<PAGE>
As filed with the Securities and Exchange Commission on February 10, 1999
File No. 33-84950
File No. 811-08804
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. 5 / X /
---- -----
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 / X /
-----
Amendment No. 5 / X /
---- -----
HARTFORD INTERNATIONAL ADVISERS HLS 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
Kevin J. Carr, Esquire
The Hartford Financial Services Group, Inc.
Investment Law Unit
55 Farmington Avenue
Hartford, Connecticut 06105
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective (check appropriate box)
<PAGE>
immediately upon filing pursuant to paragraph (b) of Rule 485
---
on ______________ pursuant to paragraph (b) of Rule 485
---
60 days after filing pursuant to paragraph (a)(1) of Rule 485
---
X on MAY 1, 1999 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
---
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
on or before March 31, 1999.
<PAGE>
This registration statement includes one combined prospectus offering Class IA
shares, one combined prospectus offering Class IB shares and one combined
statement of additional information describing Class IA and Class IB shares, for
the following funds:
<TABLE>
<CAPTION>
FUND NAME FILE NUMBERS
- --------- ------------
33 ACT 40 ACT
------ ------
<S> <C> <C>
Hartford Advisers HLS Fund, Inc. 2-81647 811-03659
Hartford Bond HLS Fund, Inc. 2-81650 811-03660
Hartford Capital Appreciation HLS Fund, Inc. 2-89794 811-04005
Hartford Dividend and Growth HLS Fund, Inc. 33-72572 811-08186
Hartford Index HLS Fund, Inc. 33-12278 811-05045
Hartford International Advisers HLS Fund, Inc. 33-84950 811-08804
Hartford International Opportunities HLS Fund, Inc. 33-33756 811-06059
Hartford MidCap HLS Fund, Inc. 333-25253 811-08185
Hartford Money Market HLS Fund, Inc. 2-81648 811-03662
Hartford Mortgage Securities HLS Fund, Inc. 2-94211 811-04201
Hartford Series Fund, Inc. 333-45431 811-08629
COMPRISED OF:
Hartford Global Leaders HLS Fund
Hartford Growth and Income HLS Fund
Hartford High Yield HLS Fund
Hartford Small Company HLS Fund, Inc. 333-01551 811-07557
Hartford Stock HLS Fund, Inc. 2-57609 811-02630
</TABLE>
<PAGE>
Hartford HLS Mutual Funds
CLASS IA SHARES
PROSPECTUS -- MAY 1, 1999
<TABLE>
<S> <C>
STOCK FUNDS
-------------------------------------------------------------
Capital Appreciation HLS Fund
Dividend and Growth HLS Fund
Global Leaders HLS Fund
Growth and Income HLS Fund
Index HLS Fund
As with all mutual funds, the Securities and International Opportunities HLS Fund
Exchange Commission has not judged whether MidCap HLS Fund
these funds are good investments or whether Small Company HLS Fund
the information in this prospectus is Stock HLS Fund
adequate and accurate. Anyone who indicates
otherwise is committing a federal crime.
ASSET ALLOCATION FUNDS
-------------------------------------------------------------
Advisers HLS Fund
International Advisers HLS Fund
BOND FUNDS
-------------------------------------------------------------
Bond HLS Fund
High Yield HLS Fund
Mortgage Securities HLS Fund
MONEY MARKET FUND
-------------------------------------------------------------
Money Market HLS Fund
HARTFORD HLS FUNDS
C/O INDIVIDUAL ANNUITY SERVICES
P.O. BOX 5085
HARTFORD, CT 06102-5085
</TABLE>
<PAGE>
2 CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
----------
<S> <C> <C>
A SUMMARY OF EACH FUND'S Hartford Capital Appreciation HLS Fund, Inc....... 4
GOALS,
STRATEGIES, RISKS, PERFORMANCE Hartford Dividend and Growth HLS Fund, Inc........ 6
AND
MANAGEMENT FEES. Hartford Global Leaders HLS Fund.................. 8
Hartford Growth and Income HLS Fund............... 10
Hartford Index HLS Fund, Inc...................... 12
Hartford International Opportunities HLS Fund, 15
Inc...............................................
Hartford MidCap HLS Fund, Inc..................... 17
Hartford Small Company HLS Fund, Inc.............. 19
Hartford Stock HLS Fund, Inc...................... 21
Hartford Advisers HLS Fund, Inc................... 23
Hartford International Advisers HLS Fund, Inc..... 25
Hartford Bond HLS Fund, Inc....................... 27
Hartford High Yield HLS Fund...................... 29
Hartford Mortgage Securities HLS Fund, Inc........ 31
Hartford Money Market HLS Fund, Inc............... 33
DESCRIPTION OF ADDITIONAL Additional investment matters..................... 35
INVESTMENT
STRATEGIES AND INVESTMENT Risks of investing in the funds................... 36
RISKS.
INFORMATION ON HOW TO PURCHASE Purchase and sale of the funds' shares............ 37
AND SELL THE FUND'S SHARES.
FURTHER INFORMATION ON THE Transaction details............................... 38
FUNDS.
Federal income taxes.............................. 38
Performance related information................... 39
General information............................... 40
Financial highlights.............................. 41
For more information.............................. back cover
</TABLE>
<PAGE>
INTRODUCTION 3
- --------------------------------------------------------------------------------
HARTFORD HLS MUTUAL FUNDS
The Hartford HLS Mutual Funds is a family of fifteen mutual funds (each a
"fund" and together the "funds") which serve as underlying investment vehicles
for certain variable annuity and variable life insurance separate accounts of
Hartford Life Insurance Company and its affiliates ("Hartford Life").
Contractholders of variable annuity products and policyholders of variable life
insurance products may choose the funds permitted in the accompanying variable
insurance product prospectus. Each fund offers two classes of shares: Class IA
shares offered hereby and Class IB shares offered pursuant to another
prospectus. Information on each fund can be found on the pages following this
summary.
Please note that mutual funds are not bank deposits and are not insured or
guaranteed by the FDIC or any other government agency. Because you could lose
money by investing in these funds, be sure to read all risk disclosure carefully
before investing.
MANAGEMENT OF THE FUNDS
HL Investment Advisors, LLC ("HL Advisors") is the investment adviser to
each fund. As investment adviser, HL Advisors is responsible for supervising the
activities of the investment sub-advisers described below. In addition, Hartford
Life serves as the administrator of each fund. HL Advisors and Hartford Life are
majority-owned indirect subsidiaries of The Hartford Financial Services Group,
Inc. ("The Hartford"), a Connecticut financial services company with over $130
billion in assets. As of December 31, 1998 HL Advisors had over $33.9 billion in
assets under management.
THE SUB-ADVISERS
Wellington Management Company, LLP ("Wellington Management") is the
investment sub-adviser to the Capital Appreciation HLS Fund, Dividend and Growth
HLS Fund, Global Leaders HLS Fund, Growth and Income HLS Fund, International
Opportunities HLS Fund, MidCap HLS Fund, Small Company HLS Fund, Stock HLS Fund,
Advisers HLS Fund and International Advisers HLS Fund. 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. As of December 31, 1998 Wellington Management had
investment management authority over $211 billion in assets.
The Hartford Investment Management Company ("HIMCO-Registered Trademark-")
is the investment sub-adviser to the High Yield HLS Fund, Index HLS Fund, Bond
HLS Fund, Mortgage Securities HLS Fund and Money Market HLS Fund.
HIMCO-Registered Trademark- is a professional money management firm that
provides services to investment companies, employee benefit plans, insurance
companies and other institutional accounts. HIMCO-Registered Trademark- is a
wholly-owned subsidiary of The Hartford. As of December 31, 1998
HIMCO-Registered Trademark- and its wholly-owned subsidiary had investment
management authority with respect to approximately $61.2 billion of assets for
various clients.
<PAGE>
4 HARTFORD CAPITAL APPRECIATION HLS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT GOAL AND STYLE. The Hartford Capital Appreciation Fund seeks growth of
SUB-ADVISER capital by investing primarily in equity securities selected on the basis of
Wellington Management potential for capital appreciation.
The fund normally invests at least 65% of its total assets in equity securities of
PORTFOLIO MANAGER small, medium and large companies. The fund may invest up to 20% of its total
SAUL J. PANNELL assets in securities of non-U.S. companies.
- - Senior Vice President of Wellington Through fundamental analysis, Wellington Management identifies companies that it
Management believes have substantial near-term capital appreciation potential regardless of
- - Manager of the fund since 1991 company size or industry sector. This strategy is sometimes referred to as a
- - Joined Wellington Management in 1979 "stock picking" approach. Small and medium sized companies are selected primarily
- - Investment professional since 1974 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.
In analyzing a prospective investment Wellington Management looks at a number of
factors, such as business environment, management, balance sheet, income
statement, anticipated earnings, revenues, dividends and other related measures of
value.
----------------------------------------------------------------------------
RISK SUMMARY. The fund is subject to the following investment risks:
- Correlation risk - Natural event risk
- Derivatives risk - Opportunity risk
- International investments risk - Small company risk
- Liquidity risk - Style risk
- Management risk - Valuation risk
- Market risk - Year 2000 risk
----------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows how the fund's total return has varied from year
to year, while the table shows the fund's performance over time (along with a
broad-based market index for reference). These figures do not include the effect
of sales charges or other fees which may be applied at the variable life insurance
or variable annuity contract level. All figures assume that all distributions were
reinvested. Keep in mind that past performance does not indicate future results.
----------------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD CAPITAL APPRECIATION HLS FUND 5
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
-------------------------------------------------------------
</TABLE>
THE INVESTMENT MANAGEMENT FEE PAID BY
THE FUND FOR THE 1998 FISCAL YEAR
WAS 0.62%
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1989 24.11%
<S> <C>
1990 -10.90%
1991 53.99%
1992 16.98%
1993 20.80%
1994 2.50%
1995 30.25%
1996 20.70%
1997 22.34%
1998 15.48%
</TABLE>
<TABLE>
<S> <C> <C>
BEST QUARTER: up 24.99%, first quarter 1991
WORST QUARTER: down -24.47%, third quarter 1990
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/98
-------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SINCE
INCEPTION
(APRIL 2,
1 YEAR 5 YEARS 10 YEARS 1984)
------- ------- -------- ---------
<S> <C> <C> <C> <C> <C>
Class IA...................... 15.48% 17.89% 18.55% 17.56%
Index......................... 28.56% 24.04% 19.17% 18.39%
</TABLE>
<TABLE>
<S> <C> <C>
SEC File No. INDEX: S&P 500 Index, an unmanaged index of equity securities that are
811-04005 similar, but not identical, to those in the fund's portfolio.
------------------------------------------------------------------------
</TABLE>
<PAGE>
6 HARTFORD DIVIDEND AND GROWTH HLS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SUB-ADVISER INVESTMENT GOAL AND STYLE. The Hartford Dividend and Growth Fund seeks a high
Wellington Management level of current income consistent with growth of capital by investing primarily
in equity securities.
PORTFOLIO MANAGER The fund invests primarily in a diversified portfolio of equity securities that
LAURIE A. GABRIEL, CFA typically have above average income yields and whose prospects for capital
- - Senior Vice President of Wellington appreciation are considered favorable by Wellington Management. Under normal
Management market and economic conditions at least 65% of the fund's total assets are
- - Manager of the fund since 1994 invested in dividend-paying equity securities. The fund may invest up to 20% of
- - Joined Wellington Management in 1976 its total assets in securities of non-U.S. companies.
- - Investment professional Wellington Management uses fundamental analysis to evaluate a security for
since 1976 purchase or sale by the fund. Fundamental analysis of a company involves the
assessment of such factors as: its business environment, management, balance
sheet, income statement, anticipated earnings, revenues and dividends.
As a key component of its fundamental analysis, Wellington Management evaluates a
company's ability to sustain and potentially increase its dividend payments.
The fund's portfolio is broadly diversified by industry and company.
----------------------------------------------------------------------------
RISK SUMMARY. The fund is subject to the following investment risks:
- Correlation risk - Natural event risk
- Derivatives risk - Opportunity risk
- International investments risk - Small company risk
- Liquidity risk - Style risk
- Management risk - Valuation risk
- Market risk - Year 2000 risk
----------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows how the fund's total return has varied from year
to year, while the table shows the fund's performance over time (along with a
broad-based market index for reference). These figures do not include the effect
of sales charges or other fees which may be applied at the variable life insurance
or variable annuity contract level. All figures assume that all distributions were
reinvested. Keep in mind that past performance does not indicate future results.
----------------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD DIVIDEND AND GROWTH HLS FUND 7
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
-------------------------------------------------------------
</TABLE>
THE INVESTMENT MANAGEMENT FEE PAID BY
THE FUND FOR THE 1998 FISCAL YEAR
WAS 0.64%
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1995 36.37%
<S> <C>
1996 22.91%
1997 31.89%
1998 16.42%
</TABLE>
<TABLE>
<S> <C> <C>
BEST QUARTER: up 16.29%, second quarter 1997
WORST QUARTER: down -7.49%, third quarter 1998
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/98
-------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SINCE
INCEPTION
(MARCH 9,
1 YEAR 1994)
------- ---------
<S> <C> <C> <C> <C>
Class IA............ 16.42% 22.18%
Index............... 28.56% 24.88%
</TABLE>
<TABLE>
<S> <C> <C>
SEC File No. INDEX: S&P 500 Index, an unmanaged index of equity securities that are
811-08186 similar, but not identical, to those in the fund's portfolio.
------------------------------------------------------------------------
</TABLE>
<PAGE>
8 HARTFORD GLOBAL LEADERS HLS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SUB-ADVISER INVESTMENT GOAL AND STYLE. The Hartford Global Leaders Fund seeks growth of
Wellington Management capital by investing primarily in equity securities issued by U.S. companies and
non- U.S. companies.
PORTFOLIO MANAGERS The fund invests primarily in a diversified portfolio of equity securities
RAND L. ALEXANDER, CFA covering a broad range of countries, industries and companies. Securities in which
- - Senior Vice President of the fund invests are denominated in both U.S. dollars and non-U.S. currencies and
Wellington Management may trade in both U.S. and non-U.S. markets.
- - Co-manager of the fund since Under normal market and economic conditions, the fund invests at least 65% of its
inception (1998) total assets in equity securities of high quality growth companies worldwide.
- - Joined Wellington Management in These companies must, in the opinion of Wellington Management, be leaders in their
1990 respective industries as indicated by an established market presence and strong
- - Investment professional since global, regional or country competitive positions. Under normal market and
1976 economic conditions, the fund will diversify its investments in securities of
issuers among at least five countries, which may include the United States. There
ANDREW S. OFFIT are no limits on the amount of the fund's assets that may be invested in each
- - Vice President of Wellington country. The fund may invest up to 25% of its assets in securities of issuers
Management located in emerging market countries.
- - Co-manager of the fund since The fund uses a two-tiered investment strategy:
inception (1998) - Using what is sometimes referred to as a "top down" approach, Wellington
- - Joined Wellington Management in Management analyzes the global macro-economic and investment environments. This
1997 includes an evaluation of U.S. and non-U.S. economic and political conditions,
- - Investment professional since fiscal and monetary policies, demographic trends and investor sentiment. Through
1987 top down analysis, Wellington Management anticipates secular and cyclical
changes to identify companies which offer the most potential for capital
appreciation given current and projected global and local economic and market
conditions.
- 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. Fundamental analysis involves the assessment of
a company through such factors as its business environment, management, balance
sheet, income statements, anticipated earnings, revenues and other related
measures of value.
The fund emphasizes high-quality growth companies. The key characteristics of
high-quality growth companies include: a strong balance sheet, a high return on
equity, a strong management team, and attractive relative value within the context
of the global marketplace or a security's primary trading market.
----------------------------------------------------------------------------
RISK SUMMARY. The fund is subject to the following investment risks:
- Correlation risk - Natural event risk
- Derivatives risk - Opportunity risk
- International investments risk - Small company risk
- Liquidity risk - Style risk
- Management risk - Valuation risk
- Market risk - Year 2000 risk
----------------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD GLOBAL LEADERS HLS FUND 9
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
PAST PERFORMANCE. The table below shows the fund's performance since inception
(along with a broad-based market index for reference). These figures do not
include the effect of sales charges or other fees which may be applied at the
variable insurance or variable annuity contract level. All figures assume that all
distributions were reinvested. Keep in mind that this performance is for a limited
period of time and that past performance does not indicate future results.
----------------------------------------------------------------------------
THE FUND PAYS THE FOLLOWING INVESTMENT
MANAGEMENT FEES BASED ON AVERAGE DAILY NET
ASSETS:
Net Asset Value Annual Rate
First $250 million 0.575%
Next $250 million 0.525%
Next $500 million 0.475%
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING
Over $1 billion 0.425% 12/31/98
--------------------------------------------------
SINCE
INCEPTION
(SEPTEMBER
30, 1998)
---------
Class IA............ 31.88%
Index............... 21.11%
</TABLE>
<TABLE>
<S> <C> <C>
SEC File No. INDEX: MSCI World Index, an unmanaged index of international equity
811-08629 securities that are similar, but not identical, to those in the fund's
portfolio.
------------------------------------------------------------------------
</TABLE>
<PAGE>
10 HARTFORD GROWTH AND INCOME HLS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SUB-ADVISER INVESTMENT GOAL. The Hartford Growth and Income Fund seeks growth of capital and
Wellington Management current income by investing primarily in equity securities with earnings growth
potential and steady or rising dividends.
PORTFOLIO MANAGER The fund invests primarily in a diversified portfolio of equity securities that
JAMES A. RULLO, CFA typically have steady or rising dividends and whose prospects for capital
- - Senior Vice President of Wellington appreciation are considered favorable by Wellington Management. The fund may
Management invest up to 20% of its total assets in securities of non-U.S. companies.
- - Manager of the fund since inception (1998) Wellington Management uses fundamental analysis to evaluate a security for
- - Joined Wellington Management in 1994 purchase or sale by the fund. Fundamental analysis of a company involves the
- - Investment professional since 1987 assessment of such factors as its business environment, management, balance sheet,
income statement, anticipated earnings, revenues, dividends and other related
measures of value.
Wellington Management then uses proprietary quantitative techniques to affirm its
fundamental evaluation of a security. These quantitative techniques consist of:
valuation analysis, which includes the use of a dividend discount model and cash
flow analysis, and momentum analysis, which includes an assessment of a company's
earnings momentum and stock price momentum. These quantitative techniques seek to
identify those securities that are: attractive from the fundamental perspective,
inexpensive based on the quantitative valuation factors, and timely according to
the quantitative momentum factors.
The fund's portfolio is broadly diversified by industry and company.
----------------------------------------------------------------------------
RISK SUMMARY. The fund is subject to the following investment risks:
- Correlation risk - Natural event risk
- Derivatives risk - Opportunity risk
- International investments risk - Small company risk
- Liquidity risk - Style risk
- Management risk - Valuation risk
- Market risk - Year 2000 risk
----------------------------------------------------------------------------
PAST PERFORMANCE. The table below shows the fund's performance since inception
(along with a broad-based market index for reference). These figures do not
include the effect of sales charges or other fees which may be applied at the
variable insurance or variable annuity contract level. All figures assume that all
distributions were reinvested. Keep in mind that this performance is for a limited
period of time and that past performance does not indicate future results.
----------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
THE FUND PAYS THE FOLLOWING INVESTMENT
MANAGEMENT FEES BASED ON AVERAGE DAILY NET
ASSETS:
Net Asset Value Annual Rate
First $250 million 0.575%
Next $250 million 0.525%
Next $500 million 0.475%
Over $1 billion 0.425%
</TABLE>
<PAGE>
HARTFORD GROWTH AND INCOME HLS FUND 11
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING
12/31/98
-------------------------------------------------------
<CAPTION>
SINCE
INCEPTION
(MAY 29,
1998)
---------
<S> <C> <C> <C>
Class IA............ 19.05%
Index............... 13.65%
</TABLE>
<TABLE>
<S> <C> <C>
SEC File No. INDEX: S&P 500 Index, an unmanaged index of equity securities that are
811-08629 similar, but not identical, to those in the fund's portfolio.
------------------------------------------------------------------------
</TABLE>
<PAGE>
12 HARTFORD INDEX HLS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT GOAL. The Hartford Index HLS Fund seeks to provide investment results
which approximate the price and yield performance of publicly traded common stocks
in the aggregate.
The fund uses the Standard & Poor's 500 Composite Stock Price Index (the "Index")
SUB-ADVISER as its standard performance comparison because it represents a significant
HIMCO proportion of the total market value of all common stocks, is well known to
investors and, in the opinion of the management of the fund, is representative of
PORTFOLIO MANAGER the performance of publicly-traded common stocks. Therefore, the fund attempts to
RODGER K. METZGER approximate the capital performance and dividend income of the Index.
- - Vice President of HIMCO The fund generally invests in no fewer than 499 stocks. HIMCO selects stocks for
- - Manager of the fund since 1987 the fund's portfolio after taking into account their individual weights in the
- - Joined HIMCO in 1987 Index. Temporary cash balances may be invested in short-term money market
- - Investment professional since instruments.
1987 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, 1998, approximately fifty percent of the Index
was composed of the forty-one largest companies, the five largest being Microsoft
Corporation, General Electric Company, Intel Corporation, WalMart Stores, Inc. and
Exxon Corporation.
No attempt is made to "manage" the 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 fund's
portfolio unless, of course, the company is removed from the Index. From time to
time administrative adjustments may be made in the fund's portfolio because of
mergers, changes in the composition of the Index and similar reasons.
The 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 fund. Investment changes to
accommodate these cash flows will be made to maintain the similarity of the 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 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 fund regarding the advisability of investing in securities generally or in
the 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
fund or Hartford Life Insurance Company. S&P has no obligation to take the needs
of the 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 fund or the timing of the issuance or sale of shares in the fund. S&P
has no obligation or liability in connection with the administration, marketing or
trading of the fund.
</TABLE>
<PAGE>
HARTFORD INDEX HLS FUND 13
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
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 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.
The fund's portfolio is broadly diversified by industry and company.
----------------------------------------------------------------------------
RISK SUMMARY. The fund is subject to the following investment risks:
- Correlation risk - Natural event risk
- Derivatives risk - Opportunity risk
- Liquidity risk - Valuation risk
- Management risk - Year 2000 risk
- Market risk
----------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows how the fund's total return has varied from year
to year, while the table shows the fund's performance over time (along with a
broad-based market index for reference). These figures do not include the effect
of sales charges or other fees which may be applied at the variable life insurance
or variable annuity contract level. All figures assume that all distributions were
reinvested. Keep in mind that past performance does not indicate future results.
----------------------------------------------------------------------------
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
-------------------------------------------------------------
</TABLE>
THE INVESTMENT MANAGEMENT FEE PAID BY
THE FUND FOR THE 1998 FISCAL YEAR
WAS 0.38%
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1989 30.47%
<S> <C>
1990 -3.99%
1991 29.53%
1992 6.82%
1993 9.12%
1994 0.94%
1995 36.55%
1996 22.09%
1997 32.61%
1998 28.06%
</TABLE>
<TABLE>
<S> <C> <C>
BEST QUARTER: up 21.17%, fourth quarter 1998
WORST QUARTER: down -14.08%, third quarter 1990
</TABLE>
<PAGE>
14 HARTFORD INDEX HLS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/98
-------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SINCE
INCEPTION
(MAY 1,
1 YEAR 5 YEARS 10 YEARS 1987)
------- ------- -------- ---------
<S> <C> <C> <C> <C> <C>
Class IA...................... 28.06% 23.37% 18.36% 15.64%
Index......................... 28.56% 24.04% 19.17% 16.43%
</TABLE>
<TABLE>
<S> <C> <C>
SEC File No. INDEX: S&P 500 Composite Stock Price Index, an unmanaged index of
811-05045 equity securities that are similar, but not identical, to those in the
fund's portfolio.
------------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND 15
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SUB-ADVISER INVESTMENT GOAL AND STYLE. The Hartford International Opportunities Fund seeks
Wellington Management growth of capital by investing primarily in equity securities issued by non-U.S.
companies.
PORTFOLIO MANAGERS The fund normally invests at least 65% of its assets in equity securities issued
TROND SKRAMSTAD by non-U.S. companies. The fund anticipates that, under normal market conditions,
- - Senior Vice President of it will diversify its investments among at least three countries OTHER THAN the
Wellington Management United States. The securities in which the fund invests are denominated in both
- - Manager of the fund since 1994 U.S. dollars and non-U.S. currencies and generally are traded in non-U.S. markets.
- - Joined Wellington Management in Wellington Management uses a three-pronged investment strategy:
1993 - Wellington Management determines the relative attractiveness of the many
- - Investment professional since countries in which the fund may invest based upon its analysis of the economic
1990 and political environment of each country.
- Wellington Management also evaluates industries on a global basis to determine
ANDREW S. OFFIT which industries offer the most potential for capital appreciation given current
- - Vice President of Wellington and projected global and local economic and market conditions.
Management - Wellington Management conducts fundamental research on individual companies and
- - Associate Manager of the fund considers companies for inclusion in the fund's portfolio that are typically
since 1997 larger, high quality companies that operate in established markets. Fundamental
- - Joined Wellington Management in analysis of a company involves the assessment of such factors as its: business
1997 environment, management, balance sheet, income statement, anticipated earnings,
- - Investment professional since revenues, dividends, and other related measures of value.
1987 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 fund may also invest on a limited basis in smaller companies and less
developed emerging markets.
----------------------------------------------------------------------------
RISK SUMMARY. The fund is subject to the following investment risks:
- Correlation risk - Natural event risk
- Derivatives risk - Opportunity risk
- International investments risk - Small company risk
- Liquidity risk - Style risk
- Management risk - Valuation risk
- Market risk - Year 2000 risk
----------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows how the fund's total return has varied from year
to year, while the table shows the fund's performance over time (along with a
broad-based market index for reference). These figures do not include the effect
of sales charges or other fees which may be applied at the variable life insurance
or variable annuity contract level. All figures assume that all distributions were
reinvested. Keep in mind that past performance does not indicate future results.
----------------------------------------------------------------------------
</TABLE>
<PAGE>
16 HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
-------------------------------------------------------------
</TABLE>
THE INVESTMENT MANAGEMENT FEE PAID BY
THE FUND FOR THE 1998 FISCAL YEAR
WAS 0.68%
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1991 13.00%
<S> <C>
1992 -4.43%
1993 33.73%
1994 -1.94%
1995 13.93%
1996 12.91%
1997 0.34%
1998 13.16%
</TABLE>
<TABLE>
<S> <C> <C>
BEST QUARTER: up 16.77%, fourth quarter 1998
WORST QUARTER: down -16.98%, third quarter 1998
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/98
-------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SINCE
INCEPTION
(JULY 2,
1 YEAR 5 YEARS 1990)
------- ------- ---------
<S> <C> <C> <C> <C>
Class IA...................... 13.16% 7.45% 7.33%
Index......................... 26.71% 11.57% 9.29%*
* Index inception performance from
6/30/90
</TABLE>
<TABLE>
<S> <C> <C>
SEC File No. INDEX: Morgan Stanley Europe, Australia, Far East GDP ("EAFE GDP")
811-07557 Index, an unmanaged index of international equity securities that are
similar, but not identical, to those in the fund's portfolio.
------------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD MIDCAP HLS FUND 17
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SUB-ADVISER INVESTMENT GOAL AND STYLE. The Hartford MidCap Fund seeks long-term growth of
Wellington Management capital by investing primarily in equity securities selected on the basis of
potential for capital appreciation.
PORTFOLIO MANAGER The fund normally invests at least 65% of its total assets in equity securities of
PHILLIP H. PERELMUTER companies with market capitalizations within the range represented by the Standard
- - Vice President of Wellington & Poor's MidCap 400 Index. The fund may invest up to 20% of its total assets in
Management securities of non-U.S. companies.
- - Manager of the fund since The fund uses a two-tiered investment strategy:
inception (1997) - Using what is sometimes referred to as a "top down" approach, Wellington
- - Joined Wellington Management in Management analyzes the macro-economic and investment environment. This includes
1995 an evaluation of economic conditions, U.S. fiscal and monetary policy, and
- - Investment professional since demographic trends. Through top down analysis, Wellington Management anticipates
1983 secular and cyclical changes and identifies industries and economic sectors that
are expected to grow faster than the overall economy.
- 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. Fundamental analysis involves the assessment of
a company through such factors as its business environment, management, balance
sheet, income statement, anticipated earnings, revenues, and other related
measures of value.
The fund favors 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, and a strong management team.
