THE FUNDS

Each Fund's Board of Directors manages the business and affairs of that Fund
and takes action on all matters not reserved for the shareholders, including the
annual election of officers of the Fund who carry out all orders and resolutions
of the Board of Directors and carry out functions relating to the day to day
management of the affairs of the Fund.

- ---------------------------------------------------

MANAGEMENT SERVICES

HL Advisors serves as investment manager to each Fund pursuant to written
agreements entered into between HL Advisors and each Fund. Pursuant to such
agreements HL Advisors has overall investment supervisory responsibility for
each Fund. In addition, Hartford Life Insurance Company ("Hartford Life"), an
affiliate of HL Advisors, provides administrative personnel, services, equipment
and facilities and office space for proper operation of the Funds. HL Advisors
has contracted with Wellington Management for the provision of day to day
investment management services to the Capital Appreciation Fund, Dividend and
Growth Fund, International Opportunities Fund, Small Company Fund, Stock Fund,
Advisers Fund, and International Advisers Fund.. In addition, HL Advisors has
contracted with HIMCO for the provision of day to day investment management and
other services for the Bond Fund, Index Fund, Mortgage Securities Fund, U.S.
Government Money Market Fund and Money Market Fund. Each Fund pays a fee to HL
Advisors, a portion of which may be used to compensate Wellington Management or
HIMCO.

For services rendered to the Funds, HL Advisors charges a monthly fee based
on the following annual rates as applied to the average of the calculated daily
net asset value of the Funds.

INDEX FUND

<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- ------------------------------------------- -----------
<S> <C>
All Assets 0.20%
</TABLE>

MORTGAGE SECURITIES FUND, MONEY MARKET FUND AND U.S. GOVERNMENT MONEY MARKET
FUND

<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- ------------------------------------------- -----------
<S> <C>
All Assets 0.25%
</TABLE>

BOND FUND AND STOCK FUND

<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- ------------------------------------------- -----------
<S> <C>
First $250,000,000 0.325%
Next $250,000,000 0.300%
Next $500,000,000 0.275%
Amount Over $1 Billion 0.250%
</TABLE>

CAPITAL APPRECIATION FUND, DIVIDEND AND GROWTH FUND, INTERNATIONAL OPPORTUNITIES
FUND, SMALL COMPANY FUND, ADVISERS FUND AND INTERNATIONAL ADVISERS FUND

<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- ------------------------------------------- -----------
<S> <C>
First $250,000,000 0.575%
Next $250,000,000 0.525%
Next $500,000,000 0.475%
Amount Over $1 Billion 0.425%
</TABLE>

Under the terms of the Investment Management Agreements, HL Advisors,
subject to the supervision of the Funds' Board of Directors, provides investment
management supervision to each Fund in accordance with the Funds' investment
objectives, policies and restrictions.

For 1996, the management fees (advisory and administrative fees) for each
Fund as a percentage of average net assets were as follows:

<TABLE>
<CAPTION>
% OF ASSETS
-----------
<S> <C>
Capital Appreciation Fund .63%
Dividend and Growth Fund .71%
Index Fund .37%
International Opportunities Fund .69%
Small Company Fund1 .58%
Stock Fund .44%
Advisers Fund .62%
International Advisers Fund .75%
Bond Fund .49%
Mortgage Securities Fund .42%
Money Market Fund .42%
U.S. Government Money Market Fund .42%
</TABLE>

1 Portion of management fee waived in 1996

HL Advisors, Hartford Plaza, Hartford, Connecticut 06115, is a wholly-owned
subsidiary of Hartford Life and was organized under the laws of the State of
Connecticut in 1981. A wholly- owned subsidiary of HL Investment Advisors,
Hartford Investment Financial Services Company, serves as investment adviser to
several other Hartford Life-sponsored funds which are also registered with the
SEC. Hartford Life is a majority owned subsidiary of Hartford Fire Insurance
Company, one of the largest multiple lines insurance carriers in the United
States. Hartford Fire Insurance Company is a subsidiary of The Hartford
Financial Services Group, Inc.

Certain officers of the Funds are also officers and/or directors of HL
Advisors and HIMCO: Joseph H. Gareau is a

<PAGE>
HARTFORD MUTUAL FUNDS 27
- --------------------------------------------------------------------------------

Director and the President of HL Advisors and HIMCO; Andrew W. Kohnke is a
Managing Director and a Director of HL Advisors and HIMCO; and C. Michael
O'Halloran is a Director, Secretary and General Counsel of HL Advisors and
HIMCO.

- ---------------------------------------------------

INVESTMENT SUB-ADVISORY AND OTHER SERVICES

Wellington Management serves as sub-adviser to the Capital Appreciation
Fund, Dividend and Growth Fund, International Opportunities Fund, Small Company
Fund, Stock Fund, Advisers Fund, and International Advisers Fund pursuant to
written contracts entered into between HL Advisors and Wellington Management. In
addition, HIMCO provides day-to-day investment management services to HL
Advisors on behalf of the Index Fund, Mortgage Securities Fund, Bond Fund, U.S.
Government Money Market Fund and HVA Money Market Fund pursuant to written
agreements between HL Advisors and HIMCO.

In connection with the services provided to the Funds, Wellington Management
and HIMCO make all determinations with respect to the purchase and sale of
portfolio securities (subject to the terms and conditions of the investment
objectives, policies and restrictions of the Funds and to the general
supervision of the Fund's Boards of Directors and HL Advisors) and places, in
the name of the Funds, all orders for execution of these Funds' portfolio
transactions. In conjunction with such activities, Wellington Management and
HIMCO regularly furnish reports to the Fund's Boards of Directors concerning
economic forecasts, investment strategy, portfolio activity and performance of
the Funds.

For services rendered to the Wellington Management-advised Funds, Wellington
Management charges a quarterly fee to HL Advisors. The Funds do not pay
Wellington Management's fee nor any part thereof, nor do the Funds have any
obligation or responsibility to do so. Wellington Management's quarterly fee is
based upon the following annual rates as applied to the average of the
calculated daily net asset value of each Fund.

DIVIDEND AND GROWTH FUND, STOCK FUND AND
ADVISERS FUND

<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- ------------------------------------------- -----------
<S> <C>
First $50,000,000 0.325%
Next $100,000,000 0.250%
Next $350,000,000 0.200%
Amount Over $500,000,000 0.150%
</TABLE>

CAPITAL APPRECIATION FUND, INTERNATIONAL OPPORTUNITIES FUND, SMALL COMPANY FUND
AND INTERNATIONAL ADVISERS FUND

<TABLE>
<CAPTION>
NET ASSET VALUE ANNUAL RATE
- ------------------------------------------- -----------
<S> <C>
First $50,000,000 0.400%
Next $100,000,000 0.300%
Next $350,000,000 0.250%
Amount Over $500,000,000 0.200%
</TABLE>

Wellington Management is a professional investment counseling firm which
provides investment services to investment companies, employee benefit plans,
endowments, foundations and other institutions and individuals. Wellington
Management and its predecessor organizations have provided investment advisory
services since 1928. As of December 31, 1996, Wellington Management held
discretionary management authority with respect to approximately $133 billion of
client assets. Wellington Management, 75 State Street, Boston, MA 02109, is a
Massachusetts limited liability partnership, of which the following persons are
managing partners: Robert W. Doran, Duncan M. McFarland and John R. Ryan.

HIMCO is a professional money management firm which provides services to
investment companies, employee benefit plans and its affiliated insurance
company accounts. HIMCO was incorporated in 1996 and is a wholly owned
subsidiary of The Hartford. As a corporate affiliate of HL Advisors, HIMCO is
reimbursed by HL Advisors for the costs it incurs in providing such services.

- ---------------------------------------------------

PORTFOLIO MANAGERS

Saul J. Pannell, Senior Vice President of Wellington Management, serves as
portfolio manager to the Capital Appreciation Fund. Mr. Pannell has been a
portfolio manager with Wellington Management since 1979.

Laurie A. Gabriel, CFA and Senior Vice President of Wellington Management,
serves as portfolio manager to the Dividend and Growth Fund. Ms. Gabriel joined
Wellington Management in 1976. She has been a quantitative research analyst with
Wellington Management since 1986, and took on portfolio management
responsibilities in 1987.

The International Opportunities Fund is managed by Wellington Management's
Global Equity Strategy Group, headed by Trond Skramstad, Senior Vice President
of Wellington Management. The Global Equity Strategy Group is comprised of
global portfolio managers and senior investment professionals. No person or
persons is primarily responsible for making recommendations to or within the
Global Equity Strategy Group. Prior to joining Wellington Management in 1993,
Mr. Skramstad was a global equity portfolio manager at Scudder, Stevens & Clark
since 1990.

<PAGE>
28 HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------

Kenneth L. Abrams, Senior Vice President of Wellington Management, serves as
portfolio manager to the Small Company Fund. Mr. Abrams has been an emerging
company research analyst with Wellington Management since 1986 and has been a
portfolio manager with Wellington Management since 1990.

Rand L. Alexander, Senior Vice President of Wellington Management, serves as
portfolio manager to the Stock Fund. Mr. Alexander has been a portfolio manager
with Wellington Management since 1990.

Paul D. Kaplan, Senior Vice President of Wellington Management, serves as
portfolio manager to the Advisers Fund. Mr. Kaplan manages the fixed income
component of the Advisers Fund. He has been a portfolio manager with Wellington
Management since 1982. Rand L. Alexander, who is portfolio manager to the Stock
Fund, manages the equity component of the Advisers Fund.

The equity component of the International Advisers Fund is managed by
Wellington Management's Global Equity Strategy Group, headed by Trond Skramstad.
The debt component of the International Advisers Fund is managed by Robert
Evans, Vice President of Wellington Management. Prior to joining Wellington
Management as a portfolio manager in 1995, Mr. Evans was a Senior Global Fixed
Income Portfolio Manager with Pacific Investment Management Company from 1991
through 1994, and in the Global Fixed Income Department of Lehman Brothers
International in London, England and New York City, New York from 1985 through
1990.

The Bond Fund is managed by Alison D. Granger. Ms. Granger, a Senior Vice
President of HIMCO, joined The Hartford in 1993 as a senior corporate bond
trader. She became Director of Trading in 1994 and a portfolio manager in 1995.
Prior to joining The Hartford, Ms. Granger was a corporate bond portfolio
manager at The Home Insurance Company and Axe-Houghton Management. Ms. Granger
holds a CFA and has over sixteen years of experience with fixed income
investments.

The Mortgage Securities Fund is managed by Timothy J. Wilhide. Mr. Wilhide
is a Portfolio Manager and Senior Vice President of HIMCO. He has seventeen
years of experience in the fixed income markets. Prior to joining The Hartford
in June 1994, Mr. Wilhide was vice president and fixed income manager for J.P.
Morgan & Co. He received his B.A. from Gannon University and his MBA from the
University of Delaware.

- ---------------------------------------------------

PORTFOLIO TURNOVER

Each Fund may sell a portfolio investment soon after its acquisition if
HIMCO and/or Wellington Management believe that such a disposition is in the
Fund's best interest. For the fiscal year ended December 31, 1996, the portfolio
turnover rate of each Fund was below 100% except for the Bond Fund and Mortgage
Securities Fund which were 212% and 201% respectively. A high rate of portfolio
turnover involves correspondingly greater brokerage commission expenses and
other transaction costs, which must be ultimately borne by a Fund's
shareholders. High portfolio turnover may result in the realization of
substantial capital gains.

- ---------------------------------------------------

BROKERAGE COMMISSIONS

Although the rules of the National Association of Securities Dealers, Inc.
prohibit its members from seeking orders for the execution of investment company
portfolio transactions on the basis of their sales of investment company shares,
under such rules, sales of investment company shares may be considered in
selecting brokers to effect portfolio transactions. Accordingly, some portfolio
transactions are, subject to such rules and to obtaining best prices and
executions, effected through dealers who sell shares of the Fund. HIMCO or
Wellington Management may also select an affiliated broker-dealer to execute
transactions for the Fund, provided that the commissions, fees or other
remuneration paid to such affiliated broker are reasonable and fair as compared
to that paid to non-affiliated brokers for comparable transactions.

- ---------------------------------------------------
ADMINISTRATIVE SERVICES
FOR THE FUNDS

An Administrative Services Agreement between each Fund and Hartford Life
provides that Hartford Life will manage the business affairs and provide
administrative services to each Fund. Under the terms of these Agreements,
Hartford Life will provide the following: administrative personnel, services,
equipment and facilities and office space for proper operation of the Funds.
Hartford Life has also agreed to arrange for the provision of additional
services necessary for the proper operation of the Funds, although the Funds pay
for these services directly. See "Expenses of the Funds." As compensation for
the services to be performed by Hartford Life, each Fund pays to Hartford Life,
as promptly as possible after the last day of each month, a monthly fee equal to
the annual rate of .175% of the average daily net assets of the Fund.

- ---------------------------------------------------
EXPENSES OF THE FUNDS

<PAGE>
HARTFORD MUTUAL FUNDS 29
- --------------------------------------------------------------------------------

state registration, qualification and filing costs and fees, (except the initial
costs and fees, which will be borne by Hartford Life), issuance and redemption
expenses, transfer agency and dividend and distribution disbursing agency costs
and expenses; custodian fees and expenses; accounting, auditing and legal
expenses; fidelity bond and other insurance premiums; fees and salaries of
directors, officers and employees of each Fund other than those who are also
officers of Hartford Life or its affiliates; industry membership dues; all
annual and semiannual reports and prospectuses mailed to each Fund's
shareholders as well as all quarterly, annual and any other periodic report
required to be filed with the SEC or with any state; any notices required by a
federal or state regulatory authority, and any proxy solicitation materials
directed to each Fund's shareholders as well as all printing, mailing and
tabulation costs incurred in connection therewith, and any expenses incurred in
connection with the holding of meetings of each Fund's shareholders and other
miscellaneous expenses related directly to the Funds' operations and interest.

The total expenses of each Fund including administrative and investment
advisory fees for 1996 as a percentage of the Funds' average net assets were as
follows:

<TABLE>
<CAPTION>
% OF ASSETS
-----------
<S> <C>
Capital Appreciation Fund .65%
Dividend and Growth Fund .73%
Index Fund .39%
International Opportunities Fund .79%
Small Company Fund .72%
Stock Fund .46%
Advisers Fund .63%
International Advisers Fund .96%
Bond Fund .52%
Mortgage Securities Fund .45%
Money Market Fund .44%
U.S. Government Money Market Fund .58%
</TABLE>

- ---------------------------------------------------
PERFORMANCE RELATED
INFORMATION

The Funds may advertise certain performance related information. Performance
information about a Fund is based on the Fund's past performance only and is no
indication of future performance.

Each Fund may include its total return in advertisements or other sales
material. When a Fund advertises its total return, it will usually be calculated
for one year, five years, and ten years or some other relevant periods if the
Fund has not been in existence for at least ten years. Total return is measured
by comparing the value of an investment in the Fund at the beginning of the
relevant period to the value of the investment at the end of the period
(assuming immediate reinvestment of any dividends or capital gains
distributions).

The U.S. Government Money Market Fund and the Money Market Fund may
advertise yield and effective yield. The yield of each of those Funds is based
upon the income earned by the Fund over a seven-day period and then annualized,
i.e. the income earned in the period is assumed to be earned every seven days
over a 52-week period and stated as a percentage of the investment. Effective
yield is calculated similarly but when annualized, the income earned by the
investment is assumed to be reinvested in Fund shares and thus compounded in the
course of a 52-week period.

- ---------------------------------------------------
DIVIDENDS

The shareholders of each Fund shall be entitled to receive such dividends as
may be declared by each Fund's Board of Directors, from time to time based upon
the investment performance of the assets making up that Fund's portfolio. The
policy with respect to each Fund, except the U.S. Government Money Market Fund
and the Money Market Fund, is to pay dividends from net investment income and to
make distributions of realized capital gains, if any, at least once each year.
The U.S. Government Money Market Fund and the Money Market Fund declare
dividends on a daily basis and pay them monthly.

Such dividends and distributions will be automatically invested in
additional full or fractional shares monthly on the last business day of each
month at the per share net asset value on that date. Provision is also made to
pay such dividends and distributions in cash if requested. Such dividends and
distributions will be in cash or in full or fractional shares of the Fund at net
asset value.

- ---------------------------------------------------

DETERMINATION OF
NET ASSET VALUE

The net asset value per share is determined for each Fund as of the close of
the NYSE (normally 4:00 p.m. Eastern Time) on each regular business day (as
previously defined) by dividing the value of the Fund's net assets by the number
of shares outstanding. The assets of each Fund (except the money market funds)
are valued primarily on the basis of market quotations. If quotations are not
readily available, assets are valued by a method that the Board of Directors
believes accurately reflects fair value. The assets of the Money Market Fund and
the U.S. Government Money Market Fund are valued at their amortized cost
pursuant to procedures established by the Board of Directors. Foreign securities
are valued on the basis of quotations from the

<PAGE>
30 HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------

primary market in which they are traded, and are translated from the local
currency into U.S. dollars using current exchange rates. With respect to all
Funds, short-term investments that will mature in 60 days or less are also
valued at amortized cost, which approximates market value.

- ---------------------------------------------------
PURCHASE OF FUND SHARES

Fund shares are made available to serve as the underlying investment
vehicles for variable annuity and variable life insurance separate accounts of
The Hartford Life Insurance Companies. Shares of the Funds are sold on a no-load
basis at their net asset values. See "Determination of Net Asset Value" and
"Sale and Redemption of Shares."

It is conceivable that in the future it may be disadvantageous for variable
annuity separate accounts and variable life insurance separate accounts to
invest in the Funds simultaneously. Although The Hartford Life Insurance
Companies and the Funds do not currently foresee any such disadvantages either
to variable annuity contract owners or variable life insurance policy owners,
each Fund's Board of Directors intends to monitor events in order to identify
any material conflicts between such contract owners and policy owners and to
determine what action, if any, should be taken in response thereto. If the Board
of Directors of a Fund were to conclude that separate funds should be
established for variable life and variable annuity separate accounts, the
variable life and variable annuity contract holders would not bear any expenses
attendant to the establishment of such separate funds.

- ---------------------------------------------------
SALE AND REDEMPTION
OF SHARES

The shares of each Fund are sold and redeemed by the Fund at their net asset
value next determined after receipt of a purchase or redemption order in good
order in writing at its home office, P.O. Box 2999, Hartford, CT 06104-2999. The
value of shares redeemed may be more or less than original cost, depending upon
the market value of the portfolio securities at the time of redemption. Payment
for shares redeemed will be made within seven days after the redemption request
is received in proper form by the Funds. However, the right to redeem Fund
shares may be suspended or payment therefor postponed for any period during
which: (1) trading on the NYSE is closed for other than weekends and holidays;
(2) an emergency exists, as determined by the SEC, as a result of which (a)
disposal by a Fund of securities owned by it is not reasonably practicable, or
(b) it is not reasonably practicable for a Fund to determine fairly the value of
its net assets; or (3) the SEC by order so permits for the protection of
stockholders of the Funds.

- ---------------------------------------------------
FEDERAL INCOME TAXES

Each Fund has elected and intends to qualify under Subchapter M of the Code.
Each Fund intends to distribute all of its net income and gains to shareholders.
Such distributions are taxable income and capital gains. Each Fund will inform
shareholders of the amount and nature of such income and gains. Each Fund may be
subject to a 4% nondeductible excise tax as well as an income tax measured with
respect to certain undistributed amounts of income and capital gain. Each Fund
expects to make such additional distributions of net investment income as are
necessary to avoid the application of these taxes. For a discussion of the tax
implications of a purchase or sale of the Funds' shares by the insurer,
reference should be made to the section entitled "Federal Tax Considerations" in
the appropriate separate account prospectus.

If eligible, each Fund may make an election to pass through to its
shareholders, The Hartford Life Insurance Companies, a credit for any foreign
taxes paid during the year. If such election is made, the pass-through of the
foreign tax credit will result in additional taxable income and income tax to
The Hartford Life Insurance Companies. The amount of additional tax may be more
than offset by the foreign tax credits which are passed through. These foreign
tax credits may provide a benefit to The Hartford Life Insurance Companies.

- ---------------------------------------------------
OWNERSHIP AND CAPITALIZATION
OF THE FUNDS

- -------------------------------- CAPITAL STOCK

As of the date of this prospectus, the authorized capital stock of the Funds
consisted of the following shares at a par value of $.10 per share: Capital
Appreciation Fund, 2 billion; Dividend and Growth Fund, 2 billion; Index Fund, 1
billion; International Opportunities Fund, 1.5 billion; Small Company Fund, 750
million; Stock Fund, 2 billion; Advisers Fund, 5 billion; International Advisers
Fund, 750 million; Bond Fund, 800 million; Mortgage Securities Fund, 800
million; Money Market Fund, 1.3 billion; and U.S. Government Money Market Fund,
100 million.

As of December 31, 1996, HIMCO owned 3,000,000 shares (7.5%) of the Small
Company Fund.

<PAGE>
HARTFORD MUTUAL FUNDS 31
- --------------------------------------------------------------------------------

At December 31, 1996, certain Hartford Life group pension contracts held
direct interests in shares of the Funds as follows:

<TABLE>
<CAPTION>
SHARES %
------------ ---------
<S> <C> <C>
Hartford Index Fund, Inc................ 16,432,999 6.30%
Hartford Mortgage Securities Fund,
Inc.................................... 17,408,850 5.65%
Hartford Capital Appreciation Fund,
Inc.................................... 15,519,596 1.79%
Hartford International Opportunities
Fund, Inc.............................. 7,835,802 1.11%
Hartford Advisers Fund, Inc............. 18,752,510 0.69%
Hartford Dividend & Growth Fund, Inc.... 443,556 0.08%
Hartford Small Company Fund, Inc........ 28,535 0.07%
Hartford International Advisers Fund,
Inc.................................... 27,096 0.03%
Hartford Stock Fund, Inc................ 92,167 0.01%
Hartford Bond Fund, Inc................. 47,060 0.01%
HVA Money Market Fund , Inc............. 31,633 0.01%
</TABLE>

- ---------------------------------------------------

VOTING

Each shareholder shall be entitled to one vote for each share of the Funds
held upon all matters submitted to the shareholders generally. With respect to
the Funds' shares, issued as described above under "Purchase of Fund Shares," as
well as Fund shares which are not otherwise attributable to variable annuity
contract owners or variable life policy holders, The Hartford Life Insurance
Companies shall be the shareholders of record. Each of The Hartford Life
Insurance Companies will vote all Fund shares, pro rata, according to the
written instructions of the contract owners of the variable annuity contracts
and the policy holders of the variable life contracts issued by it using the
Funds as investment vehicles. This position is consistent with the policy of the
SEC staff.

- ---------------------------------------------------

OTHER RIGHTS

Each share of Fund stock, when issued and paid for in accordance with the
terms of the offering, will be fully paid and non-assessable. Shares of Fund
stock have no pre-emptive, subscription or conversion rights and are redeemable
as set forth under "Sale and Redemption of Shares." Upon liquidation of a Fund,
the shareholders of that Fund shall be entitled to share, pro rata, in any
assets of the Fund after discharge of all liabilities and payment of the
expenses of liquidation.

- ---------------------------------------------------
GENERAL INFORMATION

- --------------------------------

REPORTS TO SHAREHOLDERS

The Funds will issue unaudited semiannual reports showing current
investments in each Fund and other information and annual financial statements
examined by independent auditors for the Funds.

- ---------------------------------------------------

CUSTODIAN, TRANSFER AND
DIVIDEND DISBURSING AGENTS

State Street Bank and Trust Company, Boston, Massachusetts, serves as
custodian of the Funds' assets. Hartford Life Insurance Company, P.O. Box 2999,
Hartford, Connecticut 06104-2999, serves as Transfer and Dividend Disbursing
Agent for the Funds.

- ---------------------------------------------------

PENDING LEGAL PROCEEDINGS

As of the date of this Prospectus, there are no pending legal proceedings
involving the Funds, HL Advisors, HIMCO or Wellington Management as a party.

- ---------------------------------------------------

REQUESTS FOR INFORMATION

This Prospectus does not contain all the information included in the
Registration Statement filed with the SEC. The Registration Statement, including
the exhibits filed therewith, may be examined at the SEC's office in Washington,
D.C. Statements contained in the Prospectus as to the contents of any contract
or other document referred to herein are not necessarily complete, and, in each
instance, reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement of which this Prospectus forms a
part, each such statement being qualified, in all respects by such reference.

For additional information, write to "Hartford Family of Funds", c/o
Individual Annuity Operations, P.O. Box 2999, Hartford, CT 06104-2999.
<PAGE>
32 HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------

- ---------------------------------------------------

APPENDIX A

The rating information which follows describes how the rating services
mentioned presently rate the described securities. No reliance is made upon the
rating firms as "experts" as that term is defined for securities purposes.
Rather, reliance on this information is on the basis that such ratings have
become generally accepted in the investment business.

- ---------------------------------------------------
RATING OF BONDS

Moody's Investors Service, Inc. ("Moody's")

Aaa -- Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.

Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risks appear somewhat larger than in Aaa securities.

A -- Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.

Baa -- Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.

B -- Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Caa -- Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.

Ca -- Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.

C -- Bonds which are rated C are the lowest rated class of bonds and issues
so rated can be regarded as having extremely poor prospects of ever earning any
real investment standing.

Standard & Poor's Corporation ("Standard & Poor's")

AAA -- Bonds rated AAA are the highest grade obligations. Capacity to pay
interest and repay principal is extremely strong.

AA -- Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from AAA issues only in small degree.

A -- Bonds rated A have a very strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the considerable
investment strength but are not entirely free from adverse effects of changes in
circumstances and economic conditions than debt in the highest rated categories.

BBB -- Bonds rated BBB and regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category then in higher rated categories.

BB, B, CCC, CC, C -- Debt rated BB, B, CCC, CC, and C is regarded, on
balance, as predominantly speculative with respect to the issuer's capacity to
pay interest and repay principal in accordance with the terms of the obligation.
While such debt will likely have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk exposures to adverse
conditions.

- ---------------------------------------------------
RATING OF COMMERCIAL PAPER

Purchases of corporate debt securities used for short-term investment,
generally called commercial paper, will be limited to the top two grades of
Moody's, Standard & Poor's, Duff & Phelps, Fitch Investor Services and Thomson
Bank Watch or other NRSROs (nationally recognized statistical
<PAGE>
HARTFORD MUTUAL FUNDS 33
- --------------------------------------------------------------------------------

rating organizations) rating services and will be an eligible security under
Rule 2a-7.

MOODY'S

Issuers rated Prime-1 (or related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations. Prime-1 repayment
capacity will normally be evidenced by the following characteristics:

- Leading market positions in well-established industries.

- High rates of return on funds employed.

- Conservative capitalization structures with moderate reliance on debt and
ample asset protection.

- Broad margins in earnings coverage of fixed financial charges and high
internal cash generation.

- Well-established access to a range of financial markets and assured
sources of alternate liquidity.

Issuers rated Prime-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will normally
be evidenced by many of the characteristics cited above but to a lesser degree.
Earnings trends and coverage ratios, while sound, will be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.

Issuers rated Prime-3 (or related supporting institutions) have an
acceptable capacity for repayment of short-term promissory obligations. The
effect of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in changes in
the level of debt protection measurements and the requirement for relatively
high financial leverage. Adequate alternate liquidity is maintained.

Issuers rated Not Prime do not fall within any of the Prime rating
categories.

STANDARD & POOR'S

The relative strength or weakness of the following factors determines
whether the issuer's commercial paper is rated A-1 or A-2.

- Liquidity ratios are adequate to meet cash requirements.

Liquidity ratios are basically as follows, broken down by the type of
issuer:

Industrial Company: acid test ratio, cash flow as a percent of current
liabilities, short-term debt as a percent of current liabilities, short-term
debt as a percent of current assets.

Utility: current liabilities as a percent of revenues, cash flow as a
percent of current liabilities, short-term debt as a percent of capitalization.

Finance Company: current ratio, current liabilities as a percent of net
receivables, current liabilities as a percent of total liabilities.

- The long-term senior debt rating is "A" or better; in some instances "BBB"
credits may be allowed if other factors outweigh the "BBB".

- The issuer has access to at least two additional channels of borrowing.

- Basic earnings and cash flow have an upward trend with allowances made for
unusual circumstances.

- Typically, the issuer's industry is well established and the issuer has a
strong position within its industry.

- The reliability and quality of management are unquestioned.
<PAGE>
34 HARTFORD MUTUAL FUNDS
- --------------------------------------------------------------------------------

- ---------------------------------------------------

APPENDIX B

- --------------------------------

CREDIT QUALITY DISTRIBUTION

HARTFORD BOND FUND

The average quality distribution of the portfolio of the Hartford Bond Fund
during the year ended December 31, 1996 as assigned by Moody's Investors
Services, Inc. ("Moody's") and Standard & Poor's Corporation ("Standard &
Poors"), was as follows:

<TABLE>
<CAPTION>
QUALITY
DISTRIBUTION QUALITY
AS DISTRIBUTION AS
ASSIGNED BY PERCENTAGE OF ASSIGNED BY PERCENTAGE OF
MOODY'S PORTFOLIO STANDARD & POORS PORTFOLIO
- ------------- ------------- ---------------- -------------
<S> <C> <C> <C>
Aaa 52.4% AAA 52.4%
Aa 8.6% AA 7.6%
A 9.2% A 13.1%
Baa 12.6% BBB 15.0%
Ba 16.2% BB 9.6%
B 1.0% B 1.8%
Unrated 0.0% Unrated 0.6%
------------- -------------
Total 100.0% Total 100.0%
</TABLE>

<PAGE>

PART B

STATEMENT OF ADDITIONAL INFORMATION

HARTFORD CAPITAL APPRECIATION FUND, INC.
HARTFORD DIVIDEND AND GROWTH FUND, INC.
HARTFORD INDEX FUND, INC.
HARTFORD INTERNATIONAL OPPORTUNITIES FUND, INC.
HARTFORD SMALL COMPANY FUND, INC.
HARTFORD STOCK FUND, INC.
HARTFORD ADVISERS FUND, INC.
HARTFORD INTERNATIONAL ADVISERS FUND, INC.
HARTFORD BOND FUND, INC.
HARTFORD MORTGAGE SECURITIES FUND, INC.
HVA MONEY MARKET FUND, INC.
HARTFORD U.S. GOVERNMENT MONEY MARKET FUND, INC.

P.O. Box 2999
Hartford, CT 06104-2999

This Statement of Additional Information ("SAI") is not a prospectus but
should be read in conjunction with the prospectus. To obtain a free copy of
the prospectus send a written request to: Hartford Family of Funds, c/o
Individual Annuity Operations, P.O. Box 2999, Hartford, CT 06104-2999 or
call 1-800-862-6668.

Date of Prospectus: May 1, 1997
Date of Statement of Additional Information: May 1, 1997

<PAGE>

TABLE OF CONTENTS PAGE

GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . .-1-

INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . .-1-

MANAGEMENT OF THE FUNDS. . . . . . . . . . . . . . . . . . . -16-

INVESTMENT MANAGEMENT ARRANGEMENTS . . . . . . . . . . . . . -22-

PORTFOLIO TURNOVER . . . . . . . . . . . . . . . . . . . . . -25-

FUND EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . -26-

DISTRIBUTION ARRANGEMENTS. . . . . . . . . . . . . . . . . . -26-

PORTFOLIO TRANSACTIONS AND BROKERAGE . . . . . . . . . . . . -26-

DETERMINATION OF NET ASSET VALUE . . . . . . . . . . . . . . -28-

PURCHASE AND REDEMPTION OF SHARES. . . . . . . . . . . . . . -29-

INVESTMENT PERFORMANCE . . . . . . . . . . . . . . . . . . . -30-

TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . -38-

CUSTODIAN. . . . . . . . . . . . . . . . . . . . . . . . . . -41-

TRANSFER AGENT SERVICES. . . . . . . . . . . . . . . . . . . -41-

INDEPENDENT PUBLIC ACCOUNTANTS . . . . . . . . . . . . . . . -41-

OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . -41-

FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . -42-

<PAGE>

GENERAL INFORMATION

The Hartford Capital Appreciation Fund, Inc., Hartford Dividend and
Growth Fund, Inc., Hartford Index Fund, Inc., Hartford International
Opportunities Fund, Inc., Hartford Small Company Fund, Inc., Hartford Stock
Fund, Inc., Hartford Advisers Fund, Inc., Hartford International Advisers
Fund, Inc., Hartford Bond Fund, Inc., Hartford Mortgage Securities Fund,
Inc., HVA Money Market Fund, Inc., and Hartford U.S. Government Money Market
Fund, Inc. are open-end management investment companies consisting of
separate diversified portfolios (each a "Fund" or together the "Funds").
This SAI relates to all twelve Funds. HL Investment Advisors, Inc. ("HL
Advisors") is the investment manager to each Fund. HL Advisors is an
indirect majority owned subsidiary of The Hartford Financial Services Group,
Inc., ("The Hartford") an insurance holding company with over $100 billion in
assets. In addition, Wellington Management Company, LLP ("Wellington
Management") and The Hartford Investment Management Company ("HIMCO"), an
affiliate of HL Advisors, are sub-advisers to certain of the Funds.

INVESTMENT OBJECTIVES AND POLICIES

A. FUNDAMENTAL RESTRICTIONS OF THE FUNDS

Each Fund has adopted the following fundamental investment restrictions
which may not be changed without approval of a majority of the applicable
Fund's outstanding voting securities. Under the Investment Company Act of
1940 (the "1940 Act"), and as used in the Prospectus and this SAI, a
"majority of the outstanding voting securities" means the approval of the
lesser of (1) the holders of 67% or more of the shares of a Fund represented
at a meeting if the holders of more than 50% of the outstanding shares of the
Fund are present in person or by proxy or (2) the holders of more than 50% of
the outstanding shares of the Fund.

The investment objective, investment style and certain investment
policies of each Fund are set forth in the Prospectus. Set forth below are
the fundamental investment policies applicable to each Fund followed by the
non-fundamental policies applicable to each Fund.

Each Fund may not:

1. Issue senior securities. For purposes of this restriction, the
issuance of shares of common stock in multiple classes or series, obtaining
of short-term credits as may be necessary for the clearance of purchases and
sales of portfolio securities, short sales against the box, the purchase or
sale of permissible options and futures transactions (and the use of initial
and maintenance margin arrangements with respect to futures contracts or
related options transactions), the purchase or sale of securities on a when
issued or delayed delivery basis, permissible borrowings entered into in
accordance with a Fund's investment policies, and reverse repurchase
agreements and mortgage dollar rolls for which a segregated

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account has been established to cover such transactions or for which an
offsetting position has been established by the Fund, are not deemed to be
issuances of senior securities.

2. Borrow money, except from banks and then only if immediately after
each such borrowing there is asset coverage of at least 300% as defined in
the 1940 Act. For purposes of this restriction, reverse repurchase
agreements, mortgage dollar rolls, short sales against the box, futures
contracts, options on futures contracts, securities or indices, when issued
and delayed delivery transactions and securities lending shall not constitute
borrowing.

3. Act as an underwriter for securities of other issuers.

4. Purchase or sell real estate, except that a Fund may (i) acquire or
lease office space for its own use, (ii) invest in securities of issuers that
invest in real estate or interests therein, (e.g. real estate investment
trusts) (iii) invest in securities that are secured by real estate or
interests therein, (iv) purchase and sell mortgage-related securities, (v)
hold and sell real estate acquired by the Fund as a result of the ownership
of securities and (vi) invest in real estate limited partnerships.

5. Invest in commodities, except that a Fund may (i) invest in
securities of issuers that invest in commodities, and (ii) engage in
permissible options and futures transactions and forward foreign currency
contracts, entered into in accordance with the Fund's investment policies.

6. Make loans, except that a Fund (i) may lend portfolio securities in
accordance with the Fund's investment policies in amounts up to 33 1/3% of
the Fund's total assets taken at market value, (ii) enter into fully
collateralized repurchase agreements, and (iii) purchase debt obligations in
which the Fund may invest consistent with its investment policies.

7. Purchase the securities of issuers conducting their principal
activity in the same industry if, immediately after such purchase, the value
of its investments in such industry would exceed 25% of its total assets
taken at market value at the time of such investment. This limitation does
not apply to investments in obligations issued or guaranteed by the U.S.
Government or any of its agencies, instrumentalities or authorities.

In addition, each Fund will operate as a "diversified" fund within the
meaning of the 1940 Act. This means that with respect to 75% of a Fund's
total assets, a Fund will not purchase securities of an issuer (other than
cash, cash items or securities issued or guaranteed by the U.S. Government,
its agencies, instrumentalities or authorities), if

(a) such purchase would cause more than 5% of the Fund's
total assets taken at market value to be invested in the
securities of such issuer; or

(b) such purchase would at the time result in more than 10%
of the outstanding voting securities of such issuer being
held by the Fund.

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If a percentage restriction on investment or utilization of assets as
set forth above is adhered to at the time an investment is made, a later
change in percentage resulting from changes in the values of a Fund's assets
will not be considered a violation of the restriction; provided, however,
that the asset coverage requirement applicable to borrowings under Section
18(f)(1) of the 1940 Act shall be maintained in the manner contemplated by
that Section.

In order to permit the sale of shares of the Funds in certain states,
the Board of Directors may, in its sole discretion, adopt restrictions on
investment policy more restrictive than those described above. Should the
Board of Directors determine that any such more restrictive policy is no
longer in the best interest of a Fund and its shareholders, the Fund may
cease offering shares in the state involved and the Board of Directors may
revoke such restrictive policy. Moreover, if the states involved shall no
longer require any such restrictive policy, the Board of Directors may, in
its sole discretion, revoke such policy.

B. NON-FUNDAMENTAL INVESTMENT RESTRICTIONS OF THE FUNDS.

The following restrictions are designated as non-fundamental and may be
changed by the Board of Directors without the approval of shareholders.

Each Fund may not:

1. Purchase securities on margin or make short sales of securities,
except that a Fund may obtain such short-term credit as may be necessary for
the clearance of purchases and sales of securities and except for
transactions in futures contracts and options thereon.

2. Purchase securities which are illiquid if, as a result of such
purchase, more than 15% of its net assets (10% for the Money Market Fund and
U.S. Government Money Market Fund) would consist of such securities.

3. Alone or together with any other of the Hartford Mutual Funds, make
investments for the purpose of exercising control over or management of any
issuer.

4. Mortgage, pledge, hypothecate, or in any manner transfer, as
security for indebtedness, any securities owned or held by it, except to
secure reverse repurchase agreements; however, for purposes of this
restriction, collateral arrangements with respect to transactions in futures
contracts and options thereon are not deemed to be a pledge of securities.

5. Invest more than 5% of its assets in securities of other investment
companies and will not acquire more than 3% of the total outstanding voting
securities of any one investment company, except that the Index Fund, U.S.
Government Money Market Fund and Money Market Fund will not purchase
securities of other investment companies at all.

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6. Purchase additional securities when money borrowed exceeds 5% of
the Fund's total assets.

7. Borrow money, engage in reverse repurchase agreements or engage in
activities which are the economic equivalent of borrowing if the combination
of such activities exceeds 33 1/3% of a Fund's total assets.

ALL FUNDS

U.S. TREASURY DEPARTMENT DIVERSIFICATION REGULATIONS. The U.S. Treasury
Department has issued diversification regulations under Section 817 of the
Internal Revenue Code. If a mutual fund underlying a variable contract, other
than a pension plan contract, is not adequately diversified within the terms
of these regulations, the contract owner will have adverse income tax
consequences. These regulations provide, among other things, that a mutual
fund shall be considered adequately diversified if (i) no more than 55% of
the value of the assets in the fund is represented by any one investment;
(ii) no more than 70% of the value of the assets in the fund is represented
by any two investments; (iii) no more than 80% of the value of the assets in
the fund is represented by any three investments and (iv) no more than 90% of
the value of the total assets of the fund is represented by any four
investments. In determining whether the diversification standards are met,
each United States Government Agency or instrumentality shall be treated as a
separate issuer.

Miscellaneous Investment Practices

A further description of certain of the policies described in the
Prospectus is set forth below.

Money Market Instruments and Temporary Investment Strategies

In addition to the U.S. Government Money Market Fund and the Money
Market Fund which may invest in cash, cash equivalents and money market
instruments at any time, all other Funds may hold cash or cash equivalents
and invest in high quality money market instruments under appropriate
circumstances as determined by HIMCO or Wellington Management. Such Funds
may invest up to 100% of their assets in cash, cash equivalents or money
market instruments only for temporary defensive purposes.

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short-term debt obligations; (5) obligations of U.S. banks, non-U.S. branches
of U.S. banks (Eurodollars), U.S. branches and agencies of non-U.S. banks
(Yankee dollars), and non-U.S. branches of non-U.S. banks; (6) asset-backed
securities; and (7) repurchase agreements.

Repurchase Agreements

Each Fund is permitted to enter into fully collateralized repurchase
agreements. The Fund's Board of Directors has established standards for
evaluation of the creditworthiness of the banks and securities dealers with
which the Funds will engage in repurchase agreements and monitors on a
quarterly basis HIMCO and Wellington Management's compliance with such
standards. Presently, each Fund may enter into repurchase agreements only
with commercial banks with at least $1 billion in assets or with recognized
government securities dealers with a minimum net capital of $100 million.

HIMCO or Wellington Management will monitor such transactions to ensure
that the value of underlying collateral will be at least equal at all times
to the total amount of the repurchase obligation, including the accrued
interest. If the seller defaults, the Fund could realize a loss on the sale
of the underlying security to the extent that the proceeds of sale including
accrued interest are less than the resale price provided in the agreement
including interest.

A repurchase agreement is an agreement by which the seller of a security
agrees to repurchase the security sold at a mutually agreed upon time and
price. It may also be viewed as the loan of money by a Fund to the seller.
The resale price would be in excess of the purchase price, reflecting an
agreed upon market interest rate.

Reverse Repurchase Agreements

Each Fund may also enter into reverse repurchase agreements. Reverse
repurchase agreements involve sales by a Fund of portfolio assets
concurrently with an agreement by a Fund to repurchase the same assets at a
later date at a fixed price. Reverse repurchase agreements carry the risk
that the market value of the securities which a Fund is obligated to
repurchase may decline below the repurchase price. A reverse repurchase
agreement is viewed as a collateralized borrowing by a Fund. Borrowing
magnifies the potential for gain or loss on the portfolio securities of a
Fund and, therefore, increases the possibility of fluctuation in a Fund's net
asset value. A Fund will establish a segregated account with the Fund's
custodian bank in which a Fund will maintain liquid assets equal in value to
a Fund's obligations in respect of reverse repurchase agreements. A Fund
will not enter into reverse repurchase transactions if the combination of all
borrowings from banks and the value of all reverse repurchase agreements for
the particular Fund equals more than 33 1/3% of the value the Fund's total
assets.

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Debt Securities

Each Fund is permitted to invest in debt securities including: (1)
securities issued or guaranteed as to principal or interest by the U.S.
Government, its agencies or instrumentalities; (2) non-convertible debt
securities issued or guaranteed by U.S. corporations or other issuers
(including foreign governments or corporations); (3) asset-backed securities
(International Opportunities Fund, International Advisers Fund, Advisers
Fund, Bond Fund, Mortgage Securities Fund and Money Market Fund only); (4)
mortgage-related securities, including collateralized mortgage obligations
("CMO's") (International Opportunities Fund, International Advisers Fund,
Advisers Fund, Bond Fund and Mortgage Securities Fund only); and (5)
securities issued or guaranteed as to principal or interest by a sovereign
government or one of its agencies or political subdivisions, supranational
entities such as development banks, non-U.S. corporations, banks or bank
holding companies, or other non-U.S. issuers.

Investment Grade Debt Securities

Each of the money market funds is permitted to invest only in high
quality, short term instruments as determined by Rule 2a-7 under the 1940
Act. Each of the other Funds is permitted to invest in debt securities rated
within the four highest rating categories (i.e., Aaa, Aa, A or Baa by Moody's
or AAA, AA, A or BBB by S&P) (or, if unrated, securities of comparable
quality as determined by HIMCO or Wellington Management). These securities
are generally referred to as "investment grade securities." Each rating
category has within it different gradations or sub-categories. If a Fund is
authorized to invest in a certain rating category, the Fund is also permitted
to invest in any of the sub-categories or gradations within that rating
category. If a security is downgraded to a rating category which does not
qualify for investment, HIMCO or Wellington Management will use its
discretion on whether to hold or sell based upon its opinion on the best
method to maximize value for shareholders over the long term. Debt
securities carrying the fourth highest rating (i.e., "Baa" by Moody's and
"BBB" by S&P), and unrated securities of comparable quality (as determined by
HIMCO or Wellington Management) are viewed to have adequate capacity for
payment of principal and interest, but do involve a higher degree of risk
than that associated with investments in debt securities in the higher
rating categories and such securities lack outstanding investment
characteristics and do have speculative characteristics.

High Yield-High Risk Securities

Each of the Capital Appreciation Fund, Advisers Fund and International
Opportunities Fund is permitted to invest up to 5%, and the International
Advisers Fund is permitted to invest up to 15%, of its assets in securities
rated as low as "C" by Moody's or "CC" by S&P or of comparable quality if not
rated. The Bond Fund is permitted to invest up to 20% of its assets in
securities rated in the highest level below investment grade (i.e., "Ba" for
Moody's or "BB" by S&P), or if unrated, securities determined to be of
comparable quality by HIMCO. Securities rated below investment grade are
commonly referred to as "high yield-

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high risk securities" or "junk bonds". Each rating category has within it
different gradations or sub-categories. For instance the "Ba" rating for
Moody's includes "Ba3", "Ba2" and "Ba1". Likewise the S&P rating category of
"BB" includes "BB+", "BB" and "BB-". If a Fund is authorized to invest in a
certain rating category, the Fund is also permitted to invest in any of the
sub-categories or gradations within that rating category. Securities in the
highest category below investment grade are considered to be of poor standing
and predominantly speculative. These securities are considered speculative
with respect to the issuer's capacity to pay interest and repay principal in
accordance with the terms of the obligations. Accordingly, it is possible
that these types of factors could, in certain instances, reduce the value of
securities held by a Fund with a commensurate effect on the value of a Fund's
shares. If a security is downgraded to a rating category which does not
qualify for investment, HIMCO or Wellington Management will use its
discretion on whether to hold or sell based upon its opinion on the best
method to maximize value for shareholders over the long term.

Mortgage-Related Securities

The mortgage-related securities in which the International Advisers
Fund, International Opportunities Fund, Advisers Fund, Bond Fund and Mortgage
Securities Fund may invest include interests in pools of mortgage loans made
by lenders such as savings and loan institutions, mortgage bankers,
commercial banks and others. Pools of mortgage loans are assembled for sale
to investors (such as the Funds) by various governmental, government-related
and private organizations. These Funds may also invest in similar
mortgage-related securities which provide funds for multi-family residences
or commercial real estate properties.

The value of these securities may be significantly affected by interest
rates, the market's perception of the issuers and the creditworthiness of the
parties involved. These securities may also be subject to prepayment risk.
The yield characteristics of the mortgage securities differ from those of
traditional debt securities. Among the major differences are that interest
and principal payments are made more frequently on mortgage securities,
usually monthly, and that principal may be prepaid at any time because the
underlying mortgage loans or other assets generally permit prepayment at any
time. Evaluating the risks associated with prepayment and determining the
rate at which prepayment is influenced by a variety of economic, geographic,
demographic, social and other factors including interest rate levels, changes
in housing needs, net equity built by mortgagors in the mortgaged properties,
job transfers, and unemployment rates. If a Fund purchases these securities
at a premium, a prepayment rate that is faster than expected will reduce
yield to maturity, while a prepayment rate that is slower than expected will
have the opposite effect of increasing yield to maturity. Conversely, if a
Fund purchases these securities at a discount, faster than expected
prepayments will increase, while slower than expected prepayments will
reduce, yield to maturity. Amounts available for reinvestment are likely to
be greater during a period of declining interest rates and, as a result, are
likely to be reinvested at lower interest rates than during a period of
declining interest rates and, as a result, are likely to be reinvested at
lower interest rates than during a period of rising interest rates.
Accelerated prepayments on

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securities purchased by a Fund at a premium also impose a risk of loss of
principal because the premium may not have been fully amortized at the time
the principal is repaid in full.

The mortgage securities in which each Fund invests differ from
conventional bonds in that principal is paid back over the life of the
mortgage securities rather than at maturity. As a result, the holder of the
mortgage securities (i.e., a Fund) receives monthly scheduled payments of
principal and interest, and may receive unscheduled principal payments
representing prepayments on the underlying mortgages. When the holder
reinvests the payments and any unscheduled prepayments of principal it
receives, it may receive a rate of interest which is lower than the rate on
the existing mortgage securities. For this reason, mortgage securities are
less effective than other types of U.S. Government securities as a means of
"locking in" long-term interest rates. See "Illiquid Securities."

Asset-Backed Securities

The International Advisers Fund, International Opportunities Fund,
Advisers Fund, Bond Fund, Mortgage Securities Fund and the Money Market Fund
may invest in asset-backed securities. The securitization techniques used for
asset-backed securities are similar to those used for mortgage-related
securities. The collateral for these securities has included home equity
loans, automobile and credit card receivables, boat loans, computer leases,
airplane leases, mobile home loans, recreational vehicle loans and hospital
accounts receivables. These Funds may invest in these and other types of
asset-backed securities that may be developed in the future. These securities
may be subject to the risk of prepayment or default. The ability of an issuer
of asset-backed securities to enforce its security interest in the underlying
securities may be limited.

Equity Securities

Each Fund except the Bond Fund, Mortgage Securities Fund, U.S.
Government Money Market Fund and Money Market Fund may invest in equity
securities which include common stocks, preferred stocks (including
convertible preferred stock) and rights to acquire such securities. In
addition, these Funds may invest in securities such as bonds, debentures and
corporate notes which are convertible into common stock at the option of the
holder. The Bond Fund may invest up to 15% of its total assets in preferred
stocks, convertible securities, and securities carrying warrants to purchase
equity securities. The Bond Fund will not invest in common stocks directly,
but may retain, for reasonable periods of time, common stocks acquired upon
conversion of debt securities or upon exercise of warrants acquired with debt
securities.

Small Capitalization Securities

All Funds except the Bond Fund, Mortgage Securities Fund,
Money Market Fund and U.S. Government Money Market Fund may invest
in equity securities (including securities issued in initial public
offerings) of companies which have less than $2 billion in market

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capitalization ("Small Capitalization Securities"). Because the issuers of
Small Capitalization Securities tend to be smaller or less well-established
companies, they may have limited product lines, market share or financial
resources and may have less historical data with respect to operations and
management. As a result, Small Capitalization Securities are often less
marketable and experience a higher level of price volatility than securities
of larger or more well-established companies. In addition, companies whose
securities are offered in initial public offerings may be more dependant on a
limited number of key employees. Because securities issued in initial public
offerings are being offered to the public for the first time, the market for
such securities may be inefficient and less liquid.

