TABLE OF CONTENTS
- LETTER FROM THE CHAIRMAN 1
- FUND MANAGER DISCUSSIONS 2
- PORTFOLIOS AT A GLANCE 9
- FINANCIAL STATEMENTS 13
A MESSAGE FROM THE CHAIRMAN
Dear Fellow Mutual Fund Investor:
A little more than six months ago, The Hartford rounded
out its financial services portfolio with eight new
mutual funds, The ITT Hartford Family of Funds. With the
addition of the mutual fund family to our existing
variable annuity and variable life products, which total
over $15 billion in assets under management as of Dec.
31, 1996, The Hartford has a financial product for all
cycles of your life.
Since their introduction, the mutual funds have been
warmly received not only by financial advisers and market
analysts, but more importantly, by you, our investors. I
attribute our early and impressive success to a variety
of factors -- all of them based on our commitment to
clients.
First, although our mutual funds are a new venture, The
Hartford is by no means a stranger to helping families
prepare for financial challenges. The Hartford is one of
the nation's oldest and most trusted names in financial
services. Second, our funds are supported by two
respected money managers -- Wellington Management
Company, LLP and The Hartford Investment Management
Company (HIMCO). Both companies enjoy a long and enviable
track record of investment management performance.
But ultimately, the success of our funds is measured by a
single yardstick: the achievement of your financial
goals. And in the past six months, we've seen early
evidence of solid performance in support of those goals.
I'm confident that the ITT Hartford Family of Mutual
Funds will continue to provide first-rate value for 1997,
as we strive to offer you the best possible returns on
your investment.
As an ITT Hartford Mutual Fund investor, I believe the
future holds enormous potential for our family of mutual
funds. By combining prudent money management, the
historically successful approach of long-term investing,
and a commitment to serve our customers, we are
well-positioned to participate in the growth of the
financial markets.
We appreciate your business, and welcome the opportunity
to provide important investment opportunities for you and
your family in the years to come.
Sincerely,
/s/ Lowndes A. Smith
Lowndes A. Smith
Director and Chairman
ITT Hartford Mutual Funds
CHAIRMAN
[PHOTO]
LOWNDES A. SMITH
ITT HARTFORD MUTUTAL FUNDS
-1-
ITT HARTFORD SMALL COMPANY FUND
PERFORMANCE Q. HOW DID THE FUND PERFORM?
OVERVIEW -
7/22/96 - Since the Fund's inception on 7/22/96, The ITT Hartford
12/31/96 Small Company Fund has performed in line with its Lipper
GROWTH OF A peer group average. The Fund's total returns were -1.2%
$10,000 for the fourth quarter ended 12/31/96 and 14.1% since
INVESTMENT inception versus 2.5% and 13.0%, respectively, for the
Lipper Small Company Growth Mutual Fund Average.
(FUND
INVESTMENT Q. WHY DID THE FUND PERFORM THIS WAY?
REFLECTS
SALES CHARGE) In recent months, the top performing industry group
within the Fund has been specialty finance. Our
[Graph] investment selections within the group continued to post
strong earnings gains, and the market rewarded them with
higher valuations. A disappointment within the Fund has
been our holdings in the specialty retail group, as our
expectations for this group have not yet been realized.
Recent additions to the Fund included names in the
restaurant group. Restaurants have seriously under
performed the market for the last two years, as worries
about labor pressures and over-expansion have persisted.
We believe these worries to be overstated and are adding
some quality names that represent excellent value, such
as Brinker International, the creator of Chili's
Restaurants, and Rally's Hamburgers. We recently
eliminated Bergen Brunswick and replaced it with McKesson
Corp., which we believe made a brilliant acquisition of
competitor Foxmeyer.
Q. WHAT IS YOUR OUTLOOK FOR 1997?
Nineteen-ninety six was a year marked by significant
under performance of small-capitalization stocks (the
Russell 2000) versus their large capitalization peers
(S&P 500). We believe this gap in performance is poised
to close in 1997, benefiting the Fund. Third quarter
earnings numbers posted by our companies and their
prospects for future growth are encouraging, and with a
strong economy as a backdrop we look forward to
improvement in 1997. Our portfolio investment approach is
driven by fundamental research of small companies. We
build the portfolio one stock at a time and have an
eclectic mix of companies. We strive to keep the
portfolio fully invested and currently find no shortage
of exciting investment ideas. As always, our emphasis is
on finding the best 80+ stocks that fit within our 3-5
year investment horizon.
PORTFOLIO MANAGER
KENNETH L. ABRAMS
SENIOR VICE PRESIDENT AND PARTNER [PHOTO]
WELLINGTON MANAGEMENT COMPANY, LLP
CUMULATIVE RETURNS
SINCE INCEPTION 7/22/96(3)
SMALL CO "A" 14.11%(1) 7.83%(2) $10,783
SMALL CO "B" 13.81%(1) 8.81%(2)
RUSSELL 2000 15.03% $11,503
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE
SMALL COMPANY FUND. PAST PERFORMANCE DOES NOT GUARANTEE
FUTURE RESULTS. THE VALUE OF SHARES WILL FLUCTUATE SO
THAT WHEN REDEEMED, SHARES MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST.
(1)PERFORMANCE RESULTS DO NOT REFLECT SALES CHARGE.
(2)THE INITIAL INVESTMENT IN CLASS A AND B SHARES
REFLECTS THE MAXIMUM SALES CHARGE AND CDSC, RESPECTIVELY.
A $10,000 INVESTMENT IN THE FUND'S CLASS B SHARES AT
INCEPTION ON 7/22/96 WOULD HAVE BEEN VALUED AT $11,381 ON
12/31/96 ($10,881 WITH A REDEMPTION AT THE END OF THE
PERIOD.)
(3)THE ITT HARTFORD MUTUAL FUNDS WERE SEEDED ON 7/1/96
AND BECAME EFFECTIVE AND OPEN FOR INVESTMENT ON 7/22/96.
PERFORMANCE RESULTS AND DISCUSSION ON PAGES 2-12 REFLECT
INVESTMENT ACTIVITY SINCE THE FUNDS BECAME OPEN FOR
INVESTMENT ON 7/22/96.
-2-
ITT HARTFORD CAPITAL APPRECIATION FUND
Q. HOW DID THE FUND PERFORM?
PERFORMANCE The ITT Hartford Capital Appreciation Fund greatly
OVERVIEW - exceeded its Lipper peer group average for both the
7/22/96 - fourth quarter ended 12/31/96 and since its inception on
12/31/96 7/22/96. The Fund's total returns were 15.2% for the
GROWTH OF A fourth quarter and 37.8% since inception versus 2.5% and
$10,000 13.6%, respectively for the Lipper Capital Appreciation
INVESTMENT Mutual Fund Average. This performance has exceeded both
large- and small-company benchmarks for the quarter and
(FUND inception-to-date periods.
INVESTMENT
REFLECTS Q. WHY DID THE FUND PERFORM THIS WAY?
SALES CHARGE)
The Fund's successes in recent months were concentrated
[Graph] in the technology area. One of our top ten holdings at
year-end was Adaptec, a well managed manufacturer of
computer components which continued to exceed investor
expectations. Our top gainer, Allegiance Corp., a
hospital products distributor, rose as investors focused
on the company's favorable prospects following its
spin-off from Baxter International. On the downside, Oak
Industries, a supplier of components for communications
infrastructure, declined when Telecommunications, Inc., a
major customer, sharply reduced its capital spending
plans for 1997. Fortunately, the Fund owns a meaningful
position in Telecommunications, Inc., and that stock has
performed well as a result of these steps.
Q. WHAT IS YOUR OUTLOOK FOR 1997?
The overall strategy of the Fund is dual-faceted. We
maintain an emphasis on medium and smaller companies with
dynamic earnings growth prospects, along with larger
companies where we typically see a catalyst for out
performance going forward. We have tended to roam off the
beaten path pursuing opportunities where we often have a
view that differs from that of the overall investment
community. This strategy has served us well and we will
continue to implement it in 1997.
PORTFOLIO MANAGER
SAUL J. PANNELL, CFA [PHOTO]
SENIOR VICE PRESIDENT AND PARTNER
WELLINGTON MANAGEMENT COMPANY, LLP
CUMULATIVE RETURNS
SINCE INCEPTION 7/22/96
CAP APP "A" 37.75%(1) 30.17%(2) $13,017
CAP APP "B" 37.35%(1) 32.35%(2)
S&P 500 18.05% $11,805
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE
CAPITAL APPRECIATION FUND. PAST PERFORMANCE DOES
NOT GUARANTEE FUTURE RESULTS. THE VALUE OF SHARES WILL
FLUCTUATE SO THAT WHEN REDEEMED, SHARES MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST.
(1)PERFORMANCE RESULTS DO NOT REFLECT SALES CHARGE.
(2)THE INITIAL INVESTMENT IN CLASS A AND B SHARES REFLECTS
THE MAXIMUM SALES CHARGE AND CDSC, RESPECTIVELY.
A $10,000 INVESTMENT IN THE FUND'S CLASS B SHARES AT
INCEPTION ON 7/22/96 WOULD HAVE BEEN VALUED AT $13,735 ON
12/31/96 ($13,235 WITH A REDEMPTION AT THE END OF THE
PERIOD.)
-3-
ITT HARTFORD INTERNATIONAL OPPORTUNITIES
Q. HOW DID THE FUND PERFORM?
PERFORMANCE The ITT Hartford International Opportunities Fund
OVERVIEW - outperformed its Lipper peer group average for the fourth
7/22/96 - quarter ended 12/31/96 and since the Fund's inception on
12/31/96 7/22/96. The Fund's total returns were 5.8% for the
GROWTH OF A fourth quarter and 8.1% since inception versus 3.9% and
$10,000 6.9%, respectively, for the Lipper International Mutual
INVESTMENT Fund Average.
(FUND Q. WHY DID THE FUND PERFORM THIS WAY?
INVESTMENT
REFLECTS Looking at the Fund's positioning around the globe, our
SALES CHARGE) overweighting in Europe bolstered returns as these
markets were driven by falling interest rates and
[Graph] earnings acceleration. Some of our best performing
holdings included Nokia, one of the world's leading
manufacturers of cellular telephone handsets, British
Telecom, which was helped by its merger with MCI, and
Powergen, which announced a second stock repurchase plan.
Nineteen-ninety six was not as good, however, for the
Japanese market, as local investors became increasingly
pessimistic about the country's future economic growth
and the potentially negative impact of deregulation on
their financial system. Fortunately, both our under
weighting in Japan and strong security selection assisted
in the Fund's relative out performance. One recent
addition in Japan was our purchase of NGK Spark Plugs,
one of the few companies with the technology to provide
Intel with the ceramic packaging used in its new
processors. The Fund also benefited from strong
performances in a number of markets in the Pacific Basin,
including Hong Kong, Australia, New Zealand, Malaysia and
Taiwan.
Q. WHAT IS YOUR OUTLOOK FOR 1997?
We plan to maintain an overweight position in continental
Europe, where economies are gradually accelerating due to
the effects of stimulative monetary policies and more
competitive currency levels. While our overall view on
Japan remains relatively cautious, much of our data
indicates a continuation of moderate economic growth and
low inflation. We will use the excessive pessimism this
market exhibits to buy selectively on weakness. As we
head into 1997, the Fund remains well diversified across
international countries and we will continue to focus on
economic and demographic trends which we expect will
translate into a wide array of investment opportunities
for our shareholders.
DIRECTOR OF WELLINGTON MANAGEMENT
EQUITY STRATEGY GROUP
TROND SKRAMSTAD [PHOTO]
SENIOR VICE PRESIDENT
AND PARTNER
WELLINGTON MANAGEMENT
COMPANY, LLP
CUMULATIVE RETURNS
SINCE INCEPTION 7/22/96
INTL "A" 8.14%(1) 2.20%(2) $10,220
INTL "B" 7.86%(1) 2.86%(2)
EAFE GDP 5.82% $10,582
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE
INTERNATIONAL OPPORTUNITIES FUND. PAST PERFORMANCE DOES
NOT GUARANTEE FUTURE RESULTS. THE VALUE OF SHARES WILL
FLUCTUATE SO THAT WHEN REDEEMED, SHARES MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST.
(1)PERFORMANCE RESULTS DO NOT REFLECT SALES CHARGE.
(2)THE INITIAL INVESTMENT IN CLASS A AND B SHARES REFLECTS
THE MAXIMUM SALES CHARGE AND CDSC, RESPECTIVELY.
A $10,000 INVESTMENT IN THE FUND'S CLASS B CHARES AT
INCEPTION ON 7/22/96 WOULD HAVE BEEN VALUED AT $10,786 ON
12/31/96 ($10,286 WITH A REDEMPTION AT THE END OF THE
PERIOD.)
-4-
ITT HARTFORD STOCK FUND
PERFORMANCE Q. HOW DID THE FUND PERFORM?
OVERVIEW -
7/22/96 - The ITT Hartford Stock Fund outperformed its Lipper peer group
12/31/96 average for the fourth quarter ended 12/31/96 and modestly
GROWTH OF A under performed since the Fund's inception (7/22/96). The
$10,000 Fund's total returns were 7.3% for the fourth quarter and
INVESTMENT 15.5% since inception versus 5.1% and 15.9%, respectively, for
the Lipper Growth Mutual Fund Average.
(FUND
INVESTMENT Q. WHY DID THE FUND PERFORM THIS WAY?
REFLECTS
SALES CHARGE) Nineteen-ninety six was a year in which "a rising tide did not
lift all boats," so stock picking was very important. For
[Graph] example: in semiconductors, Intel was up over 130% while Texas
Instruments rose only 30%; in computers, IBM climbed 70% while
Hewlett Packard increased only 23%; in pharmaceuticals, Warner
Lambert was up 60% while Amgen was down 5%. Happily, Intel,
IBM and Warner Lambert were all held by the Fund since its
inception in July. Our emphasis on industry sectors that we
expect to grow faster than the overall economy was also a
significant benefit to the Fund in 1996. Our overweight
positions in some of the best performing groups, including
technology, financial services, health care and aerospace,
were strong contributors to total return. Fund performance was
also bolstered by acquisition bids on three of our holdings:
U.S. Healthcare, Conrail and MCI.
Q. WHAT IS YOUR OUTLOOK FOR 1997?
Going forward, we remain optimistic about the U.S. equity
market. Stocks should continue to perform well as corporate
earnings growth continues, with the Fund's focus on those
companies with superior growth potential and reasonable
valuations. We expect cash flows into the market to remain
strong and takeover activity to continue. We also expect
companies to continue to be aggressive buyers of their own
stocks. While 1995 and 1996 have been spectacular back-to-back
years for US stocks, we see continued support for the market
on an event such as a significant change in the current
economic environment causing interest rates to begin a
sustained move upward.
PORTFOLIO MANAGER
RAND L. ALEXANDER, CFA [PHOTO]
SENIOR VICE PREIDENT AND PARTNER
WELLINGTON MANAGEMENT COMPANY, LLP
CUMULATIVE RETURNS
SINCE INCEPTION 7/22/96
STOCK "A" 15.50%(1) 9.15%(2) $10,915
STOCK "B" 15.20%(1) 10.20%(2)
S&P 500 18.05% $11,805
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE STOCK
FUND. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE
VALUE OF SHARES WILL FLUCTUATE SO THAT WHEN REDEEMED, SHARES
MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
(1) PERFORMANCE RESULTS DO NOT REFLECT SALES CHARGE.
(2) THE INITIAL INVESTMENT IN CLASS A AND B SHARES REFLECTS
THE MAXIMUM SALES CHARGE AND CDSC, RESPECTIVELY.
A $10,000 INVESTMENT IN THE FUND'S CLASS B SHARES AT INCEPTION
ON 7/22/96 WOULD HAVE BEEN VALUED AT $11,520 ON 12/31/96
($11,020 WITH A REDEMPTION AT THE END OF THE PERIOD.)
-5-
ITT HARTFORD DIVIDEND AND GROWTH FUND
Q. HOW DID THE FUND PERFORM?
PERFORMANCE Results for the ITT Hartford Dividend and Growth Fund were
OVERVIEW - competitive in 1996, with returns in line with its Lipper peer
7/22/96 - group average. The Fund provided a total return of 7.4% for
12/31/96 the fourth quarter ended 12/31/96 and 15.3% since inception
GROWTH OF A (7/22/96). This compares to returns of 7.5% and 15.1% for
$10,000 those two periods respectively for the Lipper Equity Income
INVESTMENT Mutual Fund Average.
(FUND Q. WHY DID THE FUND PERFORM THIS WAY?
INVESTMENT
REFLECTS In recent months, "value" stocks as measured by the Russell
SALES CHARGE) 1000 Value Index outperformed "growth" stocks as measured by
the Russell 1000 Growth index. Given our value-oriented
[Graph] approach, this environment benefited the Fund. During the
quarter, we sold Pfizer, one of the Fund's largest holdings
that had reached our price target. We replaced this position
with Pharmacia & Upjohn, based on its strong, but less
well-recognized product distribution pipeline, and attractive
valuation. We also established a new position in Sears during
the quarter based on the following factors: retail operations
have been and should continue to be strong; cost cutting and
productivity enhancements should continue to play out in
earnings growth; and their focus on off-the-mall hardware
stores should provide a new avenue for growth. Significant
individual contributors to the Fund's performance since
inception were Warner Lambert, Merck, Citicorp and Exxon, all
of which were top ten holdings as of year end.
Q. WHAT IS YOUR OUTLOOK FOR 1997?
The ongoing focus of the Fund is on stock selection; we
maintain broad diversification across U.S. economic sectors.
In addition, compared to the S&P 500, the Fund has a
higher-than-average dividend yield, a lower-than-average
price-to-earnings ratio (a measure of relative valuation) and
a lower-than-average beta (a measure of risk, or volatility).
We expect the Fund to exhibit these value-oriented
characteristics consistently over time. Although the U.S.
economic expansion is now almost six years old, it still shows
few signs of excess. Moderate growth and low inflation have
led to a relatively stable interest rate environment.
Corporate profits, driven by a continuing focus on cost
control and productivity gains, should show moderate gains
again in 1997. In short, the backdrop is constructive for
equities.
PORTFOLIO MANAGER
LAURIE A. GABRIEL, CFA [PHOTO]
SENIOR VICE PRESIDENT AND PARTNER
WELLINGTON MANAGEMENT COMPANY, LLP
CUMULATIVE RETURNS
SINCE INCEPTION 7/22/96
DIV & GRO "A" 15.29%(1) 8.95%(2) $10,895
DIV & GRO "B" 14.82%(1) 9.82%(2)
S&P 500 18.05% $11,805
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE DIVIDEND
AND GROWTH FUND. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE
RESULTS. THE VALUE OF SHARES WILL FLUCTUATE SO THAT WHEN
REDEEMED, SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
(1) PERFORMANCE RESULTS DO NOT REFLECT SALES CHARGE.
(2) THE INITIAL INVESTMENT IN CLASS A AND B SHARES REFLECTS
THE MAXIMUM SALES CHARGE AND CDSC, RESPECTIVELY.
A $10,000 INVESTMENT IN THE FUND'S CLASS B SHARES AT INCEPTION
ON 7/22/96 WOULD HAVE BEEN VALUED AT $11,482 ON 12/31/96
($10,982 WITH A REDEMPTION AT THE END OF THE PERIOD.)