----------------------------------------------------------------------------
RISK SUMMARY. The fund is subject to the following investment risks:
- Correlation risk - Natural event risk
- Derivatives risk - Opportunity risk
- International investments risk - Small company risk
- Liquidity risk - Style risk
- Management risk - Valuation risk
- Market risk - Year 2000 risk
----------------------------------------------------------------------------
PAST PERFORMANCE. The table and bar chart below show the fund's performance since
inception (along with a broad-based market index for reference). These figures do
not include the effect of sales charges or other fees which may be applied at the
variable life insurance or variable annuity contract level. All figures assume
that all distributions were reinvested. Keep in mind that past performance does
not indicate future results.
----------------------------------------------------------------------------
</TABLE>
<PAGE>
18 HARTFORD MIDCAP HLS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
-------------------------------------------------------------
</TABLE>
THE INVESTMENT MANAGEMENT FEE PAID BY
THE FUND FOR THE 1998 FISCAL YEAR
WAS 0.76%
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1998 26.57%
<S> <C>
</TABLE>
<TABLE>
<S> <C> <C>
BEST QUARTER: up 28.31%, fourth quarter 1998
WORST QUARTER: down -16.15%, third quarter 1998
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/98
-------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SINCE
INCEPTION
(JULY 14,
1 YEAR 1997)
------- ---------
<S> <C> <C> <C> <C>
Class IA...................... 26.57% 28.28%
Index......................... 19.11% 21.33%
</TABLE>
<TABLE>
<S> <C> <C>
SEC File No. INDEX: Standard & Poor's MidCap 400 Index, an unmanaged index of equity
811-08185 securities that are similar, but not identical, to those in the fund's
portfolio.
------------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD SMALL COMPANY HLS FUND 19
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SUB-ADVISER INVESTMENT GOAL AND STYLE. The Hartford Small Company Fund seeks growth of
Wellington Management capital by investing primarily in equity securities selected on the basis of
potential for capital appreciation.
Portfolio Manager The fund normally invests at least 65% of its total assets in equity securities of
MARK E. WATERHOUSE companies with market capitalizations within the range represented by the Russell
- - Vice President of Wellington 2000 Index. The fund may invest up to 20% of its total assets in securities of
Management non-U.S. companies.
- - Manager of the fund since 1997 Through fundamental analysis Wellington Management identifies companies that it
- - Joined Wellington Management in believes have substantial potential for near-term capital appreciation. Wellington
1995 Management selects securities of companies that, in its opinion:
- - Investment professional since - have potential for above-average earnings growth,
1984 - are undervalued in relation to their investment potential,
- have positive business and/or fundamental financial characteristics that are
overlooked or misunderstood by investors, or
- are relatively obscure and undiscovered by the overall investment community.
Fundamental analysis of a company involves the assessment of such factors as its
business environment, management, balance sheet, income statement, anticipated
earnings, revenues, dividends, and other related measures of value.
The fund is broadly diversified by industry and sector.
----------------------------------------------------------------------------
RISK SUMMARY. The fund is subject to the following investment risks:
- Correlation risk - Natural event risk
- Derivatives risk - Opportunity risk
- International investments risk - Small company risk
- Liquidity risk - Style risk
- Management risk - Valuation risk
- Market risk - Year 2000 risk
----------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows how the fund's total return has varied from year
to year, while the table shows the fund's performance over time (along with a
broad-based market index for reference). These figures do not include the effect
of sales charges or other fees which may be applied at the variable life insurance
or variable annuity contract level. All figures assume that all distributions were
reinvested. Keep in mind that past performance does not indicate future results.
----------------------------------------------------------------------------
</TABLE>
<PAGE>
20 HARTFORD SMALL COMPANY HLS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
-------------------------------------------------------------
</TABLE>
THE INVESTMENT MANAGEMENT FEE PAID BY
THE FUND FOR THE 1998 FISCAL YEAR
WAS 0.75%
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1997 18.38%
<S> <C>
1998 11.62%
</TABLE>
<TABLE>
<S> <C> <C>
BEST QUARTER: up 27.68%, fourth quarter 1998
WORST QUARTER: down -19.71%, third quarter 1998
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/98
-------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SINCE
INCEPTION
(AUGUST
1 YEAR 9, 1996)
------- ---------
<S> <C> <C> <C>
Class IA...................... 11.62% 15.63%
Index......................... -2.55% 14.37%
</TABLE>
<TABLE>
<S> <C> <C>
SEC File No. INDEX: Russell 2000 Index, an unmanaged index of small company equity
811-07557 securities that are similar, but not identical, to those in the fund's
portfolio.
------------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD STOCK HLS FUND 21
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SUB-ADVISER INVESTMENT GOAL AND STYLE. The Hartford Stock Fund seeks long-term growth of
Wellington Management capital, with income as a secondary consideration, by investing primarily in
equity securities.
PORTFOLIO MANAGERS The fund normally invests at least 65% of the fund's total assets in stocks. The
RAND L. ALEXANDER, CFA fund may invest up to 20% of its total assets in securities of non-U.S. companies.
- - Senior Vice President of The fund invests in a diversified portfolio of primarily equity securities using a
Wellington Management two-tiered investment strategy:
- - Manager of the fund since 1992 - Using what is sometimes referred to as a "top down" approach, Wellington
- - Joined Wellington Management in Management analyzes the macroeconomic and investment environment. This includes
1990 an evaluation of economic conditions, U.S. fiscal and monetary policy,
- - Investment professional since demographic trends, and investor sentiment. Through top down analysis,
1976 Wellington Management anticipates secular and cyclical changes and identifies
industries and economic sectors that are expected to grow faster than the
PHILIP H. PERELMUTER overall economy.
- - Vice President of Wellington - Top down analysis is followed by what is sometimes referred to as a "bottom up"
Management approach, which is the use of fundamental analysis to identify specific
- - Associate Manager of the fund securities for purchase or sale. The fund favors high-quality growth companies.
since 1995 The key characteristics of high-quality growth companies include: a leadership
- - Joined Wellington Management in position within an industry, a strong balance sheet, a high return on equity,
1995 sustainable or increasing dividends, a strong management team and a globally
- - Investment professional since competitive position.
1983
Fundamental analysis of a company involves the assessment of such factors as its
business environment, management, balance sheet, income statement, anticipated
earnings, revenues, dividends, and other related measures of value.
----------------------------------------------------------------------------
RISK SUMMARY. The fund is subject to the following investment risks:
- Correlation risk - Natural event risk
- Derivatives risk - Opportunity risk
- International investments risk - Small company risk
- Liquidity risk - Style risk
- Management risk - Valuation risk
- Market risk - Year 2000 risk
----------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows how the fund's total return has varied from year
to year, while the table shows the fund's performance over time (along with a
broad-based market index for reference). These figures do not include the effect
of sales charges or other fees which may be applied at the variable life insurance
or variable annuity contract level. All figures assume that all distributions were
reinvested. Keep in mind that past performance does not indicate future results.
----------------------------------------------------------------------------
</TABLE>
<PAGE>
22 HARTFORD STOCK HLS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
-------------------------------------------------------------
</TABLE>
THE INVESTMENT MANAGEMENT FEE PAID BY
THE FUND FOR THE 1998 FISCAL YEAR
WAS 0.44%
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1989 26.02%
<S> <C>
1990 -3.87%
1991 24.58%
1992 10.04%
1993 14.34%
1994 -1.89%
1995 34.10%
1996 24.33%
1997 31.38%
1998 33.47%
</TABLE>
<TABLE>
<S> <C> <C>
BEST QUARTER: up 22.17%, fourth quarter 1998
WORST QUARTER: down -17.22%, third quarter 1990
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/98
-------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SINCE
INCEPTION
(AUGUST
1 YEAR 5 YEARS 10 YEARS 31, 1977)
------- ------- -------- ---------
<S> <C> <C> <C> <C> <C>
Class IA...................... 33.47% 23.47% 18.48% 16.12%
Index......................... 28.56% 24.04% 19.17% 16.89%
</TABLE>
<TABLE>
<S> <C> <C>
SEC File No. INDEX: S&P 500 Index, an unmanaged index of equity securities that are
811-02630 similar, but not identical, to those in the fund's portfolio.
------------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD ADVISERS HLS FUND 23
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SUB-ADVISER INVESTMENT GOAL AND STYLE. The Hartford Advisers Fund seeks maximum long-term
Wellington Management total return by investing in common stocks and other equity securities, bonds and
other debt securities and money market instruments.
PORTFOLIO MANAGERS The fund actively allocates its assets among three categories:
PAUL D. KAPLAN - equity securities
- - Senior Vice President of Wellington - debt securities and
Management - money market instruments.
- - Co-manager of the fund since 1992 Asset allocation decisions are based on Wellington Management's judgment of the
- - Joined Wellington Management in 1982 projected investment environment for financial assets, relative fundamental
- - Investment professional since 1974 values, the attractiveness of each asset category, and expected future returns of
each asset category. Wellington Management does not attempt to engage in
RAND L. ALEXANDER short-term market timing among asset categories. As a result, shifts in asset
- - Senior Vice President of Wellington allocation are expected to be gradual and continuous and the fund will normally
Management have some portion of its assets invested in each asset category. There is no limit
- - Co-manager of the fund since 1992 on the amount of fund assets that may be allocated to each asset category. The
- - Joined Wellington Management in 1990 fund may invest up to 20% of its total assets in securities of non-U.S. companies.
- - Investment professional since 1976 The fund's investments in equity securities and securities that are convertible
into equity securities are substantially similar to the investments permitted for
the Stock Fund.
The debt securities in which the 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, securities deemed by Wellington
Management to be of comparable quality.
----------------------------------------------------------------------------
RISK SUMMARY. The fund is subject to the following investment risks:
- Correlation risk - Market risk
- Credit risk - Natural event risk
- Derivatives risk - Opportunity risk
- Interest rate risk - Small company risk
- International investments risk - Style risk
- Liquidity risk - Valuation risk
- Management risk - Year 2000 risk
----------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows how the fund's total return has varied from year
to year, while the table shows the fund's performance over time (along with a
broad-based market index for reference). These figures do not include the effect
of sales charges or other fees which may be applied at the variable life insurance
or variable annuity contract level. All figures assume that all distributions were
reinvested. Keep in mind that past performance does not indicate future results.
----------------------------------------------------------------------------
</TABLE>
<PAGE>
24 HARTFORD ADVISERS HLS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
-------------------------------------------------------------
</TABLE>
THE INVESTMENT MANAGEMENT FEE PAID BY
THE FUND FOR THE 1998 FISCAL YEAR
WAS 0.62%
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1989 21.72%
<S> <C>
1990 1.26%
1991 20.33%
1992 8.30%
1993 12.25%
1994 -2.74%
1995 28.34%
1996 16.62%
1997 24.51%
1998 24.66%
</TABLE>
<TABLE>
<S> <C> <C>
BEST QUARTER: up 13.92%, second quarter 1997
WORST QUARTER: down -9.25%, third quarter 1990
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/98
-------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SINCE
INCEPTION
(MARCH
1 YEAR 5 YEARS 10 YEARS 31, 1983)
------- ------- -------- ---------
<S> <C> <C> <C> <C> <C>
Class IA...................... 24.66% 17.70% 15.08% 13.90%
S&P Index..................... 28.56% 24.04% 19.17% 17.74%
LGCB Index.................... 9.47% 7.30% 9.33% 10.08%
</TABLE>
<TABLE>
<S> <C> <C>
SEC File No. INDICES: S&P 500 Index and the Lehman Government Corporate Bond Index,
811-03659 unmanaged indices of securities that are similar, but not identical, to
those in the fund's portfolio.
------------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD INTERNATIONAL ADVISERS HLS FUND 25
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SUB-ADVISER Investment Goal and Style. The Hartford International Advisers HLS Fund seeks
Wellington Management maximum long-term total rate of return by investing in common stocks and other
equity securities, bonds and other debt securities and money market instruments.
PORTFOLIO MANAGERS The fund actively allocates its assets among three categories:
TROND SKRAMSTAD - equity securities
- - Senior Vice President of Wellington - debt securities and
Management - money market instruments.
- - Manager of the equity component of the fund Securities in which the fund invests primarily will be denominated in non-U.S.
since 1995 currencies and will be traded in non-U.S. markets.
- - Joined Wellington Management in 1993 Asset allocation decisions are based upon Wellington Management's judgment of the
- - Investment professional since 1990 projected investment environment for financial assets, relative fundamental values
and attractiveness of each asset category. Wellington Management does not attempt
ROBERT L. EVANS to make short-term market timing decisions among asset categories. As a result,
- - Senior Vice President of Wellington shifts in asset allocation are expected to be gradual and continuous and the fund
Management will normally have some portion of its assets invested in each asset category.
- - Manager of the debt component of the fund There is no limit on the amount of fund assets that may be allocated to each asset
since 1995 category. The fund's investments in equity securities are substantially similar to
- - Joined Wellington Management in 1995 the equity securities investments permitted for the International Opportunities
- - Investment professional since 1985 HLS Fund.
The fund consists of a diversified portfolio of securities covering a broad range
ANDREW S. OFFIT of countries, industries, and companies. The fund anticipates that, under normal
- - Vice President of Wellington Management market conditions, it will diversify its investments in at least three countries
- - Associate Manager of the equity component other than the United States.
of the fund since 1997 Debt securities in which the fund may invest include investment grade, non-
- - Joined Wellington Management in 1997 convertible debt securities assigned within the four highest bond rating
- - Investment professional since 1987 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 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.
----------------------------------------------------------------------------
RISK SUMMARY. The fund is subject to the following investment risks:
- Correlation risk - Market risk
- Credit risk - Natural event risk
- Derivatives risk - Opportunity risk
- Interest rate risk - Small company risk
- International investments risk - Style risk
- Liquidity risk - Valuation risk
- Management risk - Year 2000 risk
----------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows how the fund's total return has varied from year
to year, while the table shows the fund's performance over time (along with a
broad-based market index for reference). These figures do not include the effect
of sales charges or other fees which may be applied at the variable life insurance
or variable annuity contract level. All figures assume that all distributions were
reinvested. Keep in mind that past performance does not indicate future results.
----------------------------------------------------------------------------
</TABLE>
<PAGE>
26 HARTFORD INTERNATIONAL ADVISERS HLS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
-------------------------------------------------------------
</TABLE>
THE INVESTMENT MANAGEMENT FEE PAID BY
THE FUND FOR THE 1998 FISCAL YEAR
WAS 0.76%
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1996 12.25%
<S> <C>
1997 5.52%
1998 13.35%
</TABLE>
<TABLE>
<S> <C> <C>
BEST QUARTER: up 10.60%, fourth quarter 1998
WORST QUARTER: down -9.05%, third quarter 1998
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/98
-------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SINCE
INCEPTION
(MARCH 1,
1 YEAR 1995)
------- ---------
<S> <C> <C> <C> <C>
Class IA............ 13.35% 12.07%
EAFE GDP Index...... 26.71% 13.91%*
Salomon Index....... 11.53% 12.97%*
* Index inception performance is from
2/28/95
</TABLE>
<TABLE>
<S> <C> <C>
SEC File No. INDICES: Morgan Stanley Europe, Australia, Far East GDP ("EAFE GDP")
811-08804 Index and the Salomon World Government Bond ex-US Index, unmanaged
indices of international securities that are similar, but not identical,
to those in the fund's portfolio.
------------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD BOND HLS FUND 27
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT GOAL AND STYLE. The Hartford Bond HLS Fund seeks maximum current
income consistent with preservation of capital by investing primarily in
SUB-ADVISER fixed-income securities.
HIMCO The fund normally invests at least 80% of its portfolio in investment grade fixed
income securities. Up to 20% of the fund may be invested in securities rated in
PORTFOLIO MANAGER the highest category of below investment grade bonds (Ba1, Ba2 or Ba3 by Moody's
ALISON D. GRANGER, CFA or BB+, BB or BB- by S&P), or securities which, if unrated, are determined by
- - Senior Vice President of HIMCO HIMCO to be of comparable quality. Securities rated below investment grade are
- - Manager of the fund since 1996 commonly referred to as "high yield-high risk securities" or "junk bonds".
- - Joined HIMCO in 1993 The fund invests at least 65% of its total assets in debt securities with a
- - Investment professional since 1981 maturity of at least one year. The fund may invest up to 15% of its total assets
in preferred stocks, convertible securities, and securities carrying warrants to
purchase equity securities. The 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. Up to 20% of the fund's total assets may be invested in securities of
non-U.S. companies.
The fund uses what is sometimes referred to as a top-down analysis to determine
which industries may benefit from current and future changes in the economy. The
fund then selects individual securities that appear comparatively undervalued
within selected industries. The portfolio manager looks at financial condition of
the issuers as well as the collateralization and other aspects of the securities
themselves.
----------------------------------------------------------------------------
RISK SUMMARY. The fund is subject to the following investment risks:
- Correlation risk - Market risk
- Credit risk - Natural event risk
- Derivatives risk - Opportunity risk
- Interest rate risk - Style risk
- International investments risk - Valuation risk
- Liquidity risk - Year 2000 risk
- Management risk
----------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows how the fund's total return has varied from year
to year, while the table shows the fund's performance over time (along with a
broad-based market index for reference). These figures do not include the effect
of sales charges or other fees which may be applied at the variable life insurance
or variable annuity contract level. All figures assume that all distributions were
reinvested. Keep in mind that past performance does not indicate future results.
----------------------------------------------------------------------------
</TABLE>
<PAGE>
28 HARTFORD BOND HLS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
-------------------------------------------------------------
</TABLE>
THE INVESTMENT MANAGEMENT FEE PAID BY
THE FUND FOR THE 1998 FISCAL YEAR
WAS 0.48%
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1989 12.10%
<S> <C>
1990 8.39%
1991 16.43%
1992 5.53%
1993 10.24%
1994 -3.95%
1995 18.49%
1996 3.54%
1997 11.35%
1998 8.15%
</TABLE>
<TABLE>
<S> <C> <C>
BEST QUARTER: up 6.68%, second quarter 1989
WORST QUARTER: down -3.40%, first quarter 1994
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/98
-------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SINCE
INCEPTION
(AUGUST
1 YEAR 5 YEARS 10 YEARS 31, 1977)
------- ------- -------- ---------
<S> <C> <C> <C> <C> <C>
Class IA...................... 8.15% 7.25% 8.86% 9.04%
Index......................... 9.47% 7.30% 9.33% 9.56%
</TABLE>
<TABLE>
<S> <C> <C>
SEC File No. INDEX: Lehman Government Corporate Bond Index, an unmanaged index of
811-03660 fixed-income securities that are similar, but not identical, to those in
the fund's portfolio.
------------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD HIGH YIELD HLS FUND 29
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT GOAL AND STYLE. The Hartford High Yield HLS Fund seeks high current
income by investing in non-investment grade fixed-income securities. Growth of
SUB-ADVISER capital is a secondary objective.
HIMCO The fund normally invests at least 65% of its portfolio in non-investment grade
fixed income securities (securities rated "Ba" or lower by Moody's or "BB" or
PORTFOLIO MANAGER lower by S&P, or securities which, if unrated, are determined by HIMCO to be of
ALISON D. GRANGER, CFA comparable quality). Securities rated below investment grade are commonly referred
- - Senior Vice President of HIMCO to as "high yield-high risk securities" or "junk bonds". Although the fund is
- - Manager of the fund since inception (1998) permitted to invest up to 100% of its total assets in non-investment grade
- - Joined HIMCO in 1993 securities, no more than 10% of total assets will be invested in securities rated
- - Investment professional since 1981 below B3 by Moody's or B- by S&P, or if unrated, determined to be of comparable
quality by HIMCO.
The fund may invest up to 15% of its total assets in preferred stocks, convertible
securities, and securities carrying warrants to purchase equity securities. The
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 30% of the fund's total assets may be invested in securities of non-U.S.
issuers. One-third (1/3) of this 30% figure (10% of total assets) may be invested
in securities issued in non-U.S. currencies (including the European Currency Unit
and its successor, the Euro). Non-U.S. dollar denominated securities for which the
fund uses currency transactions to reflect U.S. dollar valuation at the time of
purchase or while the fund holds the security are excluded from the calculation of
the percentage of securities issued in non-U.S. currencies. The fund may also
invest in non-U.S. debt securities of issuers located in less developed markets,
which are also known as emerging markets.
The fund uses what is sometimes referred to as a top-down analysis to determine
which industries may benefit from current and future changes in the economy. The
fund then selects individual securities that appear comparatively undervalued
within selected industries. The portfolio manager looks at financial condition of
the issuers as well as the collateralization and other aspects of the securities
themselves.
----------------------------------------------------------------------------
RISK SUMMARY. The fund is subject to the following investment risks:
- Correlation risk - Market risk
- Credit risk - Natural event risk
- Derivatives risk - Opportunity risk
- Interest rate risk - Style risk
- International investments risk - Valuation risk
- Liquidity risk - Year 2000 risk
- Management risk
----------------------------------------------------------------------------
PAST PERFORMANCE. The table below shows the fund's performance since inception.
These figures do not include the effect of sales charges or other fees which may
be applied at the variable insurance or variable annuity contract level. The
figures assume that all distributions were reinvested. Keep in mind that this
performance is for a limited period of time and that past performance does not
indicate future results.
----------------------------------------------------------------------------
</TABLE>
<PAGE>
30 HARTFORD HIGH YIELD HLS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
THE FUND PAYS THE FOLLOWING INVESTMENT
MANAGEMENT FEES BASED ON AVERAGE DAILY NET
ASSETS:
Net Asset Value Annual Rate
First $250 million 0.575%
Next $250 million 0.525%
Next $500 million 0.475%
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING
Over $1 billion 0.425% 12/31/98
--------------------------------------------------
SINCE
INCEPTION
(SEPTEMBER
30, 1998)
---------
Class IA............ 3.58%
Index............... 1.62%
</TABLE>
<TABLE>
<S> <C> <C>
SEC File No. INDEX: Lehman High Yield Corporate Index, an unmanaged index of high
811-08629 yield fixed income securities that are similar, but not identical, to
those in the fund's portfolio.
------------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD MORTGAGE SECURITIES HLS FUND 31
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SUB-ADVISER INVESTMENT GOAL AND STYLE. The Hartford Mortgage Securities HLS Fund seeks
HIMCO maximum current income consistent with safety of principal and maintenance of
liquidity by investing primarily in mortgage-related securities, including
PORTFOLIO MANAGER securities issued by the Government National Mortgage Association.
PETER P. PERROTTI The fund normally invests at least 65% of its total assets in high quality
- - Senior Vice President of HIMCO mortgage-related securities either (i) issued by U.S. Government agencies,
- - Manager of the fund effective May 1, 1999 instrumentalities or sponsored corporations or (ii) rated A or better by Moody's
- - Joined HIMCO in 1990 or S&P or, if not rated, which are of equivalent investment quality as determined
- - Investment professional since 1989 by HIMCO. At times the 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.
----------------------------------------------------------------------------
RISK SUMMARY. The fund is subject to the following investment risks:
- Correlation risk - Market risk
- Credit risk - Natural event risk
- Derivatives risk - Opportunity risk
- Interest rate risk - Small company risk
- International investments risk - Style risk
- Liquidity risk - Valuation risk
- Management risk - Year 2000 risk
----------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows how the fund's total return has varied from year
to year, while the table shows the fund's performance over time (along with a
broad-based market index for reference). These figures do not include the effect
of sales charges or other fees which may be applied at the variable life insurance
or variable annuity contract level. All figures assume that all distributions were
reinvested. Keep in mind that past performance does not indicate future results.
----------------------------------------------------------------------------
</TABLE>
<PAGE>
32 HARTFORD MORTGAGE SECURITIES HLS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
-------------------------------------------------------------
</TABLE>
THE INVESTMENT MANAGEMENT FEE PAID BY
THE FUND FOR THE 1998 FISCAL YEAR
WAS 0.43%
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1989 13.13%
<S> <C>
1990 9.70%
1991 14.71%
1992 4.64%
1993 6.31%
1994 -1.61%
1995 16.17%
1996 4.99%
1997 9.01%
1998 6.72%
</TABLE>
<TABLE>
<S> <C> <C>
BEST QUARTER: up 6.55%, second quarter 1989
WORST QUARTER: down -2.13%, first quarter 1994
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/98
-------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SINCE
INCEPTION
(JANUARY
1 YEAR 5 YEARS 10 YEARS 1, 1985)
------- ------- -------- ---------
<S> <C> <C> <C> <C> <C>
Class IA...................... 6.72% 6.92% 8.27% 8.89%
Index......................... 6.96% 7.23% 9.13% 10.12%
</TABLE>
<TABLE>
<S> <C> <C>
SEC File No. INDEX: Lehman Mortgage Backed Securities, an unmanaged index of
811-04201 mortgage backed securities that are similar, but not identical, to those
in the fund's portfolio.
------------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD MONEY MARKET HLS FUND 33
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SUB-ADVISER INVESTMENT GOAL AND STYLE. The Hartford Money Market HLS Fund seeks maximum
HIMCO current income consistent with liquidity and preservation of capital.
The fund seeks to maintain a stable share price of $1.00. The fund focuses on
PORTFOLIO MANAGER specific short-term money market instruments such as securities issued by
WILLIAM H. DAVISON corporations and financial institutions. The fund purchases securities which it
- - Senior Vice President of HIMCO believes offer attractive returns relative to the risks undertaken. In addition,
- - Manager of the fund since 1992 the portfolio manager adjusts the average maturity of the portfolio in
- - Joined HIMCO in 1990 anticipation of interest rate changes.
- - Investment professional since ----------------------------------------------------------------------------
1981 RISK SUMMARY. An investment in the fund is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although the
fund seeks to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in the fund. In addition, the fund is subject
to the following risks:
- Credit risk - Opportunity risk
- Interest rate risk - Style risk
- Management risk - Valuation risk
- Market risk - Year 2000 risk
- Natural event risk
----------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows how the fund's total return has varied from year
to year, while the table shows the fund's performance over time (along with a
broad-based market index for reference). These figures do not include the effect
of sales charges or other fees which may be applied at the variable life insurance
or variable annuity contract level. All figures assume that all distributions were
reinvested. Keep in mind that past performance does not indicate future results.
----------------------------------------------------------------------------
</TABLE>
<PAGE>
34 HARTFORD MONEY MARKET HLS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
-------------------------------------------------------------
</TABLE>
THE INVESTMENT MANAGEMENT FEE PAID BY
THE FUND FOR THE 1998 FISCAL YEAR
WAS 0.43%
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1989 9.10%
<S> <C>
1990 8.09%
1991 6.01%
1992 3.63%
1993 2.94%
1994 3.95%
1995 5.74%
1996 5.09%
1997 5.31%
1998 5.25%
</TABLE>
<TABLE>
<S> <C> <C>
BEST QUARTER: up 2.36%, second quarter 1989
WORST QUARTER: down 0.72%, first quarter 1994
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/98
-------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SINCE
INCEPTION
(JUNE 30,
1 YEAR 5 YEARS 10 YEARS 1980)
------- ------- -------- ---------
<S> <C> <C> <C> <C> <C>
Class IA...................... 5.25% 5.11% 5.53% 7.52%
Index......................... 4.94% 5.02% 5.43% %
-------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
SEC File No. INDEX: 60-Day Treasury Bill Index, an unmanaged index of short-term
811-03410 treasury bills that are similar, but not identical, to those in the
fund's portfolio.
Current 7-day yield as of December 31, 1998: 4.79%
Effective 7-day yield as of December 31, 1998: 4.90%
Please call 1-800-862-6668 for the most recent current and effective
yield information.
------------------------------------------------------------------------
</TABLE>
<PAGE>
ADDITIONAL INVESTMENT MATTERS 35
- --------------------------------------------------------------------------------
USE OF OPTIONS AND FUTURES. Each fund (other than the Money Market fund) may
purchase and sell options and enter into futures contracts, in each case with
respect to stocks, bonds, groups of securities (such as financial indices) or
foreign currencies.These techniques permit a fund to gain exposure to a
particular security or group of securities, and thereby earn returns similar to
those which would be earned by direct investments in those securities. These
techniques are also used to manage risk by hedging a fund's portfolio
investments. Use of these techniques may result in losses to a fund or increase
volatility.
USE OF MONEY MARKET INVESTMENTS FOR TEMPORARY DEFENSIVE PURPOSES. From time to
time each fund (other than the Money Market fund) may invest some or all of its
assets in high quality money market securities for temporary defensive purposes
in response to adverse market, economic or political conditions. To the extent a
fund is in a defensive position, the fund may lose the benefit of upswings and
limit its ability to meet its investment objective.