Non-U.S. Securities

Each Fund, except the Mortgage Securities Fund and U.S. Government Money
Market Fund, is permitted to invest a portion of its assets in non-U.S.
securities, including, in the case of permitted equity investments, American
Depositary Receipts ("ADRs") and Global Depositary Receipts ("GDRs"). ADRs
are certificates issued by a U.S. bank or trust company and represent the
right to receive securities of a non-U.S. issuer deposited in a domestic bank
or non-U.S. branch of a U.S. bank. ADRs are traded on a U.S. securities
exchange, or in an over-the-counter market, and are denominated in U.S.
dollars. GDRs are certificates issued globally and evidence a similar
ownership arrangement. GDRs are traded on non-U.S. securities exchanges and
are denominated in non-U.S. currencies. The value of an ADR or a GDR will
fluctuate with the value of the underlying security, will reflect any changes
in exchange rates and otherwise will involve risks associated with investing
in non-U.S. securities. When selecting securities of non-U.S. issuers, HIMCO
or Wellington Management will evaluate the economic and political climate
and the principal securities markets of the country in which an issuer is
located.

Investing in securities issued by non-U.S. companies involves
considerations and potential risks not typically associated with investing in
obligations issued by U.S. companies. Less information may be available about
non-U.S. companies than about U.S. companies and non-U.S. companies generally
are not subject to uniform accounting, auditing and financial reporting
standards or to other regulatory practices and requirements comparable to
those applicable to U.S. companies. The values of non-U.S. securities are
affected by changes in currency rates or exchange control regulations,
restrictions or prohibition on the repatriation of non-U.S. currencies,
application of non-U.S. tax laws, including withholding taxes, changes in
governmental administration or economic or monetary policy (in the U.S. or
outside the U.S.) or changed circumstances in dealings between nations. Costs
are also incurred in connection with conversions between various currencies.

Investing in non-U.S. sovereign debt will expose a Fund to the direct or
indirect consequences of political, social or economic changes in the
developing and emerging countries that issue the securities. The ability and
willingness of sovereign obligers in developing and emerging countries or the
governmental authorities that control repayment of their external debt to pay
principal and interest on such debt when due may depend on general economic
and

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political conditions within the relevant country. Countries such as those in
which the Funds may invest have historically experienced, and may continue to
experience, high rates of inflation, high interest rates, exchange rate trade
difficulties and unemployment. Some of these countries are also characterized
by political uncertainty or instability. Additional factors which may
influence the ability or willingness to service debt include, but are not
limited to, a country's cash flow situation, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of its debt
service burden to the economy as a whole, and its government's policy towards
the IMF, the World Bank and other international agencies.

Although the International Advisers Fund and International Opportunities
Fund will focus on companies that operate in established markets, from time
to time the Fund may invest up to 25% of its assets in companies located in
emerging countries. Compared to the United States and other developed
countries, developing countries may have relatively unstable governments,
economies based on only a few industries, and securities markets that are
less liquid and trade a small number of securities. Prices on these exchanges
tend to be volatile and, in the past, securities in these countries have
offered greater potential for gain (as well as loss) than securities of
companies located in developed countries.

Currency Transactions

Each Fund, except the Index Fund, Mortgage Securities Fund, U.S.
Government Money Market Fund and Money Market Fund, may engage in currency
transactions to hedge the value of portfolio securities denominated in
particular currencies against fluctuations in relative value. Currency
transactions include forward currency contracts, currency swaps,
exchange-listed and over-the-counter ("OTC") currency futures contracts and
options thereon and exchange listed and OTC options on currencies.

Forward currency contracts involve a privately negotiated obligation to
purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. Currency swaps are agreements to
exchange cash flows based on the notional difference between or among two or
more currencies. See "Swap Agreements."

The use of currency transactions to protect the value of a Fund's assets
against a decline in the value of a currency does not eliminate potential
losses arising from fluctuations in the value of the Fund's underlying
securities. Further, the Funds may enter into currency transactions only with
counterparties that HIMCO or Wellington Management deems to be creditworthy.

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Options and Futures Contracts

In seeking to protect against the effect of changes in equity market
values, currency exchange rates or interest rates that are adverse to the
present or prospective position of the Funds, for cash flow management, and,
to a lesser extent, to enhance returns, each Fund, except the U.S. Government
Money Market Fund and Money Market Fund, may employ certain hedging, income
enhancement and risk management techniques, including the purchase and sale
of options, futures and options on futures involving equity and debt
securities and foreign currencies, aggregates of equity and debt securities,
indices of prices of equity and debt securities and other financial indices.
A Fund's ability to engage in these practices may be limited by tax
considerations and certain other legal considerations.

A Fund may write covered options and purchase put and call options on
individual securities as a partial hedge against an adverse movement in the
security and in circumstances consistent with the objective and policies of
the Fund. This strategy limits potential capital appreciation in the
portfolio securities subject to the put or call option.

The Funds may also write covered put and call options and purchase put
and call options on foreign currencies to hedge against the risk of foreign
exchange fluctuations on foreign securities the particular Fund holds in its
portfolio or that it intends to purchase. For example, if a Fund enters into
a contract to purchase securities denominated in foreign currency, it could
effectively establish the maximum U.S. dollar cost of the securities by
purchasing call options on that foreign currency. Similarly, if a Fund held
securities denominated in a foreign currency and anticipated a decline in the
value of that currency against the U.S. dollar, the Fund could hedge against
such a decline by purchasing a put option on the foreign currency involved.

In addition, a Fund may purchase put and call options and write covered
put and call options on aggregates of equity and debt securities, and may
enter into futures contracts and options thereon for the purchase or sale of
aggregates of equity and debt securities, indices of equity and debt
securities and other financial indices, all for the purpose of protecting
against potential changes in the market value of portfolio securities or in
interest rates. Aggregates are composites of equity or debt securities that
are not tied to a commonly known index. An index is a measure of the value of
a group of securities or other interests. An index assigns relative values to
the securities included in that index, and the index fluctuates with changes
in the market value of those securities.

A Fund may write covered options only. "Covered" means that, so long as
a Fund is obligated as the writer of a call option on particular securities
or currency, it will own either the underlying securities or currency or an
option to purchase the same underlying securities or currency having an
expiration date not earlier than the expiration date of the covered option
and an exercise price equal to or less than the exercise price of the covered
option, or will establish or maintain with its custodian for the term of the
option a segregated account consisting of cash, U.S. Government securities or
other liquid, high grade debt obligations

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having a value equal to the fluctuating market value of the optioned
securities or currencies. A Fund will cover any put option it writes on
particular securities or currency by maintaining a segregated account with
its custodian as described above.

To hedge against fluctuations in currency exchange rates, a Fund may
purchase or sell foreign currency futures contracts, and write put and call
options and purchase put and call options on such futures contracts. For
example, a Fund may use foreign currency futures contracts when it
anticipates a general weakening of the foreign currency exchange rate that
could adversely affect the market values of the Fund's foreign securities
holdings. In this case, the sale of futures contracts on the underlying
currency may reduce the risk of a reduction in market value caused by foreign
currency variations and, by so doing, provide an alternative to the
liquidation of securities positions in the Fund and resulting transaction
costs. When the Fund anticipates a significant foreign exchange rate increase
while intending to invest in a non-U.S. security, the Fund may purchase a
foreign currency futures contract to hedge against a rise in foreign exchange
rates pending completion of the anticipated transaction. Such a purchase of a
futures contract would serve as a temporary measure to protect the Fund
against any rise in the foreign exchange rate that may add additional costs
to acquiring the non-U.S. security position. The Fund similarly may use
futures contracts on equity and debt securities to hedge against fluctuations
in the value of securities it owns or expects to acquire.

The Funds also may purchase call or put options on foreign currency
futures contracts to obtain a fixed foreign exchange rate at limited risk. A
Fund may purchase a call option on a foreign currency futures contract to
hedge against a rise in the foreign exchange rate while intending to invest
in a non-U.S. security of the same currency. A Fund may purchase put options
on foreign currency futures contracts to hedge against a decline in the
foreign exchange rate or the value of its non-U.S. securities. A Fund may
write a call option on a foreign currency futures contract as a partial hedge
against the effects of declining foreign exchange rates on the value of
non-U.S. securities and in circumstances consistent with a Fund's investment
objectives and policies.

Options on indexes are settled in cash, not in delivery of securities.
The exercising holder of an index option receives, instead of a security,
cash equal to the difference between the closing price of the securities
index and the exercise price of the option. When a Fund writes a covered
option on an index, a Fund will be required to deposit and maintain with a
custodian cash or high-grade, liquid short-term debt securities equal in
value to the aggregate exercise price of a put or call option pursuant to the
requirements and the rules of the applicable exchange. If, at the close of
business on any day, the market value of the deposited securities falls below
the contract price, the Fund will deposit with the custodian cash or
high-grade, liquid short-term debt securities equal in value to the
deficiency.

To the extent that a Fund enters into futures contracts, options on
futures contracts and options on foreign currencies that are traded on an
exchange regulated by the Commodities Futures Trading Commission ("CFTC"), in
each case that are not for "BONA FIDE hedging" purposes (as defined by
regulations of the CFTC), the aggregate initial margin and premiums

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<PAGE>

required to establish those positions may not exceed 5% of the liquidation
value of the Fund's portfolio, after taking into account the unrealized
profits and unrealized losses on any such contracts the Fund has entered
into. However, the "in-the-money" amount of such options may be excluded in
computing the 5% limit. Adoption of this guideline will not limit the
percentage of a Fund's assets at risk to 5%.

Although any one Fund may not employ all or any of the foregoing
strategies, its use of options, futures and options thereon and forward
currency contracts (as described under "Currency Transactions") would involve
certain investment risks and transaction costs to which it might not be
subject were such strategies not employed. Such risks include: (1) dependence
on the ability of HIMCO or Wellington Management to predict movements in the
prices of individual securities, fluctuations in the general securities
markets or market sections and movements in interest rates and currency
markets; (2) imperfect correlation between movements in the price of the
securities or currencies hedged or used for cover; (3) the fact that skills
and techniques needed to trade options, futures contracts and options thereon
or to use forward currency contracts are different from those needed to
select the securities in which a Fund invests; (4) lack of assurance that a
liquid secondary market will exist for any particular option, futures
contract, option thereon or forward contract at any particular time, which
may affect a Fund's ability to establish or close out a position; (5)
possible impediments to effective portfolio management or the ability to meet
current obligations caused by the segregation of a large percentage of a
Fund's assets to cover its obligations; and (6) the possible need to defer
closing out certain options, futures contracts, options thereon and forward
contracts in order to continue to qualify for the beneficial tax treatment
afforded "regulated investment companies" under the Code. In the event that
the anticipated change in the price of the securities or currencies that are
the subject of such a strategy does not occur, it may be that a Fund would
have been in a better position had it not used such a strategy at all.

Swap Agreements

Each Fund, except the Index Fund, U.S. Government Money Market Fund and
Money Market Fund, may enter into interest rate swaps, currency swaps, and
other types of swap agreements such as caps, collars, and floors. In a
typical interest rate swap, one party agrees to make regular payments equal
to a floating interest rate multiplied by a "notional principal amount," in
return for payments equal to a fixed rate multiplied by the same amount, for
a specified period of time. If a swap agreement provides for payments in
different currencies, the parties might agree to exchange the notional
principal amount as well. Swaps may also depend on other prices or rates,
such as the value of an index or mortgage prepayment rates.

In a typical cap or floor agreement, one party agrees to make payments
only under specified circumstances, usually in return for payment of a fee by
the other party. For example, the buyer of an interest rate cap obtains the
right to receive payments to the extent that a specified interest rate
exceeds an agreed-upon level, while the seller of an interest rate floor is
obligated to make payments to the extent that a specified interest rate falls
below an

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<PAGE>

agreed-upon level. An interest rate collar combines elements of buying a
cap and selling a floor.

Swap agreements will tend to shift a Fund's investment exposure from one
type of investment to another. For example, if a Fund agreed to exchange
floating rate payments for fixed rate payments, the swap agreement would tend
to decrease the Fund's exposure to rising interest rates. Caps and floors
have an effect similar to buying or writing options. Depending on how they
are used, swap agreements may increase or decrease the overall volatility of
a Fund's investments and its share price and yield.

The Funds will usually enter into interest rate swaps on a net basis,
i.e., where the two parties make net payments with a Fund receiving or
paying, as the case may be, only the net amount of the two payments. The net
amount of the excess, if any, of a Fund's obligations over its entitlement
with respect to each interest rate swap will be U.S. Government Securities or
other liquid high grade debt obligations having an aggregate net asset value
at least equal to the accrued excess will be maintained by the Fund's
custodian in a segregated account. If a Fund enters into a swap on other than
a net basis, the Fund will maintain in the segregated account the full amount
of the Fund's obligations under each such swap. The Fund may enter into
swaps, caps, collars and floors with member banks of the Federal Reserve
System, members of the New York Stock Exchange or other entities determined
by HIMCO or Wellington Management, pursuant to procedures adopted and
reviewed on an ongoing basis by the Board of Directors, to be creditworthy.
If a default occurs by the other party to such transaction, a Fund will have
contractual remedies pursuant to the agreements related to the transaction
but such remedies may be subject to bankruptcy and insolvency laws which
could affect such Fund's rights as a creditor.

The swap market has grown substantially in recent years with a large
number of banks and financial services firms acting both as principals and as
agents utilizing standardized swap documentation. As a result, the swap
market has become relatively liquid. Caps, collars and floors are more recent
innovations and they are less liquid than swaps. There can be no assurance,
however, that a Fund will be able to enter into interest rate swaps or to
purchase interest rate caps, collars or floors at prices or on terms HIMCO or
Wellington Management, as appropriate, believes are advantageous to such
Fund. In addition, although the terms of interest rate swaps, caps, collars
and floors may provide for termination, there can be no assurance that a Fund
will be able to terminate an interest rate swap or to sell or offset interest
rate caps, collars or floors that it has purchased. Interest rate swaps,
caps, collars and floors are considered by the SEC to be illiquid securities.

The successful utilization of hedging and risk management transactions
requires skills different from those needed in the selection of a Fund's
portfolio securities and depends on HIMCO's or Wellington Management's
ability to predict correctly the direction and degree of movements in
interest rates. Although the Funds believe that use of the hedging and risk
management techniques described above will benefit the Funds, if HIMCO's or
Wellington Management's judgment about the direction or extent of the
movement in interest rates is

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<PAGE>

incorrect, a Fund's overall performance would be worse than if it had not
entered into any such transactions. For example, if a Fund had purchased an
interest rate swap or an interest rate floor to hedge against its expectation
that interest rates would decline but instead interest rates rose, such Fund
would lose part or all of the benefit of the increased payments it would
receive as a result of the rising interest rates because it would have to pay
amounts to its counterparties under the swap agreement or would have paid the
purchase price of the interest rate floor. These activities are commonly used
when managing derivative investments.

Illiquid Securities

Each Fund is permitted to invest in illiquid securities. No illiquid
securities will be acquired if upon the purchase more than 10% of the U.S.
Government Money Market Fund's or Money Market Fund's net assets or 15% of
each other Fund's net assets would consist of such securities. "Illiquid
Securities" are securities that may not be sold or disposed of in the
ordinary course of business within seven days at approximately the price used
to determine a Fund's net asset value. Each Fund may purchase certain
restricted securities commonly known as Rule 144A securities that can be
resold to institutions and which may be determined to be liquid pursuant to
policies and guidelines of the Board of Directors. A Fund may not be able to
sell illiquid securities when HIMCO or Wellington Management considers it
desirable to do so or may have to sell such securities at a price that is
lower than the price that could be obtained if the securities were more
liquid. A sale of illiquid securities may require more time and may result in
higher dealer discounts and other selling expenses than does the sale of
securities that are not illiquid. Illiquid securities also may be more
difficult to value due to the unavailability of reliable market quotations
for such securities, and investment in illiquid securities may have an
adverse impact on net asset value.

Under current interpretations of the SEC Staff, the following types of
securities in which a Fund may invest will be considered illiquid: (1)
repurchase agreements maturing in more than seven days; (2) certain
restricted securities (securities whose public resale is subject to legal or
contractual restrictions); (3) options, with respect to specific securities,
not traded on a national securities exchange that are not readily marketable;
and (4) any other securities in which a Fund may invest that are not readily
marketable.

When-Issued and Delayed-Delivery Securities

Each Fund is permitted to purchase or sell securities on a when-issued
or delayed-delivery basis. When-issued or delayed-delivery transactions arise
when securities are purchased or sold with payment and delivery taking place
in the future in order to secure what is considered to be an advantageous
price and yield at the time of entering into the transaction. While the Funds
generally purchase securities on a when-issued basis with the intention of
acquiring the securities, the Funds may sell the securities before the
settlement date if HIMCO or Wellington Management deems it advisable. At the
time a Fund makes the commitment to purchase securities on a when-issued
basis, the Fund will record the transaction and thereafter reflect the value,
each day, of such security in determining the net asset value of the Fund. At

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<PAGE>

the time of delivery of the securities, the value may be more or less than
the purchase price. A Fund will maintain, in a segregated account, cash, U.S.
Government securities or other liquid, high-grade debt obligations having a
value equal to or greater than the Fund's purchase commitments; likewise a
Fund will segregate securities sold on a delayed-delivery basis.

Other Investment Companies

Each Fund, except the Index Fund, U.S. Government Money Market Fund and
Money Market Fund, is permitted to invest in other investment companies.
Securities in certain countries are currently accessible to the Funds only
through such investments. The investment in other investment companies is
limited in amount by the 1940 Act, and will involve the indirect payment of a
portion of the expenses, including advisory fees, of such other investment
companies. Under the 1940 Act, a Fund will not purchase a security of an
investment company if, as a result, (1) more than 10% of the Fund's assets
would be invested in securities of other investment companies, (2) such
purchase would result in more than 3% of the total outstanding voting
securities of any one such investment company being held by the Fund; or (3)
more than 5% of the Fund's assets would be invested in any one such
investment company.

Portfolio Securities Lending

Each of the Funds may lend its portfolio securities to broker/dealers
and other institutions as a means of earning interest income. The borrower
will be required to deposit as collateral, cash, cash equivalents, U.S.
government securities or other high quality liquid debt securities that at
all times will be at least equal to 100% of the market value of the loaned
securities and such amount will be maintained in a segregated account of the
respective Fund. While the securities are on loan the borrower will pay the
respective Fund any income accruing thereon.

Delays or losses could result if a borrower of portfolio securities
becomes bankrupt or defaults on its obligation to return the loaned
securities. The Funds may lend securities only if: (1) the loan is fully
secured by appropriate collateral at all times; and (2) the value of all
loaned securities of any Fund is not more than 33 1/3% of the Fund's total
assets taken at the time of the loan.

MANAGEMENT OF THE FUNDS

The directors and officers of the Fund and their principal business
occupations for the last five years are set forth below. Those directors who
are deemed to be "interested persons" of the Fund, as that term is defined in
the 1940 Act are indicated by an asterisk next to their respective names.

Name, Address, Age and Position with the Fund

JOSEPH ANTHONY BIERNAT (age 69)
Director
30 Hurdle Fence Drive
Avon, CT 06001

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<PAGE>

Mr. Biernat served as Senior Vice President and Treasurer of United
Technologies Corporation from 1984 until March, 1987, when he retired. He
subsequently served as Executive Vice President of Boston Security
Counselors, Inc., Hartford, Connecticut, and served as Vice President-Client
Services of Wright Investors' Service, Bridgeport, Connecticut. Mr. Biernat
presently is consulting to organizations on financial matters, with the
majority of time spent with T.O. Richardson & Co., Farmington, Connecticut.

WINIFRED ELLEN COLEMAN (age 64)
Director
27 Buckingham Lane
West Hartford, CT 06117

Ms. Coleman has served as President of Saint Joseph College since 1991.

JOSEPH HARRY GAREAU* (age 50)
Director and President
P.O. Box 2999
Hartford, CT 06104-2999

Mr. Gareau has served as Executive Vice President and Chief Investment
Officer of The Hartford since 1993. Formerly, he served as Senior Vice
President (September, 1992 - April, 1993) and Vice President (October, 1987 -
September, 1992). Mr. Gareau is also a Director and the President of HL
Advisors and HIMCO.

WILLIAM ATCHISON O'NEILL (age 66)
Director
Box 360
East Hampton, CT 06424

The Honorable William A. O'Neill served as Governor of the State of
Connecticut from 1980 until 1991. He is presently retired.

MILLARD HANDLEY PRYOR, JR. (age 64)
Director
90 State House Square
Hartford, CT 06103

Mr. Pryor has served as Managing Director of Pryor & Clark Company, Hartford,
Connecticut, since June, 1992. He served as Chairman of the Board of Lydall,
Inc. from 1985 until October, 1991 and formerly served as President and Chief
Executive Officer.

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<PAGE>

LOWNDES ANDREW SMITH* (age 57)
Director and Chairman
P.O. Box 2999
Hartford, CT 06104-2999

Mr. Smith has served as President, Chief Operating Officer, and Director of
The Hartford Life Companies, and as a Director of The Hartford , since
November, 1989.

JOHN KELLEY SPRINGER (age 65)
Director
55 Farmington Avenue
Hartford, CT 06105

Mr. Springer has served as Chief Executive Officer of Connecticut Health
System, Inc., a hospital holding company, since 1989. Formerly, he served as
the Chief Executive Officer of Hartford Hospital, Hartford, Connecticut.

PETER CUMMINS (age 58)
Vice President
Hartford Plaza
Hartford, CT 06115

Mr. Cummins has been Vice President of sales and marketing of the Individual
Life and Annuity Division of The Hartford Life Companies since 1989.

JOHN PHILLIP GINNETTI (age 51)
Vice President
P.O. Box 2999
Hartford, CT 06104-2999

Mr. Ginnetti has served as Executive Vice President and Director of Asset
Management Services, a division of The Hartford Life Companies, since 1994.
From 1988 to 1994 he served as Senior Vice President and Director of the
Individual Life and Annuities Division, also a division of ITT Hartford
Insurance Group-Life Companies.

ANDREW WILLIAM KOHNKE (age 38)
Vice President
P.O. Box 2999
Hartford, CT 06104-2999

Mr. Kohnke has served as a Vice President since 1992, and as an Investment
Manager since 1983, of The Hartford Life Companies. Mr. Kohnke is also a
Director and Managing Director of HL Advisors and HIMCO.

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<PAGE>

THOMAS MICHAEL MARRA (age 38)
Vice President
P.O. Box 2999
Hartford, CT 06104-2999

Mr. Marra has served as a Executive Vice President since 1996, as Senior Vice
President since 1994, and as Director of the Individual Life and Annuity
Division of The Hartford Life Companies, since 1980.

CHARLES MINER O'HALLORAN (age 50)
Vice President and Secretary
Hartford Plaza
Hartford, CT 06115

Mr. O'Halloran has served as a Vice President since December, 1994, and as
Senior Associate General Counsel since 1988 and Corporate Secretary since
1996 of The Hartford. Mr. O'Halloran is also a Director, Secretary and
General Counsel of HL Advisors and HIMCO.

GEORGE RICHARD JAY (age 45)
Treasurer and Controller
P.O. Box 2999
Hartford, CT 06104-2999

Mr. Jay has served as Secretary and Director, Life and Equity Accounting and
Financial Control, of The Hartford Life Companies since 1987.

KEVIN J. CARR (age 42)
Assistant Secretary and Counsel
Hartford Plaza
Hartford, CT 06115

Mr. Carr has served as Counsel since November 1996 and Associate Counsel
since November 1995, of The Hartford. Formerly he served as Counsel of
Connecticut Mutual Life Insurance Company from March 1995 to November 1995,
Associate Counsel of 440 Financial Group of Worcester from 1994 to 1995 and
Corporate Counsel-General Manager of Parker Media, a Hartford-based
publishing company, from 1990-1994.

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<PAGE>

JAMES CUBANSKI (age 36)
Assistant Secretary
Hartford Plaza
Hartford, CT 06115

Mr. Cubanski has served as Director of Tax Administration of The Hartford
since July, 1995. Formerly he served as Director of Federal Tax
Administration (July, 1993 -July, 1995) and Manager of Federal Taxes
(February, 1991 - July, 1993).

An Audit Committee and Nominating Committee have been appointed for the
Fund. Each Committee is made up of those directors who are not "interested
persons" of the Fund.

All Board members and officers of the Fund are also board members and
officers of ITT Hartford Mutual Funds, Inc., an open-end management
investment company comprised of eight separate funds, whose shares are sold
to the general public. Each of the Directors and principal officers
affiliated with the Fund who is also an affiliated person of HL Advisors,
HIMCO or Wellington Management is named above, together with the capacity in
which such person is affiliated with the Fund, HL Advisors, HIMCO or
Wellington Management.

COMPENSATION OF OFFICERS AND DIRECTORS. The Funds pay no salaries or
compensation to any officer or director affiliated with The Hartford. The
chart below sets forth the fees paid by the Fund to the non-interested
Directors and certain other information as of December 31, 1996:

JOSEPH A. WINIFRED E. WILLIAM A. MILLARD H. JOHN K.
BIERNAT COLEMAN O'NEILL PRYOR SPRINGER
<S> <C> <C> <C> <C> <C>
COMPENSATION
RECEIVED FROM THE FUNDS $18,000 $18,000 $18,000 $18,000 $18,000

PENSION OR RETIREMENT
BENEFITS ACCRUED AS
FUND EXPENSE $0 $0 $0 $0 $0

TOTAL COMPENSATION
FROM THE FUNDS AND
COMPLEX PAID TO
DIRECTORS* $23,250 $20,250 $23,250 $23,250 $23,250
</TABLE>

*As of December 31, 1996, there were twenty-one funds in the Complex
(including the Funds).

Other Information about the Fund. Each Fund is a Maryland corporation with
authorized capital stock, par value $0.10 per share as follows: Capital
Appreciation Fund, 2 billion; Dividend and Growth Fund, 2 billion; Index
Fund, 1 billion; International Opportunities Fund, 1.5 billion; Small Company
Fund, 750 million; Stock Fund, 2 billion; Advisers Fund, 4 billion;
International Advisers Fund, 750 million; Bond Fund, 800 million; Mortgage

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<PAGE>

Securities Fund, 800 million; Money Market Fund, 1.3 billion; U.S. Government
Money Market Fund, 100 million.

As of December 31, 1996, HIMCO owned 3,000,000 shares (7.5%) of the
Small Company Fund.

At December 31, 1996, certain Hartford Life group pension contracts held
direct interests in shares of the Funds as follows:

Shares %
Hartford Index Fund, Inc. 16,432,999 6.30%
Hartford Mortgage Securities Fund, Inc. 17,408,850 5.65%
Hartford Capital Appreciation Fund, Inc. 15,519,596 1.79%
Hartford International Opportunities Fund, Inc. 7,835,802 1.11%
Hartford Advisers Fund, Inc. 18,752,510 0.69%
Hartford Dividend & Growth Fund, Inc. 443,556 0.08%
Hartford Small Company Fund, Inc. 28,535 0.07%
Hartford International Advisers Fund, Inc. 27,096 0.03%
Hartford Stock Fund, Inc. 92,167 0.01%
Hartford Bond Fund, Inc. 47,060 0.01%
HVA Money Market Fund, Inc. 31,633 0.01%

VOTING

Each shareholder shall be entitled to one vote for each share of the
Funds held upon all matters submitted to the shareholders generally. With
respect to the Funds' shares issued as described above under "Purchase of
Fund Shares," as well as Fund shares which are not otherwise attributable to
variable annuity contract owners or variable life policy holders, the ITT
Hartford Life Insurance Companies shall be the shareholders of record. Each
of the ITT Hartford Life Insurance Companies will vote all Fund shares, pro
rata, according to the written instructions of the contract owners of the
variable annuity contracts and the policy holders of the variable life
contracts issued by it using the Funds as investment vehicles. This position
is consistent with the policy of the SEC Staff.

OTHER RIGHTS

Each share of Fund stock, when issued and paid for in accordance with
the terms of the offering, will be fully paid and non-assessable. Shares of
Fund stock have no pre-emptive, subscription or conversion rights and are
redeemable as set forth under "Sale and Redemption of Shares." There are no
shareholder pre-emptive rights. Upon liquidation of a Fund, the shareholders
of that Fund shall be entitled to share, pro rata, in any assets of the Fund
after discharge of all liabilities and payment of the expenses of liquidation.

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<PAGE>

Each Fund's Articles of Incorporation provides that the Directors,
officers and employees of the Fund may be indemnified by the Fund to the
fullest extent permitted by Maryland law and the federal securities laws. The
Fund's Bylaws provide that the Fund shall indemnify each of its Directors,
officers and employees against liabilities and expenses reasonably incurred
by them, in connection with, or resulting from, any claim, action, suit or
proceeding, threatened against or otherwise involving such Director, officer
or employee, directly or indirectly, by reason of being or having been a
Director, officer or employee of the Fund. Neither the Articles of
Incorporation nor the Bylaws authorize the Fund to indemnify any Director or
officer against any liability to which he or she would otherwise be subject
by reason of or for willful misfeasance, bad faith, gross negligence or
reckless disregard of such person's duties.

INVESTMENT MANAGEMENT ARRANGEMENTS

Each Fund has entered into an investment advisory agreement with HL
Investment Advisors, Inc. ("HL Advisors"). The investment advisory agreement
provides that HL Advisors, subject to the supervision and approval of each
Fund's Board of Directors, is responsible for the management of each Fund. HL
Advisors is responsible for investment management supervision of all Funds.
HL Advisors has entered into an investment services agreement with The
Hartford Investment Management Company ("HIMCO") for services related to the
day-to-day investment and reinvestment of the assets of the Index Fund,
Mortgage Securities Fund, Bond Fund, U.S. Government Fund and Money Market
Fund. In connection with its management of the such Funds, HIMCO provides
investment research and supervision of the investments held by a Fund and
conducts a continuous program of investment and reinvestment of the Funds'
assets, in accordance with the investment objectives and policies of a Fund.
HIMCO also furnishes the Funds such statistical information, with respect to
the investments which the Funds may hold or contemplate purchasing, as the
Fund may reasonably request. HIMCO will apprise the Fund of important
developments materially affecting any of the Funds and furnish the Funds from
time to time with such information as HIMCO may believe appropriate for this
purpose. In addition, Hartford Life Insurance Company ("Hartford Life"), a
corporate affiliate of HL Advisors and HIMCO, provides administrative
services to the Funds including administrative personnel, services, equipment
and facilities and office space for proper operation of the Funds. Although
Hartford Life has agreed to arrange for the provision of additional services
necessary for the proper operation of the Fund, each Fund pays for these
services directly.

With respect to the Small Company Fund, Capital Appreciation Fund,
International Advisers Fund, International Opportunities Fund, Stock Fund,
Dividend and Growth Fund and Advisers Fund, HL Advisors has entered into a
sub-advisory investment management agreement with Wellington Management
Company ("Wellington Management"). Under the sub-advisory agreement,
Wellington Management, subject to the general supervision of the Board of
Directors and HL Advisors, is responsible for (among other things) the
day-to-day investment and reinvestment of the assets of such Funds and
furnishing each such Fund with

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<PAGE>

advice and recommendations with respect to investments and the purchase and
sale of appropriate securities for each Fund.

As provided by the investment advisory agreement, each Fund pays HL
Advisors an investment management fee, which is accrued daily and paid
monthly, equal on an annual basis to a stated percentage of the respective
Fund's average daily net asset value. HL Advisors, not any Fund, pays the
subadvisory fees of Wellington Management as set forth in the Prospectus. HL
Advisors pays HIMCO the direct and indirect costs incurred in managing the
HIMCO-advised Funds.

No person other than HL Advisors, HIMCO or Wellington Management and
their directors and employees regularly furnishes advice to the Funds with
respect to the desirability of the Funds investing in, purchasing or selling
securities. HIMCO and Wellington Management may from time to time receive
statistical or other information regarding general economic factors and
trends, from The Hartford and its affiliates.

Securities held by any Fund may also be held by other funds and other
clients for which HIMCO, Wellington Management or their respective affiliates
provide investment advice. Because of different investment objectives or
other factors, a particular security may be bought by HIMCO or Wellington
Management for one or more clients when one or more clients are selling the
same security. If purchases or sales of securities arise for consideration at
or about the same time for any Fund or client accounts (including other
funds) for which HIMCO or Wellington Management act as an investment adviser,
(including the Funds described herein) transactions in such securities will
be made, insofar as feasible, for the respective funds and other client
accounts in a manner deemed equitable to all. To the extent that transactions
on behalf of more than one client of HIMCO, Wellington Management or their
respective affiliates during the same period may increase the demand for
securities being purchased or the supply of securities being sold, there may
be an adverse effect on price.

For the last three fiscal years, each Fund has paid the following
advisory fees to HL Advisors:

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<PAGE>

FUND NAME 1996 1995 1994
<S> <C> <C> <C>
Capital Appreciation Fund $12,519,486 $7,715,873 $4,889,579
Dividend and Growth Fund $2,968,879 $757,373 $99,465
Index Fund $945,609 $447,326 $300,556
International Opportunities $4,428,186 $3,213,660 $2,546,060
Small Company Fund $31,521 --- ---
Stock Fund $6,450,702 $4,134,925 $3,096,882
Advisers Fund $22,209,882 $16,044,763 $12,575,934
International Advisers Fund $392,271 --- ---
Bond Fund $1,152,953 $906,000 $808,161
Mortgage Securities Fund $804,297 $790,058 $827,557
Money Market Fund $1,121,482 $762,534 $704,435
U.S. Government Money Market Fund $26,505 $24,282 $23,635
</TABLE>

For the last three fiscal years, each Fund has paid the following
administrative fees to Hartford Life:

FUND NAME 1996 1995 1994
<S> <C> <C> <C>
Capital Appreciation Fund $4,795,769 $2,814,856 $1,710,237
Dividend and Growth Fund $965,006 $230,541 $35,293
Index Fund $827,408 $391,411 $262,987
International Opportunities $1,493,655 $1,045,064 $810,246
Small Company Fund $13,232 --- ---
Stock Fund $4,210,075 $2,586,517 $1,888,808
Advisers Fund $8,785,932 $6,244,398 $5,001,520
International Advisers Fund $119,528 $24,683 ---
Bond Fund $636,196 $491,868 $435,417
Mortgage Securities Fund $563,008 $553,041 $579,290
Money Market Fund $784,977 $542,895 $493,104
U.S. Government Money Market Fund $18,554 $16,998 $16,545
</TABLE>

Pursuant to the investment advisory agreement, subadvisory investment
agreements and investment services agreements neither HL Advisors, HIMCO nor
Wellington Management is liable to the Funds or their shareholders for any
error of judgment or mistake of law or for any loss suffered by the Funds in
connection with the matters to which their respective agreements relate,
except a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of HIMCO or Wellington Management in the performance
of their duties or from their reckless disregard of the obligations and
duties under the applicable agreement.

HL Advisors, whose principal business address is at 200 Hopmeadow
Street, Simsbury, Connecticut and whose mailing address is P.O. Box 2999,
Hartford, Connecticut 06104, was organized in 1981. As of December 31, 1996,
HL Advisors and its affiliates had over $47 billion in assets under
management. HL Advisors is a majority owned indirect subsidiary of The

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<PAGE>

Hartford. HIMCO, whose principal business and mailing addresses are the same
as HL Advisors was organized in 1996 and is a wholly-owned subsidiary of The
Hartford. HIMCO is a professional money management firm that provides
services to investment companies, employee benefit plans and its affiliated
insurance companies.

Wellington Management, 75 State Street, Boston, MA 02109, is a
professional investment counseling firm that provides services to investment
companies, employee benefit plans, endowments, foundations and other
institutions and individuals. Wellington Management and its predecessor
organizations have provided investment advisory services since 1928. As of
December 31, 1996, Wellington Management had investment management authority
with respect to approximately $133 billion in assets. Wellington Management
is a Massachusetts Limited Liability Partnership. The three managing general
partners of Wellington Management are Robert W. Doran, Duncan M. McFarland
and John R. Ryan.

The investment advisory agreement, subadvisory investment agreements and
investment services agreements continue in effect for two years from initial
approval and from year to year thereafter if approved annually by a vote of a
majority of the Directors of the Fund including a majority of the Directors
who are not parties to an agreement or interested persons of any party to the
contract, cast in person at a meeting called for the purpose of voting on
such approval, or by holders of a majority of the applicable Fund's
outstanding voting securities. The contract automatically terminates upon
assignment as defined under the 1940 Act. The investment advisory agreement
may be terminated without penalty on 60 days' notice at the option of either
party to the respective contract or by vote of the holders of a majority of
the outstanding voting securities of the applicable Fund. The subadvisory
investment agreements may be terminated at any time without the payment of
any penalty by the Board of Directors, and investment services agreements by
vote of a majority of the outstanding voting securities of the respective
Fund or by HL Advisors, upon 60 days' notice to HIMCO and Wellington
Management, and by Wellington Management or HIMCO upon 90 days' written
notice to HL Advisors (with respect to that Fund only). The subadvisory
investment agreement and investment services agreements terminate
automatically upon the termination of the corresponding investment advisory
agreement.

HL Advisors may make payments from time to time from its own resources,
which may include the management fees paid by the Fund to compensate broker
dealers, depository institutions, or other persons for providing distribution
assistance and administrative services and to otherwise promote the sale of
shares of the Funds including paying for the preparation, printing and
distribution of prospectuses and sales literature or other promotional
activities.

PORTFOLIO TURNOVER

For the last three fiscal years, each Fund had the following portfolio
turnover rates:

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<PAGE>

FUND NAME 1996 1995 1994
Capital Appreciation Fund 85.4% 78.6% 73.3%
Dividend and Growth Fund 56.9% 41.4% 27.8%(1)
Index Fund 19.3% 1.5% 1.8%
International Opportunities 70.0% 55.6% 46.4%
Small Company Fund(2) 31.8% N/A N/A
Stock Fund 42.3% 52.9% 63.8%
Advisers Fund 53.8% 63.5% 60.0%
International Advisers Fund 95.2% 47.2%(3) N/A
Bond Fund 212.0% 215.0% 328.8%
Mortgage Securities Fund 201.0% 489.4% 365.7%
Money Market Fund(4) N/A N/A N/A
U.S. Government Money Market Fund(4) N/A N/A N/A

(1) For the period March 8, 1994 to December 31, 1994.
(2) The Small Company Fund commenced operations on August 9,1996. It is
anticipated that the portfolio turnover rate of the Small Company Fund
will not exceed 100%.
(3) For the period February 28, 1995 to December 31, 1995.
(4) Because of the short-term nature of their portfolio securities and market
conditions, no meaningful or accurate prediction can be made of the
portfolio turnover rate for the Money Market and U.S. Government Money
Market Funds.

Turnover rate is computed by determining the percentage relationship of
the lesser of purchases and sales of securities to the monthly average of the
value of securities owned for the fiscal year, exclusive of securities whose
maturities at the time of acquisition were one year or less. A high turnover
rate will result in increased brokerage expenses and the likelihood of some
short term gains which may be taxable to shareholders at ordinary income tax
rates (see "Federal Income Taxes" in the prospectus).

FUND EXPENSES

Each Fund assumes and pays the following costs and expenses: interest;
taxes; brokerage charges (which may be to affiliated broker-dealers); costs
of preparing, printing and filing any amendments or supplements to the
registration forms of each Fund and its securities; all federal and state
registration, qualification and filing costs and fees, (except the initial
costs and fees, which will be borne by Hartford Life), issuance and
redemption expenses, transfer agency and dividend and distribution disbursing
agency costs and expenses; custodian fees and expenses; accounting, auditing
and legal expenses; fidelity bond and other insurance premiums; fees and
salaries of directors, officers and employees of each Fund other than those
who are also officers of Hartford Life; industry membership dues; all annual
and semiannual reports and prospectuses mailed to each Fund's shareholders as
well as all quarterly, annual and any other periodic report required to be
filed with the SEC or with any state; any notices required by a federal or
state regulatory authority, and any proxy solicitation materials directed to
each Fund's shareholders as well as all printing, mailing and tabulation costs

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<PAGE>

incurred in connection therewith, and any expenses incurred in connection
with the holding of meetings of each Fund's shareholders and other
miscellaneous expenses related directly to the Funds' operations and interest.

DISTRIBUTION ARRANGEMENTS

Each Fund's shares are sold on a continuous basis to separate accounts
sponsored by The Hartford and its affiliates.

PORTFOLIO TRANSACTIONS AND BROKERAGE

The Funds have no obligation to deal with any dealer or group of dealers
in the execution of transactions in portfolio securities. Subject to any
policy established by HL Advisors and the Board of Directors, HIMCO and
Wellington Management are primarily responsible for the investment decisions
of each Fund and the placing of its portfolio transactions. In placing
orders, it is the policy of each Fund to obtain the most favorable net
results, taking into account various factors, including price, dealer spread
or commission, if any, size of the transaction and difficulty of execution.
While HIMCO and Wellington Management generally seek reasonably competitive
spreads or commissions. HIMCO and Wellington Management may direct brokerage
transactions to broker/dealers who also sell The Hartford's variable annuity
and variable life insurance contracts and the sale of such contracts may be
taken into account by HIMCO and Wellington Management when allocating
brokerage transactions.

HIMCO and Wellington Management will generally deal directly with the
dealers who make a market in the securities involved (unless better prices
and execution are available elsewhere) if the securities are traded primarily
in the over-the-counter market. Such dealers usually act as principals for
their own account. On occasion, securities may be purchased directly from
the issuer. Bonds and money market securities are generally traded on a net
basis and do not normally involve either brokerage commissions or transfer
taxes. Portfolio securities in the Money Market Fund normally are purchased
directly from, or sold directly to, the issuer, an underwriter or market
maker for the securities. There usually will be no brokerage commissions
paid by the Money Market Fund for such purchases or sales.

While HIMCO and Wellington Management (as applicable) seek to obtain the
most favorable net results in effecting transactions in a Fund's portfolio
securities, dealers who provide supplemental investment research to HIMCO or
Wellington Management may receive orders for transactions from HIMCO or
Wellington Management. Such supplemental research services ordinarily
consist of assessments and analyses of the business or prospects of a
company, industry, or economic sector. If, in the judgment of HIMCO or
Wellington Management, a Fund will be benefited by such supplemental research
services, HIMCO and Wellington Management are authorized to pay spreads or
commissions to brokers or dealers

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<PAGE>

furnishing such services which are in excess of spreads or commissions which
another broker or dealer may charge for the same transaction. Information so
received will be in addition to and not in lieu of the services required to
be performed by HIMCO and Wellington Management under the investment advisory
agreement or the sub-investment advisory agreement. The expenses of HIMCO
and Wellington Management will not necessarily be reduced as a result of the
receipt of such supplemental information. HIMCO and Wellington Management
may use such supplemental research in providing investment advice to
portfolios other than those for which the transactions are made. Similarly,
the Funds may benefit from such research obtained by HIMCO and Wellington
Management for portfolio transactions for other clients.

Investment decisions for the Funds will be made independently from those
of any other clients that may be (or in the future may be) managed by HIMCO,
Wellington Management or their affiliates. If, however, accounts managed by
HIMCO or Wellington Management are simultaneously engaged in the purchase of
the same security, then, pursuant to general authorization of each Fund's
Board of Directors, available securities may be allocated to each Fund or
other client account and may be averaged as to price in whatever manner HIMCO
or Wellington Management deems to be fair. Such allocation and pricing may
affect the amount of brokerage commissions paid by each Fund. In some cases,
this system might adversely affect the price paid by a Fund (for example,
during periods of rapidly rising or falling interest rates) or limit the size
of the position obtainable for a Fund (for example, in the case of a small
issue).

For the last three fiscal years, each Fund has paid the following
brokerage fees:

FUND NAME 1996 1995 1994
Capital Appreciation Fund $6,257,262 $3,069,000 $2,045,000
Dividend and Growth Fund(1) $1,256,273 $303,000 $65,000
Index Fund $258,946 $66,000 $24,000
International Opportunities $3,607,685 $1,986,000 $1,940,000
Small Company Fund(2) $32,863 N/A N/A
Stock Fund $2,403,555 $1,839,000 $1,872,000
Advisers Fund $3,413,943 $2,608,000 $2,771,000
International Advisers Fund(3) $238,35 6 $76,000 N/A
Bond Fund(4) N/A N/A N/A
Mortgage Securities Fund(4) N/A N/A N/A
Money Market Fund(4) N/A N/A N/A
U.S. Government Money Market Fund(4) N/A N/A N/A

(1) Commenced operations in 1994.
(2) Commenced operations in 1996.
(3) Commenced operations in 1995.
(4) No brokerage commissions were paid in 1994, 1995 or 1996 by the Bond Fund,
Mortgage Securities Fund, Money Market Fund or U.S. Government Money Market
Fund.

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<PAGE>

Changes in the amounts of brokerage commissions paid reflect changes in
portfolio turnover rates.

DETERMINATION OF NET ASSET VALUE

The net asset value of the shares of each Fund is determined by Hartford
Life, in the manner described in the Funds' Prospectus. The Funds will be
closed for business and will not price their shares on the following business
holidays: New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Securities
held by each Fund other than the Money Market Fund will be valued as follows:
Debt securities (other than short-term obligations) are valued on the basis
of valuations furnished by an unaffiliated pricing service which determines
valuations for normal institutional size trading units of debt securities.
Short-term securities held in the U.S. Government Money Market Fund and the
Money Market Fund are valued at amortized cost or original cost plus accrued
interest receivable, both of which approximate market value. All other
Funds' short-term investments with a maturity of 60 days or less when
purchased are valued at amortized cost, which approximates market value.
Short-term investments with a maturity of more than 60 days when purchased
are valued based on market quotations until the remaining days to maturity
become less than 61 days. From such time until maturity, the investments are
valued at amortized cost.

Equity securities are valued at the last sales price reported on
principal securities exchanges (domestic or foreign). If no sale took place
on such day and in the case of certain equity securities traded
over-the-counter, then such securities are valued at the mean between the bid
and asked prices. Securities quoted in foreign currencies are translated
into U.S. dollars at the exchange rate at the end of the reporting period.
Options are valued at the last sales price; if no sale took place on such
day, then options are valued at the mean between the bid and asked prices.
Securities for which market quotations are not readily available and all
other assets are valued in good faith at fair value by, or under guidelines
established by, the Funds' Board of Directors.

The net asset value per share of the U.S. Government Money Market Fund
and the Money Market Fund is determined by using the amortized cost method of
valuing its portfolio instruments. Under the amortized cost method of
valuation, an instrument is valued at cost and the interest payable at
maturity upon the instrument is accrued as income, on a daily basis, over the
remaining life of the instrument. Neither the amount of daily income nor the
net asset value is affected by unrealized appreciation or depreciation of the
portfolio's investments assuming the instrument's obligation is paid in full
on maturity. In periods of declining interest rates, the indicated daily
yield on shares of the portfolio computed using amortized cost may tend to be
higher than a similar computation made using a method of valuation based upon
market prices

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and estimates. In periods of rising interest rates, the indicated daily
yield on shares of the portfolio computed using amortized cost may tend to be
lower than a similar computation made using a method of valuation based upon
market prices and estimates. For all Funds, securities with remaining
maturities of less than 60 days are valued at amortized cost, which
approximates market value.

The amortized cost method of valuation permits the U.S. Government Money
Market Fund and the Money Market Fund to maintain a stable $1.00 net asset
value per share. The Fund's Board of Directors periodically reviews the
extent of any deviation from the $1.00 per share value that would occur if a
method of valuation based on market prices and estimates were used. In the
event such a deviation would exceed one-half of one percent, the Board of
Directors will promptly consider any action that reasonably should be
initiated to eliminate or reduce material dilution or other unfair results to
shareholders. Such action may include selling portfolio securities prior to
maturity, not declaring earned income dividends, valuing portfolio securities
on the basis of current market prices, if available, or, if not available, at
fair market value as determined in good faith by the Board of Directors, and
(considered highly unlikely by management of the Fund) redemption of shares
in kind (i.e., portfolio securities).

PURCHASE AND REDEMPTION OF SHARES

For information regarding the purchase of Fund shares, see "Purchase of
Fund Shares" in the Funds' Prospectus.

For a description of how a shareholder may have a Fund redeem his/her
shares, or how he/she may sell shares, see "Sale and Redemption of Shares" in
the Funds' Prospectus.

SUSPENSION OF REDEMPTIONS

A Fund may not suspend a shareholder's right of redemption, or postpone
payment for a redemption for more than seven days, unless the New York Stock
Exchange (NYSE) is closed for other than customary weekends or holidays, or
trading on the NYSE is restricted, or for any period during which an
emergency exists as a result of which (1) disposal by a Fund of securities
owned by it is not reasonably practicable, or (2) it is not reasonably
practicable for a Fund to fairly determine the value of its assets, or for
such other periods as the Securities and Exchange Commission may permit for
the protection of investors.

INVESTMENT PERFORMANCE

MONEY MARKET FUNDS

In accordance with regulations prescribed by the SEC, the Fund is
required to compute the U.S. Government Money Market Fund and the Money
Market Fund's current annualized yield for a seven-day period in a manner
which does not take into consideration any realized or unrealized gains or
losses on its portfolio securities. This current annualized yield is

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computed by determining the net change (exclusive of realized gains and
losses on the sale of securities and unrealized appreciation and
depreciation) in the value of a hypothetical account having a balance of one
share of the Money Market Fund at the beginning of such seven-day period,
dividing such net change in account value by the value of the account at the
beginning of the period to determine the base period return and annualizing
this quotient on a 365- day basis.

The SEC also permits the Fund to disclose the effective yield of the
U.S. Government Money Market Fund and the Money Market Fund for the same
seven-day period, determined on a compounded basis. The effective yield is
calculated by compounding the unannualized base period return by adding one
to the base period return, raising the sum to a power equal to 365 divided by
7, and subtracting one from the result.

The yield on amounts held in the U.S. Government Money Market Fund and
the Money Market Fund normally will fluctuate on a daily basis. Therefore,
the disclosed yield for any given past period is not an indication or
representation of future yields or rates of return.

HVA Money Market Fund

The Money Market Fund's actual yield is affected by changes in interest
rates on money market securities, average portfolio maturity of the Money
Market Fund, the types and quality of portfolio securities held by the Money
Market Fund, and its operating expenses.

Yield calculations of the Fund used for illustration purposes are based
on the consideration of a hypothetical account having a balance of exactly
one share at the beginning of a seven day period, which period will end on
the date of the most recent financial statements. The yield for the fund
during this seven day period will be the change in the value of the
hypothetical account, including dividends declared on the original share,
dividends declared on any shares purchased with dividends on that share, and
any monthly account charges or sales charges that would affect an account of
average size, but excluding any capital changes. The following is an example
of this yield calculation for the Fund based on a seven day period ending
December 31, 1996.

Example:

Assumptions:

Value of a hypothetical pre-existing account with exactly one share at
the beginning of the period: $1.000000

Value of the same account* (excluding capital changes) at the end of the
seven day period: $1.00094

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<PAGE>

*This value would include the value of any additional shares purchased
with dividends from the original share, and all dividends declared on both
the original share and any such additional shares.