-6-
ITT HARTFORD ADVISERS FUND
Q. HOW DID THE FUND PERFORM?
PERFORMANCE In its startup phase, the ITT Hartford Advisers Fund
OVERVIEW - outperformed its Lipper peer group average for the quarter
7/22/96 - ended 12/31/96 and since inception (7/22/96), providing total
12/31/96 returns of 6.0% and 11.6% respectively, versus 5.2% and 11.4%
GROWTH OF A for the Lipper Flexible Mutual Fund average. Clearly the most
$10,000 significant contributor to total return for the Fund in 1996
INVESTMENT was its overweighting in equities.
(FUND Q. WHY DID THE FUND PERFORM THIS WAY?
INVESTMENT
REFLECTS The success of the equity portion of the fund can be
SALES CHARGE) attributed to a variety of factors. Our large company focus
drove fund performance as several of the Fund's top equity
[Graph] holdings (General Electric, Citicorp, IBM, Travelers and
Proctor & Gamble) outperformed the overall market. Our
emphasis on favorable industry sectors that we expect will
grow faster than the overall economy was also a benefit to the
Fund. Our overweight positions in some of the best performing
groups, including technology, financial services, health care
and aerospace were strong contributors to total return. While
it is our view that the equity market is likely to provide
competitive performance going forward, the challenge remains
to find value in a market that has risen nearly 70% in two
years. As a result, we trimmed the Fund's allocation in
equities slightly toward the end of the year.
[Graph] Q. WHAT IS YOUR OUTLOOK FOR 1997?
At year-end the allocation of the Fund was 61% stocks, 34%
bonds and 5% cash, reflecting our current view that the U.S.
stock market continues to be more attractive than the U.S.
bond market or cash. However, we remain optimistic about both
the U.S. stock and bond markets based on our expectations for
a continued environment of moderate economic growth and low
inflation. Stocks should continue to perform as corporate
earnings growth continues, with the Fund's focus on those
companies with superior growth potential and reasonable
valuations. With respect to bonds, we are most heavily
weighted in US Treasuries based on their attractive valuations
relative to other fixed-income securities. We continue to find
mortgages attractive in light of their substantial yield
advantage and expect to add to the sector in early 1997. We
continue to view cash as the least attractive asset class in
terms of total return potential.
PORTFOLIO MANAGER
PAUL D. KAPLAN
SENIOR VICE PRESIDENT AND PARTNER
WELLINGTON MANAGEMENT COMPANY, LLP
PORTFOLIO MANAGER
RAND L. ALEXANDER, CFA [PHOTO]
SENIOR VICE PRESIDENT AND PARTNER
WELLINGTON MANAGEMENT COMPANY, LLP
CUMULATIVE RETURNS
SINCE INCEPTION 7/22/96
ADVISERS "A" 11.56%(1) 5.43%(2) $10,543
ADVISERS "B" 11.28%(1) 6.28%(2)
S&P 500 18.05% $11,805
LEHMAN GOVT/CORP 5.04%(2) $10,504
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE STOCK
FUND. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS. THE
VALUE OF SHARES WILL FLUCTUATE SO THAT WHEN REDEEMED, SHARES
MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
(1) PERFORMANCE RESULTS DO NOT REFLECT SALES CHARGE.
(2) THE INITIAL INVESTMENT IN CLASS A AND B SHARES REFLECTS
THE MAXIMUM SALES CHARGE AND CDSC, RESPECTIVELY.
A $10,000 INVESTMENT IN THE FUND'S CLASS B SHARES AT INCEPTION
ON 7/22/96 WOULD HAVE BEEN VALUED AT $11,128 ON 12/31/96
($10,628 WITH A REDEMPTION AT THE END OF THE PERIOD.)
-7-
ITT HARTFORD BOND INCOME STRATEGY FUND
Q. HOW DID THE FUND PERFORM?
PERFORMANCE Results for the ITT Hartford Bond Income Strategy Fund were in
OVERVIEW - line with its Lipper peer group for the quarter ended 12/31/96
7/22/96 - and since its inception on 7/22/96. The Fund's total returns
12/31/96 were 3.6% for the quarter and 5.7% since inception. This
GROWTH OF A compares to returns of 3.5% and 5.8% respectively for for
$10,000 those periods for the Lipper Corporate Bond BBB Average.
INVESTMENT
Q. WHY DID THE FUND PERFORM THIS WAY?
(FUND
INVESTMENT The duration of the fund was longer than that of its index.
REFLECTS Given that yields declined (and bond prices consequently rose)
SALES CHARGE) during this time, the fund's longer duration allowed it to
outperform in this bullish environment.
The strong economy resulted in positive earnings and cash
flow fundamentals for many US corporations. Investors
consequently demand a lower yield to invest in the debt
of these companies. Yield spreads narrowed resulting in a
price appreciation of our investments in investment grade
and BB-rated high yield corporate debt. Our overweighting
of certain communications-related credits such as Rogers
Cantel and an investment in long-maturity K-Mart debt
provided significant outperformance. The Rogers Cantel
investment returned 8.31% for the final three months of
the year, while our K-Mart holdings provided
double-digits returns.
Finally, the portfolio carried a yield which was higher than
that of its index. This higher income accumulated and resulted
in higher total return over time.
Q. WHAT IS YOUR OUTLOOK FOR 1997?
We are maintaining a portfolio duration which is about 10%
longer than our benchmark index. We also remain overweighted
in the corporate and mortgage sectors. However, given the very
strong performance of these markets during December and so far
in January, we anticipate upgrading the quality of the Fund's
corporate bond investments by selling some of the portfolio's
nearly-maximum allocation to BB rated high yield securities.
As an exception, and despite their phenomenal absolute returns
in 1996, we still view the emerging markets as providing an
attractive opportunity. We would view a correction in the
mortgage market as a signal to add to our holdings. We will
continue our strategy of maintaining a very well diversified
portfolio and will be shopping in the market on a daily basis
for investments which we believe are relative bargains.
PORTFOLIO MANAGER
ALLISON D. GRANGER, CFA [PHOTO]
SENIOR VICE PRESIDENT
THE HARTFORD INVESTMENT
MANAGEMENT COMPANY (HIMCO)
CUMULATIVE RETURNS
SINCE INCEPTION 7/22/96
BOND "A" 5.73%(1) 0.97%(2) $10,097
BOND "B" 5.38%(1) 0.38%(2)
LEHMAN GOVT/CORP 5.04% $10,504
THE CHART REPRESENTS A HYPOTHETICAL INVESTMENT IN THE DIVIDEND
AND GROWTH FUND. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE
RESULTS. THE VALUE OF SHARES WILL FLUCTUATE SO THAT WHEN
REDEEMED, SHARES MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST.
(1) PERFORMANCE RESULTS DO NOT REFLECT SALES CHARGE.
(2) THE INITIAL INVESTMENT IN CLASS A AND B SHARES REFLECTS
THE MAXIMUM SALES CHARGE AND CDSC, RESPECTIVELY.
A $10,000 INVESTMENT IN THE FUND'S CLASS B SHARES AT INCEPTION
ON 7/22/96 WOULD HAVE BEEN VALUED AT $10,538 ON 12/31/96
($10,038 WITH A REDEMPTION AT THE END OF THE PERIOD.)
-8-
PORTFOLIO AT A GLANCE
ITT HARTFORD SMALL COMPANY FUND
TOP HOLDINGS AS OF:
DECEMBER 31, 1996
% OF FUND'S
INVESTMENTS
1. MCKESSON 2.5%
2. ETHAN ALLEN INC 1.9%
3. AIR EXPRESS INTERNATIONAL 1.8%
4. INTELLIGENT ELECTRONICS 1.8%
5. VENCOR INC. 1.7%
6. NATURAL MICROSYSTEMS CORP 1.7%
7. TYCO TOYS INC 1.6%
8. FALCON DRILLING COMPANY 1.6%
9. BOOLE & BABBAGE INC 1.5%
10. WESTCORP DEL 1.5%
TOP 5 SECTORS AS OF:
DECEMBER 31, 1996
% OF FUND'S
INVESTMENTS
INFORMATION TECHNOLOGY 26%
HEALTHCARE 18%
INFORMATION & ENTERTAINMENT 14%
FINANCE 12%
INDUSTRIAL & COMMERCIAL 11%
[GRAPH]
ITT HARTFORD CAPITAL APPRECIATION FUND
TOP HOLDINGS AS OF:
DECEMBER 31, 1996
% OF FUND'S
INVESTMENTS
1. TELECEL COMMUNICACOES 5.3%
2. SCITEX CORP ORD 4.0%
3. DSP COMMUNICATIONS INC. 3.4%
4. NOVACARE INC 3.1%
5. TEXAS INSTRUMENTS 2.9%
6. FORRESTER RESEARCH INC 2.8%
7. TCI SATELLITE ENTERTAINMENT 2.8%
8. AVENOR INC. 2.8%
9. WORLDCOM INC 2.7%
10. WYMAN-GORDON COMPANY 2.7%
TOP 5 SECTORS AS OF:
DECEMBER 31, 1996
% OF FUND'S
INVESTMENTS
INFORMATION TECHNOLOGY 41%
HEALTHCARE 10%
UTILITIES 10%
INFORMATION & ENTERTAINMENT 9%
FINANCE 8%
[GRAPH]
IN REGARDS TO THE MANAGER DISCUSSIONS AND THE TOP 10 HOLDINGS, SECURITIES
REFERRED TO MAY OR MAY NOT CURRENTLY BE HELD IN IN THE PORTFOLIO.
-9-
ITT HARTFORD INTERNATIONAL OPPORTUNITIES FUND
TOP HOLDINGS AS OF:
DECEMBER 31, 1996
% OF FUND'S
INVESTMENTS
1. COOKSON GROUP (UNITED KINGDOM) 1.7%
2. UNIDANMARK A REGD (DENMARK) 1.6%
3. METALLGESELLSCHAFT AG (GERMANY) 1.3%
4. DAI NIPPON PRINTING (JAPAN) 1.2%
5. DAIMLER-BENZ AG (GERMANY) 1.2%
6. RHONE-POULENC (FRANCE) 1.2%
7. POLYGRAM NV (NETHERLANDS) 1.2%
8. MABUCHI MOTORS (JAPAN) 1.1%
9. RANK GROUP PLC (UNITED KINGDOM) 1.1%
10. MATSUSHITA ELECTRIC (JAPAN) 1.1%
TOP 5 COUNTRIES AS OF:
DECEMBER 31, 1996
% OF EQUITY
INVESTMENTS
JAPAN 18%
UNITED KINGDOM 13%
FRANCE 9%
GERMANY 5%
CANADA 4%
[GRAPH]
ITT HARTFORD STOCK FUND
TOP HOLDINGS AS OF:
DECEMBER 31, 1996
% OF FUND'S
INVESTMENTS
1. GENERAL ELECTRIC 4.0%
2. MCDONALDS CORP 2.5%
3. CITICORP 2.4%
4. ROYAL DUTCH PETROLEUM 2.3%
5. BOEING COMPANY 2.3%
6. WAL-MART 2.2%
7. PROCTOR AND GAMBLE 1.9%
8. GANNETT CO., INC 1.8%
9. TRAVELERS GROUP INC. 1.7%
10. JOHNSON & JOHNSON 1.6%
TOP 5 SECTORS AS OF:
DECEMBER 31, 1996
% OF FUND'S
INVESTMENTS
FINANCE 17%
HEALTHCARE 16%
INDUSTRIAL & COMMERCIAL 13%
INFORMATION TECHNOLOGY 12%
ENERGY 10%
[GRAPH]
IN REGARDS TO THE MANAGER DISCUSSIONS AND THE TOP 10 HOLDINGS, SECURITIES
REFERRED TO MAY OR MAY NOT CURRENTLY BE HELD IN IN THE PORTFOLIO.
-10-
ITT HARTFORD DIVIDEND & GROWTH FUND
TOP HOLDINGS AS OF:
DECEMBER 31, 1996
% OF FUND'S
INVESTMENTS
1. CITICORP 4.0%
2. FIRST BANK SYSTEM INC 3.3%
3. PHILLIP MORRIS 3.2%
4. FIRST UNION CORPORATION 3.0%
5. GENERAL ELECTRIC 2.7%
6. PHARMACIA & UPJOHN 2.6%
7. EXXON 2.5%
8. CHEVRON CORP 2.2%
9. FLOWERS INDUSTRIES INC 2.2%
10. BANCORP HAWAII INC 1.9%
TOP 5 SECTORS AS OF:
DECEMBER 31, 1996
% OF FUND'S
INVESTMENTS
FINANCE 19%
UTILITIES 18%
CONSUMER STAPLES 14%
ENERGY 13%
HEALTHCARE 10%
[GRAPH]
ITT HARTFORD ADVISERS FUND
TOP HOLDINGS AS OF:
DECEMBER 31, 1996
% OF FUND'S
INVESTMENTS
1. GENERAL ELECTRIC 2.4%
2. CITICORP 1.6%
3. BOEING COMPANY 1.5%
4. MCDONALDS CORP 1.5%
5. ROYAL DUTCH PETROLEUM 1.3%
6. PROCTOR AND GAMBLE 1.3%
7. WAL-MART 1.3%
8. EXXON 1.3%
9. GANNETT CO., INC. 1.2%
10. TRAVELERS GROUP INC. 1.2%
TOP 5 SECTORS AS OF:
DECEMBER 31, 1996
% OF EQUITY
INVESTMENTS
FINANCE 18%
HEALTHCARE 15%
INFORMATION TECHNOLOGY 14%
INDUSTRIAL & COMMERCIAL 11%
ENERGY 10%
[GRAPH]
IN REGARDS TO THE MANAGER DISCUSSIONS AND THE TOP 10 HOLDINGS, SECURITIES
REFERRED TO MAY OR MAY NOT CURRENTLY BE HELD IN IN THE PORTFOLIO.
-11-
ITT HARTFORD BOND INCOME STRATEGY FUND
TOP HOLDINGS AS OF:
DECEMBER 31, 1996
% OF FUND'S
INVESTMENTS
1. INTERAMERICAN DEV BANK 4.5%
2. SOCIETE GENERALE 2.7%
3. CITICORP 2.3%
4. MASS MUTUAL LIFE INS 2.3%
5. KFW INTL FINANCE INC. 2.3%
6. ABBEY-GLOBAL 2.3%
7. PHOENIX HOME LIFE 2.3%
8. SOUTHERN INVESTMENTS UK 2.3%
9. PACIFIC GAS AND ELEC CO 2.2%
10. PUBLIC SERVICES 2.2%
CREDIT QUALITY DISTRIBUTION:
DECEMBER 31, 1996
% OF FUND'S
INVESTMENTS
AAA 51%
AA 8%
A 10%
BAA 4%
BA 21%
B 2%
NOT RATED 4%
[GRAPH]
IN REGARDS TO THE MANAGER DISCUSSIONS AND THE TOP 10 HOLDINGS, SECURITIES
REFERRED TO MAY OR MAY NOT CURRENTLY BE HELD IN IN THE PORTFOLIO.
PERFORMANCE REVIEW:
SINCE INCEPTION 7-22-96(3) THROUGH 12-31-96
CUMULATIVE RETURN
CUMULATIVE RETURN SINCE INCEPTION
FUND SINCE INCEPTION(1) (SALES CHARGE ADJUSTED)(2)
SMALL COMPANY FUND (CLASS A) 14.11% 7.83
SMALL COMPANY FUND (CLASS B) 13.81% 8.81
CAPITAL APPRECIATION FUND (CLASS A) 37.75% 30.17
CAPITAL APPRECIATION FUND (CLASS B) 37.35% 32.35
INTERNATIONAL OPPORTUNITIES FUND (CLASS A) 8.14% 2.20
INTERNATIONAL OPPORTUNITIES FUND (CLASS B) 7.86% 2.86
STOCK FUND (CLASS A) 15.50% 9.15
STOCK FUND (CLASS B) 15.20% 10.20
DIVIDEND & GROWTH FUND (CLASS A) 15.29% 8.95
DIVIDEND & GROWTH FUND (CLASS B) 14.82% 9.82
ADVISERS FUND (CLASS A) 11.56% 5.43
ADVISERS FUND (CLASS B) 11.28% 6.28
BOND INCOME STRATEGY FUND (CLASS A) 5.73% 0.97
BOND INCOME STRATEGY FUND (CLASS B) 5.38% 0.38
(1)PERFORMANCE RESULTS ARE HISTORICAL AND INCLUDE REINVESTMENT OF ALL
DISTRIBUTIONS AND CHANGES IN NET ASSET VALUE. PERFORMANCE RESULTS DO
NOT REFLECT SALES CHARGES.
(2)PERFORMANCE RESULTS ARE HISTORICAL AND INCLUDE REINVESTMENT OF ALL
DISTRIBUTIONS AND CHANGES IN NET ASSET VALUE. PERFORMANCE RESULTS REFLECT THE
EFFECT OF MAXIMUM SALES CHARGES. THE MAXIMUM SALES CHARGE FOR CLASS A SHARES
IS 5.5% (4.5%, BOND INCOME STRATEGY). CLASS B SHARES REFLECT THE DEDUCTION OF
THE CONTINGENT DEFERRED SALES CHARGE (CDSC) IN YEARS ONE THROUGH SIX OF 5%,
4%, 3%, 3%, 2%, 1% RESPECTIVELY.
(3)THE ITT HARTFORD MUTUAL FUNDS WERE SEEDED ON 7/1/96 AND BECAME EFFECTIVE
AND OPEN FOR INVESTMENT ON 7/22/96. PERFORMANCE RESULTS AND DISCUSSION ON
PAGES 2-12 REFLECT INVESTMENT ACTIVITY SINCE THE FUNDS BECAME OPEN FOR
INVESTMENT ON 7/22/96.
THE INVESTMENT RETURN AND PRINCIPAL VALUE OF THE FUND WILL FLUCTUATE SO THAT
SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THE ORIGINAL COST.
-12-
ITT HARTFORD
MUTUAL FUNDS
[LOGO] 1996 ANNUAL REPORT
- --------------------------------------------------------------------------------
ITT HARTFORD MONEY MARKET FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
PRINCIPAL MARKET
AMOUNT VALUE
----------- --------------
COMMERCIAL PAPER -- 85.8%
Abbey National North America
$ 300,000 5.32% due 03/11/97............... $ 296,941
American Home Products Corp.
300,000 5.33% due 01/24/97............... 298,978
Aristar, Inc.
300,000 5.42% due 02/07/97............... 298,329
AT&T Corp.
300,000 5.35% due 03/03/97............... 297,280
Bankers Trust Corp.
300,000 5.29% due 05/30/97............... 293,432
BFCE U.S. Finance Corp.
300,000 5.36% due 01/07/97............... 299,732
Bradford & Bingley Building Society
300,000 5.32% due 04/14/97............... 295,434
Countrywide Home Loan
300,000 5.44% due 01/13/97............... 299,456
Daimler Benz N.A. Corp.
300,000 5.36% due 02/18/97............... 297,856
Eksportfinans A/S
300,000 5.32% due 03/24/97............... 296,365
Electronic Data Systems Corp.
300,000 5.43% due 03/21/97............... 296,425
Finova Capital Corp.
300,000 5.38% due 02/07/97............... 298,341
Ford Motor Credit Corp.
300,000 5.33% due 02/18/97............... 297,868
General Electric Capital Corp.
300,000 5.33% due 01/17/97............... 299,289
Goldman Sachs Group Limited
Partnership
300,000 5.31% due 03/03/97............... 297,301
Johnson Controls, Inc.
300,000 5.37% due 01/23/97............... 299,015
MCI Communications
300,000 5.30% due 02/20/97............... 297,792
Merrill Lynch & Co., Inc.