ABOUT EACH FUND'S INVESTMENT GOAL. Each fund's investment goal may be changed
only with approval of the shareholders of the fund. A fund may not be able to
achieve its goal.
TAX CONSEQUENCES OF PORTFOLIO TRADING PRACTICES. At times each fund (other than
the Money Market fund) may engage in short-term trading, which could produce
higher brokerage expenses for a fund and higher taxable distributions to the
fund's shareholders. The funds are not managed to achieve a particular tax
result for shareholders. Shareholders should consult their own tax adviser for
individual tax advice.
<PAGE>
36 RISKS OF INVESTING IN THE FUNDS
- --------------------------------------------------------------------------------
The funds are subject to the following investment risks:
CORRELATION RISK. The risk that changes in the value of a hedging instrument
will not match those of the asset being hedged (hedging is the use of one
investment to offset the effects of another investment). Incomplete correlation
can result in unanticipated risks.
CREDIT RISK. The risk that the issuer of a security, or the counterparty to a
contract, will have its credit rating downgraded, default or otherwise become
unable to honor a financial obligation. This risk is higher for junk bonds.
DERIVATIVES RISK. When a derivative (a security whose value is based on another
security or index) is used as a hedge against an opposite position that the fund
also holds, any loss generated by the derivative should be substantially offset
by gains on the hedged investment, and vice versa. While hedging can reduce or
eliminate losses, it can also reduce or eliminate gains. To the extent that a
derivative is not used as a hedge, the fund is directly exposed to the potential
gains and losses of that derivative. Gains and losses from non-hedging
derivative positions may be substantially greater than the derivative's original
cost.
INTEREST RATE RISK. The risk of market losses attributable to increases in
interest rates. With fixed-rate securities (such as bonds), a rise in interest
rates typically causes a fall in values, while a fall in rates typically causes
a rise in values. Generally speaking, a fixed-rate security with longer maturity
is more sensitive to interest rate changes than a similar security of shorter
maturity.
INTERNATIONAL INVESTMENT RISKS. Investments in foreign markets involve special
risks and considerations. Some of these factors are also present when investing
in the United States but are heightened when investing in non-US markets and
especially emerging markets. For example, these risks may include political and
economic instability, differing accounting and financial reporting standards or
inability to obtain reliable financial information regarding a company's balance
sheet and operations.
In addition, international investors may experience higher commission rates
on foreign portfolio transactions, potential adverse changes in tax and exchange
control regulations, the potential for restrictions on the flow of international
capital, and potential adverse effects from the transition to the euro in
European Monetary Union countries. Many foreign countries impose withholding
taxes on income from investments in such countries, which a fund may not be able
to recover. Also, changes in the exchange rates between the US dollar and
foreign currencies may have a negative impact on investments denominated in
foreign currencies, for example, by eroding or reversing gains or widening
losses from those investments. These risks are common to all mutual fund
investing in international securities.
LIQUIDITY RISK. The risk that certain securities may be difficult or impossible
to sell at the time and the price that the seller would like, especially in down
markets. The seller may have to lower the price, sell other securities instead,
or forego an investment opportunity, any of which could have a negative effect
on fund management or performance. Common to all mutual funds.
MANAGEMENT RISK. The risk that a strategy used by the fund's management may fail
to produce the intended result. Common to all mutual funds.
MARKET RISK. The risk that the market value of a security may move up and down,
sometimes rapidly and unpredictably. Market risk may affect a single issuer, an
industry, a sector or the stock or bond market as a whole. Common to all stocks
and bonds and the mutual funds that invest in them.
NATURAL EVENT RISK. The risk of losses attributable to natural disasters, crop
failures and similar events. Common to all mutual funds.
OPPORTUNITY RISK. The risk of missing out on an investment opportunity because
the assets necessary to take advantage of it are tied up in less advantageous
investments. Common to all mutual funds.
SMALL COMPANY RISK. The risks of securities of small capitalization companies,
which typically include issuers with less experience and shorter operating
histories. These investments may be more speculative than investments in larger
or better established companies. Other risks associated with smaller or newer
companies include less publicly-available information about the company, and the
normal risks which accompany the development of new products, markets or
services.
STYLE RISK. The risk that a portfolio's investment style may not produce
favorable results relative to market trends. Common to all mutual funds.
VALUATION RISK. The risk that the fund has valued certain of its securities at a
higher price than it can sell them for. Common to all mutual funds.
YEAR 2000 RISK. The risk that the funds' operations could be disrupted by year
2000 computer system problems. Although the adviser and the funds' service
providers are taking steps to address this issue, there may still be some risk
of adverse effects. If the issuers of securities in a fund's portfolio have year
2000 problems, these securities could go down in value. Common to all mutual
funds.
<PAGE>
PURCHASE AND SALE OF FUND SHARES 37
- --------------------------------------------------------------------------------
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
Hartford Life. Shares of the funds are sold by Hartford Securities Distribution
Company (the "Distributor") on a no-load basis at their net asset value as
defined under Transaction Details.
The funds offer Hartford Life contractholders or policyholders two different
classes of shares -- Class IA and Class IB. Class IA shares are offered by this
prospectus. Class IB shares are offered by a separate prospectus in connection
with a variable annuity product. The different classes of shares represent
investments in the same portfolio of securities but are subject to different
expenses and will likely have different share prices and performance.
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 Hartford Life 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 Class IA 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 5085, Hartford, CT
06102-5085. 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.
<PAGE>
38 TRANSACTION DETAILS
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share is determined for each fund as of the close of
the New York Stock Exchange ("NYSE") (normally 4:00 p.m. Eastern Time) on each
business day that the NYSE is open. The net asset value is determined by
dividing the value of the fund's net assets attributable to a class of shares by
the number of shares outstanding for that class. The assets of each fund (except
the Money Market Fund) 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 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 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.
DIVIDENDS
The shareholders of each fund are 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
current policy for each fund, except 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 Money Market Fund declares dividends on a
daily basis and pays 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.
EXCHANGE PRIVILEGES
Contractholders and policyholders may exchange shares in each fund as
indicated by the accompanying insurance product prospectus. The funds are
intended to be long-term investment vehicles and are not designed to provide
investors with a means of speculating on short-term market movements. Investors
who engage in excessive account activity generate additional costs which are
borne by all of the funds' shareholders. In order to minimize such costs, the
funds reserve the right to reject any purchase request that is reasonably deemed
to be disruptive to efficient portfolio management, either because of the timing
of the investment or previous excessive trading by the
contractholder/policyholder.
FEDERAL INCOME TAXES
Each fund has elected and intends to continue qualifying under Subchapter M
of the Internal Revenue Code of 1986, as amended. Each fund intends to
distribute all of its net income and gains to shareholders. Because the shares
are purchased only through products that defer taxes, these distributions
generally will not be considered taxable income to you at the time of
distribution. Each fund will inform contractholders or policyholders 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 insurance product prospectus.
If eligible, each fund may make an election to pass through to its
shareholder, Hartford Life, a credit for any foreign taxes paid during the year.
If such an election is made, the pass-through of the foreign tax credit will
result in additional taxable income and income tax to Hartford Life. 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 Hartford
Life.
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 funds.
<PAGE>
PERFORMANCE RELATED INFORMATION 39
- --------------------------------------------------------------------------------
The funds may advertise 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 period 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 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.
The funds are offered exclusively through variable insurance products.
Performance information presented for the funds should not be compared directly
with performance information of other insurance products without taking into
account insurance-related charges and expenses payable with respect to these
insurance products. Insurance related charges and expenses are not reflected in
the funds' performance information and will reduce an investor's return under
the insurance product.
<PAGE>
40 GENERAL INFORMATION
- --------------------------------------------------------------------------------
DISTRIBUTOR
Hartford Securities Distribution Company, Inc., 200 Hopmeadow Street,
Simsbury, CT 06089, serves as distributor to the funds.
CUSTODIAN
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, serves as custodian of each fund's assets.
TRANSFER AND DIVIDEND DISBURSING AGENTS
Hartford Life Insurance Company, 200 Hopmeadow Street, Simsbury, CT 06089,
serves as Transfer and Dividend Disbursing Agent for the funds.
<PAGE>
FINANCIAL HIGHLIGHTS 41
- --------------------------------------------------------------------------------
HARTFORD CAPITAL APPRECIATION HLS FUND
These tables are intended to help you understand each fund's financial
performance for the past five years. The total returns in the table represent
the rate that an investor would have earned on an investment in each fund
(assuming reinvestment of all dividends and distributions). This information has
been audited by Arthur Andersen, LLP, whose report, along with each fund's
financial statements, are included in the annual report which is available upon
request.
<TABLE>
<CAPTION>
CLASS IA -- PERIOD ENDED: 12/31/98 12/31/97 12/31/96 12/31/95 12/31/94
----------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................ $ 3.914 $ 3.490 $ 2.860 $ 3.052
Net investment income (loss)....... 0.020 0.022 0.030 0.011
Net realized and unrealized gain
(loss) on investments............. 0.794 0.655 0.785 0.070
----------- ----------- --------- ----------- -----------
Total from investment operations... 0.814 0.677 0.815 0.081
Less distributions:
Dividends from net investment
income.......................... (0.022) (0.025) (0.030) (0.011)
Distributions from net realized
gain on investments............. (0.296) (0.228) (0.155) (0.262)
Return of capital................ 0.000 0.000 0.000 0.000 0.000
----------- ----------- --------- ----------- -----------
Total from distributions......... (0.318) (0.253) (0.185) (0.273)
----------- ----------- --------- ----------- -----------
Net increase (decrease) in net
asset value....................... 0.496 0.424 0.630 (0.192)
Net asset value, end of period..... $ $ 4.410 $ 3.914 $ 3.490 $ 2.860
----------- ----------- --------- ----------- -----------
----------- ----------- --------- ----------- -----------
TOTAL RETURN....................... % 22.34% 20.70% 30.25% 2.50%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................ $ 4,802,992 $3,386,670 $ 2,157,892 $ 1,158,644
Ratio of expenses to average net
assets............................ % 0.64% 0.65% 0.68% 0.72%
Ratio of net investment income
(loss) to average net assets...... % 0.44% 0.60% 0.95% 0.40%
Portfolio turnover rate............ % 57.60% 85.40% 78.60% 73.30%
</TABLE>
<PAGE>
42 FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD DIVIDEND AND GROWTH HLS FUND
These tables are intended to help you understand each fund's financial
performance since inception. The total returns in the table represent the rate
that an investor would have earned on an investment in each fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Arthur Andersen, LLP, whose report, along with each fund's financial
statements, are included in the annual report which is available upon request.
<TABLE>
<CAPTION>
3/8/94-
CLASS IA -- PERIOD ENDED: 12/31/98 12/31/97 12/31/96 12/31/95 12/31/94(A)
----------- ----------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................ $ 1.547 $ 1.371 $ 0.994 $ 1.000
Net investment income (loss)....... 0.035 0.034 0.033 0.024
Net realized and unrealized gain
(loss) on investments............. 0.445 0.258 0.323 (0.005)
----------- ----------- --------- --------- ----------
Total from investment operations... 0.480 0.292 0.356 0.019
Less distributions:
Dividends from net investment
income.......................... (0.031) (0.034) (0.033) (0.024)
Distributions from net realized
gain on investments............. (0.044) (0.028) 0.000 (0.001)
Return of capital................ 0.000 0.000 0.000 0.000 0.000
----------- ----------- --------- --------- ----------
Total from distributions......... (0.075) (0.062) (0.033) (0.025)
----------- ----------- --------- --------- ----------
Net increase (decrease) in net
asset value....................... 0.405 0.230 0.323 (0.006)
Net asset value, end of period..... $ $ 1.952 $ 1.547 $ 1.317 $ 0.994
----------- ----------- --------- --------- ----------
----------- ----------- --------- --------- ----------
TOTAL RETURN....................... % 31.89% 22.91% 36.37% 1.60%(b)
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................ $ 1,994,653 $ 879,980 $ 265,070 $55,066
Ratio of expenses to average net
assets............................ % 0.68% 0.73% 0.77% 0.83%(c)
Ratio of net investment income
(loss) to average net assets % 2.21% 2.52% 2.91% 3.52%(c)
Portfolio turnover rate............ % 34.20% 56.90% 41.40% 27.80%
</TABLE>
- ---------
(a) The Fund was declared effective by the Securities and Exchange Commission on
March 8, 1994.
(b) Not annualized.
(c) 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.
<PAGE>
FINANCIAL HIGHLIGHTS 43
- --------------------------------------------------------------------------------
HARTFORD GLOBAL LEADERS HLS FUND
These tables are intended to help you understand each fund's financial
performance since inception. The total returns in the table represent the rate
that an investor would have earned on an investment in each fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Arthur Andersen, LLP, whose report, along with each fund's financial
statements, are included in the annual report which is available upon request.
<TABLE>
<CAPTION>
CLASS IA -- PERIOD ENDED: 9/30/98-12/31/98(A)
-----------
<S> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................
Net investment income (loss).......
Net realized and unrealized gain
(loss) on investments.............
-----------
Total from investment operations...
Less distributions:
Dividends from net investment
income..........................
Distributions from net realized
gain on investments.............
Return of capital................ 0.000
-----------
Total from distributions.........
-----------
Net increase (decrease) in net
asset value.......................
Net asset value, end of period..... $
-----------
TOTAL RETURN....................... %
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................
Ratio of expenses to average net
assets............................ %
Ratio of net investment income
(loss) to average net assets...... %
Portfolio turnover rate............ %
</TABLE>
- ---------
(a) The fund was declared effective by the Securities and Exchange Commission on
September 30, 1998.
<PAGE>
44 FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD GROWTH AND INCOME HLS FUND
These tables are intended to help you understand each fund's financial
performance since inception. The total returns in the table represent the rate
that an investor would have earned on an investment in each fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Arthur Andersen, LLP, whose report, along with each fund's financial
statements, are included in the annual report which is available upon request.
<TABLE>
<CAPTION>
CLASS IA -- PERIOD ENDED: 5/29/98-12/31/98(A)
-----------
<S> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................
Net investment income (loss).......
Net realized and unrealized gain
(loss) on investments.............
-----------
Total from investment operations...
Less distributions:
Dividends from net investment
income..........................
Distributions from net realized
gain on investments.............
Return of capital................ 0.000
-----------
Total from distributions.........
-----------
Net increase (decrease) in net
asset value.......................
Net asset value, end of period..... $
-----------
-----------
TOTAL RETURN....................... %
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................
Ratio of expenses to average net
assets............................ %
Ratio of net investment income
(loss) to average net assets...... %
Portfolio turnover rate............ %
</TABLE>
- ---------
(a) The fund was declared effective by the Securities and Exchange Commission on
May 29, 1998.
<PAGE>
FINANCIAL HIGHLIGHTS 45
- --------------------------------------------------------------------------------
HARTFORD INDEX HLS FUND
These tables are intended to help you understand each fund's financial
performance for the past five years. The total returns in the table represent
the rate that an investor would have earned on an investment in each fund
(assuming reinvestment of all dividends and distributions). This information has
been audited by Arthur Andersen, LLP, whose report, along with each fund's
financial statements, are included in the annual report which is available upon
request.
<TABLE>
<CAPTION>
CLASS IA -- PERIOD ENDED: 12/31/98 12/31/97 12/31/96 12/31/95 12/31/94
----------- ----------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................ $ 2.382 $ 2.028 $ 1.522 $ 1.546
Net investment income (loss)....... 0.035 0.044 0.044 0.038
Net realized and unrealized gain
(loss) on investments............. 0.692 0.393 0.507 (0.024)
----------- ----------- --------- --------- ---------
Total from investment operations... 0.727 0.437 0.551 0.014
Less distributions:
Dividends from net investment
income.......................... (0.035) (0.044) (0.044) (0.038)
Distributions from net realized
gain on investments............. (0.196) (0.039) (0.001) 0.000
Return of capital................ 0.000 0.000 0.000 0.000 0.000
----------- ----------- --------- --------- ---------
Total from distributions......... (0.231) (0.083) (0.045) (0.035)
----------- ----------- --------- --------- ---------
Net increase (decrease) in net
asset value....................... 0.496 0.354 0.506 (0.024)
Net asset value, end of period..... $ $ 2.878 $ 2.382 $ 2.028 $ 1.522
----------- ----------- --------- --------- ---------
----------- ----------- --------- --------- ---------
TOTAL RETURN....................... % 32.61% 22.09% 36.55% 0.94%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................ $ 1,123,455 $ 621,065 $ 318,253 $ 157,660
Ratio of expenses to average net
assets............................ % 0.39% 0.39% 0.39% 0.45%
Ratio of net investment income
(loss) to average net assets...... % 1.52% 2.07% 2.46% 2.50%
Portfolio turnover rate............ % 5.70% 19.30% 1.50% 1.80%
</TABLE>
<PAGE>
46 FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND
These tables are intended to help you understand each fund's financial
performance for the past five years. The total returns in the table represent
the rate that an investor would have earned on an investment in each fund
(assuming reinvestment of all dividends and distributions). This information has
been audited by Arthur Andersen, LLP, whose report, along with each fund's
financial statements, are included in the annual report which is available upon
request.
<TABLE>
<CAPTION>
CLASS IA -- PERIOD ENDED: 12/31/98 12/31/97 12/31/96 12/31/95 12/31/94
----------- ----------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................ $ 1.407 $ 1.306 $ 1.176 $ 1.215
Net investment income (loss)....... 0.022 0.023 0.020 0.016
Net realized and unrealized gain
(loss) on investments............. (0.019) 0.140 0.141 (0.039)
----------- ----------- --------- --------- ----------
Total from investment operations... 0.003 0.163 0.161 (0.023)
Less distributions:
Dividends from net investment
income.......................... (0.012) (0.025) (0.020) (0.016)
Distributions from net realized
gain on investments............. (0.104) (0.037) (0.011) 0.000
Return of capital................ 0.000 0.000 0.000 0.000 0.000
----------- ----------- --------- --------- ----------
Total from distributions......... (0.116) (0.062) (0.031) (0.016)
----------- ----------- --------- --------- ----------
Net increase (decrease) in net
asset value....................... (0.113 0.101 0.130 (0.039)
Net asset value, end of period..... $ $ 1.294 $ 1.407 $ 1.306 $ 1.176
----------- ----------- --------- --------- ----------
----------- ----------- --------- --------- ----------
TOTAL RETURN....................... % 0.34% 12.91% 13.93% (1.94)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................ $ 1,092,946 $ 996,543 $ 686,475 $563,765
Ratio of expenses to average net
assets............................ % 0.77% 0.86% 0.85% 1.00%
Ratio of net investment income
(loss) to average net assets...... % 1.48% 1.74% 1.60% 1.42%
Portfolio turnover rate............ % 72.70% 70.00% 55.60% 46.40%
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS 47
- --------------------------------------------------------------------------------
HARTFORD MIDCAP HLS FUND
These tables are intended to help you understand each fund's financial
performance since inception. The total returns in the table represent the rate
that an investor would have earned on an investment in each fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Arthur Andersen, LLP, whose report, along with each fund's financial
statements, are included in the annual report which is available upon request.
<TABLE>
<CAPTION>
7/15/97-
CLASS IA -- PERIOD ENDED: 12/31/98 12/31/97(A)
--------- ----------
<S> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................ $ 1.000
Net investment income (loss)....... 0.001
Net realized and unrealized gain
(loss) on investments............. 0.137
--------- ----------
Total from investment operations... 0.138
Less distributions:
Dividends from net investment
income.......................... (0.001)
Distributions from net realized
gain on investments............. 0.000
Return of capital................ 0.000 0.000
--------- ----------
Total from distributions......... (0.001)
--------- ----------
Net increase (decrease) in net
asset value....................... 0.137
Net asset value, end of period..... $ $ 1.137
--------- ----------
--------- ----------
TOTAL RETURN....................... % 13.81%(b)
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................ $27,589
Ratio of expenses to average net
assets............................ % 0.46%(c)
Ratio of net investment income
(loss) to average net assets...... % 0.45%(c)
Portfolio turnover rate............ % 46.10%
</TABLE>
- ---------
(a) The Fund was declared effective by the Securities and Exchange Commission on
July 15, 1997.
(b) Not annualized.
(c) 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.
<PAGE>
48 FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD SMALL COMPANY HLS FUND
These tables are intended to help you understand each fund's financial
performance since inception. The total returns in the table represent the rate
that an investor would have earned on an investment in each fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Arthur Andersen, LLP, whose report, along with each fund's financial
statements, are included in the annual report which is available upon request.
<TABLE>
<CAPTION>
8/9/96-
CLASS IA -- PERIOD ENDED: 12/31/98 12/31/97 12/31/96(A)
--------- --------- ----------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................ $ 1.069 $ 1.000
Net investment income (loss)....... 0.001 0.002
Net realized and unrealized gain
(loss) on investments............. 0.195 0.069
--------- --------- ----------
Total from investment operations... 0.196 0.071
Less distributions:
Dividends from net investment
income.......................... (0.001) (0.002)
Distributions from net realized
gain on investments............. (0.062) 0.000
Return of capital................ 0.000 0.000 0.000
--------- --------- ----------
Total from distributions......... (0.063) (0.002)
--------- --------- ----------
Net increase (decrease) in net
asset value....................... 0.133 0.069
Net asset value, end of period..... $ $ 1.202 $ 1.069
--------- --------- ----------
--------- --------- ----------
TOTAL RETURN....................... % 18.38% 7.15%(b)
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................ $ 210,769 $42,812
Ratio of expenses to average net
assets............................ % 0.77% 0.72%(c)
Ratio of net investment income
(loss) to average net assets...... % 0.08% 0.31%(c)
Portfolio turnover rate............ % 222.2% 31.8%
</TABLE>
- ---------
(a) The Fund was declared effective by the Securities and Exchange Commission on
August 9, 1996.
(b) Not annualized.
(c) 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.
<PAGE>
FINANCIAL HIGHLIGHTS 49
- --------------------------------------------------------------------------------
HARTFORD STOCK HLS FUND
These tables are intended to help you understand each fund's financial
performance for the past five years. The total returns in the table represent
the rate that an investor would have earned on an investment in each fund
(assuming reinvestment of all dividends and distributions). This information has
been audited by Arthur Andersen, LLP, whose report, along with each fund's
financial statements, are included in the annual report which is available upon
request.
<TABLE>
<CAPTION>
CLASS IA -- PERIOD ENDED: 12/31/98 12/31/97 12/31/96 12/31/95 12/31/94
----------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................ $ 4.143 $ 3.527 $ 2.801 $ 3.099
Net investment income (loss)....... 0.050 0.060 0.070 0.061
Net realized and unrealized gain
(loss) on investments............. 1.196 0.763 0.840 (0.111)
----------- ----------- --------- ----------- -----------
Total from investment operations... 1.246 0.823 0.910 (0.050)
Less distributions:
Dividends from net investment
income.......................... (0.049) (0.059) (0.070) (0.061)
Distributions from net realized
gain on investments............. (0.217) (0.148) (0.114) (0.187)
Return of capital................ 0.000 0.000 0.000 0.000 0.000
----------- ----------- --------- ----------- -----------
Total from distributions......... (0.266) (0.207) (0.184) (0.248)
----------- ----------- --------- ----------- -----------
Net increase (decrease) in net
asset value....................... 0.980 0.616 0.726 (0.298)
Net asset value, end of period..... $ $ 5.123 $ 4.143 $ 3.527 $ 2.801
----------- ----------- --------- ----------- -----------
----------- ----------- --------- ----------- -----------
TOTAL RETURN....................... % 31.38% 24.33% 34.10% (1.89)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................ $ 4,713,322 $2,994,209 $ 1,876,884 $1,163,158
Ratio of expenses to average net
assets............................ % 0.45% 0.46% 0.48% 0.50%
Ratio of net investment income
(loss) to average net assets...... % 1.11% 1.59% 2.23% 2.17%
Portfolio turnover rate............ % 31.60% 42.30% 52.90% 63.80%
</TABLE>
<PAGE>
50 FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD ADVISERS HLS FUND
These tables are intended to help you understand each fund's financial
performance for the past five years. The total returns in the table represent
the rate that an investor would have earned on an investment in each fund
(assuming reinvestment of all dividends and distributions). This information has
been audited by Arthur Andersen, LLP, whose report, along with each fund's
financial statements, are included in the annual report which is available upon
request.
<TABLE>
<CAPTION>
CLASS IA -- PERIOD ENDED: 12/31/98 12/31/97 12/31/96 12/31/95 12/31/94
----------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................ $ 2.169 $ 1.958 $ 1.600 $ 1.752
Net investment income (loss)....... 0.056 0.059 0.064 0.054
Net realized and unrealized gain
(loss) on investments............. 0.455 0.255 0.377 (0.100)
----------- ----------- --------- ----------- -----------
Total from investment operations... 0.511 0.314 0.441 (0.046)
Less distributions:
Dividends from net investment
income.......................... (0.055) (0.059) (0.064) (0.054)
Distributions from net realized
gain on investments............. (0.098) (0.044) (0.019) (0.052)
Return of capital................ 0.000 0.000 0.000 0.000 0.000
----------- ----------- --------- ----------- -----------
Total from distributions......... (0.153) (0.103) (0.083) (0.106)
----------- ----------- --------- ----------- -----------
Net increase (decrease) in net
asset value....................... 0.358 0.211 0.358 (0.152)
Net asset value, end of period..... $ $ 2.527 $ 2.169 $ 1.958 $ 1.600
----------- ----------- --------- ----------- -----------
----------- ----------- --------- ----------- -----------
TOTAL RETURN....................... % 24.51% 16.62% 28.34% (2.74)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................ $ 8,283,912 $5,879,529 $ 4,262,769 $3,034,034
Ratio of expenses to average net
assets............................ % 0.63% 0.63% 0.65% 0.65%
Ratio of net investment income
(loss) to average net assets...... % 2.44% 2.92% 3.57% 3.34%
Portfolio turnover rate............ % 36.10% 53.80% 63.50% 60.00%
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS 51
- --------------------------------------------------------------------------------
HARTFORD INTERNATIONAL ADVISERS HLS FUND
These tables are intended to help you understand each fund's financial
performance since inception. The total returns in the table represent the rate
that an investor would have earned on an investment in each fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Arthur Andersen, LLP, whose report, along with each fund's financial
statements, are included in the annual report which is available upon request.
<TABLE>
<CAPTION>
3/1/95-
CLASS IA -- PERIOD ENDED: 12/31/98 12/31/97 12/31/96 12/31/95(A)
--------- --------- --------- ----------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................ $ 1.167 $ 1.109 $ 1.000
Net investment income (loss)....... 0.056 0.040 0.030
Net realized and unrealized gain
(loss) on investments............. 0.006 0.093 0.126
--------- --------- --------- ----------
Total from investment operations... 0.062 0.133 0.156
Less distributions:
Dividends from net investment
income.......................... (0.050) (0.051) (0.030)
Distributions from net realized
gain on investments............. (0.004) (0.024) (0.017)
Return of capital................ 0.000 0.000 0.000 0.000
--------- --------- --------- ----------
Total from distributions......... (0.054) (0.075) (0.047)
--------- --------- --------- ----------
Net increase (decrease) in net
asset value....................... 0.008 0.058 0.109
Net asset value, end of period..... $ $ 1.175 $ 1.167 $ 1.109
--------- --------- --------- ----------
--------- --------- --------- ----------
TOTAL RETURN....................... % 5.52% 12.25% 13.24%(b)
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................ $ 207,582 $ 104,486 $31,264
Ratio of expenses to average net
assets............................ % 0.87% 0.96% 0.65%(c)
Ratio of net investment income
(loss) to average net assets...... % 3.08% 3.24% 3.36%(c)
Portfolio turnover rate............ % 162.50% 95.20% 47.20%
</TABLE>
- ---------
(a) The Fund was declared effective by the Securities and Exchange Commission on
March 1, 1995.
(b) Not annualized.
(c) 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.
<PAGE>
52 FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD BOND HLS FUND
These tables are intended to help you understand each fund's financial
performance for the past five years. The total returns in the table represent
the rate that an investor would have earned on an investment in each fund
(assuming reinvestment of all dividends and distributions). This information has
been audited by Arthur Andersen, LLP, whose report, along with each fund's
financial statements, are included in the annual report which is available upon
request.