Calculation:
Ending account value $1.00094
Less beginning account value 1.000000

Net change in account value $.00094
Base period return:
(adjusted change/beginning
account value)
$.001035/$1.000000 = $.001035
Current yield = $.00094 X (365/7) = 5.11%

Effective yield = (1 + .00094)365/7 - 1 = 5.24%

The current yield and effective yield information will fluctuate, and
publication of yield information may not provide a basis for comparison with
bank deposits, other investments which are insured and/or pay a fixed yield
for a stated period of time, or other investment companies. In addition, the
current yield and effective yield information may be of limited use for
comparative purposes because it does not reflect charges imposed at the
Separate Account level which, if included, would decrease the yield.

Hartford U.S. Government Money Market Fund, Inc.

The Fund's yield quotations as they appear in advertising and sales
materials are calculated by a method prescribed by the rules of the
Securities and Exchange Commission.

Yield calculations of the Fund used for illustrations purposes are based
on the consideration of a hypothetical account having a balance of exactly
one share at the beginning of a seven day period, which period will end on
the date of the most recent financial statements. The yield for the Fund
during this seven day period will be the change in the value of the
hypothetical account, including dividends declared on the original share,
dividends declared on any shares purchased with dividends on that share, and
any monthly account charges or sales charges that would affect an account of
average size, but excluding any capital changes. The following is an example
of this yield calculation for the fund based on a seven day period ending
December 31, 1996.

Example:

Assumptions:

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<PAGE>

Value of a hypothetical pre-existing account with exactly one share at
the beginning of the period: $1.000000000

Value of the same account* (excluding capital changes) at the end of the
seven day period: $1.000927.

*This value would include the value of any additional shares purchased
with dividends from the original share, and all dividends declared on both
the original share and any such additional shares.

Calculation:
Ending account value $1.000927
Less beginning account value 1.000000

Net change in account value $.000927
Base period return:
(adjusted change/beginning
account value)
$.001049/$1.000000 = $.001049
Current yield = $.000927 X (365/7) = 4.83%

Effective yield = (1 + .000927)365/7 - 1 = 4.95%

In addition, the current yield and effective yield information may be of
limited use for comparative purposes because it does not reflect charges
imposed at the Separate Account level which, if included, would decrease the
yield.

At any time in the future, yields and total return may be higher or
lower than past yields and there can be no assurance that any historical
results will continue.

OTHER FUNDS

STANDARDIZED AVERAGE ANNUAL TOTAL RETURN QUOTATIONS. Average annual
total return quotations for the Funds are computed by finding the average
annual compounded rates of return that would cause a hypothetical investment
made on the first day of

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<PAGE>

a designated period to equal the ending redeemable value of such hypothetical
investment on the last day of the designated period in accordance with the
following formula:

P(1+T)(n) = ERV
Where:
P = a hypothetical initial n = number of years
payment of $1,000, less ERV = ending redeemable value
the maximum sales load of the hypothetical
applicable to a Fund $1,000 initial payment
made at the beginning
of the designated
period (or fractional
portion thereof)
T = average annual total return

The computation above assumes that all dividends and distributions made by a
Fund are reinvested at net asset value during the designated period. The
average annual total return quotation is determined to the nearest 1/100 of
1%.

One of the primary methods used to measure performance is "total
return." "Total return" will normally represent the percentage change in
value of a class of a Fund, or of a hypothetical investment in a class of a
Fund, over any period up to the lifetime of the class. Unless otherwise
indicated, total return calculations will assume the deduction of the maximum
sales charge and usually assume the reinvestment of all dividends and capital
gains distributions and will be expressed as a percentage increase or
decrease from an initial value, for the entire period or for one or more
specified periods within the entire period. Total return calculations that do
not reflect the reduction of sales charges will be higher than those that do
reflect such charges.

Total return percentages for periods longer than one year will usually
be accompanied by total return percentages for each year within the period
and/or by the average annual compounded total return for the period. The
income and capital components of a given return may be separated and
portrayed in a variety of ways in order to illustrate their relative
significance. Performance may also be portrayed in terms of cash or
investment values, without percentages. Past performance cannot guarantee
any particular future result. In determining the average annual total return
(calculated as provided above), recurring fees, if any, that are charged to
all shareholder accounts are taken into consideration. For any account fees
that vary with the size of the account, the account fee used for purposes of
the above computation is assumed to be the fee that would be charged to the
mean account size of the Fund.

Each Fund's average annual total return quotations and yield quotations
as they may appear in the Prospectus, this SAI or in advertising are
calculated by standard methods prescribed by the SEC.

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<PAGE>

Each Fund may also publish its distribution rate and/or its effective
distribution rate. A Fund's distribution rate is computed by dividing the
most recent monthly distribution per share annualized, by the current net
asset value per share. A Fund's effective distribution rate is computed by
dividing the distribution rate by the ratio used to annualize the most recent
monthly distribution and reinvesting the resulting amount for a full year on
the basis of such ratio. The effective distribution rate will be higher than
the distribution rate because of the compounding effect of the assumed
reinvestment. A Fund's yield is calculated using a standardized formula, the
income component of which is computed from the yields to maturity of all debt
obligations held by the Fund based on prescribed methods (with all purchases
and sales of securities during such period included in the income calculation
on a settlement date basis), whereas the distribution rate is based on a
Fund's last monthly distribution. A Fund's monthly distribution tends to be
relatively stable and may be more or less than the amount of net investment
income and short-term capital gain actually earned by the Fund during the
month (see "Dividends, Capital Gains and Taxes" in the Funds' Prospectus).

Other data that may be advertised or published about each Fund include
the average portfolio quality, the average portfolio maturity and the average
portfolio duration.

STANDARDIZED YIELD QUOTATIONS. The yield of a class is computed by
dividing the class's net investment income per share during a base period of
30 days, or one month, by the maximum offering price per share of the class
on the last day of such base period in accordance with the following formula:

2[((a-b) +1)(6) -1]
(cd)
Where:
a = net investment income c = the average daily number of
earned during the shares of the subject class
period attributable to outstanding during the period
the subject class that were entitled to receive
dividends

b = net expenses accrued d = the maximum offering price per
for the period share of the subject
attributable to the
subject class

Net investment income will be determined in accordance with rules established
by the SEC.

NON-STANDARDIZED PERFORMANCE. In addition, in order to more completely
represent a Fund's performance or more accurately compare such performance to
other measures of investment return, a Fund also may include in
advertisements, sales literature and shareholder reports other total return
performance data ("Non-Standardized Return"). Non-Standardized Return may
be quoted for the same or different periods as those for which Standardized
Return is quoted; it may consist of an aggregate or average annual percentage
rate of return, actual year-by-year rates or any combination thereof.
Non-Standardized Return may or may not take sales charges into account;
performance data calculated without

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<PAGE>

taking the effect of sales charges into account will be higher than data
including the effect of such charges. All non-standardized performance will
be advertised only if the standard performance data for the same period, as
well as for the required periods, is also presented.

GENERAL INFORMATION. From time to time, the Funds may advertise their
performance compared to similar funds using certain unmanaged indices,
reporting services and publications. Descriptions of some of the indices
which may be used are listed below.

The Standard & Poor's 500 Composite Stock Price Index is a well
diversified list of 500 companies representing the U.S. Stock Market.

The Standard and Poor's Small Cap 600 index is designed to represent
price movements in the small cap U.S. equity market. It contains companies
chosen by the Standard & Poors Index Committee for their size, industry
characteristics, and liquidity. None of the companies in the S&P 600 overlap
with the S&P 500 or the S&P 400 (MidCap Index). The S&P 600 is weighted by
market capitalization. REITs are not eligible for inclusion.

The NASDAQ Composite OTC Price Index is a market value-weighted and
unmanaged index showing the changes in the aggregate market value of
approximately 3,500 stocks.

The Lehman Government Bond Index is a measure of the market value of
all public obligations of the U.S. Treasury; all publicly issued debt of all
agencies of the U.S. Government and all quasi-federal corporations; and all
corporate debt guaranteed by the U.S. Government. Mortgage backed securities,
bonds and foreign targeted issues are not included in the Lehman Government
Index.

The Lehman Government/Corporate Bond Index is a measure of the market
value of approximately 5,300 bonds with a face value currently in excess of
$1.3 trillion. To be included in the Lehman Government/Corporate Index, an
issue must have amounts outstanding in excess of $1 million, have at least
one year to maturity and be rated "Baa" or higher ("investment grade") by a
nationally recognized rating agency.

The Russell 2000 Index represents the bottom two thirds of the largest
3000 publicly traded companies domiciled in the U.S. Russell uses total
market capitalization to sort its universe to determine the companies that
are included in the Index. Only common stocks are included in the Index.
REITs are eligible for inclusion.

The Russell 2500 Index is a market value-weighted, unmanaged index
showing total return (i.e., principal changes with income) in the aggregate
market value of 2,500 stocks of publicly traded companies domiciled in the
United States. The Index includes stocks traded on the New York Stock
Exchange and the American Stock Exchange as well as in the over-the-counter
market.

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<PAGE>

The Morgan Stanley Capital International EAFE Index (the "EAFE Index")
is an unmanaged index, which includes over 1,000 companies representing the
stock markets of Europe, Australia, New Zealand and the Far East. The EAFE
Index is typically shown weighted by the market capitalization. However,
EAFE is also available weighted by Gross Domestic Product (GDP). These
weights are modified on July 1st of each year to reflect the prior year's
GDP. Indices with dividends reinvested constitute an estimate of total return
arrived at by reinvesting one twelfth of the month end yield at every month
end. The series with net dividends reinvested take into account those
dividends net of withholding taxes retained at the source of payment.

The Lehman Brothers High Yield BB Index is a measure of the market value
of public debt issues with a minimum par value of $100 million and rated
Ba1-Ba3 by Moody's. All bonds within the index are U.S. dollar denominated,
non-convertible and have at least one year remaining to maturity.

The Composite Index for Hartford Advisers Fund is comprised of the S&P
500 (55%), the Lehman Government/Corporate Bond Index (35%), both mentioned
above, and 90 Day U.S. Treasury Bills (10%).

The Composite Index for the Capital Appreciation Fund is the Russell
2500 Index (60%)/S&P 500 Index (40%), both of which are mentioned above.

In addition, from time to time in reports and promotions: (1) a
Fund's performance may be compared to other groups of mutual funds tracked
by: (a): Lipper Analytical Services, a widely used independent research firm
which ranks mutual funds by overall performance, investment objectives, and
assets; (b) Morningstar, Inc., another widely used independent research firm
which ranks mutual funds by overall performance, investment objectives, and
assets; or (c) other financial or business publications, such as Business
Week, Money Magazine, Forbes and Barron's which provide similar information;
(2) the Consumer Price Index (measure for inflation) may be used to assess
the real rate of return from an investment in the Fund; (3) other statistics
such as GNP, and net import and export figures derived form governmental
publications, e.g., The Survey of Current Business or other independent
parties, e.g.,the Investment Company Institute, may be used to illustrate
investment attributes to the Fund or the general economic, business,
investment, or financial environment in which the Fund operates; (4) various
financial, economic and market statistics developed by brokers, dealers and
other persons may be used to illustrate aspects of the Fund's performance;
(5) the effect of tax-deferred compounding on the Fund's investment returns,
or on returns in general, may be illustrated by graphs, charts, etc. where
such graphs or charts would compare, at various points in time, the return
from an investment in the Fund (or returns in general) on a tax-deferred
basis (assuming reinvestment of capital gains and dividends and assuming one
or more tax rates) with the return on a taxable basis; and (6) the sectors or
industries in which the Fund invests may be compared to relevant indices or
surveys (e.g., S&P Industry Surveys) in order to evaluate the Fund's
historical performance or current or potential value with respect to the
particular industry or sector.

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Each Fund's investment performance may be advertised in various
financial publications, newspapers, magazines including the following:

Across the Board Insurance Times
Advertising Age Insurance Week
Adviser's Magazine Insurance Product News
Adweek Insurance Sales
Agent Investment Dealers Digest
American Banker Investment Advisor
American Agent and Broker Journal of Commerce
Associated Press Journal of Accountancy
Barron's Journal of the American Society
Best's Review of CLU & ChFC
Bloomberg Kiplinger's Personal Finance
Broker World Knight-Ridder
Business Week Life Association News
Business Wire Life Insurance Selling
Business News Features Life Times
Business Month LIMRA's MarketFacts
Business Marketing Lipper Analytical Services, Inc.
Business Daily MarketFacts
Business Insurance Medical Economics
California Broker Money
Changing Times Morningstar, Inc.
Consumer Reports Nation's Business
Consumer Digest National Underwriter
Crain's New Choices (formerly 50 Plus)
Dow Jones News Service New England Business
Economist New York Times
Entrepreneur Pension World
Entrepreneurial Woman Pensions & Investments
Financial Services Week Professional Insurance Agents
Financial World Professional Agent
Financial Planning Registered Representative
Financial Times Reuter's
Forbes Rough Notes
Fortune Round the Table
Hartford Courant Inc Service
Independent Business Success
Institutional Investor The Standard
Insurance Forum The Boston Globe
Insurance Advocate Independent The Washington Post
Insurance Review Investor's Tillinghast
U.S. News & World Report Time
U.S. Banker Value Line
United Press International Wall Street Journal
USA Today Wiesenberger Investment
Working Woman

-38-

<PAGE>

From time to time the Fund may publish the sales of shares of one or
more of the Funds on a gross or net basis and for various periods of time,
and compare such sales with sales similarly reported by other investment
companies.

The manner in which total return and yield are calculated is described
above. The following table sets forth the average annual total return, and
yield where applicable, for each Fund through December 31, 1996.

TOTAL RETURN/YIELD

10 YEARS OR
SINCE
FUND 1 YEAR 5 YEARS INCEPTION SEC 30-DAY YIELD
- ---- ------ ------ ------------ ----------------
<S> <C> <C> <C> <C>
Capital Appreciation 20.70% 17.89% 16.68%

Dividend and Growth 22.91% --- 20.96%

Index 22.09% 14.42% 12.82%

International Opportunities 12.93% 10.03% 7.57%

Small Company --- --- 7.15%

Stock 24.37% 15.54% 14.58%

Advisers 16.59% 12.09% 12.24%

International Advisers 11.79% --- 15.10%

Bond 8.52% 6.51% 7.64% 6.25%

Mortgage Securities 5.07% 5.96% 7.78% 6.67%

HVA Money Market 5.19% 4.29% 5.84%

U.S. Government Money Market 4.91% 4.00% 5.42%
</TABLE>

TAXES

Each Fund is treated as a separate entity for accounting and tax
purposes. Each Fund has qualified and elected or intends to qualify and
elect to be treated as a "regulated investment company" under Subchapter M of
the Internal Revenue Code of 1986, as amended (the "Code"), and intends to
continue to so qualify in the future. As such and by complying with the
applicable provisions of the Code regarding the sources of its income, the
timing of its distributions, and the diversification of its assets, each Fund
will not be subject to federal income tax on taxable income (including net
short-term and long-term capital gains) which

-39-

<PAGE>

is distributed to shareholders at least annually in accordance with the
timing requirements of the Code.

Each Fund will be subject to a 4% non-deductible federal excise tax on
certain amounts not distributed (and not treated as having been distributed)
on a timely basis in accordance with annual minimum distribution
requirements. Each Fund intends under normal circumstances to avoid
liability for such tax by satisfying such distribution requirements.

If a Fund acquires stock in certain non-U.S. corporations that receive
at least 75% of their annual gross income from passive sources (such as
interest, dividends, rents, royalties or capital gain) or hold at least 50%
of their assets in investments producing such passive income ("passive
foreign investment companies"), that Fund could be subject to federal income
tax and additional interest charges on "excess distributions" received from
such companies or gain from the sale of stock in such companies, even if all
income or gain actually received by the Fund is timely distributed to its
shareholders. The Fund would not be able to pass through to its shareholders
any credit or deduction for such a tax. Certain elections may, if available,
ameliorate these adverse tax consequences, but any such election would
require the applicable Fund to recognize taxable income or gain without the
concurrent receipt of cash. Any Fund that is permitted to acquire stock in
foreign corporations may limit and/or manage its holdings in passive foreign
investment companies to minimize its tax liability or maximize its return
from these investments.

Foreign exchange gains and losses realized by a Fund in connection with
certain transactions involving foreign currency-denominated debt securities,
certain foreign currency futures and options, foreign currency forward
contracts, foreign currencies, or payables or receivables denominated in a
foreign currency are subject to Section 988 of the Code, which generally
causes such gains and losses to be treated as ordinary income and losses and
may affect the amount, timing and character of distributions to shareholders.
Any such transactions that are not directly related to a Fund's investment
in stock or securities, possibly including speculative currency positions or
currency derivatives not used for hedging purposes, may increase the amount
of gain it is deemed to recognize from the sale of certain investments held
for less than three months, which gain is limited under the Code to less than
30% of its annual gross income, and could under future Treasury regulations
produce income not among the types of "qualifying income" from which the Fund
must derive at least 90% of its annual gross income.

Some Funds may be subject to withholding and other taxes imposed by
foreign countries with respect to their investments in foreign securities.
Tax conventions between certain countries and the U.S. may reduce or
eliminate such taxes. The Funds anticipate that they generally will not
qualify to pass such foreign taxes and any associated tax deductions or
credits through to their shareholders, who therefore generally will not
report such amounts on their own tax returns.

-40-

<PAGE>

For Federal income tax purposes, each Fund is permitted to carry forward
a net capital loss in any year to offset its own capital gains, if any,
during the eight years following the year of the loss. To the extent
subsequent capital gains are offset by such losses, they would not result in
federal income tax liability to the applicable Fund and would not be
distributed as such to shareholders.

Each Fund that invests in certain PIKs, zero coupon securities or
certain deferred interest securities (and, in general, any other securities
with original issue discount or with market discount if the Fund elects to
include market discount in income currently) must accrue income on such
investments prior to the receipt of the corresponding cash payments.
However, each Fund must distribute, at least annually, all or substantially
all of its net income, including such accrued income, to shareholders to
qualify as a regulated investment company under the Code and avoid federal
income and excise taxes. Therefore, a Fund may have to dispose of its
portfolio securities under disadvantageous circumstances to generate cash, or
may have to leverage itself by borrowing the cash, to satisfy distribution
requirements.

Investment in debt obligations that are at risk of or in default
presents special tax issues for any Fund that may hold such obligations. Tax
rules are not entirely clear about issues such as when the Fund may cease to
accrue interest, original issue discount, or market discount, when and to
what extent deductions may be taken for bad debts or worthless securities,
how payments received on obligations in default should be allocated between
principal and income, and whether exchanges of debt obligations in a workout
context are taxable. These and other issues will be addressed by any Fund
that may hold such obligations in order to reduce the risk of distributing
insufficient income to preserve its status as a regulated investment company
and seek to avoid becoming subject to federal income or excise tax.

Limitations imposed by the Code on regulated investment companies like
the Funds may restrict a Fund's ability to enter into futures, options, and
forward transactions.

Certain options, futures and forward foreign currency transactions
undertaken by a Fund may cause the Fund to recognize gains or losses from
marking to market even though its positions have not been sold or terminated
and affect the character as long-term or short-term (or, in the case of
certain currency forwards, options and futures, as ordinary income or loss)
and timing of some capital gains and losses realized by the Fund. Also,
certain of a Fund's losses on its transactions involving options, futures or
forward contracts and/or offsetting portfolio positions may be deferred
rather than being taken into account currently in calculating the Fund's
taxable income. Certain of the applicable tax rules may be modified if a
Fund is eligible and chooses to make one or more of certain tax elections
that may be available. These transactions may therefore affect the amount,
timing and character of a Fund's distributions to shareholders. The Funds
will take into account the special tax rules (including consideration of
available elections) applicable to options, futures or forward contracts in
order to minimize any potential adverse tax consequences.

-41-

<PAGE>

The federal income tax rules applicable to interest rate swaps, caps and
floors are unclear in certain respects, and a Fund may be required to account
for these transactions in a manner that, in certain circumstances, may limit
the degree to which it may utilize these transactions.

The foregoing discussion relates solely to U.S. Federal income tax law
as applicable to U.S. persons (i.e., U.S. citizens or residents and U.S.
domestic corporations, partnerships, trusts or estates) subject to tax under
such law. The discussion does not address special tax rules applicable to
certain classes of investors, such as tax-exempt entities, insurance
companies, and financial institutions. Dividends, capital gain
distributions, and ownership of or gains realized on the redemption
(including an exchange) of the shares of a Fund may also be subject to state
and local taxes. Shareholders should consult their own tax advisers as to
the federal, state or local tax consequences of ownership of shares of, and
receipt of distributions from, the Funds in their particular circumstances.

STATE AND LOCAL. Each Fund may be subject to state or local taxes in
jurisdictions in which such Fund may be deemed to be doing business. In
addition, in those states or localities which have income tax laws, the
treatment of such Fund and its shareholders under such laws may differ from
their treatment under federal income tax laws, and investment in such Fund
may have different tax consequences for shareholders than would direct
investment in such Fund's portfolio securities. Shareholders should consult
their own tax advisers concerning these matters.

CUSTODIAN

Portfolio securities of each Fund are held pursuant to Custodian
Agreements between each Fund and State Street Bank and Trust Company.

TRANSFER AGENT SERVICES

Hartford Life Insurance Company, Hartford Plaza, Hartford, Connecticut
06115, serves as Transfer and Dividend Disbursing Agent for the Funds. The
Transfer Agent issues and redeems shares of the Funds and disburses any
dividends declared by the Funds.

INDEPENDENT PUBLIC ACCOUNTANTS

The financial statements and financial highlights included in this SAI
and elsewhere in the registration statement have been audited by Arthur
Andersen LLP, independent public accountants, as indicated in their reports
with respect thereto, and are included herein in reliance upon the authority
of said firm as experts in giving said reports.

-42-

<PAGE>

OTHER INFORMATION

The Hartford has granted the Fund the right to use the name, "The
Hartford" or "Hartford", and has reserved the right to withdraw its consent
to the use of such name by the Fund and the Funds at any time, or to grant
the use of such name to any other company.

FINANCIAL STATEMENTS

Each Fund's audited financial statements as of December 31, 1996,
together with the notes thereto and the report of Arthur Andersen LLP are
attached to this SAI.

-43-

<PAGE>

PART C

OTHER INFORMATION

Item 24. Financial Statements and Exhibits
(a) Financial statements: Incorporated by reference to Parts A and B
of this Post-Effective Amendment to the Registration Statement.

(b) Exhibits:
(1) Articles of Incorporation(a)
(2) By-Laws(a)
(3) Not Applicable
(4) Share Certificate(a)
(5) Form of Investment Management Agreement(b)
(5.1) Form of Investment Sub-Advisory Agreement(b)
(6) Not Applicable
(7) Not Applicable
(8) Form of Custodian Agreement(a)
(8.1) Form of Custodian Agreement with Chase Manhattan Bank(c)
(8.2) Form of Custodian Agreement with State Street Bank and
Trust Company
(9) Form of Administrative Services Agreement(b)
(9.1) Form of Share Purchase Agreement(a)
(10) Opinion and Consent of Counsel(d)
(11) Consent of Independent Public Accountants
(12) 1996 Annual Report to Shareholders' Financial Statements
(13) Not Applicable
(14) Not Applicable
(15) Not Applicable
(16) Schedule of Computation for Performance Quotations(a)
(17) Not Applicable
(18) Not Applicable
(19) Powers of Attorney(c)
(27) Financial Data Schedule

- -------------------------------
(a) Previously filed as exhibit to Registrant's Registration Statement filed on
October 12, 1994.
(b) Previously filed as exhibit to Registrant's Pre-Effective Amendment #1
filed on February 6, 1995.
(c) Previously filed as exhibit to Registrant's Post-Effective Amendment #1
filed on April 23, 1996.
(d) Filed with Registrant's Rule 24f-2 Notice.

<PAGE>

Items 25 through 29 and Item 31 are incorporated by reference to Part C of
Registrant's Registration Statement.

Item 30. LOCATION OF ACCOUNTS & RECORDS

The Hartford Life Insurance Company
P.O. Box 2999
Hartford, CT 06104-2999

AND

State Street Bank and Trust Company
225 Franklin Street
Boston, MA 02110

Item 32. UNDERTAKING

The Registrant undertakes to furnish to each person to whom a prospectus
has been delivered a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 the Registrant
certifies that it meets all of the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Hartford, State of
Connecticut, on the 9th day of April, 1997.

HARTFORD INTERNATIONAL ADVISERS FUND, INC.

By:______*________________________________
Joseph H. Gareau
Its: President

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.

SIGNATURE TITLE DATE

_______*_________________ President April 9, 1997
Joseph H. Gareau (Chief Executive Officer
& Director)

_______*_________________ Controller April 9, 1997
George R. Jay (Chief Accounting Officer)

_______*_________________ Vice President & Treasurer April 9, 1997
J. Richard Garrett (Chief Financial Officer)

_______*_________________ Director April 9, 1997
Joseph A. Biernat

_______*_________________ Director April 9, 1997
Winifred E. Coleman

_______*_________________ Director April 9, 1997
William A. O'Neill

<PAGE>

_______*_________________ Director April 9, 1997
Millard H. Pryor, Jr.

_______*_________________ Director April 9, 1997
Lowndes A. Smith

_______*_________________ Director April 9, 1997
John K. Springer

/s/ Kevin J. Carr April 9, 1997
- -----------------
* By Kevin J. Carr
Attorney-in-fact

<PAGE>

EXHIBIT INDEX

Exhibit No. Page No.

8.2 Custodian Agreement with State Street
Bank and Trust Company

11 Consent of Arthur Andersen LLP

12 Annual Report to Shareholders

27 Financial Data Schedule

<PAGE>

EXHIBIT 8.2

GLOBAL CUSTODY AGREEMENT WITH
STATE STREET BANK AND TRUST COMPANY

<PAGE>

CUSTODIAN CONTRACT
Between
HARTFORD INTERNATIONAL ADVISERS FUND, INC.
and
STATE STREET BANK AND TRUST COMPANY

<PAGE>

TABLE OF CONTENTS

Page
----

1. Employment of Custodian and Property to be
Held By It 1
2. Duties of the Custodian with Respect to Property of
the Fund Held by the Custodian in the United States 1
2.1 Holding Securities 1
2.2 Delivery of Securities 2
2.3 Registration of Securities 4
2.4 Bank Accounts 4
2.5 Availability of Federal Funds 4
2.6 Collection of Income 4
2.7 Payment of Fund Monies 5
2.8 Liability for Payment in Advance of
Receipt of Securities Purchased 6
2.9 Appointment of Agents 6
2.10 Deposit of Securities in U.S. Securities System 6
2.11 Fund Assets Held in the Custodian's Direct
Paper System 8
2.12 Segregated Account 8
2.13 Ownership Certificates for Tax Purposes 9
2.14 Proxies 9
2.15 Communications Relating to Fund Portfolio Securities 9
2.16 Reports to Fund by Independent Public Accountants 9
3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States 10
3.1 Appointment of Foreign Sub-Custodians 10
3.2 Assets to be Held 10
3.3 Foreign Securities Systems 10
3.4 Holding Securities 10
3.5 Agreements with Foreign Banking Institutions 11
3.6 Access of Independent Accountants of the Fund 11
3.7 Reports by Custodian 11
3.8 Transactions in Foreign Custody Account 11
3.9 Liability of Foreign Sub-Custodians 12
3.10 Liability of Custodian 12
3.11 Reimbursement for Advances 12
3.12 Monitoring Responsibilities 13
3.13 Branches of U.S. Banks 13
3.14 Tax Law 13
4. Payments for Repurchases or Redemptions and Sales
of Shares of the Fund 13
5. Proper Instructions 14

<PAGE>

6. Actions Permitted Without Express Authority 14
7. Evidence of Authority 15
8. Duties of Custodian with Respect to the Books of
Account and Calculations of Net Asset Value and
Net Income 15
9. Records 15
10. Opinion of Fund's Independent Accountant 15
11. Compensation of Custodian 16
12. Responsibility of Custodian 16
13. Effective Period, Termination and Amendment 17
14. Successor Custodian 18
15. Interpretive and Additional Provisions. 18
16. Massachusetts Law to Apply 19
17. Prior Contracts 19
18. Shareholder Communications Election 19

<PAGE>

CUSTODIAN CONTRACT

This Contract between Hartford International Advisers Fund, Inc., a
corporation organized and existing under the laws of the State of Maryland,
having its principal place of business at 690 Asylum Avenue, Hartford Plaza,
Hartford, Connecticut 06115 hereinafter called the "Fund", and State Street Bank
and Trust Company, a Massachusetts trust company, having its principal place of
business at 225 Franklin Street, Boston, Massachusetts, 02110, hereinafter
called the "Custodian",

WITNESSETH: That in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:

1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT

The Fund hereby employs the Custodian as the custodian of its assets,
including securities it desires to be held in places within the United States
("domestic securities") and securities it desires to be held outside the United
States ("foreign securities") pursuant to the provisions of the Articles of
Incorporation. The Fund agrees to deliver to the Custodian all securities and
cash owned by it, and all payments of income, payments of principal or capital
distributions received by it with respect to all securities owned by the Fund
from time to time, and the cash consideration received by it for such new or
treasury shares of capital stock, $ 0.10 par value, ("Shares") of the Fund as
may be issued or sold from time to time. The Custodian shall not be responsible
for any property of the Fund held or received by the Fund and not delivered to
the Custodian.

Upon receipt of "Proper Instructions" (within the meaning of Article 5),
the Custodian shall from time to time employ one or more sub-custodians located
in the United States, but only in accordance with an applicable vote by the
Board of Directors of the Fund, and provided that the Custodian shall have no
more or less responsibility or liability to the Fund on account of any actions
or omissions of any sub-custodian so employed than any such sub-custodian has to
the Custodian. The Custodian may employ as sub-custodians for the Fund's
securities and other assets the foreign banking institutions and foreign
securities depositories designated in Schedule "A" hereto but only in accordance
with the provisions of Article 3.

2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD BY THE
CUSTODIAN IN THE UNITED STATES

2.1 HOLDING SECURITIES. The Custodian shall hold and physically segregate
for the account of the Fund all non-cash property, to be held by it in the
United States, including all domestic investments owned by the Fund, other
than (a) securities which are maintained pursuant to Section 2.10 in a
clearing agency which acts as a securities depository or in a book-entry
system authorized by the U.S. Department of the Treasury and certain
federal agencies (each, a "U.S. Securities System") and (b) commercial
paper of an issuer for which the Custodian acts as issuing and paying agent
("Direct Paper") which is deposited and/or maintained in the Direct Paper
System of the Custodian (the "Direct Paper System") pursuant to Section
2.11.

<PAGE>

2.2 DELIVERY OF SECURITIES. The Custodian shall release and deliver
domestic securities owned by the Fund held by the Custodian or in a U.S.
Securities System account of the Custodian or in the Custodian's Direct
Paper book-entry system account ("Direct Paper System Account") only upon
receipt of Proper Instructions, which may be continuing instructions when
deemed appropriate by the parties, and only in the following cases:

1) Upon sale of such securities for the account of the Fund and
receipt of payment therefor;

2) Upon the receipt of payment in connection with any
repurchase agreement related to such securities entered into by the
Fund;

3) In the case of a sale effected through a U.S. Securities
System, in accordance with the provisions of Section 2.10 hereof;

4) To the depository agent in connection with tender or other
similar offers for portfolio securities of the Fund;

5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable; provided that,
in any such case, the cash or other consideration is to be delivered
to the Custodian;

6) To the issuer thereof, or its agent, for transfer into the
name of the Fund or into the name of any nominee or nominees of the
Custodian or into the name or nominee name of any agent appointed
pursuant to Section 2.9 or into the name or nominee name of any
sub-custodian appointed pursuant to Article 1; or for exchange for a
different number of bonds, certificates or other evidence representing
the same aggregate face amount or number of units; PROVIDED that, in
any such case, the new securities are to be delivered to the
Custodian;

7) Upon the sale of such securities for the account of the
Fund, to the broker or its clearing agent, against a receipt, for
examination in accordance with "street delivery" custom; provided that
in any such case, the Custodian shall have no responsibility or
liability for any loss arising from the delivery of such securities
prior to receiving payment for such securities except as may arise
from the Custodian's own negligence or willful misconduct;

8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
securities of the issuer of such securities, or pursuant to provisions
for conversion contained in such securities, or pursuant to any
deposit agreement; provided that, in any such case, the new securities
and cash, if any, are to be delivered to the Custodian;

<PAGE>

9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or similar
securities or the surrender of interim receipts or temporary
securities for definitive securities; provided that, in any such case,
the new securities and cash, if any, are to be delivered to the
Custodian;

10) For delivery in connection with any loans of securities made
by the Fund, BUT ONLY against receipt of adequate collateral as agreed
upon from time to time by the Custodian and the Fund, which may be in
the form of cash or obligations issued by the United States
government, its agencies or instrumentalities, except that in
connection with any loans for which collateral is to be credited to
the Custodian's account in the book-entry system authorized by the
U.S. Department of the Treasury, the Custodian will not be held liable
or responsible for the delivery of securities owned by the Fund prior
to the receipt of such collateral;

11) For delivery as security in connection with any borrowings
by the Fund requiring a pledge of assets by the Fund, BUT ONLY against
receipt of amounts borrowed;

12) For delivery in accordance with the provisions of any
agreement among the Fund, the Custodian and a broker-dealer registered
under the Securities Exchange Act of 1934 (the "Exchange Act") and a
member of The National Association of Securities Dealers, Inc.
("NASD"), relating to compliance with the rules of The Options
Clearing Corporation and of any registered national securities
exchange, or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the
Fund;

13) For delivery in accordance with the provisions of any
agreement among the Fund, the Custodian, and a Futures Commission
Merchant registered under the Commodity Exchange Act, relating to
compliance with the rules of the Commodity Futures Trading Commission
and/or any Contract Market, or any similar organization or
organizations, regarding account deposits in connection with
transactions by the Fund;

14) Upon receipt of instructions from the transfer agent
("Transfer Agent") for the Fund, for delivery to such Transfer Agent
or to the holders of shares in connection with distributions in kind,
as may be described from time to time in the Fund's currently
effective prospectus and statement of additional information
("prospectus"), in satisfaction of requests by holders of Shares for
repurchase or redemption; and

15) For any other proper corporate purpose, BUT ONLY upon
receipt of, in addition to Proper Instructions, a certified copy of a
resolution of the Board of Directors or of the Executive Committee
signed by an officer of the Fund and certified by the Secretary or an
Assistant Secretary, specifying the securities to be

<PAGE>

delivered, setting forth the purpose for which such delivery is to be
made, declaring such purpose to be a proper corporate purpose, and
naming the person or persons to whom delivery of such securities shall
be made.

2.3 REGISTRATION OF SECURITIES. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of the Fund or in
the name of any nominee of the Fund or of any nominee of the Custodian which
nominee shall be assigned exclusively to the Fund, UNLESS the Fund has
authorized in writing the appointment of a nominee to be used in common with
other registered investment companies having the same investment adviser as the
Fund, or in the name or nominee name of any agent appointed pursuant to Section
2.9 or in the name or nominee name of any sub-custodian appointed pursuant to
Article 1. All securities accepted by the Custodian on behalf of the Fund under
the terms of this Contract shall be in "street name" or other good delivery
form. If, however, the Fund directs the Custodian to maintain securities in
"street name", the Custodian shall utilize its best efforts only to timely
collect income due the Fund on such securities and to notify the Fund on a best
efforts basis only of relevant corporate actions including, without limitation,
pendency of calls, maturities, tender or exchange offers.

2.4 BANK ACCOUNTS. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of the Fund, subject only
to draft or order by the Custodian acting pursuant to the terms of this
Contract, and shall hold in such account or accounts, subject to the provisions
hereof, all cash received by it from or for the account of the Fund, other than
cash maintained by the Fund in a bank account established and used in accordance
with Rule 17f-3 under the Investment Company Act of 1940. Funds held by the
Custodian for the Fund may be deposited by it to its credit as Custodian in the
Banking Department of the Custodian or in such other banks or trust companies as
it may in its discretion deem necessary or desirable; PROVIDED, however, that
every such bank or trust company shall be qualified to act as a custodian under
the Investment Company Act of 1940 and that each such bank or trust company and
the funds to be deposited with each such bank or trust company shall be approved
by vote of a majority of the Board of Directors of the Fund. Such funds shall
be deposited by the Custodian in its capacity as Custodian and shall be
withdrawable by the Custodian only in that capacity.

2.5 AVAILABILITY OF FEDERAL FUNDS. Upon mutual agreement between the Fund and
the Custodian, the Custodian shall, upon the receipt of Proper Instructions,
make federal funds available to the Fund as of specified times agreed upon from
time to time by the Fund and the Custodian in the amount of checks received in
payment for Shares of the Fund which are deposited into the Fund's account.

2.6 COLLECTION OF INCOME. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other payments with
respect to United States registered securities held hereunder to which the Fund
shall be entitled either by law or pursuant to custom in the securities
business, and shall collect on a timely basis all income and other payments with
respect to United States bearer securities if, on the date of payment by the
issuer, such securities are held by the Custodian or its agent thereof and shall
credit

<PAGE>

such income, as collected, to the Fund's custodian account. Without limiting
the generality of the foregoing, the Custodian shall detach and present for
payment all coupons and other income items requiring presentation as and when
they become due and shall collect interest when due on securities held
hereunder. Income due the Fund on United States securities loaned pursuant to
the provisions of Section 2.2 (10) shall be the responsibility of the Fund. The
Custodian will have no duty or responsibility in connection therewith, other
than to provide the Fund with such information or data as may be necessary to
assist the Fund in arranging for the timely delivery to the Custodian of the
income to which the Fund is properly entitled.

2.7 PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions, which may be
continuing instructions when deemed appropriate by the parties, the Custodian
shall pay out monies of the Fund in the following cases only:

1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of the Fund but
only (a) against the delivery of such securities, or evidence of title to
such options, futures contracts or options on futures contracts, to the
Custodian (or any bank, banking firm or trust company doing business in the
United States or abroad which is qualified under the Investment Company Act
of 1940, as amended, to act as a custodian and has been designated by the
Custodian as its agent for this purpose) registered in the name of the Fund
or in the name of a nominee of the Custodian referred to in Section 2.3
hereof or in proper form for transfer; (b) in the case of a purchase
effected through a U.S. Securities System, in accordance with the
conditions set forth in Section 2.10 hereof; (c) in the case of a purchase
involving the Direct Paper System, in accordance with the conditions set
forth in Section 2.11; (d) in the case of repurchase agreements entered
into between the Fund and the Custodian, or another bank, or a
broker-dealer which is a member of NASD, (i) against delivery of the
securities either in certificate form or through an entry crediting the
Custodian's account at the Federal Reserve Bank with such securities or
(ii) against delivery of the receipt evidencing purchase by the Fund of
securities owned by the Custodian along with written evidence of the
agreement by the Custodian to repurchase such securities from the Fund or
(e) for transfer to a time deposit account of the Fund in any bank, whether
domestic or foreign; such transfer may be effected prior to receipt of a
confirmation from a broker and/or the applicable bank pursuant to Proper
Instructions from the Fund as defined in Article 5;

2) In connection with conversion, exchange or surrender of
securities owned by the Fund as set forth in Section 2.2 hereof;

3) For the redemption or repurchase of Shares issued by the Fund as
set forth in Article 4 hereof;

<PAGE>

4) For the payment of any expense or liability incurred by the Fund,
including but not limited to the following payments for the account of the
Fund: interest, taxes, management, accounting, transfer agent and legal
fees, and operating expenses of the Fund whether or not such expenses are
to be in whole or part capitalized or treated as deferred expenses;

5) For the payment of any dividends declared pursuant to the
governing documents of the Fund;

6) For payment of the amount of dividends received in respect of
securities sold short;

7) For any other proper purpose, BUT ONLY upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of the
Board of Directors or of the Executive Committee of the Fund signed by an
officer of the Fund and certified by its Secretary or an Assistant
Secretary, specifying the amount of such payment, setting forth the purpose
for which such payment is to be made, declaring such purpose to be a proper
purpose, and naming the person or persons to whom such payment is to be
made.

2.8 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES PURCHASED.
Except as specifically stated otherwise in this Contract, in any and every case
where payment for purchase of domestic securities for the account of the Fund is
made by the Custodian in advance of receipt of the securities purchased in the
absence of specific written instructions from the Fund to so pay in advance, the
Custodian shall be absolutely liable to the Fund for such securities to the same
extent as if the securities had been received by the Custodian.

2.9 APPOINTMENT OF AGENTS. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust company
which is itself qualified under the Investment Company Act of 1940, as amended,
to act as a custodian, as its agent to carry out such of the provisions of this
Article 2 as the Custodian may from time to time direct; PROVIDED, however, that
the appointment of any agent shall not relieve the Custodian of its
responsibilities or liabilities hereunder.

2.10 DEPOSIT OF SECURITIES IN U.S. SECURITIES SYSTEMS. The Custodian may
deposit and/or maintain domestic securities owned by the Fund in a clearing
agency registered with the Securities and Exchange Commission under Section 17A
of the Securities Exchange Act of 1934, which acts as a securities depository,
or in the book-entry system authorized by the U.S. Department of the Treasury
and certain federal agencies, collectively referred to herein as "U.S.
Securities System" in accordance with applicable Federal Reserve Board and
Securities and Exchange Commission rules and regulations, if any, and subject to
the following provisions:

1) The Custodian may keep domestic securities of the Fund in a U.S.
Securities System provided that such securities are represented in an
account

<PAGE>

("Account") of the Custodian in the U.S. Securities System which shall not
include any assets of the Custodian other than assets held as a fiduciary,
custodian or otherwise for customers;

2) The records of the Custodian with respect to domestic securities
of the Fund which are maintained in a U.S. Securities System shall identify
by book-entry those securities belonging to the Fund;

3) The Custodian shall pay for domestic securities purchased for the
account of the Fund upon (i) receipt of advice from the U.S. Securities
System that such securities have been transferred to the Account, and (ii)
the making of an entry on the records of the Custodian to reflect such
payment and transfer for the account of the Fund. The Custodian shall
transfer domestic securities sold for the account of the Fund upon (i)
receipt of advice from the U.S. Securities System that payment for such
securities has been transferred to the Account, and (ii) the making of an
entry on the records of the Custodian to reflect such transfer and payment
for the account of the Fund. Copies of all advices from the U.S.
Securities System of transfers of domestic securities for the account of
the Fund shall identify the Fund, be maintained for the Fund by the
Custodian and be provided to the Fund at its request. Upon request, the
Custodian shall furnish the Fund confirmation of each transfer to or from
the account of the Fund in the form of a written advice or notice and shall
furnish to the Fund copies of daily transaction sheets reflecting each
day's transactions in the U.S. Securities System for the account of the
Fund.

4) The Custodian shall provide the Fund with any report obtained by
the Custodian on the U.S. Securities System's accounting system, internal
accounting control and procedures for safeguarding domestic securities
deposited in the U.S. Securities System;

5) The Custodian shall have received the initial or annual
certificate, as the case may be, required by Article 13 hereof;

6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for any loss or damage to the Fund
resulting from use of the U.S. Securities System by reason of any
negligence, misfeasance or misconduct of the Custodian or any of its agents
or of any of its or their employees or from failure of the Custodian or any
such agent to enforce effectively such rights as it may have against the
U.S. Securities System; at the election of the Fund, it shall be entitled
to be subrogated to the rights of the Custodian with respect to any claim
against the U.S. Securities System or any other person which the Custodian
may have as a consequence of any such loss or damage if and to the extent
that the Fund has not been made whole for any such loss or damage.

<PAGE>

2.11 FUND ASSETS HELD IN THE CUSTODIAN'S DIRECT PAPER SYSTEM. The Custodian may
deposit and/or maintain securities owned by the Fund in the Direct Paper System
of the Custodian subject to the following provisions:

1) No transaction relating to securities in the Direct Paper System
will be effected in the absence of Proper Instructions;

2) The Custodian may keep securities of the Fund in the Direct Paper
System only if such securities are represented in an account ("Account") of
the Custodian in the Direct Paper System which shall not include any assets
of the Custodian other than assets held as a fiduciary, custodian or
otherwise for customers;

3) The records of the Custodian with respect to securities of the
Fund which are maintained in the Direct Paper System shall identify by
book-entry those securities belonging to the Fund;

4) The Custodian shall pay for securities purchased for the account
of the Fund upon the making of an entry on the records of the Custodian to
reflect such payment and transfer of securities to the account of the Fund.
The Custodian shall transfer securities sold for the account of the Fund
upon the making of an entry on the records of the Custodian to reflect such
transfer and receipt of payment for the account of the Fund;

5) The Custodian shall furnish the Fund confirmation of each
transfer to or from the account of the Fund, in the form of a written
advice or notice, of Direct Paper on the next business day following such
transfer and shall furnish to the Fund copies of daily transaction sheets
reflecting each day's transaction in the U.S. Securities System for the
account of the Fund;

6) The Custodian shall provide the Fund with any report on its
system of internal accounting control as the Fund may reasonably request
from time to time;

2.12 SEGREGATED ACCOUNT. The Custodian shall upon receipt of Proper
Instructions establish and maintain a segregated account or accounts for and on
behalf of the Fund, into which account or accounts may be transferred cash
and/or securities, including securities maintained in an account by the
Custodian pursuant to Section 2.10 hereof, (i) in accordance with the provisions
of any agreement among the Fund, the Custodian and a broker-dealer registered
under the Exchange Act and a member of the NASD (or any futures commission
merchant registered under the Commodity Exchange Act), relating to compliance
with the rules of The Options Clearing Corporation and of any registered
national securities exchange (or the Commodity Futures Trading Commission or any
registered contract market), or of any similar organization or organizations,
regarding escrow or other arrangements in connection with transactions by the
Fund, (ii) for purposes of segregating cash or government securities in
connection with options purchased, sold or written by the Fund or commodity
futures contracts or options thereon purchased or sold by the Fund, (iii) for
the

<PAGE>

purposes of compliance by the Fund with the procedures required by Investment
Company Act Release No. 10666, or any subsequent release or releases of the
Securities and Exchange Commission relating to the maintenance of segregated
accounts by registered investment companies and (iv) for other proper corporate
purposes, BUT ONLY, in the case of clause (iv), upon receipt of, in addition to
Proper Instructions, a certified copy of a resolution of the Board of Directors
or of the Executive Committee signed by an officer of the Fund and certified by
the Secretary or an Assistant Secretary, setting forth the purpose or purposes
of such segregated account and declaring such purposes to be proper corporate
purposes.

2.13 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian shall execute
ownership and other certificates and affidavits for all federal and state tax
purposes in connection with receipt of income or other payments with respect to
domestic securities of the Fund held by it and in connection with transfers of
such securities.

2.14 PROXIES. The Custodian shall, with respect to the domestic securities held
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of the
Fund or a nominee of the Fund, all proxies, without indication of the manner in
which such proxies are to be voted, and shall promptly deliver to the Fund such
proxies, all proxy soliciting materials and all notices relating to such
securities.

2.15 COMMUNICATIONS RELATING TO FUND PORTFOLIO SECURITIES. Subject to the
provisions of Section 2.3, the Custodian shall transmit promptly to the Fund all
written information (including, without limitation, pendency of calls and
maturities of domestic securities and expirations of rights in connection
therewith and notices of exercise of call and put options written by the Fund
and the maturity of futures contracts purchased or sold by the Fund) received by
the Custodian from issuers of the domestic securities being held for the Fund.
With respect to tender or exchange offers, the Custodian shall transmit promptly
to the Fund all written information received by the Custodian from issuers of
the domestic securities whose tender or exchange is sought and from the party
(or his agents) making the tender or exchange offer. If the Fund desires to
take action with respect to any tender offer, exchange offer or any other
similar transaction, the Fund shall notify the Custodian at least three business
days prior to the date on which the Custodian is to take such action.

2.16 REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS The Custodian shall
provide the Fund, at such times as the Fund may reasonably require, with reports
by independent public accountants on the accounting system, internal accounting
control and procedures for safeguarding securities, futures contracts and
options on futures contracts, including domestic securities deposited and/or
maintained in a U.S. Securities System, relating to the services provided by the
Custodian under this Contract; such reports shall be of sufficient scope and in
sufficient detail, as may reasonably be required by the Fund to provide
reasonable assurance that any material inadequacies would be disclosed by such
examination, and, if there are no such inadequacies, the reports shall so state.

<PAGE>

3. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND HELD OUTSIDE
OF THE UNITED STATES

3.1 APPOINTMENT OF FOREIGN SUB-CUSTODIANS. The Fund hereby authorizes and
instructs the Custodian to employ as sub-custodians for the Fund's
securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories designated
on Schedule A hereto ("foreign sub-custodians"). Upon receipt of "Proper
Instructions", as defined in Section 5 of this Contract, together with a
certified resolution of the Fund's Board of Directors, the Custodian and
the Fund may agree to amend Schedule A hereto from time to time to
designate additional foreign banking institutions and foreign securities
depositories to act as sub-custodian. Upon receipt of Proper Instructions,
the Fund may instruct the Custodian to cease the employment of any one or
more such sub-custodians for maintaining custody of the Fund's assets.

3.2 ASSETS TO BE HELD. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities", as defined in paragraph (c)(1) of Rule 17f-5 under
the Investment Company Act of 1940, and (b) cash and cash equivalents in
such amounts as the Custodian or the Fund may determine to be reasonably
necessary to effect the Fund's foreign securities transactions. The
Custodian shall identify on its books as belonging to the Fund, the foreign
securities of the Fund held by each foreign sub-custodian.

3.3 FOREIGN SECURITIES SYSTEMS. Except as may otherwise be agreed upon in
writing by the Custodian and the Fund, assets of the Fund shall be
maintained in a clearing agency which acts as a securities depository or in
a book-entry system for the central handling of securities located outside
the United States (each, a "Foreign Securities System") only through
arrangements implemented by the foreign banking institutions serving as
sub-custodians pursuant to the terms hereof (Foreign Securities Systems and
U.S. Securities Systems are collectively referred to herein as the
"Securities System"). Where possible, such arrangements shall include
entry into agreements containing the provisions set forth in Section 3.5
hereof.

3.4 HOLDING SECURITIES. The Custodian may hold securities and other non-
cash property for all of its customers, including the Fund, with a foreign
sub-custodian in a single account that is identified as belonging to the
Custodian for the benefit of its customers, PROVIDED HOWEVER, that (i) the
records of the Custodian with respect to securities and other non-cash
property of the Fund which are maintained in such account shall identify by
book-entry those securities and other non-cash property belonging to the
Fund and (ii) the Custodian shall require that securities and other non-
cash property so held by the foreign sub-custodian be held separately from
any assets of the foreign sub-custodian or of others.