300,000 5.44% due 01/21/97............... 299,093
National Fuel Gas
300,000 5.38% due 01/06/97............... 299,776
National Rural Utilities
300,000 5.45% due 03/05/97............... 297,139
Nationwide Building Society
300,000 5.63% due 02/27/97............... 297,326
New York Times Co.
300,000 5.33% due 01/21/97............... 299,112
Nordbanken North America
300,000 5.38% due 02/28/97............... 297,400
NYNEX Corp.
300,000 5.43% due 03/18/97............... 296,561
Pacific Dunlop Ltd.
300,000 5.50% due 01/03/97............... 299,908
Sanwa Business Credit Corp.
300,000 5.40% due 01/15/97............... 299,370
Sears Roebuck Acceptance Corp.
300,000 5.32% due 03/19/97............... 296,586
Sharp Electronics Corp.
300,000 5.27% due 03/21/97............... 296,531
PRINCIPAL MARKET
AMOUNT VALUE
----------- --------------
Svenska Handelsbanken, Inc.
$ 300,000 5.42% due 03/24/97............... $ 296,296
Tambrands, Inc.
300,000 5.52% due 02/11/97............... 298,114
Westpac Capital Corp.
300,000 5.60% due 02/18/97............... 297,760
--------------
Total commercial paper............. $ 9,230,806
--------------
--------------
NON-CONVERTIBLE CORPORATE NOTES -- 5.6%
General Motor Acceptance Corp.
300,000 5.72% due 04/11/97............... $ 300,166
Wells Fargo
300,000 5.59% due 09/05/97............... 300,157
--------------
Total non-convertible corporate
notes............................ $ 600,323
--------------
--------------
REPURCHASE AGREEMENT -- 8.6%
922,000 Interest in $108,163,000 joint
repurchase agreement dated
12/31/96 with State Street Bank
6.70% due 01/02/97; maturity
amount $922,343 (Collateralized
by $53,860,000 U.S. Treasury Note
7.5% due 02/15/05 and $54,303,000
U.S. Treasury Note 8.875% due
08/15/17)........................ $ 922,000
--------------
--------------
DIVERSIFICATION OF ASSETS:
Total commercial paper (cost $9,230,806)..... 85.8 % $ 9,230,806
Total non-convertible corporate notes (cost
$600,323).................................. 5.6 600,323
Total repurchase agreement (cost $922,000)... 8.6 922,000
------ ------------
Total investment in securities
(Identified cost $10,753,129).............. 100.0 $ 10,753,129
Excess of cash, receivables and other assets
over liabilities........................... 0.0 772
------ ------------
Net assets (applicable to $1.00 per share
based on 10,753,901 shares outstanding).... 100.0 % $ 10,753,901
------ ------------
------ ------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $.001 per share; authorized
800,000,000 shares; outstanding 10,753,901
shares............................................. $ 10,754
Paid in surplus...................................... 10,743,147
------------
Total net assets..................................... $ 10,753,901
------------
------------
Class A
Shares of beneficial interest outstanding, $.001
par value; 800,000,000 authorized (Net assets
$10,753,621)....................................... 10,753,621
------------
------------
Net asset value and offering price per
share..................................... $ 1.00
-----
-----
Class Y
Shares of beneficial interest outstanding,
$.001 par value; 800,000,000 authorized
(Net assets $280).......................... 280
-----
-----
Net asset value and offering price per
share.................................... $ 1.00
-----
-----
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
1
- --------------------------------------------------------------------------------
ITT HARTFORD BOND INCOME STRATEGY FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
PRINCIPAL MARKET
AMOUNT VALUE
----------- -------------
U.S. TREAURIES & FEDERAL AGENCIES -- 41.5%
FEDERAL NATIONAL MORTGAGE
ASSOCIATION -- 17.0%
Pass-Throughs
$ 1,954,266 6.00% due 05/01/11 -
07/01/11.................... $ 1,879,150
-------------
U.S. TREASURY BONDS -- 5.3%
150,000 6.00% due 02/15/26......... 136,453
108,000 6.75% due 08/15/26......... 108,743
185,000 6.875% due 08/15/25......... 188,527
50,000 8.125% due 08/15/19......... 57,781
80,000 8.75% due 05/15/17......... 97,550
-------------
589,054
-------------
U.S. TREASURY NOTES -- 19.2%
500,000 5.00% due 01/31/98......... 495,000
250,000 5.875% due 10/31/98......... 249,688
500,000 6.25% due 06/30/98......... 502,344
50,000 6.875% due 05/15/06......... 51,547
400,000 6.875% due 08/31/99......... 408,250
100,000 7.00% due 07/15/06......... 103,906
300,000 7.50% due 10/31/99......... 311,156
-------------
2,121,891
-------------
Total U.S. treasuries &
Federal agencies............ $ 4,590,095
-------------
-------------
CORPORATE BONDS -- 37.7%
CABLE -- 2.7%
Lenfest Communications, Inc.
100,000 8.38% due 11/01/05.......... $ 96,625
Rogers Cablesystems of America
100,000 10.00% due 12/01/07......... 105,500
Tele-Communications, Inc.
100,000 9.25% due 01/15/23.......... 96,386
-------------
298,511
-------------
CELLULAR COMMUNICATIONS --
0.9%
Rogers Cantel, Inc.
100,000 9.38% due 06/01/08.......... 104,750
-------------
CONSUMER SERVICES -- 1.0%
ADT Operations
100,000 9.25% due 08/01/03.......... 106,625
-------------
ENERGY & SERVICES -- 0.9%
Cal Energy Co.
100,000 9.50% due 09/15/06.......... 103,250
-------------
FINANCIAL SERVICES -- 12.4%
American Reinsurance*
100,000 7.45% due 12/15/26.......... 99,599
Citicorp
250,000 7.13% due 05/15/06.......... 251,231
First Nationwide*
100,000 10.63% due 10/01/03......... 108,000
Ford Motor Credit Co.
250,000 6.13% due 01/09/06.......... 233,939
Lehman Brothers, Inc.
175,000 7.36% due 12/15/03.......... 176,972
Massachusetts Mutual Life
Insurance Co.
250,000 7.63% due 11/15/23.......... 250,190
Phoenix Home Life Insurance
Co.
250,000 6.95% due 12/01/06.......... 246,222
-------------
1,366,153
-------------
PRINCIPAL MARKET
AMOUNT VALUE
----------- -------------
GAMING -- 2.7%
Grand Casinos
$ 200,000 10.13% due 12/01/03......... $ 202,000
Trump Atlantic
100,000 11.25% due 05/01/06......... 99,000
-------------
301,000
-------------
INDUSTRIAL -- 4.7%
Buckeye Cellulos
100,000 8.50% due 12/15/05.......... 100,250
Freeport-McMoran, Inc.
100,000 8.75% due 02/15/04.......... 103,903
Newport News*
100,000 8.63% due 12/01/06.......... 102,250
Owens-Illinois, Inc.
100,000 11.00% due 12/01/03......... 111,500
U.S. Home Corp.
100,000 7.95% due 03/01/01.......... 97,616
-------------
515,519
-------------
MEDIA & SERVICES -- 1.8%
Turner Broadcasting Senior
Note
100,000 7.40% due 02/01/04.......... 99,501
Viacom, Inc.
100,000 6.75% due 01/15/03.......... 95,716
-------------
195,217
-------------
RETAIL -- 2.8%
K Mart Corp.
100,000 7.84% due 01/02/02.......... 93,442
K Mart Corp.
125,000 7.95% due 02/01/23.......... 102,500
Stop and Shop Companies, Inc.
100,000 9.75% due 02/01/02.......... 111,603
-------------
307,545
-------------
TECHNOLOGY -- 0.8%
Digital Equipment Corp.
100,000 7.75% due 04/01/23.......... 87,563
-------------
TRANSPORTATION -- 0.9%
Continental Airlines*
100,000 9.50% due 12/15/01.......... 101,375
-------------
UTILITIES -- 6.1%
El Paso Electric Co.
100,000 8.90% due 02/01/06.......... 105,500
Niagara Mohawk First Mortgage
100,000 7.75% due 05/15/06.......... 93,582
Pacific Gas and Electric Co.
250,000 7.25% due 03/01/26.......... 240,937
Public Service Electric & Gas,
MBIA-Insured
250,000 6.75% due 01/01/16.......... 235,492
-------------
675,511
-------------
Total corporate bonds......... $ 4,163,019
-------------
-------------
FOREIGN/YANKEE BONDS & NOTES -- 11.2%
Abbey-Global
250,000 6.69% due 10/17/05.......... $ 248,072
Societe Generale
250,000 9.88% due 07/15/03.......... 287,200
Southern Investments UK PLC
250,000 6.80% due 12/01/06.......... 244,707
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
2
PRINCIPAL MARKET
AMOUNT VALUE
----------- -------------
FOREIGN/YANKEE BONDS & NOTES -- (CONTINUED)
Banco Nacional Com Ext
$ 125,000 7.25% due 02/02/04.......... $ 111,688
KFW International Finance,
Inc.
250,000 7.00% due 03/01/13.......... 249,729
Quebec Province
100,000 7.13% due 02/09/24.......... 95,504
-------------
Total foreign/yankee bonds &
notes....................... $ 1,236,900
-------------
-------------
SUPRANATIONALS -- 4.4%
Interamerican Development Bank
450,000 8.50% due 05/01/01.......... $ 486,054
-------------
-------------
ENHANCED EQUIPMENT TRUST CERTIFICATES -- 1.0%
Norwest Airlines Corp. Trust
95,077 11.30% due 06/21/14......... $ 115,741
-------------
-------------
SHORT-TERM SECURITIES -- 1.5%
COMMERCIAL PAPER -- 0.9%
Houston Lighting & Power
100,000 6.00% due 01/03/97.......... $ 99,967
-------------
REPURCHASE AGREEMENT -- 0.6%
69,000 Interest in $108,163,000 joint
repurchase agreement dated
12/31/96 with State Street
Bank 6.70% due 01/02/97;
maturity amount $69,026
(Collaterlized by
$53,860,000 U.S. Treasury
Note 7.5% due 02/15/05 and
$54,303,000 U.S. Treasury
Note 8.875% due 08/15/17)... 69,000
-------------
Total short-term securities... $ 168,967
-------------
-------------
MARKET
VALUE
------------
DIVERSIFICATION OF ASSETS:
Total U.S. treasuries & Federal agencies
(cost $4,528,776).......................... 41.5% $ 4,590,095
Total corporate bonds (cost $4,084,597)...... 37.7 4,163,019
Total foreign/yankee bonds & notes (cost
$1,223,381)................................ 11.2 1,236,900
Total supranationals (cost $478,556)......... 4.4 486,054
Total enhanced equipment trust certificates
(cost $117,223)............................ 1.0 115,741
Total short-term securities (cost
$168,967).................................. 1.5 168,967
------ ------------
Total investment in securities
(Identified cost $10,601,500).............. 97.3 10,760,776
Excess of cash, receivables and other assets
over liabilities........................... 2.7 293,358
------ ------------
Net assets................................... 100.0% $ 11,054,134
------ ------------
------ ------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $.001 per share; authorized
300,000,000 shares; outstanding 1,076,989 shares... $ 1,077
Paid in surplus...................................... 10,786,181
Accumulated undistributed net investment income...... 10,290
Accumulated undistributed net realized gain on
investments........................................ 97,310
Unrealized appreciation of investments............... 159,276
------------
Net assets at value.................................. $ 11,054,134
------------
------------
Class A
Net asset value per share ($10,925,338
DIVIDED BY 1,064,430 shares
outstanding)............................... $ 10.26
------
------
Maximum offering price per share ($10.26
DIVIDED BY 95.5%)......................... $ 10.74
------
------
Class B
Net asset value per share ($123,606
DIVIDED BY 12,054 shares outstanding)..... $ 10.25
------
------
Class Y
Net asset value per share ($5,190
DIVIDED BY 505 shares outstanding)........ $ 10.27
------
------
* Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
3
- --------------------------------------------------------------------------------
ITT HARTFORD ADVISERS FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
MARKET
SHARES VALUE
-------- ------------
COMMON STOCKS -- 59.8%
AEROSPACE & DEFENSE -- 2.3%
2,200 Boeing Co..................... $ 234,025
2,000 United Technologies Corp...... 132,000
------------
366,025
------------
BUSINESS SERVICES -- 0.5%
1,300 Fluor Corp.................... 81,575
------------
COMMUNICATIONS EQUIPMENT --
1.0%
*1,000 Cisco Systems, Inc............ 63,625
1,000 General Motors Corp. Class
H........................... 56,250
777 Lucent Technologies, Inc...... 35,936
------------
155,811
------------
COMPUTERS & OFFICE
EQUIPMENT -- 2.9%
*3,200 Adaptec, Inc.................. 128,000
1,200 International Business
Machines Corp............... 181,200
3,000 Xerox Corp.................... 157,875
------------
467,075
------------
CONSUMER DURABLES -- 0.6%
2,000 Goodyear Tire & Rubber Co..... 102,750
------------
CONSUMER NON-DURABLES -- 3.3%
800 Colgate Palmolive Co.......... 73,800
800 Gillette Co................... 62,200
1,000 Kimberly-Clark Corp........... 95,250
1,600 NIKE, Inc. Class B............ 95,600
1,900 Proctor & Gamble Co........... 204,250
------------
531,100
------------
CONSUMER SERVICES -- 2.0%
5,000 McDonalds Corp................ 226,250
*4,000 Mirage Resorts, Inc........... 86,500
------------
312,750
------------
ELECTRONICS -- 3.4%
3,800 General Electric Co........... 375,725
1,200 Intel Corp.................... 157,125
------------
532,850
------------
ENERGY & SERVICES -- 5.9%
1,800 Amoco Corp.................... 144,900
1,500 Chevron Corp.................. 97,500
2,000 Exxon Corp.................... 196,000
1,200 Royal Dutch Petroleum Co...... 204,900
1,100 Schlumberger Ltd.............. 109,862
3,016 Union Pacific Resources Group,
Inc......................... 88,218
2,200 Unocal Corp................... 89,375
------------
930,755
------------
FINANCIAL SERVICES -- 10.6%
2,000 Ace Ltd....................... 120,250
2,600 Allstate Corp................. 150,475
2,900 American Express Co........... 163,850
1,000 American International Group,
Inc......................... 108,250
2,200 Associates First Capital
Corp........................ 97,075
2,400 Citicorp...................... 247,200
1,600 First Bank System, Inc........ 109,200
800 Marsh & McLennan.............. 83,200
2,000 Merrill Lynch & Co., Inc...... 163,000
1,500 NationsBank Corp.............. 146,625
MARKET
SHARES VALUE
-------- ------------
FINANCIAL SERVICES --
(CONTINUED)
1,600 State Street Boston Corp...... $ 103,200
4,100 Travelers Group, Inc. (The)... 186,038
------------
1,678,363
------------
FOOD, BEVERAGE & TOBACCO --
1.4%
1,600 Kellogg Co.................... 105,000
3,000 Sara Lee Corp................. 111,750
------------
216,750
------------
HEALTH CARE -- 9.1%
2,600 Abbott Laboratories........... 131,950
2,200 American Home Products
Corp........................ 128,975
1,000 Bristol-Myers Squibb Co....... 108,750
2,000 Columbia/HCA Healthcare
Corp........................ 81,500
3,000 Johnson & Johnson............. 149,250
2,100 Merck & Co., Inc.............. 166,425
1,100 Pfizer, Inc................... 91,162
2,200 Pharmacia & Upjohn, Inc....... 87,175
1,700 SmithKline Beecham PLC ADR.... 115,600
2,000 Tenet Healthcare, Corp........ 43,750
2,000 United HealthCare Corp........ 90,000
*2,500 Vencor, Inc................... 79,063
2,200 Warner-Lambert Co............. 165,000
------------
1,438,600
------------
INDUSTRIAL MATERIALS -- 3.6%
1,400 Aluminum Company of America... 89,250
1,600 Crown Cork and Seal, Inc...... 87,000
1,600 Dow Chemical Co............... 125,400
800 du Pont (E.I.) de Nemours &
Co.......................... 75,500
1,000 International Paper Co........ 40,375
2,300 Phelps Dodge Corp............. 155,250
------------
572,775
------------
MANUFACTURING -- 1.1%
1,200 Caterpillar, Inc.............. 90,300
1,000 Minnesota Mining &
Manufacturing Co............ 82,875
------------
173,175
------------
MEDIA & SERVICES -- 2.6%
2,500 Gannett Co., Inc.............. 187,188
4,400 Gaylord Entertainment Class
A........................... 100,650
3,800 Viacom, Inc. Class B.......... 132,525
------------
420,363
------------
RETAIL -- 3.5%
2,000 Home Depot, Inc. (The)........ 100,250
*2,800 Saks Holding, Inc............. 75,600
2,100 Sears, Roebuck & Co........... 96,862
*3,000 Toys "R" Us, Inc.............. 90,000
8,800 Wal-Mart Stores, Inc.......... 201,300
------------
564,012
------------
SOFTWARE & SERVICES -- 3.3%
1,400 Computer Sciences Corp........ 114,975
2,200 Electronic Data Systems
Corp........................ 95,150
2,800 First Data Corp............... 102,200
*2,000 Microsoft Corp................ 165,250
*1,200 Oracle Systems Corp........... 50,100
------------
527,675
------------
TRANSPORTATION -- 1.4%
5,800 Southwest Airlines Co......... 128,325
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
4
MARKET
SHARES VALUE
-------- ------------
COMMON STOCKS -- (CONTINUED)
TRANSPORTATION -- (CONTINUED)
1,600 Union Pacific Corp............ $ 96,200
------------
224,525
------------
UTILITIES -- 1.3%
2,900 SBC Communications, Inc....... 150,075
1,300 Texas Utilities Co............ 52,975
------------
203,050
------------
Total common stocks........... $ 9,499,979
------------
------------
PRINCIPAL
AMOUNT
--------
U.S. TREASURIES & FEDERAL AGENCIES -- 32.6%
FEDERAL HOME LOAN MORTGAGE
CORPORATION -- 1.4%
$236,659 6.50% due 5/01/26........... $ 226,232
------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION -- 1.4%
226,808 6.50% due 04/15/26.......... 216,390
------------
U.S. TREASURY BOND -- 4.7%
700,000 7.25% due 5/15/16........... 739,156
------------
U.S. TREASURY NOTES -- 25.1%
300,000 5.125% due 04/30/98......... 296,906
500,000 5.75% due 08/15/03......... 485,000
500,000 5.875% due 10/31/98......... 499,375
850,000 6.25% due 05/31/00......... 853,719
700,000 6.375% due 08/15/02......... 704,594
400,000 6.50% due 10/15/06......... 402,250
700,000 7.50% due 02/15/05......... 748,782
------------
3,990,626
------------
Total U.S. treasuries &
Federal agencies............ $ 5,172,404
------------
------------
SHORT-TERM SECURITIES -- 5.1%
REPURCHASE AGREEMENTS -- 5.1%
191,000 Interest in $399,594,000 joint
repurchase agreement dated
12/31/96 with State Street
Bank 6.7693% due 01/02/97;
maturity amount $191,072
(Collateralized by
$218,212,000 U.S. Treasury
Note 6.25% due 06/30/98 and
$280,160,000 U.S. Treasury
Strip (principal) 0% due
05/15/19) $ 191,000
624,000 Interest in $300,000,000 joint
repurchase agreement dated
12/31/96 with First Boston
6.75% due 01/02/97; maturity
amount $624,234
(Collateralized by
$301,035,000 U.S. Treasury
Note 6.25% due 10/31/01) 624,000
------------
Total short-term securities... $ 815,000
------------
------------
MARKET
VALUE
-----------
DIVERSIFICATION OF ASSETS:
Total common stocks (cost $8,511,537)........ 59.8% $ 9,499,979
Total U.S. treasuries & Federal agencies
(cost $5,129,366).......................... 32.6 5,172,404
Total short-term securities (cost
$815,000).................................. 5.1 815,000
------ -----------
Total investment in securities
(Identified cost $14,455,903).............. 97.5 15,487,383
Excess of cash, receivables and other assets
over liabilities........................... 2.5 391,846
------ -----------
Net assets................................... 100.0% $15,879,229
------ -----------
------ -----------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $.001 per share; authorized
400,000,000 shares; outstanding 1,433,297 shares... $ 1,433
Paid in surplus...................................... 14,810,376
Accumulated undistributed net investment income...... 1,776
Accumulated undistributed net realized gain on
investments........................................ 34,164
Unrealized appreciation of investments............... 1,031,480
-----------
Net assets at value.................................. $15,879,229
-----------
-----------