<TABLE>
<CAPTION>
CLASS IA -- PERIOD ENDED: 12/31/98 12/31/97 12/31/96 12/31/95 12/31/94
--------- --------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................ $ 1.000 $ 1.028 $ 0.926 $ 1.044
Net investment income (loss)....... 0.063 0.064 0.064 0.060
Net realized and unrealized gain
(loss) on investments............. 0.047 (0.029) 0.102 (0.100)
--------- --------- --------- --------- -----------
Total from investment operations... 0.110 0.035 0.166 (0.040)
Less distributions:
Dividends from net investment
income.......................... (0.060) (0.063) (0.064) (0.060)
Distributions from net realized
gain on investments............. 0.000 0.000 0.000 (0.018)
Return of capital................ 0.000 0.000 0.000 0.000 0.000
--------- --------- --------- --------- -----------
Total from distributions......... (0.060) (0.063) (0.064) (0.078)
--------- --------- --------- --------- -----------
Net increase (decrease) in net
asset value....................... 0.050 (0.028) 0.102 (0.018)
Net asset value, end of period..... $ $ 1.050 $ 1.000 $ 1.028 $ 0.926
--------- --------- --------- --------- -----------
--------- --------- --------- --------- -----------
TOTAL RETURN....................... % 11.35% 3.54% 18.49% (3.95)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................ $552,870 $ 402,548 $ 342,495 $247,458
Ratio of expenses to average net
assets............................ % 0.51% 0.52% 0.53% 0.55%
Ratio of net investment income
(loss) to average net assets...... % 6.58% 6.37% 6.51% 6.23%
Portfolio turnover rate............ % 112.90%(a) 212.00% 215.00% 328.80%
Current Yield(b)................... 6.34% 6.25% 6.46% 7.19%
</TABLE>
- ---------
(a) Excluding mortgage dollar rolls
(b) 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. This
figure has not been audited.
<PAGE>
FINANCIAL HIGHLIGHTS 53
- --------------------------------------------------------------------------------
HARTFORD HIGH YIELD HLS FUND
These tables are intended to help you understand each fund's financial
performance since inception. The total returns in the table represent the rate
that an investor would have earned on an investment in each fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Arthur Andersen, LLP, whose report, along with each fund's financial
statements, are included in the annual report which is available upon request.
<TABLE>
<CAPTION>
CLASS IA -- PERIOD ENDED: 9/30/98-12/31/98(A)
-----------
<S> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................
Net investment income (loss).......
Net realized and unrealized gain
(loss) on investments.............
-----------
Total from investment operations...
Less distributions:
Dividends from net investment
income..........................
Distributions from net realized
gain on investments.............
Return of capital................ 0.000
-----------
Total from distributions.........
-----------
Net increase (decrease) in net
asset value.......................
Net asset value, end of period..... $
-----------
TOTAL RETURN....................... %
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................
Ratio of expenses to average net
assets............................ %
Ratio of net investment income
(loss) to average net assets...... %
Portfolio turnover rate............ %
</TABLE>
- ---------
(a) The fund was declared effective by the Securities and Exchange Commission on
September 30, 1998.
<PAGE>
54 FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD MORTGAGE SECURITIES HLS FUND
These tables are intended to help you understand each fund's financial
performance for the past five years. The total returns in the table represent
the rate that an investor would have earned on an investment in each fund
(assuming reinvestment of all dividends and distributions). This information has
been audited by Arthur Andersen, LLP, whose report, along with each fund's
financial statements, are included in the annual report which is available upon
request.
<TABLE>
<CAPTION>
CLASS IA -- PERIOD ENDED: 12/31/98 12/31/97 12/31/96 12/31/95 12/31/94
----------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................ $ 1.056 $ 1.071 $ 0.984 $ 1.075
Net investment income (loss)....... 0.071 0.069 0.068 0.068
Net realized and unrealized gain
(loss) on investments............. 0.022 (0.018) 0.087 (0.086)
----------- ----------- --------- ----------- -----------
Total from investment operations... 0.093 0.051 0.155 (0.018)
Less distributions:
Dividends from net investment
income.......................... (0.065) (0.066) (0.068) (0.068)
Distributions from net realized
gain on investments............. 0.000 0.000 0.000 (0.005)
Return of capital................ 0.000 0.000 0.000 0.000 0.000
----------- ----------- --------- ----------- -----------
Total from distributions......... (0.065) (0.066) (0.068) (0.073)
----------- ----------- --------- ----------- -----------
Net increase (decrease) in net
asset value....................... 0.028 (0.015) 0.087 (0.091)
Net asset value, end of period..... $ $ 1.084 $ 1.056 $ 1.071 $ 0.984
----------- ----------- --------- ----------- -----------
----------- ----------- --------- ----------- -----------
TOTAL RETURN....................... % 9.01% 4.99% 16.17% (1.61)%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................ $ 325,702 $ 325,495 $ 327,565 $ 304,147
Ratio of expenses to average net
assets............................ % 0.45% 0.45% 0.47% 0.48%
Ratio of net investment income
(loss) to average net assets...... % 6.60% 6.67% 6.50% 6.65%
Portfolio turnover rate............ % 46.50%(a) 200.00% 489.40% 365.70%
Current Yield(b)................... 6.66% 6.67% 6.90% 7.84%
</TABLE>
- ---------
(a) Excluding mortgage dollar rolls
(b) 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. This
figure has not been audited.
<PAGE>
FINANCIAL HIGHLIGHTS 55
- --------------------------------------------------------------------------------
HARTFORD MONEY MARKET HLS FUND
These tables are intended to help you understand each fund's financial
performance since inception. The total returns in the table represent the rate
that an investor would have earned on an investment in each fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Arthur Andersen, LLP, whose report, along with each fund's financial
statements, are included in the annual report which is available upon request.
<TABLE>
<CAPTION>
CLASS IA -- PERIOD ENDED: 12/31/98 12/31/97 12/31/96 12/31/95 12/31/94
----------- ----------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
Net investment income (loss)....... 0.049 0.050 0.056 0.039
Net realized and unrealized gain
(loss) on investments............. 0.000 0.000 0.000 0.000 0.000
----------- ----------- --------- ----------- -----------
Total from investment operations... 0.049 0.050 0.056 0.039
Less distributions:
Dividends from net investment
income.......................... (0.049) (0.050) (0.056) (0.039)
Distributions from net realized
gain on investments............. 0.000 0.000 0.000 0.000
Return of capital................ 0.000 0.000 0.000 0.000 0.000
----------- ----------- --------- ----------- -----------
Total from distributions......... (0.049) (0.050) (0.056) (0.039)
----------- ----------- --------- ----------- -----------
Net increase (decrease) in net
asset value....................... 0.000 0.000 0.000 0.000 0.000
Net asset value, end of period..... $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
----------- ----------- --------- ----------- -----------
----------- ----------- --------- ----------- -----------
TOTAL RETURN....................... % 5.31% 5.09% 5.74% 3.95%
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................ $ 612,480 $ 542,586 $ 339,709 $ 321,465
Ratio of expenses to average net
assets............................ % 0.44% 0.44% 0.45% 0.47%
Ratio of net investment income
(loss) to average net assets...... % 5.21% 5.04% 5.57% 3.99%
Portfolio turnover rate............ -- -- -- -- --
Current Yield(a)................... % 5.36% 5.10% 5.40% 5.43%
Effective Yield(a)................. % 5.50% 5.23% 5.54% 5.58%
</TABLE>
- ---------
(a) 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. This
figure has not been audited.
<PAGE>
56 FOR MORE INFORMATION
- --------------------------------------------------------------------------------
Two documents are available that offer further information on the Hartford HLS
Funds:
ANNUAL/SEMIANNUAL REPORT
TO SHAREHOLDERS
Includes financial statements and portfolio holdings. In the fund's annual
report you will find a discussion of the market conditions and investment
strategies that significantly affected performance during the last fiscal year,
and the auditor's report.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI contains more detailed information on all aspects of the funds. The
current annual report is included in the SAI.
A current SAI has been filed with the Securities and Exchange Commission and is
incorporated by reference into (is legally a part of) this prospectus.
To request a free copy of the current annual/semiannual report or the SAI,
please contact the funds at:
BY MAIL:
Hartford HLS Funds
c/o Individual Annuity Services
P.O. Box 5085
Hartford, CT 06102-5085
BY PHONE:
1-800-862-6668
ON THE INTERNET:
www.thehartford.com
Or you may view or obtain these documents from the SEC:
IN PERSON:
at the SEC's Public Reference Room in
Washington, DC
BY PHONE:
1-800-SEC-0330 (1-800-732-0330)
BY MAIL:
Public Reference Section
Securities and Exchange Commission
Washington, DC 20549-6009
(duplicating fee required)
ON THE INTERNET:
www.sec.gov
SEC FILE NUMBERS:
Hartford Capital Appreciation HLS Fund 811-04005
Hartford Dividend and Growth HLS Fund 811-08186
Hartford Global Leaders HLS Fund 811-08629
Hartford Growth and Income HLS Fund 811-08629
Hartford Index HLS Fund 811-05045
Hartford International Opportunities
HLS Fund 811-06059
Hartford MidCap HLS Fund 811-08185
Hartford Small Company HLS Fund 811-07557
Hartford Stock HLS Fund 811-02630
Hartford Advisers HLS Fund 811-03659
Hartford International Advisers HLS Fund 811-08804
Hartford Bond HLS Fund 811-03660
Hartford High Yield HLS Fund 811-08629
Hartford Mortgage Securities HLS Fund 811-04201
Hartford Money Market HLS Fund 811-03662
<PAGE>
Hartford HLS Mutual Funds
CLASS IB SHARES
PROSPECTUS -- MAY 1, 1999
<TABLE>
<S> <C>
STOCK FUNDS
-------------------------------------------------------------
Capital Appreciation HLS Fund
Dividend and Growth HLS Fund
Global Leaders HLS Fund
Growth and Income HLS Fund
Index HLS Fund
As with all mutual funds, the Securities and International Opportunities HLS Fund
Exchange Commission has not judged whether MidCap HLS Fund
these funds are good investments or whether Small Company HLS Fund
the information in this prospectus is Stock HLS Fund
adequate and accurate. Anyone who indicates
otherwise is committing a federal crime.
ASSET ALLOCATION FUNDS
-------------------------------------------------------------
Advisers HLS Fund
International Advisers HLS Fund
BOND FUNDS
-------------------------------------------------------------
Bond HLS Fund
High Yield HLS Fund
Mortgage Securities HLS Fund
MONEY MARKET FUND
-------------------------------------------------------------
Money Market HLS Fund
HARTFORD HLS FUNDS
C/O INDIVIDUAL ANNUITY SERVICES
P.O. BOX 5085
HARTFORD, CT 06102-5085
</TABLE>
<PAGE>
2 CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
----------
<S> <C> <C>
A SUMMARY OF EACH FUND'S Hartford Capital Appreciation HLS Fund, Inc....... 4
GOALS,
STRATEGIES, RISKS, PERFORMANCE Hartford Dividend and Growth HLS Fund, Inc........ 6
AND
MANAGEMENT FEES. Hartford Global Leaders HLS Fund.................. 8
Hartford Growth and Income HLS Fund............... 10
Hartford Index HLS Fund, Inc...................... 12
Hartford International Opportunities HLS Fund, 15
Inc...............................................
Hartford MidCap HLS Fund, Inc..................... 17
Hartford Small Company HLS Fund, Inc.............. 19
Hartford Stock HLS Fund, Inc...................... 21
Hartford Advisers HLS Fund, Inc................... 23
Hartford International Advisers HLS Fund, Inc..... 25
Hartford Bond HLS Fund, Inc....................... 28
Hartford High Yield HLS Fund...................... 30
Hartford Mortgage Securities HLS Fund, Inc........ 32
Hartford Money Market HLS Fund, Inc............... 34
DESCRIPTION OF ADDITIONAL Additional investment matters..................... 36
INVESTMENT
STRATEGIES AND INVESTMENT Risks of investing in the funds................... 37
RISKS.
INFORMATION ON HOW TO PURCHASE Purchase and sale of fund shares.................. 38
AND SELL THE FUND'S SHARES.
FURTHER INFORMATION ON THE Transaction details............................... 40
FUNDS.
Federal income taxes.............................. 40
Performance related information................... 41
General information............................... 42
Financial highlights.............................. 43
For more information.............................. back cover
</TABLE>
<PAGE>
INTRODUCTION 3
- --------------------------------------------------------------------------------
HARTFORD HLS MUTUAL FUNDS
The Hartford HLS Mutual Funds is a family of fifteen mutual funds (each a
"fund" and together the "funds") which serve as underlying investment vehicles
for certain variable annuity and variable life insurance separate accounts of
Hartford Life Insurance Company and its affiliates ("Hartford Life").
Contractholders of variable annuity products and policyholders of variable life
insurance products may choose the funds permitted in the accompanying variable
insurance product prospectus. Each fund offers two classes of shares: Class IB
shares offered hereby and Class IA shares offered pursuant to another
prospectus. The Class IB shares were first offered publicly in April, 1998.
Class IA shares are offered pursuant to another prospectus and are subject to
the same expenses as the Class IB shares, but unlike the Class IB shares, they
are not subject to distribution fees imposed pursuant to a distribution plan
("Distribution Plan") adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940 (the "1940 Act'). Information on each fund can be found on
the pages following this summary.
Please note that mutual funds are not bank deposits and are not insured or
guaranteed by the FDIC or any other government agency. Because you could lose
money by investing in these funds, be sure to read all risk disclosure carefully
before investing.
MANAGEMENT OF THE FUNDS
HL Investment Advisors, LLC ("HL Advisors") is the investment adviser to
each fund. As investment adviser, HL Advisors is responsible for supervising the
activities of the investment sub-advisers described below. In addition, Hartford
Life serves as the administrator of each fund. HL Advisors and Hartford Life are
majority-owned indirect subsidiaries of The Hartford Financial Services Group,
Inc. ("The Hartford"), a Connecticut financial services company with over $130
billion in assets. As of December 31, 1998 HL Advisors had over $33.9 billion in
assets under management.
THE SUB-ADVISERS
Wellington Management Company, LLP ("Wellington Management") is the
investment sub-adviser to the Capital Appreciation HLS Fund, Dividend and Growth
HLS Fund, Global Leaders HLS Fund, Growth and Income HLS Fund, International
Opportunities HLS Fund, MidCap HLS Fund, Small Company HLS Fund, Stock HLS Fund,
Advisers HLS Fund and International Advisers HLS Fund. 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. As of December 31, 1998 Wellington Management had
investment management authority over $211 billion in assets.
The Hartford Investment Management Company ("HIMCO-Registered Trademark-")
is the investment sub-adviser to the High Yield HLS Fund, Index HLS Fund, Bond
HLS Fund, Mortgage Securities HLS Fund and Money Market HLS Fund.
HIMCO-Registered Trademark- is a professional money management firm that
provides services to investment companies, employee benefit plans, insurance
companies and other institutional accounts. HIMCO-Registered Trademark- is a
wholly-owned subsidiary of The Hartford. As of December 31, 1998
HIMCO-Registered Trademark- and its wholly-owned subsidiary had investment
management authority with respect to approximately $61.2 billion of assets for
various clients.
<PAGE>
4 HARTFORD CAPITAL APPRECIATION HLS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT GOAL AND STYLE. The Hartford Capital Appreciation Fund seeks growth of
SUB-ADVISER capital by investing primarily in equity securities selected on the basis of
Wellington Management potential for capital appreciation.
The fund normally invests at least 65% of its total assets in equity securities of
PORTFOLIO MANAGER small, medium and large companies. The fund may invest up to 20% of its total
SAUL J. PANNELL assets in securities of non-U.S. companies.
- - Senior Vice President of Wellington Through fundamental analysis, Wellington Management identifies companies that it
Management believes have substantial near-term capital appreciation potential regardless of
- - Manager of the fund since 1991 company size or industry sector. This strategy is sometimes referred to as a stock
- - Joined Wellington Management in 1979 picking approach. Small and medium sized companies are selected primarily on the
- - Investment professional since 1974 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.
In analyzing a prospective investment Wellington Management looks at a number of
factors, such as business environment, management, balance sheet, income
statement, anticipated earnings, revenues, dividends and other related measures of
value.
----------------------------------------------------------------------------
RISK SUMMARY. The fund is subject to the following investment risks:
- Correlation risk - Natural event risk
- Derivatives risk - Opportunity risk
- International investments risk - Small company risk
- Liquidity risk - Style risk
- Management risk - Valuation risk
- Market risk - Year 2000 risk
----------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows how the fund's total return has varied from year
to year, while the table shows the fund's performance over time (along with a
broad-based market index for reference). These figures do not include the effect
of sales charges or other fees which may be applied at the variable life insurance
or variable annuity contract level. All figures assume that all distributions were
reinvested. Keep in mind that past performance does not indicate future results.
Although Class IB shares are being offered by this prospectus, because the Class
IB shares have limited performance history, the performance history of Class IA
shares is shown below. Class IB share performance would be lower due to the 0.18%
12b-1 fee applied to Class IB shares.
----------------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD CAPITAL APPRECIATION HLS FUND 5
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
-------------------------------------------------------------
</TABLE>
THE INVESTMENT MANAGEMENT FEE PAID BY THE FUND FOR THE 1998 FISCAL YEAR WAS
0.62%
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1989 24.11%
<S> <C>
1990 -10.90%
1991 53.99%
1992 16.98%
1993 20.80%
1994 2.50%
1995 30.25%
1996 20.70%
1997 22.34%
1998 15.48%
</TABLE>
<TABLE>
<S> <C> <C>
BEST QUARTER: up 24.99%, first quarter 1991
WORST QUARTER: down -24.47%, third quarter 1990
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/98
-------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SINCE
INCEPTION
(APRIL 2,
1 YEAR 5 YEARS 10 YEARS 1984)
------- ------- -------- ---------
<S> <C> <C> <C> <C> <C>
Class IA...................... 15.48% 17.89% 18.55% 17.56%
Index......................... 28.56% 24.04% 19.17% 18.39%
</TABLE>
<TABLE>
<S> <C> <C>
SEC File No. INDEX: S&P 500 Index, an unmanaged index of equity securities that are
811-04005 similar, but not identical, to those in the fund's portfolio.
------------------------------------------------------------------------
</TABLE>
<PAGE>
6 HARTFORD DIVIDEND AND GROWTH HLS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SUB-ADVISER INVESTMENT GOAL AND STYLE. The Hartford Dividend and Growth Fund seeks a high
Wellington Management level of current income consistent with growth of capital by investing primarily
in equity securities.
PORTFOLIO MANAGER The fund invests primarily in a diversified portfolio of equity securities that
LAURIE A. GABRIEL, CFA typically have above average income yields and whose prospects for capital
- - Senior Vice President of Wellington appreciation are considered favorable by Wellington Management. Under normal
Management market and economic conditions at least 65% of the fund's total assets are
- - Manager of the fund since 1994 invested in dividend-paying equity securities. The fund may invest up to 20% of
- - Joined Wellington Management in 1976 its total assets in securities of non-U.S. companies.
- - Investment professional since 1976 Wellington Management uses fundamental analysis to evaluate a security for
purchase or sale by the fund. Fundamental analysis of a company involves the
assessment of such factors as: its business environment, management, balance
sheet, income statement, anticipated earnings, revenues and dividends.
As a key component of its fundamental analysis, Wellington Management evaluates a
company's ability to sustain and potentially increase its dividend payments.
The fund's portfolio is broadly diversified by industry and company.
----------------------------------------------------------------------------
RISK SUMMARY. The fund is subject to the following investment risks:
- Correlation risk - Natural event risk
- Derivatives risk - Opportunity risk
- International investments risk - Small company risk
- Liquidity risk - Style risk
- Management risk - Valuation risk
- Market risk - Year 2000 risk
----------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows how the fund's total return has varied from year
to year, while the table shows the fund's performance over time (along with a
broad-based market index for reference). These figures do not include the effect
of sales charges or other fees which may be applied at the variable life insurance
or variable annuity contract level. All figures assume that all distributions were
reinvested. Keep in mind that past performance does not indicate future results.
Although Class IB shares are being offered by this prospectus, because the Class
IB shares have limited performance history, the performance history of Class IA
shares is shown below. Class IB share performance would be lower due to the 0.18%
12b-1 fee applied to Class IB shares.
----------------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD DIVIDEND AND GROWTH HLS FUND 7
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
-------------------------------------------------------------
</TABLE>
THE INVESTMENT MANAGEMENT FEE PAID BY THE FUND FOR THE 1998 FISCAL YEAR WAS
0.64%
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1995 36.37%
<S> <C>
1996 22.91%
1997 31.89%
1998 16.42%
</TABLE>
<TABLE>
<S> <C> <C>
BEST QUARTER: up 16.29%, second quarter 1997
WORST QUARTER: down -7.49%, third quarter 1998
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/98
-------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SINCE
INCEPTION
(MARCH 9,
1 YEAR 1994)
------- ---------
<S> <C> <C> <C> <C>
Class IA............ 16.42% 22.18%
Index............... 28.56% 24.88%
</TABLE>
<TABLE>
<S> <C> <C>
SEC File No. INDEX: S&P 500 Index, an unmanaged index of equity securities that are
811-08186 similar, but not identical, to those in the fund's portfolio.
------------------------------------------------------------------------
</TABLE>
<PAGE>
8 HARTFORD GLOBAL LEADERS HLS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SUB-ADVISER INVESTMENT GOAL AND STYLE. The Hartford Global Leaders Fund seeks growth of
Wellington Management capital by investing primarily in equity securities issued by U.S. companies and
non- U.S. companies.
PORTFOLIO MANAGERS The fund invests primarily in a diversified portfolio of equity securities
RAND L. ALEXANDER, CFA covering a broad range of countries, industries and companies. Securities in which
- - Senior Vice President of the fund invests are denominated in both U.S. dollars and non-U.S. currencies and
Wellington Management may trade in both U.S. and non-U.S. markets.
- - Co-manager of the fund since Under normal market and economic conditions, the fund invests at least 65% of its
inception (1998) total assets in equity securities of high quality growth companies worldwide.
- - Joined Wellington Management in These companies must, in the opinion of Wellington Management, be leaders in their
1990 respective industries as indicated by an established market presence and strong
- - Investment professional since global, regional or country competitive positions. Under normal market and
1976 economic conditions, the fund will diversify its investments in securities of
issuers among at least five countries, which may include the United States. There
ANDREW S. OFFIT are no limits on the amount of the fund's assets that may be invested in each
- - Vice President of Wellington country. The fund may invest up to 25% of its assets in securities of issuers
Management located in emerging market countries.
- - Co-manager of the fund since The fund uses a two-tiered investment strategy:
inception (1998) - Using what is sometimes referred to as a "top down" approach, Wellington
- - Joined Wellington Management in Management analyzes the global macro-economic and investment environments. This
1997 includes an evaluation of U.S. and non-U.S. economic and political conditions,
- - Investment professional since fiscal and monetary policies, demographic trends and investor sentiment. Through
1987 top down analysis, Wellington Management anticipates secular and cyclical
changes to identify companies which offer the most potential for capital
appreciation given current and projected global and local economic and market
conditions.
- 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. Fundamental analysis involves the assessment of
a company through such factors as its business environment, management, balance
sheet, income statements, anticipated earnings, revenues and other related
measures of value.
The fund emphasizes high-quality growth companies. The key characteristics of
high-quality growth companies include: a strong balance sheet, a high return on
equity, a strong management team, and attractive relative value within the context
of the global marketplace or a security's primary trading market.
----------------------------------------------------------------------------
RISK SUMMARY. The fund is subject to the following investment risks:
- Correlation risk - Natural event risk
- Derivatives risk - Opportunity risk
- International investments risk - Small company risk
- Liquidity risk - Style risk
- Management risk - Valuation risk
- Market risk - Year 2000 risk
----------------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD GLOBAL LEADERS HLS FUND 9
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
PAST PERFORMANCE. The table below shows the fund's performance since inception
(along with a broad-based market index for reference). These figures do not
include the effect of sales charges or other fees which may be applied at the
variable insurance or variable annuity contract level. All figures assume that all
distributions were reinvested. Keep in mind that this performance is for a limited
period of time and that past performance does not indicate future results.
Although Class IB shares are being offered by this prospectus, because the Class
IB shares have limited performance history, the performance history of Class IA
shares is shown below. Class IB share performance would be lower due to the 0.18%
12b-1 fee applied to Class IB shares.
----------------------------------------------------------------------------
THE FUND PAYS THE FOLLOWING INVESTMENT
MANAGEMENT FEES BASED ON AVERAGE DAILY NET
ASSETS:
Net Asset Value Annual Rate
First $250 million 0.575%
Next $250 million 0.525%
Next $500 million 0.475%
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING
Over $1 billion 0.425% 12/31/98
--------------------------------------------------
SINCE
INCEPTION
(SEPTEMBER
30, 1998)
---------
Class IA............ 31.88%
Index............... 21.11%
</TABLE>
<TABLE>
<S> <C> <C>
SEC File No. INDEX: MSCI World Index, an unmanaged index of international equity
811-08629 securities that are similar, but not identical, to those in the fund's
portfolio.
------------------------------------------------------------------------
</TABLE>
<PAGE>
10 HARTFORD GROWTH AND INCOME HLS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SUB-ADVISER INVESTMENT GOAL. The Hartford Growth and Income Fund seeks growth of capital and
Wellington Management current income by investing primarily in equity securities with earnings growth
potential and steady or rising dividends.
PORTFOLIO MANAGER The fund invests primarily in a diversified portfolio of equity securities that
JAMES A. RULLO, CFA typically have steady or rising dividends and whose prospects for capital
- - Senior Vice President of Wellington appreciation are considered favorable by Wellington Management. The fund may
Management invest up to 20% of its total assets in securities of non-U.S. companies.
- - Manager of the fund since inception (1998) Wellington Management uses fundamental analysis to evaluate a security for
- - Joined Wellington Management in 1994 purchase or sale by the fund. Fundamental analysis of a company involves the
- - Investment professional since 1987 assessment of such factors as its business environment, management, balance sheet,
income statement, anticipated earnings, revenues, dividends and other related
measures of value.
Wellington Management then uses proprietary quantitative techniques to affirm its
fundamental evaluation of a security. These quantitative techniques consist of:
valuation analysis, which includes the use of a dividend discount model and cash
flow analysis, and momentum analysis, which includes an assessment of a company's
earnings momentum and stock price momentum. These quantitative techniques seek to
identify those securities that are: attractive from the fundamental perspective,
inexpensive based on the quantitative valuation factors, and timely according to
the quantitative momentum factors.
The fund's portfolio is broadly diversified by industry and company.
----------------------------------------------------------------------------
RISK SUMMARY. The fund is subject to the following investment risks:
- Correlation risk - Natural event risk
- Derivatives risk - Opportunity risk
- International investments risk - Small company risk
- Liquidity risk - Style risk
- Management risk - Valuation risk
- Market risk - Year 2000 risk
----------------------------------------------------------------------------
PAST PERFORMANCE. The table below shows the fund's performance since inception
(along with a broad-based market index for reference). These figures do not
include the effect of sales charges or other fees which may be applied at the
variable insurance or variable annuity contract level. All figures assume that all
distributions were reinvested. Keep in mind that this performance is for a limited
period of time and that past performance does not indicate future results.
Although Class IB shares are being offered by this prospectus, because the Class
IB shares have limited performance history, the performance history of Class IA
shares is shown below. Class IB share performance would be lower due to the 0.18%
12b-1 fee applied to Class IB shares.
----------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C> <C>
THE FUND PAYS THE FOLLOWING INVESTMENT
MANAGEMENT FEES BASED ON AVERAGE DAILY NET
ASSETS:
Net Asset Value Annual Rate
First $250 million 0.575%
Next $250 million 0.525%
Next $500 million 0.475%
Over $1 billion 0.425%
</TABLE>
<PAGE>
HARTFORD GROWTH AND INCOME HLS FUND 11
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING
12/31/98
-------------------------------------------------------
<CAPTION>
SINCE
INCEPTION
(MAY 29,
1998)
---------
<S> <C> <C> <C>
Class IA............ 19.05%
Index............... 13.65%
</TABLE>
<TABLE>
<S> <C> <C>
SEC File No. INDEX: S&P 500 Index, an unmanaged index of equity securities that are
811-08629 similar, but not identical, to those in the fund's portfolio.
------------------------------------------------------------------------
</TABLE>
<PAGE>
12 HARTFORD INDEX HLS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT GOAL. The Hartford Index HLS Fund seeks to provide investment results
which approximate the price and yield performance of publicly traded common stocks
in the aggregate.