3.5 AGREEMENTS WITH FOREIGN BANKING INSTITUTIONS. Each agreement with a
foreign banking institution shall provide that: (a) the Fund's assets will
not be subject to any right, charge, security interest, lien or claim of
any kind in favor of the foreign banking institution or its creditors or
agent, except a claim of payment for their safe custody or administration;

<PAGE>

(b) beneficial ownership of the Fund's assets will be freely transferable
without the payment of money or value other than for custody or
administration; (c) adequate records will be maintained identifying the
assets as belonging to the Fund; (d) officers of or auditors employed by,
or other representatives of the Custodian, including to the extent
permitted under applicable law the independent public accountants for the
Fund, will be given access to the books and records of the foreign banking
institution relating to its actions under its agreement with the Custodian;
and (e) assets of the Fund held by the foreign sub-custodian will be
subject only to the instructions of the Custodian or its agents.

3.6 ACCESS OF INDEPENDENT ACCOUNTANTS OF THE FUND. Upon request of the
Fund, the Custodian will use its best efforts to arrange for the
independent accountants of the Fund to be afforded access to the books and
records of any foreign banking institution employed as a foreign
sub-custodian insofar as such books and records relate to the performance
of such foreign banking institution under its agreement with the Custodian.

3.7 REPORTS BY CUSTODIAN. The Custodian will supply to the Fund from time
to time, as mutually agreed upon, statements in respect of the securities
and other assets of the Fund held by foreign sub-custodians, including but
not limited to an identification of entities having possession of the
Fund's securities and other assets and advices or notifications of any
transfers of securities to or from each custodial account maintained by a
foreign banking institution for the Custodian on behalf of the Fund
indicating, as to securities acquired for the Fund, the identity of the
entity having physical possession of such securities.

3.8 TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT. (a) Except as otherwise
provided in paragraph (b) of this Section 3.8, the provision of Sections
2.2 and 2.7 of this Contract shall apply, MUTATIS MUTANDIS to the foreign
securities of the Fund held outside the United States by foreign
sub-custodians. (b) Notwithstanding any provision of this Contract to the
contrary, settlement and payment for securities received for the account of
the Fund and delivery of securities maintained for the account of the Fund
may be effected in accordance with the customary established securities
trading or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs, including, without
limitation, delivering securities to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer) against a receipt with
the expectation of receiving later payment for such securities from such
purchaser or dealer. (c) Securities maintained in the custody of a foreign
sub-custodian may be maintained in the name of such entity's nominee to the
same extent as set forth in Section 2.3 of this Contract, and the Fund
agrees to hold any such nominee harmless from any liability as a holder of
record of such securities.

3.9 LIABILITY OF FOREIGN SUB-CUSTODIANS. Each agreement pursuant to which
the Custodian employs a foreign banking institution as a foreign
sub-custodian shall require the institution to exercise reasonable care in
the performance of its duties and to indemnify, and hold harmless, the
Custodian and each Fund from and against any loss, damage, cost, expense,
liability or claim arising out of or in connection with the institution's
performance of such obligations. At the election of the Fund, it shall be
entitled to be subrogated to the rights of the Custodian with respect to
any claims against a foreign banking institution as a consequence of any
such loss, damage, cost, expense, liability or claim if and to the extent

<PAGE>

that the Fund has not been made whole for any such loss, damage, cost,
expense, liability or claim.

3.10 LIABILITY OF CUSTODIAN. The Custodian shall be liable for the acts or
omissions of a foreign banking institution to the same extent as set forth
with respect to sub-custodians generally in this Contract and, regardless
of whether assets are maintained in the custody of a foreign banking
institution, a foreign securities depository or a branch of a U.S. bank as
contemplated by paragraph 3.13 hereof, the Custodian shall not be liable
for any loss, damage, cost, expense, liability or claim resulting from
nationalization, expropriation, currency restrictions, or acts of war or
terrorism or any loss where the sub-custodian has otherwise exercised
reasonable care. Notwithstanding the foregoing provisions of this
paragraph 3.10, in delegating custody duties to State Street London Ltd.,
the Custodian shall not be relieved of any responsibility to the Fund for
any loss due to such delegation, except such loss as may result from (a)
political risk (including, but not limited to, exchange control
restrictions, confiscation, expropriation, nationalization, insurrection,
civil strife or armed hostilities) or (b) other losses (excluding a
bankruptcy or insolvency of State Street London Ltd. not caused by
political risk) due to Acts of God, nuclear incident or other losses under
circumstances where the Custodian and State Street London Ltd. have
exercised reasonable care.

3.11 REIMBURSEMENT FOR ADVANCES. If the Fund requires the Custodian to
advance cash or securities for any purpose including the purchase or sale
of foreign exchange or of contracts for foreign exchange, or in the event
that the Custodian or its nominee shall incur or be assessed any taxes,
charges, expenses, assessments, claims or liabilities in connection with
the performance of this Contract, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful
misconduct, any property at any time held for the account of the Fund shall
be security therefor and should the Fund fail to repay the Custodian
promptly, the Custodian shall be entitled to utilize available cash and to
dispose of the Fund assets to the extent necessary to obtain reimbursement.

3.12 MONITORING RESPONSIBILITIES. The Custodian shall furnish annually to
the Fund, during the month of June, information concerning the foreign
sub-custodians employed by the Custodian. Such information shall be
similar in kind and scope to that furnished to the Fund in connection with
the initial approval of this Contract. In addition, the Custodian will
promptly inform the Fund in the event that the Custodian learns of a
material adverse change in the financial condition of a foreign
sub-custodian or any material loss of the assets of the Fund or in the case
of any foreign sub-custodian not the subject of an exemptive order from the
Securities and Exchange Commission is notified by such foreign
sub-custodian that there appears to be a substantial likelihood that its
shareholders' equity will decline below $200 million (U.S. dollars or the
equivalent thereof) or that its shareholders' equity has declined below
$200 million (in each case computed in accordance with generally accepted
U.S. accounting principles).

3.13 BRANCHES OF U.S. BANKS. (a) Except as otherwise set forth in this
Contract, the provisions hereof shall not apply where the custody of the
Fund assets are maintained in a

<PAGE>

foreign branch of a banking institution which is a "bank" as defined by
Section 2(a)(5) of the Investment Company Act of 1940 meeting the
qualification set forth in Section 26(a) of said Act. The appointment of
any such branch as a sub-custodian shall be governed by paragraph 1 of this
Contract. (b) Cash held for the Fund in the United Kingdom shall be
maintained in an interest bearing account established for the Fund with the
Custodian's London branch, which account shall be subject to the direction
of the Custodian, State Street London Ltd. or both.

3.14 TAX LAW. The Custodian shall have no responsibility or liability for
any obligations now or hereafter imposed on the Fund or the Custodian as
custodian of the Fund by the tax law of the United States of America or any
state or political subdivision thereof. It shall be the responsibility of
the Fund to notify the Custodian of the obligations imposed on the Fund or
the Custodian as custodian of the Fund by the tax law of jurisdictions
other than those mentioned in the above sentence, including responsibility
for withholding and other taxes, assessments or other governmental charges,
certifications and governmental reporting. The sole responsibility of the
Custodian with regard to such tax law shall be to use reasonable efforts to
assist the Fund with respect to any claim for exemption or refund under the
tax law of jurisdictions for which the Fund has provided such information.

4. PAYMENTS FOR REPURCHASES OR REDEMPTIONS AND SALES OF SHARES OF THE FUND

From such funds as may be available for the purpose but subject to the
limitations of the Articles of Incorporation and any applicable votes of the
Board of Directors of the Fund pursuant thereto, the Custodian shall, upon
receipt of instructions from the Transfer Agent, make funds available for
payment to holders of Shares who have delivered to the Transfer Agent a request
for redemption or repurchase of their Shares. In connection with the redemption
or repurchase of Shares of the Fund, the Custodian is authorized upon receipt of
instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders. In connection with the
redemption or repurchase of Shares of the Fund, the Custodian shall honor checks
drawn on the Custodian by a holder of Shares, which checks have been furnished
by the Fund to the holder of Shares, when presented to the Custodian in
accordance with such procedures and controls as are mutually agreed upon from
time to time between the Fund and the Custodian.

The Custodian shall receive from the distributor for the Fund's Shares or
from the Transfer Agent of the Fund and deposit into the Fund's account such
payments as are received for Shares of the Fund issued or sold from time to time
by the Fund. The Custodian will provide timely notification to the Fund and the
Transfer Agent of any receipt by it of payments for Shares of the Fund.

5. PROPER INSTRUCTIONS

Proper Instructions as used herein means a writing signed or initialled by
one or more person or persons as the Board of Directors shall have from time to
time authorized. Each such writing shall set forth the specific transaction or
type of transaction involved, including a specific statement of the purpose for
which such action is requested. Oral instructions will be considered Proper
Instructions

<PAGE>

if the Custodian reasonably believes them to have been given by a person
authorized to give such instructions with respect to the transaction involved.
The Fund shall cause all oral instructions to be confirmed in writing. Upon
receipt of a certificate of the Secretary or an Assistant Secretary as to the
authorization by the Board of Directors of the Fund accompanied by a detailed
description of procedures approved by the Board of Directors, Proper
Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the Board of Directors
and the Custodian are satisfied that such procedures afford adequate safeguards
for the Fund's assets. For purposes of this Section, Proper Instructions shall
include instructions received by the Custodian pursuant to any three-party
agreement which requires a segregated asset account in accordance with Section
2.12.

6. ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY

The Custodian may in its discretion, without express authority from the
Fund:

1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its duties
under this Contract, PROVIDED that all such payments shall be
accounted for to the Fund;

2) surrender securities in temporary form for securities in
definitive form;

3) endorse for collection, in the name of the Fund, checks,
drafts and other negotiable instruments; and

4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase, transfer
and other dealings with the securities and property of the Fund except
as otherwise directed by the Board of Directors of the Fund.

7. EVIDENCE OF AUTHORITY

The Custodian shall be protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or paper believed by it to be
genuine and to have been properly executed by or on behalf of the Fund. The
Custodian may receive and accept a certified copy of a vote of the Board of
Directors of the Fund as conclusive evidence (a) of the authority of any person
to act in accordance with such vote or (b) of any determination or of any action
by the Board of Directors pursuant to the Articles of Incorporation as described
in such vote, and such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.

8. DUTIES OF CUSTODIAN WITH RESPECT TO THE BOOKS OF ACCOUNT AND CALCULATION OF
NET ASSET VALUE AND NET INCOME

The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board of Directors of the Fund to keep the
books of account of the Fund and/or

<PAGE>

compute the net asset value per share of the outstanding shares of the Fund or,
if directed in writing to do so by the Fund, shall itself keep such books of
account and/or compute such net asset value per share. If so directed, the
Custodian shall also calculate daily the net income of the Fund as described in
the Fund's currently effective prospectus and shall advise the Fund and the
Transfer Agent daily of the total amounts of such net income and, if instructed
in writing by an officer of the Fund to do so, shall advise the Transfer Agent
periodically of the division of such net income among its various components.
The calculations of the net asset value per share and the daily income of the
Fund shall be made at the time or times described from time to time in the
Fund's currently effective prospectus.

9. RECORDS

The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet the
obligations of the Fund under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder.
All such records shall be the property of the Fund and shall at all times during
the regular business hours of the Custodian be open for inspection by duly
authorized officers, employees or agents of the Fund and employees and agents of
the Securities and Exchange Commission. The Custodian shall, at the Fund's
request, supply the Fund with a tabulation of securities owned by the Fund and
held by the Custodian and shall, when requested to do so by the Fund and for
such compensation as shall be agreed upon between the Fund and the Custodian,
include certificate numbers in such tabulations.

10. OPINION OF FUND'S INDEPENDENT ACCOUNTANT

The Custodian shall take all reasonable action, as the Fund may from time
to time request, to obtain from year to year favorable opinions from the Fund's
independent accountants with respect to its activities hereunder in connection
with the preparation of the Fund's Form N-1A, and Form N-SAR or other annual
reports to the Securities and Exchange Commission and with respect to any other
requirements of such Commission.

11. COMPENSATION OF CUSTODIAN

The Custodian shall be entitled to reasonable compensation for its services
and expenses as Custodian, as agreed upon from time to time between the Fund and
the Custodian.

12. RESPONSIBILITY OF CUSTODIAN

So long as and to the extent that it is in the exercise of reasonable care,
the Custodian shall not be responsible for the title, validity or genuineness of
any property or evidence of title thereto received by it or delivered by it
pursuant to this Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by it to
be genuine and to be signed by the proper party or parties, including any
futures commission merchant acting pursuant to the terms of a three-party
futures or options agreement. The Custodian shall be held to the exercise of
reasonable care in carrying out the provisions of this Contract, but shall be
kept

<PAGE>

indemnified by and shall be without liability to the Fund for any action taken
or omitted by it in good faith without negligence. It shall be entitled to rely
on and may act upon advice of counsel (who may be counsel for the Fund) on all
matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice.

Except as may arise from the Custodian's own negligence or willful
misconduct or the negligence or willful misconduct of a sub-custodian or agent,
the Custodian shall be without liability to the Fund for any loss, liability,
claim or expense resulting from or caused by; (i) events or circumstances beyond
the reasonable control of the Custodian or any sub-custodian or Securities
System or any agent or nominee of any of the foregoing, including, without
limitation, nationalization or expropriation, imposition of currency controls or
restrictions, the interruption, suspension or restriction of trading on or the
closure of any securities market, power or other mechanical or technological
failures or interruptions, computer viruses or communications disruptions, acts
of war or terrorism, riots, revolutions, work stoppages, natural disasters or
other similar events or acts; (ii) errors by the Fund or the Investment Advisor
in their instructions to the Custodian provided such instructions have been in
accordance with this Contract; (iii) the insolvency of or acts or omissions by a
Securities System; (iv) any delay or failure of any broker, agent or
intermediary, central bank or other commercially prevalent payment or clearing
system to deliver to the Custodian's sub-custodian or agent securities purchased
or in the remittance or payment made in connection with securities sold; (v) any
delay or failure of any company, corporation, or other body in charge of
registering or transferring securities in the name of the Custodian, the Fund,
the Custodian's sub-custodians, nominees or agents or any consequential losses
arising out of such delay or failure to transfer such securities including non-
receipt of bonus, dividends and rights and other accretions or benefits; (vi)
delays or inability to perform its duties due to any disorder in market
infrastructure with respect to any particular security or Securities System; and
(vii) any provision of any present or future law or regulation or order of the
United States of America, or any state thereof, or any other country, or
political subdivision thereof or of any court of competent jurisdiction.

The Custodian shall be liable for the acts or omissions of a foreign
banking institution to the same extent as set forth with respect to sub-
custodians generally in this Contract.

If the Fund requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may, in
the opinion of the Custodian, result in the Custodian or its nominee assigned to
the Fund being liable for the payment of money or incurring liability of some
other form, the Fund, as a prerequisite to requiring the Custodian to take such
action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.

If the Fund requires the Custodian, its affiliates, subsidiaries or agents,
to advance cash or securities for any purpose (including but not limited to
securities settlements, foreign exchange contracts and assumed settlement) or in
the event that the Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in connection with
the performance of this Contract, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the Fund shall be security
therefor and should the Fund fail to repay the Custodian promptly, the

<PAGE>

Custodian shall be entitled to utilize available cash and to dispose of the Fund
assets to the extent necessary to obtain reimbursement.

In no event shall the Custodian be liable for indirect, special or
consequential damages.

13. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT

This Contract shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage prepaid to
the other party, such termination to take effect not sooner than thirty (30)
days after the date of such delivery or mailing; PROVIDED, however that the
Custodian shall not act under Section 2.10 hereof in the absence of receipt of
an initial certificate of the Secretary or an Assistant Secretary that the Board
of Directors of the Fund has approved the initial use of a particular U.S.
Securities System, as required by Rule 17f-4 under the Investment Company Act of
1940, as amended and that the Custodian shall not act under Section 2.11 hereof
in the absence of receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board of Directors has approved the initial use of
the Direct Paper System; PROVIDED FURTHER, however, that the Fund shall not
amend or terminate this Contract in contravention of any applicable federal or
state regulations, or any provision of the Articles of Incorporation, and
further provided, that the Fund may at any time by action of its Board of
Directors (i) substitute another bank or trust company for the Custodian by
giving notice as described above to the Custodian, or (ii) immediately terminate
this Contract in the event of the appointment of a conservator or receiver for
the Custodian by the Comptroller of the Currency or upon the happening of a like
event at the direction of an appropriate regulatory agency or court of competent
jurisdiction.

Upon termination of the Contract, the Fund shall pay to the Custodian such
compensation as may be due as of the date of such termination and shall likewise
reimburse the Custodian for its costs, expenses and disbursements.

14. SUCCESSOR CUSTODIAN

If a successor custodian shall be appointed by the Board of Directors of
the Fund, the Custodian shall, upon termination, deliver to such successor
custodian at the office of the Custodian, duly endorsed and in the form for
transfer, all securities then held by it hereunder and shall transfer to an
account of the successor custodian all of the Fund's securities held in a
Securities System.

If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board of
Directors of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.

In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Directors shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940,
doing business

<PAGE>

in Boston, Massachusetts, of its own selection, having an aggregate capital,
surplus, and undivided profits, as shown by its last published report, of not
less than $25,000,000, all securities, funds and other properties held by the
Custodian and all instruments held by the Custodian relative thereto and all
other property held by it under this Contract and to transfer to an account of
such successor custodian all of the Fund's securities held in any Securities
System. Thereafter, such bank or trust company shall be the successor of the
Custodian under this Contract.

In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Directors to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.

15. INTERPRETIVE AND ADDITIONAL PROVISIONS

In connection with the operation of this Contract, the Custodian and the
Fund may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, PROVIDED that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision of
the Articles of Incorporation of the Fund. No interpretive or additional
provisions made as provided in the preceding sentence shall be deemed to be an
amendment of this Contract.

16. MASSACHUSETTS LAW TO APPLY

This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of the Commonwealth of Massachusetts.

17. PRIOR CONTRACTS

This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Fund and the Custodian relating to the custody of the
Fund's assets.

18. SHAREHOLDER COMMUNICATIONS ELECTION

Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs the Fund to indicate whether it authorizes the
Custodian to provide the Fund's name, address, and share position to requesting
companies whose securities the Fund owns. If the Fund tells the Custodian "no",
the Custodian will not provide this information to requesting companies. If the
Fund tells the Custodian "yes" or does not check either "yes" or "no" below, the

<PAGE>

Custodian is required by the rule to treat the Fund as consenting to disclosure
of this information for all securities owned by the Fund or any funds or
accounts established by the Fund. For the Fund's protection, the Rule prohibits
the requesting company from using the Fund's name and address for any purpose
other than corporate communications. Please indicate below whether the Fund
consents or objects by checking one of the alternatives below.

YES [ ] The Custodian is authorized to release the Fund's name, address,
and share positions.

NO [X] The Custodian is not authorized to release the Fund's name,
address, and share positions.

<PAGE>

IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 22nd day of August, 1996.

ATTEST HARTFORD INTERNATIONAL ADVISERS
FUND, INC.

/s/ Kevin J. Carr By /s/ George R. Jay
- -------------------------- -----------------------------------

ATTEST STATE STREET BANK AND TRUST COMPANY

/s/ Janice M. Duffy By /s/ Mark J. Bowler
- -------------------------- ----------------------------------
Mark J. Bowler
Senior Vice President

<PAGE>

Schedule A
----------

The following foreign banking institutions and foreign securities depositories
have been approved by the Board of Directors of Hartford International Advisers
Fund, Inc. for use as sub-custodians for the Fund's securities and other assets:

(Insert banks and securities depositories)

<PAGE>

EXHIBIT 11

ARTHUR ANDERSEN LLP

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our reports
(and to all references to our Firm) included in or made a part of this
Registration Statement File No. 33-84950 for Hartford International Advisers
Fund, Inc. on Form N-1A.

ARTHUR ANDERSEN LLP

Hartford, CT
April 9, 1997

<PAGE>

EXHIBIT 12

ANNUAL REPORT TO SHAREHOLDERS

<PAGE>

- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
HARTFORD BOND FUND, INC., HARTFORD STOCK FUND, INC., HVA MONEY MARKET
FUND, INC., HARTFORD ADVISERS FUND, INC., HARTFORD U.S. GOVERNMENT MONEY
MARKET FUND, INC., HARTFORD CAPITAL APPRECIATION FUND, INC., HARTFORD
MORTGAGE SECURITIES FUND, INC., HARTFORD INDEX FUND, INC., HARTFORD
INTERNATIONAL OPPORTUNITIES FUND, INC., HARTFORD DIVIDEND AND GROWTH
FUND, INC., HARTFORD INTERNATIONAL ADVISERS FUND, INC. AND HARTFORD SMALL
COMPANY FUND, INC.:

We have audited the accompanying statement of assets of Hartford Bond Fund,
Inc., Hartford Stock Fund, Inc., HVA Money Market Fund, Inc., Hartford Advisers
Fund, Inc., Hartford U.S. Government Money Market Fund, Inc., Hartford Capital
Appreciation Fund, Inc., Hartford Mortgage Securities Fund, Inc., Hartford
Index Fund, Inc., Hartford International Opportunities Fund, Inc., Hartford
Dividend and Growth Fund, Inc., Hartford International Advisers Fund, Inc. and
Hartford Small Company Fund, Inc. (all Maryland corporations) (the Funds) as of
December 31, 1996, and the related statement of operations for the year then
ended (except for Hartford Small Company Fund, Inc., which reflects the period
from inception, August 9, 1996, to December 31, 1996), the statements of
changes in net assets for each of the two years in the period then ended
(except for Hartford International Advisers Fund, Inc., which reflects the year
ended December 31, 1996 and the period from inception, March 1, 1995, to
December 31, 1995, and Hartford Small Company Fund, Inc., which reflects the
period from inception, August 9, 1996, to December 31, 1996) and the financial
highlights for each of the five years in the period then ended (except for
Hartford Dividend and Growth Fund, Inc., which reflects the two years ended
December 31, 1996 and the period from inception, March 8, 1994, to December 31,
1994, Hartford International Advisers Fund, Inc., which reflects the year ended
December 31, 1996 and the period from inception, March 1, 1995, to December 31
1995, and Hartford Small Company Fund, Inc., which reflects the period from
inception, August 9, 1996, to December 31, 1996). These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of December 31, 1996,
by correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of
Hartford Bond Fund, Inc., Hartford Stock Fund, Inc., HVA Money Market Fund,
Inc., Hartford Advisers Fund, Inc., Hartford U.S. Government Money Market Fund,
Inc., Hartford Capital Appreciation Fund, Inc., Hartford Mortgage Securities
Fund, Inc., Hartford Index Fund, Inc., Hartford International Opportunities
Fund, Inc., Hartford Dividend and Growth Fund, Inc., Hartford International
Advisers Fund, Inc. and Hartford Small Company Fund, Inc. of December 31, 1996,
the results of their operations for the year then ended (except for Hartford
Small Company Fund, Inc., which reflects the period from inception, August 9,
1996, to December 31, 1996), the changes in its net assets for each of the two
years in the period then ended (except for Hartford International Advisers
Fund, Inc., which reflects the year ended December 31, 1996 and the period from
inception, March 1, 1995, to December 31, 1995, and Hartford Small Company
Fund, Inc., which reflects the period from inception, August 9, 1996, to
December 31, 1996) and the financial highlights for each of the five years in
the period then ended (except for Hartford Dividend and Growth Fund, Inc.,
which reflects the two years ended December 31, 1996 and the period from
inception, March 8, 1994, to December 31, 1994, Hartford International Advisers
Fund, Inc., which reflects the year ended December 31, 1996 and the period from
inception, March 1, 1995, to December 31, 1995, and Hartford Small Company
Fund, Inc., which reflects the period from inception, August 9, 1996, to
December 31, 1996) in conformity with generally accepted accounting principles.

Hartford, Connecticut
February 19, 1997 ARTHUR ANDERSEN LLP

<PAGE>
- --------------------------------------------------------------------------------
HARTFORD BOND FUND, INC.
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- -------------
<C> <S> <C>
U.S. TREASURIES & FEDERAL AGENCIES -- 37.9%
U.S. TREASURY NOTES -- 17.1%
$ 5,100,000 5.00% due 02/15/99.......... $ 5,005,971
6,100,000 5.00% due 01/31/98.......... 6,039,000
2,000,000 5.88% due 08/15/98.......... 1,997,500
4,700,000 5.88% due 10/31/98.......... 4,694,125
3,000,000 5.88% due 02/15/04.......... 2,921,250
1,000,000 6.00% due 08/31/97.......... 1,000,938
4,000,000 6.00% due 05/31/98.......... 4,002,500
4,000,000 6.13% due 08/31/98.......... 4,011,252
750,000 6.25% due 05/31/00.......... 753,281
3,300,000 6.25% due 07/31/98.......... 3,315,470
1,000,000 6.75% due 05/31/99.......... 1,016,875
6,000,000 6.75% due 06/30/99.......... 6,105,000
2,450,000 6.88% due 07/31/99.......... 2,499,767
8,000,000 6.88% due 08/31/99.......... 8,165,000
5,900,000 6.88% due 05/15/06.......... 6,082,534
750,000 7.00% due 07/15/06.......... 779,297
4,900,000 7.25% due 02/15/98.......... 4,965,846
4,500,000 7.50% due 10/31/99.......... 4,667,346
600,000 7.88% due 11/15/04.......... 654,750
-------------
68,677,702
-------------
U.S. TREASURY BONDS -- 10.7%
5,800,000 6.50% due 11/15/26.......... 5,691,250
2,500,000 6.75% due 08/15/26.......... 2,517,188
6,000,000 6.88% due 08/15/25.......... 6,114,378
3,900,000 8.13% due 08/15/19.......... 4,506,938
17,350,000 8.75% due 05/15/17.......... 21,156,156
2,500,000 8.88% due 08/15/17.......... 3,085,938
-------------
43,071,848
-------------
U.S. TREASURY STRIPS -- 3.0%
9,900,000 10.75% due 02/15/03......... 12,118,224
-------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION -- 7.1%
Pass-Throughs
22,211,776 6.00% due 01/25/12 -
05/01/26.................... 21,292,988
4,574,991 6.50% due 09/01/10 -
01/11/11.................... 4,492,069
Multifamily Dus
2,971,991 6.48% due 12/01/05.......... 2,926,639
-------------
28,711,696
-------------
Total U.S. treasuries &
Federal agencies............ $ 152,579,470
-------------
-------------
CORPORATE BONDS AND NOTES -- 40.8%
CABLE -- 4.4%
Continental Cablevision, Inc.
1,000,000 9.50% due 08/01/13.......... $ 1,146,727
Lenfest Communications
1,000,000 8.38% due 11/01/05.......... 966,250
Rogers Cablesystems
4,000,000 9.63% due 08/01/02.......... 4,180,000
Rogers Cablesystems
1,000,000 10.00% due 12/01/07......... 1,055,000
TCI Communications, Inc.
5,000,000 7.88% due 02/15/26.......... 4,324,975
Tele-Communications, Inc.
5,000,000 6.58% due 02/15/05.......... 4,992,760
Tele-Communications, Inc.
1,000,000 8.65% due 09/15/04.......... 1,023,856
-------------
17,689,568
-------------
CONSUMER SERVICES -- 0.7%
ADT Operations
2,665,000 8.25% due 08/01/00.......... 2,781,676
-------------
ENERGY & SERVICES -- 2.5%
Tenneco, Inc.
6,850,000 8.20% due 11/15/99.......... 7,166,943

<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- -------------
<C> <S> <C>
CORPORATE BONDS AND NOTES -- (CONTINUED)
ENERGY & SERVICES --
(CONTINUED)
Union Oil Co. of California
$ 2,500,000 9.38% due 02/15/11.......... $ 2,985,320
-------------
10,152,263
-------------
FINANCIAL SERVICES -- 16.4%
Ahmanson (H.F.) & Co.
5,500,000 6.35% due 09/01/98.......... 5,517,699
American Reinsurance
5,000,000 7.45% due 12/15/26.......... 4,979,963
Bank of New York Co, Inc.
3,000,000 7.63% due 07/15/02.......... 3,123,855
Capital Holding Corp.
4,800,000 0.00% due 02/07/97.......... 4,946,880
Charles Schwab Corp.
3,000,000 6.63% due 08/04/98.......... 3,018,387
Chase Manhattan Corp.
3,000,000 7.75% due 11/01/99.......... 3,103,386
Ford Motor Credit Co.
3,000,000 7.75% due 11/15/02.......... 3,131,031
General Motors Acceptance
Corp.
4,000,000 5.88% due 01/12/99.......... 3,976,500
Lehman Brothers Inc.
3,000,000 10.00% due 05/15/99......... 3,217,902
Lehman Brothers Inc.
10,125,000 7.36% due 12/15/03.......... 10,239,097
Massachusetts Mutual Life
Insurance Co.
11,750,000 7.63% due 11/15/23.......... 11,758,930
Mellon Financial Co.
4,000,000 6.30% due 06/01/00.......... 3,978,708
Phoenix Home Life
2,750,000 6.95% due 12/01/06*......... 2,708,442
Salomon Brothers Inc.
2,500,000 7.00% due 01/20/98.......... 2,519,213
-------------
66,219,993
-------------
GAMING -- 2.0%
Grand Casinos
5,000,000 10.13% due 12/01/03......... 5,050,000
Trump Atlantic
3,000,000 11.25% due 05/01/06......... 2,970,000
-------------
8,020,000
-------------
HOME BUILDING -- 0.5%
U.S. Home Corp.
2,000,000 7.95% due 03/01/01.......... 1,952,332
-------------
INDUSTRIAL MATERIALS -- 1.0%
Acetex Corp.
1,000,000 9.75% due 10/01/03.......... 987,500
Borden Chemical
1,000,000 9.50% due 05/01/05.......... 1,027,500
Newport News*
2,000,000 8.63% due 12/01/06.......... 2,045,000
-------------
4,060,000
-------------
MEDIA & SERVICES -- 2.2%
Paramount Communications
3,000,000 8.25% due 08/01/22.......... 2,814,204
Turner Broadcasting
5,900,000 7.40% due 02/01/04.......... 5,870,600
-------------
8,684,804
-------------
MINING & METALS -- 0.5%
Freeport-McMoran, Inc.
1,900,000 8.75% due 02/15/04.......... 1,974,149
-------------
PAPER & FOREST PRODUCTS --
1.3%
Buckeye Cellulos
3,000,000 9.25% due 09/15/08.......... 3,090,000
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

102
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- -------------
<C> <S> <C>
CORPORATE BONDS AND NOTES -- (CONTINUED)
PAPER & FOREST PRODUCTS --
(CONTINUED)
Georgia-Pacific Corp.
$ 2,000,000 9.85% due 06/15/97.......... $ 2,034,870
-------------
5,124,870
-------------
REAL ESTATE -- 1.9%
Duke Realty LP
5,000,000 7.25% due 09/22/02.......... 5,047,045
ERP Operating LP
2,500,000 6.25% due 12/22/97.......... 2,505,088
-------------
7,552,133
-------------
RETAIL -- 1.7%
K Mart Corp.
5,000,000 8.96% due 12/10/19.......... 4,312,500
Stop and Shop Companies, Inc.
2,150,000 9.75% due 02/01/02.......... 2,399,467
-------------
6,711,967
-------------
TECHNOLOGY -- 0.4%
Digital Equipment Corp.
2,000,000 7.75% due 04/01/23.......... 1,751,266
-------------
TRANSPORTATION -- 0.6%
Continental Airlines
2,500,000 9.50% due 12/15/01.......... 2,534,375
-------------
UTILITIES -- 4.7%
Bell Telephone Co. of
Pennsylvania
3,000,000 8.35% due 12/15/30.......... 3,580,797
Chesapeake & Potomac Telephone
Co.
1,500,000 8.30% due 08/01/31.......... 1,683,957
El Paso Electric Co.
2,000,000 9.40% due 05/01/11.......... 2,140,000
El Paso Electric Co.
1,000,000 8.90% due 02/01/06.......... 1,055,000
Long Island Lighting Co.
1,835,000 7.63% due 04/15/98.......... 1,851,632
Niagara Mohawk First Mortgage
2,000,000 7.75% due 05/15/06.......... 1,871,632
Public Service EI-MBIA
7,000,000 6.75% due 01/01/16.......... 6,593,769
-------------
18,776,787
-------------
Total corporate bonds and
notes....................... $ 163,986,183
-------------
-------------
FOREIGN/YANKEE BONDS AND NOTES -- 9.8%
FOREIGN CORPORATIONS -- 4.2%
Abbey National First
Capital-Yankee
7,575,000 8.20% due 10/15/04.......... $ 8,136,467
Societe Generale
3,490,000 9.88% due 07/15/03.......... 4,009,315
Southern Investments UK PLC
5,000,000 6.80% due 12/01/06.......... 4,894,140
-------------
17,039,922
-------------
FOREIGN GOVERNMENTS -- 5.6%
Banco Nacional Com Ext
5,000,000 7.25% due 02/02/04.......... 4,467,500
KFW International Finance Inc.
5,000,000 7.00% due 03/01/13.......... 4,994,570
Province of Manitoba Debenture
5,000,000 9.63% due 12/01/18.......... 6,296,300
Quebec Province
4,000,000 9.13% due 03/01/00.......... 4,314,448
Quebec Province
2,400,000 7.13% due 02/09/24.......... 2,292,096
-------------
22,364,914
-------------
Total foreign/yankee bonds and
notes....................... $ 39,404,836
-------------
-------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- -------------
<C> <S> <C>
ASSET-BACKED SECURITIES -- 3.5%
FOREIGN GOVERNMENTS --
(CONTINUED)
Chemical Master Credit Card
Trust
Series 96-1, Class A
$11,400,000 5.55% due 09/15/03.......... $ 11,077,380
Oakwood Mortgage Investors,
Inc.
Series 94-A, Class B1
3,023,857 8.40% due 02/15/15.......... 3,064,546
-------------
Total asset-backed
securities.................. $ 14,141,926
-------------
-------------
SUPRANATIONAL -- 2.0%
Interamer Development Bank
7,400,000 8.50% due 05/01/01.......... $ 7,992,881
-------------
-------------
ENHANCED EQUIPMENT TRUST CERTIFICATES -- 1.9%
Norwest Airlines Trust Series
2
2,472,000 11.30% due 06/21/14......... $ 3,009,257
U.S. Air Inc. Series Class A
4,870,190 6.76% due 04/15/08.......... 4,741,665
-------------
$ 7,750,922
-------------
-------------
SHORT-TERM SECURITIES -- 7.3%
COMMERCIAL PAPER -- 2.5%
Houston Industries Financial
5,000,000 6.15% due 01/02/97.......... $ 4,999,146
Houston Lighting & Power
5,000,000 6.00% due 01/03/97.......... 4,998,333
-------------
9,997,479
-------------
REPURCHASE AGREEMENT -- 4.8%
19,391,000 Interest in $108,163,000 joint
repurchase agreement dated
12/31/96 with State Street
Bank 6.70% due 01/02/97;
maturity amount $19,398,218;
(Collateralized by
$53,860,000 U.S. Treasury
Note 7.5% due 02/15/05 and
$54,303,000 U.S. Treasury
Note 8.875% due 08/15/17)... 19,391,000
-------------
Total short-term securities... $ 29,388,479
-------------
-------------
DIVERSIFICATION OF ASSETS:
Total U.S. treasuries & Federal agencies
(cost $151,466,093)........................ 37.9 % $152,579,470
Total corporate bonds and notes (cost
$171,455,212).............................. 40.8 163,986,183
Total foreign/yankee bonds and notes (cost
$30,232,722)............................... 9.8 39,404,836
Total asset-backed securities (cost
$13,836,082)............................... 3.5 14,141,926
Total supranational (cost $7,899,616)........ 2.0 7,992,881
Total enhanced equipment trust certificates
(cost $7,645,763).......................... 1.9 7,750,922
Total short-term securities (cost
$29,388,479)............................... 7.3 29,388,479
------ ------------
Total investment in securities
(Identified cost $411,923,967)............. 103.2 415,244,697
Excess of liabilities over cash and
receivables................................ (3.2 ) (12,696,897)
------ ------------
Net assets (applicable to $1.00 per share
based on 402,874,209 shares outstanding)... 100.0 % $402,547,800
------ ------------
------ ------------

SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $.10 per share; authorized
800,000,000 shares; outstanding 402,874,209
shares............................................. $ 40,287,421
Capital surplus...................................... 367,142,717
Undistributed net investment income.................. 6,188
Undistributed net realized loss on investments....... (8,209,256)
Unrealized appreciation of investments............... 3,320,730
------------
Net assets, applicable to shares outstanding......... $402,547,800
------------
------------
</TABLE>

* Security exempt from registration under rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

103
<PAGE>
- --------------------------------------------------------------------------------
HARTFORD STOCK FUND, INC.
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
----------- ---------------
<C> <S> <C>
COMMON STOCKS -- 95.0%
AEROSPACE & DEFENSE -- 3.8%
700,000 Boeing Co..................... $ 74,462,500
587,000 United Technologies Corp...... 38,742,000
---------------
113,204,500
---------------
BUSINESS SERVICES -- 0.8%
400,000 Fluor Corp.................... 25,100,000
---------------
COMMUNICATIONS EQUIPMENT --
3.0%
*280,000 Cisco Systems, Inc............ 17,815,000
545,000 General Motors Corp. Class
H........................... 30,656,250
343,529 Lucent Technologies, Inc...... 15,888,216
430,000 Motorola, Inc................. 26,391,250
---------------
90,750,716
---------------
COMPUTERS & OFFICE
EQUIPMENT -- 3.9%
580,000 Adaptec, Inc.................. 23,200,000
300,000 International Business
Machines Corp............... 45,300,000
900,000 Xerox Corp.................... 47,362,500
---------------
115,862,500
---------------
CONSUMER DURABLES -- 0.7%
400,000 Goodyear Tire & Rubber Co..... 20,550,000
---------------
CONSUMER NON-DURABLES -- 4.9%
250,000 Colgate Palmolive Co.......... 23,062,500
205,000 Gillette Co................... 15,938,750
310,000 Kimberly-Clark Corp........... 29,527,500
300,000 NIKE, Inc. Class B............ 17,925,000
550,000 Proctor & Gamble Co........... 59,125,000
---------------
145,578,750
---------------
CONSUMER SERVICES -- 3.5%
374,548 Autotote (Unregistered
Shares)..................... 323,048
80,000 Circus Circus Enterprises..... 2,750,000
160,000 Hasbro, Inc................... 6,220,000
1,560,000 McDonalds Corp................ 70,590,000
1,207,600 Mirage Resorts................ 26,114,350
---------------
105,997,398
---------------
ELECTRONICS -- 5.3%
1,225,000 General Electric Co........... 121,121,875
285,000 Intel Corp.................... 37,317,188
---------------
158,439,063
---------------
ENERGY & SERVICES -- 10.3%
530,000 Amoco Corp.................... 42,665,000
500,000 Chevron Corp.................. 32,500,000
640,000 Exxon Corp.................... 62,720,000
400,000 Repsol S.A. ADR............... 15,250,000
370,000 Royal Dutch Petroleum Co...... 63,177,500
410,000 Schlumberger Ltd.............. 40,948,750
379,783 Total S.A. ADR................ 15,286,266
578,778 Union Pacific Resources Group,
Inc......................... 16,929,257
440,000 Unocal Corp................... 17,875,000
---------------
307,351,773
---------------
FINANCIAL SERVICES -- 15.5%
255,000 Ace Ltd....................... 15,331,875
790,000 Allstate Corp................. 45,721,250
890,000 American Express Co........... 50,285,000
300,000 American International Group,
Inc......................... 32,475,000

<CAPTION>
SHARES MARKET
----------- VALUE
---------------
<C> <S> <C>
FINANCIAL SERVICES --
(CONTINUED)
*350,000 Associates First Capital Co.
Class A..................... $ 15,443,750
171,200 Bank of Boston Corp........... 10,999,600
670,000 Citicorp...................... 69,010,000
185,000 First Bank System, Inc........ 12,626,250
310,000 Marsh & McLennan Co........... 32,240,000
570,000 Merrill Lynch & Co., Inc...... 46,455,000
380,000 NationsBank Corp.............. 37,145,000
500,000 State Street Boston Corp...... 32,250,000
1,420,000 Travelers Group, Inc. (The)... 64,432,500
---------------
464,415,225
---------------
FOOD, BEVERAGE & TOBACCO --
1.8%
260,000 Kellogg Co.................... 17,062,500
950,000 Sara Lee Corp................. 35,387,500
---------------
52,450,000
---------------
FOREIGN STOCKS - JAPAN -- 1.2%
315,000 Eisai Co. Ltd................. 6,187,645
250,000 Fuji Bank Ltd................. 3,640,045
300,000 Matsushita Electric Industrial
Co.......................... 4,884,983
300,000 Nomura Securities Co. Ltd..... 4,497,286
260,000 Sankyo Co. Ltd................ 7,347,290
250,000 Sanwa Bank Ltd................ 3,403,119
300,000 Takeda Chemical Industries
Ltd......................... 6,280,692
---------------
36,241,060
---------------
HEALTH CARE -- 14.0%
820,000 Abbott Laboratories........... 41,615,000
750,000 American Home Products
Corp........................ 43,968,750
310,000 Bristol-Myers Squibb Co....... 33,712,500
525,000 Columbia/HCA Healthcare
Corp........................ 21,393,750
835,000 Johnson & Johnson............. 41,541,250
660,000 Merck & Co., Inc.............. 52,305,000
450,000 Pfizer, Inc................... 37,293,750
605,000 Pharmacia & Upjohn, Inc....... 23,973,125
460,000 Rhone-Poulenc S.A. ADR........ 15,582,500
590,000 SmithKline Beecham PLC ADR.... 40,120,000
*630,000 Tenet Healthcare Corp......... 13,781,250
471,400 Vencor, Inc................... 14,908,025
500,000 Warner-Lambert Co............. 37,500,000
---------------
417,694,900
---------------
INDUSTRIAL MATERIALS -- 5.7%
185,000 Aluminum Company of America... 11,793,750
600,000 Crown Cork & Seal, Inc........ 32,625,000
530,000 Dow Chemical Co............... 41,538,750
290,000 du Pont (ei) de Nemours &
Co.......................... 27,368,750
335,000 International Paper Co........ 13,525,625
645,000 Phelps Dodge Corp............. 43,537,500
---------------
170,389,375
---------------
MANUFACTURING -- 2.2%
426,000 Caterpillar, Inc.............. 32,056,500
255,000 Ingersoll-Rand Co............. 11,347,500
280,000 Minnesota Mining &
Manufacturing Co............ 23,205,000
---------------
66,609,000
---------------
MEDIA & SERVICES -- 4.0%
810,000 Gannett Co., Inc.............. 60,648,750
764,437 Gaylord Entertainment Class
A........................... 17,486,496
*1,225,000 Viacom, Inc. Class B.......... 42,721,875
---------------
120,857,121
---------------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

104
<PAGE>
<TABLE>
<CAPTION>
SHARES MARKET
----------- VALUE
---------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
RETAIL -- 5.6%
450,000 CVS Corp...................... $ 18,618,750
585,000 Home Depot, Inc. (The)........ 29,323,125
300,000 Saks Holding, Inc............. 8,100,000
660,000 Sears, Roebuck & Co........... 30,442,500
*650,000 Toys "R" Us, Inc.............. 19,500,000
2,720,000 Wal-Mart Stores, Inc.......... 62,220,000
---------------
168,204,375
---------------
SOFTWARE & SERVICES -- 5.1%
250,000 Automatic Data Processing
Inc......................... 10,718,750
*315,000 Computer Sciences Corp........ 25,869,375
*825,000 Electronic Data Systems
Corp........................ 35,681,250
840,000 First Data Corp............... 30,660,000
*450,000 Microsoft Corp................ 37,181,250
*300,000 Oracle Systems Corp........... 12,525,000
---------------
152,635,625
---------------
TRANSPORTATION -- 2.0%
1,300,000 Southwest Airlines Co......... 28,762,500
300,000 Toyota Motor Corp............. 8,606,875
400,000 Union Pacific Corp............ 24,050,000
---------------
61,419,375
---------------
UTILITIES -- 1.7%
900,000 SBC Communications, Inc....... 46,575,000
80,000 Texas Utilities Co............ 3,260,000
---------------
49,835,000
---------------
Total common stocks........... $ 2,843,585,756
---------------
---------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- ---------------
<C> <S> <C>
SHORT-TERM SECURITIES -- 4.9%

REPURCHASE AGREEMENT
$88,781,000 Interest in $399,594,000 joint
repurchase agreement dated
12/31/96 with State Street
Bank 6.7693% due 01/02/97;
maturity amount $88,814,388
(Collateralized by
$218,2121,000 U.S. Treasury
Note 6.25% due 06/30/98 and
$280,160,000 U.S. Treasury
Strip (principal) 0% due
05/15/19)................... $ 88,781,000
56,753,000 Interest in $300,000,000 joint
repurchase agreement dated
12/31/96 with First Boston
6.75% due 01/02/97; maturity
amount $56,774,282;
(Collaterlized by
$301,035,000 U.S. Treasury
Note 6.25% due 10/31/01).... 56,753,000
---------------
Total short-term securities... $ 145,534,000
---------------
---------------
</TABLE>

<TABLE>
<S> <C> <C>
DIVERSIFICATION OF ASSETS:
Total common stocks (cost $2,174,279,133).... 95.0 % $2,843,585,756
Total short-term securities (cost
$145,534,000).............................. 4.9 145,534,000
------ --------------
Total investment in securities
(Identified cost $2,319,813,134)........... 99.9 2,989,119,756
Excess of cash and receivables over
liabilities................................ 0.1 5,088,835
------ --------------
Net assets (applicable to $4.14271 per share
based on 722,765,582 shares outstanding)... 100.0% $2,994,208,591
------ --------------
------ --------------

SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share; authorized
2,000,000,000 shares; outstanding 722,765,582
shares............................................. $ 72,276,558
Capital surplus...................................... 2,090,786,868
Undistributed net investment income.................. 197,231
Undistributed net realized gain on investments....... 161,641,312
Unrealized appreciation of investments............... 669,306,622
--------------
Net assets, applicable to shares outstanding......... $2,994,208,591
--------------
--------------
</TABLE>

* Non-income producing during period.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

105
<PAGE>
- --------------------------------------------------------------------------------
HVA MONEY MARKET FUND, INC.
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
AMORTIZED
PRINCIPAL COST AND
AMOUNT VALUE
----------- --------------
<C> <S> <C>
SHORT-TERM SECURITIES -- 86.7%
COMMERCIAL PAPER -- 73.6%
A T & T Corp.
$10,000,000 5.35% due 03/03/97............... $ 9,909,347
Abbey National North America
10,000,000 5.32% due 03/11/97............... 9,898,033
American Home Products Corp.
10,000,000 5.35% due 02/11/97............... 9,939,069
American Home Products Corp.
5,000,000 5.36% due 02/11/97............... 4,969,478
Aristar Inc.
5,000,000 5.37% due 02/19/97............... 4,963,454
Bankers Trust Corp.
10,000,000 5.29% due 05/30/97............... 9,781,053
Bankers Trust Corp.
5,000,000 5.34% due 06/04/97............... 4,885,783
BFCE U.S. Finance Corp.
10,000,000 5.36% due 01/07/97............... 9,991,067
Bradford & Bingley Building Society
10,000,000 5.32% due 04/14/97............... 9,847,789
Countrywide Home Loan
5,000,000 5.44% due 01/13/97............... 4,990,933
Countrywide Home Loan
10,000,000 5.35% due 01/08/97............... 9,989,597
Daimler Benz N.A. Corp.
5,000,000 5.62% due 02/19/97............... 4,961,753
Daimler Benz N.A. Corp.
10,000,000 5.62% due 02/19/97............... 9,923,506
Dean Witter, Discover Co.
10,000,000 5.38% due 01/02/97............... 9,998,506
Eksportfinans A/S
4,000,000 5.31% due 02/10/97............... 3,976,400
Electronic Data Systems Corp.
5,000,000 5.30% due 02/20/97............... 4,963,194
Electronic Data Systems Corp.
10,000,000 5.43% due 03/21/97............... 9,880,842
Finova Capital Corp.
10,000,000 5.39% due 01/29/97............... 9,958,078
General Electric Capital Corp.
5,000,000 5.61% due 02/03/97............... 4,974,288
General Electric Capital Corp.
5,000,000 5.55% due 01/15/97............... 4,989,208
General Motors Acceptance Corp.
5,000,000 5.62% due 01/21/97............... 4,984,389
Goldman Sachs Group LP
10,000,000 5.31% due 03/03/97............... 9,910,025
Johnson Controls, Inc.
5,000,000 5.39% due 01/24/97............... 4,982,782
Johnson Controls, Inc.
10,246,000 5.37% due 01/23/97............... 10,212,376
Merrill Lynch & Co., Inc.
5,000,000 5.33% due 03/10/97............... 4,949,661
Merrill Lynch & Co., Inc.
10,000,000 5.32% due 01/21/97............... 9,970,444
Monsanto Co.
10,100,000 5.31% due 01/10/97............... 10,086,592
National Fuel Gas Co.
9,700,000 5.38% due 01/06/97............... 9,692,752
National Fuel Gas Co.
5,000,000 5.35% due 02/12/97............... 4,968,792
Nationwide Building Society
5,000,000 5.63% due 02/27/97............... 4,955,429
Nationwide Building Society
10,000,000 5.36% due 01/24/97............... 9,965,756

<CAPTION>
AMORTIZED
PRINCIPAL COST AND
AMOUNT VALUE
----------- --------------
<C> <S> <C>
COMMERCIAL PAPER -- (CONTINUED)
Nordbanken North America
$ 5,000,000 5.40% due 03/07/97............... $ 4,951,250
Nordbanken North America
5,000,000 5.36% due 05/12/97............... 4,902,478
Nordbanken North America
7,402,000 5.38% due 02/28/97............... 7,337,841
NYNEX Corp.
14,200,000 5.43% due 03/18/97............... 14,037,221
Pacific Dunlop Asia Ltd.
5,000,000 5.36% due 05/06/97............... 4,906,944
Pacific Dunlop Asia Ltd.
5,000,000 5.38% due 02/04/97............... 4,974,594
Pacific Dunlop Ltd.
5,000,000 5.48% due 02/28/97............... 4,955,856
PHH Corp.
10,000,000 5.38% due 01/13/97............... 9,982,067
Rubbermaid Inc.
10,000,000 5.34% due 04/01/97............... 9,866,500
Sanwa Business Credit Corp.
5,000,000 5.40% due 01/15/97............... 4,989,500
Sanwa Business Credit Corp.
10,000,000 5.52% due 01/15/97............... 9,978,533
Sears Roebuck Acceptance Corp.
10,000,000 5.32% due 03/19/97............... 9,886,211
Sharp Electronics Corp.
10,000,000 5.41% due 03/14/97............... 9,891,800
Sharp Electronics Corp.
5,000,000 5.30% due 02/14/97............... 4,967,611
Sumitomo Bank, Ltd., NY Branch
5,000,000 5.58% due 01/30/97............... 4,977,545
Sumitomo Bank, Ltd., NY Branch
10,000,000 5.47% due 02/24/97............... 9,917,950
Svenska Handelsbanken Inc.
15,000,000 5.42% due 03/24/97............... 14,814,817
Tambrands, Inc.
6,000,000 5.45% due 04/23/97............... 5,898,267
Tambrands, Inc.
9,000,000 5.34% due 04/29/97............... 8,842,470
Transamerica Finance Group, Inc.
7,000,000 5.41% due 01/30/97............... 6,969,494
Westpac Capital Corp.
5,000,000 5.38% due 02/07/97............... 4,972,353
--------------
Total commercial paper............. 399,491,678
--------------
U.S. GOVERNMENT & AGENCY
OBLIGATIONS -- 1.9%
U.S. Treasury Notes
10,000,000 6.88% due 02/28/97............... 10,023,588
--------------
REPURCHASE AGREEMENT -- 11.2%
60,871,000 Interest in $108,163,000 joint
repurchase agreement dated
12/31/96 with State Street Bank
6.70% due 01/02/97; maturity
amount $60,893,658; (Collaterized
by $53,860,000 U.S. Treasury Note
7.5% due 02/15/05 and $54,303,000
U.S. Treasury Note 8.875% due
08/15/17)........................ 60,871,000
--------------
Total short-term securities........ $ 470,386,266
--------------
--------------
CORPORATE NOTES -- 11.9%
American Honda Finance Corp.
5,000,000 5.53% due 08/15/97............... 5,000,000
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