Class A
Net asset value per share ($14,346,717
DIVIDED BY 1,294,601 shares
outstanding)............................... $ 11.08
------
------
Maximum offering price per share ($11.08
DIVIDED BY 94.5%)......................... $ 11.72
------
------
Class B
Net asset value per share ($1,498,526
DIVIDED BY 135,633 shares outstanding).... $ 11.05
------
------
Class Y
Net asset value per share ($33,986
DIVIDED BY 3,063 shares outstanding)...... $ 11.10
------
------
* Non-income producing.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
5
- --------------------------------------------------------------------------------
ITT HARTFORD DIVIDEND AND GROWTH FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
MARKET
SHARES VALUE
----------- -------------
COMMON STOCKS -- 94.0%
AEROSPACE & DEFENSE -- 3.0%
1,500 Northrop Grumman Corp......... $ 124,125
1,900 Sundstrand Corp............... 80,750
-------------
204,875
-------------
BUSINESS SERVICES -- 0.5%
1,300 Browning Ferris Industries,
Inc......................... 34,125
-------------
COMPUTERS & OFFICE
EQUIPMENT -- 1.2%
1,500 Xerox Corp.................... 78,938
-------------
CONSUMER DURABLES -- 3.8%
2,900 Ford Motor Co................. 92,437
1,400 Goodyear Tire & Rubber Co..... 71,925
1,800 ITT Industries, Inc........... 44,100
1,800 Smith (A.O.) Corp............. 53,775
-------------
262,237
-------------
CONSUMER NON-DURABLES -- 4.7%
1,500 Avon Products................. 85,687
1,300 Colgate Palmolive Co.......... 119,925
1,200 Kimberly-Clark Corp........... 114,300
-------------
319,912
-------------
CONSUMER SERVICES -- 0.6%
500 Eastman Kodak................. 40,125
-------------
ELECTRONICS -- 2.6%
1,800 General Electric Co........... 177,975
-------------
ENERGY & SERVICES -- 13.1%
2,200 Ashland, Inc.................. 96,525
2,300 Chevron Corp.................. 149,500
1,300 Cinergy Corp.................. 43,387
1,700 Exxon Corp.................... 166,600
2,000 Pennzoil Co................... 113,000
2,400 Phillips Petroleum............ 106,200
2,400 Sun Company, Inc.............. 58,500
338 Union Pacific Resources
Group....................... 9,887
1,900 Unocal Corp................... 77,188
3,100 USX-Marathon Group............ 74,013
-------------
894,800
-------------
FINANCIAL SERVICES -- 18.2%
2,100 Allstate Corp................. 121,538
2,200 American Express Co........... 124,300
3,100 Bancorp Hawaii, Inc........... 130,200
900 Bank of Boston Corp........... 57,825
600 CIGNA Corp.................... 81,975
2,600 Citicorp...................... 267,800
3,200 First Bank System, Inc........ 218,400
2,700 First Union Corp.............. 199,800
800 Wachovia Corp................. 45,200
-------------
1,247,038
-------------
FOOD, BEVERAGE & TOBACCO --
8.4%
6,900 Flowers Industries, Inc....... 148,350
1,900 General Mills, Inc............ 120,412
900 Interstate Bakeries........... 44,212
700 Kellogg Co.................... 45,938
1,900 Philip Morris Companies,
Inc......................... 213,988
-------------
572,900
-------------
SHARES MARKET
----------- VALUE
-------------
HEALTH CARE -- 9.9%
1,700 American Home Products
Corp........................ $ 99,662
1,500 Bard (C.R.), Inc.............. 42,000
1,000 Bristol-Myers Squibb Co....... 108,750
1,600 Merck & Co., Inc.............. 126,800
4,400 Pharmacia & Upjohn, Inc....... 174,350
1,700 Warner-Lambert Co............. 127,500
-------------
679,062
-------------
INDUSTRIAL MATERIALS -- 3.9%
700 Calgon Carbon Corp............ 8,575
300 Crompton & Knowles Corp....... 5,775
200 Dow Chemical Co............... 15,675
400 du Pont (E.I.) de Nemours &
Co.......................... 37,750
500 Eastman Chemical Co........... 27,625
200 Georgia Gulf Corp............. 5,375
100 Grace (W.R.) & Co............. 5,175
2,000 International Paper Co........ 80,750
400 Lubrizol Corp................. 12,400
200 Nalco Chemical Co............. 7,225
1,300 Weyerhaeuser Co............... 61,587
-------------
267,912
-------------
MANUFACTURING -- 1.3%
1,100 Minnesota Mining &
Manufacturing Co............ 91,162
-------------
MEDIA & SERVICES -- 1.3%
100 ACNielson Corp................ 1,513
500 Cognizant Corp................ 16,500
1,000 Gannett Co., Inc.............. 74,875
-------------
92,888
-------------
REAL ESTATE -- 1.0%
1,300 Patriot American
Hospitality................. 56,062
200 Starwood Lodging Trust........ 11,025
-------------
67,087
-------------
RETAIL -- 2.9%
2,500 Mercantile Stores, Inc........ 123,438
1,600 Sears, Roebuck & Co........... 73,800
-------------
197,238
-------------
TRANSPORTATION -- 1.1%
1,300 Union Pacific Corp............ 78,163
-------------
UTILITIES -- 16.5%
1,400 Ameritech Corp................ 84,875
2,300 BellSouth Corp................ 92,863
500 Carolina Power and Lighting... 18,250
200 Comsat Corp................... 4,925
1,700 DPL, Inc...................... 41,650
1,400 DQE, Inc...................... 40,600
3,000 Edison International.......... 59,625
400 Equitable Resources........... 11,900
2,000 Frontier Corp................. 45,250
2,200 GTE Corp...................... 100,100
1,000 Illinova Corp................. 27,500
1,400 NE Electric System............ 48,825
1,200 NIPSCO Industries, Inc........ 47,550
1,100 NYNEX Corp.................... 52,937
1,500 Pacific Enterprises........... 45,562
2,400 Pacific Gas & Electric Co..... 50,400
2,400 Pinnacle West Capital Corp.... 76,200
1,000 Public Service Co. of
Colorado.................... 38,875
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
6
SHARES MARKET
----------- VALUE
-------------
COMMON STOCKS -- (CONTINUED)
UTILITIES -- (CONTINUED)
1,700 SBC Communications, Inc....... $ 87,975
700 Scana Corp.................... 18,725
1,900 Texas Utilities Co............ 77,425
2,600 The Southern Co............... 58,825
-------------
1,130,837
-------------
Total common stocks........... $ 6,437,274
-------------
-------------
CONVERTIBLE PREFERRED STOCKS -- 2.6%
AEROSPACE & DEFENSE -- 1.2%
1,500 Lorel Space &
Communications*............. $ 84,000
-------------
MEDIA & SERVICES -- 1.4%
2,000 American Radio*............... 92,000
-------------
Total convertible preferred
stocks...................... $ 176,0000
-------------
-------------
PRINCIPAL
AMOUNT
-----------
SHORT-TERM SECURITIES -- 3.7%
REPURCHASE AGREEMENTS
$ 183,000 Interest in $399,594,000 joint
repurchase agreement dated
12/31/96 with State Street
Bank 6.7693% due 01/02/97
maturity amount $183,069
(Collateralized by
$218,212,000 U.S. Treasury
Note 6.25% due 06/30/98 and
$280,160,000 U.S. Treasury
Strip (principal) 0% due
05/15/19)................... $ 183,000
74,000 Interest in $300,000,000 joint
repurchase agreement dated
12/31/96 with First Boston
6.75% due 01/02/97; maturity
amount $74,028
(Collateralized by
$301,035,000 U.S. Treasury
Note 6.25% due 10/31/01).... 74,000
-------------
Total short-term securities... $ 257,000
-------------
-------------
MARKET
VALUE
-----------
DIVERSIFICATION OF ASSETS:
Total common stocks (cost $5,970,422)........ 94.0% $ 6,437,274
Total convertible preferred stocks (cost
$184,650).................................. 2.6 176,000
Total short-term securities (cost
$257,000).................................. 3.7 257,000
-------- -----------
Total investment in securities
(Identified cost $6,412,072)............... 100.3 6,870,274
Excess of liabilities over cash, receivables
and other assets........................... (0.3) (21,991)
-------- -----------
Net assets................................... 100.0% $ 6,848,283
-------- -----------
-------- -----------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital Stock, par value $.001 per share; authorized
300,000,000 shares; outstanding 598,562 shares....... $ 599
Paid in surplus........................................ 6,366,039
Distribution in excess of net investment income........ (1,060)
Accumulated undistributed net realized gain on
investments.......................................... 24,503
Unrealized appreciation of investments................. 458,202
-----------
Net assets at value.................................... $ 6,848,283
-----------
-----------
Class A
Net asset value per share ($6,082,738
DIVIDED BY 531,428 shares outstanding).... $ 11.45
-----------
-----------
Maximum offering price per share ($11.45
DIVIDED BY 94.5%)......................... $ 12.12
-----------
-----------
Class B
Net asset value per share ($729,524
DIVIDED BY 63,991 shares outstanding)..... $ 11.40
-----------
-----------
Class Y
Net asset value per share ($36,021
DIVIDED BY 3,143 shares outstanding)...... $ 11.46
-----------
-----------
* Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
7
- --------------------------------------------------------------------------------
ITT HARTFORD STOCK FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
MARKET
SHARES VALUE
----------- ---------------
COMMON STOCKS -- 89.2%
AEROSPACE & DEFENSE -- 3.7%
1,600 Boeing Co..................... $ 170,200
1,700 United Technologies Corp...... 112,200
---------------
282,400
---------------
BUSINESS SERVICES -- 0.8%
1,000 Fluor Corp.................... 62,750
---------------
COMMUNICATION EQUIPMENT --
1.6%
*600 Cisco Systems, Inc............ 38,175
1,200 General Motors Corp. Class
H........................... 67,500
388 Lucent Technologies........... 17,945
---------------
123,620
---------------
COMPUTERS & OFFICE EQUIPMENT
-- 3.6%
*1,600 Adaptec, Inc.................. 64,000
600 International Business
Machines Corp............... 90,600
2,200 Xerox Corp.................... 115,775
---------------
270,375
---------------
CONSUMER DURABLES -- 0.8%
1,200 Goodyear Tire & Rubber Co..... 61,650
---------------
CONSUMER NON-DURABLES -- 5.4%
700 Colgate Palmolive Co.......... 64,575
900 Gillette Co................... 69,975
800 Kimberly-Clark Corp........... 76,200
1,000 NIKE, Inc. Class B............ 59,750
1,300 Proctor & Gamble.............. 139,750
---------------
410,250
---------------
CONSUMER SERVICES -- 3.2%
4,000 McDonalds Corp................ 181,000
*3,000 Mirage Resorts, Inc........... 64,875
---------------
245,875
---------------
ELECTRONICS -- 5.0%
3,000 General Electric Co........... 296,625
600 Intel Corp.................... 78,563
---------------
375,188
---------------
ENERGY & SERVICES -- 8.8%
1,000 Amoco Corp.................... 80,500
1,600 Chevron Corp.................. 104,000
1,100 Exxon Corp.................... 107,800
1,000 Royal Dutch Petroleum Co...... 170,750
800 Schlumberger Ltd.............. 79,900
2,000 Union Pacific Resources Group,
Inc......................... 58,500
1,600 Unocal Corp................... 65,000
---------------
666,450
---------------
FINANCIAL SERVICES -- 15.1%
1,200 Ace Ltd....................... 72,150
1,800 Allstate Corp................. 104,175
1,800 American Express Co........... 101,700
700 American International Group,
Inc......................... 75,775
1,000 Associates First Capital
Corp........................ 44,125
1,700 Citicorp...................... 175,100
1,300 First Bank System, Inc........ 88,725
700 Marsh & McLennan Cos., Inc.... 72,800
1,300 Merrill Lynch & Co., Inc...... 105,950
1,000 NationsBank Corp.............. 97,750
1,200 State Street Boston Corp...... 77,400
SHARES MARKET
----------- VALUE
---------------
FINANCIAL SERVICES --
(CONTINUED)
2,766 Travelers Group, Inc. (The)... $ 125,507
---------------
1,141,157
---------------
FOOD, BEVERAGE & TOBACCO --
2.1%
1,000 Kellogg Co.................... 65,625
2,400 Sara Lee Corp................. 89,400
---------------
155,025
---------------
HEALTH CARE -- 14.2%
2,000 Abbott Laboratories........... 101,500
1,800 American Home Products
Corp........................ 105,525
700 Bristol-Myers Squibb Co....... 76,125
2,000 Columbia/HCA Healthcare
Corp........................ 81,500
2,400 Johnson & Johnson............. 119,400
1,300 Merck & Co., Inc.............. 103,025
1,200 Pfizer, Inc................... 99,450
1,600 Pharmacia & Upjohn, Inc....... 63,400
1,100 SmithKline Beecham PLC ADR.... 74,800
1,400 Tenet Healthcare Corp......... 30,625
1,600 United HealthCare Corp........ 72,000
*1,300 Vencor, Inc................... 41,112
1,400 Warner-Lambert Co............. 105,000
---------------
1,073,462
---------------
INDUSTRIAL MATERIALS -- 4.5%
700 Aluminum Company of America... 44,625
1,200 Crown Cork & Seal, Inc........ 65,250
900 Dow Chemical Co............... 70,537
500 du Pont (E.I.) de Nemours &
Co.......................... 47,187
500 International Paper Co........ 20,188
1,400 Phelps Dodge Corp............. 94,500
---------------
342,287
---------------
MANUFACTURING -- 2.1%
1,000 Caterpillar, Inc.............. 75,250
1,000 Minnesota Mining &
Manufacturing Co............ 82,875
---------------
158,125
---------------
MEDIA & SERVICES -- 4.1%
1,800 Gannett Co., Inc.............. 134,775
3,000 Gaylord Entertainment Class
A........................... 68,625
3,000 Viacom, Inc. Class B.......... 104,625
---------------
308,025
---------------
RETAIL -- 5.5%
1,400 Home Depot, Inc. (The)........ 70,175
*2,100 Saks Holding, Inc............. 56,700
1,400 Sears, Roebuck & Co........... 64,575
*2,200 Toys "R" Us, Inc.............. 66,000
7,000 Wal-Mart Stores, Inc.......... 160,125
---------------
417,575
---------------
SOFTWARE & SERVICES -- 4.4%
700 Computer Sciences Corp........ 57,488
2,000 Electronic Data Systems
Corp........................ 86,500
2,200 First Data Corp............... 80,300
*1,000 Microsoft Corp................ 82,625
*600 Oracle Systems Corp........... 25,050
---------------
331,963
---------------
TRANSPORTATION -- 2.0%
3,500 Southwest Airlines Co......... 77,438
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
8
SHARES MARKET
----------- VALUE
---------------
COMMON STOCKS -- (CONTINUED)
TRANSPORTATION -- (CONTINUED)
1,200 Union Pacific Corp............ $ 72,150
---------------
149,588
---------------
UTILITIES -- 2.3%
1,800 SBC Communications, Inc....... 93,150
2,000 Texas Utilities Co............ 81,500
---------------
174,650
---------------
Total common stocks........... $ 6,750,415
---------------
---------------
PRINCIPAL
AMOUNT
-----------
SHORT-TERM SECURITIES -- 7.9%
REPURCHASE AGREEMENTS
$ 366,000 Interest in $399,594,000 joint
repurchase agreement dated
12/31/96 with State Street
Bank 6.7693% due 01/02/97;
maturity amount $366,138
(Collateralized by
$218,212,000 U.S. Treasury
Note 6.25% due 06/30/98 and
$280,160,000 U.S. Treasury
Strip (principal) 0% due
05/15/19)................... $ 366,000
235,000 Interest in $300,000,000 joint
repurchase agreement dated
12/31/96 with First Boston
6.75% due 01/02/97; maturity
amount $235,088
(Collateralized by
$301,035,000 U.S. Treasury
Note 6.25% due 10/31/01).... 235,000
---------------
Total short-term securities... $ 601,000
---------------
---------------
MARKET
VALUE
------------
DIVERSIFICATION OF ASSETS:
Total common stocks (cost $6,260,567)........ 89.2% $ 6,750,415
Total short-term securities (cost
$601,000).................................. 7.9 601,000
------ ------------
Total investment in securities
(Identified cost $6,861,567)............... 97.1 7,351,415
Excess of cash, receivables and other assets
over liabilities........................... 2.9 219,929
------ ------------
Net assets................................... 100.0% $ 7,571,344
------ ------------
------ ------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $.001 per share; authorized
300,000,000 shares; outstanding 656,761 shares..... $ 657
Paid in surplus...................................... 7,073,235
Accumulated undistributed net realized gain on
investments........................................ 7,604
Unrealized appreciation of investments............... 489,848
------------
Net assets at value.................................. $ 7,571,344
------------
------------
Class A
Net asset value per share ($6,273,141
DIVIDED BY 543,879 shares outstanding).... $ 11.53
---------
---------
Maximum offering price per share ($11.53
DIVIDED BY 94.5%)......................... $ 12.20
---------
---------
Class B
Net asset value per share ($1,253,759
DIVIDED BY 109,034 shares outstanding).... $ 11.50
---------
---------
Class Y
Net asset value per share ($44,444
DIVIDED BY 3,848 shares outstanding)...... $ 11.55
---------
---------
* Non-income producing.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
9
- --------------------------------------------------------------------------------
ITT HARTFORD CAPITAL APPRECIATION FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
MARKET
SHARES VALUE
------- -----------
COMMON STOCKS -- 95.3%
AEROSPACE & DEFENSE -- 3.1%
1,000 Precision Castparts Corp...... $ 49,625
*11,700 Wyman-Gordon Co............... 260,325
-----------
309,950
-----------
BUSINESS SERVICES -- 4.1%
6,400 Allegiance Corp............... 176,800
*20,000 National Media Corp........... 140,000
*3,200 XLConnect Solutions, Inc...... 92,000
-----------
408,800
-----------
COMMUNICATION EQUIPMENT --
8.6%
*5,000 Geotel Communications Corp.... 65,000
*6,100 Gilat Satellite Network....... 150,212
*2,700 Oak Industries, Inc........... 62,100
*9,000 Proxim, Inc................... 207,000
40,000 Scitex Corp................... 380,000
-----------
864,312
-----------
COMPUTERS & OFFICE
EQUIPMENT -- 1.8%
*4,600 Adaptec, Inc.................. 184,000
-----------
CONSUMER SERVICES -- 4.1%
3,150 Harman International
Industries, Inc............. 175,219
*11,000 Mirage Resorts, Inc........... 237,875
-----------
413,094
-----------
ELECTRONICS -- 7.6%
*16,800 DSP Communications, Inc....... 325,500
*2,900 Solectron Corp................ 154,788
4,400 Texas Instruments............. 280,500
-----------
760,788
-----------
ENERGY & SERVICES -- 3.8%
*12,000 Forasol-Foramer N.V........... 235,500
*6,700 J Ray McDermott S A........... 147,400
-----------
382,900
-----------
FINANCIAL SERVICES -- 7.3%
2,000 Ace Ltd....................... 120,250
4,200 First USA, Inc................ 145,425
*15,000 Matrix Capital Corp........... 238,125
*5,600 RAC Financial Group Inc....... 118,300
4,000 United Cos. Financial Corp.... 106,500
-----------
728,600
-----------
HEALTH CARE -- 9.3%
*8,500 Genzyme Corp.................. 184,875
*8,500 IDX Systems Corp.............. 243,312
*27,300 Novacare, Inc................. 300,300
*8,200 Superior Consultant
Holdings.................... 202,950
-----------
931,437
-----------
INDUSTRIAL MATERIALS -- 6.3%
18,000 Avenor, Inc................... 266,588
*7,000 Titanium Metals Corp.......... 230,125
*3,700 UCAR International, Inc....... 139,213
-----------
635,926
-----------
MANUFACTURING -- 1.8%
10,000 Wabash National Corp.......... 183,750
-----------
SHARES MARKET
------- VALUE
-----------
MEDIA & SERVICES -- 7.4%
*15,000 National Education Corp....... $ 228,750
*27,340 TCI Satellite Entertainment
Group Class A............... 269,983
*16,400 Tele-Communications, Inc.