The fund uses the Standard & Poor's 500 Composite Stock Price Index (the "Index")
SUB-ADVISER as its standard performance comparison because it represents a significant
HIMCO proportion of the total market value of all common stocks, is well known to
investors and, in the opinion of the management of the fund, is representative of
PORTFOLIO MANAGER the performance of publicly-traded common stocks. Therefore, the fund attempts to
RODGER K. METZGER approximate the capital performance and dividend income of the Index.
- - Vice President of HIMCO The fund generally invests in no fewer than 499 stocks. HIMCO selects stocks for
- - Manager of the fund since 1987 the fund's portfolio after taking into account their individual weights in the
- - Joined HIMCO in 1987 Index. Temporary cash balances may be invested in short-term money market
- - Investment professional since instruments.
1987 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, 1998, approximately fifty percent of the Index
was composed of the forty-one largest companies, the five largest being Microsoft
Corporation, General Electric Company, Intel Corporation, WalMart Stores, Inc. and
Exxon Corporation.
No attempt is made to "manage" the 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 fund's
portfolio unless, of course, the company is removed from the Index. From time to
time administrative adjustments may be made in the fund's portfolio because of
mergers, changes in the composition of the Index and similar reasons.
The 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 fund. Investment changes to
accommodate these cash flows will be made to maintain the similarity of the 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 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 fund regarding the advisability of investing in securities generally or in
the 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
fund or Hartford Life Insurance Company. S&P has no obligation to take the needs
of the 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 fund or the timing of the issuance or sale of shares in the fund. S&P
has no obligation or liability in connection with the administration, marketing or
trading of the fund.
</TABLE>
<PAGE>
HARTFORD INDEX HLS FUND 13
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
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 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.
The fund's portfolio is broadly diversified by industry and company.
----------------------------------------------------------------------------
RISK SUMMARY. The fund is subject to the following investment risks:
- Correlation risk - Natural event risk
- Derivatives risk - Opportunity risk
- Liquidity risk - Valuation risk
- Management risk - Year 2000 risk
- Market risk
----------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows how the fund's total return has varied from year
to year, while the table shows the fund's performance over time (along with a
broad-based market index for reference). These figures do not include the effect
of sales charges or other fees which may be applied at the variable life insurance
or variable annuity contract level. All figures assume that all distributions were
reinvested. Keep in mind that past performance does not indicate future results.
Although Class IB shares are being offered by this prospectus, because the Class
IB shares have limited performance history, the performance history of Class IA
shares is shown below. Class IB share performance would be lower due to the 0.18%
12b-1 fee applied to Class IB shares.
----------------------------------------------------------------------------
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
-------------------------------------------------------------
</TABLE>
THE INVESTMENT MANAGEMENT FEE PAID BY THE FUND FOR THE 1998 FISCAL YEAR WAS
0.38%
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1989 30.47%
<S> <C>
1990 -3.99%
1991 29.53%
1992 6.82%
1993 9.12%
1994 0.94%
1995 36.55%
1996 22.09%
1997 32.61%
1998 28.06%
</TABLE>
<TABLE>
<S> <C> <C>
BEST QUARTER: up 21.17%, fourth quarter 1998
WORST QUARTER: down -14.08%, third quarter 1990
</TABLE>
<PAGE>
14 HARTFORD INDEX HLS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/98
-------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SINCE
INCEPTION
(MAY 1,
1 YEAR 5 YEARS 10 YEARS 1987)
------- ------- -------- ---------
<S> <C> <C> <C> <C> <C>
Class IA...................... 28.06% 23.37% 18.36% 15.64%
Index......................... 28.56% 24.04% 19.17% 16.43%
</TABLE>
<TABLE>
<S> <C> <C>
SEC File No. INDEX: S&P 500 Composite Stock Price Index, an unmanaged index of
811-05045 equity securities that are similar, but not identical, to those in the
fund's portfolio.
------------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND 15
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SUB-ADVISER INVESTMENT GOAL AND STYLE. The Hartford International Opportunities Fund seeks
Wellington Management growth of capital by investing primarily in equity securities issued by non-U.S.
companies.
PORTFOLIO MANAGERS The fund normally invests at least 65% of its assets in equity securities issued
TROND SKRAMSTAD by non-U.S. companies. The fund anticipates that, under normal market conditions,
- - Senior Vice President of it will diversify its investments among at least three countries OTHER THAN the
Wellington Management United States. The securities in which the fund invests are denominated in both
- - Manager of the fund since 1994 U.S. dollars and non-U.S. currencies and generally are traded in non-U.S. markets.
- - Joined Wellington Management in Wellington Management uses a three-pronged investment strategy:
1993 - Wellington Management determines the relative attractiveness of the many
- - Investment professional since countries in which the fund may invest based upon its analysis of the economic
1990 and political environment of each country.
- Wellington Management also evaluates industries on a global basis to determine
ANDREW S. OFFIT which industries offer the most potential for capital appreciation given current
- - Vice President of Wellington and projected global and local economic and market conditions.
Management - Wellington Management conducts fundamental research on individual companies and
- - Associate Manager of the fund considers companies for inclusion in the fund's portfolio that are typically
since 1997 larger, high quality companies that operate in established markets. Fundamental
- - Joined Wellington Management in analysis of a company involves the assessment of such factors as its: business
1997 environment, management, balance sheet, income statement, anticipated earnings,
- - Investment professional since revenues, dividends, and other related measures of value.
1987 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 fund may also invest on a limited basis in smaller companies and less
developed emerging markets.
----------------------------------------------------------------------------
RISK SUMMARY. The fund is subject to the following investment risks:
- Correlation risk - Natural event risk
- Derivatives risk - Opportunity risk
- International investments risk - Small company risk
- Liquidity risk - Style risk
- Management risk - Valuation risk
- Market risk - Year 2000 risk
----------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows how the fund's total return has varied from year
to year, while the table shows the fund's performance over time (along with a
broad-based market index for reference). These figures do not include the effect
of sales charges or other fees which may be applied at the variable life insurance
or variable annuity contract level. All figures assume that all distributions were
reinvested. Keep in mind that past performance does not indicate future results.
Although Class IB shares are being offered by this prospectus, because the Class
IB shares have limited performance history, the performance history of Class IA
shares is shown below. Class IB share performance would be lower due to the 0.18%
12b-1 fee applied to Class IB shares.
----------------------------------------------------------------------------
</TABLE>
<PAGE>
16 HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
-------------------------------------------------------------
</TABLE>
THE INVESTMENT MANAGEMENT FEE PAID BY THE FUND FOR THE 1998 FISCAL YEAR WAS
0.68%
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1991 13.00%
<S> <C>
1992 -4.43%
1993 33.73%
1994 -1.94%
1995 13.93%
1996 12.91%
1997 0.34%
1998 13.16%
</TABLE>
<TABLE>
<S> <C> <C>
BEST QUARTER: up 16.77%, fourth quarter 1998
WORST QUARTER: down -16.98%, third quarter 1998
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/98
-------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SINCE
INCEPTION
(JULY 2,
1 YEAR 5 YEARS 1990)
------- ------- ---------
<S> <C> <C> <C> <C>
Class IA...................... 13.16% 7.45% 7.33%
Index......................... 26.71% 11.57% 9.29%*
* Index inception performance from
6/30/90
</TABLE>
<TABLE>
<S> <C> <C>
SEC File No. INDEX: Morgan Stanley Europe, Australia, Far East GDP ("EAFE GDP")
811-07557 Index, an unmanaged index of international equity securities that are
similar, but not identical, to those in the fund's portfolio.
------------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD MIDCAP HLS FUND 17
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SUB-ADVISER INVESTMENT GOAL AND STYLE. The Hartford MidCap Fund seeks long-term growth of
Wellington Management capital by investing primarily in equity securities selected on the basis of
potential for capital appreciation.
PORTFOLIO MANAGER The fund normally invests at least 65% of its total assets in equity securities of
PHILLIP H. PERELMUTER companies with market capitalizations within the range represented by the Standard
- - Vice President of Wellington & Poor's MidCap 400 Index. The fund may invest up to 20% of its total assets in
Management securities of non-U.S. companies.
- - Manager of the fund since
inception (1997) The fund uses a two-tiered investment strategy:
- - Joined Wellington Management in
1995 - Using what is sometimes referred to as a "top down" approach, Wellington
- - Investment professional since Management analyzes the macro-economic and investment environment. This includes
1983 an evaluation of economic conditions, U.S. fiscal and monetary policy, and
demographic trends. 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.
- 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. Fundamental analysis involves the assessment of
a company through such factors as its business environment, management, balance
sheet, income statement, anticipated earnings, revenues, and other related
measures of value.
The fund favors 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, and a strong management team.
----------------------------------------------------------------------------
RISK SUMMARY. The fund is subject to the following investment risks:
- Correlation risk - Natural event risk
- Derivatives risk - Opportunity risk
- International investments risk - Small company risk
- Liquidity risk - Style risk
- Management risk - Valuation risk
- Market risk - Year 2000 risk
----------------------------------------------------------------------------
PAST PERFORMANCE. The table and bar chart below show the fund's performance since
inception (along with a broad-based market index for reference). These figures do
not include the effect of sales charges or other fees which may be applied at the
variable life insurance or variable annuity contract level. All figures assume
that all distributions were reinvested. Keep in mind that past performance does
not indicate future results.
Although Class IB shares are being offered by this prospectus, because the Class
IB shares have limited performance history, the performance history of Class IA
shares is shown below. Class IB share performance would be lower due to the 0.18%
12b-1 fee applied to Class IB shares.
----------------------------------------------------------------------------
</TABLE>
<PAGE>
18 HARTFORD MIDCAP HLS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
-------------------------------------------------------------
</TABLE>
THE INVESTMENT MANAGEMENT FEE PAID BY THE FUND FOR THE 1998 FISCAL YEAR WAS
0.76%
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1998 26.57%
<S> <C>
</TABLE>
<TABLE>
<S> <C> <C>
BEST QUARTER: up 28.31%, fourth quarter 1998
WORST QUARTER: down -16.15%, third quarter 1998
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/98
-------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SINCE
INCEPTION
(JULY 14,
1 YEAR 1997)
------- ---------
<S> <C> <C> <C> <C>
Class IA...................... 26.57% 28.28%
Index......................... 19.11% 21.33%
</TABLE>
<TABLE>
<S> <C> <C>
SEC File No. INDEX: Standard & Poor's MidCap 400 Index, an unmanaged index of equity
811-08185 securities that are similar, but not identical, to those in the fund's
portfolio.
------------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD SMALL COMPANY HLS FUND 19
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SUB-ADVISER INVESTMENT GOAL AND STYLE. The Hartford Small Company Fund seeks growth of
Wellington Management capital by investing primarily in equity securities selected on the basis of
potential for capital appreciation.
Portfolio Manager The fund normally invests at least 65% of its total assets in equity securities of
MARK E. WATERHOUSE companies with market capitalizations within the range represented by the Russell
- - Vice President of Wellington 2000 Index. The fund may invest up to 20% of its total assets in securities of
Management non-U.S. companies.
- - Manager of the fund since 1997 Through fundamental analysis Wellington Management identifies companies that it
- - Joined Wellington Management in believes have substantial potential for near-term capital appreciation. Wellington
1995 Management selects securities of companies that, in its opinion:
- - Investment professional since - have potential for above-average earnings growth,
1984 - are undervalued in relation to their investment potential,
- have positive business and/or fundamental financial characteristics that are
overlooked or misunderstood by investors, or
- are relatively obscure and undiscovered by the overall investment community.
Fundamental analysis of a company involves the assessment of such factors as its
business environment, management, balance sheet, income statement, anticipated
earnings, revenues, dividends, and other related measures of value.
The fund is broadly diversified by industry and sector.
----------------------------------------------------------------------------
RISK SUMMARY. The fund is subject to the following investment risks:
- Correlation risk - Natural event risk
- Derivatives risk - Opportunity risk
- International investments risk - Small company risk
- Liquidity risk - Style risk
- Management risk - Valuation risk
- Market risk - Year 2000 risk
----------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows how the fund's total return has varied from year
to year, while the table shows the fund's performance over time (along with a
broad-based market index for reference). These figures do not include the effect
of sales charges or other fees which may be applied at the variable life insurance
or variable annuity contract level. All figures assume that all distributions were
reinvested. Keep in mind that past performance does not indicate future results.
Although Class IB shares are being offered by this prospectus, because the Class
IB shares have limited performance history, the performance history of Class IA
shares is shown below. Class IB share performance would be lower due to the 0.18%
12b-1 fee applied to Class IB shares.
----------------------------------------------------------------------------
</TABLE>
<PAGE>
20 HARTFORD SMALL COMPANY HLS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
-------------------------------------------------------------
</TABLE>
THE INVESTMENT MANAGEMENT FEE PAID BY THE FUND FOR THE 1998 FISCAL YEAR WAS
0.75%
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1997 18.38%
<S> <C>
1998 11.62%
</TABLE>
<TABLE>
<S> <C> <C>
BEST QUARTER: up 27.68%, fourth quarter 1998
WORST QUARTER: down -19.71%, third quarter 1998
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/98
-------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SINCE
INCEPTION
(AUGUST
1 YEAR 9, 1996)
------- ---------
<S> <C> <C> <C>
Class IA...................... 11.62% 15.63%
Index......................... -2.55% 14.37%
</TABLE>
<TABLE>
<S> <C> <C>
SEC File No. INDEX: Russell 2000 Index, an unmanaged index of small company equity
811-07557 securities that are similar, but not identical, to those in the fund's
portfolio.
------------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD STOCK HLS FUND 21
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SUB-ADVISER INVESTMENT GOAL AND STYLE. The Hartford Stock Fund seeks long-term growth of
Wellington Management capital, with income as a secondary consideration, by investing primarily in
equity securities.
PORTFOLIO MANAGERS The fund normally invests at least 65% of the fund's total assets in stocks. The
RAND L. ALEXANDER, CFA fund may invest up to 20% of its total assets in securities of non-U.S. companies.
- - Senior Vice President of The fund invests in a diversified portfolio of primarily equity securities using a
Wellington Management two-tiered investment strategy:
- - Manager of the fund since 1992 - Using what is sometimes referred to as a "top down" approach, Wellington
- - Joined Wellington Management in Management analyzes the macroeconomic and investment environment. This includes
1990 an evaluation of economic conditions, U.S. fiscal and monetary policy,
- - Investment professional since demographic trends, and investor sentiment. Through top down analysis,
1976 Wellington Management anticipates secular and cyclical changes and identifies
industries and economic sectors that are expected to grow faster than the
PHILIP H. PERELMUTER overall economy.
- - Vice President of Wellington - Top down analysis is followed by what is sometimes referred to as a "bottom up"
Management approach, which is the use of fundamental analysis to identify specific
- - Associate Manager of the fund securities for purchase or sale. The fund favors high-quality growth companies.
since 1995 The key characteristics of high-quality growth companies include: a leadership
- - Joined Wellington Management in position within an industry, a strong balance sheet, a high return on equity,
1995 sustainable or increasing dividends, a strong management team and a globally
- - Investment professional since competitive position.
1983
Fundamental analysis of a company involves the assessment of such factors as its
business environment, management, balance sheet, income statement, anticipated
earnings, revenues, dividends, and other related measures of value.
----------------------------------------------------------------------------
RISK SUMMARY. The fund is subject to the following investment risks:
- Correlation risk - Natural event risk
- Derivatives risk - Opportunity risk
- International investments risk - Small company risk
- Liquidity risk - Style risk
- Management risk - Valuation risk
- Market risk - Year 2000 risk
----------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows how the fund's total return has varied from year
to year, while the table shows the fund's performance over time (along with a
broad-based market index for reference). These figures do not include the effect
of sales charges or other fees which may be applied at the variable life insurance
or variable annuity contract level. All figures assume that all distributions were
reinvested. Keep in mind that past performance does not indicate future results.
Although Class IB shares are being offered by this prospectus, because the Class
IB shares have limited performance history, the performance history of Class IA
shares is shown below. Class IB share performance would be lower due to the 0.18%
12b-1 fee applied to Class IB shares.
----------------------------------------------------------------------------
</TABLE>
<PAGE>
22 HARTFORD STOCK HLS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
-------------------------------------------------------------
</TABLE>
THE INVESTMENT MANAGEMENT FEE PAID BY THE FUND FOR THE 1998 FISCAL YEAR WAS
0.44%
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1989 26.02%
<S> <C>
1990 -3.87%
1991 24.58%
1992 10.04%
1993 14.34%
1994 -1.89%
1995 34.10%
1996 24.33%
1997 31.38%
1998 33.47%
</TABLE>
<TABLE>
<S> <C> <C>
BEST QUARTER: up 22.17%, fourth quarter 1998
WORST QUARTER: down -17.22%, third quarter 1990
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/98
-------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SINCE
INCEPTION
(AUGUST
1 YEAR 5 YEARS 10 YEARS 31, 1977)
------- ------- -------- ---------
<S> <C> <C> <C> <C> <C>
Class IA...................... 33.47% 23.47% 18.48% 16.12%
Index......................... 28.56% 24.04% 19.17% 16.89%
</TABLE>
<TABLE>
<S> <C> <C>
SEC File No. INDEX: S&P 500 Index, an unmanaged index of equity securities that are
811-02630 similar, but not identical, to those in the fund's portfolio.
------------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD ADVISERS HLS FUND 23
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SUB-ADVISER INVESTMENT GOAL AND STYLE. The Hartford Advisers Fund seeks maximum long-term
Wellington Management total return by investing in common stocks and other equity securities, bonds and
other debt securities and money market instruments.
PORTFOLIO MANAGERS The fund actively allocates its assets among three categories:
PAUL D. KAPLAN - equity securities
- - Senior Vice President of Wellington - debt securities and
Management - money market instruments.
- - Co-manager of the fund since 1992 Asset allocation decisions are based on Wellington Management's judgment of the
- - Joined Wellington Management in 1982 projected investment environment for financial assets, relative fundamental
- - Investment professional since 1974 values, the attractiveness of each asset category, and expected future returns of
each asset category. Wellington Management does not attempt to engage in
RAND L. ALEXANDER short-term market timing among asset categories. As a result, shifts in asset
- - Senior Vice President of Wellington allocation are expected to be gradual and continuous and the fund will normally
Management have some portion of its assets invested in each asset category. There is no limit
- - Co-manager of the fund since 1992 on the amount of fund assets that may be allocated to each asset category. The
- - Joined Wellington Management in 1990 fund may invest up to 20% of its total assets in securities of non-U.S. companies.
- - Investment professional since 1976 The fund's investments in equity securities and securities that are convertible
into equity securities are substantially similar to the investments permitted for
the Stock Fund.
The debt securities in which the 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, securities deemed by Wellington
Management to be of comparable quality.
----------------------------------------------------------------------------
RISK SUMMARY. The fund is subject to the following investment risks:
- Correlation risk - Market risk
- Credit risk - Natural event risk
- Derivatives risk - Opportunity risk
- Interest rate risk - Small company risk
- International investments risk - Style risk
- Liquidity risk - Valuation risk
- Management risk - Year 2000 risk
----------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows how the fund's total return has varied from year
to year, while the table shows the fund's performance over time (along with a
broad-based market index for reference). These figures do not include the effect
of sales charges or other fees which may be applied at the variable life insurance
or variable annuity contract level. All figures assume that all distributions were
reinvested. Keep in mind that past performance does not indicate future results.
Although Class IB shares are being offered by this prospectus, because the Class
IB shares have limited performance history, the performance history of Class IA
shares is shown below. Class IB share performance would be lower due to the 0.18%
12b-1 fee applied to Class IB shares.
----------------------------------------------------------------------------
</TABLE>
<PAGE>
24 HARTFORD ADVISERS HLS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
-------------------------------------------------------------
</TABLE>
THE INVESTMENT MANAGEMENT FEE PAID BY THE FUND FOR THE 1998 FISCAL YEAR WAS
0.62%
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1989 21.72%
<S> <C>
1990 1.26%
1991 20.33%
1992 8.30%
1993 12.25%
1994 -2.74%
1995 28.34%
1996 16.62%
1997 24.51%
1998 24.66%
</TABLE>
<TABLE>
<S> <C> <C>
BEST QUARTER: up 13.92%, second quarter 1997
WORST QUARTER: down -9.25%, third quarter 1990
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/98
-------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SINCE
INCEPTION
(MARCH
1 YEAR 5 YEARS 10 YEARS 31, 1983)
------- ------- -------- ---------
<S> <C> <C> <C> <C> <C>
Class IA...................... 24.66% 17.70% 15.08% 13.90%
S&P Index..................... 28.56% 24.04% 19.17% 17.74%
LGCB Index.................... 9.47% 7.30% 9.33% 10.08%
</TABLE>
<TABLE>
<S> <C> <C>
SEC File No. INDICES: S&P 500 Index and the Lehman Government Corporate Bond Index,
811-03659 unmanaged indices of securities that are similar, but not identical, to
those in the fund's portfolio.
------------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD INTERNATIONAL ADVISERS HLS FUND 25
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT GOAL AND STYLE. The Hartford International Advisers HLS Fund seeks
maximum long-term total rate of return by investing in common stocks and other
equity securities, bonds and other debt securities and money market instruments.
SUB-ADVISER The fund actively allocates its assets among three categories:
Wellington Management - equity securities
- debt securities and
PORTFOLIO MANAGERS - money market instruments.
TROND SKRAMSTAD Securities in which the fund invests primarily will be denominated in non-U.S.
- - Senior Vice President of Wellington currencies and will be traded in non-U.S. markets.
Management Asset allocation decisions are based upon Wellington Management's judgment of the
- - Manager of the equity component of the fund projected investment environment for financial assets, relative fundamental values
since 1995 and attractiveness of each asset category. Wellington Management does not attempt
- - Joined Wellington Management in 1993 to make short-term market timing decisions among asset categories. As a result,
- - Investment professional since 1990 shifts in asset allocation are expected to be gradual and continuous and the fund
will normally have some portion of its assets invested in each asset category.
ROBERT L. EVANS There is no limit on the amount of fund assets that may be allocated to each asset
- - Senior Vice President of Wellington category. The fund's investments in equity securities are substantially similar to
Management the equity securities investments permitted for the International Opportunities
- - Manager of the debt component of the fund HLS Fund.
since 1995 The fund consists of a diversified portfolio of securities covering a broad range
- - Joined Wellington Management in 1995
- - Investment professional since 1985 of countries, industries, and companies. The fund anticipates that, under normal
market conditions, it will diversify its investments in at least three countries
ANDREW S. OFFIT other than the United States.
- - Vice President of Wellington Management Debt securities in which the fund may invest include investment grade, non-
- - Associate Manager of the equity component
of the fund since 1997 convertible debt securities assigned within the four highest bond rating
- - Joined Wellington Management in 1997 categories by Moody's Investors Service, Inc. ("Moody's") or S&P, or, if unrated,
- - Investment professional since 1987 which are determined by Wellington Management to be of comparable quality. In
addition, the 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.
----------------------------------------------------------------------------
RISK SUMMARY. The fund is subject to the following investment risks:
- Correlation risk - Market risk
- Credit risk - Natural event risk
- Derivatives risk - Opportunity risk
- Interest rate risk - Small company risk
- International investments risk - Style risk
- Liquidity risk - Valuation risk
- Management risk - Year 2000 risk
----------------------------------------------------------------------------
</TABLE>
<PAGE>
26 HARTFORD INTERNATIONAL ADVISERS HLS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows how the fund's total return has varied from year
to year, while the table shows the fund's performance over time (along with a
broad-based market index for reference). These figures do not include the effect
of sales charges or other fees which may be applied at the variable life insurance
or variable annuity contract level. All figures assume that all distributions were
reinvested. Keep in mind that past performance does not indicate future results.
Although Class IB shares are being offered by this prospectus, because the Class
IB shares have limited performance history, the performance history of Class IA
shares is shown below. Class IB share performance would be lower due to the 0.18%
12b-1 fee applied to Class IB shares.
----------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C> <C>
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
-------------------------------------------------------------
</TABLE>
THE INVESTMENT MANAGEMENT FEE PAID BY THE FUND FOR THE 1998 FISCAL YEAR WAS
0.76%
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1996 12.25%
<S> <C>
1997 5.52%
1998 13.35%
</TABLE>
<TABLE>
<S> <C> <C>
BEST QUARTER: up 10.60%, fourth quarter 1998
WORST QUARTER: down -9.05%, third quarter 1998
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/98
-------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SINCE
INCEPTION
(MARCH 1,
1 YEAR 1995)
------- ---------
<S> <C> <C> <C> <C>
Class IA............ 13.35% 12.07%
EAFE GDP Index...... 26.71% 13.91%*
Salomon Index....... 11.53% 12.97%*
* Index inception performance is from
2/28/95
</TABLE>
<TABLE>
<S> <C> <C>
SEC File No. INDICES: Morgan Stanley Europe, Australia, Far East GDP ("EAFE GDP")
811-08804 Index and the Salomon World Government Bond ex-US Index, unmanaged
indices of international securities that are similar, but not identical,
to those in the fund's portfolio.
------------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD BOND HLS FUND 27
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT GOAL AND STYLE. The Hartford Bond HLS Fund seeks maximum current
income consistent with preservation of capital by investing primarily in
fixed-income securities.
The fund normally invests at least 80% of its portfolio in investment grade fixed
income securities. Up to 20% of the fund may be invested in securities rated in
SUB-ADVISER the highest category of below investment grade bonds ("Ba1", "Ba2" or "Ba3" by
HIMCO Moody's or "BB+", "BB" or "BB-" by S&P), or securities which, if unrated, are
determined by HIMCO to be of comparable quality. Securities rated below investment
PORTFOLIO MANAGER grade are commonly referred to as "high yield-high risk securities" or "junk
ALISON D. GRANGER, CFA bonds".
- - Senior Vice President of HIMCO The fund invests at least 65% of its total assets in debt securities with a
- - Manager of the fund since inception (1998) maturity of at least one year. The fund may invest up to 15% of its total assets
- - Joined HIMCO in 1993 in preferred stocks, convertible securities, and securities carrying warrants to
- - Investment professional since 1981 purchase equity securities. The 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. Up to 20% of the fund's total assets may be invested in securities of
non-U.S. companies.
The fund uses what is sometimes referred to as a top-down analysis to determine
which industries may benefit from current and future changes in the economy. The
fund then selects individual securities that appear comparatively undervalued
within selected industries. The portfolio manager looks at financial condition of
the issuers as well as the collateralization and other aspects of the securities
themselves.
----------------------------------------------------------------------------
RISK SUMMARY. The fund is subject to the following investment risks:
- Correlation risk - Market risk
- Credit risk - Natural event risk
- Derivatives risk - Opportunity risk
- Interest rate risk - Style risk
- International investments risk - Valuation risk
- Liquidity risk - Year 2000 risk
- Management risk
----------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows how the fund's total return has varied from year
to year, while the table shows the fund's performance over time (along with a
broad-based market index for reference). These figures do not include the effect
of sales charges or other fees which may be applied at the variable life insurance
or variable annuity contract level. All figures assume that all distributions were
reinvested. Keep in mind that past performance does not indicate future results.
Although Class IB shares are being offered by this prospectus, because the Class
IB shares have limited performance history, the performance history of Class IA
shares is shown below. Class IB share performance would be lower due to the 0.18%
12b-1 fee applied to Class IB shares. Class IA year-by-year total returns by
calendar year The investment management fee paid by the fund for the 1998 fiscal
year was 0.48%
----------------------------------------------------------------------------
</TABLE>
<PAGE>
28 HARTFORD BOND HLS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
-------------------------------------------------------------
</TABLE>
THE INVESTMENT MANAGEMENT FEE PAID BY
THE FUND FOR THE 1998 FISCAL YEAR
WAS 0.48%
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1989 12.10%
<S> <C>
1990 8.39%
1991 16.43%
1992 5.53%
1993 10.24%
1994 -3.95%
1995 18.49%
1996 3.54%
1997 11.35%
1998 8.15%
</TABLE>
<TABLE>
<S> <C> <C>
BEST QUARTER: up 6.68%, second quarter 1989
WORST QUARTER: down -3.40%, first quarter 1994
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/98
-------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SINCE
INCEPTION
(AUGUST
1 YEAR 5 YEARS 10 YEARS 31, 1977)
------- ------- -------- ---------
<S> <C> <C> <C> <C> <C>
Class IA...................... 8.15% 7.25% 8.86% 9.04%
Index......................... 9.47% 7.30% 9.33% 9.56%
</TABLE>
<TABLE>
<S> <C> <C>
SEC File No. INDEX: Lehman Government Corporate Bond Index, an unmanaged index of
811-03660 fixed-income securities that are similar, but not identical, to those in
the fund's portfolio.