106
<PAGE>
<TABLE>
<CAPTION>
AMORTIZED
PRINCIPAL COST AND
AMOUNT VALUE
----------- --------------
<C> <S> <C>
CORPORATE NOTES -- (CONTINUED)
American Honda Corp.**
$10,000,000 5.53% due 02/07/97............... $ 9,999,464
Aristar, Inc.
10,000,000 7.38% due 02/15/97............... 10,016,764
Bear Stearns Companies, Inc.
5,000,000 5.81% due 04/08/97............... 5,002,345
Chrysler Financial Corp.
4,000,000 5.86% due 07/31/97............... 4,004,078
Commercial Credit Group, Inc.
5,000,000 6.75% due 01/15/97............... 5,002,028
General Motors Acceptance Corp.
5,200,000 5.72% due 04/11/97............... 5,202,877
General Motors Acceptance Corp.
5,000,000 7.88% due 02/28/97............... 5,020,290
Greyhound Financial Corp.
5,000,000 8.25% due 03/11/97............... 5,020,333
Wells Fargo
10,200,000 5.59% due 09/05/97............... 10,205,359
--------------
Total corporate notes.............. $ 64,473,538
--------------
--------------
</TABLE>

<TABLE>
<CAPTION>
AMORTIZED
COST AND
VALUE
--------------
<S> <C> <C>
DIVERSIFICATION OF ASSETS:
Total short-term securities (cost
$470,386,266).............................. 86.7% $ 470,386,266
Total corporate notes (cost $64,473,538)..... 11.9 64,473,538
------ --------------
Total investment in securities
(Identified cost $534,859,804)*............ 98.6% 534,859,804
Excess of cash and receivables over
liabilities................................ 1.4 7,725,772
------ --------------
Net assets (applicable to $1.00 per share
based on 542,585,576 shares outstanding)... 100.0% $ 542,585,576
------ --------------
------ --------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share; authorized
800,000,000 shares; outstanding 542,585,576
shares............................................. $ 54,258,558
Capital surplus...................................... 488,327,018
--------------
Net assets, applicable to shares outstanding......... $ 542,585,576
--------------
--------------
</TABLE>

* Aggregate cost for Federal income tax purposes.
** Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

107
<PAGE>
- --------------------------------------------------------------------------------
HARTFORD ADVISERS FUND, INC.
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
----------- ---------------
<C> <S> <C>
COMMON STOCKS -- 65.8%
AEROSPACE & DEFENSE -- 2.6%
940,000 Boeing Co..................... $ 99,992,500
833,000 United Technologies Corp...... 54,978,000
---------------
154,970,500
---------------
BUSINESS SERVICES -- 0.6%
570,000 Fluor Corp.................... 35,767,500
---------------
COMMUNICATIONS EQUIPMENT --
2.0%
*350,000 Cisco Systems, Inc............ 22,268,750
730,000 General Motors Class H........ 41,062,500
487,746 Lucent Technologies Corp...... 22,558,253
550,000 Motorola, Inc................. 33,756,250
---------------
119,645,753
---------------
COMPUTERS & OFFICE
EQUIPMENT -- 2.7%
810,000 Adaptec, Inc.................. 32,400,000
400,000 International Business
Machines Corp............... 60,400,000
1,260,000 Xerox Corp.................... 66,307,500
---------------
159,107,500
---------------
CONSUMER DURABLES -- 0.5%
550,000 Goodyear Tire & Rubber Co..... 28,256,250
---------------
CONSUMER NON-DURABLES -- 3.2%
350,000 Colgate Palmolive Co.......... 32,287,500
250,000 Gillette Co................... 19,437,500
420,000 Kimberly-Clark Corp........... 40,005,000
350,000 NIKE, Inc. Class B............ 20,912,500
700,000 Proctor & Gamble Co........... 75,250,000
---------------
187,892,500
---------------
CONSUMER SERVICES -- 2.5%
561,821 Autotote Unregistered
Shares...................... 484,571
120,000 Circus Circus Enterprises..... 4,125,000
240,000 Hasbro, Inc................... 9,330,000
2,110,000 McDonalds Corp................ 95,477,500
*1,641,600 Mirage Resorts................ 35,499,600
---------------
144,916,671
---------------
ELECTRONICS -- 3.8%
1,665,000 General Electric Corp......... 164,626,875
450,000 Intel Corp.................... 58,921,875
---------------
223,548,750
---------------
ENERGY & SERVICES -- 7.1%
750,000 Amoco Corp.................... 60,375,000
700,000 Chevron Corp.................. 45,500,000
885,000 Exxon Corp.................... 86,730,000
530,000 Repsol SA ADR................. 20,206,250
480,000 Royal Dutch Petroleum Co...... 81,960,000
570,000 Schlumberger Ltd.............. 56,928,750
500,000 Total S.A. ADR................ 20,125,000
830,000 Union Pacific Resources Group,
Inc......................... 24,277,500
570,000 Unocal Corp................... 23,156,250
---------------
419,258,750
---------------
FINANCIAL SERVICES -- 10.7%
370,000 Ace Ltd....................... 22,246,250
1,080,000 Allstate Corp................. 62,505,000
1,230,000 American Express Co........... 69,495,000

<CAPTION>
SHARES MARKET
----------- VALUE
---------------
<C> <S> <C>
FINANCIAL SERVICES --
(CONTINUED)

415,000 American International Group,
Inc......................... $ 44,923,750
*460,000 Associates First Capital Corp.
Class A..................... 20,297,500
251,300 Bank of Boston Corp........... 16,146,025
850,000 Citicorp...................... 87,550,000
265,000 First Bank System, Inc........ 18,086,250
400,000 Marsh & McLennan Co........... 41,600,000
800,000 Merrill Lynch & Co., Inc...... 65,200,000
550,000 NationsBank Corp.............. 53,762,500
600,000 State Street Boston Corp...... 38,700,000
1,900,000 Travelers Group, Inc. (The)... 86,212,500
---------------
626,724,775
---------------
FOOD, BEVERAGE & TOBACCO --
1.1%
240,000 Kellogg Co.................... 15,750,000
1,300,000 Sara Lee Corp................. 48,425,000
---------------
64,175,000
---------------
FOREIGN STOCKS - JAPAN -- 1.1%
472,000 Eisai Co. Ltd................. 9,271,646
375,000 Fuji Bank Ltd................. 5,460,067
450,000 Matsushita Electric Industrial
Co.......................... 7,327,474
450,000 Nomura Securities Co. Ltd..... 6,745,929
400,000 Sankyo Co. Ltd................ 11,303,523
375,000 Sanwa Bank Ltd................ 5,104,678
370,000 Takeda Chemical Industries
Ltd......................... 7,746,187
450,000 Toyota Motor Corp............. 12,910,312
---------------
65,869,816
---------------
HEALTH CARE -- 9.6%
1,110,000 Abbott Laboratories........... 56,332,500
1,015,000 American Home Products
Corp........................ 59,504,375
430,000 Bristol-Myers Squibb Co....... 46,762,500
745,000 Columbia/HCA Healthcare
Corp........................ 30,358,750
1,150,000 Johnson & Johnson............. 57,212,500
865,000 Merck & Co., Inc.............. 68,551,250
600,000 Pfizer, Inc................... 49,725,000
725,000 Pharmacia & Upjohn, Inc....... 28,728,125
650,000 Rhone-Poulenc S.A. ADR........ 22,018,750
800,000 SmithKline Beecham PLC ADR.... 54,400,000
*870,000 Tenet Healthcare Corp......... 19,031,250
672,200 Vencor, Inc................... 21,258,325
700,000 Warner-Lambert Co............. 52,500,000
---------------
566,383,325
---------------
INDUSTRIAL MATERIALS -- 4.0%
245,000 Aluminum Company of America... 15,618,750
800,000 Crown Cork & Seal, Inc........ 43,500,000
765,000 Dow Chemical Co............... 59,956,875
450,000 du Pont (ei) de Nemours &
Co.......................... 42,468,750
400,000 International Paper Co........ 16,150,000
800,000 Phelps Dodge Corp............. 54,000,000
---------------
231,694,375
---------------
MANUFACTURING -- 1.6%
550,000 Caterpillar, Inc.............. 41,387,500
400,000 Ingersoll-Rand Co............. 17,800,000
420,000 Minnesota Mining &
Manufacturing Co............ 34,807,500
---------------
93,995,000
---------------
MEDIA & SERVICES -- 2.7%
1,070,000 Gannett Co., Inc.............. 80,116,250
1,111,088 Gaylord Entertainment Co.
Class A..................... 25,416,127
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

108
<PAGE>
<TABLE>
<CAPTION>
SHARES MARKET
----------- VALUE
---------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
MEDIA & SERVICES --
(CONTINUED)
*1,600,000 Viacom, Inc. Class B.......... $ 55,800,000
---------------
161,332,377
---------------
RETAIL -- 4.0%
630,000 CVS Corp...................... 26,066,250
815,000 Home Depot, Inc. (The)........ 40,851,875
400,000 Saks Holding Inc.............. 10,800,000
915,000 Sears, Roebuck & Co........... 42,204,375
*900,000 Toys "R" Us, Inc.............. 27,000,000
3,710,000 Wal-Mart Stores, Inc.......... 84,866,250
---------------
231,788,750
---------------
SOFTWARE & SERVICES -- 3.6%
250,000 Automatic Data Processing,
Inc......................... 10,718,750
*510,000 Computer Sciences Corp........ 41,883,750
*1,175,000 Electronic Data Systems
Corp........................ 50,818,750
1,200,000 First Data Corp............... 43,800,000
*590,000 Microsoft Corp................ 48,748,750
*425,000 Oracle Systems Corp........... 17,743,750
---------------
213,713,750
---------------
TRANSPORTATION -- 1.2%
1,700,000 Southwest Airlines Co......... 37,612,500
580,000 Union Pacific Corp............ 34,872,500
---------------
72,485,000
---------------
UTILITIES -- 1.2%
1,250,000 SBC Communications, Inc....... 64,687,500
120,000 Texas Utilities Co............ 4,890,000
---------------
69,577,500
---------------
Total common stocks........... $ 3,871,103,842
---------------
---------------
<CAPTION>

PRINCIPAL
AMOUNT
-----------
<C> <S> <C>
U.S. TREASURIES & FEDERAL AGENCIES -- 24.0%
U.S. TREASURY BONDS -- 3.9%
$214,000,000 7.25% due 05/15/16.......... 225,970,732
---------------
U.S. TREASURY NOTES -- 16.2%
100,000,000 5.75% due 08/15/03.......... 97,000,000
100,000,000 5.88% due 10/31/98.......... 99,875,000
200,000,000 6.25% due 05/31/00.......... 200,875,000
100,000,000 6.50% due 08/15/05.......... 100,687,500
75,000,000 6.50% due 10/15/06.......... 75,421,875
175,000,000 7.50% due 11/15/01.......... 184,242,275
75,000,000 7.50% due 02/15/05.......... 80,226,600
110,000,000 7.75% due 12/31/99.......... 115,018,750
---------------
953,347,000
---------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION -- 1.9%
114,696,688 6.50% due
06/15/23-03/15/26........... 109,762,699
4,191,434 9.00% due
06/20/16-07/20/16........... 4,441,578
---------------
114,204,277
---------------
FEDERAL HOME LOAN MORTGAGE
CORPORATION -- 2.0%
123,765,015 6.50% due
08/01/25-05/01/26........... 118,330,930
---------------
Total U.S. treasuries &
Federal agencies............ $ 1,411,852,939
---------------
---------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- ---------------
<C> <S> <C>
CORPORATE BONDS AND NOTES -- 6.0%
COMPUTERS & OFFICE
EQUIPMENT -- 0.2%
Honeywell Inc.
$13,135,000 6.60% due 04/15/01.......... $ 13,145,272
---------------
ENERGY & SERVICES -- 0.3%
Husky Oil Ltd.
15,000,000 6.88% due 11/15/03.......... 14,913,510
---------------
FINANCIAL SERVICES -- 3.9%
Associates Corp. N.A.
15,000,000 6.50% due 10/15/02.......... 14,872,110
Bank of Boston Corp.
10,000,000 6.63% due 02/01/04.......... 9,785,450
Banponce Corp.
4,825,000 6.75% due 12/15/05.......... 14,064,566
Bayerische Landesbank NY
15,000,000 5.63% due 02/26/01.......... 14,574,375
Belgium Credit National
20,000,000 7.00% due 11/14/05.......... 19,400,000
Browning-Ferris Industries
15,000,000 6.10% due 01/15/03.......... 14,487,165
Chase Manhattan Corp.
10,000,000 8.50% due 02/15/02.......... 10,738,300
CIT Group Holdings
20,000,000 6.75% due 05/14/01.......... 20,221,740
Fairfax Financial Holdings
10,000,000 7.75% due 12/15/03.......... 10,248,640
First Interstate Bank
12,000,000 9.00% due 11/15/04.......... 12,775,056
Ford Motor Credit Co.
10,000,000 5.63% due 12/15/98.......... 9,889,980
General Motors Acceptance
Corp.
15,000,000 5.63% due 02/01/99.......... 14,816,310
Great Western Financial
10,000,000 8.63% due 12/01/98.......... 10,353,710
Home Savings America
15,000,000 6.00% due 11/01/00.......... 14,656,530
London Insurance Group
20,500,000 6.88% due 09/15/05.......... 20,131,246
Travelers Group, Inc. (The)
10,000,000 6.25% due 12/01/05.......... 9,434,130
Travelers/Aetna P&C
10,000,000 6.75% due 04/15/01.......... 10,044,290
---------------
230,493,598
---------------
HEALTH CARE -- 0.2%
Zeneca Group PLC
10,000,000 6.30% due 06/15/03.......... 9,743,750
---------------
INDUSTRIAL MATERIALS -- 0.3%
Phillips Electronics
15,000,000 7.20% due 06/01/26.......... 15,182,130
Postal Square LP
4,523,092 8.95% due 06/15/22.......... 5,337,294
---------------
20,519,424
---------------
MEDIA & SERVICES -- 0.5%
360 Communications Co.
15,000,000 7.13% due 03/01/03.......... 14,829,510
Tele-Communications, Inc.
15,000,000 7.25% due 08/01/05.......... 14,081,250
---------------
28,910,760
---------------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

109
<PAGE>
- --------------------------------------------------------------------------------
HARTFORD ADVISERS FUND, INC.
STATEMENT OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
----------- ---------------
<C> <S> <C>
CORPORATE BONDS AND NOTES -- 6.0%
UTILITIES -- 0.6%
Hydro Quebec
$15,000,000 7.38% due 02/01/03.......... $ 15,453,300
Pacific Gas & Electric
11,000,000 7.88% due 03/01/02.......... 11,489,764
Southern California Gas Co.
10,000,000 5.75% due 11/15/03.......... 9,380,200
---------------
36,323,264
---------------
Total corporate bonds and
notes....................... $ 354,049,578
---------------
---------------
FOREIGN GOVERNMENT BONDS -- 0.5%
City Of Naples Italy
20,000,000 7.52% due 07/15/06.......... 20,422,200
Thailand Kingdom
10,000,000 5.88% due 09/30/00.......... 9,744,610
---------------
Total foreign governments..... $ 30,166,810
---------------
---------------
MUNICIPAL BONDS -- 0.4%
FINANCIAL SERVICES -- 0.4%
Mount Sinai School of Medicine
NY
20,000,000 6.00% due 07/01/03.......... $ 19,343,300
---------------
---------------
SHORT-TERM SECURITES -- 2.8%
REPURCHASE AGREEMENTS
$59,656,000 Interest in $399,594,000 joint
repurchase agreement dated
12/31/96 with State Street
Bank 6.7693% due 01/02/97;
maturity amount $59,678,435;
(Collateralized by
$218,212,000 U.S. Treasury
Note 6.25% due 06/30/98 and
$280,160,000 U.S. Treasury
Strip (principal) 0% due
05/15/19)................... 59,656,000
102,480,000 Interest in $300,000,000 joint
repurchase agreement dated
12/31/96 with First Boston
6.75% due 01/02/97; maturity
amount $102,518,430;
(Collateralized by
$301,035,000 U.S. Treasury
Note 6.25% due 10/31/01).... 102,480,000
---------------
Total short-term securites.... $ 162,136,000
---------------
---------------
</TABLE>

<TABLE>
<CAPTION>
MARKET
VAULE
---------------
<S> <C> <C>
DIVERSIFICATION OF ASSETS:
Total common stocks (cost $2,927,719,303).... 65.8% $ 3,871,103,842
Total U.S. treasuries & Federal agencies
(cost $1,389,227,676)...................... 24.0 1,411,852,939
Total corporate bonds and notes (cost
$354,684,170).............................. 6.0 354,049,578
Total foreign government bonds (cost
$30,000,000)............................... 0.5 30,166,810
Total municipal bonds (cost $19,576,238)..... 0.4 19,343,300
Total short-term securities (cost
$162,136,000).............................. 2.8 162,136,000
------ ---------------
Total investment in securities
(Identified cost $4,883,343,387)........... 99.5 5,848,652,469
Excess of cash and receivables over
liabilities................................ 0.5 30,876,699
------ ---------------
Net assets (applicable to $2.16953 per share
based on 2,710,050,229 shares
outstanding)............................... 100.0% $ 5,879,529,168
------ ---------------
------ ---------------

SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $.10 per share; authorized
4,000,000,000 shares; outstanding 2,710,050,229
shares............................................. $ 271,005,023
Capital surplus...................................... 4,374,578,836
Undistributed net investment income.................. 527,117
Undistributed net realized gain on investments....... 268,109,110
Unrealized appreciation of investments............... 965,309,082
---------------
Net assets, applicable to shares outstanding......... $ 5,879,529,168
---------------
---------------
</TABLE>

* Non-income producing during period.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

110
<PAGE>
- --------------------------------------------------------------------------------
HARTFORD U.S. GOVERNMENT MONEY MARKET FUND, INC.
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
AMORTIZED
PRINCIPAL COST AND
AMOUNT VALUE
- ----------- -------------
<C> <S> <C>
U.S. TREASURIES & FEDERAL AGENCIES -- 83.3%
Federal Farm Credit Bank
$ 750,000 5.22% due 02/11/97.......... $ 745,541
850,000 5.23% due 03/10/97.......... 841,603
470,000 5.28% due 01/16/97.......... 468,966
970,000 5.55% due 01/03/97.......... 969,701
-------------
3,025,811
-------------
Federal Home Loan Bank
500,000 5.21% due 01/16/97.......... 498,915
500,000 5.21% due 02/13/97.......... 496,888
565,000 5.22% due 02/18/97.......... 561,068
1,000,000 5.31% due 03/10/97.......... 989,970
500,000 5.44% due 01/24/97.......... 498,262
-------------
3,045,103
-------------
Federal Home Loan Mortgage
Corp.
435,000 5.22% due 01/27/97.......... 433,360
500,000 5.22% due 02/11/97.......... 497,028
500,000 5.22% due 03/17/97.......... 494,563
-------------
1,424,951
-------------
Federal National Mortgage
Association
495,000 5.22% due 02/04/97.......... 492,560
500,000 5.22% due 04/03/97.......... 493,330
795,000 5.23% due 01/22/97.......... 792,577
500,000 5.24% due 03/13/97.......... 494,833
-------------
2,273,300
-------------
Total U.S. treasuries &
Federal agencies............ $ 9,769,165
-------------
-------------

<CAPTION>
AMORTIZED
PRINCIPAL COST AND
AMOUNT VALUE
- ----------- -------------
<C> <S> <C>

REPURCHASE AGREEMENT -- 16.8%
$ 1,970,000 Interest in $108,163,000 joint
repurchase agreement dated
12/31/96 with State Street
Bank 6.70% due 01/02/97;
maturity amount $1,970,733;
(Collateralized by
$53,860,000 U.S. Treasury
Note 7.5% due 02/15/05 and
$54,303,000 U.S. Treasury
Note 8.875% due 08/15/17)... $ 1,970,000
-------------
Total short-term securities... $ 11,739,165
-------------
-------------
</TABLE>

<TABLE>
<S> <C> <C>
DIVERSIFICATION OF ASSETS:
Total investment in securities
(Identified cost $11,739,165)*............. 100.1% $ 11,739,165
Excess of liabilities over cash and
receivables................................ (0.1) (9,023)
------ ------------
Net assets (Applicable to $1.00 per share
based on 11,730,142 shares outstanding).... 100.0% $ 11,730,142
------ ------------
------ ------------

SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share; authorized
100,000,000 shares; outstanding 11,730,142
shares............................................. $ 1,173,014
Capital surplus...................................... 10,557,128
------------
Net assets, applicable to shares outstanding......... $ 11,730,142
------------
------------
</TABLE>

* Aggregate cost for Federal income tax purposes.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

111
<PAGE>
- --------------------------------------------------------------------------------
Hartford Capital Appreciation Fund, Inc.
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES MARKET
----------- VALUE
--------------
<C> <S> <C>
COMMON STOCKS -- 89.2
AEROSPACE & DEFENSE -- 4.7%
341,100 Boeing Co..................... $ 36,284,513
1,012,900 Loral Space &
Communications.............. 18,612,038
380,200 Northrop Grumman Corp......... 31,461,550
357,000 Oregon Matallurgical Corp..... 11,513,250
971,500 Precision Castparts Corp...... 48,210,688
138,628 SPS Technologies, Inc......... 8,906,849
129,900 Wyman-Gordon Co............... 2,890,275
--------------
157,879,163
--------------
BUSINESS SERVICES -- 2.5%
675,100 Allegiance Corp............... 18,649,638
269,600 Corporate Express, Inc........ 7,936,350
*398,100 Ionics, Inc................... 19,108,800
801,400 Manpower, Inc................. 26,045,500
515,600 United Auto Group, Inc........ 13,276,700
--------------
85,016,988
--------------
COMMUNICATIONS EQUIPMENT --
6.5%
*378,600 Apt Satellite Holdings ADR.... 5,300,400
*600,000 Cisco Systems, Inc............ 38,175,000
970,000 ECI Telecom Ltd............... 20,612,500
*550,000 Geotek Communication.......... 3,918,750
956,100 Lucent Technologies, Inc...... 44,219,625
375,000 Network General Corp.......... 11,343,750
*917,400 Oak Industries, Inc........... 21,100,200
503,800 Omnipoint Corp................ 9,698,150
*313,600 Plantronics, Inc.............. 14,112,000
*200,000 Premisys Communications....... 6,750,000
550,000 Proxim, Inc................... 12,650,000
767,400 Scitex Corp. Ord.............. 7,290,300
*500,000 TCSI Corp..................... 3,125,000
*288,400 3 Com Corp.................... 21,161,350
--------------
219,457,025
--------------
COMPUTERS & OFFICE
EQUIPMENT -- 4.9%
*1,330,000 Adaptec, Inc.................. 53,200,000
*600,000 Computer Horizons Corp........ 23,100,000
650,000 EMC Corp...................... 21,531,250
500,000 Hewlett-Packard Co............ 25,125,000
*625,000 Symbol Technologies, Inc...... 27,656,250
*2,524,000 Unisys Corp................... 17,037,000
--------------
167,649,500
--------------
CONSUMER NON-DURABLES -- 1.7%
434,600 First Brands Corp............. 12,331,775
*631,600 Quiksilver, Inc............... 13,500,450
*344,500 Revlon Inc. Class A........... 10,291,938
125,000 Sunbeam Corp.................. 3,218,750
400,000 Tommy Hilfiger Corp........... 19,200,000
--------------
58,542,913
--------------
CONSUMER SERVICES -- 4.6%
1,214,500 America West Airlines Class
B........................... 19,280,188
395,100 Berg Electronics Corp......... 11,606,063
660,000 Cheesecake Factory............ 11,962,500
741,300 Harman International.......... 41,234,813
701,900 Landry's Seafood
Restaurants................. 15,003,113
*1,550,000 Mirage Resorts................ 33,518,750
*265,851 Planet Hollywood
International, Inc.......... 5,250,557

<CAPTION>
SHARES MARKET
----------- VALUE
--------------
<C> <S> <C>
CONSUMER SERVICES --
(CONTINUED)
458,100 Royal Caribbean............... $ 10,708,088
316,400 Starbucks Coffee.............. 9,056,950
--------------
157,621,022
--------------
ELECTRONICS -- 5.6%
*325,000 Analog Devices, Inc........... 11,009,375
*800,000 Credence Systems Corp......... 16,100,000
*214,600 DSP Communications, Inc....... 4,157,875
131,000 Etec Systems, Inc............. 5,010,750
610,000 Measurex Corp................. 14,640,000
500,750 Molex, Inc.................... 17,839,219
*715,000 Silicon Valley Group.......... 14,389,375
*746,600 Solectron Corp................ 39,849,775
825,000 Stewart & Stevenson........... 24,028,125
718,228 Thomas & Betts Corp........... 31,871,368
400,000 Vishay Intertechnology........ 9,350,000
--------------
188,245,862
--------------
ENERGY AND SERVICES -- 5.5%
548,800 Alberta Energy................ 13,171,200
660,600 Ashland, Inc.................. 28,983,825
*1,200,000 Input Output Inc.............. 22,200,000
620,000 J Ray McDermott S.A........... 13,640,000
155,000 Pride Petroleum Services,
Inc......................... 3,603,750
520,300 Repsol S.A. ADR............... 19,836,438
*586,000 Rowan Cos..................... 13,258,250
451,935 Transocean Offshore........... 28,302,429
1,000,000 USX-Marathon Group............ 23,875,000
720,000 YPF S.A. Sponsored ADR........ 18,180,000
--------------
185,050,892
--------------
FINANCIAL SERVICES -- 14.1%
730,000 Ace Ltd....................... 43,891,250
616,000 Allstate Corp................. 35,651,000
556,000 Ambac, Inc.................... 36,904,500
350,000 Bank of Boston Corp........... 22,487,500
*966,400 Dime Bancorp, Inc............. 14,254,400
652,800 First USA Inc................. 22,603,200
1,000,000 Greenpoint Financial Corp..... 47,250,000
*863,940 Imperial Credit Industries.... 18,142,740
519,100 Legg Mason, Inc............... 19,985,350
400,070 Long Island Bancorp........... 14,002,450
432,900 MBIA, Inc..................... 43,831,125
994,600 Morgan Stanley Group.......... 56,816,525
803,800 North American Mortgage
Company..................... 15,875,050
700,000 Peoples Bank.................. 20,212,500
925,000 The Money Store............... 25,553,125
637,500 United Cos Financial Corp..... 16,973,438
570,000 Washington Mutual............. 24,688,125
--------------
479,122,278
--------------
FOREIGN SECURITIES -- 3.2%
799,500 Amersham International PLC.... 15,734,122
121,500 Avenor, Inc................... 1,826,324
737,000 Banyu Pharmaceutical Co....... 10,286,378
1,856,000 Eisai Co. Ltd................. 36,457,998
910,000 Sankyo Co., Ltd............... 25,715,515
36,325 Sulzer AG PC.................. 19,370,145
--------------
109,390,482
--------------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

112
<PAGE>
<TABLE>
<CAPTION>
SHARES MARKET
----------- VALUE
--------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
HEALTH CARE -- 13.6%
870,000 Abbott Laboratories........... $ 44,152,500
*595,000 Apria Healthcare.............. 11,156,250
448,800 Bard (C.R.), Inc.............. 12,566,400
852,300 Bergen Brunswig Corp. Class
A........................... 24,290,550
*1,075,000 Biomet, Inc................... 16,259,375
*650,000 Coventry Corp................. 6,022,656
1,169,800 Depuy, Inc.................... 23,688,450
147,500 Ergo Science Corp............. 1,935,938
*145,000 Genetics Institute-ADR........ 12,288,750
599,000 Genzyme Corp.................. 13,028,250
*576,800 Haemonetics................... 10,887,100
123,100 HEALTHSOUTH Rehabilitation
Corp........................ 4,754,738
*600,000 IDX Systems Corp.............. 17,175,000
641,700 Kinetic Concepts, Inc......... 7,860,825
*901,700 Magellan Health Services,
Inc......................... 20,175,538
420,700 McKesson...................... 23,559,200
755,900 Medpartners................... 15,873,900
*1,200,000 Multicare Cos., Inc........... 24,300,000
213,700 National Surgery Centers,
Inc......................... 8,120,600
1,082,800 Novacare, Inc................. 11,910,800
*1,050,000 Perrigo....................... 9,581,250
640,700 Perseptive Biosystems, Inc.... 4,444,856
510,000 Rhone-Poulenc Rorer........... 39,843,750
981,629 Rhone-Poulenc S.A............. 33,252,682
220,000 Shared Medical Systems
Corp........................ 10,835,000
*970,500 Tenet Healthcare Corp......... 21,229,688
*859,700 Vencor, Inc................... 27,188,013
295,000 Xomed Surgical................ 5,900,000
--------------
462,282,059
--------------
INDUSTRIAL MATERIALS -- 2.9%
623,000 Abitibi Price, Inc............ 9,812,250
50,000 American Pad & Paper, Inc..... 1,131,250
490,000 Owens Corning Fiberglass
Corp........................ 20,886,250
*1,800,000 Repap Enterprises............. 5,006,250
*309,500 Titan Exploration, Inc........ 3,714,000
*603,500 Titanium Metals Corp.......... 19,840,063
*971,300 UCAR Intl. Corp............... 36,545,163
--------------
96,935,226
--------------
MANUFACTURING -- 0.4%
755,000 Cognex Corp................... 13,967,500
--------------
MEDIA & SERVICES -- 2.5%
*3,011,600 Mobil Media Corp.............. 1,317,575
206,000 National Education Corp....... 3,141,500
*850,000 Pronet, Inc................... 3,718,750
471,140 TCI Satellite Entertainment
Class A..................... 4,652,508
*920,000 Tele-Comm Liberty Media Group
A........................... 26,277,500
*1,461,400 Tele-Communications, Inc.
Class A..................... 19,089,538
412,100 Univision Communication....... 15,247,700
*449,900 Western Wireless Corp. Class
A........................... 6,242,363
250,000 Westwood One, Inc............. 4,156,250
--------------
83,843,684
--------------
<CAPTION>
SHARES MARKET
----------- VALUE
--------------
<C> <S> <C>
REAL ESTATE -- 0.7%
*986,400 Castle & Cooke, Inc........... $ 15,659,100
380,800 Thornburg Mortgage Asset
Corp........................ 8,139,600
--------------
23,798,700
--------------
RETAIL -- 2.9%
*141,200 American Eagle Outfitters..... 1,111,950
*568,000 Gymboree Corp................. 12,993,000
450,000 Home Depot, Inc. (The)........ 22,556,250
560,000 Mercantile Stores, Inc........ 27,650,000
*701,000 Saks Holding, Inc............. 18,927,000
335,000 Limited, Inc. (The)........... 6,155,625
*600,000 Urban Outfitters, Inc......... 7,800,000
--------------
97,193,825
--------------
SOFTWARE & SERVICES -- 7.2%
*157,500 BBN Corp...................... 3,543,750
*860,000 BMC Software, Inc............. 35,582,500
401,800 Cadence Design System......... 15,971,550
271,200 Cognos Corp................... 7,627,500
*743,900 Compuware Corp................ 37,287,988
200,000 DST Systems, Inc.............. 6,275,000
530,218 First Data Corp............... 19,352,957
*482,500 Integrated Systems, Inc....... 12,545,000
1,154,000 Macromedia, Inc............... 20,772,000
*785,000 Mercury Interactive Corp...... 10,205,000
*425,000 Oracle Systems Corp........... 17,743,750
*412,400 Parametric Technology Corp.... 21,187,050
*281,100 Policy Management Systems
CP.......................... 12,965,738
*198,500 Rational Software Corp........ 7,853,156
*335,200 Sterling Software, Inc........ 10,600,700
*232,000 Workgroup Technology Corp..... 1,537,000
*263,600 Xeikon NV ADR................. 1,977,000
--------------
243,027,639
--------------
TRANSPORTATION -- 2.3%
*370,000 AMR Corp...................... 32,606,250
1,000,000 Canadian Pacific Ltd.......... 26,500,000
*560,780 M.S. Carriers................. 8,972,480
615,000 Werner Enterprises, Inc....... 11,146,875
--------------
79,225,605
--------------
UTILITIES -- 3.4%
1,550,000 Calpine Corp.................. 31,000,000
*650,000 MFS Communications Co.,
Inc......................... 35,425,000
320,000 Portugal Telecom S.A. ADR..... 9,040,000
1,471,800 Worldcom, Inc................. 38,358,788
--------------
113,823,788
--------------
Total common stocks........... $3,022,074,151
--------------
--------------
CONVERTIBLE PREFERRED STOCKS -- 1.1%
AEROSPACE & DEFENSE -- 0.7%
*1,228,000 Cooper Industries............. 23,792,500
--------------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

113
<PAGE>
- --------------------------------------------------------------------------------
HARTFORD CAPITAL APPRECIATION FUND, INC.
STATEMENT OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES MARKET
----------- VALUE
--------------
<C> <S> <C>
CONVERTIBLE PREFERRED STOCKS -- (CONTINUED)
ENERGY & SERVICES -- 0.4%
472,100 Sun Co........................ $ 11,861,501
--------------
Total convertible preferred
stocks...................... $ 35,654,001
--------------
--------------

PREFERRED STOCKS -- 0.6%
ELECTRONICS
350,000 Nokia PFD ADS................. $ 20,168,750
--------------
--------------
<CAPTION>

PRINCIPAL
AMOUNT
-----------
<C> <S> <C>
CORPORATE NOTES -- 0.5%
FOOD, BEVERAGE & TOBACCO
Unisys Corp.***
$15,000,000 12.00% due 04/15/03......... $ 16,050,000
--------------
--------------
<CAPTION>

SHARES
-----------
<C> <S> <C>
WARRANTS -- 0.1%
*920,200 Nordic American Tanker........ $ 4,140,900
--------------
--------------
<CAPTION>

PRINCIPAL
AMOUNT
-----------
<C> <S> <C>
SHORT-TERM SECURITIES -- 8.3%
U.S. TREASURY BILL -- 0.2%
$ 5,000,000 5.06% due 06/26/97.......... 4,876,433
--------------
REPURCHASE AGREEMENTS -- 8.1%
174,848,000 Interest in $399,594,000 joint
repurchase agreement dated
12/31/96 with State Street
Bank 6.7693% due 01/02/97;
maturity amount
$174,913,755;
(Collateralized by
$218,212,000 U.S. Treasury
Note 6.25% due 06/30/98 and
$280,160,000 U.S. Treasury
Strip (principal) 0% due
05/15/19)................... 174,848,000
100,672,000 Interest in $300,000,000 joint
repurchase agreement dated
12/31/96 with First Boston
6.75% due 01/02/97; maturity
amount $100,709,752;
(Collateralized by
$301,035,000 U.S. Treasury
Note 6.25% due 10/31/01).... 100,672,000
--------------
275,520,000
--------------
Total short-term securities... $ 280,396,433
--------------
--------------
</TABLE>

MARKET
VALUE
--------------
DIVERSIFICATION OF ASSETS:
Total common stocks (cost $2,527,790,617).... 89.2 % $3,022,074,151
Total convertible preferred stocks (cost
$31,208,778)............................... 1.1 35,654,001
Total non-convertible preferred stocks (cost
$16,381,570)............................... 0.6 20,168,750
Total corporate notes (cost $15,293,984)..... 0.5 16,050,000
Total warrants (cost $4,586,075)............. 0.1 4,140,900
Total short-term securities (cost
$280,396,433).............................. 8.3 280,396,433
------ --------------
Total investment in securities
(Identified cost $2,875,657,457)........... 99.8 3,378,484,235
Excess of cash and receivables over
liabilities................................ 0.2 8,185,553
------ --------------
Net assets (applicable to $3.91433 per share
based on 865,198,432 shares outstanding)... 100.0 % $3,386,669,788
------ --------------
------ --------------

SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share; authorized
2,000,000,000 shares; outstanding 865,198,432
shares............................................. $ 86,519,843
Capital surplus...................................... 2,536,015,068
Distribution in excess of net investment income...... (1,027,494)
Undistributed net realized gain on investments....... 261,597,674
Unrealized appreciation of investments............... 502,826,778
Unrealized depreciation of futures contracts......... (322,442)
Unrealized appreciation of forward foreign currency
contracts (Note 2)................................. 1,053,529
Unrealized appreciation of translation on other
assets and liabilities in foreign currencies....... 6,832
--------------
Net assets, applicable to shares outstanding......... $3,386,669,788
--------------
--------------

* Non-income producing during period.
** The Fund had 650 Russell 2000 March futures contracts open at December 31,
1996. The contracts had a market value of $117,893,750 at December 31, 1996.
*** Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.

FORWARD FOREIGN CURRENCY CONTRACTS -- NOTE 2 -- OUTSTANDING AT DECEMBER 31, 1996

<TABLE>
<CAPTION>
UNREALIZED
TOTAL AGGREGATE DELIVERY APPRECIATION
DESCRIPTION VALUE FACE VALUE DATE (DEPRECIATION)
- ------------------------------ ---------- ---------- --------- -------------
<S> <C> <C> <C> <C>
French Francs (Sell) $25,310,813 $25,000,000 06/30/97 $ (310,813)
Japanese Yen (Sell) 28,933,082 30,000,000 04/23/97 1,066,918
Japanese Yen (Sell) 19,702,576 20,000,000 05/26/97 297,424
-------------
$ 1,053,529
-------------
-------------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

114
<PAGE>
- --------------------------------------------------------------------------------
Hartford Mortgage Securities Fund, Inc.
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------- --------------
<C> <S> <C>
U.S. TREASURIES & FEDERAL AGENCIES -- 78.3%
U.S. TREASURY NOTES -- 0.8%
$ 1,500,000 5.25% due 12/31/97.......... $ 1,490,157
1,000,000 6.25% due 10/31/01.......... 1,000,625
--------------
$ 2,490,782
--------------
FEDERAL HOME LOAN MORTGAGE
CORPORATION -- 25.7%
Pass-Throughs
4,336,494 6.00% due 02/01/11 -
03/01/11.................... 4,175,965
17,119,433 6.50% due 02/01/09 -
06/01/26.................... 16,531,773
23,195,925 7.00% due 12/01/10 -
03/01/26.................... 22,865,736
10,874,607 7.50% due 01/01/24 -
01/01/27.................... 10,901,623
6,551,157 8.00% due 02/01/13 -
11/01/24.................... 6,719,828
5,771,032 8.50% due 07/01/01 -
05/01/25.................... 5,985,146
5,643,753 9.00% due 10/15/01 -
10/01/06.................... 5,889,887
6,435,620 9.50% due 11/01/08......... 6,832,891
3,548,703 10.00% due 09/01/05 -
11/01/20.................... 3,873,224
--------------
83,776,073
--------------
COLLATERALIZED MORTGAGE
OBLIGATIONS -- 1.4%
Federal Home Loan Mortgage
Corp. Series 1033, Class E
503,972 8.10% due 12/15/04......... 506,351
Fanniemae Strip Series D,
Class 2
978,898 11.00% due 04/01/09......... 1,098,189
Federal National Mortgage
Association Series 89-87,
Class G
391,392 8.75% due 02/25/18......... 390,218
Federal National Mortgage
Association Series 90-108,
Class E
301,099 8.50% due 06/25/19......... 305,920
Federal National Mortgage
Association Series 91-134,
Class H
526,965 7.95% due 03/25/20......... 531,707
Federal National Mortgage
Association Series 91-G8,
Class D
2,064,174 8.50% due 03/25/19......... 2,084,526
--------------
4,916,911
--------------
FEDERAL NATIONAL MORTGAGE
ASSOCIATION -- 26.5%
Pass-Throughs
588,933 5.50% due 04/01/11.......... 554,322
5,402,124 6.00% due 02/01/26.......... 5,015,537
1,981,980 6.20% due 01/01/06.......... 1,893,465
19,190,073 6.50% due 02/01/11 -
07/01/26.................... 18,438,097
13,667,807 7.00% due 05/01/09 -
06/01/26.................... 13,460,793
14,519,347 7.50% due 01/01/12 -
01/01/27.................... 14,576,793
15,467,234 8.00% due 04/01/22 -
01/01/27.................... 15,767,541
7,505,003 8.50% due 06/01/24 -
11/01/26.................... 7,799,528
8,247,902 9.00% due 05/01/21 -
06/01/25.................... 8,741,329
--------------
86,247,405
--------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION -- 23.9%
Pass-Throughs
11,704,162 7.00% due 01/15/24 -
09/15/26.................... 11,459,691
30,642,805 7.50% due 11/15/09 -
01/01/27.................... 30,734,208
20,979,555 8.00% due 02/15/01 -
12/29/26.................... 21,450,457
3,411,531 8.50% due 06/15/17 -
02/15/25.................... 3,555,333
2,294,258 9.00% due 01/15/25 -
12/15/25.................... 2,417,758
4,007,636 9.50% due 10/15/09 -
11/15/09.................... 4,376,498

<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------- --------------
<C> <S> <C>
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION -- (CONTINUED)
$ 2,349,643 10.00% due 11/15/09 -
05/15/13.................... $ 2,590,286
660,828 11.00% due 02/15/10 -
09/15/10.................... 744,026
81,745 11.25% due 01/15/01......... 87,921
116,888 12.00% due 05/15/15......... 132,700
74,704 12.50% due 06/15/14 -
08/15/15.................... 86,234
42,849 13.00% due 11/15/14......... 49,378
8,658 13.50% due 07/15/14......... 10,047
--------------
77,694,537
--------------
Total U.S. treasuries &
Federal agencies............ $ 255,125,708
--------------
--------------
CORPORATE NOTES -- 1.0%
FINANCIAL SERVICES
Capital Holding Corp.
3,000,000 0.00% due 02/07/97.......... $ 3,091,800
--------------
--------------
ASSET-BACKED SECURITIES -- 1.1%
Corestates Home Equity Trust
Series 94-1, Class A
3,525,605 6.65% due 05/15/09.......... $ 3,537,380
--------------
--------------
<CAPTION>
COLLATERALIZED MORTGAGE OBLIGATIONS -- 16.9%
<C> <S> <C>
Bear Stearns Mortgage
Securities, Inc. Series 95-1,
Class 1A
4,240,254 6.47% due 05/25/10.......... 4,131,678
Chase Mortgage Finance Corp.
Series 93-C2, Class 2A-3
3,907,530 8.25% due 01/25/24.......... 3,957,523
CMC Securities Corp., Series
92-D, Class D-2L
460,081 7.20% due 12/25/08.......... 461,075
Collateralized Mortgage
Obligation Trust Series 52,
Class A
802,740 0.00% due 05/01/17.......... 561,918
Countrywide Mortgage Backed
Securities, Inc. Series 93-C,
Class A1
1,902,890 6.50% due 01/25/24.......... 1,898,494
DLJ Mortgage Acceptance
Corporation Series 96-TD,
Class A
1,163,558 6.88% due 09/29/23.......... 1,105,381
DLJ Mortgage Acceptance
Corporation Series 96-I, B1
512,343 7.25% due 09/25/11.......... 503,698
DLJ Mortgage Acceptance
Corporation Series 96-I, B2
170,781 7.25% due 09/25/11.......... 161,975
GE Capital Mortgage Services,
Inc. Series 94-21, Class A
8,027,019 6.50% due 08/25/09.......... 7,867,843
GE Capital Mortgage Services,
Inc. Series 94-26, Class A
8,092,516 7.01% due 07/25/09.......... 8,088,114
GE Capital Mortgage Services,
Inc. Series 96-1, Class B2
609,941 6.75% due 02/25/11.......... 581,425
GE Capital Mortgage Services,
Inc. Series 96-1, Class M
1,827,881 6.75% due 02/25/11.......... 1,764,953
GE Capital Mortgage Services,
Inc. Series 96-10, Class B1
610,837 6.75% due 06/25/11.......... 584,861
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

115
<PAGE>
- --------------------------------------------------------------------------------
HARTFORD MORTGAGE SECURITIES FUND, INC.
STATEMENT OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------- --------------
<C> <S> <C>
COLLATERALIZED MORTGAGE
OBLIGATIONS -- (CONTINUED)
GE Capital Mortgage Services,
Inc. Series 96-10, Class B2
$ 610,837 6.75% due 06/25/11.......... $ 581,751
Housing Securities, Inc.
Series 93-E, Class E15
4,619,952 10.00% due 09/25/08......... 4,923,210
PNC Mortgage Securities Corp.
Series 96-2, Class B1
633,668 6.60% due 02/25/11.......... 606,935
PNC Mortgage Securities Corp.
Series 96-2, Class B2
211,223 6.60% due 02/25/11.......... 200,926
PNC Mortgage Securities Corp.
Series 96-2, Class B3
337,956 6.60% due 02/25/11.......... 312,187
Prudential Home Mortgage
Securities Co. Series 96-3,
Class B1
1,212,532 6.75% due 03/25/11.......... 1,165,421
Prudential Home Mortgage
Securities Co. Series 96-3,
Class B2
605,781 6.75% due 03/25/11.......... 572,519
Prudential Home Mortgage
Securities Co. Series 93-H,
Class 2B
4,863,581 6.76% due 09/28/08.......... 4,735,912
Residential Funding Mortgage
Sec I Series 95-S15, Class M3
1,313,748 7.00% due 10/25/10.......... 1,255,456
Residential Funding Mortgage
Sec I Series 95-S18, Class M3
743,469 7.00% due 11/25/10.......... 710,289
Residential Funding Mortgage
Sec I Series 96-S11, Class M3
281,525 7.00% due 04/25/11.......... 268,456
Residential Funding Mortgage
Sec I Series 96-S5, Class M3
579,746 6.75% due 02/25/11.......... 545,235
Residential Funding Mortgage
Sec I Series 95-S19, Class M3
575,072 7.00% due 12/25/10.......... 548,375
Residential Funding Mortgage
Sec I Series 96-S8, Class M3
555,599 6.75% due 03/25/11.......... 522,526
Residential Funding Mortgage
Sec I Series 96-S17, Class M3
598,871 7.25% due 07/25/11.......... 576,787
Residential Funding Mortgage
Sec I Series 96-S19, Class M3
521,079 7.50% due 09/25/11.......... 508,052
Ryland Acceptance Corp. Series
82, Class 1
385,057 10.25% due 09/13/11......... 386,380
Structured Asset Securities
Corp. Series 96-CFL, Class D
5,000,000 7.03% due 02/25/28.......... 4,910,970
--------------
Total collateralized mortgage
obligations................. $ 55,000,325
--------------
--------------
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------- --------------
<C> <S> <C>
SHORT-TERM SECURITIES -- 10.9%

COMMERCIAL PAPER -- 6.1%
$10,000,000 Smith Barney Corp.
5.45% due 01/10/97.......... $ 9,986,375
10,000,000 Smith Barney Corp.
5.45% due 01/09/97.......... 9,987,889
--------------
$ 19,974,264
--------------
REPURCHASE AGREEMENT -- 4.8%
15,447,000 Interest in $108,163,000 joint
repurchase agreement dated
12/31/96 with State Street
Bank 6.70% due 01/02/97;
maturity amount $15,452,750;
(Collateralized by
$53,860,000 U.S. Treasury
Note 7.5% due 02/15/05 and
$54,303,000 U.S. Treasury
Note 8.875% due 08/15/17)... 15,447,000
--------------
Total short-term securities... $ 35,421,264
--------------
--------------
</TABLE>

<TABLE>
<S> <C> <C>
DIVERSIFICATION OF ASSETS:
Total U.S. treasuries & Federal agencies
(cost $263,510,647)........................ 78.3% $255,125,708
Total corporate notes (cost $3,204,548)...... 1.0 3,091,800
Total asset-backed securities (cost
$3,481,027)................................ 1.1 3,537,380
Total collateralized mortgage obligations
(cost $45,270,675)......................... 16.9 55,000,325
Total short-term securities (cost
$35,421,264)............................... 10.9 35,421,264
-------- -------------
Total investment in securities
(Identified cost $350,888,161)............. 108.2 352,176,477
Excess of liabilities over cash and
receivables................................ (8.2) (26,681,294)
-------- -------------
Net assets (applicable to $1.05576 per share
based on 308,302,596 shares outstanding)... 100.0% $325,495,183
-------- -------------
-------- -------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share; authorized
800,000,000 shares; outstanding 308,302,596 shares... $ 30,830,260
Capital surplus........................................ 305,843,809
Undistributed net investment income.................... 179,286
Net realized loss on investments....................... (12,646,488)
Unrealized appreciation of investments................. 1,288,316
-------------
Net assets, applicable to shares outstanding........... $325,495,183
-------------
-------------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