Class A..................... 214,225
*600 Univision Communication Class
A........................... 22,200
-----------
735,158
-----------
RETAIL -- 1.5%
*800 Delia's, Inc.................. 15,900
*9,900 Urban Outfitters, Inc......... 128,700
-----------
144,600
-----------
SOFTWARE & SERVICES -- 18.9%
*9,800 BA Merchant Services, Inc.
Class A..................... 175,175
*5,000 BBN Corp...................... 112,500
*4,700 Cadence Design System......... 186,825
*3,300 DST Systems, Inc.............. 103,537
*10,500 Forrester Research, Inc....... 270,375
*8,500 IKOS Systems, Inc............. 170,000
*5,000 Macromedia, Inc............... 90,000
*1,800 Parametric Technology Corp.... 92,475
*11,500 Peerless Systems Corp......... 195,500
*9,300 Puma Technology, Inc.......... 160,425
*10,400 Pure Atria Corp............... 257,400
*5,000 Rogue Wave Software........... 78,750
*250 Sanchez Computer Associates... 1,969
-----------
1,894,931
-----------
UTILITIES -- 9.7%
*10,000 Calpine Corp.................. 200,000
*8,000 Telecel-Communicacoes......... 510,145
*10,000 Worldcom, Inc................. 260,625
-----------
970,770
-----------
Total common stocks........... $ 9,549,016
-----------
-----------
PRINCIPAL
AMOUNT
-------
SHORT-TERM SECURITIES -- 1.1%
REPURCHASE AGREEMENTS -- 1.1%
$21,000 Interest in $399,594,000 joint
repurchase agreement dated
12/31/96 with State Street
Bank 6.7693% due 01/02/97;
maturity amount $21,008
(Collateralized by
$218,212,000 U.S. Treasury
Note 6.25% due 06/30/98 and
$280,160,000 U.S. Treasury
Strip (principal) 0% due
05/15/19)................... $ 21,000
95,000 Interest in $300,000,000 joint
repurchase agreement dated
12/31/96 with First Boston
6.75% due 01/02/97; maturity
amount $95,036
(Collateralized by
$301,035,000 U.S. Treasury
Note 6.25% due 10/31/01).... 95,000
-----------
Total short-term securities... $ 116,000
-----------
-----------
DIVERSIFICATION OF ASSETS:
Total common stocks (cost $8,705,982)........ 95.3 % $ 9,549,016
Total short-term securities (cost
$116,000).................................. 1.1 116,000
------ ------------
Total investment in securities
(Identified cost $8,821,982)............... 96.4 9,665,016
Excess of cash, receivables and other assets
over liabilities........................... 3.6 359,568
------ ------------
Net assets................................... 100.0 % $ 10,024,584
------ ------------
------ ------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
10
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $.001 per share; authorized
300,000,000 shares; outstanding 750,636 shares..... $ 751
Paid in surplus...................................... 8,754,357
Accumulated undistributed net realized gain on
investments........................................ 426,258
Unrealized appreciation of investments............... 843,034
Unrealized appreciation on foreign currency
translation of other assets and liabilities........ 184
------------
Net assets at value.................................. $ 10,024,584
------------
------------
Class A
Net asset value per share ($9,028,258
DIVIDED BY 675,875 shares outstanding).... $ 13.36
------
------
Maximum offering price per share ($13.36
DIVIDED BY 94.5%)......................... $ 14.14
------
------
Class B
Net asset value per share ($889,033
DIVIDED BY 66,745 shares outstanding)..... $ 13.32
------
------
Class Y
Net asset value per share ($107,293
DIVIDED BY 8,016 shares outstanding)...... $ 13.38
------
------
* Non-income producing.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
11
- --------------------------------------------------------------------------------
ITT HARTFORD SMALL COMPANY FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
MARKET
SHARES VALUE
----------- --------------
COMMON STOCKS -- 93.5%
AEROSPACE & DEFENSE -- 1.1%
*2,000 Gulfstream Aerospace Corp.......... $ 48,500
*200 Rohr, Inc.......................... 4,525
--------------
53,025
--------------
BUSINESS SERVICES -- 4.2%
*4,900 Borg-Warner Security Corp.......... 52,675
*10,900 Intelligent Electronics, Inc....... 87,200
*400 Lason, Inc......................... 8,200
*2,400 Tetra Technologies, Inc............ 60,600
--------------
208,675
--------------
COMMUNICATION EQUIPMENT -- 7.6%
*1,800 Fore Systems, Inc.................. 59,175
*2,600 Gilat Satellite Networks Ltd....... 64,025
*1,600 Kronos, Inc........................ 51,200
*2,600 Natural Microsystems Corp.......... 81,900
*1,500 Oak Industries, Inc................ 34,500
3,300 Scitex Corp........................ 31,350
*1,200 Videoserver, Inc................... 51,000
*300 West Teleservices Corp............. 6,825
--------------
379,975
--------------
COMPUTERS & OFFICE EQUIPMENT --
2.4%
*1,700 Affiliated Computer Services Class
A................................ 50,575
*2,400 Caere Corp......................... 27,600
*3,600 Diamond Multimedia Systems......... 42,750
--------------
120,925
--------------
CONSUMER NON-DURABLES -- 3.2%
2,400 Ethan Allen, Inc................... 92,400
2,400 First Brands Corp.................. 68,100
--------------
160,500
--------------
CONSUMER SERVICES -- 5.0%
*2,200 Brinker International, Inc......... 35,200
*2,800 Golden Bear Golf, Inc.............. 31,500
*400 PJ America, Inc.................... 7,200
*1,200 Planet Hollywood International,
Inc.............................. 23,700
*3,000 Prime Hospitality Corp............. 48,375
*5,200 Rally's Hamburgers, Inc............ 23,725
*6,700 Tyco Toys, Inc..................... 78,725
--------------
248,425
--------------
ELECTRONICS -- 4.0%
*2,500 Actel Corp......................... 59,375
*3,000 Conductus, Inc..................... 19,500
2,400 Dallas Semiconductor Corp.......... 55,200
*600 Etec Systems, Inc.................. 22,950
*2,500 Gemstar International Group Ltd.... 43,750
--------------
200,775
--------------
ENERGY & SERVICES -- 1.6%
*2,000 Falcon Drilling Co., Inc........... 78,500
--------------
FINANCIAL SERVICES -- 11.2%
1,100 Bancorp Hawaii, Inc................ 46,200
525 Conseco, Inc....................... 33,484
1,400 Frontier Insurance Group, Inc...... 53,550
*2,400 Imperial Bancorp................... 54,900
*3,400 Imperial Credit Industries......... 71,400
1,400 Legg Mason, Inc.................... 53,900
1,200 MMI Companies, Inc................. 38,700
SHARES MARKET
----------- VALUE
--------------
FINANCIAL SERVICES -- (CONTINUED)
*2,200 Prepaid Legal Services, Inc........ $ 40,150
1,200 Reinsurance Group of America....... 56,550
2,400 Resource Bancshares Mortgage
Group............................ 34,200
3,400 Westcorp........................... 74,375
--------------
557,409
--------------
FOOD, BEVERAGE & TOBACCO -- 1.2%
*1,600 Robert Mondavi Corp. Class B....... 58,400
--------------
HEALTH CARE -- 17.4%
*2,000 Alliance Pharmaceuticals Corp...... 27,250
*3,300 Amylin Pharmaceuticals, Inc........ 42,900
*2,100 Apria Healthcare Group, Inc........ 39,375
*1,800 FHP International Corp............. 66,825
*2,200 Genesis Health Ventures, Inc....... 68,475
*1,800 IDX Systems Corp................... 51,525
*1,800 Isomedix, Inc...................... 23,400
3,800 Kinetic Concepts, Inc.............. 46,550
*2,200 Ligand Pharmaceuticals Class B..... 32,725
*2,900 Magainin Pharmaceuticals, Inc...... 27,912
*3,000 Magellan Health Services, Inc...... 67,125
2,200 Mckesson Corp...................... 123,200
*2,400 Medpartners, Inc................... 50,400
*5,400 NABI, Inc.......................... 47,250
*3,000 Physio-Control International
Corp............................. 67,500
*2,700 Vencor, Inc........................ 85,388
--------------
867,800
--------------
INDUSTRIAL MATERIALS -- 1.0%
*1,400 UCAR International Inc............. 52,675
--------------
MANUFACTURING -- 2.2%
1,800 Memtec Ltd. ADR.................... 59,175
3,500 NN Ball & Roller, Inc.............. 53,375
--------------
112,550
--------------
MEDIA & SERVICES -- 7.7%
*4,800 American Telecasting, Inc.......... 27,600
*2,520 Home Shopping Network.............. 59,850
*2,000 International Cabletel, Inc........ 50,500
*6,600 Iwerks Entertainment, Inc.......... 33,000
*100 Metro Networks, Inc................ 2,525
*4,200 Pegasus Communications Corp........ 57,750
*2,700 Peoples Choice TV Corp............. 16,537
*4,900 Playboy Enterprises Class B........ 47,775
*7,300 Valuevision International, Inc.
Class A.......................... 39,238
*3,400 Western Wireless Corp. Class A..... 47,175
--------------
381,950
--------------
REAL ESTATE -- 0.9%
*2,700 Castle & Cooke, Inc................ 42,863
--------------
RETAIL -- 6.2%
*2,100 Bed & Bath Beyond, Inc............. 50,925
*2,500 Gymboree Corp...................... 57,187
1,200 Mercantile Stores, Inc............. 59,250
*1,500 Saks Holding, Inc.................. 40,500
*7,900 Sports and Recreation, Inc......... 61,225
*3,300 Urban Outfitters, Inc.............. 42,900
--------------
311,987
--------------
SOFTWARE & SERVICES -- 10.6%
*400 BA Merchant Services, Inc. Class
A................................ 7,150
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
12
SHARES MARKET
----------- VALUE
--------------
COMMON STOCKS -- (CONTINUED)
SOFTWARE & SERVICES -- (CONTINUED)
*1,600 Bisys Group, Inc................... $ 59,300
*3,050 Boole & Babbage, Inc............... 76,250
*500 Desktop Data, Inc.................. 9,625
*2,100 DST Systems, Inc................... 65,887
*3,100 IKOS Systems, Inc.................. 62,000
*400 Information Management Resources... 8,450
*2,900 Macromedia, Inc.................... 52,200
*2,400 Mercury Interactive Corp........... 31,200
*3,300 Premenos Technology Corp........... 28,463
*900 Puma Technology, Inc............... 15,525
*1,374 Sterling Commerce, Inc............. 48,434
*2,100 Sterling Software, Inc............. 66,412
--------------
530,896
--------------
TRANSPORTATION -- 2.9%
2,800 Air Express International Corp..... 90,300
*2,300 Swift Transportation Co., Inc...... 54,050
--------------
144,350
--------------
UTILITIES -- 3.1%
*2,000 McLeod, Inc. Class A............... 51,000
*16,900 Peoples Telephone Co., Inc......... 53,869
*6,100 Trescom International, Inc......... 48,800
--------------
153,669
--------------
Total common stocks................ $ 4,665,349
--------------
--------------
PREFERRED STOCK -- 0.6%
MEDIA & SERVICES -- 0.6%
1,100 AMC Entertainment, Inc............. $ 29,700
--------------
--------------
PRINCIPAL
AMOUNT
-----------
SHORT-TERM SECURITIES -- 4.9%
REPURCHASE AGREEMENTS -- 4.9%
$ 25,000 Interest in $399,594,000 joint
repurchase agreement dated
12/31/96 with State Street Bank
6.7693% due 01/02/97; maturity
amount $25,009 (Collateralized by
$218,212,000 U.S. Treasury Note
6.25% due 06/30/98 and
$280,160,000 U.S. Treasury Strip
(principal) 0% due 05/15/19)..... $ 25,000
218,000 Interest in $300,000,000 joint
repurchase agreement dated
12/31/96 with First Boston 6.75%
due 01/02/97; maturity amount
$218,082 (Collateralized by
$301,035,000 U.S. Treasury Note
6.25% due 10/31/01).............. 218,000
--------------
Total short-term securities........ $ 243,000
--------------
--------------
MARKET
VALUE
------------
DIVERSIFICATION OF ASSETS:
Total common stocks (cost $4,503,678)........ 93.5% $ 4,665,349
Total preferred stock (cost $39,099)......... 0.6 29,700
Total short-term securities (cost
$243,000).................................. 4.9 243,000
------ ------------
Total investment in securities
(Identified cost $4,785,777)............... 99.0 4,938,049
Excess of cash, receivables and other assets
over liabilities........................... 1.0 48,976
------ ------------
Net assets................................... 100.0% $ 4,987,025
------ ------------
------ ------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $.001 per share; authorized
300,000,000 shares; outstanding 466,902 shares..... $ 466
Paid in surplus...................................... 4,833,336
Accumulated undistributed net realized gain on
investments........................................ 951
Unrealized appreciation of investments............... 152,272
------------
Net assets at value.................................. $ 4,987,025
------------
------------
Class A
Net asset value per share ($4,673,328
DIVIDED BY 437,487 shares outstanding).... $ 10.68
------
------
Maximun offering price per share ($10.68
DIVIDED BY 94.5%)......................... $ 11.30
------
------
Class B
Net asset value per share ($241,355
DIVIDED BY 22,659 shares outstanding)..... $ 10.65
------
------
Class Y
Net asset value per share ($72,342
DIVIDED BY 6,756 shares outstanding)...... $ 10.71
------
------
* Non-income producing.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
13
- --------------------------------------------------------------------------------
ITT HARTFORD INTERNATIONAL OPPORTUNITIES FUND
STATEMENT OF NET ASSETS
DECEMBER 31, 1996
MARKET
SHARES VALUE
-------- ------------
COMMON STOCKS -- 84.1%
ARGENTINA -- 0.8%
1,900 Perezcompanc SA B............. $ 13,359
1,000 YPF Sociedad Anonima Sponsored
ADR......................... 25,250
------------
38,609
------------
AUSTRALIA -- 3.5%
3,500 Amcor Ltd..................... 22,489
10,235 Boral Ltd..................... 29,103
2,785 Broken Hill Proprietary Co.
Ltd......................... 39,639
15,559 Goodman Fielder Ltd........... 19,278
10,000 Pioneer International Ltd..... 29,785
1,000 Qantas Air Ltd. ADR***........ 16,679
------------
156,973
------------
AUSTRIA -- 0.7%
300 OMV AG........................ 33,793
------------
BELGIUM -- 0.6%
*300 Credit Communal Holding***.... 27,342
------------
BRAZIL -- 0.9%
1,000 Electrobras On ADR............ 17,900
90,000 Petroleo Brasileiro........... 14,335
160,000 Telecomunic Brasileiras....... 11,471
------------
43,706
------------
CANADA -- 1.1%
1,500 Canadian Pacific Ltd.......... 39,750
900 Canwest Global Communication
Corp........................ 9,225
------------
48,975
------------
CHILE -- 0.8%
1,000 Banco Santander Chile ADR..... 15,000
750 Enersis SA ADR................ 20,813
------------
35,813
------------
DENMARK -- 2.4%
1,300 TeleDanmark B ADR............. 35,425
1,400 Unidanmark A Registered....... 72,386
------------
107,811
------------
FINLAND -- 1.7%
*5,000 Merita Bank Ltd. A............ 15,513
4,000 Metsa-Serla Oy B.............. 29,941
1,400 Rauma Oy...................... 29,464
------------
74,918
------------
FRANCE -- 7.2%
330 Accor SA...................... 41,704
1,150 Assurances Generales de
France...................... 37,052
900 Banque Nationale de
Paris***.................... 34,762
300 Credit Commercial de France... 13,850
525 Havas SA...................... 36,759
100 Peugeot SA.................... 11,234
450 Remy Cointreau................ 12,724
1,500 Rhone-Poulenc................. 51,041
170 Saint Gobain.................. 24,002
200 Societe Generale.............. 21,582
200 Societe Nationale Elf
Acquitaine.................. 18,170
300 Total SA...................... 24,352
------------
327,232
------------
SHARES MARKET
-------- VALUE
------------
GERMANY -- 4.6%
750 Daimler-Benz AG............... $ 51,343
85 Degussa AG.................... 38,608
270 Hornbach Holding Pref
(Non-voting)................ 19,272
70 Karstadt AG................... 23,256
40 Mannesmann AG................. 17,188
2,800 Metallgesellschaft AG......... 57,086
------------
206,753
------------
HONG KONG -- 3.3%
3,000 Citic Pacific Ltd............. 17,414
5,000 Hutchison Whampoa Ltd......... 39,270
6,000 Lai Sun Development........... 9,076
1,000 New World Development Co.