------------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD HIGH YIELD HLS FUND 29
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT GOAL AND STYLE. The Hartford High Yield HLS Fund seeks high current
income by investing in non-investment grade fixed-income securities. Growth of
SUB-ADVISER capital is a secondary objective.
HIMCO The fund normally invests at least 65% of its portfolio in non-investment grade
fixed income securities (securities rated "Ba" or lower by Moody's or "BB" or
PORTFOLIO MANAGER lower by S&P, or securities which, if unrated, are determined by HIMCO to be of
ALISON D. GRANGER, CFA comparable quality). Securities rated below investment grade are commonly referred
- - Senior Vice President of HIMCO to as "high yield-high risk securities" or "junk bonds". Although the fund is
- - Manager of the fund since inception (1998) permitted to invest up to 100% of its total assets in non-investment grade
- - Joined HIMCO in 1993 securities, no more than 10% of total assets will be invested in securities rated
- - Investment professional since 1981 below B3 by Moody's or B- by S&P, or if unrated, determined to be of comparable
quality by HIMCO.
The fund may invest up to 15% of its total assets in preferred stocks, convertible
securities, and securities carrying warrants to purchase equity securities. The
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 30% of the fund's total assets may be invested
in securities of non-U.S. issuers. One-third ( 1/3) of this 30% figure (10% of
total assets) may be invested in securities issued in non-U.S. currencies
(including the European Currency Unit and its successor, the Euro). Non-U.S.
dollar denominated securities for which the fund uses currency transactions to
reflect U.S. dollar valuation at the time of purchase or while the fund holds the
security are excluded from the calculation of the percentage of securities issued
in non-U.S. currencies. The fund may also invest in non-U.S. debt securities of
issuers located in less developed markets, which are also known as emerging
markets.
The fund uses what is sometimes referred to as a top-down analysis to determine
which industries may benefit from current and future changes in the economy. The
fund then selects individual securities that appear comparatively undervalued
within selected industries. The portfolio manager looks at financial condition of
the issuers as well as the collateralization and other aspects of the securities
themselves.
----------------------------------------------------------------------------
RISK SUMMARY. The fund is subject to the following investment risks:
- Correlation risk - Market risk
- Credit risk - Natural event risk
- Derivatives risk - Opportunity risk
- Interest rate risk - Style risk
- International investments risk - Valuation risk
- Liquidity risk - Year 2000 risk
- Management risk
----------------------------------------------------------------------------
PAST PERFORMANCE. The table below shows the fund's performance since inception.
These figures do not include the effect of sales charges or other fees which may
be applied at the variable insurance or variable annuity contract level. The
figures assume that all distributions were reinvested. Keep in mind that this
performance is for a limited period of time and that past performance does not
indicate future results.
Although Class IB shares are being offered by this prospectus, because the Class
IB shares have limited performance history, the performance history of Class IA
shares is shown below. Class IB share performance would be lower due to the 0.18%
12b-1 fee applied to Class IB shares.
----------------------------------------------------------------------------
</TABLE>
<PAGE>
30 HARTFORD HIGH YIELD HLS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
THE FUND PAYS THE FOLLOWING INVESTMENT
MANAGEMENT FEES BASED ON AVERAGE DAILY NET
ASSETS:
Net Asset Value Annual Rate
First $250 million 0.575%
Next $250 million 0.525%
Next $500 million 0.475%
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING
Over $1 billion 0.425% 12/31/98
--------------------------------------------------
SINCE
INCEPTION
(SEPTEMBER
30, 1998)
---------
Class IA............ 3.58%
Index............... 1.62%
</TABLE>
<TABLE>
<S> <C> <C>
SEC File No. INDEX: Lehman High Yield Corporate Index, an unmanaged index of high
811-08629 yield fixed income securities that are similar, but not identical, to
those in the fund's portfolio.
------------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD MORTGAGE SECURITIES HLS FUND 31
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SUB-ADVISER INVESTMENT GOAL AND STYLE. The Hartford Mortgage Securities HLS Fund seeks
HIMCO maximum current income consistent with safety of principal and maintenance of
liquidity by investing primarily in mortgage-related securities, including
PORTFOLIO MANAGER securities issued by the Government National Mortgage Association.
PETER P. PERROTTI The fund normally invests at least 65% of its total assets in high quality
- - Senior Vice President of HIMCO mortgage-related securities either (i) issued by U.S. Government agencies,
- - Manager of the fund effective May 1, 1999 instrumentalities or sponsored corporations or (ii) rated A or better by Moody's
- - Joined HIMCO in 1990 or S&P or, if not rated, which are of equivalent investment quality as determined
- - Investment professional since 1989 by HIMCO. At times the 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.
----------------------------------------------------------------------------
RISK SUMMARY. The fund is subject to the following investment risks:
- Correlation risk - Market risk
- Credit risk - Natural event risk
- Derivatives risk - Opportunity risk
- Interest rate risk - Small company risk
- International investments risk - Style risk
- Liquidity risk - Valuation risk
- Management risk - Year 2000 risk
----------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows how the fund's total return has varied from year
to year, while the table shows the fund's performance over time (along with a
broad-based market index for reference). These figures do not include the effect
of sales charges or other fees which may be applied at the variable life insurance
or variable annuity contract level. All figures assume that all distributions were
reinvested. Keep in mind that past performance does not indicate future results.
Although Class IB shares are being offered by this prospectus, because the Class
IB shares have limited performance history, the performance history of Class IA
shares is shown below. Class IB share performance would be lower due to the 0.18%
12b-1 fee applied to Class IB shares.
----------------------------------------------------------------------------
</TABLE>
<PAGE>
32 HARTFORD MORTGAGE SECURITIES HLS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
-------------------------------------------------------------
</TABLE>
THE INVESTMENT MANAGEMENT FEE PAID BY
THE FUND FOR THE 1998 FISCAL YEAR
WAS 0.43%
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1989 13.13%
<S> <C>
1990 9.70%
1991 14.71%
1992 4.64%
1993 6.31%
1994 -1.61%
1995 16.17%
1996 4.99%
1997 9.01%
1998 6.72%
</TABLE>
<TABLE>
<S> <C> <C>
BEST QUARTER: up 6.55%, second quarter 1989
WORST QUARTER: down -2.13%, first quarter 1994
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/98
-------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SINCE
INCEPTION
(JANUARY
1 YEAR 5 YEARS 10 YEARS 1, 1985)
------- ------- -------- ---------
<S> <C> <C> <C> <C> <C>
Class IA...................... 6.72% 6.92% 8.27% 8.89%
Index......................... 6.96% 7.23% 9.13% 10.12%
</TABLE>
<TABLE>
<S> <C> <C>
SEC File No. INDEX: Lehman Mortgage Backed Securities, an unmanaged index of
811-04201 mortgage backed securities that are similar, but not identical, to those
in the fund's portfolio.
------------------------------------------------------------------------
</TABLE>
<PAGE>
HARTFORD MONEY MARKET HLS FUND 33
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SUB-ADVISER INVESTMENT GOAL AND STYLE. The Hartford Money Market HLS Fund seeks maximum
HIMCO current income consistent with liquidity and preservation of capital.
The fund seeks to maintain a stable share price of $1.00. The fund focuses on
PORTFOLIO MANAGER specific short-term money market instruments such as securities issued by
WILLIAM H. DAVISON corporations and financial institutions. The fund purchases securities which it
- - Senior Vice President of HIMCO believes offer attractive returns relative to the risks undertaken. In addition,
- - Manager of the fund since 1992 the portfolio manager adjusts the average maturity of the portfolio in
- - Joined HIMCO in 1990 anticipation of interest rate changes.
- - Investment professional since ----------------------------------------------------------------------------
1981 RISK SUMMARY. An investment in the fund is not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although the
fund seeks to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in the fund. In addition, the fund is subject
to the following risks:
- Credit risk - Opportunity risk
- Interest rate risk - Style risk
- Management risk - Valuation risk
- Market risk - Year 2000 risk
- Natural event risk
----------------------------------------------------------------------------
PAST PERFORMANCE. The bar chart and table below indicate the risks of investing
in the fund. The bar chart shows how the fund's total return has varied from year
to year, while the table shows the fund's performance over time (along with a
broad-based market index for reference). These figures do not include the effect
of sales charges or other fees which may be applied at the variable life insurance
or variable annuity contract level. All figures assume that all distributions were
reinvested. Keep in mind that past performance does not indicate future results.
Although Class IB shares are being offered by this prospectus, because the Class
IB shares have limited performance history, the performance history of Class IA
shares is shown below. Class IB share performance would be lower due to the 0.18%
12b-1 fee applied to Class IB shares.
----------------------------------------------------------------------------
</TABLE>
<PAGE>
34 HARTFORD MONEY MARKET HLS FUND
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
CLASS IA YEAR-BY-YEAR TOTAL RETURNS BY CALENDAR YEAR
-------------------------------------------------------------
</TABLE>
THE INVESTMENT MANAGEMENT FEE PAID BY
THE FUND FOR THE 1998 FISCAL YEAR
WAS 0.43%
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
1989 9.10%
<S> <C>
1990 8.09%
1991 6.01%
1992 3.63%
1993 2.94%
1994 3.95%
1995 5.74%
1996 5.09%
1997 5.31%
1998 5.25%
</TABLE>
<TABLE>
<S> <C> <C>
BEST QUARTER: up 2.36%, second quarter 1989
WORST QUARTER: down 0.72%, first quarter 1994
AVERAGE ANNUAL TOTAL RETURNS FOR PERIODS ENDING 12/31/98
-------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SINCE
INCEPTION
(JUNE 30,
1 YEAR 5 YEARS 10 YEARS 1980)
------- ------- -------- ---------
<S> <C> <C> <C> <C> <C>
Class IA...................... 5.25% 5.11% 5.53% 7.52%
Index......................... 4.94% 5.02% 5.43% %
</TABLE>
<TABLE>
<S> <C> <C>
SEC File No. INDEX: 60-Day Treasury Bill Index, an unmanaged index of short-term
811-03410 treasury bills that are similar, but not identical, to those in the
fund's portfolio.
Current 7-day yield as of December 31, 1998: 4.79%
Effective 7-day yield as of December 31, 1998: 4.90%
Please call 1-800-862-6668 for the most recent current and effective
yield information.
------------------------------------------------------------------------
</TABLE>
<PAGE>
ADDITIONAL INVESTMENT MATTERS 35
- --------------------------------------------------------------------------------
USE OF OPTIONS AND FUTURES. Each fund (other than the Money Market fund) may
purchase and sell options and enter into futures contracts, in each case with
respect to stocks, bonds, groups of securities (such as financial indices) or
foreign currencies. These techniques permit a fund to gain exposure to a
particular security or group of securities, and thereby earn returns similar to
those which would be earned by direct investments in those securities. These
techniques are also used to manage risk by hedging a fund's portfolio
investments. Use of these techniques may result in losses to a fund or increase
volatility.
USE OF MONEY MARKET INVESTMENTS FOR TEMPORARY DEFENSIVE PURPOSES. From time to
time each fund (other than the Money Market fund) may invest some or all of its
assets in high quality money market securities for temporary defensive purposes
in response to adverse market, economic or political conditions. To the extent a
fund is in a defensive position, the fund may lose the benefit of upswings and
limit its ability to meet its investment objective.
ABOUT EACH FUND'S INVESTMENT GOAL. Each fund's investment goal may be changed
only with approval of the shareholders of the fund. A fund may not be able to
achieve its goal.
TAX CONSEQUENCES OF PORTFOLIO TRADING PRACTICES. At times each fund (other than
the Money Market fund) may engage in short-term trading, which could produce
higher brokerage expenses for a fund and higher taxable distributions to the
fund's shareholders. The funds are not managed to achieve a particular tax
result for shareholders. Shareholders should consult their own tax adviser for
individual tax advice.
<PAGE>
36 RISKS OF INVESTING IN THE FUNDS
- --------------------------------------------------------------------------------
The funds are subject to the following investment risks:
CORRELATION RISK. The risk that changes in the value of a hedging instrument
will not match those of the asset being hedged (hedging is the use of one
investment to offset the effects of another investment). Incomplete correlation
can result in unanticipated risks.
CREDIT RISK. The risk that the issuer of a security, or the counterparty to a
contract, will have its credit rating downgraded, default or otherwise become
unable to honor a financial obligation. This risk is higher for junk bonds.
DERIVATIVES RISK. When a derivative (a security whose value is based on another
security or index) is used as a hedge against an opposite position that the fund
also holds, any loss generated by the derivative should be substantially offset
by gains on the hedged investment, and vice versa. While hedging can reduce or
eliminate losses, it can also reduce or eliminate gains. To the extent that a
derivative is not used as a hedge, the fund is directly exposed to the potential
gains and losses of that derivative. Gains and losses from non-hedging
derivative positions may be substantially greater than the derivative's original
cost.
INTEREST RATE RISK. The risk of market losses attributable to increases in
interest rates. With fixed-rate securities (such as bonds), a rise in interest
rates typically causes a fall in values, while a fall in rates typically causes
a rise in values. Generally speaking, a fixed-rate security with longer maturity
is more sensitive to interest rate changes than a similar security of shorter
maturity.
INTERNATIONAL INVESTMENT RISKS. Investments in foreign markets involve special
risks and considerations. Some of these factors are also present when investing
in the United States but are heightened when investing in non-US markets and
especially emerging markets. For example, these risks may include political and
economic instability, differing accounting and financial reporting standards or
inability to obtain reliable financial information regarding a company's balance
sheet and operations.
In addition, international investors may experience higher commission rates
on foreign portfolio transactions, potential adverse changes in tax and exchange
control regulations, the potential for restrictions on the flow of international
capital, and potential adverse effects from the transition to the euro in
European Monetary Union countries. Many foreign countries impose withholding
taxes on income from investments in such countries, which a fund may not be able
to recover. Also, changes in the exchange rates between the US dollar and
foreign currencies may have a negative impact on investments denominated in
foreign currencies, for example, by eroding or reversing gains or widening
losses from those investments. These risks are common to all mutual fund
investing in international securities.
LIQUIDITY RISK. The risk that certain securities may be difficult or impossible
to sell at the time and the price that the seller would like, especially in down
markets. The seller may have to lower the price, sell other securities instead,
or forego an investment opportunity, any of which could have a negative effect
on fund management or performance. Common to all mutual funds.
MANAGEMENT RISK. The risk that a strategy used by the fund's management may fail
to produce the intended result. Common to all mutual funds.
MARKET RISK. The risk that the market value of a security may move up and down,
sometimes rapidly and unpredictably. Market risk may affect a single issuer, an
industry, a sector or the stock or bond market as a whole. Common to all stocks
and bonds and the mutual funds that invest in them.
NATURAL EVENT RISK. The risk of losses attributable to natural disasters, crop
failures and similar events. Common to all mutual funds.
OPPORTUNITY RISK. The risk of missing out on an investment opportunity because
the assets necessary to take advantage of it are tied up in less advantageous
investments. Common to all mutual funds.
SMALL COMPANY RISK. The risks of securities of small capitalization companies,
which typically include issuers with less experience and shorter operating
histories. These investments may be more speculative than investments in larger
or better established companies. Other risks associated with smaller or newer
companies include less publicly-available information about the company, and the
normal risks which accompany the development of new products, markets or
services.
STYLE RISK. The risk that a portfolio's investment style may not produce
favorable results relative to market trends. Common to all mutual funds.
VALUATION RISK. The risk that the fund has valued certain of its securities at a
higher price than it can sell them for. Common to all mutual funds.
YEAR 2000 RISK. The risk that the funds' operations could be disrupted by year
2000 computer system problems. Although the adviser and the funds' service
providers are taking steps to address this issue, there may still be some risk
of adverse effects. If the issuers of securities in a fund's portfolio have year
2000 problems, these securities could go down in value. Common to all mutual
funds.
<PAGE>
PURCHASE AND SALE OF FUND SHARES 37
- --------------------------------------------------------------------------------
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
Hartford Life. Shares of the funds are sold by Hartford Securities Distribution
Company (the "Distributor") on a no-load basis at their net asset value as
defined under Transaction Details.
The funds offer Hartford Life contractholders or policyholders two different
classes of shares -- Class IA and Class IB. Class IB shares are offered by this
prospectus. Class IA shares are offered by a separate prospectus in connection
with a variable annuity product. The different classes of shares represent
investments in the same portfolio of securities but are subject to different
expenses and will likely have different share prices and performance. The Class
IB shares may pay for certain distribution related expenses in connection with
activities primarily intended to result in the sale of Class IB 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 Hartford Life 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 Class IB 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 5085, Hartford, CT
06102-5085. 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.
Each fund has adopted a Distribution Plan pursuant to Rule 12b-1 under the
1940 Act for the Class IB shares. Pursuant to the Distribution Plan, each fund
compensates the Distributor from assets attributable to the Class IB shares for
services rendered and expenses borne in connection with activities primarily
intended to result in the sale of the Class IB shares. It is anticipated that a
portion of the amounts received by the Distributor will be used to defray
various costs incurred or paid by the Distributor in connection with the
printing and mailing of fund prospectuses, statements of additional information,
any supplements thereto and shareholder reports and holding seminars and sales
meetings with wholesale and retail sales personnel designed to promote the
distribution of Class IB shares. The Distributor may also use the amounts
received to provide compensation to financial intermediaries and third-party
broker-dealers for their services in connection with the distribution of Class
IB shares.
Although the Distribution Plan provides that each fund may pay annually up
to 0.25% of the average daily net assets of a fund attributable to its Class IB
shares for activities primarily intended to result in the sale of Class IB
shares, the Distributor has voluntarily agreed to waive .07% of the fee. This
waiver may be withdrawn at any time after notice to shareholders. Under the
terms of the Distribution Plan and the principal underwriting agreement, each
fund is authorized to make payments monthly to the Distributor which may be used
to pay or reimburse entities providing distribution and shareholder servicing
with respect to the Class IB shares for such entities' fees or expenses incurred
or paid in that regard.
The Distribution Plan is of a type known as a "compensation" plan because
payments are made for services rendered to the fund with respect to Class IB
shares regardless of the level of expenditures by the Distributor. The Directors
will, however, take into account such expenditures for purposes of reviewing
operations under the Distribution Plan and in connection with their annual
consideration of the Plan's renewal. The Distributor has indicated that it
expects its expenditures to include, without limitation: (a) the printing and
mailing of fund prospectuses, statements of additional information, any
supplements thereto and shareholder reports for prospective contract owners of
variable insurance products with respect to the Class IB shares of a fund; (b)
those relating to the development, preparation, printing and mailing of
advertisements, sales literature and other promotional materials describing and/
or relating to the Class IB shares of a fund; (c) holding seminars and sales
meetings designed to promote the distribution of fund Class IB shares; (d)
obtaining information and providing explanations to wholesale and retail
distributors of contracts regarding fund investment objectives and policies and
other information about a fund, including the
<PAGE>
38 PURCHASE AND SALE OF FUND SHARES
- --------------------------------------------------------------------------------
performance of the funds; (e) training sales personnel regarding the Class IB
shares of a fund; (f) compensation to financial intermdeiaries and third-party
broker-dealers; and (g) financing any other activity that the Distributor
determines is primarily intended to result in the sale of Class IB shares.
<PAGE>
TRANSACTION DETAILS 39
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The net asset value per share is determined for each fund as of the close of
the New York Stock Exchange ("NYSE") (normally 4:00 p.m. Eastern Time) on each
business day that the NYSE is open. The net asset value is determined by
dividing the value of the fund's net assets attributable to a class of shares by
the number of shares outstanding for that class. The assets of each fund (except
the Money Market Fund) 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 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 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.
DIVIDENDS
The shareholders of each fund are 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
current policy for each fund, except 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 Money Market Fund declares dividends on a
daily basis and pays 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.
EXCHANGE PRIVILEGES
Contractholders and policyholders may exchange shares in each fund as
indicated by the accompanying insurance product prospectus. The funds are
intended to be long-term investment vehicles and are not designed to provide
investors with a means of speculating on short-term market movements. Investors
who engage in excessive account activity generate additional costs which are
borne by all of the funds' shareholders. In order to minimize such costs, the
funds reserve the right to reject any purchase request that is reasonably deemed
to be disruptive to efficient portfolio management, either because of the timing
of the investment or previous excessive trading by the
contractholder/policyholder.
FEDERAL INCOME TAXES
Each fund has elected and intends to continue qualifying under Subchapter M
of the Internal Revenue Code of 1986, as amended. Each fund intends to
distribute all of its net income and gains to shareholders. Because the shares
are purchased only through products that defer taxes, these distributions
generally will not be considered taxable income to you at the time of
distribution. Each fund will inform contractholders or policyholders 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 insurance product prospectus.
If eligible, each fund may make an election to pass through to its
shareholder, Hartford Life, a credit for any foreign taxes paid during the year.
If such an election is made, the pass-through of the foreign tax credit will
result in additional taxable income and income tax to Hartford Life. 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 Hartford
Life.
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 funds.
<PAGE>
40 PERFORMANCE RELATED INFORMATION
- --------------------------------------------------------------------------------
The funds may advertise 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 period 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 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.
The funds are offered exclusively through variable insurance products.
Performance information presented for the funds should not be compared directly
with performance information of other insurance products without taking into
account insurance-related charges and expenses payable with respect to these
insurance products. Insurance related charges and expenses are not reflected in
the funds' performance information and will reduce an investor's return under
the insurance product.
<PAGE>
GENERAL INFORMATION 41
- --------------------------------------------------------------------------------
DISTRIBUTOR
Hartford Securities Distribution Company, Inc., 200 Hopmeadow Street,
Simsbury, CT 06089, serves as distributor to the funds.
CUSTODIAN
State Street Bank and Trust Company, 225 Franklin Street, Boston,
Massachusetts 02110, serves as custodian of each fund's assets.
TRANSFER AND DIVIDEND DISBURSING AGENTS
Hartford Life Insurance Company, 200 Hopmeadow Street, Simsbury, CT 06089,
serves as Transfer and Dividend Disbursing Agent for the funds.
<PAGE>
42 FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD CAPITAL APPRECIATION HLS FUND
These tables are intended to help you understand each fund's financial
performance since inception. The total returns in the table represent the rate
that an investor would have earned on an investment in each fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Arthur Andersen, LLP, whose report, along with each fund's financial
statements, are included in the annual report which is available upon request.
<TABLE>
<CAPTION>
CLASS IB -- PERIOD ENDED: 4/1/98-12/31/98(A)
-----------
<S> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................
Net investment income (loss).......
Net realized and unrealized gain
(loss) on investments.............
-----------
Total from investment operations...
Less distributions:
Dividends from net investment
income..........................
Distributions from net realized
gain on investments.............
Return of capital................ 0.000
-----------
Total from distributions.........
-----------
Net increase (decrease) in net
asset value.......................
Net asset value, end of period.....
-----------
-----------
TOTAL RETURN.......................
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................
Ratio of expenses to average net
assets............................
Ratio of net investment income
(loss) to average net assets......
Portfolio turnover rate............
</TABLE>
- ---------
(a) Class IB shares were first offered on April 1, 1998.
<PAGE>
FINANCIAL HIGHLIGHTS 43
- --------------------------------------------------------------------------------
HARTFORD DIVIDEND AND GROWTH HLS FUND
These tables are intended to help you understand each fund's financial
performance since inception. The total returns in the table represent the rate
that an investor would have earned on an investment in each fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Arthur Andersen, LLP, whose report, along with each fund's financial
statements, are included in the annual report which is available upon request.
<TABLE>
<CAPTION>
CLASS IB -- PERIOD ENDED: 4/1/98-12/31/98(A)
-----------
<S> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................
Net investment income (loss).......
Net realized and unrealized gain
(loss) on investments.............
-----------
Total from investment operations...
Less distributions:
Dividends from net investment
income..........................
Distributions from net realized
gain on investments.............
Return of capital................ 0.000
-----------
Total from distributions.........
-----------
Net increase (decrease) in net
asset value.......................
Net asset value, end of period..... $
-----------
-----------
TOTAL RETURN....................... %
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................
Ratio of expenses to average net
assets............................ %
Ratio of net investment income
(loss) to average net assets...... %
Portfolio turnover rate............ %
</TABLE>
- ---------
(a) Class IB shares were first offered on April 1, 1998.
<PAGE>
44 FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD GLOBAL LEADERS HLS FUND
These tables are intended to help you understand each fund's financial
performance since inception. The total returns in the table represent the rate
that an investor would have earned on an investment in each fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Arthur Andersen, LLP, whose report, along with each fund's financial
statements, are included in the annual report which is available upon request.
<TABLE>
<CAPTION>
CLASS IB -- PERIOD ENDED: 9/30/98-12/31/98(A)
-----------
<S> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................
Net investment income (loss).......
Net realized and unrealized gain
(loss) on investments.............
-----------
Total from investment operations...
Less distributions:
Dividends from net investment
income..........................
Distributions from net realized
gain on investments.............
Return of capital................ 0.000
-----------
Total from distributions.........
-----------
Net increase (decrease) in net
asset value.......................
Net asset value, end of period..... $
-----------
TOTAL RETURN....................... %
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................
Ratio of expenses to average net
assets............................ %
Ratio of net investment income
(loss) to average net assets...... %
Portfolio turnover rate............ %
</TABLE>
- ---------
(a) The fund was declared effective by the Securities and Exchange Commission on
September 30, 1998.
<PAGE>
FINANCIAL HIGHLIGHTS 45
- --------------------------------------------------------------------------------
HARTFORD GROWTH AND INCOME HLS FUND
These tables are intended to help you understand each fund's financial
performance since inception. The total returns in the table represent the rate
that an investor would have earned on an investment in each fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Arthur Andersen, LLP, whose report, along with each fund's financial
statements, are included in the annual report which is available upon request.
<TABLE>
<CAPTION>
CLASS IB -- PERIOD ENDED: 5/29/98-12/31/98(A)
-----------
<S> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................
Net investment income (loss).......
Net realized and unrealized gain
(loss) on investments.............
-----------
Total from investment operations...
Less distributions:
Dividends from net investment
income..........................
Distributions from net realized
gain on investments.............
Return of capital................ 0.000
-----------
Total from distributions.........
-----------
Net increase (decrease) in net
asset value.......................
Net asset value, end of period..... $
-----------
-----------
TOTAL RETURN....................... %
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................
Ratio of expenses to average net
assets............................ %
Ratio of net investment income
(loss) to average net assets...... %
Portfolio turnover rate............ %
</TABLE>
- ---------
(a) The fund was declared effective by the Securities and Exchange Commission on
May 29, 1998.
<PAGE>
46 FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD INDEX HLS FUND
These tables are intended to help you understand each fund's financial
performance since inception. The total returns in the table represent the rate
that an investor would have earned on an investment in each fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Arthur Andersen, LLP, whose report, along with each fund's financial
statements, are included in the annual report which is available upon request.
<TABLE>
<CAPTION>
CLASS IB -- PERIOD ENDED: 4/1/98-12/31/98(A)
-----------
<S> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................
Net investment income (loss).......
Net realized and unrealized gain
(loss) on investments.............
-----------
Total from investment operations...
Less distributions:
Dividends from net investment
income..........................
Distributions from net realized
gain on investments.............
Return of capital................ 0.000
-----------
Total from distributions.........
-----------
Net increase (decrease) in net
asset value.......................
Net asset value, end of period..... $
-----------
-----------
TOTAL RETURN....................... %
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................
Ratio of expenses to average net
assets............................ %
Ratio of net investment income
(loss) to average net assets...... %
Portfolio turnover rate............ %
</TABLE>
- ---------
(a) Class IB shares were first offered on April 1, 1998.
<PAGE>
FINANCIAL HIGHLIGHTS 47
- --------------------------------------------------------------------------------
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND
These tables are intended to help you understand each fund's financial
performance since inception. The total returns in the table represent the rate
that an investor would have earned on an investment in each fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Arthur Andersen, LLP, whose report, along with each fund's financial
statements, are included in the annual report which is available upon request.
<TABLE>
<CAPTION>
CLASS IB -- PERIOD ENDED: 4/1/98-12/31/98(A)
-----------
<S> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................
Net investment income (loss).......
Net realized and unrealized gain
(loss) on investments.............
-----------
Total from investment operations...
Less distributions:
Dividends from net investment
income..........................
Distributions from net realized
gain on investments.............
Return of capital................ 0.000
-----------
Total from distributions.........
-----------
Net increase (decrease) in net
asset value.......................