116
<PAGE>
- --------------------------------------------------------------------------------
Hartford Index Fund, Inc.
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES MARKET
----------- VALUE
-------------
<C> <S> <C>
COMMON STOCKS -- 99.1%
AEROSPACE & DEFENSE -- 2.6%
30,700 Allied Signal, Inc............ $ 2,056,900
38,999 Boeing Co..................... 4,148,519
6,900 General Dynamics Corp......... 486,450
21,000 Lockheed Martin Corp.......... 1,921,500
23,100 McDonnell Douglas Corp........ 1,478,400
6,300 Northrop Grumman Corp......... 521,325
25,700 Raytheon Co................... 1,236,813
23,800 Rockwell International
Corp........................ 1,448,825
9,000 Textron, Inc.................. 848,250
26,100 United Technologies Corp...... 1,722,600
-------------
15,869,582
-------------
BUSINESS SERVICES -- 1.1%
14,200 Alco Standard Corp............ 733,075
23,100 Browning Ferris Industries,
Inc......................... 606,375
9,000 DeLuxe Corp................... 294,750
16,400 Donnelley (R.R.) & Sons Co.... 514,550
4,100 Fleming Companies, Inc........ 70,725
9,100 Fluor Corp.................... 571,025
4,400 Foster Wheeler Corp........... 163,350
5,800 Grainger (W.W.), Inc.......... 465,450
3,400 John H. Harland Co............ 112,200
10,900 Moore Corp. Ltd............... 222,088
5,200 National Service Industries,
Inc......................... 194,350
6,300 Safety Kleen Corp............. 103,163
7,300 Supervalu, Inc................ 207,138
19,400 Sysco Corp.................... 632,925
52,700 WMX Technologies, Inc......... 1,719,338
-------------
6,610,502
-------------
COMMUNICATIONS EQUIPMENT --
2.9%
*6,600 Andrew Corp................... 350,213
21,100 Bay Networks, Inc............. 440,463
*17,000 Cabletron Systems, Inc........ 565,250
*70,600 Cisco Systems, Inc............ 4,491,925
*12,700 DSC Communications............ 227,013
14,900 General Instrument............ 322,213
4,200 Harris Corp................... 288,225
69,200 Lucent Technologies........... 3,200,500
64,500 Motorola, Inc................. 3,958,688
28,100 Northern Telecom Ltd.......... 1,738,688
4,900 Raychem Corp.................. 392,613
8,400 Scientific Atlanta, Inc....... 126,000
19,500 Tellabs, Inc.................. 733,688
*18,900 3 Com Corp.................... 1,386,788
-------------
18,222,267
-------------
COMPUTERS & OFFICE
EQUIPMENT -- 3.9%
13,200 Amdahl Corp................... 160,050
13,500 Apple Computer, Inc........... 281,813
*29,400 Compaq Computer Corp.......... 2,182,950
*4,300 Data General Corp............. 62,350
19,600 Dell Computer Corp............ 1,041,250
*16,800 Digital Equipment Corp........ 611,100
25,300 EMC Corp. - Mass.............. 838,063
110,600 Hewlett-Packard Co............ 5,557,650
56,300 International Business
Machines Corp............... 8,501,300
16,100 Pitney Bowes, Inc............. 877,450
27,300 Seagate Technology, Inc....... 1,078,350
39,900 Sun Microsystems, Inc......... 1,024,931
*12,900 Tandem Computers.............. 177,375
*19,000 Unisys Corp................... 128,250

<CAPTION>
SHARES MARKET
----------- VALUE
-------------
<C> <S> <C>
COMPUTERS & OFFICE
EQUIPMENT -- (CONTINUED)
35,300 Xerox Corp.................... $ 1,857,663
-------------
24,380,545
-------------
CONSUMER DURABLES -- 2.3%
79,200 Chrysler Corp................. 2,613,600
8,900 Cooper Tire & Rubber Co....... 175,775
11,100 Dana Corp..................... 362,138
6,700 Echlin, Inc................... 211,888
128,900 Ford Motor Co................. 4,108,688
82,200 General Motors Corp........... 4,582,650
13,100 Genuine Parts Co.............. 582,950
16,900 Goodyear Tire & Rubber Co..... 868,238
12,800 ITT Industries................ 313,600
13,800 TRW, Inc...................... 683,100
-------------
14,502,627
-------------
CONSUMER NON-DURABLES -- 4.2%
3,000 Alberto Culver Co............. 144,000
14,400 Avon Products, Inc............ 822,600
9,500 Black & Decker Corp........... 286,188
3,100 Briggs & Stratton............. 136,400
3,100 Centex Corp................... 116,638
5,600 Clorox Co..................... 562,100
16,000 Colgate Palmolive Co.......... 1,476,000
3,900 Fleetwood..................... 107,250
8,400 Fruit of the Loom, Inc. Class
A........................... 318,150
60,100 Gillette Co................... 4,672,775
12,000 International Flavors &
Fragrances.................. 540,000
4,200 Kaufman & Broad Home Corp..... 54,075
30,700 Kimberly-Clark Corp........... 2,924,175
7,800 Liz Claiborne, Inc............ 301,275
17,400 Masco Corp.................... 626,400
10,900 Maytag Corp................... 215,275
17,300 Newell Co..................... 544,950
31,300 NIKE, Inc. Class B............ 1,870,175
74,100 Proctor & Gamble Co........... 7,965,750
2,500 Pulte Corp.................... 76,875
6,100 Reebok International Ltd...... 256,200
16,300 Rubbermaid, Inc............... 370,825
4,200 Russell Corp.................. 124,950
6,600 Snap-On, Inc.................. 235,125
2,200 Springs Industries, Inc....... 94,600
9,700 Stanley Works................. 261,900
5,400 Stride Rite Corp.............. 54,000
6,800 Tupperware Corp............... 364,650
6,900 V F Corp...................... 465,750
8,100 Whirlpool Corp................ 377,663
-------------
26,366,714
-------------
CONSUMER SERVICES -- 2.0%
10,700 Brunswick..................... 256,800
17,100 Darden Restaurants, Inc....... 149,625
36,200 Eastman Kodak................. 2,905,050
11,300 H & R Block, Inc.............. 327,700
*11,200 Harrah's Entertainment,
Inc......................... 222,600
9,400 Hasbro, Inc................... 365,425
14,000 HFS, Inc...................... 836,500
26,900 Hilton Hotels Corp............ 702,763
12,700 ITT Corp...................... 550,863
13,900 Marriott International,
Inc......................... 767,975
29,600 Mattel, Inc................... 821,400
75,900 McDonalds Corp................ 3,434,475
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

117
<PAGE>
- --------------------------------------------------------------------------------
HARTFORD INDEX FUND, INC.
STATEMENT OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES MARKET
----------- VALUE
-------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
CONSUMER SERVICES --
(CONTINUED)
4,900 Polaroid Corp................. $ 213,150
11,500 Ralston Purina Group.......... 843,813
14,100 Wendy's International, Inc.... 289,050
-------------
12,687,189
-------------
ELECTRONICS -- 6.3%
14,800 Advanced Micro Devices,
Inc......................... 381,100
23,900 AMP, Inc...................... 917,163
19,500 Applied Materials, Inc........ 700,781
5,100 E G & G, Inc.................. 102,638
24,400 Emerson Electric Co........... 2,360,700
179,000 General Electric.............. 17,698,625
5,400 General Signal Corp........... 230,850
89,200 Intel Corp.................... 11,679,625
4,500 Johnson Controls, Inc......... 372,938
14,000 LSI Logic Corp................ 374,500
22,700 Micron Technology, Inc........ 661,138
*15,100 National Semiconductor
Corp........................ 368,063
*19,000 Silicon Graphics, Inc......... 484,500
3,600 Tektronix, Inc................ 184,500
20,700 Texas Instruments, Inc........ 1,319,625
5,800 Thomas & Betts Corp........... 257,375
67,900 Westinghouse Electric Corp.... 1,349,513
-------------
39,443,634
-------------
ENERGY & SERVICES -- 9.2%
10,100 Amerada Hess Corp............. 584,538
54,100 Amoco Corp.................... 4,355,050
7,000 Ashland, Inc.................. 307,125
17,500 Atlantic Richfield Co......... 2,318,750
15,700 Baker Hughes, Inc............. 541,650
13,600 Burlington Resources, Inc..... 685,100
70,900 Chevron Corp.................. 4,608,500
11,400 Coastal Corp.................. 557,175
19,100 Dresser Industries, Inc....... 592,100
135,000 Exxon Corp.................... 13,230,000
13,600 Halliburton Co................ 819,400
2,700 Helmerich & Payne, Inc........ 140,738
5,300 Kerr-McGee Corp............... 381,600
3,700 Louisiana Land & Exploration
Co.......................... 198,413
6,000 McDermott International,
Inc......................... 99,750
42,800 Mobil Corp.................... 5,232,300
35,800 Occidental Petroleum Corp..... 836,825
11,400 Oryx Energy Co................ 282,150
16,400 Panenergy Corp................ 738,000
5,100 Pennzoil Co................... 288,150
28,600 Phillips Petroleum Co......... 1,265,550
*9,300 Rowan Cos., Inc............... 210,413
58,300 Royal Dutch Petroleum Co...... 9,954,725
9,900 Santa Fe Energy Resources,
Inc......................... 137,363
26,800 Schlumberger Ltd.............. 2,676,650
7,900 Sun Company, Inc.............. 192,563
28,800 Texaco, Inc................... 2,826,000
27,200 Union Pacific Resources
Group....................... 795,600
27,200 Unocal Corp................... 1,105,000
31,300 USX-Marathon Group............ 747,288
*5,800 Western Atlas, Inc............ 411,075
-------------
57,119,541
-------------
FINANCIAL SERVICES -- 14.6%
12,200 AON Corp...................... 757,925
17,600 Aetna Life & Casualty Co...... 1,408,000
11,500 H.F. Ahmanson & Co............ 373,750
<CAPTION>
SHARES MARKET
----------- VALUE
-------------
<C> <S> <C>
FINANCIAL SERVICES --
(CONTINUED)
4,900 Alexander & Alexander......... $ 85,138
49,800 Allstate Corp................. 2,882,175
51,500 American Express Co........... 2,909,750
23,700 American General Corp......... 968,738
52,700 American International Group,
Inc......................... 5,704,775
46,500 Banc One Corp................. 1,999,500
39,000 BankAmerica Corp.............. 3,890,250
16,600 Bank of Boston Corp........... 1,066,550
42,600 Bank of New York, Inc......... 1,437,750
8,900 Bankers Trust NY Corp......... 767,625
21,200 Barnett Banks, Inc............ 871,850
5,800 Beneficial Corp............... 367,575
16,800 Boatman Bancshares, Inc....... 1,083,600
47,700 Chase Manhattan Corp.......... 4,257,225
19,500 Chubb Corp. (The)............. 1,048,125
8,400 CIGNA Corp.................... 1,147,650
51,200 Citicorp...................... 5,273,600
11,700 Comerica, Inc................. 612,788
24,200 Corestates Financial Corp..... 1,255,375
17,500 Dean Witter, Discover & Co.... 1,159,375
19,400 Federal Home Loan Mortgage
Corp........................ 2,136,425
118,700 Federal National Mortgage
Association................. 4,421,575
11,500 Fifth Third Bancorp........... 722,344
14,600 First Bank System, Inc........ 996,450
34,700 First Chicago Corp............ 1,865,125
30,800 First Union Corp.............. 2,279,200
28,500 Fleet Financial Group, Inc.... 1,421,438
9,300 General Re Corp............... 1,467,075
6,200 Golden West Financial Corp.... 391,375
15,000 Great Western Financial
Corp........................ 435,000
14,900 Greentree Financial Corp...... 575,513
10,500 Household International
Corp........................ 968,625
8,300 Jefferson Pilot Corp.......... 469,988
24,500 Keycorp....................... 1,237,250
12,100 Lincoln National Corp......... 635,250
4,800 MBIA, Inc..................... 486,000
24,200 MBNA Corp..................... 1,004,300
8,000 Marsh and McLennan Cos.,
Inc......................... 832,000
14,100 Mellon Bank Corp.............. 1,001,100
17,900 Merrill Lynch & Co., Inc...... 1,458,850
6,600 MGIC Investment............... 501,600
20,300 Morgan (J.P.) & Co., Inc...... 1,981,788
16,600 Morgan Stanley Group.......... 948,275
24,100 National City Corp............ 1,081,488
31,300 NationsBank Corp.............. 3,059,575
40,300 Norwest Corp.................. 1,753,050
37,100 PNC Bank Corp................. 1,395,888
10,900 Providian Corp................ 559,988
6,000 Republic New York Corp........ 489,750
14,100 Safeco Corp................... 556,069
11,900 Salomon Brothers, Inc......... 560,788
9,300 St. Paul Cos., Inc............ 545,213
24,200 Sun Trust Banks, Inc.......... 1,191,850
7,900 Torchmark Corp................ 398,950
7,700 Transamerica Corp............. 608,300
69,600 Travelers Group, Inc. (The)... 3,158,100
8,200 UNUM Corp..................... 592,450
16,400 US Bancorp Oregon............. 736,975
4,000 USLife Corp................... 133,000
13,000 USF&G Corp.................... 271,375
18,000 Wachovia Corp................. 1,017,000
10,100 Wells Fargo & Co.............. 2,724,475
-------------
90,399,919
-------------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

118
<PAGE>
<TABLE>
<CAPTION>
SHARES MARKET
----------- VALUE
-------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
FOOD, BEVERAGE & TOBACCO --
8.4%
18,500 American Brands, Inc.......... $ 918,063
54,300 Anheuser Busch Cos., Inc...... 2,172,000
59,200 Archer-Daniels-Midland........ 1,302,400
7,500 Brown-Forman.................. 343,125
15,600 CPC International............. 1,209,000
25,400 Campbell Soup Co.............. 2,038,350
270,500 Coca-Cola Co.................. 14,235,063
26,200 Conagra, Inc.................. 1,303,450
4,100 Coors Adolph Class B.......... 77,900
17,000 General Mills Co.............. 1,077,375
40,000 H.J. Heinz Co................. 1,430,000
16,700 Hershey Foods Corp............ 730,625
22,900 Kellogg Co.................... 1,502,813
168,900 Pepsico, Inc.................. 4,940,325
88,500 Philip Morris Cos., Inc....... 9,967,313
14,800 Quaker Oats Co................ 564,250
52,600 Sara Lee Corp................. 1,959,350
40,600 Seagram....................... 1,573,250
20,200 UST, Inc...................... 653,975
17,400 Unilever NV................... 3,049,350
11,300 Whitman Corp.................. 258,488
12,600 Wrigley Wm Jr., Co............ 708,750
-------------
52,015,215
-------------
HEALTH CARE -- 10.7%
84,500 Abbott Laboratories........... 4,288,375
7,100 Allergan, Inc................. 252,938
*9,200 Alza Corp..................... 238,050
69,400 American Home Products
Corp........................ 4,068,575
28,800 Amgen, Inc.................... 1,566,000
6,200 Bard (C.R.), Inc.............. 173,600
6,000 Bausch & Lomb, Inc............ 210,000
29,700 Baxter International, Inc..... 1,217,700
13,500 Becton, Dickinson & Co........ 585,563
10,800 Beverly Enterprises, Inc...... 137,700
12,600 Biomet, Inc. ADR.............. 190,575
19,300 Boston Scientific Corp........ 1,158,000
54,500 Bristol-Myers Squibb Co....... 5,926,875
73,000 Columbia/HCA Healthcare
Corp........................ 2,974,750
8,100 Guidant Corp.................. 461,700
17,700 Humana, Inc................... 338,513
144,800 Johnson & Johnson............. 7,203,800
60,000 Lilly Eli & Co................ 4,380,000
12,900 Loews Corp.................... 1,215,825
8,000 Mallinckrodt Group, Inc....... 353,000
6,800 Manor Care, Inc............... 183,600
26,100 Medtronic, Inc................ 1,774,800
131,100 Merck & Co., Inc.............. 10,389,675
4,700 Millipore Corp................ 194,463
12,500 Pall Corp..................... 318,750
70,100 Pfizer, Inc................... 5,809,538
55,200 Pharmacia & Upjohn, Inc....... 2,187,300
9,000 Pioneer Hi-Bred
International............... 630,000
40,200 Schering-Plough Corp.......... 2,602,950
25,600 Service Corp. International... 716,800
2,600 Shared Medical Systems
Corp........................ 128,050
8,800 St. Jude Medical, Inc......... 375,100
23,600 Tenet Healthcare Corp......... 516,250
20,000 United Health Care Corp....... 900,000
6,800 U.S. Surgical Corp............ 267,750
29,500 Warner-Lambert Co............. 2,212,500
-------------
66,149,065
-------------
<CAPTION>
SHARES MARKET
----------- VALUE
-------------
<C> <S> <C>
INDUSTRIAL MATERIALS -- 5.7%
12,100 Air Products & Chemicals
Corp........................ $ 836,413
24,600 Alcan Aluminum Ltd............ 827,175
19,000 Allegheny Teledyne, Inc....... 437,000
18,900 Aluminum Company of America... 1,204,875
11,600 Armco, Inc.................... 47,850
4,500 Armstrong World Industries,
Inc......................... 312,750
4,700 Asarco, Inc................... 116,913
38,800 Barrick Gold Corp............. 1,115,500
24,400 Battle Mountain Gold Co....... 167,750
5,700 Bemis, Inc.................... 210,188
12,100 Bethlehem Steel Corp.......... 108,900
5,300 Boise Cascade Corp............ 168,275
10,400 Champion International
Corp........................ 449,800
13,900 Crown Cork & Seal, Inc........ 755,813
10,100 Cyprus Amax Minerals.......... 236,088
26,400 Dow Chemical Co............... 2,069,100
61,200 du Pont (ei) de Nemours &
Co.......................... 5,775,750
8,400 Eastman Chemical Co........... 464,100
15,200 Echo Bay Mines Ltd............ 100,700
7,000 Ecolab, Inc................... 263,375
15,600 Englehard Corp................ 298,350
4,000 FMC Corp...................... 280,500
21,000 Freeport-McMoran Copper &
Gold, Inc. Class B.......... 627,375
9,900 Georgia-Pacific Corp.......... 712,800
5,800 B.F. Goodrich Co. (The)....... 234,900
9,700 Grace (WR) & Co............... 501,975
6,900 Great Lakes Chemical Corp..... 322,575
11,100 Hercules, Inc................. 480,075
15,900 Homestake Mining Co........... 226,575
18,300 Inco Co. Ltd.................. 583,313
5,300 Inland Steel Industries,
Inc......................... 106,000
32,600 International Paper Co........ 1,316,225
9,400 James River Corp.............. 311,375
11,800 Louisiana-Pacific Corp........ 249,275
5,700 Mead Corp..................... 331,313
63,900 Monsanto Co................... 2,484,113
15,500 Morton International, Inc..... 631,625
7,300 Nalco Chemical Co............. 263,713
10,800 Newmont Mining Corp........... 483,300
9,500 Nucor Corp.................... 484,500
5,600 Owens Corning Fiberglass
Corp........................ 238,700
19,900 PPG Industries, Inc........... 1,116,888
7,000 Phelps Dodge Corp............. 472,500
26,000 Placer Dome, Inc.............. 565,500
3,100 Potlatch Corp................. 133,300
17,000 Praxair....................... 784,125
6,900 Reynolds Metal Co............. 388,988
7,000 Rohm & Haas Co................ 571,375
14,300 Santa Fe Pacific Gold Corp.... 219,863
9,300 Sherwin Williams.............. 520,800
5,400 Sigma Aldrich Corp............ 337,163
10,800 Stone Container Corp.......... 160,650
6,000 Temple-Inland, Inc............ 324,750
7,600 Union Camp Corp............... 362,900
13,800 Union Carbide Corp............ 564,075
9,200 USX - U.S. Steel Group........ 288,650
11,100 Westvaco Corp................. 319,125
21,600 Weyerhaeuser Co............... 1,023,300
6,000 Willamette Industries, Inc.... 419,250
9,900 Worthington Industries,
Inc......................... 179,438
-------------
35,589,532
-------------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

119
<PAGE>
- --------------------------------------------------------------------------------
HARTFORD INDEX FUND, INC.
STATEMENT OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES MARKET
----------- VALUE
-------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
MANUFACTURING -- 2.8%
11,400 Avery Dennison
International............... $ 403,275
3,300 Ball Corp..................... 85,800
8,000 Case Corp..................... 436,000
20,800 Caterpillar, Inc.............. 1,565,200
4,300 Cincinnati Milacron, Inc...... 94,063
11,700 Cooper Industries............. 492,863
25,000 Corning, Inc.................. 1,156,250
5,000 Crane Co...................... 145,000
4,300 Cummins Engine, Inc........... 197,800
28,100 Deere & Co.................... 1,141,563
12,200 Dover Corp.................... 613,050
8,400 Eaton Corp.................... 585,900
3,600 Giddings & Lewis.............. 46,350
5,300 Harnischfeger Industries,
Inc......................... 255,063
13,800 Honeywell, Inc................ 907,350
13,500 Illinois Tool Works, Inc...... 1,078,313
11,900 Ingersoll-Rand Co............. 529,550
45,400 Minnesota Mining &
Manufacturing Co............ 3,762,525
900 Nacco Industries.............. 48,150
*8,000 Navistar International
Corp........................ 73,000
4,200 PACCAR, Inc................... 285,600
8,100 Parker-Hannifin Corp.......... 313,875
4,700 Perkin Elmer.................. 276,713
18,600 Tenneco, Inc.................. 839,325
16,300 Thermo Electron Corp.......... 670,338
3,400 Timken Co..................... 155,975
3,000 Trinova Corp.................. 109,125
17,000 Tyco International Ltd........ 898,875
-------------
17,166,891
-------------
MEDIA & SERVICES -- 3.1%
54,500 Airtouch Communications....... 1,376,125
18,600 Cognizant Corp................ 613,800
35,500 Comcast Corp.................. 632,344
73,700 Walt Disney Co................ 5,131,363
10,500 Dow Jones & Co................ 355,688
18,500 Dun & Bradstreet Corp......... 439,375
15,300 Gannett Co., Inc.............. 1,145,588
7,700 Harcourt General, Inc......... 355,163
8,800 Interpublic Group............. 418,000
*4,100 King World Productions,
Inc......................... 151,188
10,200 Knight Ridder, Inc............ 390,150
10,800 McGraw-Hill Cos., Inc......... 498,150
2,900 Meredith Corp................. 152,975
10,500 New York Times Co. (The) Class
A........................... 399,000
*72,200 Tele-Communications, Inc.
Class A..................... 943,113
61,800 Time Warner, Inc.............. 2,317,500
10,800 Times Mirror Co. Class A...... 537,300
6,700 Tribune Co.................... 528,463
67,900 U.S. West Media Group......... 1,256,150
38,500 Viacom, Inc. Class B.......... 1,342,688
-------------
18,984,123
-------------
RETAIL -- 4.5%
27,400 Albertson's, Inc.............. 976,125
8,100 American Greetings Corp. Class
A........................... 229,838
15,800 American Stores Co............ 645,825
16,300 Autozone...................... 442,138
11,500 CVS Corp...................... 475,813
11,400 Charming Shoppes, Inc......... 57,713
10,600 Circuit City Stores, Inc...... 319,325
*42,800 CUC International............. 1,016,500
23,600 Dayton Hudson Corp............ 926,300
<CAPTION>
SHARES MARKET
----------- VALUE
-------------
<C> <S> <C>
RETAIL -- (CONTINUED)
12,300 Dillard Department Stores,
Inc. Class A................ $ 379,763
22,600 Federated Department Stores... 771,225
30,800 Gap, Inc...................... 927,850
6,500 Giant Food, Inc............... 224,250
4,200 Great Atlantic & Pacific Tea
Co.......................... 133,875
52,200 Home Depot, Inc. (The)........ 2,616,525
4,200 Jostens, Inc.................. 88,725
52,600 K Mart Corp................... 545,725
*13,700 Kroger Co..................... 637,050
29,500 Limited, Inc. (The)........... 542,063
2,100 Longs Drug Store.............. 103,163
18,800 Lowe's Cos., Inc.............. 667,400
27,400 May Department Stores Co.
(The)....................... 1,280,950
4,000 Mercantile Stores, Inc........ 197,500
8,800 Nordstrom, Inc................ 311,850
25,100 J.C. Penney, Inc.............. 1,223,625
6,800 Pep Boys--Manny, Moe, Jack.... 209,100
21,400 Price/Costco, Inc............. 537,675
13,300 Rite Aid Corp................. 528,675
42,600 Sears Roebuck & Co............ 1,964,925
8,500 TJX Cos., Inc................. 402,688
6,300 Tandy Corp.................... 277,200
*29,800 Toys "R" Us Inc............... 894,000
249,400 Wal-Mart Stores, Inc.......... 5,705,025
26,800 Walgreen Co................... 1,072,000
16,400 Winn Dixie Stores Inc......... 518,650
14,500 Woolworth (F.W.) Co........... 317,188
-------------
28,168,242
-------------
SOFTWARE & SERVICES -- 3.3%
5,000 Autodesk, Inc................. 140,000
31,600 Automatic Data Processing..... 1,354,850
*7,500 Ceridian Corp................. 303,750
39,700 Computer Associates Corp...... 1,975,075
8,300 Computer Sciences Corp........ 681,638
48,700 First Data Corp............... 1,777,550
*5,200 Intergraph Corp............... 53,300
*130,000 Microsoft Corp................ 10,741,250
*37,400 Novell, Inc................... 354,131
*71,500 Oracle Systems Corp........... 2,985,125
-------------
20,366,669
-------------
TRANSPORTATION -- 1.5%
*9,900 AMR Corp...................... 872,438
16,600 Burlington Northern Santa Fe
Corp........................ 1,433,825
23,600 CSX Corp...................... 997,100
4,300 Caliber System, Inc........... 82,775
8,700 Consolidated Freightways,
Inc......................... 866,738
8,100 Delta Airlines, Inc........... 574,088
*12,400 Federal Express Corp.......... 551,800
34,100 Laidlaw, Inc. Class B......... 392,150
13,600 Norfolk Southern Corp......... 1,190,000
8,900 Ryder Systems, Inc............ 250,313
15,800 Southwest Air Lines Co........ 349,575
26,600 Union Pacific Corp............ 1,599,325
7,000 USAir Group................... 163,625
-------------
9,323,752
-------------
UTILITIES -- 10.0%
20,600 Alltel Corp................... 646,325
20,400 American Electric Power Co.,
Inc......................... 838,950
59,700 Ameritech Corp................ 3,619,313
175,900 AT&T Corp..................... 7,651,650
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

120
<PAGE>
<TABLE>
<CAPTION>
SHARES MARKET
----------- VALUE
-------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
UTILITIES -- (CONTINUED)
16,000 Baltimore Gas and Electric.... $ 428,000
47,600 Bell Atlantic Corp............ 3,082,100
108,000 BellSouth Corp................ 4,360,500
16,500 Carolina Power and Lighting
Co.......................... 602,250
22,900 Central & Southwest Corp...... 586,813
17,100 Cinergy Corp.................. 570,713
6,000 Columbia Gas System, Inc.
(The)....................... 381,750
25,600 Consolidated Edison NY........ 748,800
10,300 Consolidated Natural Gas
Co.......................... 569,075
15,800 DTE Energy Co................. 511,525
19,600 Dominion Resources, Inc....... 754,600
21,900 Duke Power Co................. 1,012,875
2,200 Eastern Enterprises........... 77,825
47,100 Edison International.......... 936,113
1 El Paso Natural Gas........... 10
27,700 Enron Corp.................... 1,194,563
7,600 Enserch Corp.................. 174,800
25,100 Entergy Corp.................. 696,525
19,900 FPL Group, Inc................ 915,400
17,800 Frontier Corp................. 402,725
13,100 GPU, Inc...................... 440,488
104,600 GTE Corp...................... 4,759,243
25,500 Houston Industries, Inc....... 576,938
74,300 MCI Communications Corp....... 2,428,681
15,700 Niagara Mohawk Power Corp..... 155,038
5,400 Nicor, Inc.................... 193,050
14,900 Noram Energy Corp............. 229,088
7,500 Northern States Power Co...... 344,063
47,800 NYNEX Corp.................... 2,300,375
16,600 Ohio Edison Co................ 377,650
3,000 Oneok, Inc.................... 90,000
9,200 Pacific Enterprises........... 279,450
44,800 Pacific Gas & Electric Co..... 940,800
46,600 Pacific Telesis Group......... 1,712,550
32,000 Pacificorp.................... 656,000
24,200 Peco Energy Company........... 611,050
3,800 Peoples Energy Corp........... 128,725
17,600 PP&L Resources, Inc........... 404,800
25,900 Public Service Enterprises.... 705,775
65,600 SBC Communications, Inc....... 3,394,800
9,400 Sonat, Inc.................... 484,100
73,200 Southern Co. (The)............ 1,656,150
46,800 Sprint Corp................... 1,866,150
24,400 Texas Utilities Co............ 994,300
51,900 U.S. West Communications
Group....................... 1,673,775
23,400 Unicom Corp................... 634,725
11,100 Union Electric Co............. 427,350
17,100 Williams Companies, Inc.
(The)....................... 641,250
<CAPTION>
SHARES MARKET
----------- VALUE
-------------
<C> <S> <C>
UTILITIES -- (CONTINUED)
94,500 Worldcom, Inc................. $ 2,462,906
-------------
62,332,470
-------------
Total common stocks........... $ 615,698,479
-------------
-------------
PRINCIPAL
AMOUNT
-----------
SHORT-TERM SECURITIES -- 1.4%
U.S. TREASURY BILL -- 0.1%
U.S. Treasury Bill
$ 500,000 5.23% due 01/09/97.......... $ 499,419
-------------
REPURCHASE AGREEMENT -- 1.3%
8,197,000 Interest in $108,163,000 joint
repurchase agreement dated
12/31/96 with State Street
Bank 6.70% due 01/02/97;
maturity amount $8,200,051;
(Collaterlized by
$53,860,000 U.S. Treasury
Note 7.5% due 02/15/05 and
$54,303,000 U.S. Treasury
Note 8.875% due 08/15/17)... 8,197,000
-------------
Total short-term securities... $ 8,696,419
-------------
-------------
</TABLE>

<TABLE>
<S> <C> <C>
DIVERSIFICATION OF ASSETS:
Total common stocks (cost $511,532,419)...... 99.1 % $615,698,479
Total short-term securities (cost
$8,696,419)................................ 1.4 8,696,419
------ ------------
Total investment in securities
(Identified cost $520,228,838)............. 100.5 624,394,898
Excess of liabilities over cash and
receivables................................ (0.5) (3,330,337)
------ ------------
Net assets (applicable to $2.38177 per share
based on 260,757,272 shares outstanding)... 100.0% $621,064,561
------ ------------
------ ------------

SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share; authorized
400,000,000 shares; outstanding 260,757,272
shares............................................. $ 26,075,727
Capital surplus...................................... 436,555,681
Undistributed net investment income.................. 72,621
Undistributed net realized gain on investments....... 54,305,106
Unrealized depreciation on futures contracts**....... (110,634)
Unrealized appreciation of investments............... 104,166,060
------------
Net assets, applicable to shares outstanding......... $621,064,561
------------
------------
</TABLE>

* Non-income producing during period.
** The Fund had 12 Standard & Poor's 500 March 1997 futures contracts open at
December 31, 1996. The contracts had a market value of $4,457,000 at December
31, 1996.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

121
<PAGE>
- --------------------------------------------------------------------------------
Hartford International Opportunities Fund, Inc.
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
----------- --------------
<C> <S> <C>
COMMON STOCKS -- 91.4%
ARGENTINA -- 0.9%
500,000 Perezcompanc S.A. B........... $ 3,515,619
203,000 YPY S.A. ADR.................. 5,125,750
--------------
8,641,369
--------------
AUSTRALIA -- 4.1%
1,164,035 Amcor Ltd..................... 7,479,531
2,584,978 Boral Ltd..................... 7,350,209
697,260 Broken Hill Proprietary Co.
Ltd......................... 9,924,129
5,082,141 Goodman Fielder Ltd........... 6,296,962
1,790,000 Pioneer International Ltd..... 5,331,435
243,700 Qantas Airways Ltd. ADR***.... 4,064,745
--------------
40,447,011
--------------
AUSTRIA -- 0.9%
83,350 OMV AG........................ 9,388,810
--------------
BELGIUM -- 0.7%
*81,500 Credit Communal Holding***.... 7,427,866
--------------
BRAZIL -- 1.4%
4,780,000 Centrais Electicas SA......... 1,711,262
2,569,600 Cervejaria Brahma Pref........ 1,404,622
241,000 Electrobras On ADR............ 4,313,948
22,840,000 Petroleo Brasileiro........... 3,637,807
42,650,000 Telecommunic Brasileiras...... 3,057,883
--------------
14,125,522
--------------
CANADA -- 2.0%
620,000 Canadian Pacific Ltd.......... 16,430,000
*325,500 Canwest Global Communication
Corp........................ 3,336,375
--------------
19,766,375
--------------
CHILE -- 0.7%
240,000 Enersis S.A. ADR.............. 6,660,000
--------------
DENMARK -- 2.1%
254,300 TeleDanmark B ADR............. 6,929,675
293,000 UniDanmark A Registered....... 15,149,417
--------------
22,079,092
--------------
FINLAND -- 1.6%
2,100 Kesko......................... 29,570
*1,380,000 Merita Bank Ltd. A............ 4,281,614
765,000 Metsa-Serla Oy B.............. 5,726,284
291,000 Rauma Oy...................... 6,124,309
--------------
16,161,777
--------------
FRANCE -- 7.8%
61,443 Accor......................... 7,764,973
99,600 Assurances Generales***....... 3,209,049
231,000 Assurances Generales de
France...................... 7,442,673
247,000 Banque Nationale de Paris..... 9,540,317
88,000 Credit Commerical de France... 4,062,525
132,432 Havas SA...................... 9,272,492
13,000 Peugeot SA.................... 1,460,355
103,315 Remy Cointreau................ 2,921,345
286,005 Rhone-Poulenc SA.............. 9,732,034
35,965 Saint Gobain.................. 5,077,831
56,945 Societe Generale.............. 6,144,982
66,000 Societe Nationale Elf
Acquitaine.................. 5,996,033
58,303 Total SA...................... 4,732,663
--------------
77,357,272
--------------

<CAPTION>
SHARES MARKET
----------- VALUE
--------------
<C> <S> <C>
GERMANY -- 4.8%
171,000 Daimler-Benz AG............... $ 11,706,180
17,250 Degussa AG.................... 7,835,267
70,600 Hornbach Holdings Pref
(Non-Vtg)................... 5,039,228
16,800 Karstadt AG................... 5,581,435
10,449 Mannesmann AG................. 4,489,837
658,000 Metallgesellschaft AG......... 13,415,248
--------------
48,067,195
--------------
HONG KONG -- 3.6%
850,000 Citic Pacific Ltd............. 4,934,068
1,090,000 Hutchison Whampoa Ltd......... 8,560,767
270,000 New World Development Co.
Ltd......................... 1,823,854
748,000 Sun Hung Kai Properties....... 9,162,642
915,000 Swire Pacific Ltd............. 8,724,148
11,350,000 Tingyi Holding Corp........... 2,971,398
--------------
36,176,877
--------------
INDIA -- 0.4%
217,100 State Bank of India........... 3,853,525
--------------
INDONESIA -- 0.9%
4,785,500 Bank Negara Indonesa BNI...... 2,532,010
71,000 Indosat ADR................... 1,943,625
1,098,000 Jaya Real Property -
Foreign..................... 1,533,714
960,000 Jaya Real Property - Foreign
Reg. D...................... 1,340,952
1,724,000 Kalbe Farma - Foreign
Registered.................. 1,970,285
--------------
9,320,586
--------------
IRELAND -- 0.5%
1,840,000 Smurfit Jefferson Group....... 5,463,155
--------------
ITALY -- 3.2%
738,300 Arnoldo Mondadori Editore
SPA......................... 5,996,715
2,370,600 Banca Commerciale Italiana
SPA......................... 4,303,095
1,550,000 Fiat SPA...................... 4,679,053
*2,630,000 Finanziaria Autogrill SPA..... 2,542,650
2,190,000 Stet.......................... 9,938,178
1,530,000 Telecom Italia SPA............ 3,964,617
--------------
31,424,308
--------------
JAPAN -- 18.9%
503,000 Asahi Organic Chemicals
Industry Co................. 2,959,843
194,700 Canon Sales Co., Inc.......... 4,327,785
90,000 Chudenko Corp................. 2,589,816
561,000 Chugai Pharmaceutical Co...... 4,688,291
54,000 Cosel Co...................... 842,078
435,000 Dai Nippon Printing Co........ 7,607,909
172,000 Danto Corp.................... 1,674,507
174,000 Fuji Machine Manufacturing
Co.......................... 4,602,223
81,000 Japan Associated Finance
Co.......................... 6,385,371
652,000 JGC Corp...................... 4,881,433
231,000 Kyudenko Corp................. 2,388,214
193,000 Mabuchi Motor Co.............. 9,694,064
380,000 Maruichi Steel Tube........... 6,547,773
529,000 Matsushita Electric Industrial
Co.......................... 8,613,853
899,000 Mitsubishi Heavy Industries... 7,125,700
186,000 Murata Manufacturing Co....... 6,169,553
801,000 NGK Spark Plug................ 8,764,280
553,000 Nippon Express Co............. 3,782,907
39,230 Nippon Television Network
Corp........................ 11,829,499
350,000 Nomura Securities Co.......... 5,246,834
792,000 Onward Kashiyama Co. Ltd...... 11,122,253
525,000 Sakura Bank................... 3,745,154
224,000 Sankyo Co. Ltd................ 6,329,973
305,000 Sanwa Bank Ltd................ 4,151,805
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

122
<PAGE>
<TABLE>
<CAPTION>
SHARES MARKET
----------- VALUE
--------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
JAPAN -- (CONTINUED)
407,000 Seventy-Seven Bank............ $ 3,331,179
55,000 Sony Corp..................... 3,596,536
935,000 Sumitomo Realty &
Development................. 5,880,503
167,000 Sumitomo Trust & Banking
Co.......................... 1,668,993
616,000 Toda Construction Co.......... 4,670,285
516,000 Tokio Marine & Fire Insurance
Co.......................... 4,845,696
1,468,000 Toyo Ink Manufacturing Co..... 6,007,581
265,000 Toyota Motor Corp............. 7,602,739
139,600 World Co...................... 5,773,068
918,000 Yamato Kogyo Co............... 8,462,651
27,000 Yamazaki Baking Co............ 430,342
--------------
188,340,691
--------------
LUXEMBOURG -- 0.2%
192,100 Indo Gulf GDR................. 155,486
202,500 Quilmes Industrial ADR........ 1,847,813
--------------
2,003,299
--------------
MALAYSIA -- 1.5%
1,870,000 Land & General Holdings
Berhad...................... 4,479,696
876,000 MBF Capital Berhad............ 1,422,131
720,000 Resorts World Berhad.......... 3,278,551
1,367,400 Sime Darby Berhad............. 5,387,289
--------------
14,567,667
--------------
MEXICO -- 2.0%
364,800 Cemex S.A. - CPO.............. 1,309,146
675,200 Cemex S.A. De C.V............. 2,423,069
1,466,000 FEMSA S.A. B.................. 4,990,955
1,030,000 Grupo Carao S.A. Series A1.... 5,364,583
*11,140,000 Grupo Financiero Bancomer B... 4,457,698
274,900 Transportacion Maritima A
ADR......................... 1,271,413
--------------
19,816,864
--------------
NETHERLANDS -- 3.5%
62,800 Akzo Nobel NV................. 8,568,239
268,787 Ing Groep NV.................. 9,665,372
218,178 KLM........................... 6,130,094
209,000 Polygram NV................... 10,632,830
--------------
34,996,535
--------------
NEW ZEALAND -- 0.9%
1,720,680 Air New Zealand Ltd. B........ 4,668,374
1,916,000 Carter Holt Harvey Ltd........ 4,345,451
--------------
9,013,825
--------------
NORWAY -- 1.9%
645,500 Fokus Bank.................... 4,437,865
553,801 Nycomed ASA A................. 8,456,130
370,000 Saga Petroleum AS A........... 6,171,129
--------------
19,065,124
--------------
PHILIPPINES -- 0.5%
44,000 Philippine Long Distance
ADR......................... 2,244,000
2,710,000 Pilipino Telephone............ 2,292,680
--------------
4,536,680
--------------
PORTUGAL -- 0.1%
10,300 Telecel Communicacoes 144A.... 656,811
--------------
SINGAPORE -- 3.2%
708,875 Development Bank of
Singapore................... 9,577,892
970,000 Far East-Levingston
Shipbuilding................ 5,062,127
1,000,000 Keppel Corp................... 7,792,288
<CAPTION>
SHARES MARKET
----------- VALUE
--------------
<C> <S> <C>
SINGAPORE -- (CONTINUED)
1,240,000 Straits Steamship Land........ $ 3,971,350
515,000 United Overseas Bank.......... 5,743,417
--------------
32,147,074
--------------
SOUTH KOREA -- 1.0%
51,920 Cho Sun Brewery Co............ 1,320,260
157,000 Korea Electric Power Corp.
ADR......................... 3,218,500
*80,260 Korean Air.................... 1,234,039
221,000 Pohang Iron & Steel Ltd.
ADR......................... 4,475,250
--------------
10,248,049
--------------
SPAIN -- 2.1%
20,700 Acerinox SA................... 2,985,446
128,000 Empresa Nacional de
Electricidad ADR............ 9,092,598
63,000 Empresa Nacional de
Electricidad................ 4,410,000
175,000 Telefonica de Espana SA....... 4,056,313
--------------
20,544,357
--------------
SWEDEN -- 1.4%
132,400 BT Industries AB.............. 2,462,615
269,000 Pharmacia & Upjohn DR......... 11,011,310
--------------
13,473,925
--------------
SWITZERLAND -- 2.7%
4,030 Cie Financiere Richemont AG... 5,642,572
7,850 Nestle SA..................... 8,401,187
13,100 Sulzer AG - Part Certified.... 6,985,517
3,200 Sulzer AG - Registered........ 1,842,229
5,475 Swissair Registered........... 4,415,977
--------------
27,287,482
--------------
THAILAND -- 1.0%
6,251,763 Bangkok Metropolitan Bank..... 2,438,281
375,000 Land & House Co. Ltd.......... 2,734,980
310,000 Siam City Cement Public Co.
Ltd......................... 1,620,122
450,000 Siam Commercial............... 3,264,426
--------------
10,057,809
--------------
UNITED KINGDOM -- 14.6%
310,622 Allied Irish Banks PLC........ 2,081,087
133,000 Amersham International PLC.... 2,617,434
852,000 Associated British Foods...... 7,064,145
160,000 Bank of Ireland............... 1,460,766
1,030,000 Bank of Scotland.............. 5,437,742
471,000 Boc Group PLC................. 7,040,606
770,000 Boots Company PLC............. 7,939,150
2,700,000 British Gas PLC............... 10,373,046
1,032,000 British Telecommunications
PLC......................... 6,967,114
1,650,000 BTR........................... 8,019,153
2,110,000 Cookson Group PLC............. 8,521,591
960,000 CN de la Rue PLC.............. 9,405,306
1,870,000 National Grid Group PLC....... 6,256,257
1,747,000 Northern Foods PLC............ 6,113,817
754,784 Powergen PLC.................. 7,394,765
1,220,000 Rank Group PLC................ 9,092,309
616,550 Reckitt & Colman PLC.......... 7,638,940
769,381 Royal & Sun Alliance
Insurance................... 5,852,473
675,082 Royal Bank of Scotland
Group....................... 6,509,935
1,856,529 Sainsbury (J) PLC............. 12,327,065
1,110,000 Sun Life & Provincial
Holdings.................... 4,967,303
610,000 United Biscuits PLC........... 2,192,176
--------------
145,272,180
--------------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

123
<PAGE>
- --------------------------------------------------------------------------------
HARTFORD INTERNATIONAL OPPORTUNITIES FUND, INC.
STATEMENT OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES MARKET
----------- VALUE
--------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
VENEZUELA -- 0.3%
95,600 Cia Anonima Telef De Venezuela
ADR......................... $ 2,688,750
--------------
Total common stocks........... $ 911,077,862
--------------
--------------
PREFERRED STOCKS -- 0.8%
140,900 Nokia Pref. ADS............... $ 8,119,363
--------------
--------------
<CAPTION>

PRINCIPAL
AMOUNT
-----------
<C> <S> <C>
SHORT-TERM SECURITIES -- 7.3%
U.S. TREASURY BILL -- 1.0%
$10,000,000 5.00% due 12/11/97.......... $ 9,501,678
--------------
REPURCHASE AGREEMENTS -- 6.3%
40,063,000 Interest in $399,594,000 joint
repurchase agreement dated
12/31/96 with State Street
Bank 6.7693% due 01/02/97;
maturity amount $40,078,067;
(Collateralized by
$218,212,000 U.S. Treasury
Note 6.25% due 06/30/98 and
$280,160,000 U.S. Treasury
Strip (principal) 0% due
05/15/19)................... 40,063,000
22,526,000 Interest in $300,000,000 joint
repurchase agreement dated
12/31/96 with First Boston
6.75% due 01/02/97; maturity
amount $22,534,447;
(Collateralized by
$301,035,000 U.S. Treasury
Note 6.25% due 10/31/01).... 22,526,000
--------------
62,589,000
--------------
Total short-term securities... $ 72,090,678
--------------
--------------
</TABLE>

<TABLE>
<CAPTION>
MARKET
VALUE
-------------
<S> <C> <C>
DIVERSIFICATION OF ASSETS:
Total common stocks (cost $840,423,679)...... 91.4% $911,077,862
Total preferred stock (cost $4,920,928)...... 0.8 8,119,363
Total short term securities (cost
$72,090,678)............................... 7.3 72,090,678
------ -------------
Total investment in securities
(Identified cost $917,435,285)............. 99.5 991,287,903
Excess of cash and receivables over
liabilities................................ 0.5 5,255,128
------ -------------
Net assets (applicable to $1.40688 per share
based on 708,337,983 shares outstanding)... 100.0% $996,543,031
------ -------------
------ -------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share authorized
1,500,000,000 shares, outstanding 708,337,983
shares............................................. $ 70,833,798
Capital surplus...................................... 775,305,019
Undistributed net investment income.................. 34,249
Undistributed net realized gain on investments....... 75,679,809
Unrealized appreciation of investments............... 73,852,618
Unrealized appreciation on futures contracts**....... 704,364
Unrealized appreciation on forward foreign currency
contracts (Note 2)................................. 99,800
Unrealized appreciation on translation on other
assets and liabilities in foreign currencies....... 33,374
-------------
Net assets, applicable to shares outstanding......... $996,543,031
-------------
-------------
</TABLE>

* Non-income producing during period.
** The Fund had 155 March TSE 35 Index futures contracts, 170 March MATIF CAC
40 Index futures contracts, 388 March ALL ORDS Index futures, 47 Hang Seng
index futures contracts, 1600 January IBEX futures contracts, 68 March TSE
TOPIX Index futures contracts, 323 January OMX Stock Index futures
contracts, 40 March MIB 30 Index futures contracts, and 164 March DTB DAX
Index futures contracts open at December 31, 1996. The contracts had a
market value of $822,332 at December 31, 1996.
*** Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.