Ltd......................... 6,755
2,000 Sun Hung Kai Properties....... 24,499
4,000 Swire Pacific Ltd............. 38,138
50,000 Tingyi Holding Corp........... 13,090
------------
148,242
------------
INDIA -- 0.3%
800 State Bank of India GDR....... 14,200
------------
INDONESIA -- 0.9%
17,000 Bank Negara Indonesa BNI...... 8,995
300 Indosat ADR................... 8,212
20,000 Kalbe Farma - Foreign
Registered.................. 22,857
------------
40,064
------------
IRELAND -- 0.6%
10,000 Jefferson Smurfit Group....... 29,691
------------
ITALY -- 2.3%
2,500 Arnoldo Mondadori Editore
S.p.A....................... 20,306
14,000 Banca Commerciale Italiana
S.p.A....................... 25,412
5,000 Fiat S.p.A.................... 15,094
6,600 Stet S.p.A.................... 29,951
5,000 Telecom Italia S.p.A.......... 12,956
------------
103,719
------------
JAPAN -- 17.8%
1,100 Canon Sales Co., Inc.......... 24,451
1,000 Chudenko Corp................. 28,776
2,000 Chugai Pharmaceutical Co...... 16,714
3,000 Dai Nippon Printing Co........ 52,468
1,000 Danto Corp.................... 9,735
1,000 Fuji Machine Manufacturing
Co.......................... 26,449
2,000 JGC Corp...................... 14,974
1,000 Kyudenko Corp................. 10,338
1,000 Mabuchi Motor Co.............. 50,228
1,000 Maruichi Steel Tube........... 17,231
3,000 Matsushita Electric Industrial
Co.......................... 48,850
3,000 Mitsubishi Heavy Industries... 23,779
1,000 Murata Manufacturing Co....... 33,170
4,000 NGK Spark Plug................ 43,767
2,000 Nippon Express Co............. 13,681
120 Nippon Television Network
Corp........................ 36,185
1,000 Nomura Securities Co.......... 14,991
3,000 Onward Kashiyama Co. Ltd...... 42,130
2,000 Sakura Bank................... 14,267
1,000 Sankyo Co., Ltd............... 28,259
2,000 Sanwa Bank Ltd................ 27,225
2,000 Seventy-Seven Bank............ 16,369
3,000 Sumitomo Realty &
Development................. 18,868
3,000 Toda Construction Co.......... 22,745
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
14
SHARES MARKET
-------- VALUE
------------
COMMON STOCKS -- (CONTINUED)
JAPAN -- (CONTINUED)
2,000 Tokio Marine & Fire Insurance
Co.......................... $ 18,782
5,000 Toyo Ink Manfacturing Co.
Ltd......................... 20,462
1,000 Toyota Motor Corp............. 28,690
900 World Co...................... 37,219
5,000 Yamato Kogyo Co. Ltd.......... 46,093
1,000 Yamazaki Baking Co. Ltd....... 15,939
------------
802,835
------------
LUXEMBOURG -- 0.3%
1,750 Quilmes Industrial ADR........ 15,969
------------
MALAYSIA -- 1.5%
9,000 Land & General Holdings
Berhad...................... 21,560
10,000 MBF Capital Berhad............ 16,235
2,000 Resort World Berhad........... 9,107
5,000 Sime Darby Berhad............. 19,699
------------
66,601
------------
MEXICO -- 1.8%
1,900 Cemex SA - CPO................ 6,818
2,600 Cemex SA De C.V............... 9,330
5,500 FEMSA SA Series B............. 18,725
3,750 Grupo Carso SA Series A1...... 19,531
*50,000 Grupo Financiero Bancomer
Series B.................... 20,008
1,000 Transportation Maritima A
ADR......................... 4,625
------------
79,037
------------
NETHERLANDS -- 3.4%
250 Akzo Nobel NV................. 34,109
1,200 Ing Groep NV.................. 43,151
917 KLM........................... 25,765
1,000 Polygram NV................... 50,875
------------
153,900
------------
NEW ZEALAND -- 0.7%
7,964 Air New Zealand Ltd. B........ 21,607
5,000 Carter Holt Harvey Ltd........ 11,340
------------
32,947
------------
NORWAY -- 2.2%
4,060 Fokus Bank.................... 27,913
2,500 Nycomed ASA Series A.......... 38,173
1,950 Saga Petroleum ASA Series A... 32,524
------------
98,610
------------
PHILIPPINES -- 0.6%
250 Philippine Long Distance
ADR......................... 12,750
15,000 Pilipino Telephone............ 12,690
------------
25,440
------------
PORTUGAL -- 0.1%
100 Telecel Communicacoes***...... 6,377
------------
SINGAPORE -- 2.8%
3,000 Development Bank of
Singapore................... 40,534
5,000 Far East Levingston
Shipbuilding................ 26,093
5,000 Keppel Corp................... 38,962
6,000 Straits Steamship Land........ 19,216
------------
124,805
------------
SOUTH KOREA -- 0.6%
750 Korea Electric Power Corp.
ADR......................... 15,375
SHARES MARKET
-------- VALUE
------------
SOUTH KOREA -- (CONTINUED)
500 Pohang Iron & Steel ADR....... $ 10,125
------------
25,500
------------
SPAIN -- 2.7%
200 Acerinox SA................... 28,845
400 Empresa Nacional de
Electricidad................ 28,414
500 Empresa Nacional de
Electricidad ADR............ 35,000
1,200 Telefonica De Espana SA....... 27,815
------------
120,074
------------
SWEDEN -- 1.2%
500 BT Industries AB***........... 9,300
1,160 Pharmacia & Upjohn, Inc.
SDR......................... 47,484
------------
56,784
------------
SWITZERLAND -- 2.2%
10 Cie Financ Richemont AG....... 14,001
25 Nestle SA..................... 26,755
55 Sulzer AG - Part Certified.... 29,329
15 Sulzer AG - Registered........ 8,636
25 Swissair - Registered......... 20,164
------------
98,885
------------
THAILAND -- 1.0%
18,900 Bangkok Metropolitan Bank..... 7,371
2,000 Land & House Co., Ltd......... 14,587
1,300 Siam City Cement Public Co.,
Ltd......................... 6,794
2,000 Siam Commercial............... 14,508
------------
43,260
------------
UNITED KINGDOM -- 13.3%
1,550 Allied Irish Banks PLC........ 10,385
500 Amersham International PLC.... 9,840
3,350 Associated British Foods...... 27,776
1,000 Bank of Ireland............... 9,130
7,000 Bank of Scotland.............. 36,955
2,625 Boc Group PLC................. 39,239
3,000 Boots Company PLC............. 30,932
10,000 British Gas PLC............... 38,419
3,000 British Telecom Co. PLC....... 20,253
2,000 BTR........................... 9,720
19,000 Cookson Group PLC............. 76,735
4,320 De la Rue PLC................. 42,324
5,000 National Grid Group PLC....... 16,728
7,000 Northern Foods PLC............ 24,497
3,851 Powergen PLC.................. 37,729
6,730 Rank Group PLC................ 50,157
2,900 Reckitt & Colman PLC.......... 35,930
2,538 Royal & Sun Alliance
Insurance................... 19,306
2,000 Royal Bank of Scotland........ 19,286
7,050 Sainsbury (J) PLC............. 46,811
------------
602,152
------------
VENEZUELA -- 0.2%
400 Cia Anonima Telef De Venezuela
ADR......................... 11,250
------------
Total common stocks........... $ 3,802,267
------------
------------
PREFERRED STOCKS -- 0.8%
FINLAND -- 0.6%
500 Nokia Corp. ADR............... $ 28,813
------------
BRAZIL -- 0.2%
12,800 Cervejaria Brahma 6,997
------------
Total preferred stocks........ $ 35,180
------------
------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
15
- --------------------------------------------------------------------------------
ITT HARTFORD INTERNATIONAL OPPORTUNITIES FUND, INC.
STATEMENT OF NET ASSETS -- (CONTINUED)
DECEMBER 31, 1996
PRINCIPAL MARKET
AMOUNT VALUE
-------- ------------
SHORT-TERM SECURITIES -- 16.1%
U.S. TREASURY BILL -- 0.6%
$ 25,000 4.85% due 03/20/97.......... $ 24,737
------------
REPURCHASE AGREEMENTS -- 15.5%
462,000 Interest in $399,594,000 joint
repurchase agreement dated
12/31/96 with State Street
Bank 6.7693% due 01/02/97;
maturity amount $462,174
(Collateralized by
$218,212,000 U.S. Treasury
Note 6.25% due 06/30/98 and
$280,160,000 U.S. Treasury
Strip (principal) 0% due
05/15/19)................... 462,000
239,000 Interest in $300,000,000 joint
repurchase agreement dated
12/31/96 with First Boston
6.75% due 01/02/97; maturity
amount $239,090
(Collateralized by
$301,035,000 U.S. Treasury
Note 6.25% due 10/31/01) 239,000
------------
701,000
------------
Total short-term securities... $ 725,737
------------
------------
DIVERSIFICATION OF ASSETS:
Total common stocks (cost $3,592,139)........ 84.1 % $ 3,802,267
Total preferred stocks (cost $24,941)........ 0.8 35,810
Total short-term securities (cost
$725,737).................................. 16.1 725,737
------ ------------
Total investment in securities
(Identified cost $4,342,817)............... 101.0 4,563,814
Excess of liabilities over cash, receivables
and other assets........................... (1.0 ) (43,650)
------ ------------
Net assets................................... 100.0 % $ 4,520,164
------ ------------
------ ------------
SUMMARY OF SHAREHOLDERS' EQUITY:
Capital stock, par value $.001 per share; authorized
300,000,000 shares; outstanding 421,612 shares..... $ 422
Paid in surplus...................................... 4,273,202
Distribution in excess of net investment income...... (1,737)
Accumulated undistributed net realized gain on
investments........................................ 20,733
Unrealized appreciation of investments............... 220,997
Unrealized appreciation of futures contracts......... 6,073
Unrealized appreciation of forward foreign currency
contracts (Note 2)................................. 538
Unrealized depreciation on translation of other
assets and liabilities in foreign currencies....... (64)
------------
Net assets at value.................................. $ 4,520,164
------------
------------
Class A
Net asset value per share ($4,293,981
DIVIDED BY 400,474 shares outstanding).... $10.72
------
------
Maximun offering price per share ($10.72
DIVIDED BY 94.5%)......................... $11.34
------
------
Class B
Net asset value per share ($162,526
DIVIDED BY 15,207 shares outstanding)..... $10.69
------
------
Class Y
Net asset value per share ($63,657
DIVIDED BY 5,931 shares outstanding)...... $10.73
------
------
* Non-income producing.
** The Fund had 1 March TSE 35 Index futures contract, 1 March MATIF CAC 40
Index futures contract, 1 March ALL ORDS Index futures contract, 2 January
IBEX futures contracts, 1 January OMX Stock Index futures contract and 1
March DTB DAX Index futures contract open as of December 31, 1996. These
contracts had a market value of $129,156 as of December 31, 1996.
*** Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
FORWARD FOREIGN CURRENCY CONTRACTS -- NOTE 2 -- OUTSTANDING AT DECEMBER 31, 1996
AGGREGATE DELIVERY UNREALIZED
DESCRIPTION TOTAL VALUE FACE VALUE DATE APPRECIATION
- ------------------------------ ----------- ----------- --------- ---------------
Spanish Peseta (Buy) $ 9,921 $ 9,816 01/17/97 $ 105
Spanish Peseta (Buy) 38,904 38,471 01/24/97 433
-----
$ 538
-----
-----
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
16
ITT HARTFORD MUTUAL FUNDS, INC.
STATEMENT OF OPERATIONS,
STATEMENT OF CHANGES IN NET ASSETS,
NOTES TO FINANCIAL STATEMENTS,
FINANCIAL HIGHLIGHTS
AND REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
ITT HARTFORD MUTUAL FUNDS, INC.
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM JULY 1, 1996 (INCEPTION) TO DECEMBER 31, 1996
ITT HARTFORD
ITT HARTFORD BOND INCOME
MONEY STRATEGY
MARKET FUND FUND
------------- ------------
INVESTMENT INCOME:
Dividends.............. $ -- $ --
Interest............... 252,103 323,463
Less: foreign tax
withheld.............. -- --
------------- ------------
Total investment
income.............. 252,103 323,463
------------- ------------
EXPENSES:
Investment advisory
fees.................. 22,884 30,076
Transfer agent fees.... 15,988 13,214
Distribution fees
Class A.............. 13,818 13,898
Class B.............. -- 225
Custodian fees and
expenses.............. 1,607 1,518
Accounting services.... 27,218 27,525
Registration fees...... 38,949 39,058
Board of directors
fees.................. 3,812 3,812
Audit fees............. 18,721 18,931
Legal fees............. 8,974 9,075
Amortization of
deferred
organizational
costs................. 2,186 3,276
Other expenses......... 6,676 7,149
------------- ------------
Total expenses
(before waivers and
reimbursements)..... 160,833 167,757
Expense waivers and
reimbursements........ (114,934) (109,635)
------------- ------------
Total expenses, net.... 45,899 58,122
------------- ------------
Net investment income
(loss)................ 206,204 265,341
------------- ------------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on
investments........... -- 159,623
Net realized gain on
forward foreign
currency contracts.... -- --
Net realized gain on
futures contracts..... -- --
Net realized loss on
foreign currency
transactions.......... -- --
Net unrealized
appreciation of
investments........... -- 159,276
Net unrealized
appreciation
(depreciation) on
translation of other
assets and liabilities
in foreign
currencies............ -- --
Net unrealized
appreciation of
futures contracts..... -- --
Unrealized appreciation
of forward foreign
currency contracts.... -- --
------------- ------------
Net realized and
unrealized gain on
investments........... -- 318,899
------------- ------------
Net increase in net
assets resulting from
operations............ $ 206,204 $ 584,240
------------- ------------
------------- ------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
18
ITT HARTFORD
ITT HARTFORD CAPITAL ITT HARTFORD ITT HARTFORD
ITT HARTFORD DIVIDEND AND ITT HARTFORD APPRECIATION SMALL INTERNATIONAL
ADVISERS FUND GROWTH FUND STOCK FUND FUND COMPANY FUND OPPORTUNITIES FUND
------------- ------------ ------------ --------------- ------------ ------------------
INVESTMENT INCOME:
Dividends.............. $ 59,991 $ 54,426 $ 32,800 $ 4,927 $ 5,710 $ 23,276
Interest............... 123,816 7,178 8,813 10,866 9,153 12,398
Less: foreign tax
withheld.............. (419) (37) (209) (37) (18) (2,757)
------------- ------------ ------------ --------------- ------------ --------
Total investment
income.............. 183,388 61,567 41,404 15,756 14,845 32,917
------------- ------------ ------------ --------------- ------------ --------
EXPENSES:
Investment advisory
fees.................. 38,897 13,810 15,357 18,419 14,746 12,988
Transfer agent fees.... 21,188 20,023 16,748 26,397 18,411 11,378
Distribution fees
Class A.............. 15,237 5,408 5,429 6,681 5,144 4,561
Class B.............. 1,479 544 1,275 977 299 167
Custodian fees and
expenses.............. 2,413 2,378 2,416 2,061 2,914 22,894
Accounting services.... 30,841 10,945 11,403 13,697 10,316 9,086
Registration fees...... 39,808 32,383 32,464 34,476 32,431 31,209
Board of directors
fees.................. 3,812 3,812 3,812 3,812 3,812 3,812
Audit fees............. 21,212 7,528 7,843 9,421 7,095 6,249
Legal fees............. 10,169 3,609 3,760 4,516 3,401 2,996
Amortization of
deferred
organizational
costs................. 3,276 3,276 3,276 3,276 3,276 3,276
Other expenses......... 9,116 3,550 3,861 4,556 2,943 2,918
------------- ------------ ------------ --------------- ------------ --------
Total expenses
(before waivers and
reimbursements)..... 197,448 107,266 107,644 128,289 104,788 111,534
Expense waivers and
reimbursements........ (123,622) (81,036) (78,838) (94,120) (79,380) (86,164)
------------- ------------ ------------ --------------- ------------ --------
Total expenses, net.... 73,826 26,230 28,806 34,169 25,408 25,370
------------- ------------ ------------ --------------- ------------ --------
Net investment income
(loss)................ 109,562 35,337 12,598 (18,413) (10,563) 7,547
------------- ------------ ------------ --------------- ------------ --------
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS:
Net realized gain on
investments........... 34,690 34,697 8,296 734,669 323,041 32,945
Net realized gain on
forward foreign
currency contracts.... -- -- -- -- -- 15,163
Net realized gain on
futures contracts..... -- -- -- -- -- 2,960
Net realized loss on
foreign currency
transactions.......... -- -- -- -- -- (834)
Net unrealized
appreciation of
investments........... 1,031,480 458,202 489,848 843,034 152,272 220,997
Net unrealized
appreciation
(depreciation) on
translation of other
assets and liabilities
in foreign
currencies............ -- -- -- 184 -- (64)
Net unrealized
appreciation of
futures contracts..... -- -- -- -- -- 6,073
Unrealized appreciation
of forward foreign
currency contracts.... -- -- -- -- -- 538
------------- ------------ ------------ --------------- ------------ --------
Net realized and
unrealized gain on
investments........... 1,066,170 492,899 498,144 1,577,887 475,313 277,778
------------- ------------ ------------ --------------- ------------ --------
Net increase in net
assets resulting from
operations............ $1,175,732 $ 528,236 $ 510,742 $1,559,474 $ 464,750 $ 285,325
------------- ------------ ------------ --------------- ------------ --------
------------- ------------ ------------ --------------- ------------ --------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
19
- --------------------------------------------------------------------------------
ITT Hartford Mutual Funds, Inc.
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM JULY 1, 1996 (INCEPTION) TO DECEMBER 31, 1996
ITT HARTFORD
ITT HARTFORD BOND INCOME
MONEY STRATEGY
MARKET FUND FUND
------------- ------------
OPERATIONS:
Net investment income
(loss)................ $ 206,204 $ 265,341
Net realized gain...... -- 159,623
Net unrealized
appreciation of
investments........... -- 159,276
------------- ------------
Net increase in net
assets resulting from
operations............ 206,204 584,240
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income
Class A.............. (206,198) (255,221)
Class B.............. -- (1,518)
Class Y.............. (6) (129)
From net realized gain
on investments
Class A.............. -- (59,781)
Class B.............. -- (686)
Class Y.............. -- (29)
CAPITAL SHARE
TRANSACTIONS:
Class A.............. 10,753,621 10,658,828
Class B.............. -- 123,373
Class Y.............. 280 5,057
------------- ------------
Net increase in net
assets................ 10,753,901 11,054,134
NET ASSETS:
Beginning of period.... -- --
End of period.......... $ 10,753,901 $11,054,134
------------- ------------
------------- ------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
20
ITT HARTFORD
ITT HARTFORD CAPITAL ITT HARTFORD ITT HARTFORD
ITT HARTFORD DIVIDEND AND ITT HARTFORD APPRECIATION SMALL INTERNATIONAL
ADVISERS FUND GROWTH FUND STOCK FUND FUND COMPANY FUND OPPORTUNITIES FUND
------------- ------------ ------------ --------------- ------------ ------------------
OPERATIONS:
Net investment income
(loss)................ $ 109,562 $ 35,337 $ 12,598 $ (18,413) $ (10,563) $ 7,547
Net realized gain...... 34,690 34,697 8,296 734,669 323,041 50,234
Net unrealized
appreciation of
investments........... 1,031,480 458,202 489,848 843,218 152,272 227,544
------------- ------------ ------------ --------------- ------------ ------------------
Net increase in net
assets resulting from
operations............ 1,175,732 528,236 510,742 1,559,474 464,750 285,325
DISTRIBUTIONS TO
SHAREHOLDERS:
From net investment
income
Class A.............. (98,048) (32,275) (10,931) -- -- (25,685)
Class B.............. (9,994) (3,872) (2,242) -- -- (963)
Class Y.............. (270) (226) (117) -- -- (446)
From net realized gain
on investments
Class A.............. -- (9,096) -- (261,732) (292,131) (11,118)
Class B.............. -- (1,043) -- (25,075) (14,827) (408)
Class Y.............. -- (55) -- (3,191) (4,569) (165)
CAPITAL SHARE
TRANSACTIONS:
Class A.............. 13,268,744 5,603,131 5,779,861 7,789,947 4,503,579 4,049,578
Class B.............. 1,509,188 727,849 1,249,897 858,773 255,112 160,933
Class Y.............. 33,877 35,634 44,134 106,388 75,111 63,113
------------- ------------ ------------ --------------- ------------ ------------------
Net increase in net
assets................ 15,879,229 6,848,283 7,571,344 10,024,584 4,987,025 4,520,164
NET ASSETS:
Beginning of period.... -- -- -- -- -- --
End of period.......... $15,879,229 $6,848,283 $ 7,571,344 $10,024,584 $ 4,987,025 $4,520,164
------------- ------------ ------------ --------------- ------------ ------------------
------------- ------------ ------------ --------------- ------------ ------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
21
- --------------------------------------------------------------------------------
ITT Hartford Mutual Funds, Inc.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. ORGANIZATION:
ITT Hartford Mutual Funds, Inc. (the Company) is an open-end management
investment company comprised of eight diversified portfolios (each a "Fund"
or together the "Funds"). The Company was organized under the laws of the
State of Maryland and was registered with the Securities and Exchange
Commission (SEC) under the Investment Company Act of 1940, as amended, as a
diversified open-end management investment company.