Net asset value, end of period..... $
-----------
-----------
TOTAL RETURN....................... %
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................
Ratio of expenses to average net
assets............................ %
Ratio of net investment income
(loss) to average net assets...... %
Portfolio turnover rate............ %
</TABLE>
- ---------
(a) Class IB shares were first offered on April 1, 1998.
<PAGE>
48 FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD MIDCAP HLS FUND
These tables are intended to help you understand each fund's financial
performance since inception. The total returns in the table represent the rate
that an investor would have earned on an investment in each fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Arthur Andersen, LLP, whose report, along with each fund's financial
statements, are included in the annual report which is available upon request.
<TABLE>
<CAPTION>
CLASS IB -- PERIOD ENDED: 4/1/98-12/31/98(A)
-----------
<S> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................
Net investment income (loss).......
Net realized and unrealized gain
(loss) on investments.............
-----------
Total from investment operations...
Less distributions:
Dividends from net investment
income..........................
Distributions from net realized
gain on investments.............
Return of capital................ 0.000
-----------
Total from distributions.........
-----------
Net increase (decrease) in net
asset value.......................
Net asset value, end of period..... $
-----------
-----------
TOTAL RETURN....................... %
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................
Ratio of expenses to average net
assets............................ %
Ratio of net investment income
(loss) to average net assets...... %
Portfolio turnover rate............ %
</TABLE>
- ---------
(a) Class IB shares were first offered on April 1, 1998.
<PAGE>
FINANCIAL HIGHLIGHTS 49
- --------------------------------------------------------------------------------
HARTFORD SMALL COMPANY HLS FUND
These tables are intended to help you understand each fund's financial
performance since inception. The total returns in the table represent the rate
that an investor would have earned on an investment in each fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Arthur Andersen, LLP, whose report, along with each fund's financial
statements, are included in the annual report which is available upon request.
<TABLE>
<CAPTION>
CLASS IB -- PERIOD ENDED: 4/1/98-12/31/98(A)
-----------
<S> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................
Net investment income (loss).......
Net realized and unrealized gain
(loss) on investments.............
-----------
Total from investment operations...
Less distributions:
Dividends from net investment
income..........................
Distributions from net realized
gain on investments.............
Return of capital................ 0.000
-----------
Total from distributions.........
-----------
Net increase (decrease) in net
asset value.......................
Net asset value, end of period..... $
-----------
-----------
TOTAL RETURN....................... %
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................
Ratio of expenses to average net
assets............................ %
Ratio of net investment income
(loss) to average net assets...... %
Portfolio turnover rate............ %
</TABLE>
- ---------
(a) Class IB shares were first offered on April 1, 1998.
<PAGE>
50 FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD STOCK HLS FUND
These tables are intended to help you understand each fund's financial
performance since inception. The total returns in the table represent the rate
that an investor would have earned on an investment in each fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Arthur Andersen, LLP, whose report, along with each fund's financial
statements, are included in the annual report which is available upon request.
<TABLE>
<CAPTION>
CLASS IB -- PERIOD ENDED: 4/1/98-12/31/98(A)
-----------
<S> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................
Net investment income (loss).......
Net realized and unrealized gain
(loss) on investments.............
-----------
Total from investment operations...
Less distributions:
Dividends from net investment
income..........................
Distributions from net realized
gain on investments.............
Return of capital................ 0.000
-----------
Total from distributions.........
-----------
Net increase (decrease) in net
asset value.......................
Net asset value, end of period..... $
-----------
-----------
TOTAL RETURN....................... %
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................
Ratio of expenses to average net
assets............................ %
Ratio of net investment income
(loss) to average net assets...... %
Portfolio turnover rate............ %
</TABLE>
- ---------
(a) Class IB shares were first offered on April 1, 1998.
<PAGE>
FINANCIAL HIGHLIGHTS 51
- --------------------------------------------------------------------------------
HARTFORD ADVISERS HLS FUND
These tables are intended to help you understand each fund's financial
performance since inception. The total returns in the table represent the rate
that an investor would have earned on an investment in each fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Arthur Andersen, LLP, whose report, along with each fund's financial
statements, are included in the annual report which is available upon request.
<TABLE>
<CAPTION>
CLASS IB -- PERIOD ENDED: 4/1/98-12/31/98(A)
-----------
<S> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................
Net investment income (loss).......
Net realized and unrealized gain
(loss) on investments.............
-----------
Total from investment operations...
Less distributions:
Dividends from net investment
income..........................
Distributions from net realized
gain on investments.............
Return of capital................ 0.000
-----------
Total from distributions.........
Net increase (decrease) in net
asset value.......................
Net asset value, end of period..... $
-----------
-----------
TOTAL RETURN....................... %
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................
Ratio of expenses to average net
assets............................ %
Ratio of net investment income
(loss) to average net assets...... %
Portfolio turnover rate............ %
</TABLE>
- ---------
(a) Class IB shares were first offered on April 1, 1998.
<PAGE>
52 FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD INTERNATIONAL ADVISERS HLS FUND
These tables are intended to help you understand each fund's financial
performance since inception. The total returns in the table represent the rate
that an investor would have earned on an investment in each fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Arthur Andersen, LLP, whose report, along with each fund's financial
statements, are included in the annual report which is available upon request.
<TABLE>
<CAPTION>
CLASS IB -- PERIOD ENDED: 4/1/98-12/31/98(A)
-----------
<S> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................
Net investment income (loss).......
Net realized and unrealized gain
(loss) on investments.............
-----------
Total from investment operations...
Less distributions:
Dividends from net investment
income..........................
Distributions from net realized
gain on investments.............
Return of capital................ 0.000
-----------
Total from distributions.........
-----------
Net increase (decrease) in net
asset value.......................
Net asset value, end of period..... $
-----------
-----------
TOTAL RETURN....................... %
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................
Ratio of expenses to average net
assets............................ %
Ratio of net investment income
(loss) to average net assets...... %
Portfolio turnover rate............ %
</TABLE>
- ---------
(a) Class IB shares were first offered on April 1, 1998.
<PAGE>
FINANCIAL HIGHLIGHTS 53
- --------------------------------------------------------------------------------
HARTFORD BOND HLS FUND
These tables are intended to help you understand each fund's financial
performance since inception. The total returns in the table represent the rate
that an investor would have earned on an investment in each fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Arthur Andersen, LLP, whose report, along with each fund's financial
statements, are included in the annual report which is available upon request.
<TABLE>
<CAPTION>
CLASS IB -- PERIOD ENDED: 4/1/98-12/31/98(A)
-----------
<S> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................
Net investment income (loss).......
Net realized and unrealized gain
(loss) on investments.............
-----------
Total from investment operations...
Less distributions:
Dividends from net investment
income..........................
Distributions from net realized
gain on investments.............
Return of capital................ 0.000
-----------
Total from distributions.........
-----------
Net increase (decrease) in net
asset value.......................
Net asset value, end of period..... $
-----------
-----------
TOTAL RETURN....................... %
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................
Ratio of expenses to average net
assets............................ %
Ratio of net investment income
(loss) to average net assets...... %
Portfolio turnover rate............ %
</TABLE>
- ---------
(a) Class IB shares were first offered on April 1, 1998.
<PAGE>
54 FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD HIGH YIELD HLS FUND
These tables are intended to help you understand each fund's financial
performance since inception. The total returns in the table represent the rate
that an investor would have earned on an investment in each fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Arthur Andersen, LLP, whose report, along with each fund's financial
statements, are included in the annual report which is available upon request.
<TABLE>
<CAPTION>
CLASS IB -- PERIOD ENDED: 9/30/98-12/31/98(A)
-----------
<S> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................
Net investment income (loss).......
Net realized and unrealized gain
(loss) on investments.............
-----------
Total from investment operations...
Less distributions:
Dividends from net investment
income..........................
Distributions from net realized
gain on investments.............
Return of capital................ 0.000
-----------
Total from distributions.........
-----------
Net increase (decrease) in net
asset value.......................
Net asset value, end of period..... $
-----------
TOTAL RETURN....................... %
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................
Ratio of expenses to average net
assets............................ %
Ratio of net investment income
(loss) to average net assets...... %
Portfolio turnover rate............ %
</TABLE>
- ---------
(a) The fund was declared effective by the Securities and Exchange Commission on
September 30, 1998.
<PAGE>
FINANCIAL HIGHLIGHTS 55
- --------------------------------------------------------------------------------
HARTFORD MORTGAGE SECURITIES HLS FUND
These tables are intended to help you understand each fund's financial
performance since inception. The total returns in the table represent the rate
that an investor would have earned on an investment in each fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Arthur Andersen, LLP, whose report, along with each fund's financial
statements, are included in the annual report which is available upon request.
<TABLE>
<CAPTION>
CLASS IB -- PERIOD ENDED: 4/1/98-12/31/98(A)
-----------
<S> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................
Net investment income (loss).......
Net realized and unrealized gain
(loss) on investments.............
-----------
Total from investment operations...
Less distributions:
Dividends from net investment
income..........................
Distributions from net realized
gain on investments.............
Return of capital................ 0.000
-----------
Total from distributions.........
-----------
Net increase (decrease) in net
asset value.......................
Net asset value, end of period..... $
-----------
TOTAL RETURN....................... %
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................
Ratio of expenses to average net
assets............................ %
Ratio of net investment income
(loss) to average net assets...... %
Portfolio turnover rate............ %
</TABLE>
- ---------
(a) Class IB shares were first offered on April 1, 1998.
<PAGE>
56 FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
HARTFORD MONEY MARKET HLS FUND
These tables are intended to help you understand each fund's financial
performance since inception. The total returns in the table represent the rate
that an investor would have earned on an investment in each fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by Arthur Andersen, LLP, whose report, along with each fund's financial
statements, are included in the annual report which is available upon request.
<TABLE>
<CAPTION>
CLASS IB -- PERIOD ENDED: 4/1/98-12/31/98(A)
-----------
<S> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................
Net investment income (loss).......
Net realized and unrealized gain
(loss) on investments.............
-----------
Total from investment operations...
Less distributions:
Dividends from net investment
income..........................
Distributions from net realized
gain on investments.............
Return of capital................ 0.000
-----------
Total from distributions.........
-----------
Net increase (decrease) in net
asset value.......................
Net asset value, end of period..... $
-----------
-----------
TOTAL RETURN....................... %
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)........................
Ratio of expenses to average net
assets............................ %
Ratio of net investment income
(loss) to average net assets...... %
Portfolio turnover rate............ %
</TABLE>
- ---------
(a) Class IB shares were first offered on April 1, 1998.
<PAGE>
FOR MORE INFORMATION 57
- --------------------------------------------------------------------------------
Two documents are available that offer further information on the Hartford HLS
Funds:
ANNUAL/SEMIANNUAL REPORT
TO SHAREHOLDERS
Includes financial statements and portfolio holdings. In the fund's annual
report you will find a discussion of the market conditions and investment
strategies that significantly affected performance during the last fiscal year,
and the auditor's report.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI contains more detailed information on all aspects of the funds. The
current annual report is included in the SAI.
A current SAI has been filed with the Securities and Exchange Commission and is
incorporated by reference into (is legally a part of) this prospectus.
To request a free copy of the current annual/semiannual report or the SAI,
please contact the funds at:
BY MAIL:
Hartford HLS Funds
c/o Individual Annuity Services
P.O. Box 5085
Hartford, CT 06102-5085
BY PHONE:
1-800-862-6668
ON THE INTERNET:
www.thehartford.com
Or you may view or obtain these documents from the SEC:
IN PERSON:
at the SEC's Public Reference Room in
Washington, DC
BY PHONE:
1-800-SEC-0330 (1-800-732-0330)
BY MAIL:
Public Reference Section
Securities and Exchange Commission
Washington, DC 20549-6009
(duplicating fee required)
ON THE INTERNET:
www.sec.gov
SEC FILE NUMBERS:
Hartford Capital Appreciation HLS Fund 811-04005
Hartford Dividend and Growth HLS Fund 811-08186
Hartford Global Leaders HLS Fund 811-08629
Hartford Growth and Income HLS Fund 811-08629
Hartford Index HLS Fund 811-05045
Hartford International Opportunities
HLS Fund 811-06059
Hartford MidCap HLS Fund 811-08185
Hartford Small Company HLS Fund 811-07557
Hartford Stock HLS Fund 811-02630
Hartford Advisers HLS Fund 811-03659
Hartford International Advisers HLS Fund 811-08804
Hartford Bond HLS Fund 811-03660
Hartford High Yield HLS Fund 811-08629
Hartford Mortgage Securities HLS Fund 811-04201
Hartford Money Market HLS Fund 811-03662
<PAGE>
PART B
STATEMENT OF ADDITIONAL INFORMATION
HARTFORD CAPITAL APPRECIATION HLS FUND, INC.
HARTFORD DIVIDEND AND GROWTH HLS FUND, INC.
HARTFORD GLOBAL LEADERS HLS FUND
HARTFORD GROWTH AND INCOME HLS FUND
HARTFORD INDEX HLS FUND, INC.
HARTFORD INTERNATIONAL OPPORTUNITIES HLS FUND, INC.
HARTFORD MIDCAP HLS FUND, INC.
HARTFORD SMALL COMPANY HLS FUND, INC.
HARTFORD STOCK HLS FUND, INC.
HARTFORD ADVISERS HLS FUND, INC.
HARTFORD INTERNATIONAL ADVISERS HLS FUND, INC.
HARTFORD BOND HLS FUND, INC.
HARTFORD HIGH YIELD HLS FUND
HARTFORD MORTGAGE SECURITIES HLS FUND, INC.
HARTFORD MONEY MARKET HLS FUND, INC.
CLASS IA and CLASS IB SHARES
P.O. Box 5085
Hartford, CT 06102-5085
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 HLS Funds, c/o Individual
Annuity Services, P.O. Box 5085, Hartford, CT 06102-5085 or call 1-800-862-6668.
Date of Prospectus: May 1, 1999
Date of Statement of Additional Information: May 1, 1999
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
<S> <C>
GENERAL INFORMATION...............................................................................................1
INVESTMENT OBJECTIVES AND POLICIES................................................................................1
MANAGEMENT OF THE FUNDS..........................................................................................17
INVESTMENT MANAGEMENT ARRANGEMENTS...............................................................................21
FUND EXPENSES....................................................................................................25
DISTRIBUTION ARRANGEMENTS........................................................................................26
PORTFOLIO TRANSACTIONS AND BROKERAGE.............................................................................28
DETERMINATION OF NET ASSET VALUE.................................................................................30
PURCHASE AND REDEMPTION OF SHARES................................................................................31
OWNERSHIP AND CAPITALIZATION OF THE FUNDS........................................................................31
INVESTMENT PERFORMANCE...........................................................................................33
TAXES............................................................................................................42
CUSTODIAN........................................................................................................44
TRANSFER AGENT SERVICES..........................................................................................44
DISTRIBUTOR......................................................................................................44
INDEPENDENT PUBLIC ACCOUNTANTS...................................................................................45
OTHER INFORMATION................................................................................................45
FINANCIAL STATEMENTS.............................................................................................45
</TABLE>
<PAGE>
GENERAL INFORMATION
This SAI relates to fifteen mutual funds (each a "Fund" and together
the "Funds") which serve as the underlying investment vehicles for certain
variable annuity and variable life insurance separate accounts of Hartford
Life Insurance Company and Hartford Life and Annuity Insurance Company
(collectively, "Hartford Life"). Each Fund offers two classes of shares:
Class IA and Class IB. HL Investment Advisors, LLC ("HL Advisors") is the
investment adviser and Hartford Life Insurance Company ("Hartford Life") is
the administrator of each Fund. HL Advisors and Hartford Life are indirect
majority owned subsidiaries of The Hartford Financial Services Group, Inc.,
("The Hartford") an insurance holding company with over $130 billion in
assets. In addition, Wellington Management Company, LLP ("Wellington
Management") and The Hartford Investment Management Company
("HIMCO-Registered Trademark-"), 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 and principal strategies 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, and the following
practices when a segregated account has been established to cover such
transactions or when an offsetting position has been established by the Fund are
not deemed to be issuances of senior securities: 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
the Fund's investment policies, and reverse repurchase agreements and mortgage
dollar rolls.
-1-
<PAGE>
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. Although 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 are not subject to this restriction, in most cases a
segregated account will be set up to cover such transactions.
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.
-2-
<PAGE>
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) 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 and Money
Market Fund will not purchase securities of other investment companies at all.
-3-
<PAGE>
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.
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.
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 STRATEGIES AND RISKS
A further description of certain of the investment strategies of each
Fund is set forth below. The percentage limits described in the sections below
are based on market value and are determined as of the time the securities are
purchased.
MONEY MARKET INSTRUMENTS AND TEMPORARY INVESTMENT STRATEGIES
In addition to the Money Market Fund which may hold cash and invest in
money market instruments at any time, all other Funds may hold cash 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 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
-4-
<PAGE>
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.
DEBT SECURITIES
-5-
<PAGE>
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, High
Yield 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, High Yield 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
The Money Market Fund 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, Dividend and Growth Fund, Global
Leaders Fund, Growth and Income Fund, MidCap Fund, Small Company Fund, Stock
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. Although the High Yield Fund is permitted to
invest up to 100% of its total
-6-
<PAGE>
assets in securities rated below investment grade, no more than 10% of total
assets will be invested in securities rated below B3 by Moody's or B- 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. 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
Opportunities Fund, International Advisers Fund, Advisers Fund, Bond Fund, High
Yield 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
-7-
<PAGE>
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
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 Opportunities Fund, International Advisers Fund,
Advisers Fund, Bond Fund, High Yield 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 and High Yield Fund as described below
and except the Mortgage Securities 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 and High Yield Fund may each invest up to 15% of its total assets in
preferred stocks, convertible securities, and securities carrying warrants to
purchase equity securities. The Bond Fund and High Yield 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.
-8-
<PAGE>
SMALL CAPITALIZATION SECURITIES
All Funds except the Mortgage Securities Fund and Money Market Fund may
invest in equity securities (including securities issued in initial public
offerings) of companies with market capitalizations within the range represented
by the Russell 2000 Index ("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 dependent 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, 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. issuers involves
considerations and potential risks not typically associated with investing in
obligations issued by U.S. issuers. Less information may be available about
non-U.S. issuers compared with U.S. issuers. For example, 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. In addition, 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.
-9-
<PAGE>
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
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.
From time to time, each of the Global Leaders Fund, International
Opportunities Fund and International Advisers Fund may invest up to 25% of each
of their assets and the High Yield Fund may invest up to 30% of its assets in
securities of issuers 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. Under normal market
conditions, the Global Leaders Fund will invest in at least five countries, one
of which will be the United States.
CURRENCY TRANSACTIONS
Each Fund, except the Index Fund, Mortgage Securities 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.
-10-
<PAGE>
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 options and futures contracts related
thereto.
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 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.
-11-
<PAGE>
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 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
-12-
<PAGE>
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 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 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
-13-
<PAGE>
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.
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. Because interest rate swaps, caps,
collars and floors are privately
-14-
<PAGE>
negotiated transactions rather then publicly traded, they may be considered 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 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 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.
-15-
<PAGE>
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 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 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 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 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) each 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 (including collateral received in connection with any loans).
-16-
<PAGE>
MANAGEMENT OF THE FUNDS
The business of each Fund is managed by a Board of Directors who elects
officers who are responsible for the day-to-day operations of the Funds and who
execute policies formulated by the directors. 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 71)
Director
30 Hurdle Fence Drive
Avon, CT 06001
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 (1988-1989), and served as Vice President-Client Services of Wright
Investors' Service, Bridgeport, Connecticut (1989-1990). Mr. Biernat is a
director of HPSC, Inc., a Boston-based Finance and Leasing Company.
WINIFRED ELLEN COLEMAN (age 66)
Director
27 Buckingham Lane
West Hartford, CT 06117
Ms. Coleman has served as President of Saint Joseph College since 1991. She is a
Director of LeMoyne College, St. Francis Hospital, Connecticut Higher Education
Student Loan Administration, and The National Conference (Greater Hartford Board
of Directors).
JOSEPH HARRY GAREAU* (age 51)
Director and President
55 Farmington Avenue
Hartford, CT 06105
Mr. Gareau serves as President and Chief Investment Officer of HIMCO.
Previously he served as Executive Vice President and Chief Investment Officer
of The Hartford from 1993-1996, as Senior Vice President and Chief Investment
Officer/Property-Casualty Division (September, 1992 - April, 1993) and as
Vice President (October, 1987 - September, 1992). Mr. Gareau is also a
Director of HIMCO, a Director and President of HL Advisors and a Director and
Executive Vice President of Hartford Investment Financial Services Company
("HIFSCO-Registered Trademark-"), a Hartford affiliated registered investment
adviser and broker dealer.
-17-
<PAGE>
WILLIAM ATCHISON O'NEILL (age 68)
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 65)
Director
695 Bloomfield Avenue
Bloomfield, CT 06002
Mr. Pryor has served as Managing Director of Pryor & Clark Company, Hartford,
Connecticut, since June, 1992. He served as Chairman and Chief Executive Officer
of Corcap, Inc. from 1988-1992. In addition, Mr. Pryor is a Director of Pryor &
Clark Company, Corcap, Inc., the Wiremold Company, Hoosier Magnetics, Inc.,
Infodata Systems, Inc. and Pacific Scientific Corporation.
LOWNDES ANDREW SMITH* (age 59)
Director and Chairman
P.O. Box 2999
Hartford, CT 06104-2999
Mr. Smith has served as Vice Chairman of Hartford Financial Services Group, Inc.
since February, 1997, as President and Chief Executive Officer of Hartford Life,
Inc. since February, 1997, and as President and Chief Operating Officer of The
Hartford Life Insurance Companies since January, 1989. He was formerly Senior
Vice President and Group Comptroller of The Hartford Insurance Group from
1987-1989. He has been a Director of Connecticut Children's Medical Center since
1993, a Director of American Counsel of Life Insurance from 1993-1996 and
1996-present, and a Director of Insurance Marketplace Standards Association from
1996 to present. Mr. Smith is also President and a Director of HIFSCO.
JOHN KELLEY SPRINGER (age 67)
Director
225 Asylum Avenue
Hartford, CT 06103
Mr. Springer currently serves as Chairman of Medspan, Inc. From 1986 to 1997 he
served as Chief Executive Officer of Connecticut Health System, Inc. Formerly,
he served as the Chief Executive Officer of Hartford Hospital, Hartford,
Connecticut (June, 1976 - August, 1989). He is also a Director of Hartford
Hospital, and CHS Insurance Ltd. (Chairman).
-18-
<PAGE>
PETER CUMMINS (age 61)
Vice President
P. O. Box 2999
Hartford, CT 06104-2999
Mr. Cummins has served as Senior Vice President since 1997 and Vice President
since 1989 of sales and marketing of the Individual Life and Annuity Division of
The Hartford Life Insurance Company. He is also a Director and Vice President of
HIFSCO.
ANDREW WILLIAM KOHNKE (age 40)
Vice President
55 Farmington Avenue
Hartford, CT 06105
Mr. Kohnke serves as Managing Director and a Director of HIMCO. Previously he
served as Vice President of HIMCO (1986-1996) and Investment Manager for HIMCO
(1983-1986). Mr. Kohnke is also a Director and Managing Director of HL Advisors
and a Director and Vice President of HIFSCO.
THOMAS MICHAEL MARRA (age 40)
Vice President
P.O. Box 2999
Hartford, CT 06104-2999
Mr. Marra has served as an Executive Vice President since 1996, and as Senior
Vice President and Director since 1994 of the Individual Life and Annuity
Division of The Hartford Life Insurance Company. Mr. Marra is also a Director
and Executive Vice President of HIFSCO. Mr. Marra joined The Hartford Life
Insurance Company in 1980.
CHARLES MINER O'HALLORAN (age 51)
Vice President and Secretary
Hartford Plaza
Hartford, CT 06115
Mr. O'Halloran has served as Senior Vice President since January, 1998,
Corporate Secretary from 1996 to 1998, Vice President since 1994 and Senior
Associate General Counsel since 1988 of The Hartford Financial Services Group,
Inc. Mr. O'Halloran is also a Director, Secretary and General Counsel of HIMCO
and HL Advisors and a Director of HIFSCO.
-19-
<PAGE>
GEORGE RICHARD JAY (age 46)
Controller and Treasurer
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 Insurance Company since 1987.
KEVIN J. CARR (age 44)
Assistant Secretary and Counsel
55 Farmington Avenue
Hartford, CT 06105
Mr. Carr has served as Counsel since November 1996 and Associate Counsel since
November 1995, of The Hartford Financial Services Group, Inc. 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. Mr. Carr is also an Assistant Secretary of
HIFSCO and HIMCO.
CHRISTOPHER JAMES COSTA (age 34)
Assistant Secretary
P.O. Box 2999
Hartford, CT 06104-2999
Mr. Costa has served as the Tax Manager of The Hartford-Sponsored Mutual Funds
since July 1996. Formerly he served as the Tax Manager and Assistant Treasurer
of The Phoenix Mutual Funds from June 1994 to June 1996 and as a Tax Consultant
with Arthur Andersen LLP from September 1990 to June 1994.
An Audit Committee and Nominating Committee have been appointed for
each 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 The Hartford Mutual Funds, Inc., an open-end management investment
company comprised of twelve 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
-20-
<PAGE>
the fees paid by the Fund to the non-interested Directors and certain other
information as of December 31, 1998:
<TABLE>
<CAPTION>
JOSEPH A. WINIFRED E. WILLIAM A. MILLARD H. JOHN K.
BIERNAT COLEMAN O'NEILL PRYOR SPRINGER
--------- ----------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C>
COMPENSATION $18,000 $18,000 $18,000 $18,000 $18,000
RECEIVED FROM THE
FUNDS
PENSION OR $0 $0 $0 $0 $0
RETIREMENT BENEFITS
ACCRUED AS FUND
EXPENSE
TOTAL COMPENSATION $25,000 $25,000 $25,000 $25,000 $25,000
FROM THE FUNDS AND
COMPLEX PAID TO
DIRECTORS*
</TABLE>
- ----------------------
*As of December 31, 1998, there were twenty-seven funds in the Complex
(including the Funds).
OTHER INFORMATION ABOUT THE FUNDS. Each Fund, except for the Global Leaders
Fund, Growth and Income Fund and High Yield Fund, is a separate Maryland
corporation registered with the Securities and Exchange Commission as an
open-end management investment company. The Global Leaders Fund, Growth and
Income Fund and High Yield Fund are diversified series of Hartford Series Fund,
Inc., a Maryland corporation, also registered with the Securities and Exchange
Commission as an open-end management investment company. The shares of each Fund
have been divided into Class IA and Class IB. The Board of Directors may
reclassify authorized shares to increase or decrease the allocation of shares in
each Fund. The Board of Directors is also authorized, from time to time and
without further shareholder approval, to authorize additional shares of each
Fund. The organization dates of each fund are as follows: Capital Appreciation
Fund, 1983; Dividend and Growth Fund, 1994; Global Leaders Fund, 1998; Growth
and Income Fund, 1998; Index Fund, 1987; International Opportunities Fund,
1990; MidCap Fund, 1997; Small Company Fund, 1996; Stock Fund, 1977; Advisers
Fund, 1983; International Advisers Fund, 1995; Bond Fund, 1977; High Yield
Fund, 1998; Mortgage Securities Fund, 1985, and Money Market Fund, 1980.
As of January 31, 1999, the officers and directors as a group
beneficially owned less than 1% of the outstanding shares of each Fund.