FORWARD FOREIGN CURRENCY CONTRACTS -- NOTE 2 -- OUTSTANDING AT DECEMBER 31, 1996

<TABLE>
<CAPTION>
UNREALIZED
AGGREGATE DELIVERY APPRECIATION
DESCRIPTION TOTAL VALUE FACE VALUE DATE (DEPRECIATION)
- ------------------------------ ----------- ----------- --------- -------------
<S> <C> <C> <C> <C>
German Deutschemark (Buy) $2,987,465 $2,954,956 03/20/97 $ 32,509
Spanish Peseta (Buy) 3,581,466 3,543,485 01/17/97 37,981
Japanese Yen (Buy) 2,107,726 2,127,015 03/13/97 (19,289)
Swedish Krona (Buy) 4,357,300 4,308,701 01/24/97 48,599
-------------
$ 99,800
-------------
-------------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

124
<PAGE>
- --------------------------------------------------------------------------------
Hartford Dividend and Growth Fund, Inc.
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES MARKET
- ----------- VALUE
--------------
<C> <S> <C>
COMMON STOCKS -- 94.5%
AEROSPACE & DEFENSE -- 3.2%
198,200 Northrop Grumman Corp......... $ 16,401,050
269,600 Sundstrand Corp............... 11,458,000
--------------
27,859,050
--------------
BUSINESS SERVICES -- 0.2%
81,500 Browning Ferris Industries,
Inc......................... 2,139,375
--------------
COMMUNICATIONS EQUIPMENT --
2.9%
27,000 Comsat Corp................... 664,875
141,200 Frontier Corp................. 3,194,650
138,300 NYNEX Corp.................... 6,655,688
281,200 SBC Communications, Inc....... 14,552,100
--------------
25,067,313
--------------
COMPUTERS & OFFICE EQUIPMENT -- 1.4%
226,500 Xerox Corp.................... 11,919,563
--------------
CONSUMER DURABLES -- 5.9%
342,400 Ford Motor Co................. 10,914,000
229,130 General Electric Corp......... 22,655,229
188,800 Goodyear Tire & Rubber Co..... 9,699,600
163,800 ITT Industries................ 4,013,100
143,900 Smith A.O. Corp............... 4,299,013
--------------
51,580,942
--------------
CONSUMER NON-DURABLES -- 4.5%
181,700 Avon Products, Inc............ 10,379,613
161,600 Colgate Palmolive Co.......... 14,907,600
154,000 Kimberly Clark Corp........... 14,668,500
--------------
39,955,713
--------------
CONSUMER SERVICES -- 0.3%
29,100 Eastman Kodak Co.............. 2,335,275
--------------
ENERGY & SERVICES -- 13.3%
280,200 Ashland, Inc.................. 12,293,775
333,400 Chevron Corp.................. 21,671,000
78,300 Equitable Resources........... 2,329,425
211,600 Exxon Corp.................... 20,736,800
221,600 Pennzoil Co................... 12,520,400
296,300 Phillips Petroleum Co......... 13,111,275
328,200 Sun Company, Inc.............. 7,999,875
105,444 Union Pacific Resources
Group....................... 3,084,237
292,600 Unocal Corp................... 11,886,875
481,600 USX-Marathon Group............ 11,498,200
--------------
117,131,862
--------------
FINANCIAL SERVICES -- 17.3%
294,300 Allstate Corp................. 17,032,613
245,300 American Express Co........... 13,859,450
371,600 Bancorp Hawaii, Inc........... 15,607,200
63,000 CIGNA Corp.................... 8,607,375
339,800 Citicorp...................... 34,999,400
414,800 First Bank System, Inc........ 28,310,100
395,700 First Union Corp.............. 29,281,800
84,300 Wachovia Corp................. 4,762,950
--------------
152,460,888
--------------
FOOD, BEVERAGE & TOBACCO --
8.2%
778,950 Flowers Industries, Inc....... 16,747,425
211,500 General Mills Co.............. 13,403,813
134,100 Interstate Bakeries........... 6,587,663
120,900 Kellogg Co.................... 7,934,063

<CAPTION>
SHARES MARKET
- ----------- VALUE
--------------
<C> <S> <C>
FOOD, BEVERAGE &
TOBACCO -- (CONTINUED)
247,700 Philip Morris Cos., Inc....... $ 27,897,213
--------------
72,570,177
--------------
HEALTH CARE -- 11.0%
236,700 American Home Products
Corp........................ 13,876,538
199,200 Bard (C.R.), Inc.............. 5,577,600
141,700 Bristol-Myers Squibb Co....... 15,409,875
272,000 Merck & Co., Inc.............. 21,556,000
495,300 Pharmacia & Upjohn............ 19,626,263
280,900 Warner-Lambert Co............. 21,067,500
--------------
97,113,776
--------------
INDUSTRIAL MATERIALS -- 4.9%
137,800 Calgon Carbon Corp............ 1,688,050
48,800 Crompton & Knowles Corp....... 939,400
46,600 Dow Chemical Co............... 3,652,275
91,000 EI du Pont de Nemours & Co.... 8,588,125
30,300 Eastman Chemical Co........... 1,674,075
30,100 Georgia Gulf Corp............. 808,938
267,700 International Paper Co........ 10,808,388
44,100 Nalco Chemical Co............. 1,593,113
46,600 W.R. Grace Co................. 2,411,550
210,900 Weyerhaeuser Co............... 9,991,388
26,200 Witco Chemical Corp........... 799,100
--------------
42,954,402
--------------
MANUFACTURING -- 1.5%
160,100 Minnesota Mining &
Manufacturing Corp.......... 13,268,288
--------------
MEDIA & SERVICES -- 1.5%
17,900 Acnielson Corp................ 270,738
93,200 Cognizant Corp................ 3,075,600
126,600 Gannett Co., Inc.............. 9,479,175
--------------
12,825,513
--------------
REAL ESTATE -- 1.2%
134,100 Patriot American
Hospitality................. 5,783,063
80,400 Starwood Lodging Trust........ 4,432,050
--------------
10,215,113
--------------
RETAIL -- 2.5%
253,500 Mercantile Stores, Inc........ 12,516,563
208,700 Sears, Roebuck & Co........... 9,626,288
--------------
22,142,851
--------------
TRANSPORTATION -- 1.1%
167,300 Union Pacific Corp............ 10,058,913
--------------
UTILITIES -- 13.6%
210,700 Ameritech Corp................ 12,773,688
330,400 BellSouth Corp................ 13,339,900
96,800 Carolina Power & Lighting..... 3,533,200
187,500 Cinergy Corp.................. 6,257,813
258,000 DPL, Inc...................... 6,321,000
189,850 DQE, Inc...................... 5,505,650
415,800 Edison International.......... 8,264,025
255,100 GTE Corp...................... 11,607,050
50,000 Illinova Corp................. 1,375,000
130,200 N E Electric System........... 4,540,725
157,400 NIPSCO Industries............. 6,236,975
159,900 Pacific Enterprises........... 4,856,963
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

125
<PAGE>
- --------------------------------------------------------------------------------
HARTFORD DIVIDEND AND GROWTH FUND, INC.
STATEMENT OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES MARKET
- ----------- VALUE
--------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
UTILITIES -- (CONTINUED)
251,100 Pacific Gas & Electric Co..... $ 5,273,100
289,400 Pinnacle West Capital......... 9,188,450
93,700 Public Service Co. of
Colorado.................... 3,642,588
118,400 Scana Corp.................... 3,167,200
218,600 Texas Utilities............... 8,907,950
233,500 The Southern Co............... 5,282,939
--------------
120,074,216
--------------
Total common stocks........... $831,673,230
--------------
--------------
<CAPTION>
PRINCIPAL
AMOUNT
- -----------
<C> <S> <C>
CONVERTIBLE PREFERRED STOCK -- 2.7%
ELECTRONICS -- 1.0%
$ 150,400 Loral Space & Comm 144A....... $ 8,422,387
--------------
MEDIA & SERVICES -- 1.7%
331,800 American Radio 144A........... 15,262,800
--------------
Total convertible preferred
stocks...................... $ 23,685,187
--------------
--------------
REPURCHASE AGREEMENTS -- 4.1%
25,430,000 Interest in $399,594,000 joint
repurchase agreement dated
12/31/96 with State Street
Bank 6.7693% due 01/02/97;
maturity amount $25,439,564;
(Collateralized by
$218,212,000 U.S. Treasury
Note 6.25% due 06/30/98 and
$280,160,000 U.S. Treasury
Strip (principal) 0% due
05/15/19)................... $ 25,430,000
11,036,000 Interest in $300,000,000 joint
repurchase agreement dated
12/31/96 with First Boston
6.75% due 01/02/97; maturity
amount $11,040,138;
(Collateralized by
$301,035,000 U.S. Treasury
Note 6.25% due 10/31/01).... 11,036,000
--------------
Total short-term securities... $ 36,466,000
--------------
--------------
<CAPTION>
MARKET
VALUE
--------------
<C> <S> <C>
DIVERSIFICATION OF ASSETS:

Total common stocks (cost $724,008,011)...... 94.5 % $831,673,230
Total convertible preferred stocks (cost
$24,312,725)............................... 2.7 23,685,187
Total short-term securities (cost
$36,466,000)............................... 4.1 36,466,000
------ ------------
Total investment in securities
(Identified cost $784,786,736)............. 101.3 891,824,417
Excess of liabilities over cash and
receivables................................ (1.3) (11,843,975)
------ ------------
Net assets (applicable to $1.5474 per share
based on 568,675,128 shares outstanding)... 100.0 % $879,980,442
------ ------------
------ ------------

SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share; authorized
1,500,000,000 shares; outstanding 568,675,128
shares............................................. $ 56,867,513
Capital surplus...................................... 688,039,346
Undistributed net investment income.................. 246,581
Undistributed net realized gain on investments....... 27,789,321
Unrealized appreciation of investments............... 107,037,681
------------
Net assets, applicable to shares outstanding......... $879,980,442
------------
------------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

126
<PAGE>
- --------------------------------------------------------------------------------
Hartford International Advisers Fund, Inc.
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ----------- --------------
<C> <S> <C>
COMMON STOCKS -- 53.0%
ARGENTINA -- 0.4%
20,000 Perezcompanc S.A. B..................... $ 140,625
12,000 YPY S.A. ADR............................ 303,000
--------------
443,625
--------------
AUSTRALIA -- 2.1%
63,750 Amcor Ltd............................... 409,627
154,955 Boral Ltd............................... 440,604
32,047 Broken Hill Proprietary Co. Ltd......... 456,128
272,252 Goodman Fielder Ltd..................... 337,330
110,000 Pioneer International Ltd............... 327,630
13,000 Qantas Airways Ltd. ADR***.............. 216,831
--------------
2,188,150
--------------
AUSTRIA -- 0.5%
4,400 OMV AG.................................. 495,630
--------------
BELGIUM -- 0.4%
*4,800 Credit Communal Holding***.............. 437,469
--------------
BRAZIL -- 0.7%
250,000 Centrais Eletricas S.A.................. 89,501
128,200 Cervejaria Brahma Pref.................. 70,078
13,750 Electrobras On ADR...................... 246,128
1,080,000 Petrol Brasileiro....................... 172,015
2,070,000 Telecomunic Brasileiras................. 148,413
--------------
726,135
--------------
CANADA -- 0.9%
31,000 Canadian Pacific Ltd.................... 821,500
15,900 Canwest Global Communication Corp....... 162,975
--------------
984,475
--------------
CHILE -- 0.4%
15,000 Enersis S.A. ADR........................ 416,250
--------------
DENMARK -- 1.4%
19,000 Tele Danmark ADR Class B................ 517,750
18,500 UniDanmark A Registered................. 956,533
--------------
1,474,283
--------------
FINLAND -- 0.9%
100 Kesko................................... 1,408
*95,000 Merita Bank Ltd. A...................... 294,749
42,000 Metsa-Serla Oy B........................ 314,384
18,000 Rauma Oy................................ 378,823
--------------
989,364
--------------
FRANCE -- 4.4%
3,751 Accor................................... 474,040
4,800 Assurances Generales***................. 154,653
11,500 Assurances Generales de France.......... 370,523
12,500 Banque Nationale de Paris............... 482,810
6,000 Credit Commercial de France............. 276,990
8,215 Havas S.A............................... 575,190
700 Peugeot S.A............................. 78,634
7,016 Remy Cointreau.......................... 198,385
15,487 Rhone-Poulenc S.A....................... 526,984
3,382 Saint Gobain............................ 477,497
2,808 Societe Generale........................ 303,014
3,200 Societe Nationale Elf Aquitaine......... 290,717
4,389 Total S.A............................... 356,271
--------------
4,565,708
--------------

<CAPTION>
SHARES MARKET
- ----------- VALUE
--------------
<C> <S> <C>
GERMANY -- 2.7%
9,950 Daimler-Benz AG......................... $ 681,149
980 Degussa AG.............................. 445,134
4,800 Hornbach Holdings Pref (Non-Vtg)........ 342,610
1,230 Karstadt AG............................. 408,641
450 Mannesmann AG........................... 193,361
38,400 Metallgesellschaft AG................... 782,896
--------------
2,853,791
--------------
HONG KONG -- 2.0%
50,000 Citic Pacific Ltd....................... 290,239
70,000 Hutchison Whampoa Ltd................... 549,774
51,000 Lai Sun Development..................... 77,143
14,000 New World Development Co. Ltd........... 94,570
39,000 Sun Hung Kai Properties................. 477,731
50,000 Swire Pacific Ltd....................... 476,729
700,000 Tingyi Holding Corp..................... 183,258
--------------
2,149,444
--------------
INDIA -- 0.2%
11,600 State Bank of India GDR................. 205,900
--------------
INDONESIA -- 0.5%
265,600 Bank Negara Indonesa BNI................ 140,476
4,000 Indosat ADR............................. 109,500
38,000 Jaya Real Property - Foreign............ 53,079
60,000 Jaya Real Property - Foreign Reg. D..... 83,810
80,000 Kalbe Farma - Foreign Registered........ 91,429
--------------
478,294
--------------
IRELAND -- 0.3%
110,000 Smurfit Jefferson Group................. 326,602
--------------
ITALY -- 1.7%
47,900 Arnoldo Mondadori Editore SPA........... 389,060
160,300 Banca Commerciale Italiana SPA.......... 290,975
70,000 Fiat SPA................................ 211,312
*100,000 Finanziaria Autogril.................... 96,679
128,500 Stet.................................... 583,131
62,000 Telecom Italia SPA...................... 160,657
--------------
1,731,814
--------------
JAPAN -- 11.6%
16,000 Asahi Organic Chemicals Industry Co..... 94,150
17,600 Canon Sales Co., Inc.................... 391,212
4,000 Chudenko Corp........................... 115,103
29,000 Chugai Pharmaceutical Co................ 242,354
2,000 Cosel Co................................ 31,188
39,000 Dai Nippon Printing Co.................. 682,088
7,000 Danto Corp.............................. 68,149
13,000 Fuji Machine Mfg. Co.................... 343,844
42,000 JGC Corp................................ 314,448
4,000 Japan Associated Finance Co............. 315,327
11,000 Kyudenko Corp........................... 113,724
12,000 Mabuchi Motor Co........................ 602,740
16,000 Maruichi Steel Tube..................... 275,696
42,000 Matsushita Electric Industrial Co....... 683,898
83,000 Mitsubishi Heavy Industries............. 657,879
12,000 Murata Manufacturing Co................. 398,036
50,000 NGK Spark Plug.......................... 547,084
67,000 Nippon Express Co....................... 458,327
1,890 Nippon Television Network Corp.......... 569,915
18,000 Nomura Securities Co.................... 269,837
51,000 Onward Kashiyama Co..................... 716,206
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

127
<PAGE>
- --------------------------------------------------------------------------------
HARTFORD INTERNATIONAL ADVISERS FUND, INC.
STATEMENT OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
SHARES MARKET
- ----------- VALUE
--------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
JAPAN -- (CONTINUED)
50,000 Sakura Bank............................. $ 356,681
11,000 Sankyo Co. Ltd.......................... 310,847
26,000 Sanwa Bank Ltd.......................... 353,924
20,000 Seventy-Seven Bank...................... 163,694
4,200 Sony Corp............................... 274,645
46,000 Sumitomo Realty & Development........... 289,308
8,000 Sumitomo Trust & Banking Co............. 79,952
44,000 Toda Construction Co.................... 333,592
26,000 Tokio Marine & Fire Insurance Co........ 244,163
81,000 Toyo Ink Manufacturing Co............... 331,481
20,000 Toyota Motor Corp....................... 573,792
9,100 World Co................................ 376,325
55,000 Yamato Kogyo Co......................... 507,022
1,000 Yamazaki Baking Co. Ltd................. 15,939
--------------
12,102,570
--------------
LUXEMBOURG -- 0.1%
8,500 Indo Gulf GDR........................... 6,880
11,900 Quilmes Industrial ADR.................. 108,588
--------------
115,468
--------------
MALAYSIA -- 0.9%
101,000 Land & General Holdings Berhad.......... 241,952
110,000 MBF Capital Berhad...................... 178,578
36,000 Resort World Berhad..................... 163,928
94,000 Sime Darby Berhad....................... 370,342
--------------
954,800
--------------
MEXICO -- 1.2%
41,700 Cemex S.A. - CPO........................ 149,647
31,300 Cemex S.A. De C.V....................... 112,325
90,000 FEMSA S.A. B............................ 306,402
60,000 Grupo Carso S.A. Series A1.............. 312,500
*670,000 Grupo Financiero Bancomer B............. 268,102
14,650 Transportacion Maritima A ADR........... 67,756
--------------
1,216,732
--------------
NETHERLANDS -- 2.1%
3,300 Akzo Nobel NV........................... 450,242
19,187 Ing Groep NV............................ 689,950
13,010 KLM..................................... 365,539
13,000 Polygram NV............................. 661,372
--------------
2,167,103
--------------
NEW ZEALAND -- 0.4%
102,600 Air New Zealand Ltd. B.................. 278,364
78,000 Carter Holt Harvey Ltd.................. 176,902
--------------
455,266
--------------
NORWAY -- 1.2%
59,100 Fokus Bank.............................. 406,317
33,344 Nycomed ASA A........................... 509,138
22,500 Saga Petroleum AS A..................... 375,271
--------------
1,290,726
--------------
PHILIPPINES -- 0.3%
3,000 Philippine Long Distance ADR............ 153,000
160,000 Pilipino Telephone...................... 135,361
--------------
288,361
--------------
PORTUGAL -- 0.1%
600 Telecel Communicacoes***................ 38,261
--------------
<CAPTION>
SHARES MARKET
- ----------- VALUE
--------------
<C> <S> <C>
SINGAPORE -- 1.9%
46,000 Development Bank of Singapore........... $ 621,524
60,000 Far East-Levingston Shipbuilding........ 313,121
69,000 Keppel Corp............................. 537,668
80,000 Straits Steamship Land.................. 256,216
23,000 United Overseas Bank.................... 256,502
--------------
1,985,031
--------------
SOUTH KOREA -- 0.5%
2,830 Cho Sun Brewery Co...................... 71,963
4,350 Korean Air.............................. 66,883
5,000 Korea Electric Power ADR................ 102,500
13,000 Pohang Iron & Steel Ltd. ADR............ 263,250
--------------
504,596
--------------
SPAIN -- 1.2%
1,750 Acerinox S.A............................ 252,393
4,000 Empresa Nacional de Electricidad ADR.... 284,144
5,250 Empresa Nacional de Electricidad........ 367,500
17,000 Telefonica de Espana S.A................ 394,042
--------------
1,298,079
--------------
SWEDEN -- 0.7%
6,000 BT Industries AB........................ 111,599
16,000 Pharmacia & Upjohn DR................... 654,948
--------------
766,547
--------------
SWITZERLAND -- 1.5%
240 Cie Financiere Richemont AG............. 336,034
390 Nestle SA............................... 417,384
865 Sulzer AG - Part Certified.............. 461,257
200 Sulzer AG - Registered.................. 115,139
300 Swissair Registered..................... 241,971
--------------
1,571,785
--------------
THAILAND -- 0.6%
310,127 Bangkok Metropolitan Bank............... 120,954
24,100 Land & House Co. Ltd.................... 175,768
16,000 Siam City Cement Public Co. Ltd......... 83,619
30,000 Siam Commercial......................... 217,628
--------------
597,969
--------------
UNITED KINGDOM -- 9.0%
14,637 Allied Irish Banks PLC.................. 98,064
7,000 Amersham International PLC.............. 137,760
64,000 Associated British Foods................ 530,640
20,000 Bank of Ireland......................... 182,596
100,000 Bank of Scotland........................ 527,936
29,000 Boc Group PLC........................... 433,498
50,000 Boots Co. PLC........................... 515,529
76,000 British Gas PLC......................... 614,699
760,000 British Telecom Co. PLC................. 513,082
80,000 BTR..................................... 388,807
120,000 Cookson Group PLC....................... 484,640
62,000 CN de la Rue PLC........................ 607,426
90,000 National Grid Group PLC................. 301,103
104,000 Northern Foods PLC...................... 363,959
50,690 Powergen PLC............................ 496,620
77,000 Rank Group PLC.......................... 573,859
40,350 Reckitt & Colman PLC.................... 499,929
58,469 Royal & Sun Alliance Insurance.......... 444,754
55,233 Royal Bank of Scotland.................. 532,622
116,143 Sainsbury (J) PLC....................... 771,172
60,000 Sun Life & Provincial Holdings.......... 268,503
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

128
<PAGE>
<TABLE>
<CAPTION>
SHARES MARKET
- ----------- VALUE
--------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
UNITED KINGDOM -- (CONTINUED)
20,000 United Biscuits PLC..................... $ 71,875
--------------
9,359,073
--------------
VENEZUELA -- 0.2%
5,600 Cia Anonima Telef De Venezuela ADR...... 157,500
--------------
Total common stocks..................... $ 55,336,801
--------------
--------------
PREFERRED STOCK -- 0.4%
FINLAND -- 0.4%
6,800 Nokia Corp. Pref. ADS................... $ 391,850
--------------
--------------
<CAPTION>
PRINCIPAL
AMOUNT
- -----------
<C> <S> <C>
FOREIGN CORPORATE BONDS -- 1.6%
CANADA -- 0.7%
Centra Gas Ontario
$ 465,000 7.80% due 12/01/06.................... $ 360,889
Trans-Canada Pipelines
415,000 8.55% due 02/01/06.................... 341,930
--------------
702,819
--------------
FRANCE -- 0.9%
Credit National
3,300,000 7.25% due 05/14/03.................... 687,932
Electricite Defrance
32,000,000 4.75% due 12/05/01.................... 316,016
--------------
1,003,948
--------------
Total foreign corporate bonds........... $ 1,706,767
--------------
--------------
FOREIGN GOVERNMENT BONDS -- 28.1%
AUSTRALIA -- 1.2%
Australia Commonwealth
1,400,000 9.50% due 08/15/03.................... $ 1,244,669
--------------
AUSTRIA -- 1.2%
Austria Republic
75,000,000 5.00% due 01/22/01.................... 735,009
50,000,000 6.25% due 10/16/03.................... 537,930
--------------
1,272,939
--------------
BELGIUM -- 0.9%
Belgium Kingdom
5,000,000 7.00% due 05/15/06.................... 170,001
18,000,000 7.25% due 04/29/04.................... 626,511
3,050,000 9.00% due 06/27/01.................... 112,967
--------------
909,479
--------------
CANADA -- 2.2%
Canada Government
340,000 6.50% due 06/01/04.................... 253,172
1,150,000 7.25% due 06/01/03.................... 896,463
100,000 8.00% due 06/01/23.................... 81,239
1,050,000 8.50% due 03/01/00.................... 844,610
250,000 8.75% due 12/01/05.................... 212,176
--------------
2,287,660
--------------
DENMARK -- 1.6%
Denmark Kingdom
2,860,000 8.00% due 03/15/06.................... 533,319
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------- --------------
<C> <S> <C>
FOREIGN GOVERNMENT BONDS -- (CONTINUED)
DENMARK -- (CONTINUED)
5,600,000 9.00% due 11/15/00.................... $ 1,081,760
--------------
1,615,079
--------------
FINLAND -- 1.6%
Finnish Republic
7,000,000 7.25% due 04/18/06.................... 1,629,309
--------------
FRANCE -- 1.5%
France O.A.T.
5,900,000 6.00% due 10/25/25.................... 1,018,565
2,626,000 9.50% due 01/25/01.................... 600,843
--------------
1,619,408
--------------
GERMANY -- 6.0%
German Federal Unity
2,679,000 6.25% due 01/04/24.................... 1,649,876
375,000 6.50% due 07/15/03.................... 258,758
3,260,000 8.25% due 09/20/01.................... 2,421,875
1,400,000 8.50% due 02/20/01.................... 1,041,614
1,200,000 8.75% due 07/20/00.................... 890,164
--------------
6,262,287
--------------
ITALY -- 3.4%
Italy BTPS
260,000,000 8.50% due 01/04/99................... 178,520
1,360,000,000 8.50% due 08/01/99................... 934,961
335,000,000 8.50% due 01/01/99................... 229,355
2,100,000,000 9.00% due 10/01/03................... 1,511,641
275,000,000 10.50% due 07/15/00................... 202,601
675,000,000 12.00% due 06/01/01................... 530,056
--------------
3,587,134
--------------
JAPAN -- 0.4%
Japan Government #33B
49,000,000 3.80% due 09/20/16.................... 452,512
--------------
NETHERLANDS -- 0.4%
Netherlands Government
705,000 7.00% due 06/15/05.................... 444,666
--------------
PORTUGAL -- 0.3%
Portugal Republic
43,000,000 9.50% due 02/23/06.................... 325,443
--------------
SPAIN -- 1.0%
Spanish Government
71,500,000 8.40% due 04/30/01................... 601,408
13,700,000 10.00% due 02/28/05................... 126,715
29,000,000 11.30% due 01/15/02................... 273,506
--------------
1,001,629
--------------
SWEDEN -- 1.5%
Sweden Kingdom
1,500,000 8.00% due 08/15/07................... 239,878
4,300,000 10.25% due 05/05/03................... 769,897
2,700,000 13.00% due 06/15/01................... 509,831
--------------
1,519,606
--------------
UNITED KINGDOM -- 4.9%
United Kingdom Treasury Gilt
475,000 7.00% due 11/06/01.................... 804,231
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

129
<PAGE>
- --------------------------------------------------------------------------------
HARTFORD INTERNATIONAL ADVISERS FUND, INC.
STATEMENT OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- ----------- --------------
FOREIGN GOVERNMENT BONDS -- (CONTINUED)
800,000 7.75% due 09/08/06.................... 1,389,576
<C> <S> <C>
660,000 9.75% due 08/27/02.................... 1,251,934
940,000 9.00% due 03/03/00.................... 1,693,075
--------------
5,138,816
--------------
Total foreign government bonds.......... $ 29,310,636
--------------
--------------

<CAPTION>
SUPRANATIONAL -- 4.4%
<C> <S> <C>
Asian Development Bank
120,000,000 5.00% due 02/02/03.................... $ 1,201,861
European Investment Bank
160,000,000 3.00% due 09/20/06.................... 1,408,633
Interamerican Development Bank
100,000,000 6.00% due 10/30/01.................... 1,029,551
International Bank for Recon &
Development
100,000,000 4.75% due 12/20/04.................... 1,003,705
--------------
Total supranational..................... $ 4,643,750
--------------
--------------
U.S. TREASURIES & FEDERAL AGENCIES -- 3.8%
U.S. Treasury Notes
2,000,000 5.25% due 12/31/97................... $ 1,986,874
2,000,000 6.125% due 12/31/01................... 1,992,500
--------------
Total U.S. treasuries & Federal
agencies.............................. $ 3,979,374
--------------
--------------
SHORT-TERM SECURITIES -- 9.9%
U.S. TREASURY BILL -- 0.1%
U.S. Treasury Bill
150,000 4.87% due 01/02/97.................... 149,980
--------------
REPURCHASE AGREEMENT -- 9.8%
6,609,000 Interest in $399,594,000 joint
repurchase agreement dated 12/31/96
with State Street Bank 6.7693% due
01/02/97; maturity amount $6,611,485;
(Collateralized by $218,212,000 U.S.
Treasury Note 6.25% due 06/30/98 and
$280,160,000 U.S. Treasury Strip
(principal) 0% due 05/15/19).......... 6,609,000
3,578,000 Interest in $300,000,000 joint
repurchase agreement dated 12/31/96
with First Boston 6.75% due 01/02/97;
maturity amount $3,579,342;
(Collateralized by $301,035,000 U.S.
Treasury Note 6.25% due 10/31/01)..... 3,578,000
--------------
10,187,000
--------------
Total short-term securities............. $ 10,336,980
--------------
--------------
</TABLE>

<TABLE>
<CAPTION>
MARKET
VALUE
--------------
<S> <C> <C>
DIVERSIFICATION OF ASSETS:
Total common stocks (cost $52,493,855)....... 53.0% $ 55,336,801
Total preferred stock (cost $237,480)........ 0.4 391,850
Total foreign corporate bonds (cost
$1,426,239)................................ 1.6 1,706,767
Total foreign government bonds (cost
$28,725,284)............................... 28.1 29,310,636
Total supranational (cost $4,792,408)........ 4.4 4,643,750
Total U.S. treasuries & Federal agencies
(cost $3,987,969).......................... 3.8 3,979,374
Total short-term securities (cost
$10,336,980)............................... 9.9 10,336,980
------ --------------
Total investment in securities
(Identified cost $102,000,215)............. 101.2 105,706,158
Excess of liabilities over cash and
receivables................................ (1.2) (1,220,416)
------ --------------
Net assets (applicable to $1.16657 per share
based on 89,565,973 shares outstanding).... 100.0% $ 104,485,742
------ --------------
------ --------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share; authorized
750,000,000 shares; outstanding 89,565,973
shares............................................. $ 8,956,597
Capital surplus...................................... 91,427,240
Distribution in excess of net investment income...... (107,552)
Undistributed net realized gain on investments....... 367,957
Unrealized appreciation of investments............... 3,705,943
Unrealized appreciation on futures contracts**....... 122,560
Unrealized appreciation on forward foreign currency
contracts (Note 2)................................. 23,782
Unrealized depreciation on translation on other
assets and liabilities in foreign currencies....... (10,785)
--------------
Net assets, applicable to shares outstanding......... $ 104,485,742
--------------
--------------
</TABLE>

* Non-income producing during period.
** The Fund had 12 March TSE 35 Index futures contracts, 8 March MATIF CAC 40
Index futures contracts, 16 March ALL ORDS Index futures, 3 March LIF FTSE
100 Index futures contracts, 158 January IBEX futures contracts, 23 January
OMX Stock Index futures contracts, 4 March MIB 30 Index futures contracts,
and 11 March DTB DAX Index futures contracts, 1 March TSE 10 year JGB Index
futures contract open at December 31, 1996. The contracts had a market value
of $129,156 at December 31, 1996.
*** Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

130
<PAGE>
FORWARD FOREIGN CURRENCY CONTRACTS -- NOTE 2 -- OUTSTANDING AT DECEMBER 31, 1996

<TABLE>
<CAPTION>
UNREALIZED
AGGREGATE DELIVERY APPRECIATION
DESCRIPTION TOTAL VALUE FACE VALUE DATE (DEPRECIATION)
- ------------------------------ ----------- ----------- --------- -------------
<S> <C> <C> <C> <C>
Australian Dollars (Buy) $ 555,909 $ 554,232 01/17/97 $ 1,677
Australian Dollars (Sell) 1,240,273 1,242,571 01/29/97 2,298
Belgian Francs (Sell) 906,180 901,473 03/27/97 (4,707)
British Pounds (Buy) 667,705 610,506 01/08/97 57,199
British Pounds (Buy) 667,705 608,868 01/08/97 58,837
British Pounds (Buy) 1,151,605 1,125,580 03/26/97 26,025
British Pounds (Sell) 1,335,411 1,266,720 01/08/97 (68,691)
British Pounds (Sell) 1,457,980 1,343,486 01/29/97 (114,494)
British Pounds (Sell) 345,671 329,260 01/29/97 (16,411)
British Pounds (Sell) 343,960 326,424 01/29/97 (17,536)
British Pounds (Sell) 516,796 493,619 01/29/97 (23,177)
British Pounds (Sell) 515,085 494,242 01/29/97 (20,843)
British Pounds (Sell) 344,816 338,923 01/29/97 (5,893)
British Pounds (Sell) 855,622 825,000 01/29/97 (30,622)
British Pounds (Sell) 766,638 739,200 01/29/97 (27,438)
Canadian Dollars (Buy) 549,652 552,771 03/03/97 (3,119)
Canadian Dollars (Buy) 857,457 859,662 03/03/97 (2,205)
Canadian Dollars (Buy) 307,826 309,415 03/20/97 (1,589)
Canadian Dollars (Sell) 2,194,105 2,200,301 01/29/97 6,196
Canadian Dollars (Sell) 782,564 784,745 01/29/97 2,181
Canadian Dollars (Sell) 1,407,109 1,426,237 03/03/97 19,128
Danish Krone (Sell) 1,617,087 1,601,318 03/26/97 (15,769)
Dutch Guilder (Sell) 445,576 441,210 03/27/97 (4,366)
Finnish Markkas (Sell) 1,619,641 1,606,639 03/27/97 (13,002)
French Franc (Sell) 2,317,094 2,285,714 01/29/97 (31,380)
French Franc (Sell) 684,892 677,255 03/27/97 (7,637)
German Deutschemarks (Sell) 1,146,384 1,133,721 03/26/97 (12,663)
German Deutschemarks (Sell) 6,264,698 6,218,067 03/27/97 (46,631)
German Deutschemarks (Buy) 689,284 681,783 03/20/97 7,501
German Deutschemarks (Buy) 1,301,992 1,292,120 03/21/97 9,872
Italian Lira (Buy) 367,159 363,372 03/21/97 3,787
Italian Lira (Sell) 3,580,832 3,552,444 01/29/97 (28,388)
Japanese Yen (Sell) 3,285,764 3,494,893 01/13/97 209,129
Japanese Yen (Sell) 484,345 503,289 01/13/97 18,944
Japanese Yen (Sell) 340,339 347,667 01/13/97 7,328
Japanese Yen (Sell) 83,895 87,452 01/13/97 3,557
Japanese Yen (Sell) 1,072,479 1,123,422 01/13/97 50,943
Japanese Yen (Sell) 389,206 407,056 01/13/97 17,850
Japanese Yen (Sell) 787,061 810,402 01/13/97 23,341
Japanese Yen (Sell) 289,742 295,310 01/13/97 5,568
Japanese Yen (Sell) 549,546 558,242 01/17/97 8,696
Portuguese Escudo (Sell) 323,319 319,335 01/29/97 (3,984)
Spanish Pesetas (Buy) 406,759 402,446 01/17/97 4,313
Spanish Pesetas (Sell) 992,519 981,686 01/29/97 (10,833)
Swedish Kronas (Buy) 301,510 298,147 01/24/97 3,363
Swedish Kronas (Buy) 97,302 96,217 01/24/97 1,085
Swedish Kronas (Sell) 751,127 746,487 01/29/97 (4,640)
Swedish Kronas (Sell) 772,482 763,464 01/29/97 (9,018)
-------------
$ 23,782
-------------
-------------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

131
<PAGE>
- --------------------------------------------------------------------------------
Hartford Small Company Fund, Inc.
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ----------- --------------
<C> <S> <C>
COMMON STOCKS -- 88.1%
AEROSPACE & DEFENSE -- 1.1%
14,100 Gulfstream Aerospace Corp............... $ 341,925
5,000 Rohr, Inc............................... 113,125
--------------
455,050
--------------
BUSINESS SERVICES -- 2.4%
*44,100 Borg-Warner Security.................... 474,075
3,000 Lason, Inc.............................. 61,500
16,800 Prepaid Legal Services.................. 306,600
13,500 Western Wireless Corp. Class A.......... 187,313
--------------
1,029,488
--------------
COMMUNICATION EQUIPMENT -- 5.2%
4,200 Etec Systems, Inc....................... 160,650
*23,600 Gilat Satellite Network................. 581,150
*16,600 Natural Microsystems Corp............... 522,900
*14,400 Oak Industries, Inc..................... 331,200
22,100 Scitex Corp............................. 209,950
*9,600 Videoserver, Inc........................ 408,000
--------------
2,213,850
--------------
COMPUTERS & OFFICE
EQUIPMENT -- 1.1%
*40,000 Diamond Multimedia Systems.............. 475,000
--------------
CONSUMER DURABLES -- 1.0%
15,200 First Brands Corp....................... 431,300
--------------
CONSUMER NON-DURABLES -- 0.1%
4,900 Vans, Inc............................... 61,250
--------------
CONSUMER SERVICES -- 2.9%
22,600 Golden Bear Golf, Inc................... 254,250
43,600 Iwerks Entertainment, Inc............... 218,000
3,200 PJ America, Inc......................... 57,600
*4,700 Planet Hollywood International, Inc..... 92,825
25,800 Prime Hospitality Corp.................. 416,025
*44,600 Rally's Hamburgers, Inc................. 203,488
--------------
1,242,188
--------------
ELECTRONICS -- 5.4%
*15,100 Actel Corp.............................. 358,625
18,400 Cinductus, Inc.......................... 119,600
25,800 Dallas Semiconductor.................... 593,392
25,000 Gemstar International Group Ltd......... 437,500
87,300 Intelligent Electronics................. 698,400
6,900 Puma Technology, Inc.................... 119,025
--------------
2,326,542
--------------
ENERGY & SERVICES -- 1.2%
*12,900 Falcon Drilling Co...................... 506,325
--------------
FINANCIAL SERVICES -- 9.8%
8,700 Bancorp Hawaii, Inc..................... 365,400
992 Conseco, Inc............................ 63,248
12,500 Frontier Insurance Group................ 478,125
16,900 Imperial Bancorp........................ 386,588
29,000 Imperial Credit Industries.............. 609,000
12,500 Legg Mason, Inc......................... 481,250
9,300 MMI Companies, Inc...................... 299,925
12,600 Reinsurance Group of America............ 593,775
20,000 Resource Bancshares..................... 285,000
29,300 Westcorp, Inc........................... 640,938
--------------
4,203,249
--------------

<CAPTION>
SHARES MARKET
- ----------- VALUE
--------------
<C> <S> <C>
FOOD, BEVERAGE & TOBACCO -- 1.1%
12,600 Robert Mondavi Corp. Class B............ $ 459,900
--------------
HEALTH CARE -- 18.7%
16,800 Alliance Pharmaceuticlas Corp........... 228,900
27,700 Amylin Pharmaceuticals, Inc............. 360,100
*19,400 Apria Healthcare........................ 363,750
11,800 Bergen Brunswig Corp. Class A........... 336,300
*12,600 FHP International....................... 467,775
*17,000 Genesis Health Ventures, Inc............ 529,125
*21,900 Haemonetics............................. 413,363
15,200 IDX Systems Corp........................ 435,100
10,600 Isomedix, Inc........................... 137,800
33,900 Kinetic Concepts, Inc................... 415,275
16,800 Ligand Pharmaceuticals Class B.......... 249,900
13,600 Liposome Co., Inc....................... 260,100
23,500 Magainin Pharmaceuticals, Inc........... 226,188
24,000 Magellan Health Services, Inc........... 537,000
18,300 McKesson................................ 1,024,800
22,100 Medpartners............................. 464,100
39,400 NABI, Inc............................... 344,750
20,900 Physio-Control International Corp....... 470,250
23,500 Vencor, Inc............................. 743,188
--------------
8,007,764
--------------
INDUSTRIAL MATERIALS -- 2.2%
*21,500 Noble Drilling Corp..................... 427,313
20,000 Tetra Technologies...................... 505,000
--------------
932,313
--------------
MANUFACTURING -- 4.2%
15,000 Fore Systems, Inc....................... 493,125
9,800 Memtec Ltd. ADR......................... 322,175
12,100 NN Ball & Roller, Inc................... 184,525
34,500 Tyco Toys, Inc.......................... 405,375
10,600 UCAR International, Inc................. 398,825
--------------
1,804,025
--------------
MEDIA & SERVICES -- 6.2%
29,900 American Telecasting.................... 171,925
17,730 HSN..................................... 421,088
*15,500 International Cabletel, Inc............. 391,375
19,300 Macromedia, Inc......................... 347,400
*1,700 Metro Networks, Inc..................... 42,925
*30,500 Pegasus Communications Corp............. 419,375
25,400 Peoples Choice TV Corp.................. 155,575
32,500 Playboy Enterprises Class B............. 316,875
62,300 Valuevisiom International, Inc. Cla..... 334,863
2,400 West Teleservices Corp.................. 54,600
--------------
2,656,001
--------------
REAL ESTATE -- 0.8%
20,200 Castle & Cooke, Inc..................... 320,675
--------------
RETAIL -- 8.2%
13,900 Bed & Bath Beyond, Inc.................. 337,075
12,900 Brinker International, Inc.............. 206,400
18,500 Ethan Allen, Inc........................ 712,250
21,200 Gymboree Corp........................... 484,950
9,700 Mercantile Stores, Inc.................. 478,938
14,000 Saks Holding, Inc....................... 378,000
69,000 Sports and Recreation................... 534,750
29,700 Urban Outfitters, Inc................... 386,100
--------------
3,518,463
--------------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

132
<PAGE>
<TABLE>
<CAPTION>
SHARES MARKET
- ----------- VALUE
--------------
<C> <S> <C>
COMMON STOCKS -- (CONTINUED)
SOFTWARE & SERVICES -- 11.4%
13,000 Affiliated Computer Services Class...... $ 386,750
*5,100 Aurum Software, Inc..................... 117,938
*3,500 BA Merchant Services, Inc. Class A...... 62,563
*12,500 Bisys Group, Inc........................ 463,281
*18,650 Boole & Babbage, Inc.................... 466,250
12,200 Caere Corp.............................. 140,300
*6,700 Cybermedia, Inc......................... 105,525
*4,500 Desktop Data, Inc....................... 86,625
18,000 DST Systems, Inc........................ 564,750
*24,100 IKOS Systems, Inc....................... 482,000
3,200 Information Management Resources........ 67,600
11,600 Kronos, Inc............................. 371,200
22,300 Mercury Interactive Corp................ 289,900
*29,800 Premenos Technology Corp................ 257,025
*11,137 Sterling Commerce....................... 392,579
*19,500 Sterling Software, Inc.................. 616,688
--------------
4,870,974
--------------
TRANSPORTATION -- 2.8%
23,500 Air Express International............... 757,875
19,400 Swift Transportation.................... 455,900
--------------
1,213,775
--------------
UTILITIES -- 2.3%
21,100 McLeod Inc. Class A..................... 538,050
134,600 Peoples Telephone Co., Inc.............. 429,038
--------------
967,088
--------------
Total common stocks..................... $ 37,695,220
--------------
--------------
PREFERRED STOCKS -- 0.6%
CONSUMER SERVICES -- 0.6%
9,600 AMC Entertainment....................... $ 259,200
--------------
--------------
<CAPTION>
PRINCIPAL
AMOUNT
- -----------
<C> <S> <C>
REPURCHASE AGREEMENTS -- 10.3%
$ 2,959,000 Interest in $399,594,000 joint
repurchase agreement dated 12/31/96
with State Street Bank 6.76935 due
01/02/97; maturity amount $2,960,113;
(Collateralized by $218,212,000 U.S.
Treasury Note 6.25% due 06/30/98 and
$280,160,000 U.S. Treasury Strip
(principal) 0% due 05/15/19).......... 2,959,000
1,470,000 Interest in $300,000,000 joint
repurchase agreement dated 12/31/96
with First Boston 6.75% due 01/02/97;
maturity amount $1,470,551;
(Collateralized by $301,035,000 U.S.
Treasury Note 6.25% due 10/31/01)..... 1,470,000
--------------
Total short-term securities............. $ 4,429,000
--------------
--------------
</TABLE>

<TABLE>
<CAPTION>
MARKET
VALUE
--------------
<S> <C> <C>
DIVERSIFICATION OF ASSETS:
Total common stocks (cost $37,333,971)....... 88.1% $ 37,695,220
Total preferred stock (cost $314,555)........ 0.6 259,200
Total short-term securities (cost
$4,429,000)................................ 10.3 4,429,000
------ --------------
Total investment in securities
(Identified cost $42,077,526).............. 99.0 42,383,420
Excess of cash and receivables over
liabilities................................ 1.0 428,501
------ --------------
Net assets (applicable to $1.06916 per share
on 40,042,487 shares outstanding).......... 100.0% $ 42,811,921
------ --------------
------ --------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $0.10 per share; authorized
750,000,000 shares; outstanding 40,042,487
shares............................................. $ 4,004,249
Capital surplus...................................... 38,312,307
Undistributed net investment income.................. 156
Undistributed net realized gain on investments....... 189,315
Unrealized appreciation of investments............... 305,894
--------------
Net assets, applicable to shares outstanding......... $ 42,811,921
--------------
--------------
</TABLE>

* Non income producing during period.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

133
<PAGE>
- --------------------------------------------------------------------------------
Hartford Mutual Funds
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>
HARTFORD HARTFORD HVA HARTFORD
BOND STOCK MONEY MARKET ADVISERS
FUND, INC. FUND, INC. FUND, INC. FUND, INC.
-------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ -- $ 44,361,165 $ -- $ 63,598,453
Interest............... 25,148,015 5,715,495 24,739,450 116,030,928
Less: Foreign tax
withheld.............. (34,375) (543,069) -- (740,316)
-------------- ------------- ------------ -------------
Total income......... 25,113,640 49,533,591 24,739,450 178,889,065
-------------- ------------- ------------ -------------
EXPENSES:
Investment advisory
fees.................. 1,152,953 6,450,702 1,121,482 22,209,882
Administrative service
fees.................. 636,196 4,210,075 784,977 8,785,932
Accounting services.... 18,193 119,798 22,428 250,625
Custodian fees......... 11,200 23,700 25,535 371,643
Board of directors..... 2,583 17,011 3,184 35,587
Other expenses......... 42,113 229,275 43,206 184,623
-------------- ------------- ------------ -------------
Total expenses....... 1,863,238 11,050,561 2,000,812 31,838,292
-------------- ------------- ------------ -------------

Net investment
income................ 23,250,402 38,483,030 22,738,638 147,050,773
-------------- ------------- ------------ -------------
Net realized gain
(loss) on security
transactions.......... 2,775,436 161,403,731 2,197 267,921,758
Net realized gain
(loss) on futures
contracts............. -- -- -- --
Net realized gain
(loss) on options
contracts............. -- -- -- --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ (12,099,332) 329,790,776 -- 373,870,758
-------------- ------------- ------------ -------------
Net realized and
unrealized gain (loss)
on investments........ (9,323,896) 491,194,507 2,197 641,792,516
-------------- ------------- ------------ -------------
Net increase (decrease)
in net assets
resulting from
operations............ $ 13,926,506 $ 529,677,537 $22,740,835 $788,843,289
-------------- ------------- ------------ -------------
-------------- ------------- ------------ -------------
</TABLE>

* From inception, August 9, 1996, to December 31, 1996.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

134
<PAGE>
<TABLE>
<CAPTION>
HARTFORD
U.S. HARTFORD HARTFORD HARTFORD HARTFORD
GOVERNMENT CAPITAL MORTGAGE HARTFORD INTERNATIONAL DIVIDEND
MONEY MARKET APPRECIATION SECURITIES INDEX OPPORTUNITIES AND GROWTH
FUND, INC. FUND, INC. FUND, INC. FUND, INC. FUND, INC. FUND, INC.
------------ ------------- ------------- ----------- ------------------ -----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............. $ -- $ 23,305,642 $ -- $ 9,760,927 $20,730,041 $16,432,783
Interest............... 569,859 11,974,675 22,969,872 1,963,795 3,341,358 1,591,811
Less: Foreign tax
withheld.............. -- (961,249) -- (60,040) (2,392,963) (17,265)
------------ ------------- ------------- ----------- ------------------ -----------
Total income......... 569,859 34,319,068 22,969,872 11,664,682 21,678,436 18,007,329
------------ ------------- ------------- ----------- ------------------ -----------
EXPENSES:
Investment advisory
fees.................. 26,505 12,519,486 804,297 945,609 4,428,186 2,968,879
Administrative service
fees.................. 18,554 4,795,769 563,008 827,408 1,493,655 965,006
Accounting services.... 530 136,636 16,145 23,472 42,646 27,177
Custodian fees......... 14,713 46,610 18,100 16,740 649,998 7,900
Board of directors..... 75 19,401 2,293 3,333 6,055 3,859
Other expenses......... 1,362 264,845 56,199 49,602 113,743 52,279
------------ ------------- ------------- ----------- ------------------ -----------
Total expenses....... 61,739 17,782,747 1,460,042 1,866,164 6,734,283 4,025,100
------------ ------------- ------------- ----------- ------------------ -----------

Net investment
income................ 508,120 16,536,321 21,509,830 9,798,518 14,944,153 13,982,229
------------ ------------- ------------- ----------- ------------------ -----------
Net realized gain
(loss) on security
transactions.......... 99 255,377,198 (441,923) 44,514,753 76,113,210 27,744,666
Net realized gain
(loss) on futures
contracts............. -- 6,073,616 (41,164) 9,782,117 1,237,540 --
Net realized gain
(loss) on options
contracts............. -- -- (65,625) -- (3,126) 44,654
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- 239,094,440 (5,189,787) 32,113,387 10,899,075 76,776,242
------------ ------------- ------------- ----------- ------------------ -----------
Net realized and
unrealized gain (loss)
on investments........ 99 500,545,254 (5,738,499) 86,410,257 88,246,699 104,565,562
------------ ------------- ------------- ----------- ------------------ -----------
Net increase (decrease)
in net assets
resulting from
operations............ $508,219 $517,081,575 $ 15,771,331 $96,208,775 $103,190,852 $118,547,791
------------ ------------- ------------- ----------- ------------------ -----------
------------ ------------- ------------- ----------- ------------------ -----------

HARTFORD
INTERNATIONAL HARTFORD
ADVISERS SMALL COMPANY
FUND, INC. FUND, INC.*
------------- -------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends.............. $1,003,081 $ 26,626
Interest............... 1,995,178 66,570
Less: Foreign tax
withheld.............. (147,422) (78)
------------- -------------
Total income......... 2,850,837 93,118
------------- -------------
EXPENSES:
Investment advisory
fees.................. 392,271 31,521
Administrative service
fees.................. 119,528 13,232
Accounting services.... 3,374 315
Custodian fees......... 100,000 10,420
Board of directors..... 479 45
Other expenses......... 8,699 829
------------- -------------
Total expenses....... 624,351 56,362
------------- -------------
Net investment
income................ 2,226,486 36,756
------------- -------------
Net realized gain
(loss) on security
transactions.......... 3,178,372 176,416
Net realized gain
(loss) on futures
contracts............. 120,799 12,899
Net realized gain
(loss) on options
contracts............. -- --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 2,337,601 305,895
------------- -------------
Net realized and
unrealized gain (loss)
on investments........ 5,636,772 495,210
------------- -------------
Net increase (decrease)
in net assets
resulting from
operations............ $7,863,258 $531,966
------------- -------------
------------- -------------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

135
<PAGE>
- --------------------------------------------------------------------------------
Hartford Mutual Funds
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>
HARTFORD HARTFORD HVA HARTFORD
BOND STOCK MONEY MARKET ADVISERS
FUND, INC. FUND, INC. FUND, INC. FUND, INC.
---------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment
income................ $ 23,250,402 $ 38,483,030 $ 22,738,638 $ 147,050,773
Net realized gain on
security transactions
and foreign
currency.............. 2,775,436 161,403,731 2,197 267,921,758
Net realized gain
(loss) on futures
contracts............. -- -- -- --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ (12,099,332) 329,790,776 -- 373,870,758
---------------- --------------- --------------- ---------------
Net increase
(decrease) in net
assets resulting
from operations..... 13,926,506 529,677,537 22,740,835 788,843,289
DISTRIBUTIONS TO
SHAREHOLDERS:
Net investment
income................ (23,252,299) (38,048,174) (22,738,638) (146,336,279)
Net realized gain on
security
transactions.......... -- (80,821,138) (2,197) (97,284,143)
CAPITAL SHARE
TRANSACTIONS:
Proceeds from sale of
shares................ 254,369,346 1,358,328,493 2,549,507,437 1,211,458,165
Reinvested dividends
and distributions..... 23,252,298 118,869,307 22,740,798 243,620,416
Cost of shares
redeemed.............. (208,242,998) (770,681,048) (2,369,371,242) (383,541,029)
---------------- --------------- --------------- ---------------
Net increase
(decrease) from
capital share
transactions........ 69,378,646 706,516,752 202,876,993 1,071,537,552
---------------- --------------- --------------- ---------------
Total increase
(decrease) in net
assets.............. 60,052,853 1,117,324,977 202,876,993 1,616,760,419
NET ASSETS:
Beginning of period.... 342,494,947 1,876,883,614 339,708,583 4,262,768,749
---------------- --------------- --------------- ---------------
End of period.......... $ 402,547,800 $ 2,994,208,591 $ 542,585,576 $5,879,529,168
---------------- --------------- --------------- ---------------
---------------- --------------- --------------- ---------------
CHANGE IN CAPITAL SHARES
OUTSTANDING:
Shares sold............ 254,649,109 360,788,240 2,549,507,437 597,537,609
Reinvested
distributions......... 23,512,053 33,332,051 22,740,798 122,083,331
Shares redeemed........ (208,369,007) (203,498,988) (2,369,371,242) (186,184,804)
---------------- --------------- --------------- ---------------
Net increase (decrease)
in shares
outstanding........... 69,792,155 190,621,303 202,876,993 533,436,136
---------------- --------------- --------------- ---------------
---------------- --------------- --------------- ---------------
</TABLE>

* From inception, August 9, 1996, to December 31, 1996.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

136
<PAGE>
<TABLE>
<CAPTION>
HARTFORD
U.S. HARTFORD HARTFORD HARTFORD
GOVERNMENT CAPITAL MORTGAGE HARTFORD INTERNATIONAL HARTFORD
MONEY MARKET APPRECIATION SECURITIES INDEX OPPORTUNITIES DIVIDEND AND GROWTH
FUND, INC. FUND, INC. FUND, INC. FUND, INC. FUND, INC. FUND, INC.
------------ --------------- ------------- ------------- ------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment
income................ $ 508,120 $ 16,536,321 $ 21,509,830 $ 9,798,518 $ 14,944,153 $ 13,982,229
Net realized gain on
security transactions
and foreign
currency.............. 99 255,377,198 (507,548) 44,514,753 76,110,084 27,789,320
Net realized gain
(loss) on futures
contracts............. -- 6,073,616 (41,164) 9,782,117 1,237,540 --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- 239,094,440 (5,189,787) 32,113,387 10,899,075 76,776,242
------------ --------------- ------------- ------------- ------------- -------------------
Net increase
(decrease) in net
assets resulting
from operations..... 508,219 517,081,575 15,771,331 96,208,775 103,190,852 118,547,791
DISTRIBUTIONS TO
SHAREHOLDERS:
Net investment
income................ (508,120) (18,981,972) (20,576,313) (9,725,897) (16,566,894) (13,722,811)
Net realized gain on
security
transactions.......... (99) (144,074,825) -- (6,503,101) (20,342,973) (6,559,586)
CAPITAL SHARE
TRANSACTIONS:
Proceeds from sale of
shares................ 11,370,111 1,992,482,669 60,478,861 909,101,858 271,959,848 514,924,406
Reinvested dividends
and distributions..... 508,218 163,056,776 20,576,314 16,228,997 36,909,865 20,282,403
Cost of shares
redeemed.............. (10,218,454) (1,280,786,138) (78,320,323) (702,498,963) (65,082,872) (18,562,229)
------------ --------------- ------------- ------------- ------------- -------------------
Net increase
(decrease) from
capital share
transactions........ 1,659,875 874,753,307 2,734,852 222,831,892 243,786,841 516,644,580
------------ --------------- ------------- ------------- ------------- -------------------
Total increase
(decrease) in net
assets.............. 1,659,875 1,228,778,085 (2,070,130) 302,811,669 310,067,826 614,909,974
NET ASSETS:
Beginning of period.... 10,070,267 2,157,891,703 327,565,313 318,252,892 686,475,205 265,070,467
------------ --------------- ------------- ------------- ------------- -------------------
End of period.......... $11,730,142 $ 3,386,669,788 $ 325,495,183 $ 621,064,561 $996,543,031 $879,980,441
------------ --------------- ------------- ------------- ------------- -------------------
------------ --------------- ------------- ------------- ------------- -------------------
CHANGE IN CAPITAL SHARES
OUTSTANDING:
Shares sold............ 11,370,111 550,329,695 57,507,862 418,317,811 202,942,268 365,817,586
Reinvested
distributions......... 508,218 48,709,013 19,671,794 7,617,074 27,910,095 14,561,833
Shares redeemed........ (10,218,454) (352,206,856) (74,651,995) (322,113,339) (48,271,571) (12,969,461)
------------ --------------- ------------- ------------- ------------- -------------------
Net increase (decrease)
in shares
outstanding........... 1,659,875 246,831,852 2,527,661 103,821,546 182,580,792 367,409,958
------------ --------------- ------------- ------------- ------------- -------------------
------------ --------------- ------------- ------------- ------------- -------------------