The Funds and their investment objectives are listed below:
ITT Hartford Money Market Fund Seeks maximum current income consistent with liquidity and
(Money Market Fund) preservation of capital.
ITT Hartford Bond Income Strategy Fund Seeks a high level of current income consistent with a
(Bond Income Strategy Fund) competitive total return, as compared to bond funds with
similar investment objectives and policies, by investing
primarily in debt securities.
ITT Hartford Advisers Fund (Advisers Seeks maximum long-term total rate of return by investing in
Fund) common stocks and other equity securities, bonds and other
debt securities and money market instruments.
ITT Hartford Dividend and Growth Fund Seeks a high level of current income consistent with growth
(Dividend and Growth Fund) of capital by investing primarily in equity securities.
ITT Hartford Stock Fund (Stock Fund) Seeks long-term growth of capital with income a secondary
consideration by investing primarily in equity securities.
ITT Hartford Capital Appreciation Fund Seeks growth of capital by investing primarily in equity
(Capital Appreciation Fund) securities selected on the basis of potential for capital
appreciation.
ITT Hartford Small Company Fund Seeks growth of capital by investing primarily in equity
(Small Company Fund) securities selected on the basis of potential for capital
appreciation.
ITT Hartford International Seeks growth of capital by investing primarily in equity
Opportunities Fund (International securities issued by non-U.S. companies.
Opportunities Fund)
The Company consists of eight series of portfolios, each of which is divided
into Class A, Class B and Class Y shares except for the Money Market Fund,
which is divided into Class A and Class Y shares. Class A shares are sold
with a front-end load sales charge of up to 5.50%. Class B shares are sold
with a contingent deferred sales charge which declines from 5.00% of net
asset value to zero depending on the period of time the shares are held.
Class Y shares are sold to certain institutional investors without a sales
charge. All classes of shares have identical voting, dividend, liquidation
and other rights and the same terms and conditions, except that each class
may have different expenses which may affect performance.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies of the Funds,
which are in accordance with generally accepted accounting principles in the
investment company industry:
a) SECURITY TRANSACTIONS--Security transactions are recorded on the trade
date (date the order to buy or sell is executed). Security gains and
losses are determined on the basis of identified cost.
b) SECURITY VALUATION--Debt securities (other than short-term obligations)
are valued on the basis of valuations furnished by an unaffiliated
pricing service which determines valuations for normal institutional size
trading units of debt securities. Mortgage securities are valued at the
bid price. Short-term securities held in the Money Market Fund are valued
at amortized cost or original cost plus accrued interest receivable, both
of which approximate market value. In the Bond Income Strategy, Advisers,
Dividend and Growth, Stock, Capital Appreciation, Small Company and
International Opportunities Funds, short-term investments purchased with
a maturity of 60 days or less are valued at amortized cost, which
approximates market value. Short-term investments purchased with a
maturity of greater than 60 days are valued based on market quotations
until the remaining days to maturity become less than 61 days. From that
time until maturity, the investments are valued at amortized cost.
22
Equity securities are valued at the last sales price reported on the
principal securities markets on which such securities are traded
(domestic or foreign). If no sale occurred on such day and in the case of
certain equity securities traded over-the-counter, then such securities
are valued at the mean between the bid and asked prices. Securities
quoted in foreign currencies are translated into U.S. dollars at the
prevailing exchange rate at the end of each business day. Options are
valued at the last sales price; if no sale occurred on such day, then
options are valued at the mean between the bid and asked prices.
Securities for which market quotations are not readily available and all
other assets are valued in good faith at fair value by a person
designated by the Funds' Board of Directors.
c) FOREIGN CURRENCY TRANSACTIONS--The accounting records of the Funds are
maintained in U.S. dollars. All assets and liabilities initially
expressed in foreign currencies are converted into U.S. dollars at the
prevailing exchange rates. Purchases and sales of investment securities,
dividends and interest income and certain expenses are translated at the
rates of exchange prevailing on the respective dates of such
transactions.
The Funds do not isolate that portion of the results of operations
resulting from changes in the foreign exchange rates on investments from
the fluctuations arising from changes in the market prices of securities
held. Such fluctuations are included with the net realized and unrealized
gain (loss) on investments in the accompanying financial statements.
Net realized foreign exchange gains or losses arise from sales of
portfolio securities, sales of foreign currencies, and the difference
between asset and liability amounts initially stated in foreign
currencies and the U.S. dollar value of the amounts actually received or
paid. Net unrealized foreign exchange gains or losses arise from changes
in the value of portfolio securities and other assets and liabilities at
the end of the reporting period, resulting from changes in the exchange
rates.
d) REPURCHASE AGREEMENTS--A repurchase agreement is an agreement by which
the seller of a security agrees to repurchase the security sold at a
mutually agreed upon time and price. At the time the Funds enter into a
repurchase agreement, the value of the underlying collateral
security(ies), including accrued interest receivable, will be equal to or
exceed the value of the repurchase agreement and, in the case of
repurchase agreements exceeding one day, the value of the underlying
security(ies), including accrued interest receivable, is required during
the term of the agreement to be equal to or exceed the value of the
repurchase agreement. Securities which serve to collateralize the
repurchase agreement are held by each Fund's custodian in book entry or
physical form in the custodial account of the Fund. Repurchase agreements
are valued at cost plus accrued interest receivable.
In June 1996, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 125, ACCOUNTING
FOR TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENTS OF
LIABILITIES. This Statement provides consistent standards for
distinguishing transfers of financial assets that are sales from
transfers that are secured borrowings. Under the provisions of SFAS No.
125, transfers of certain financial assets, such as repurchase
agreements, are required to be accounted for as sales if control, as
defined, over those assets has been surrendered by the transferor. The
Statement also requires collateral under repurchase agreements and
securities lending transactions to be separately classified by the debtor
and recognized as an asset by the creditor in the respective financial
statements if certain conditions are met. SFAS No. 125 is effective for
transfers of financial assets occurring after December 31, 1996, except
for certain transfers for which the effective date has been delayed to
January 1, 1998 by SFAS No. 127, DEFERRAL OF THE EFFECTIVE DATE OF
CERTAIN PROVISIONS OF FASB STATEMENT NO. 125, issued by the FASB in
December 1996. Management does not believe the adoption of this new
accounting standard will have a material impact on the financial position
or future results of operations of the Funds.
e) JOINT TRADING ACCOUNT--Pursuant to an exemptive order issued by the
Securities and Exchange Commission, the Funds may transfer uninvested
cash balances into a joint trading account managed by Hartford Investment
Management Company (HIMCO) or Wellington Management Company (Wellington).
These balances may be invested in one or more repurchase agreements
and/or short-term money market instruments.
f) FUTURES, OPTIONS ON FUTURES AND OPTIONS TRANSACTIONS--The Funds enter
into futures contracts to retain their cash balances and yet be exposed
to the market, thereby providing the liquidity necessary to accommodate
redemptions while at the same time providing shareholders the investment
return of a fully invested portfolio. A futures contract is an agreement
between two parties to buy and sell a security at a predetermined price
on a future date. When the Funds enter into such contracts, they are
required to deposit with their broker an amount of "initial margin" of
cash or U.S.
23
- --------------------------------------------------------------------------------
ITT HARTFORD MUTUAL FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
Treasury Bills. Subsequent payments, called maintenance margin, to and
from the broker, are made on a daily basis as the price of the underlying
debt security fluctuates, making the long and short positions in the
futures contract more or less valuable (i.e., mark-to-market) and
resulting in an unrealized gain or loss to the Funds. The market value of
a traded futures contract is the last sale price. In the absence of a
last sale price, the last offering price. In the absence of either of
these prices, fair value is determined according to procedures
established by the Funds' Board of Directors. The variation margin on
futures contracts is included in the excess of cash, receivables and
other assets over liabilities or the excess of liabilities over cash,
receivables and other assets, as applicable, in each Fund's Statement of
Net Assets.
At any time prior to expiration of the futures contract, the Funds may
close the position by taking an opposite position which would operate to
terminate the position in the futures contract. A final determination of
maintenance margin is then made, additional cash is required to be paid
by or released to the Funds and the Funds realize a gain or loss.
The premium paid by the Fund for the purchase of a call or put option is
included in the Fund's Statement of Net Assets as an investment and
subsequently "marked-to-market" to reflect the current market value of
the option purchased as of the end of the reporting period. If an option
which the Fund has purchased expires on its stipulated expiration date,
the Fund realizes a loss in the amount of the cost of the option. If the
Fund enters into a closing transaction, it realizes a gain or loss,
depending upon whether the proceeds from the sale are greater or less
than the cost of the option. If the Fund exercises a put option, it
realizes a gain or loss from the sale of the underlying security and the
proceeds from such sale will be decreased by the premium originally paid.
If the Fund exercises a call option, the cost of the security which the
Fund purchases upon exercise of the option will be increased by the
premium originally paid.
g) FEDERAL INCOME TAXES--For Federal income tax purposes, the Funds intend
to continue to qualify as regulated investment companies under Subchapter
M of the Internal Revenue Code by distributing substantially all of their
taxable income and net realized capital gains to their shareholders or
otherwise complying with the requirements for regulated investment
companies. Accordingly, no provision for Federal income taxes has been
made in the accompanying financial statements.
h) FUND SHARE VALUATION AND DIVIDEND DISTRIBUTIONS TO SHAREHOLDERS--Orders
for the Funds' shares are executed in accordance with the investment
instructions of the shareholders. Dividend income is accrued as of the
ex-dividend date. Interest income and expenses are accrued on a daily
basis. The net asset value of each Fund's shares is determined as of the
close of each business day of the New York Stock Exchange (the Exchange).
Orders for the purchase of a Fund's shares received prior to the close of
the Exchange on any day on which the Fund is open for business are priced
at the per-share net asset value determined as of the close of the
Exchange. Orders received after the close of the Exchange, or on a day on
which the Exchange and/or the Fund is not open for business, are priced
at the next determined per-share net asset value.
Each Fund intends to distribute substantially all of its net investment
income and realized capital gains to shareholders no less frequently than
once a year. Normally, dividends from net investment income of the Stock,
Capital Appreciation, Small Company and International Opportunities Funds
will be declared and paid annually; dividends from net investment income
of the Advisers and Dividend and Growth Funds will be declared and paid
semi-annually; dividends from the net investment income of the Bond
Income Strategy Fund will be declared and paid monthly, and dividends
from net investment income of the Money Market Fund will be declared
daily and paid monthly. Dividends from the Money Market Fund are not paid
on shares until the day following the date on which the shares are
issued. Unless shareholders specify otherwise, all dividends and
distributions will be automatically reinvested in additional full or
fractional shares of each Fund.
i) FORWARD FOREIGN CURRENCY CONTRACTS--As of December 31, 1996, the
International Opportunities Fund had entered into forward foreign
currency exchange contracts that obligate the Fund to repurchase
currencies at specified future dates. The Fund enters into forward
foreign currency contracts to manage currency exchange rate risk.
Forward contracts involve elements of market risk in excess of the amount
reflected in the Statement of Net Assets. The Fund bears the risk of an
unfavorable change in the foreign exchange rate underlying the forward
contract.
j) ORGANIZATIONAL COSTS--Costs incurred by the Funds in connection with
their organization and public offering of shares have been deferred and
are being amortized on a straight-line basis over five years. The
unamortized deferred
24
organizational costs of each Fund as of December 31, 1996 are included in
the excess of cash, receivables and other assets over liabilities or the
excess of liabilities over cash, receivables and other assets, as
applicable, in each Fund's Statement of Net Assets.
k) USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the financial statements and the reported
amounts of income and expenses during the period. Operating results in
the future could vary from the amounts derived from management's
estimates.
3. EXPENSES:
a) INVESTMENT MANAGEMENT AND ADVISORY AGREEMENTS--HIMCO, a wholly-owned
subsidiary of Hartford Life Insurance Company (HL), serves as investment
adviser to each Fund pursuant to an Investment Advisory Agreement dated
July 22, 1996. HIMCO has overall investment supervisory responsibility
for each Fund and is responsible for the day to day investment decisions
with respect to the assets of the Bond Income Strategy and the Money
Market Funds. In addition, HIMCO provides administrative personnel,
services, equipment and facilities and office space for the operation of
the Company. HIMCO has contracted with Wellington for the provision of
day-to-day management services to the Advisers, Dividend and Growth,
Stock, Capital Appreciation, Small Company and International
Opportunities Funds in accordance with each Fund's investment objectives
and policies. Each Fund pays a fee to HIMCO, a portion of which may be
used to compensate Wellington.
The schedule below reflects the rates of compensation paid to HIMCO for
services rendered:
MONEY MARKET FUND
AVERAGE DAILY NET ASSETS ANNUAL FEE
- ------------------------------------ ------------
On first $500 million .50%
On next $500 million .45%
Over $1 billion .40%
BOND INCOME STRATEGY FUND
AVERAGE DAILY NET ASSETS ANNUAL FEE
- ------------------------------------ ------------
On first $500 million .65%
On next $500 million .55%
Over $1 billion .50%
ADVISERS AND
DIVIDEND AND GROWTH FUNDS
AVERAGE DAILY NET ASSETS ANNUAL FEE
- ------------------------------------ ------------
On first $500 million .75%
On next $500 million .65%
Over $1 billion .60%
STOCK AND
CAPITAL APPRECIATION FUNDS
AVERAGE DAILY NET ASSETS ANNUAL FEE
- ------------------------------------ ------------
On first $500 million .80%
On next $500 million .70%
Over $1 billion .65%
25
- --------------------------------------------------------------------------------
ITT HARTFORD MUTUAL FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
SMALL COMPANY AND
INTERNATIONAL OPPORTUNITIES FUNDS
AVERAGE DAILY NET ASSETS ANNUAL FEE
- ------------------------------------ ------------
On first $500 million .85%
On next $500 million .75%
Over $1 billion .70%
b) DISTRIBUTION AND SERVICE PLANS FOR CLASS A AND B SHARES--Hartford
Securities Distribution Company, Inc. (HSD, or the Distributor), a
wholly-owned subsidiary of HL, is the principal underwriter and
distributor of the Funds. HSD is solely engaged in distribution
activities which include marketing, distribution and clearing of shares
through broker/dealers, financing distribution costs, supervising the
activities of the transfer agent and maintaining financial books and
records.
The Funds have adopted Distribution and Service Plans to compensate the
Distributor for the distribution of Class A and Class B shares and
servicing the accounts of Class A and Class B shareholders. The Class A
plan provides for periodic payments to broker-dealers who provide
services to accounts that hold Class A shares and for promotional and
other sales related costs. The Distributor is compensated at an annual
rate that may not exceed 0.35% of the average daily net asset value of
Class A shares of each Fund, some or all of which may be remitted to
broker-dealers. Up to 0.25% of the fee may be used for shareholder
servicing expenses with the remainder used for distribution expenses. The
Class A Rule 12b-1 fee for each Fund has been voluntarily capped at 0.30%
through July 1, 1997. The cap may be removed at any time after this date.
Some or all of the 12b-1 fee for Class B shares may be paid to broker-
dealers for distribution and or shareholder account services. Under the
Plan, the Fund pays the Distributor 1.00% of the average daily net assets
of Class B shares that are outstanding for 8 years or less, 0.25% of
which is intended as a fee for services provided to existing shareholders
with the remainder used for distribution expenses.
c) OPERATING EXPENSES--Allocable expenses incurred by the Funds are
allocated to each Fund in proportion to the average daily net assets of
each Fund, except where the allocation of certain expenses is more fairly
made directly to the Fund. ITT Hartford Group, Inc. (ITT Hartford), the
ultimate parent of HIMCO, has voluntarily agreed to limit the total
operating expenses of the Class A and Class Y shares of the Money Market
Fund and Class A, B and Y shares of all other Funds, exclusive of taxes,
interest, brokerage commissions, certain distribution expenses and
extraordinary expenses, until at least July 1, 1997 as follows:
FUND CLASS A CLASS B CLASS Y
----------------------------------------- ------- ------- -------
Money Market Fund........................ 1.00% N/A 0.55%
Bond Income Strategy Fund................ 1.25% 1.95% 0.80%
Advisers Fund............................ 1.40% 2.10% 0.95%
Dividend and Growth Fund................. 1.40% 2.10% 0.95%
Stock Fund............................... 1.45% 2.15% 1.00%
Capital Appreciation Fund................ 1.45% 2.15% 1.00%
Small Company Fund....................... 1.45% 2.15% 1.00%
International Opportunities Fund......... 1.65% 2.35% 1.20%
Such voluntary and temporary fee waivers and expense limitation
arrangements may be terminated by ITT Hartford at any time without
notice.
d) OTHER RELATED PARTY TRANSACTIONS--ITT Hartford and its subsidiaries
provide facilities and office equipment, as well as perform certain other
services, including fund accounting and financial reporting, to the
Funds. Certain officers of the Funds are directors and/or officers of
HIMCO, HSD and/or ITT Hartford or its subsidiaries. No officer of the
Funds receives any compensation directly from the Funds.