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
-21-
<PAGE>
and reinvestment of the assets of the Index Fund, Mortgage Securities Fund, Bond
Fund, High Yield 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, 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, MidCap Fund,
Stock Fund, Dividend and Growth Fund, Global Leaders Fund, Growth and Income
Fund and Advisers Fund, HL Advisors has entered into an investment sub-advisory
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 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
-22-
<PAGE>
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:
<TABLE>
<CAPTION>
FUND NAME 1998 1997 1996
- --------- ---- ---- ----
<S> <C> <C> <C>
Capital Appreciation Fund $23,148,831 $18,471,888 $12,519,486
Dividend and Growth Fund $11,746,871 $6,910,062 $2,968,879
Global Leaders Fund(1) --- --- ---
Growth and Income Fund(1) --- --- ---
Index Fund $2,931,531 $1,771,465 $945,609
International Opportunities $5,838,942 $5,565,620 $4,428,186
MidCap Fund(2) $449,736 $28,186 ---
Small Company Fund $1,511,160 $657,507 $31,521
Stock Fund $15,103,808 $10,265,666 $6,450,702
Advisers Fund $43,114,112 $31,252,771 $22,209,882
International Advisers Fund $1,429,470 $926,609 $392,271
Bond Fund $2,149,809 $1,422,689 $1,152,953
High Yield Fund(1) --- --- ---
Mortgage Securities Fund $838,841 $802,900 $804,297
Money Market Fund $1,756,465 $1,436,068 $1,121,482
</TABLE>
- --------------------
(1)Portion of advisory fee waived for 1998
(2)Portion of advisory fee waived for 1997
Pursuant to the investment advisory agreement, investment sub-advisory
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 06089, was organized in 1981. As of December 31,
1998, HL Advisors had approximately $33.9 billion in assets under management. HL
Advisors is a majority owned indirect subsidiary of The Hartford. HIMCO, whose
principal business addresses is 55 Farmington Avenue, Hartford, Connecticut
06105, was organized in 1996 and is a wholly-owned
-23-
<PAGE>
subsidiary of The Hartford. HIMCO is a professional money management firm that
provides services to investment companies, employee benefit plans, its
affiliated insurance companies and other institutional accounts. As of December
31, 1998, HIMCO and its wholly-owned subsidiary had approximately $61.2 billion
in assets under management.
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, 1998, Wellington Management had investment management authority
with respect to approximately $211 billion in assets. Wellington Management is a
Massachusetts Limited Liability Partnership. The three managing partners of
Wellington Management are Robert W. Doran, Duncan M. McFarland and John R. Ryan.
The investment management agreement, investment subadvisory 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 investment subadvisory agreements
and investment services agreements may be terminated at any time without the
payment of any penalty by the Board of Directors, 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 investment subadvisory 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.
FUND ADMINISTRATION
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:
-24-
<PAGE>
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 .20% of the average daily net
assets of the Fund. In addition to the administrative services fee Hartford Life
is compensated for fund accounting services at a competitive market rate.
For the last three fiscal years, each Fund has paid the following
administrative fees to Hartford Life:
<TABLE>
<CAPTION>
FUND NAME 1998 1997 1996
- --------- ---- ---- ----
<S> <C> <C> <C>
Capital Appreciation Fund $9,497,866 $7,245,777 $4,795,769
Dividend and Growth Fund $4,656,224 $2,486,421 $965,006
Global Leaders Fund $2,027 --- ---
Growth and Income Fund $12,712 --- ---
Index Fund $2,669,517 $1,550,032 $827,408
International Opportunities $2,115,423 $1,931,542 $1,493,655
MidCap Fund $144,116 $9,636 ---
Small Company Fund $481,386 $200,110 $13,232
Stock Fund $10,675,568 $6,879,714 $4,210,075
Advisers Fund $18,087,300 $12,508,493 $8,785,932
International Advisers Fund $453,310 $282,011 $119,528
Bond Fund $1,314,094 $794,107 $636,196
High Yield Fund $6,683 --- ---
Mortgage Securities Fund $609,614 $562,030 $563,008
Money Market Fund $1,284,777 $1,005,248 $784,977
</TABLE>
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
-25-
<PAGE>
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, expenses related to
distribution activities as provided under each Fund's Rule 12b-1 distribution
plan for Class IB shares and other miscellaneous expenses related directly to
the Funds' operations and interest.
DISTRIBUTION ARRANGEMENTS
Each fund's shares are sold by Hartford Securities Distribution Company
(the "distributor") on a continuous basis to separate accounts sponsored by The
Hartford and its affiliates.
Each fund has adopted separate distribution plans (the "Plans") for
Class IB shares pursuant to appropriate resolutions of each fund's Board of
Directors in accordance with the requirements of Rule 12b-1 under the 1940 Act
and the requirements of the applicable rule of the NASD regarding asset based
sales charges.
Pursuant to the Plan, each fund may compensate the distributor for its
expenditures in financing any activity primarily intended to result in the sale
of Fund shares. The expenses of each Fund pursuant to each Plan are accrued on a
fiscal year basis and may not exceed, the annual rate of 0.25% of each Fund's
average daily net assets attributable to Class IB shares. All or any portion of
this fee may be remitted to brokers who provide distribution or shareholder
account services.
Distribution fees paid to the distributor may be spent on any
activities or expenses primarily intended to result in the sale of each fund's
shares including (a) compensation to and expenses, including overhead and
telephone expenses, of employees of the distributor engaged in the distribution
of the Class IB shares; (b) printing and mailing of prospectuses, statements of
additional information, and reports for prospective purchasers of variable
annuity or variable life insurance contracts ("Variable Contracts") investing
indirectly in Class IB shares; (c) compensation to financial intermediaries and
broker-dealers to pay or reimburse them for their services or expenses in
connection with the distribution of Variable Contracts investing indirectly in
Class IB shares; (d) expenses relating to the development, preparation,
printing, and mailing of fund advertisements, sales literature, and other
promotional materials describing and/or relating to the fund; (e) expenses of
holding seminars and sales meetings designed to promote the distribution of the
Class IB shares; (f) expenses of obtaining information and providing
explanations to Variable Contract owners regarding fund investment objectives
and policies and other information about the fund, including performance; (g)
expenses of training sales personnel regarding the fund; (h) expenses of
compensating sales personnel in connection with the allocation of cash values
and premiums of the Variable Contracts to the fund; and (i) expenses of personal
services and/or maintenance of Variable Contract accounts with respect to Class
IB shares attributable to such accounts. These plans are considered compensation
type
-26-
<PAGE>
plans which means the distributor is paid the agreed upon fee regardless of the
distributor's expenditures.
In accordance with the terms of the Plans, the distributor provides to
each Fund, for review by each fund's Board of Directors, a quarterly written
report of the amounts expended under the respective Plans and the purpose for
which such expenditures were made.
The Plans were adopted by a majority vote of the Board of Directors,
including at least a majority of Directors who are not, and were not at the time
they voted, interested persons of each fund as defined in the 1940 Act and do
not and did not have any direct or indirect financial interest in the operation
of the Plans, cast in person at a meeting called for the purpose of voting on
the Plans. In approving the Plans, the Directors identified and considered a
number of potential benefits which the Plans may provide including the potential
to increase assets in order to benefit from economics of scale. The Board of
Directors believes that there is a reasonable likelihood that the Plans will
benefit the Class IB shareholders of each Fund. Under their terms, the Plans
remain in effect from year to year provided such continuance is approved
annually by vote of the Directors in the manner described above. The Plans may
not be amended to increase materially the amount to be spent for distribution
without approval of the shareholders of each fund affected thereby, and material
amendments to the Plans must also be approved by the Board of Directors in the
manner described above. A Plan may be terminated at any time, without payment of
any penalty, by vote of the majority of the Directors who are not interested
persons of each fund and have no direct or indirect financial interest in the
operations of the Plan, or by a vote of a "majority of the outstanding voting
securities" (as defined in the 1940 Act) of each fund affected thereby. A Plan
will automatically terminate in the event of its assignment (as defined in the
1940 Act).
For the fiscal year ended December 31, 1998, the following 12b-1 fees
were paid by the Funds:
<TABLE>
<CAPTION>
FUND NAME CLASS IB SHARES
---------
<S> <C>
Capital Appreciation Fund
Dividend and Growth Fund
Global Leaders Fund
Growth and Income Fund
Index Fund
International Opportunities Fund
MidCap Fund
Small Company Fund
Stock Fund
Advisers Fund
International Advisers
Bond Fund
</TABLE>
-27-
<PAGE>
<TABLE>
<S> <C>
High Yield Fund
Mortgage Securities Fund
Money Market Fund
</TABLE>
The entire amount of 12b-1 fees listed above were paid to
broker-dealers.
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
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
-28-
<PAGE>
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:
<TABLE>
<CAPTION>
FUND NAME 1998 1997 1996
- --------- ---- ---- ----
<S> <C> <C> <C>
Capital Appreciation Fund $6,360,557 $6,257,262
Dividend and Growth Fund $1,876,099 $1,256,273
Global Leaders Fund(5) --- ---
Growth and Income Fund(5) --- ---
Index Fund $66,985 $258,946
International Opportunities Fund $4,019,255 $3,607,685
MidCap Fund(1) $18,881 ---
Small Company Fund(2) $563,124 $32,863
Stock Fund $2,552,822 $2,403,555
Advisers Fund $2,994,604 $3,413,943
International Advisers Fund $436,813 $238,356
Bond Fund(3) N/A N/A N/A
High Yield Fund(4) --- ---
Mortgage Securities Fund(3) N/A N/A N/A
Money Market Fund(3) N/A N/A N/A
</TABLE>
(1)Commenced operations in 1997.
(2)Commenced operations in 1996.
(3)No brokerage commissions were paid in 1996, 1997 or 1998 by the Bond
Fund, Mortgage Securities Fund or Money Market Fund.
(4)Commenced operations in 1998.
Changes in the amounts of brokerage commissions paid reflect changes in
portfolio turnover rates.
-29-
<PAGE>
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, Martin Luther King Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Christmas Day and
other holidays as observed by the New York Stock Exchange. 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 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 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 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.
-30-
<PAGE>
The amortized cost method of valuation permits 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
and Sale 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.
OWNERSHIP AND CAPITALIZATION OF THE FUNDS
CAPITAL STOCK
The Board of Directors is authorized, without further shareholder
approval, to authorize additional shares and to classify and reclassify the
Funds into one or more classes. Accordingly, the Directors have authorized the
issuance of two classes of shares of the Funds designated as Class IA and Class
IB shares. The shares of each class represent an interest in the same portfolio
of investments of the Funds and have equal rights as to voting, redemption, and
liquidation. However, each class bears different expenses and therefore the net
asset values of the two classes and any dividends declared may differ between
the two classes.
As of December 31, 1998, HL Advisors owned shares in the following
Funds:
-31-
<PAGE>
<TABLE>
<CAPTION>
Fund Percentage of Ownership
---- -----------------------
Class IA Class IB
-------- --------
<S> <C> <C>
Global Leaders Fund
Growth and Income Fund
High Yield Fund
</TABLE>
VOTING
Under each Fund's multi-class system, shares of each class of a Fund
represent an equal pro rata interest in that Fund and, generally, shall have
identical voting, dividend, liquidation, and other rights, preferences, powers,
restrictions, limitations, qualifications and terms and conditions, except that:
(a) each class shall have a different designation; (b) each class of shares
shall bear its "Class Expenses;" (c) each class shall have exclusive voting
rights on any matter submitted to shareholders that relates solely to its
distribution arrangements; (d) each class shall have separate voting rights on
any matter submitted to shareholders in which the interests of one class differ
from the interests of any other class; (e) each class may have separate exchange
privileges; and (f) each class may have different conversion features, although
a conversion feature is not currently contemplated. Expenses currently
designated as "Class Expenses" by the Fund's Board of Directors are currently
limited to payments made to the Distributor for the Class IB shares, pursuant to
the Distribution Plan for the Class IB shares adopted pursuant to Rule 12b-1
under the 1940 Act. Each shareholder is entitled to one vote for each share of
the Funds held upon all matters submitted to the shareholders generally. Class
specific issues, such as a modification to a Rule 12b-1 plan for Class IB shares
that could materially increase fees, will be voted on only by the affected
class. Hartford Life, or its affiliates, is the shareholder of record for all
funds. Hartford Life 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 "Purchase 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.
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
-32-
<PAGE>
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 PERFORMANCE
MONEY MARKET FUNDS
In accordance with regulations prescribed by the SEC, the Fund is
required to compute 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 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
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 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.
Hartford Money Market HLS 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
-33-
<PAGE>
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, 1998.
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: $1.000918
*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.
<TABLE>
<S> <C>
Calculation:
Ending account value $1.000918
Less beginning account value 1.000000
Net change in account value $.000918
Base period return:
(adjusted change/beginning account value)
$.000918/$1.000000 = $.000918
Current yield = $.000918 X (365/7) = 4.79%
Effective yield = (1 + .000918)^(365/7) - 1 = 4.90%
</TABLE>
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.
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 a
-34-
<PAGE>
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:
<TABLE>
<S> <C> <C> <C>
P = a hypothetical initial payment of n = number of years
$1,000, less the maximum sales load
applicable to a Fund
T = average annual total return ERV = ending redeemable value of the
hypothetical $1,000 initial payment
made at the beginning of the
designated period (or fractional
portion thereof)
</TABLE>
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.
-35-
<PAGE>
In contrast to Class IA shares, the Class IB shares are new and charge
12b-1 fees to cover distribution expenses. Because the historical performance of
Class IA shares may be helpful to a prospective investor's decision, the Funds
may advertise standard average annual total return for Class IA shares and, when
available, Class IB shares.
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:
<TABLE>
<S> <C> <C> <C>
a = net investment income earned during c = the average daily number of shares of
the period attributable to the subject the subject class outstanding during
class the period that were entitled to
receive dividends
b = net expenses accrued for the period d = the maximum offering price per share
attributable to the subject class of the subject
</TABLE>
Net investment income will be determined in accordance with rules established by
the SEC.
-36-
<PAGE>
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
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 & Poor's MidCap 400 Index is designed to represent price
movements in the mid cap U.S. equity market. It contains companies chosen by the
Standard & Poors Index Committee for their size, liquidity and industry
representation. None of the companies in the S&P 400 overlap with those in the
S&P 500 Index or the S&P 600 Index. Decisions about stocks to be included and
deleted are made by the Committee which meets on a regular basis. S&P 400 stocks
are market cap weighted; each stock influences the Index in proportion to its
relative market cap. REITs are not eligible for inclusion.
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.
-37-
<PAGE>
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.
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
-38-
<PAGE>
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.
Each Fund's investment performance may be advertised in various
financial publications, newspapers, magazines including the following:
<TABLE>
<S> <C> <C>
Across the Board Changing Times Insurance Review
Advertising Age Consumer Reports Investor's
Adviser' Magazine Consumer Digest Insurance Times
Adweek Crain's Insurance Week
Agent Dow Jones News Service Insurance Product News
American Banker Economist Insurance Sales
American Agent and Broker Entrepreneur Investment Dealers Digest
Associated Press Entrepreneurial Woman Investment Advisor
Barron's Financial Services Week Journal of Commerce
Best's Review Financial World Journal of Accountancy
Bloomberg Financial Planning Journal of the American
Broker World Financial Times Society of CLU &
Business Week Forbes ChFC
Business Wire Fortune Kiplinger's Personal
Business News Features Hartford Courant Finance
Business Month Inc Knight-Ridder
Business Marketing Independent Business Life Association News
Business Daily Institutional Investor Life Insurance Selling
Business Insurance Insurance Forum Life Times
California Broker Insurance Advocate LIMRA's MarketFacts
Independent
</TABLE>
-39-
<PAGE>
<TABLE>
<S> <C> <C>
Lipper Analytical Services, Pensions & Investments Tillinghast
Inc. Professional Insurance Time
MarketFacts Agents U.S. News & World Report
Medical Economics Professional Agent U.S. Banker
Money Registered Representative United Press International
Morningstar, Inc. Reuter's USA Today
Nation's Business Rough Notes Value Line
National Underwriter Round the Table Wall Street Journal
New Choices (formerly 50 Service Wiesenberger Investment
Plus) Success Working Woman
New England Business The Standard
New York Times The Boston Globe
Pension World The Washington Post
</TABLE>
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, 1998.
<TABLE>
<CAPTION>
TOTAL RETURN YIELD
----------------------------------------------------- ----------
FUND SINCE 1 YEAR 5 YEARS 10 YEARS SEC 30-DAY
------- ------ ------- -------- ----------
(INCEPTION DATE) INCEPTION YIELD
- ---------------- --------- -----
<S> <C> <C> <C> <C>
Capital Appreciation
Class IA (April 2, 1984) 17.56% 15.48% 17.89% 18.55%
Class IB (April 1, 1998) 1.65% N/A N/A N/A
Dividend and Growth
Class IA (March 8, 1994) 22.18% 16.42% N/A N/A
Class IB (April 1, 1998) 3.67% N/A N/A N/A
Global Leaders
Class IA (September 30, 1998) 31.88%* N/A N/A N/A
Class IB (September 30, 1998) 31.82%* N/A N/A N/A
Growth and Income
Class IA (May 29, 1998) 19.05%* N/A N/A N/A
Class IB (May 29, 1998) 9.78%* N/A N/A N/A
Index
Class IA (May 1, 1987) 15.64% 28.06% 23.37% 18.36%
Class IB (April 1, 1998) N/A N/A N/A N/A
International Opportunities
Class IA (July 2, 1990) 7.33% 13.16% 7.45% N/A
Class IB (April 1, 1998) -1.13% N/A N/A N/A
MidCap Fund
Class IA (July 15, 1997) 28.28% 26.57% N/A N/A
</TABLE>
-40-
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Class IB (April 1, 1998) N/A N/A N/A N/A
Small Company
Class IA (August 9, 1996) 15.63% 11.62% N/A N/A
Class IB (April 1, 1998) -1.30% N/A N/A N/A
Stock
Class IA (August 31, 1977) 16.12% 33.47% 23.47% 18.48%
Class IB (April 1, 1998) 14.91% N/A N/A N/A
Advisers
Class IA (March 31, 1983) 13.90% 24.66% 17.70% 15.08%
Class IB (April 1, 1998) 11.96% N/A N/A N/A
International Advisers
Class IA (March 1, 1995) 12.07% 13.35% N/A N/A
Class IB (April 1, 1998) N/A N/A N/A N/A
Bond
Class IA (August 31, 1977) 9.04% 8.15% 7.25% 8.86% 5.92%
Class IB (April 1, 1998) 5.89% N/A N/A N/A 5.72%
High Yield
Class IA (September 30, 1998) 3.58%* N/A N/A N/A 8.90%
Class IB (September 30, 1998) 3.53%* N/A N/A N/A 8.65%
Mortgage Securities
Class IA (January 1, 1985) 8.89% 6.72% 6.92% 8.27% 6.15%
Class IB (April 1, 1998) N/A N/A N/A N/A
Money Market
Class IA (June 30, 1980) 7.52% 5.25% 5.11% 5.53% 4.75%
Class IB (April 1, 1998) 3.77% N/A N/A N/A 4.57%
</TABLE>
*Not Annualized
The Funds are offered exclusively through variable insurance products.
Performance information presented for the Funds should not be compared directly
with performance information of other insurance products without taking into
account insurance-related charges and expenses payable with respect to these
insurance products. Insurance related charges and expenses are not reflected in
the Funds' performance information and will reduce an investor's return under
the insurance product.
-41-
<PAGE>
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 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.
-42-
<PAGE>
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.
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
-43-
<PAGE>
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.
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,
225 Franklin Street, Boston, MA 02110.
TRANSFER AGENT SERVICES
Hartford Life Insurance Company, 200 Hopmeadow Street, Simsbury, CT
06089, 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.
DISTRIBUTOR
Hartford Securities Distribution Company, 200 Hopmeadow Street,
Simsbury, Connecticut 06089, acts as the Fund's Distributor.
-44-
<PAGE>
INDEPENDENT PUBLIC ACCOUNTANTS
The financial statements and financial highlights as of December 31,
1998 and for the year then ended, included in this SAI, have been audited by
Arthur Andersen LLP, independent public accountants, as stated in their report
appearing herein.
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, 1998 and
for the year then ended, together with the notes thereto and the report of
Arthur Andersen LLP, independent public accountants, are attached to this SAI.
-45-
<PAGE>
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.
<PAGE>
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 rating
organizations) rating services and will be an eligible security under Rule 2a-7.
<PAGE>
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:
<PAGE>
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>
PART C
OTHER INFORMATION
Item 23. Exhibits
a.(i) Articles of Incorporation (1)
a.(ii) Articles Supplementary(7)
b. By-Laws(1)
c. Not Applicable
d.(i) Form of Investment Management Agreement(2)
d.(ii) Form of Investment Sub-Advisory Agreement(2)
e. Form of Principal Underwriting Agreement(5)
f. Not Applicable
g.(i) Form of Custodian Agreement(1)
g.(ii) Form of Custodian Agreement with Chase Manhattan Bank(3)
g.(iii) Form of Custodian Agreement with State Street Bank and
Trust Company(4)
h.(i) Form of Administrative Services Agreement(2)
h.(ii) Form of Share Purchase Agreement(1)
i. Opinion and Consent of Counsel(8)
j. Consent of Independent Public Accountants(8)
k. 1998 Annual Report to Shareholders' Financial Statements(6)
l. Not Applicable
m. Form of Rule 12b-1 Distribution Plan(5)
n. Financial Data Schedules(8)
o. Form of Multi-Class Plan Pursuant to Rule 18f-3(5)
p. Powers of Attorney(7)
- -------------------------
(1) Previously filed as exhibit to Registrant's Registration Statement filed on
October 12, 1994.
(2) Previously filed as exhibit to Registrant's Pre-Effective Amendment #1
filed on February 6, 1995.
(3) reviously filed as exhibit to Registrant's Post-Effective Amendment #1
filed on April 23, 1996.
(4) Previously filed as exhibit to Registrant's Post-Effective Amendment #2
filed on April 10, 1997.
(5) Previously filed as exhibit to Registrant's Post-Effective Amendment #3
filed on November 19, 1997.
(6) Incorporated by reference to Registrant's filing pursuant to Rule 30d-1 of
the Investment Company Act of 1940.
(7) Previously filed as exhibit to Registrant's Post-Effective Amendment #4
filed on April 17, 1998.
(8) To be filed by amendment.
<PAGE>
Item 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Inapplicable
Item 25. INDEMNIFICATION
Article EIGHTH of the Articles of Incorporation provides:
EIGHTH: (a) The Corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the
right of the corporation) by reason of the fact that he is or was a
Director, Officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a Director or Officer of
another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to
any criminal action or proceeding, has no reasonable cause to believe
his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement, conviction, or upon a plea
of nolo contendere or its equivalent, creates a rebuttable presumption
that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interest of
the Corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was
unlawful.
(b) The Corporation shall indemnify any person who was or is party or
is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to
procure, a judgment in its favor by reason of the fact that he is or
was a Director, Officer, employee or agent of the Corporation, or is
or was serving at the request of the Corporation as a Director,
Officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including
attorney's fees) actually and reasonably incurred by him in connection
with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Corporation. No indemnification
shall be made in respect of any claim, issue or matter as to which
such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the Corporation.
(c) To the extent that a Director, Officer, employee or agent of the
Corporation has been successful on the merits or otherwise in defense
of any action, suit or proceeding referred to in subsections (a) and
(b), or in defense of any claim, issue
<PAGE>
or matter therein, he shall be indemnified against expenses (including
attorney's fees) actually and reasonably incurred by him in connection
therewith.
(d) Any indemnification under subsections (a) and (b) (unless ordered
by a court) shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of the
Director, Officer, employee or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in
subsections (a) and (b). Such determination shall be made (1) by the
Board of Directors by a majority vote of a quorum consisting of
Directors who were neither interested persons nor parties to such
action suit or proceeding, or (2) if such quorum is not obtainable, or
even if obtainable a quorum of disinterested Directors so directs, by
independent legal counsel in a written opinion.
(e) Expenses incurred in defending civil or criminal action, suit or
proceeding may be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding as authorized by the
Board of Directors in the specific case upon receipt of an undertaking
by or on behalf of the Director, Officer, employee or agent to repay
such amount unless it shall ultimately be determined that he is
entitled to be indemnified by the Corporation as authorized in this
Article and upon meeting one of the following conditions:
(i) the indemnitee shall provide a security for his undertaking,
(ii) the investment company shall be insured against losses
arising by reason of any lawful advances, or (iii) a majority of
a quorum of the disinterested, non-party Directors of the
investment company, or an independent legal counsel in a written
opinion, shall determine, based on a review of readily available
facts (as opposed to a full trial-type inquiry), that there is
reason to believe that the indemnitee ultimately will be found
entitled to indemnification.
(f) The corporation may purchase and maintain insurance on behalf of
any person who is or was a Director, Officer, employee or agent of
the Corporation, or is or was serving at the request of the
Corporation as a Director, Officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise
against any liability asserted against him and incurred by him in
any such capacity, or arising out of his status as such.
(g) Anything to the contrary in the foregoing clauses (a) through (f)
notwithstanding, no Director or Officer shall be indemnified by
the Corporation and no insurance policy obtained by the
Corporation will protect or attempt to protect any such person
against any liability to the Corporation or to its security
holders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the
<PAGE>
conduct of his office, or in a manner inconsistent with Securities and
Exchange Commission Release 11330 under the Investment Company Act of
1940.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person in
connection with the securities being registered), the registrant
undertakes that it will, unless in the opinion of its counsel the
matter has been settled by controlling precedent submit to a court of
appropriate jurisdiction the questions whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
Item 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
<TABLE>
<CAPTION>
POSITION WITH HL
NAME INVESTMENT ADVISORS, INC. OTHER BUSINESS
---- ------------------------- --------------
<S> <C> <C>
Joseph H. Gareau President Executive Vice President and Director of
Hartford Investment Financial Services
Company(1) ("HIFSCO"); President and
Director of The Hartford Investment
Management Company(2) ("HIMCO")
Andrew W. Kohnke Managing Director Vice President and Director of HIFSCO;
and Director Managing Director and Director of HIMCO
Bruce J. MacLean Managing Director Managing Director and Director of HIMCO
and Director
Donald E. Waggaman, Jr. Managing Director Managing Director and Director of HIMCO
and Director
Charles M. O'Halloran Director Senior Vice President and Corporate
Secretary of The Hartford Financial
Services Group, Inc.(3) ("The Hartford");
Director of HIFSCO and HIMCO
Edmund V. Mahoney Chief Compliance Vice President of HIMCO
Officer
</TABLE>
<PAGE>
Item 27. PRINCIPAL UNDERWRITERS
Hartford Securities Distribution Company, Inc. ("HSD") is an indirect
wholly owned subsidiary of The Hartford Financial Services Group, Inc. HSD
is the principal underwriter for the following registered investment companies:
<TABLE>
<S><C>
Hartford Life Insurance
Company DC Variable Account I
Separate Account Two (DC Variable Account II)
Separate Account Two (Variable Account "A")
Separate Account Two (QP Variable Account)
Separate Account Two (NQ Variable Account)
Putnam Capital Manager Trust Separate Account
Separate Account One
Separate Account Two
Separate Account Three
Separate Account Five
Hartford Life and Annuity
Insurance Company Separate Account One
Separate Account Three
Separate Account Five
Separate Account Six
Putnam Capital Manager Trust Separate Account Two
American Maturity Life
Insurance Company Separate Account American Maturity Life Variable Annuity
</TABLE>
The Directors and principal officers of HSD and their position with the
Registrant are as follows:
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITION AND OFFICES
BUSINESS ADDRESS* POSITIONS AND OFFICES WITH UNDERWRITER WITH REGISTRANT
----------------- -------------------------------------- ---------------
<S> <C> <C>
Peter Cummins Senior Vice-President Vice President
Lynda Godkin Senior Vice President, General Counsel None
and Corporate Secretary
George Jay Controller & Fin. Principal Controller & Treasurer
Stephen T. Joyce Asst. Secretary None
Glen J. Kvadus Asst. Secretary None
Thomas M. Marra Exec. Vice-Pres. Vice President
Paul Eugene Olson Supv. Registered Principal None
Edward M. Ryan, Jr. Asst. Secretary None
Lowndes A. Smith President and CEO Chairman
Donald W. Waggaman, Jr. Treasurer None
</TABLE>
<PAGE>
* Principal business address is P.O. Box 2999, Hartford, CT 06104-2999
Item 28. LOCATION OF ACCOUNTS AND 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 29. MANAGEMENT SERVICES
Not Applicable
Item 30. UNDERTAKINGS
Not Applicable
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 the Registrant 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 8th day of
February, 1999.
HARTFORD INTERNATIONAL ADVISERS HLS 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 February 8, 1999
- ------------------------- (Chief Executive Officer
Joseph H. Gareau & Director)
* Controller & Treasurer February 8, 1999
- ------------------------- (Chief Accounting Officer &
George R. Jay Chief Financial Officer)
* Director February 8, 1999
- -------------------------
Joseph A. Biernat
* Director February 8, 1999
- -------------------------
Winifred E. Coleman
* Director February 8, 1999
- -------------------------
William A. O'Neill
<PAGE>
* Director February 8, 1999
- -------------------------
Millard H. Pryor, Jr.
* Director February 8, 1999
- -------------------------
Lowndes A. Smith
* Director February 8, 1999
- -------------------------
John K. Springer
/s/ Kevin J. Carr February 8, 1999
- -------------------------
* By Kevin J. Carr
Attorney-in-fact