HARTFORD
INTERNATIONAL HARTFORD
ADVISERS SMALL COMPANY
FUND, INC. FUND, INC.*
------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment
income................ $ 2,226,486 $ $36,756
Net realized gain on
security transactions
and foreign
currency.............. 3,178,372 176,416
Net realized gain
(loss) on futures
contracts............. 120,799 12,899
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 2,337,601 305,895
------------- -------------
Net increase
(decrease) in net
assets resulting
from operations..... 7,863,258 531,966
DISTRIBUTIONS TO
SHAREHOLDERS:
Net investment
income................ (3,160,906) (36,601)
Net realized gain on
security
transactions.......... (2,100,363) --
CAPITAL SHARE
TRANSACTIONS:
Proceeds from sale of
shares................ 80,121,321 42,814,882
Reinvested dividends
and distributions..... 5,081,390 29,636
Cost of shares
redeemed.............. (14,583,123) (527,962)
------------- -------------
Net increase
(decrease) from
capital share
transactions........ 70,619,588 42,316,556
------------- -------------
Total increase
(decrease) in net
assets.............. 73,221,577 42,811,921
NET ASSETS:
Beginning of period.... 31,264,165 --
------------- -------------
End of period.......... $104,485,742 $42,811,921
------------- -------------
------------- -------------
CHANGE IN CAPITAL SHARES
OUTSTANDING:
Shares sold............ 69,719,902 40,509,778
Reinvested
distributions......... 4,382,000 27,965
Shares redeemed........ (12,726,579) (495,256)
------------- -------------
Net increase (decrease)
in shares
outstanding........... 61,375,323 40,042,487
------------- -------------
------------- -------------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

137
<PAGE>
- --------------------------------------------------------------------------------
Hartford Mutual Funds
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1995

<TABLE>
<CAPTION>
HARTFORD HARTFORD HVA HARTFORD
BOND STOCK MONEY MARKET ADVISERS
FUND, INC. FUND, INC. FUND, INC. FUND, INC.
-------------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment
income................ $ 18,291,476 $ 32,886,265 $ 17,286,032 $ 127,308,402
Net realized gain
(loss) on security
transactions and
foreign currency...... 6,010,729 80,821,093 -- 97,284,118
Net realized gain
(loss) on futures
contracts............. -- -- -- --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 22,790,429 308,861,831 -- 649,451,880
-------------- --------------- --------------- ----------------
Net increase
(decrease) in net
assets resulting
from operations..... 47,092,634 422,569,189 17,286,032 874,044,400
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment
income................ (18,291,476) (32,886,265) (17,286,032) (127,308,402)
Net realized gain on
security
transactions.......... -- (47,489,646) -- (36,509,652)
CAPITAL SHARE
TRANSACTIONS:
Proceeds from sale of
shares................ 227,913,447 668,241,451 1,501,677,031 462,346,769
Reinvested dividends
and distributions..... 18,291,476 80,375,915 17,286,033 163,818,063
Cost of shares
redeemed.............. (179,969,221) (377,085,012) (1,500,719,153) (107,656,490)
-------------- --------------- --------------- ----------------
Net increase (decrease)
in net assets
resulting from capital
share transactions.... 66,235,702 371,532,354 18,243,911 518,508,342
-------------- --------------- --------------- ----------------
Total increase
(decrease) in net
assets.............. 95,036,860 713,725,632 18,243,911 1,228,734,688
NET ASSETS:
Beginning of period.... 247,458,087 1,163,157,982 321,464,672 3,034,034,061
-------------- --------------- --------------- ----------------
End of period.......... $ 342,494,947 $ 1,876,883,614 $ 339,708,583 $ 4,262,768,749
-------------- --------------- --------------- ----------------
-------------- --------------- --------------- ----------------
CHANGE IN CAPITAL SHARES
OUTSTANDING:
Shares sold............ 230,010,396 209,187,665 1,501,677,031 249,891,294
Reinvested
distributions......... 18,548,321 27,804,998 17,286,033 93,801,847
Shares redeemed........ (182,704,340) (120,045,047) (1,500,719,153) (62,784,455)
-------------- --------------- --------------- ----------------
Net increase (decrease)
in shares
outstanding........... 65,854,377 116,947,616 18,243,911 280,908,686
-------------- --------------- --------------- ----------------
-------------- --------------- --------------- ----------------
</TABLE>

* From inception, March 1, 1995, to December 31, 1995.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

138
<PAGE>
<TABLE>
<CAPTION>
HARTFORD U.S. HARTFORD HARTFORD HARTFORD
GOVERNMENT CAPITAL MORTGAGE HARTFORD INTERNATIONAL
MONEY MARKET APPRECIATION SECURITIES INDEX OPPORTUNITIES
FUND, INC. FUND, INC. FUND, INC. FUND, INC. FUND, INC.
----------------- --------------- -------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment
income................ $ 522,636 $ 15,311,450 $ 20,533,930 $ 5,497,890 $ 9,584,461
Net realized gain
(loss) on security
transactions and
foreign currency...... -- 127,384,090 5,901,957 461,701 21,336,447
Net realized gain
(loss) on futures
contracts............. -- 18,046,253 70,186 6,181,218 --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ -- 236,498,480 20,383,033 55,250,626 48,716,467
----------------- --------------- -------------- ------------- -------------
Net increase
(decrease) in net
assets resulting
from operations..... 522,636 397,240,273 46,889,106 67,391,435 79,637,375
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment
income................ (522,636) (15,311,450) (20,533,930) (5,497,890) (9,584,461)
Net realized gain on
security
transactions.......... -- (63,784,485) -- (65,176) (5,087,710)
CAPITAL SHARE
TRANSACTIONS:
Proceeds from sale of
shares................ 3,856,273 1,268,592,773 26,917,379 473,229,846 97,286,805
Reinvested dividends
and distributions..... 522,636 79,095,935 20,533,929 5,563,067 14,672,173
Cost of shares
redeemed.............. (3,927,941) (666,584,981) (50,387,738) (380,028,762) (54,214,080)
----------------- --------------- -------------- ------------- -------------
Net increase (decrease)
in net assets
resulting from capital
share transactions.... 450,968 681,103,727 (2,936,430) 98,764,151 57,744,898
----------------- --------------- -------------- ------------- -------------
Total increase
(decrease) in net
assets.............. 450,968 999,248,065 23,418,746 160,592,520 122,710,102
NET ASSETS:
Beginning of period.... 9,619,299 1,158,643,638 304,146,567 157,660,372 563,765,103
----------------- --------------- -------------- ------------- -------------
End of period.......... $10,070,267 $ 2,157,891,703 $ 327,565,313 $ 318,252,892 $686,475,205
----------------- --------------- -------------- ------------- -------------
----------------- --------------- -------------- ------------- -------------
CHANGE IN CAPITAL SHARES
OUTSTANDING:
Shares sold............ 3,856,273 393,716,534 25,766,526 251,812,101 79,597,149
Reinvested
distributions......... 522,636 28,381,165 19,717,253 3,055,911 12,477,963
Shares redeemed........ (3,927,941) (208,868,838) (48,682,017) (201,506,805) (45,827,064)
----------------- --------------- -------------- ------------- -------------
Net increase (decrease)
in shares
outstanding........... 450,968 213,228,861 (3,198,238) 53,361,207 46,248,048
----------------- --------------- -------------- ------------- -------------
----------------- --------------- -------------- ------------- -------------

<CAPTION>
HARTFORD
HARTFORD INTERNATIONAL
DIVIDEND AND GROWTH ADVISERS
FUND, INC. FUND, INC.*
------------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment
income................ $ 3,832,811 $ 473,778
Net realized gain
(loss) on security
transactions and
foreign currency...... 6,559,586 473,990
Net realized gain
(loss) on futures
contracts............. -- --
Net unrealized
appreciation
(depreciation) of
investments during the
period................ 31,161,907 1,503,899
------------------- -------------
Net increase
(decrease) in net
assets resulting
from operations..... 41,554,304 2,451,667
DISTRIBUTIONS TO
SHAREHOLDERS FROM:
Net investment
income................ (3,832,811) (473,778)
Net realized gain on
security
transactions.......... -- (477,974)
CAPITAL SHARE
TRANSACTIONS:
Proceeds from sale of
shares................ 174,323,932 30,838,557
Reinvested dividends
and distributions..... 3,757,111 478,342
Cost of shares
redeemed.............. (5,797,586) (1,552,649)
------------------- -------------
Net increase (decrease)
in net assets
resulting from capital
share transactions.... 172,283,457 29,764,250
------------------- -------------
Total increase
(decrease) in net
assets.............. 210,004,950 31,264,165
NET ASSETS:
Beginning of period.... 55,065,517 --
------------------- -------------
End of period.......... $265,070,467 $31,264,165
------------------- -------------
------------------- -------------
CHANGE IN CAPITAL SHARES
OUTSTANDING:
Shares sold............ 147,459,686 29,196,317
Reinvested
distributions......... 3,182,667 434,386
Shares redeemed........ (4,769,969) (1,440,053)
------------------- -------------
Net increase (decrease)
in shares
outstanding........... 145,872,384 28,190,650
------------------- -------------
------------------- -------------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

139
<PAGE>
- --------------------------------------------------------------------------------
Hartford Mutual Funds
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996

1. ORGANIZATION:

Hartford Bond Fund, Inc., Hartford Stock Fund, Inc., HVA Money Market Fund,
Inc., Hartford Advisers Fund, Inc., Hartford U.S. Government Money Market
Fund, Inc., Hartford Capital Appreciation Fund, Inc., Hartford Mortgage
Securities Fund, Inc., Hartford Index Fund, Inc., Hartford International
Opportunities Fund, Inc., Hartford Dividend and Growth Fund, Inc., Hartford
International Advisers Fund, Inc. and Hartford Small Company Fund, Inc. (the
Funds) are organized under the laws of the State of Maryland and are
registered with the Securities and Exchange Commission (SEC) under the
Investment Company Act of 1940, as amended, as diversified open-ended
management investment companies.

Fund shares are made available to serve as the underlying investment media
of the variable annuity, variable life insurance and group pension contracts
issued by the affiliated life insurance company Separate Accounts of ITT
Hartford Life Insurance Companies (Hartford Life Insurance Company and ITT
Hartford Life and Annuity Insurance Company). The Fund's objectives are as
follows:

<TABLE>
<S> <C>
Hartford Bond Fund, Inc. Seeks a high level of current income while preserving capital through
investing in high-grade government and corporate bonds and other debt
securities.

Hartford Stock Fund, Inc. Seeks long-term capital growth through a diversified portfolio of equity
securities.

HVA Money Market Fund, Inc. Seeks a high level of current income consistent with liquidity and the
need for preservation of capital through high-quality money-market
securities.

Hartford Advisers Fund, Inc. Seeks a high, long-term total rate of return (capital growth and current
income) through a varying mix of stocks, bonds and money market
instruments.

Hartford U.S. Government Seeks a high level of current income consistent with preservation of
Money Market Fund, Inc. capital through short-term securities issued or guaranteed by the U.S.
Government and its Agencies.

Hartford Capital Appreciation Seeks growth of capital through investment in equity securities of
Fund, Inc. companies with high growth potential, including small emerging
companies.

Hartford Mortgage Securities Seeks a high level of current income by investing primarily in
Fund, Inc. mortgage-backed securities, including securities issued by the
Government National Mortgage Association.

Hartford Index Fund, Inc. Seeks to approximate the price and yield performance represented by the
Standard & Poor's 500 Composite Stock Price Index through investments in
common stocks.

Hartford International Seeks a long-term total return consistent with that of international
Opportunities Fund, Inc. equity markets through investment primarily in foreign equity securities
issues.

Hartford Dividend and Growth Seeks a high level of current income consistent with growth of capital
Fund, Inc. and moderate investment risk. Primary investments are equity securities
and securities convertible into equity securities that typically have
above average yield.

Hartford International Seeks a long-term total rate of return consistent with moderate risk.
Advisers Fund, Inc. Investments include a mix of debt, equity and money market instruments
primarily with foreign issuers.

Hartford Small Company Fund, Seeks growth of capital by investing primarily in equity securities
Inc. selected on the basis of potential for capital appreciation.
</TABLE>

2. SIGNIFICANT ACCOUNTING POLICIES:

The following is a summary of significant accounting policies of the Funds,
which are in accordance with generally accepted accounting principles in the
investment company industry:

a) SECURITY TRANSACTIONS--Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Security gains and
losses are determined on the basis of identified cost.

b) SECURITY VALUATION--Debt securities (other than short-term obligations)
are valued on the basis of valuations furnished by an unaffiliated
pricing service which determines valuations for normal institutional size
trading units of debt securities. Mortgage securities are valued at the
bid price. Short-term securities held in the HVA Money Market Fund, Inc.
and Hartford U.S. Government Money Market Fund, Inc. are valued at
amortized cost or original cost plus

140
<PAGE>
accrued interest receivable, both of which approximate market value. In
Hartford Bond Fund, Inc., Hartford Stock Fund, Inc., Hartford Advisers
Fund, Inc., Hartford Capital Appreciation Fund, Inc., Hartford Mortgage
Securities Fund, Inc., Hartford Index Fund, Inc., Hartford International
Opportunities Fund, Inc., Hartford Dividend and Growth Fund, Inc.,
Hartford International Advisers Fund, Inc., and Hartford Small Company
Fund Inc., short-term investments with a maturity of 60 days or less when
purchased are valued at amortized cost, which approximates market value.
Short-term investments with a maturity of more than 60 days when
purchased are valued based on market quotations until the remaining days
to maturity become less than 61 days. From such time until maturity, the
investments are valued at amortized cost.

Equity securities are valued at the last sales price reported on principal
securities exchanges (domestic or foreign). If no sale occurred on such
day and in the case of certain equity securities traded over-the-counter,
then such securities are valued at the mean between the bid and asked
prices. Securities quoted in foreign currencies are translated into U.S.
dollars at the exchange rate at the end of the reporting period. Options
are valued at the last sales price; if no sale occurred on such day, then
options are valued at the mean between the bid and asked prices.
Securities for which market quotations are not readily available and all
other assets are valued in good faith at fair value by a person designated
by the Funds' Board of Directors.

c) FOREIGN CURRENCY TRANSACTIONS--The accounting records of the Funds are
maintained in U.S. dollars. All assets and liabilities initially
expressed in foreign currencies are converted into U.S. dollars at
prevailing exchange rates. Purchases and sales of investment securities,
dividend and interest income, and certain expenses are translated at the
rates of exchange prevailing on the respective dates of such
transactions.

The Funds do not isolate that portion of the results of operations
resulting from changes in the foreign exchange rates on investments from
the fluctuations arising from changes in the market prices of securities
held. Such fluctuations are included with the net realized and unrealized
gain or loss on investments.

Net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales of foreign currencies, and the difference
between asset and liability amounts initially stated in foreign currencies
and the U.S. dollar value of the amounts actually received or paid. Net
unrealized foreign exchange gains or losses arise from changes in the
value of portfolio securities and other assets and liabilities at the end
of the reporting period, resulting from changes in the exchange rates.

d) REPURCHASE TRANSACTIONS--A repurchase agreement is an agreement by which
the seller of a security agrees to repurchase the security sold at a
mutually agreed upon time and price. At the time the Funds enter into a
repurchase agreement, the value of the underlying collateral
security(ies), including accrued interest, will be equal to or exceed the
value of the repurchase agreement and, in the case of repurchase
agreements exceeding one day, the value of the underlying security(ies),
including accrued interest, is required during the term of the agreement
to be equal to or exceed the value of the repurchase agreement.
Securities which serve to collateralize the repurchase agreement are held
by each Fund's custodian in book entry or physical form in the custodial
account of the Fund. Repurchase agreements are valued at cost plus
accrued interest receivable.

In June 1996, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 125, ACCOUNTING FOR
TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENTS OF
LIABILITIES. This Statement provides consistent standards for
distinguishing transfers of financial assets that are sales from transfers
that are secured borrowings. Under the provisions of SFAS No. 125,
transfers of certain financial assets, such as repurchase agreements, are
required to be accounted for as sales if control, as defined, over those
assets has been surrendered by the transferor. The Statement also requires
collateral under repurchase agreements and securities lending transactions
to be separately classified by the debtor and recognized as an asset by
the creditor in the respective financial statements if certain conditions
are met. SFAS No. 125 is effective for transfers of financial assets
occurring after December 31, 1996, except for certain transfers for which
the effective date has been delayed to January 1, 1998 by SFAS No. 127,
DEFERRAL OF THE EFFECTIVE DATE OF CERTAIN PROVISIONS OF FASB STATEMENT NO.
125, issued by the FASB in December 1996. Management does not believe the
adoption of this new accounting standard will have a material impact on
the financial position or future results of operations of the Funds.

141
<PAGE>
- --------------------------------------------------------------------------------
HARTFORD MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996

e) JOINT TRADING ACCOUNT--Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Funds may transfer uninvested
cash balances into a joint trading account managed by Hartford Investment
Management Company (HIMCO). These balances may be invested in one or more
repurchase agreements and/or short-term money market instruments.

f) FUTURES, OPTIONS ON FUTURES AND OPTIONS TRANSACTIONS--The Funds enter
into futures contracts to retain their cash balances and yet be exposed
to the market thereby providing the liquidity necessary to accommodate
redemptions while at the same time providing shareholders the investment
return of a fully invested portfolio. A futures contract is an agreement
between two parties to buy and sell a security for a set price on a
future date. When the funds enter into such contracts, they are required
to deposit with their custodian an amount of "initial margin" of cash or
U.S. Treasury bills. Subsequent payments, called maintenance margin, to
and from the broker, are made on a daily basis as the price of the
underlying debt security fluctuates, making the long and short positions
in the futures contract more or less valuable (i.e., mark-to-market),
which results in an unrealized gain or loss to the Funds. The market
value of a traded futures contract is the last sale price or, in the
absence of a last sale price, the last offering price or, in the absence
of either of these prices, fair value is determined according to
procedures established by the Funds' Board of Directors. The variation
margin on futures contracts is included in excess of cash and receivables
over liabilities or excess of liabilities over cash and receivables, as
applicable, in the Fund's Statement of Net Assets.

At any time prior to expiration of the futures contract, the Funds may
close the position by taking an opposite position which would operate to
terminate the position in the futures contract. A final determination of
maintenance margin is then made, additional cash is required to be paid by
or released to the Funds and the Funds realize a gain or loss.

The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's Statement of Net Assets as excess of cash and
receivables over liabilities or excess of liabilities over cash and
receivables and subsequently "marked to market" to reflect the current
market value of the option purchased as of the end of the reporting
period. If an option which the Fund has purchased expires on its
stipulated expiration date, the Fund realizes a loss in the amount of the
cost of the option. If the Fund enters into a closing transaction, it
realizes a gain or loss, depending on whether the proceeds from the sale
are greater or less than the cost of the option. If the Fund exercises a
put option, it realizes a gain or loss from the sale of the underlying
security and the proceeds from such sale will be decreased by the premium
originally paid. If the Fund exercises a call option, the cost of the
security which the Fund purchases upon exercise will be increased by the
premium originally paid.

g) FEDERAL INCOME TAXES--For Federal income tax purposes, the Funds intend
to continue to qualify as regulated investment companies under Subchapter
M of the Internal Revenue Code by distributing substantially all of their
taxable income to their shareholders or otherwise complying with the
requirements for regulated investment companies. Accordingly, no
provision for Federal income taxes has been made in the accompanying
Financial Statements.

h) FUND SHARE VALUATION AND DIVIDEND DISTRIBUTIONS TO SHAREHOLDERS--Orders
for the Fund's shares are executed in accordance with the investment
instructions of the contract owners. Dividend income is accrued as of the
ex-dividend date. Interest income and expenses are accrued on a daily
basis. The net asset value of the Fund's shares is determined as of the
close of each business day of the New York Stock Exchange (the Exchange).
Orders for the purchase of the Funds' shares received prior to the close
of the Exchange on any day on which the fund is open for business are
priced at the per-share net asset value determined as of the close of the
Exchange. Orders received after the close of the Exchange, or on a day on
which the Exchange and/or the Fund is not open for business, are priced
at the per-share net asset value next determined.

Dividends are declared by the Funds' Board of Directors based upon the
investment performance of the respective Funds. The policy with respect to
the Hartford Bond Fund, Inc., Hartford Stock Fund, Inc., Hartford Advisers
Fund, Inc., Hartford Capital Appreciation Fund, Inc., Hartford Mortgage
Securities Fund, Inc., Hartford Index Fund, Inc., Hartford International
Opportunities Fund, Inc., Hartford Dividend and Growth Fund, Inc.,
Hartford International Advisers Fund, Inc. and Hartford Small Company
Fund, Inc. is to distribute dividends from net investment income monthly
and distribute realized capital gains, if any, annually.

HVA Money Market Fund, Inc. and Hartford U.S. Government Money Market
Fund, Inc. seek to maintain a stable net asset value per share of $1.00 by
declaring a daily dividend from net investment income, including net
short-term capital gains and losses, and by valuing their investments
using the amortized cost method. Dividends are distributed monthly.

142
<PAGE>
Income and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences include the treatment of non-taxable
dividends, expiring capital loss carryforwards, foreign currency
gain/loss, partnerships, and losses deferred due to cash sales and excise
tax regulations. Permanent book and tax basis differences relating to
shareholder distributions will result in reclassifications to capital
accounts (see Note 7).

i) FOREIGN CURRENCY CONTRACTS--As of December 31, 1996, Hartford Capital
Appreciation Fund, Inc., Hartford International Opportunities Fund, Inc.
and Hartford International Advisers Fund, Inc. have entered into forward
foreign currency exchange contracts that obligate the Funds to repurchase
currencies at specified future dates. The Funds enter into forward
foreign currency contracts to manage currency exchange rate risk. The
forward foreign currency contracts cost are included in excess cash and
receivables over liabilities or excess liabilities over cash and
receivables, as applicable, in the Funds Statement of Net Assets.

Forward contracts involve elements of market risk in excess of the amount
reflected in the Statement of Net Assets. The Fund bears the risk of an
unfavorable change in the foreign exchange rate underlying the forward
contract.

j) USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and the reported
amounts of income and expenses during the period. Operating results in
the future could vary from the amounts derived from management's
estimates.

3. EXPENSES:

a) INVESTMENT MANAGEMENT AND ADVISORY AGREEMENTS--HIMCO, a wholly-owned
subsidiary of Hartford Life Insurance Company (HL), provides investment
management services and supervision for Hartford Stock Fund, Inc.,
Hartford Advisers Fund, Inc., Hartford Capital Appreciation Fund, Inc.,
Hartford International Opportunities Fund, Inc., Hartford Dividend and
Growth Fund, Inc., Hartford International Advisers Fund, Inc. and
Hartford Small Company Fund, Inc. pursuant to an Investment Management
Agreement, which was approved by each Fund's Board of Directors and
shareholders.

The schedule below reflects the rates of compensation paid to HIMCO for
services rendered:
<TABLE>
<CAPTION>
HARTFORD BOND FUND, INC.
AND HARTFORD STOCK FUND, INC.

AVERAGE DAILY NET ASSETS ANNUAL FEE
- ------------------------------------ ------------
<S> <C>
On first $250 million .325%
On next $250 million .300
On next $500 million .275
Over $1 billion .250

HARTFORD ADVISERS FUND, INC.,
HARTFORD CAPITAL APPRECIATION FUND, INC.,
HARTFORD INTERNATIONAL OPPORTUNITIES FUND, INC.,
HARTFORD DIVIDEND AND GROWTH FUND, INC.,
HARTFORD INTERNATIONAL ADVISERS FUND, INC.
AND HARTFORD SMALL COMPANY FUND, INC.

AVERAGE DAILY NET ASSETS ANNUAL FEE
- ------------------------------------ ------------
<S> <C>
On first $250 million .575%
On next $250 million .525
On next $500 million .475
Over $1 billion .425
</TABLE>

HIMCO also serves as investment adviser to Hartford Bond Fund Inc., HVA
Money Market Fund, Inc., Hartford U.S. Government Money Market Fund, Inc.,
Hartford Mortgage Securities Fund, Inc. and Hartford Index Fund, Inc.
pursuant to an Agreement, which was approved by each Fund's Board of
Directors and shareholders. The annual fees

143
<PAGE>
- --------------------------------------------------------------------------------
HARTFORD MUTUAL FUNDS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
paid to HIMCO are .25% of the average daily net assets for HVA Money
Market Fund, Inc., Hartford U.S. Government Money Market Fund, Inc. and
Hartford Mortgage Securities Fund, Inc. and .20% of the average daily net
assets for Hartford Index Fund, Inc.

For Hartford Small Company Fund, Inc., HIMCO waived its fees until the
Fund's assets (excluding assets contributed by companies affiliated with
HIMCO) reached $20 million. For 1996, the fee waived was $11,952.

Wellington Management Company (Wellington), under a Sub-Investment
Advisory Agreement with HIMCO, furnishes an investment program to HIMCO,
for utilization by HIMCO in rendering services to Hartford Stock Fund,
Inc., Hartford Advisers Fund, Inc., Hartford Capital Appreciation Fund,
Inc., Hartford International Opportunities Fund, Inc., Hartford Dividend
and Growth Fund, Inc., Hartford International Advisers Fund, Inc. and
Hartford Small Company Fund, Inc. Wellington determines the purchase and
sale of portfolio securities and places such orders for execution, in the
name of the respective Fund. In conjunction with such activities,
Wellington regularly furnishes reports to the Funds' Board of Directors
concerning economic forecasts, investment strategy, portfolio activity and
performance of the Funds.

b) ADMINISTRATIVE SERVICES AGREEMENT--Under an Administrative Services
Agreement between HL and each of the Funds, HL provides administrative
services to the Funds and receives monthly compensation at the annual
rate of .175% of each Fund's average daily net assets. The Funds assume
and pay certain other expenses (including, but not limited to,
shareholder accounting, state taxes and directors' fees). Directors' fees
represent remuneration paid or accrued to directors not affiliated with
HL or any other related company.

c) OPERATING EXPENSES--Allocable expenses of the Funds are charged to each
fund based on the ratio of the net assets of each fund to the combined
net assets of the Funds. Nonallocable expenses are charged to each fund
based on specific identification.

4. TAX COST AND UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS:

As of December 31, 1996, the tax cost, aggregate gross unrealized
appreciation on all investments where there was an excess of value over tax
cost, the aggregate gross unrealized depreciation of investments where there
was an excess of tax cost over value and the net unrealized appreciation
(depreciation) of investments were as follows:

<TABLE>
<CAPTION>
AGGREGATE GROSS AGGREGATE GROSS
UNREALIZED UNREALIZED NET UNREALIZED
TAX COST APPRECIATION DEPRECIATION APPRECIATION
---------------- ---------------- --------------- --------------
<S> <C> <C> <C> <C>
Hartford Bond Fund, Inc............................... $ 411,959,593 $ 5,910,050 $ (2,624,945) $ 3,285,105
Hartford Stock Fund, Inc.............................. 2,320,023,744 705,165,338 (36,069,327) 669,096,011
Hartford Advisers Fund, Inc........................... 4,886,005,355 1,025,238,238 (62,591,124) 962,647,114
Hartford Dividend and Growth Fund, Inc................ 784,890,284 117,004,938 (10,070,806) 106,934,132
Hartford Capital Appreciation Fund, Inc............... 2,876,667,293 660,646,685 (158,829,742) 501,816,943
Hartford Mortgage Securities Fund, Inc................ 350,954,028 3,866,619 (2,644,170) 1,222,449
Hartford Index Fund, Inc.............................. 520,448,400 117,761,059 (13,814,561) 103,946,498
Hartford International Opportunities Fund, Inc........ 917,435,336 120,474,019 (46,621,452) 73,852,567
Hartford International Advisers Fund, Inc............. 102,027,721 6,840,836 (3,162,399) 3,678,437
Hartford Small Company Fund, Inc...................... 42,166,118 2,408,726 (2,191,424) 217,302
</TABLE>

5. EQUITY OF AFFILIATES:

a) HARTFORD INTERNATIONAL ADVISERS FUND, INC.--HL redeemed ownership of
10,000,000 shares during 1996 realizing a gain of $1,463,486.

b) HARTFORD SMALL COMPANY FUND, INC.--HIMCO has ownership of 3,000,000
shares of Hartford Small Company Fund, Inc. representing 7.5% of the
total outstanding shares of the Fund as of December 31, 1996.

144
<PAGE>
c) As of December 31, 1996, certain HL group pension contracts held direct
interest in shares as follows:

<TABLE>
<CAPTION>
PERCENT OF
TOTAL
SHARES SHARES
------------ -----------
<S> <C> <C>
Hartford Bond Fund, Inc........................................................................... 47,060 0.01%
Hartford Stock Fund, Inc.......................................................................... 92,167 0.01%
HVA Money Market Fund, Inc........................................................................ 31,633 0.01%
Hartford Advisers Fund, Inc....................................................................... 18,752,510 0.69%
Hartford Capital Appreciation Fund, Inc........................................................... 15,519,596 1.79%
Hartford Mortgage Securities Fund, Inc............................................................ 17,408,850 5.65%
Hartford Index Fund, Inc.......................................................................... 16,432,999 6.30%
Hartford International Opportunities Fund, Inc.................................................... 7,835,802 1.11%
Hartford Dividend and Growth Fund, Inc............................................................ 443,556 0.08%
Hartford International Advisers Fund, Inc......................................................... 27,096 0.03%
Hartford Small Company Fund, Inc.................................................................. 28,535 0.07%
</TABLE>

6. INVESTMENT TRANSACTIONS:

Investment transactions (excluding short-term investments) for the year
ended December 31, 1996, were as follows:

<TABLE>
<CAPTION>
PURCHASES AT SALES AT
COST PROCEEDS
---------------- ----------------
<S> <C> <C>
Hartford Bond Fund, Inc................................................................. $ 829,303,424 $ 745,960,818
Hartford Stock Fund, Inc................................................................ 1,587,351,083 980,091,109
Hartford Advisers Fund, Inc............................................................. 3,629,548,507 2,632,120,718
Hartford Capital Appreciation Fund, Inc................................................. 2,864,732,163 2,170,279,640
Hartford Mortgage Securities Fund, Inc.................................................. 627,266,106 629,848,302
Hartford Index Fund, Inc................................................................ 318,741,927 85,951,283
Hartford International Opportunities Fund, Inc.......................................... 738,825,064 554,302,885
Hartford Dividend and Growth Fund, Inc.................................................. 797,686,130 302,163,138
Hartford International Advisers, Fund, Inc.............................................. 122,147,523 59,862,398
Hartford Small Company Fund, Inc........................................................ 42,881,641 5,409,531
</TABLE>

7. RECLASS OF CAPITAL ACCOUNTS

In accordance with statement of position 93-2, Determination, Disclosure,
and Financial Statement presentation of Income, Capital Gain, and Return of
Capital Distributions by Investment Companies, the Funds have recorded
several reclassifications in their capital accounts. These reclassifications
have no impact on the net asset value of the Funds and are designed
generally to present undistributed income and realized gains on a tax basis
which is considered to be more informative to the shareholder. As of
December 31, 1996 the Funds recorded the following reclassifications to
increase (decrease) the accounts listed below:

<TABLE>
<CAPTION>
UNDISTRIBUTED UNDISTRIBUTED
NET INVESTMENT NET REALIZED CAPITAL
INCOME (LOSS) GAINS (LOSS) SURPLUS
-------------- ------------- -----------
<S> <C> <C> <C>
Hartford Bond Fund, Inc.......................................................... $ 8,085 $ 30,403 $ (38,488)
Hartford Stock Fund, Inc......................................................... (237,625) 237,625 --
Hartford Advisers Fund, Inc...................................................... (187,377) 187,377 --
Hartford Capital Appreciation Fund, Inc.......................................... 1,418,157 (1,418,157) --
Hartford Mortgage Securities Fund, Inc........................................... (754,232) 754,232 --
Hartford Index Fund, Inc......................................................... -- -- --
Hartford International Opportunities Fund, Inc................................... 1,662,153 (1,731,747) 69,594
Hartford Dividend and Growth Fund, Inc........................................... (12,837) -- 12,837
Hartford International Advisers Fund, Inc........................................ 826,948 (826,948) --
</TABLE>

145
<PAGE>
- --------------------------------------------------------------------------------
Hartford Mutual Funds
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)

<TABLE>
<CAPTION>
NET REALIZED
AND
NET ASSET UNREALIZED
VALUE AT NET GAIN TOTAL FROM
BEGINNING INVESTMENT (LOSS) ON INVESTMENT
OF PERIOD INCOME INVESTMENTS OPERATIONS
--------- ---------- ------------ -----------
<S> <C> <C> <C> <C>

HARTFORD BOND FUND, INC.
For the Year Ended
December 31, 1996..... $1.028 $0.064 $(0.029) $ 0.035
1995................... 0.926 0.064 0.102 0.166
1994................... 1.044 0.060 (0.100) (0.040)
1993................... 1.024 0.062 0.039 0.101
1992................... 1.061 0.074 (0.019) 0.055
1991................... 0.979 0.072 0.082 0.154
HARTFORD STOCK FUND, INC.
For the Year Ended
December 31, 1996..... 3.527 0.060 0.763 0.823
1995................... 2.801 0.070 0.840 0.910
1994................... 3.099 0.061 (0.111) (0.050)
1993................... 2.965 0.053 0.339 0.392
1992................... 2.927 0.051 0.219 0.270
1991................... 2.452 0.059 0.532 0.591
HVA MONEY MARKET FUND,
INC.
For the Year Ended
December 31, 1996..... 1.00 0.500 -- 0.050
1995................... 1.000 0.056 -- 0.056
1994................... 1.000 0.039 -- 0.039
1993................... 1.000 0.029 -- 0.029
1992................... 1.000 0.036 -- 0.036
1991................... 1.000 0.059 -- 0.059
HARTFORD ADVISERS FUND,
INC.
For the Year Ended
December 31, 1996...... 1.958 0.059 0.255 0.314
1995................... 1.600 0.064 0.377 0.441
1994................... 1.752 0.054 (0.100) (0.046)
1993................... 1.676 0.050 0.145 0.195
1992................... 1.649 0.059 0.070 0.129
1991................... 1.436 0.063 0.223 0.286
HARTFORD U.S. GOVERNMENT
MONEY MARKET FUND, INC.
For the Year Ended
December 31, 1996..... 1.000 0.048 -- 0.048
1995................... 1.000 0.054 -- 0.054
1994................... 1.000 0.036 -- 0.036
1993................... 1.000 0.027 -- 0.027
1992................... 1.000 0.032 -- 0.032
1991................... 1.000 0.055 -- 0.055
HARTFORD CAPITAL
APPRECIATION FUND, INC.
For the Year Ended
December 31, 1996..... 3.490 0.022 0.655 0.677
1995................... 2.860 0.030 0.785 0.815
1994................... 3.052 0.011 0.070 0.081
1993................... 2.634 0.003 0.526 0.529
1992................... 2.607 0.008 0.388 0.396
1991................... 1.709 0.021 0.898 0.919
HARTFORD MORTGAGE
SECURITIES FUND, INC.
For the Year Ended
December 31, 1996..... 1.071 0.069 (0.018) 0.051
1995................... 0.984 0.068 0.087 0.155
1994................... 1.075 0.068 (0.086) (0.018)
1993................... 1.079 0.071 (0.004) 0.067
1992................... 1.115 0.086 (0.036) 0.050
1991................... 1.054 0.088 0.061 0.149
HARTFORD INDEX FUND, INC.
For the Year Ended
December 31, 1996..... 2.028 0.044 0.393 0.437
1995................... 1.522 0.044 0.507 0.551
1994................... 1.546 0.038 (0.024) 0.014
1993................... 1.450 0.035 0.096 0.131
1992................... 1.390 0.033 0.060 0.093
1991................... 1.134 0.036 0.294 0.330
HARTFORD INTERNATIONAL
OPPORTUNITIES FUND,
INC.
For the Year Ended
December 31, 1996..... 1.306 0.023 0.140 0.163
1995................... 1.176 0.020 0.141 0.161
1994................... 1.215 0.016 (0.039) (0.023)
1993................... 0.917 0.009 0.298 0.307
1992................... 0.973 0.013 (0.056) (0.043)
1991................... 0.871 0.011 0.102 0.113
HARTFORD DIVIDEND AND
GROWTH FUND, INC.
For the Year Ended
December 31, 1996..... 1.317 0.034 0.258 0.292
1995................... 0.994 0.033 0.323 0.356
From inception, March
8, 1994, through
December 31, 1994..... 1.000 0.024 (0.005) 0.019
HARTFORD INTERNATIONAL
ADVISERS FUND, INC.
For the Year Ended
December 31, 1996..... 1.109 0.040 0.093 0.133
From inception, March
1, 1995, through
December 31, 1995..... 1.000 0.030 0.126 0.156
HARTFORD SMALL COMPANY
FUND, INC.
From inception, August
9, 1996, through
December 31, 1996..... 1.000 0.002 0.069 0.071
</TABLE>

(1) Annualized.
(2) Management fees were waived until assets (excluding assets contributed by
companies affiliated with HIMCO) reached $20 million. The ratio of operating
expenses to average net assets would have been higher if management fees
were not waived. The ratio of net investment income to average net assets
would have been lower if management fees were not waived.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

146
<PAGE>
<TABLE>
<CAPTION>
DIVIDENDS NET ASSET NET ASSETS
FROM NET DISTRIBUTIONS NET INCREASE VALUE AT AT END OF
INVESTMENT FROM REALIZED (DECREASE) IN END TOTAL PERIOD
INCOME CAPITAL GAINS NET ASSETS OF PERIOD RETURN (IN THOUSANDS)
---------- ------------- ------------- --------- ------- --------------
<S> <C> <C> <C> <C> <C> <C>

HARTFORD BOND FUND, INC.
For the Year Ended
December 31, 1996..... $(0.063) $ -- $(0.028) $1.00 3.54% $ 402,548
1995................... (0.064) -- 0.102 1.028 18.49 342,495
1994................... (0.060) (0.018) (0.118) 0.926 (3.95) 247,458
1993................... (0.062) (0.019) 0.020 1.044 10.24 239,602
1992................... (0.074) (0.018) (0.037) 1.024 5.53 128,538
1991................... (0.072) -- 0.082 1.061 16.43 97,377
HARTFORD STOCK FUND, INC.
For the Year Ended
December 31, 1996..... (0.059) (0.148) 0.616 4.143 24.33 2,994,209
1995................... (0.070) (0.114) 0.726 3.527 34.10 1,876,884
1994................... (0.061) (0.187) (0.298) 2.801 (1.89) 1,163,158
1993................... (0.053) (0.205) 0.134 3.099 14.34 968,425
1992................... (0.051) (0.181) 0.038 2.965 10.04 569,903
1991................... (0.059) (0.057) 0.475 2.927 24.58 406,489
HVA MONEY MARKET FUND,
INC.
For the Year Ended
December 31, 1996..... (0.050) -- -- 1.000 5.09 542,586
1995................... (0.056) -- -- 1.000 5.74 339,709
1994................... (0.039) -- -- 1.000 3.95 321,465
1993................... (0.029) -- -- 1.000 2.94 234,088
1992................... (0.036) -- -- 1.000 3.63 190,246
1991................... (0.059) -- -- 1.000 6.01 177,483
HARTFORD ADVISERS FUND,
INC.
For the Year Ended
December 31, 1996...... (0.059) (0.044) 0.211 2.169 16.62 5,879,529
1995................... (0.064) (0.019) 0.358 1.958 28.34 4,262,769
1994................... (0.054) (0.052) (0.152) 1.600 (2.74) 3,034,034
1993................... (0.050) (0.069) 0.076 1.752 12.25 2,426,550
1992................... (0.059) (0.043) 0.027 1.676 8.30 985,747
1991................... (0.063) (0.010) 0.213 1.649 20.33 631,424
HARTFORD U.S. GOVERNMENT
MONEY MARKET FUND, INC.
For the Year Ended
December 31, 1996..... (0.048) -- -- 1.000 4.87 11,730
1995................... (0.054) -- -- 1.000 5.52 10,070
1994................... (0.036) -- -- 1.000 3.67 9,619
1993................... (0.027) -- -- 1.000 2.68 9,449
1992................... (0.032) -- -- 1.000 3.22 10,525
1991................... (0.055) -- -- 1.000 5.61 11,257
HARTFORD CAPITAL
APPRECIATION FUND, INC.
For the Year Ended
December 31, 1996..... (0.025) (0.228) 0.424 3.914 20.70 3,386,670
1995................... (0.030) (0.155) 0.630 3.490 30.25 2,157,892
1994................... (0.011) (0.262) (0.192) 2.860 2.50 1,158,644
1993................... (0.003) (0.108) 0.418 3.052 20.80 778,904
1992................... (0.008) (0.361) 0.027 2.634 16.98 300,373
1991................... (0.021) -- 0.898 2.607 53.99 158,046
HARTFORD MORTGAGE
SECURITIES FUND, INC.
For the Year Ended
December 31, 1996..... (0.066) -- (0.015) 1.056 4.99 325,495
1995................... (0.068) -- 0.087 1.071 16.17 327,565
1994................... (0.068) (0.005) (0.091) 0.984 (1.61) 304,147
1993................... (0.071) -- (0.004) 1.075 6.31 365,198
1992................... (0.086) -- (0.036) 1.079 4.64 258,711
1991................... (0.088) -- 0.061 1.115 14.71 162,484
HARTFORD INDEX FUND, INC.
For the Year Ended
December 31, 1996..... (0.044) (0.039) 0.354 2.382 22.09 621,065
1995................... (0.044) (0.001) 0.506 2.028 36.55 318,253
1994................... (0.038) -- (0.024) 1.522 0.94 157,660
1993................... (0.035) -- 0.096 1.546 9.12 140,396
1992................... (0.033) -- 0.060 1.450 6.82 82,335
1991................... (0.036) (0.038) 0.256 1.390 29.53 47,770
HARTFORD INTERNATIONAL
OPPORTUNITIES FUND,
INC.
For the Year Ended
December 31, 1996..... (0.025) (0.037) 0.101 1.407 12.91 996,543
1995................... (0.020) (0.011) 0.130 1.306 13.93 686,475
1994................... (0.016) -- (0.039) 1.176 (1.94) 563,765
1993................... (0.009) -- 0.298 1.215 33.73 281,608
1992................... (0.013) -- (0.056) 0.917 (4.43) 47,560
1991................... (0.011) -- 0.102 0.973 13.00(1) 22,854
HARTFORD DIVIDEND AND
GROWTH FUND, INC.
For the Year Ended
December 31, 1996..... (0.034) (0.028) 0.230 1.547 22.91 879,980
1995................... (0.033) -- 0.323 1.317 36.37 265,070
From inception, March
8, 1994, through
December 31, 1994..... (0.024) (0.001) (0.006) 0.994 1.96(1) 55,066
HARTFORD INTERNATIONAL
ADVISERS FUND, INC.
For the Year Ended
December 31, 1996..... (0.051) (0.024) 0.058 1.167 12.25 104,486
From inception, March
1, 1995, through
December 31, 1995..... (0.030) (0.017) 0.109 1.109 15.84(1) 31,264
HARTFORD SMALL COMPANY
FUND, INC.
From inception, August
9, 1996, through
December 31, 1996..... (0.002) -- 0.069 1.069 18.12(1) 42,812

<CAPTION>
RATIO OF
RATIO OF NET
OPERATING INVESTMENT
EXPENSES INCOME PORTFOLIO AVERAGE
TO AVERAGE TO AVERAGE TURNOVER COMMISSION
NET ASSETS NET ASSETS RATE RATE PAID
------------- ------------- --------- ----------
<S> <C> <C> <C> <C>
HARTFORD BOND FUND, INC.
For the Year Ended
December 31, 1996..... 0.52% 6.37% 212.0% $ --
1995................... 0.53 6.51 215.0 --
1994................... 0.55 6.23 328.8 --
1993................... 0.57 5.93 494.3 --
1992................... 0.64 7.21 434.1 --
1991................... 0.66 7.29 337.0 --
HARTFORD STOCK FUND, INC.
For the Year Ended
December 31, 1996..... 0.46 1.59 42.3 0.0490
1995................... 0.48 2.23 52.9 --
1994................... 0.50 2.17 63.8 --
1993................... 0.53 1.86 69.0 --
1992................... 0.57 1.90 69.8 --
1991................... 0.60 2.14 24.3 --
HVA MONEY MARKET FUND,
INC.
For the Year Ended
December 31, 1996..... 0.44 5.04 -- --
1995................... 0.45 5.57 -- --
1994................... 0.47 3.99 -- --
1993................... 0.48 2.91 -- --
1992................... 0.53 3.60 -- --
1991................... 0.54 5.88 -- --
HARTFORD ADVISERS FUND,
INC.
For the Year Ended
December 31, 1996...... 0.63 2.92 53.8 0.0487
1995................... 0.65 3.57 63.5 --
1994................... 0.65 3.34 60.0 --
1993................... 0.69 3.07 55.3 --
1992................... 0.78 3.55 72.8 --
1991................... 0.81 4.13 42.1 --
HARTFORD U.S. GOVERNMENT
MONEY MARKET FUND, INC.
For the Year Ended
December 31, 1996..... 0.58 4.77 -- --
1995................... 0.57 5.38 -- --
1994................... 0.58 3.63 -- --
1993................... 0.58 2.65 -- --
1992................... 0.75 3.19 -- --
1991................... 0.73 5.48 -- --
HARTFORD CAPITAL
APPRECIATION FUND, INC.
For the Year Ended
December 31, 1996..... 0.65 0.60 85.4 0.0665
1995................... 0.68 0.95 78.6 --
1994................... 0.72 0.40 73.3 --
1993................... 0.76 0.12 91.4 --
1992................... 0.87 0.36 100.3 --
1991................... 0.92 0.92 107.2 --
HARTFORD MORTGAGE
SECURITIES FUND, INC.
For the Year Ended
December 31, 1996..... 0.45 6.67 201.0 --
1995................... 0.47 6.50 489.4 --
1994................... 0.48 6.65 365.7 --
1993................... 0.49 6.49 183.4 --
1992................... 0.56 7.96 277.2 --
1991................... 0.58 8.25 152.2 --
HARTFORD INDEX FUND, INC.
For the Year Ended
December 31, 1996..... 0.39 2.07 19.3 0.0500
1995................... 0.39 2.46 1.5 --
1994................... 0.45 2.50 1.8 --
1993................... 0.49 2.36 0.8 --
1992................... 0.60 2.48 1.2 --
1991................... 0.67 2.89 6.7 --
HARTFORD INTERNATIONAL
OPPORTUNITIES FUND,
INC.
For the Year Ended
December 31, 1996..... 0.79 1.74 70.0 --
1995................... 0.86 1.60 55.6 --
1994................... 0.85 1.42 46.4 --
1993................... 1.00 0.84 31.8 --
1992................... 1.23 1.40 25.1 --
1991................... 1.24 1.17 24.7 --
HARTFORD DIVIDEND AND
GROWTH FUND, INC.
For the Year Ended
December 31, 1996..... 0.73 2.52 56.9 0.0715
1995................... 0.77 2.91 41.4 --
From inception, March
8, 1994, through
December 31, 1994..... 0.83(1) 3.52(1) 27.8 --
HARTFORD INTERNATIONAL
ADVISERS FUND, INC.
For the Year Ended
December 31, 1996..... 0.96 3.24 95.2 0.0064
From inception, March
1, 1995, through
December 31, 1995..... 0.65(1)(2) 3.36(1)(2) 47.2 --
HARTFORD SMALL COMPANY
FUND, INC.
From inception, August
9, 1996, through
December 31, 1996..... 0.72(1)(2) 0.31(1)(2) 31.8 0.0290
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.

147

<PAGE>
<ARTICLE> 6

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<INVESTMENTS-AT-COST> 102,000,215
<INVESTMENTS-AT-VALUE> 105,706,158
<RECEIVABLES> 1,908,306
<ASSETS-OTHER> 756
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 107,615,220
<PAYABLE-FOR-SECURITIES> 2,916,475
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 213,003
<TOTAL-LIABILITIES> 3,129,478
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 8,956,597
<SHARES-COMMON-STOCK> 89,565,973
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (107,552)
<ACCUMULATED-NET-GAINS> 367,957
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,841,500
<NET-ASSETS> 104,485,742
<DIVIDEND-INCOME> 855,659
<INTEREST-INCOME> 1,995,178
<OTHER-INCOME> 0
<EXPENSES-NET> 624,351
<NET-INVESTMENT-INCOME> 2,226,486
<REALIZED-GAINS-CURRENT> 3,299,171
<APPREC-INCREASE-CURRENT> 2,337,601
<NET-CHANGE-FROM-OPS> 7,863,258
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (3,160,906)
<DISTRIBUTIONS-OF-GAINS> (2,100,363)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 69,719,902
<NUMBER-OF-SHARES-REDEEMED> 12,726,579
<SHARES-REINVESTED> 4,382,000
<NET-CHANGE-IN-ASSETS> 73,221,577
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (3,983)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 392,271
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 624,351
<AVERAGE-NET-ASSETS> 68,643,784
<PER-SHARE-NAV-BEGIN> 1.11
<PER-SHARE-NII> 0.04
<PER-SHARE-GAIN-APPREC> 0.09
<PER-SHARE-DIVIDEND> (0.051)
<PER-SHARE-DISTRIBUTIONS> (0.024)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.17
<EXPENSE-RATIO> 0.96
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>