26
4. AFFILIATE HOLDINGS:
a) As of December 31, 1996, HIMCO had ownership of shares in the Funds as
follows:
FUND CLASS A CLASS B CLASS Y
- ------------------------------------------------------------------------------------------- ------------ ----------- -----------
Money Market Fund.......................................................................... 10,210,019 N/A 128
Bond Income Strategy Fund.................................................................. 1,031,000 488 490
Advisers Fund.............................................................................. 1,007,370 479 479
Dividend and Growth Fund................................................................... 302,557 478 479
Stock Fund................................................................................. 301,006 476 476
Capital Appreciation Fund.................................................................. 309,810 490 490
Small Company Fund......................................................................... 321,031 508 507
International Opportunities Fund........................................................... 303,122 479 480
5. INVESTMENT TRANSACTIONS:
For the period from July 1, 1996 (inception) to December 31, 1996,
investment transactions (excluding short-term investments) were as follows:
COST OF PROCEEDS FROM
FUND PURCHASES SALES
- -------------------------------------------------------------------------------------- ---------------- ------------------
Bond Income Strategy Fund............................................................. $ 16,658,804 $ 6,387,439
Advisers Fund......................................................................... 15,498,768 1,893,363
Dividend and Growth Fund.............................................................. 7,171,445 1,051,071
Stock Fund............................................................................ 6,684,137 431,866
Capital Appreciation Fund............................................................. 14,701,916 6,730,604
Small Company Fund.................................................................... 6,423,566 2,203,829
International Opportunities Fund...................................................... 4,161,383 577,089
6. TAX COST AND UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS:
As of December 31, 1996, the aggregate gross unrealized appreciation and
depreciation on all investments, based on cost for federal income tax
purposes, was as follows:
TAX UNREALIZED UNREALIZED NET UNREALIZED
FUND COST APPRECIATION DEPRECIATION APPRECIATION
- ------------------------------------------------------------------ ------------- ------------ ------------ --------------
Bond Income Strategy Fund......................................... $ 10,601,500 $ 190,409 $ (31,133) $ 159,276
Advisers Fund..................................................... 14,456,044 1,180,775 (149,436) 1,031,339
Dividend and Growth Fund.......................................... 6,418,218 530,811 (78,755) 452,056
Stock Fund........................................................ 6,861,567 596,342 (106,495) 489,847
Capital Appreciation Fund......................................... 8,821,982 1,186,092 (343,058) 843,034
Small Company Fund................................................ 4,786,372 454,968 (303,291) 151,677
International Opportunities Fund.................................. 4,342,817 362,745 (141,748) 220,997
7. CAPITAL SHARE TRANSACTIONS:
The following information is for the period from July 1, 1996 (inception) to
December 31, 1996:
MONEY BOND INCOME DIVIDEND AND
MARKET FUND STRATEGY FUND ADVISERS FUND GROWTH FUND
----------------------- ---------------------- ---------------------- -------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ----------- --------- ----------- --------- ----------- ------- ----------
CLASS A
Shares sold.................... 10,742,496 $10,742,496 1,033,915 $10,347,528 1,286,188 $13,174,231 528,490 $5,568,935
Shares issued on reinvestment
of distributions.............. 206,091 206,091 30,839 314,647 8,674 97,406 3,550 41,188
Shares redeemed................ (194,966) (194,966) (324) (3,347) (261) (2,893) (612) (6,992)
---------- ----------- --------- ----------- --------- ----------- ------- ----------
Net increase................... 10,753,621 $10,753,621 1,064,430 $10,658,828 1,294,601 $13,268,744 531,428 $5,603,131
---------- ----------- --------- ----------- --------- ----------- ------- ----------
---------- ----------- --------- ----------- --------- ----------- ------- ----------
27
- --------------------------------------------------------------------------------
ITT HARTFORD MUTUAL FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
CAPITAL SMALL COMPANY INTERNATIONAL
STOCK FUND APPRECIATION FUND FUND OPPORTUNITIES FUND
----------------------- ---------------------- ---------------------- -------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ----------- --------- ----------- --------- ----------- ------- ----------
CLASS A
Shares sold.................... 544,300 $ 5,784,608 658,540 $ 7,560,478 410,929 $ 4,223,877 397,759 $4,020,902
Shares issued on reinvestment
of distributions.............. 927 10,897 19,716 260,446 27,530 290,714 3,456 36,538
Shares redeemed................ (1,348) (15,644) (2,381) (30,977) (972) (11,012) (741) (7,862)
---------- ----------- --------- ----------- --------- ----------- ------- ----------
Net increase................... 543,879 $ 5,779,861 675,875 $ 7,789,947 437,487 $ 4,503,579 400,474 $4,049,578
---------- ----------- --------- ----------- --------- ----------- ------- ----------
---------- ----------- --------- ----------- --------- ----------- ------- ----------
MONEY BOND INCOME DIVIDEND AND
MARKET FUND STRATEGY FUND ADVISERS FUND GROWTH FUND
----------------------- ---------------------- ---------------------- -------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ----------- --------- ----------- --------- ----------- ------- ----------
CLASS B
Shares sold.................... -- $ -- 12,400 $ 126,990 135,067 $ 1,502,853 63,586 $ 723,176
Shares issued on reinvestment
of distributions.............. -- -- 215 2,203 890 9,972 405 4,673
Shares redeemed................ -- -- (561) (5,820) (324) (3,637) -- --
---------- ----------- --------- ----------- --------- ----------- ------- ----------
Net increase................... -- $ -- 12,054 $ 123,373 135,633 $ 1,509,188 63,991 $ 727,849
---------- ----------- --------- ----------- --------- ----------- ------- ----------
---------- ----------- --------- ----------- --------- ----------- ------- ----------
CAPITAL INTERNATIONAL
STOCK FUND APPRECIATION FUND SMALL COMPANY FUND OPPORTUNITIES FUND
----------------------- ---------------------- ---------------------- -------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ----------- --------- ----------- --------- ----------- ------- ----------
CLASS B
Shares sold.................... 109,160 $ 1,251,332 64,875 $ 834,147 22,152 $ 250,555 15,077 $ 159,562
Shares issued on reinvestment
of distributions.............. 189 2,215 1,881 24,777 1,387 14,601 130 1,371
Shares redeemed................ (315) (3,650) (11) (151) (880) (10,044) -- --
---------- ----------- --------- ----------- --------- ----------- ------- ----------
Net increase................... 109,034 $ 1,249,897 66,745 $ 858,773 22,659 $ 255,112 15,207 $ 160,933
---------- ----------- --------- ----------- --------- ----------- ------- ----------
---------- ----------- --------- ----------- --------- ----------- ------- ----------
MONEY BOND INCOME DIVIDEND AND
MARKET FUND STRATEGY FUND ADVISERS FUND GROWTH FUND
----------------------- ---------------------- ---------------------- -------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ----------- --------- ----------- --------- ----------- ------- ----------
CLASS Y
Shares sold.................... 276 $ 276 490 $ 4,900 3,039 $ 33,608 3,119 $ 35,353
Shares issued on reinvestment
of distributions.............. 4 4 15 157 24 269 24 281
Shares redeemed................ -- -- -- -- -- -- -- --
---------- ----------- --------- ----------- --------- ----------- ------- ----------
Net increase................... 280 $ 280 505 $ 5,057 3,063 $ 33,877 3,143 $ 35,634
---------- ----------- --------- ----------- --------- ----------- ------- ----------
---------- ----------- --------- ----------- --------- ----------- ------- ----------
CAPITAL INTERNATIONAL
STOCK FUND APPRECIATION FUND SMALL COMPANY FUND OPPORTUNITIES FUND
----------------------- ---------------------- ---------------------- -------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ----------- --------- ----------- --------- ----------- ------- ----------
CLASS Y
Shares sold.................... 3,838 $ 44,018 7,775 $ 103,199 6,324 $ 70,546 5,873 $ 62,502
Shares issued on reinvestment
of distributions.............. 10 116 241 3,189 432 4,565 58 611
Shares redeemed................ -- -- -- -- -- -- -- --
---------- ----------- --------- ----------- --------- ----------- ------- ----------
Net increase................... 3,848 $ 44,134 8,016 $ 106,388 6,756 $ 75,111 5,931 $ 63,113
---------- ----------- --------- ----------- --------- ----------- ------- ----------
---------- ----------- --------- ----------- --------- ----------- ------- ----------
28
8. RECLASSIFICATION OF CAPITAL ACCOUNTS:
In accordance with AICPA Statement of Position 93-2, DETERMINATION,
DISCLOSURE AND FINANCIAL STATEMENT PRESENTATION OF INCOME, CAPITAL GAIN AND
RETURN OF CAPITAL DISTRIBUTIONS BY INVESTMENT COMPANIES, several
reclassifications have been recorded in the Funds' capital accounts. These
reclassifications had no impact on the net asset value of the Funds and are
designed generally to present accumulated undistributed (distribution in
excess of) net investment income and net realized gain on investments on a
tax basis which is considered to be more informative to the shareholder. As
of December 31, 1996, the Funds recorded the following reclassifications to
increase (decrease) the accounts listed below:
ACCUMULATED
UNDISTRIBUTED ACCUMULATED
(DISTRIBUTION UNDISTRIBUTED
IN EXCESS OF) NET REALIZED
NET INVESTMENT GAIN ON PAID IN
INCOME INVESTMENTS SURPLUS
-------------- ------------- -------
Bond Income Strategy Fund..................................................... $ 1,817 $ (1,817) $--
Advisers Fund................................................................. 526 (526) --
Dividend and Growth Fund...................................................... (24) -- 24
Stock Fund.................................................................... 692 (692) --
Capital Appreciation Fund..................................................... 18,413 (18,413) --
Small Company Fund............................................................ 10,563 (10,563) --
International Opportunities Fund.............................................. 17,810 (17,810) --
29
- --------------------------------------------------------------------------------
ITT Hartford Mututal Funds, Inc.
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
NET REALIZED
AND DISTRIBUTIONS
NET ASSET UNREALIZED DIVIDENDS FROM NET
VALUE AT NET GAIN (LOSS) TOTAL FROM FROM NET REALIZED
BEGINNING INVESTMENT ON INVESTMENT INVESTMENT GAIN ON
OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME INVESTMENTS
--------- ---------- ------------ ----------- ---------- -------------
ITT HARTFORD MONEY MARKET
FUND
July 1, 1996 to
December 31, 1996
Class A................ $1.00 $ 0.02 $ 0.00 $ 0.02 $(0.02) $ 0.00
Class Y................ 1.00 0.02 0.00 0.02 (0.02) 0.00
ITT HARTFORD BOND INCOME
STRATEGY FUND
July 1, 1996 to
December 31, 1996
Class A................ 10.00 0.26 0.31 0.57 (0.25) (0.06)
Class B................ 10.00 0.20 0.34 0.54 (0.23) (0.06)
Class Y................ 10.00 0.28 0.31 0.59 (0.26) (0.06)
ITT HARTFORD ADVISERS
FUND
July 1, 1996 to
December 31, 1996
Class A................ 10.00 0.09 1.07 1.16 (0.08) 0.00
Class B................ 10.00 0.02 1.11 1.13 (0.08) 0.00
Class Y................ 10.00 0.03 1.16 1.19 (0.09) 0.00
ITT HARTFORD DIVIDEND AND
GROWTH FUND
July 1, 1996 to
December 31, 1996
Class A................ 10.00 0.07 1.46 1.53 (0.06) (0.02)
Class B................ 10.00 0.01 1.48 1.49 (0.07) (0.02)
Class Y................ 10.00 0.02 1.53 1.55 (0.07) (0.02)
ITT HARTFORD STOCK FUND
July 1, 1996 to
December 31, 1996
Class A................ 10.00 0.02 1.53 1.55 (0.02) 0.00
Class B................ 10.00 0.00 1.52 1.52 (0.02) 0.00
Class Y................ 10.00 0.01 1.57 1.58 (0.03) 0.00
ITT HARTFORD CAPITAL
APPRECIATION FUND
July 1, 1996 to
December 31, 1996
Class A................ 10.00 (0.03) 3.80 3.77 0.00 (0.41)
Class B................ 10.00 (0.02) 3.75 3.73 0.00 (0.41)
Class Y................ 10.00 0.00 3.79 3.79 0.00 (0.41)
ITT HARTFORD SMALL
COMPANY FUND
July 1, 1996 to
December 31, 1996
Class A................ 10.00 (0.02) 1.42 1.40 0.00 (0.72)
Class B................ 10.00 (0.02) 1.39 1.37 0.00 (0.72)
Class Y................ 10.00 0.00 1.43 1.43 0.00 (0.72)
ITT HARTFORD
INTERNATIONAL
OPPPORTUNITIES FUND
July 1, 1996 to
December 31, 1996
Class A................ 10.00 0.02 0.79 0.81 (0.06) (0.03)
Class B................ 10.00 (0.01) 0.80 0.79 (0.07) (0.03)
Class Y................ 10.00 0.00 0.84 0.84 (0.08) (0.03)
(a) Annualized.
(b) Does not include sales charges.
(c) The portfolio turnover rate and the average commission rate paid are
calculated at the Fund level and are non-class specific.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
30
AVERAGE NET
NET ASSETS ASSETS
NET ASSET AT END OF DURING THE RATIO OF
CHANGE IN VALUE AT PERIOD PERIOD EXPENSES TO
TOTAL NET ASSET END TOTAL (IN (IN AVERAGE
DISTRIBUTIONS VALUE OF PERIOD RETURN(A)(B) THOUSANDS) THOUSANDS) NET ASSETS(A)
---------- ------------ --------- ------- ----------- ------------ -------------
ITT HARTFORD MONEY MARKET
FUND
July 1, 1996 to
December 31, 1996
Class A................ $(0.02) $ 0.00 $1.00 4.53% $10,754 $10,339 3.30%
Class Y................ (0.02) 0.00 1.00 5.28 0.3 0.3 7619.74
ITT HARTFORD BOND INCOME
STRATEGY FUND
July 1, 1996 to
December 31, 1996
Class A................ (0.31) 0.26 10.26 12.91 10,925 10,402 3.22
Class B................ (0.29) 0.25 10.25 12.12 124 49 45.58
Class Y................ (0.32) 0.27 10.27 13.40 5 5 415.09
ITT HARTFORD ADVISERS
FUND
July 1, 1996 to
December 31, 1996
Class A................ (0.08) 1.08 11.08 26.05 14,347 11,384 3.42
Class B................ (0.08) 1.05 11.05 25.42 1,499 325 10.49
Class Y................ (0.09) 1.10 11.10 26.76 34 6 323.30
ITT HARTFORD DIVIDEND AND
GROWTH FUND
July 1, 1996 to
December 31, 1996
Class A................ (0.08) 1.45 11.45 34.46 6,083 4,032 4.80
Class B................ (0.09) 1.40 11.40 33.39 730 119 22.77
Class Y................ (0.09) 1.46 11.46 34.90 36 7 315.44
ITT HARTFORD STOCK FUND
July 1, 1996 to
December 31, 1996
Class A................ (0.02) 1.53 11.53 34.92 6,273 4,047 4.64
Class B................ (0.02) 1.50 11.50 34.25 1,254 277 12.14
Class Y................ (0.03) 1.55 11.55 35.60 44 7 297.22
ITT HARTFORD CAPITAL
APPRECIATION FUND
July 1, 1996 to
December 31, 1996
Class A................ (0.41) 3.36 13.36 85.06 9,028 4,978 4.75
Class B................ (0.41) 3.32 13.32 84.15 889 215 14.61
Class Y................ (0.41) 3.38 13.38 85.50 107 10 207.19
ITT HARTFORD SMALL
COMPANY FUND
July 1, 1996 to
December 31, 1996
Class A................ (0.72) 0.68 10.68 31.78 4,673 3,845 4.95
Class B................ (0.72) 0.65 10.65 31.11 241 66 37.48
Class Y................ (0.72) 0.71 10.71 32.47 72 8 255.90
ITT HARTFORD
INTERNATIONAL
OPPPORTUNITIES FUND
July 1, 1996 to
December 31, 1996
Class A................ (0.09) 0.72 10.72 18.35 4,294 3,407 6.07
Class B................ (0.10) 0.69 10.69 17.71 163 36 64.02
Class Y................ (0.11) 0.73 10.73 18.83 64 8 279.41
RATIO OF RATIO OF
EXPENSES TO NET
AVERAGE INVESTMENT AVERAGE
NET ASSETS INCOME (LOSS) PORTFOLIO COMMISSION
AFTER WAIVERS AND TO AVERAGE TURNOVER RATE
REIMBURSEMENTS(A) NET ASSETS(A) RATE(C) PAID(C)
----------------- ------------- --------- ----------
ITT HARTFORD MONEY MARKET
FUND
July 1, 1996 to
December 31, 1996
Class A................ 1.00% 4.49% N/A N/A
Class Y................ 0.55 4.56
ITT HARTFORD BOND INCOME
STRATEGY FUND
July 1, 1996 to
December 31, 1996
Class A................ 1.25 5.72 75.52% N/A
Class B................ 1.95 5.22
Class Y................ 0.80 6.17
ITT HARTFORD ADVISERS
FUND
July 1, 1996 to
December 31, 1996
Class A................ 1.40 2.13 19.75 $0.0297
Class B................ 2.10 1.24
Class Y................ 0.95 2.75
ITT HARTFORD DIVIDEND AND
GROWTH FUND
July 1, 1996 to
December 31, 1996
Class A................ 1.40 1.95 29.80 0.0306
Class B................ 2.10 0.82
Class Y................ 0.95 2.41
ITT HARTFORD STOCK FUND
July 1, 1996 to
December 31, 1996
Class A................ 1.45 0.71 11.87 0.0281
Class B................ 2.15 (0.12)
Class Y................ 1.00 1.37
ITT HARTFORD CAPITAL
APPRECIATION FUND
July 1, 1996 to
December 31, 1996
Class A................ 1.45 (0.70) 149.99 0.0381
Class B................ 2.15 (1.53)
Class Y................ 1.00 0.04
ITT HARTFORD SMALL
COMPANY FUND
July 1, 1996 to
December 31, 1996
Class A................ 1.45 (0.60) 69.92 0.0313
Class B................ 2.15 (1.30)
Class Y................ 1.00 0.03
ITT HARTFORD
INTERNATIONAL
OPPPORTUNITIES FUND
July 1, 1996 to
December 31, 1996
Class A................ 1.65 0.51 21.51 0.0175
Class B................ 2.35 (0.86)
Class Y................ 1.20 0.57
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
31
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS OF
ITT HARTFORD MUTUAL FUNDS, INC.:
We have audited the accompanying statements of net assets of ITT Hartford Mutual
Funds, Inc. (a Maryland Corporation) (consisting of ITT Hartford Money Market,
ITT Hartford Bond Income Strategy, ITT Hartford Advisers, ITT Hartford Dividend
and Growth, ITT Hartford Stock, ITT Hartford Capital Appreciation, ITT Hartford
Small Company and ITT Hartford International Opportunities Funds) (the Funds) as
of December 31, 1996, and the related statements of operations and changes in
net assets and the financial highlights for the period from July 1, 1996
(inception) to December 31, 1996. These financial statements and financial
highlights are the responsibility of the Funds' management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of December 31, 1996, by
correspondence with the custodian bank. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective Funds comprising ITT Hartford Mutual Funds, Inc. as of
December 31, 1996, and the results of their operations, the changes in their net
assets and the financial highlights for the period from July 1, 1996 (inception)
to December 31, 1996, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
February 14, 1997
32
THE ITT HARTFORD MUTUAL FUND FAMILY BY REGULAR MAIL:
ITT Hartford Mutual Funds
- - SMALL COMPANY FUND P.O. Box 8416
Boston, MA 02266-8146
- - CAPITAL APPRECIATION FUND 1-888-843-7824
- - INTERNATIONAL OPPORTUNITIES FUND BY E-MAIL ON THE INTERNET:
lifeinfo@itthartford.com
- - STOCK FUND
UNDERWRITER
- - DIVIDEND AND GROWTH FUND Hartford Securities
Distribution Company, Inc.
- - ADVISERS FUND P.O. Box 2999
Hartford, CT 06104-2999
- - BOND INCOME STRATEGY FUND
INVESTMENT MANAGER
- - MONEY MARKET FUND The Hartford Investment Management
Company (HIMCO)
P.O. Box 2999
Hartford, CT 06104-2999
INVESTMENT SUB-ADVISER
Wellington Management Company, LLP
75 State Street
Boston, MA 02109
This presentation is authorized
only when preceded or accompanied
by a currently effective prospectus.
The prospectus contains detailed
information about the funds,
including charges and fees, so
please read it carefully before you
invest or send money.
405765-1 Printed in U.S.A.-C- 1997 [LOGO]
The Hartford, Hartford, CT 06115